Q4 2023 Compass Minerals International Inc Earnings Call

November 17, 2023

Speaker 1: Today's conference is being recorded and all lines have been placed on mute to prevent any background noise.

Speaker 1: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press the star key followed by the number one on your telephone keypad.

Speaker 1: If you would like to withdraw your question, press star 1 a second time.

Speaker 1: Thank you. And I will now turn the conference over to Brent Collins, Vice President of Investor Relations. Mr. Collins, you may begin.

Speaker 2: Thank you, operator. Good morning, and welcome to the Compass Minerals fourth quarter and fiscal 2023 earnings conference call. Today, we will discuss our recent results as well as our outlook for 2024.

Speaker 2: We'll begin with prepared remarks from our President and CEO , Kevin Crutchfield, and our CFO , Lauren Crenshaw.

Speaker 2: Joining in for the question and answer portion of the call will be Jamie Standen, our Chief Commercial Officer, and Chris Yandell, our Head of Lithium.

Speaker 2: Before we get started, I will remind everyone that the remarks we make today reflect financial and operational outlooks as of today's date, November 17, 2023.

Speaker 2: These outlooks entail assumptions and expectations that involve risk.

Speaker 2: and uncertainties that could cause the company's actual results to differ materially.

Speaker 2: A discussion of these risks can be found in our SEC filings located online at investors.compassminerals.com. Our remarks today also includes

Speaker 2: You can find reconciliations of these items in our earnings release or in our presentation, both of which are also available online.

Speaker 2: The results of our earnings release issued last night and presented during this call reflect only the continued operations of the business.

Speaker 2: other than amounts pertaining to the condensed consolidated statements of cash flows or unless noted otherwise. I'll now turn the call over to Kevin.

Speaker 2: Thank you, Brent. Good morning, everyone. And thank you for joining us on our call today.

Speaker 2: Over the course of fiscal 2023, we advanced the ball on a number of important strategic fronts.

Speaker 3: Unfortunately, the positive strides we've made across several areas this year have been wholly overshadowed by sustained uncertainty surrounding our lithium project in Utah, which has weighed heavily on our share price. I'll come back to our strategic achievement.

Speaker 3: But I first want to provide some commentary on our operations in Utah and on our lithium project specific.

Speaker 3: As a reminder, we've been operating in the state of Utah for more than half a century.

Speaker 3: currently providing approximately 370 local jobs at our Ogden facility.

Speaker 3: We've been an engaged corporate citizen in the community for decades.

Speaker 3: Our plan to lithium project would build upon the successful sulfate of potash. Sodium chloride and magnesium chloride businesses that currently operate on the lake and would not require any additional Brian draw from the gray salt lake.

Speaker 3: The current process draws mineral-rich lake water, or brine, from the Graysalt Lake into a series of solar evaporation.

Speaker 3: which the brine moves through over a two to three year evaporation cycle.

Speaker 3: As the water content of the brine evaporates and the mineral concentration increases,

Speaker 3: Some of those minerals naturally precipitate out of the brine and are deposited on the pond floor.

Speaker 3: These deposits provide the minerals necessary for processing into SOP, sodium chloride, and magnesium chloride.

Speaker 3: Those three products make up our core Ogden business today.

Speaker 3: Our lithium development would simply entail extracting a fourth mineral salt out of the brine that were already processed.

Speaker 3: Our project would add over 100 incremental local high-paying jobs and drive substantial additional royalty and tax receipts to the local economy.

Speaker 3: In our view, that's a win-win situation, and we continue to patiently educate all relevant parties and decision-makers on the positive attributes of this project.

Speaker 3: Maintaining the health and sustainability of the lake is a shared goal for all stakeholders in the community.

Speaker 3: We're no different. And in fact, we've worked hard to be part of the solutions to maintaining and improving the health of the lake for the long term.

Speaker 3: Several weeks ago, we announced our intention to suspend indefinitely any further investment in our lithium project in Utah until we achieve regulatory clarity with the state. We did not make this decision lightly.

Speaker 3: A critical linchpin to making investments on the order of magnitude we're considering here and have now paused is regulatory certainty.

Speaker 3: Without such certainty, it's essentially impossible to have confidence in the projected returns on invested capital over the next 30 years. Therefore, to move

Speaker 3: We must have confidence that the regulatory environment will include a set of rules that are reasonable now and will be stable and predictable over the coming decade.

Speaker 3: The March passage of House Bill 513 and particularly the subsequent rulemaking process have introduced uncertainty around the regulatory environment we'll be operating in, as well as the timing of how our development could proceed.

Speaker 3: Since the inception of House Bill 513, Compass Minerals has actively engaged with the state of Utah in a collaborative attempt to ensure the provisions of the legislation are implemented in a way that will not slow or halt the progress the company has made to date regarding its pursuit of developing a sustainable lithium salt resource to service the burgeoning North American advanced battery market.

Speaker 3: Despite the active and ongoing best efforts by all parties, we concluded that it's in the best interest of our shareholders to suspend further investment in our lithium project beyond certain already committed items associated with the early stages of construction of the commercial-scale DLE demonstration unit that we've talked about in the past.

Speaker 3: I want to share some additional thoughts about how we're thinking about the project.

Speaker 3: First, to be perfectly clear, we'll not move forward with the project at any cost.

Speaker 3: We'll continue to refine our engineering estimates on phase one and we'll incorporate the proposed financial terms from the state when we receive them.

Speaker 3: then we'll have a better view of the economics of the project.

Speaker 3: will only proceed if we're convinced that the long-term returns justify the investment.

Speaker 3: Second, if we do advance lithium, we'll do so in a manner that is financially prudent. As projected capital for the

Speaker 3: Questions about how we'll fund the program have taken on greater importance.

Speaker 3: clearly bringing a partner in at the asset level will help answer at least part of that question by reducing our share of the capital cost.

Speaker 3: We still have some work to do on this, but the one thing I want to stress today is that we're firmly committed to not using common equity to fund our share of any future lithium development.

Speaker 3: We believe there are numerous other viable sources of funds at considerably lower cost of capital and do not dilute the ownership of existing shareholders.

Speaker 3: Third, whereas previously we were on the path toward commencing operations in the fiscal 2025 timeframe, we have to acknowledge that our timeline today is different than when we started this project.

Speaker 3: I'm hopeful that we will be able to chart a path forward with the state of Utah that will allow this resource to be responsibly developed for the great benefit of all stakeholders, including the state in a timely manner.

Speaker 3: But we have to believe that we know the rules of the game and are standing on solid ground before we can credibly talk about timing again. And we aren't there yet.

Speaker 3: I'll comment now on the progress we made on our 2023 strategic objective.

Speaker 3: Lauren will then review our financial performance for the year and we'll discuss our outlook for 2024.

Speaker 3: We talked about it a lot this year, but restoration of the profitability of the salt business to historic levels was an important goal for the company in fiscal 23. Year over year, full-year adjusted EBITDA per ton for salt increased by approximately 40%.

Speaker 3: $20.38 compared to $14.59 last fiscal year.

Speaker 3: Salt-adjusted EBITDA margin percentage also increased over the same period.

Speaker 3: up to nearly 23 percent from 18 percent a year ago.

Speaker 3: This improvement was driven by better pricing, as we saw increases of 12% and 6% in price for highway de-icing and C&I, respectively, year over year. We did a great job getting back to the basics and focusing on winning markets that we can effectively and profitably serve.

Speaker 3: I'm also happy to know that despite the recent bidding season occurring on the heels of a winter that within the North American markets that we served had only 80% of the average number of snow days, our base plan for 2024 shows us continuing to improve salt profitability on both an EBITDA per ton and EBITDA margin base.

Speaker 3: After a rigorous multi-year process, two core Fortress products were added to the U.S. Forest Service Qualified Product List in December of 2022. This opened the door to allow governmental agencies to purchase Fortress fire retardant products.

Speaker 3: which were the first new products to enter the market in nearly two decades. Fortress was awarded its first

Speaker 3: and we consolidate our ownership of the company shortly thereafter.

Speaker 3: In June 23, we achieved another milestone when we dropped our first commercial product.

Speaker 3: Feedback that we've received on the efficacy of the products and the operational performance of the team has been excellent.

Speaker 3: We're currently in the process of finalizing our contract with the U.S. Forest Service for 2024. We're off to a good start with Fortress, and we're excited about the high-margin, counter-seasonal growth potential that this business can provide for the company.

Speaker 3: We also improved the balance sheet and financial standing of the company during the fiscal year, which was another of our strategic goals. Early in the fiscal year in October , we successfully closed on a strategic equity partnership with Koch Minerals and Trading to help fund phase one of our lithium project and to pay down debt.

Speaker 3: We also improved our debt maturity profile in May with a successful refinancing that pushed our nearest maturity out to 2027.

Speaker 3: We make safety a top priority because it's the right thing to do for our people and it's the right thing to do for our business.

Speaker 3: Safety is often the leading indicator of operational performance.

Speaker 3: And if you can't do the basics of keeping yourself and your colleagues safe, how can you possibly operate reliably?

Speaker 3: Our employees have clearly embraced the culture we're building here around zero harm, and it shows in our results.

Speaker 3: Specifically, our total recordable injury rate dropped approximately 8% to 1.17, and our lost time injury rate declined from 0.93 from a 1.02, or 9% in the comparable year ago period. Those are outstanding numbers, particularly in the complex operating environments that we have here at Compass Mineral.

Speaker 3: I want to extend my thanks to all the employees across the company for their commitment to safety and contribution to these outstanding results.

Speaker 3: As I reflect on the year, it's disappointing to know that the solid steps forward we made across our business were drowned out by noise and uncertainty that arose in Utah around our planned lithium project. We're determined to resolve those questions as soon as possible, and we remain engaged with Utah leaders on that front.

Speaker 3: Compass Minerals has unique, high-quality assets that have tremendous value. I'm confident that the intrinsic value of the company will be recognized with continued strong execution. So with that, I'll now turn the.

Speaker 3: Thanks, Kevin. I'll begin my remarks by discussing our fiscal 23 performance before providing perspective around our outlook for fiscal 24.

Speaker 2: Starting at the consolidated level, fourth quarter results primarily reflect weaker plant nutrition sales offset by improved profitability in the salt business year over year.

Speaker 3: Consolidated revenue declined 6% year-over-year to $233.6 million. Consolidated operating earnings declined to $3.9 million while adjusted EBITDA was slightly lower year-over-year at $33 million.

Speaker 3: Net loss for the quarter narrowed to 2.5 million from a net loss of 5.5 million year over year.

Speaker 3: For the full year, a below-average highway de-icing season and the impact of adverse weather conditions in California on the plant nutrition business negatively impacted the company's revenue.

Speaker 3: However, the SALT business demonstrated improved profitability that allowed for gains in consolidated operating earnings and adjusted EBITDA year over year.

Speaker 2: Consolidated revenue was 3% lower at just over $1.2 billion. Consolidated operating earnings was $79.1 million, up $36.2 million year over year. And adjusted EBITDA of $200.8 million rose $12.3 million year over year.

Speaker 3: Net income from continuing operations was $15.5 million versus a net loss of $37.3 million in the prior year.

Speaker 3: Our full-year effective income tax rate came in at 53 percent, which is influenced by the fact that throughout the year we booked valuation allowances on U.S. deferred tax assets. Excluding the impact of valuation allowances, our full-year effective income tax rate was roughly 22 percent, which is below the range we guided to last quarter.

Speaker 3: The rate came in below our expectation primarily due to lower estimated income associated with Fortress earnings slipping into the first quarter and the refinement of certain foreign tax estimates.

Speaker 2: On a quarterly basis, segment revenue was essentially flat year over year.

Speaker 3: at $186.7 million, resulting from a 9% increase in price offset by a 9% decrease in total sales volumes, which declined for both the Highway D.I.C. and C&I SALT businesses.

Speaker 2: Highway de-icing price rose 11% year over year while C&I price increased 8% reflecting continued pricing power across both product lines.

Speaker 2: Quarterly distribution costs per ton decreased 8% year over year due to favorable freight rates within the C&I business, while all-in product costs per ton increased 4% year over year driven by the impact of unplanned downtime.

Speaker 2: Operating earnings increased 91% to $28.8 million, while adjusted EBITDA improved 29% to $44.4 million year over year.

Speaker 2: For the full year, salt segment revenue was flat year over year at approximately $1 billion.

Speaker 3: A below average highway de-icing season in our served markets in North America was the leading cause of a 10% decrease in total sales volume.

Speaker 3: with highway de-icing volumes down 11% and CNI volumes down 6%.

Speaker 2: Higher highway de-icing and CNI salt pricing led to an increase in overall salt segment pricing of 11% year over year.

Speaker 3: The decline in volumes and increase in price were consistent with the value over volume strategy that we pursued in 2023 and was the driver of this business's improved profitability.

Speaker 3: On a per turn basis, both distribution and all in product costs saw modest increases year over year of 2% and 6% respectively.

Speaker 3: The SALT segment generated $170.7 million in operating earnings and adjusted EBITDA of $230.7 million, up 47% and 26% respectively year-over-year.

Speaker 2: Importantly, the segment saw adjusted EBITDA margins improved by over 400 basis points year-over-year, and adjusted EBITDA per ton recovered to over $20 per ton, which, as Kevin mentioned, was an important strategic objective for us this year.

Speaker 2: Turning to our plant nutrition segment, fourth quarter revenue totaled $35.3 million, down 39% year over year, driven by a combination of a 26% decrease in price and an 18% decline in sales volume.

Speaker 3: The decrease in price reflected the deterioration of global potassium fertilizer prices throughout the year.

Speaker 2: This influenced purchaser behavior as throughout the year, buyers didn't want to hold inventory and generally waited to buy product until needed.

Speaker 2: Distribution costs per ton increased by 6% year over year due to the timing of market demand and associated rail car storage fees, while all-in product costs per ton declined 2%.

Speaker 3: The segment had an operating loss of 1.6 million for the quarter, down 14.2 million year-over-year. Adjusted EBITDA declined 15.3%.

Speaker 3: As we've discussed throughout the year, highly unusual weather in California was the primary driver of the decrease in full year sales volumes year over year.

Speaker 3: For the full year, the segment generated $172.1 million in revenue, down 23% year over year, primarily due to a 23% decrease in sales volume.

Speaker 2: Distribution costs per ton rose 6% year over year due to the impact of lower sales volumes on our fixed distribution costs, while all-in product costs per ton were up 15%.

Speaker 2: Operating earnings for the full year total $11.2 million and adjusted EBITDA total $45.5 million.

Speaker 3: I would now like to provide a bit of color on Fortress's results for the year.

Speaker 3: Fortress had its first sales in 2023, so we recognize modest positive contributions from the business to revenue, operating earnings, and adjusted EBITDA this period of $10.4 million, $3.2 million, and $4.6 million, respectively.

Speaker 3: Our initial contract with the U.S. Forest Service was largely structured as take or pay and covered the calendar year ending in December 23.

Speaker 2: We expected to recognize the vast majority of the value of the contract during our fiscal year ended in September , based on historic patterns of wildfire.

Speaker 3: However, wildfire activity in the final quarter of our fiscal year, which included heavy rain in the western U.S. from Tropical Storm Hillary, was unusually mild. Specifically, calendar year-to-date through September , acres burned from wildfire

Speaker 2: were approximately 36% of the 10-year average, according to the National Interagency Fire Center.

Speaker 3: As a result, while the ultimate value of the initial calendar 23 contract is unchanged.

Speaker 3: The bulk of the revenue recognition related to the take or pay portion of the contract will occur in the current quarter, three months later than our original expectation.

Speaker 3: Accordingly, approximately $12 million in adjusted EBITDA that we had expected to impact the fourth quarter of 2023 will slide into the current quarter.

Speaker 2: Overall, we were encouraged by the operating performance we saw at Fortress in its initial year of commercial operation.

Speaker 2: Turning to our balance sheet, at quarter end, we had liquidity of $317 million, comprised of roughly $39 million of cash, and revolver capacity of around $278 million.

Speaker 3: Net debt to adjusted EBITDA stood at 3.7 times at the end of the quarter. Moving on to our outlook.

Speaker 2: The latest North America Highway de-icing bidding season has concluded, and we expect the average contract price for the upcoming North America winter season to be up by roughly 3% versus the prior year's bid season results, and total committed bid volumes to decline by approximately 5% year over year.

Speaker 3: Despite the 5% decrease in commitments, we are expecting an increase in sales volumes year-over-year based on historical sales-to-commitment ratios and assuming we experience average winter weather activity.

Speaker 2: Snow days during last year's winter within our North America served markets were only approximately 80% of the long run average. As a result, simply having an average winter should drive more than enough volume year over year to offset lower commitment levels.

Speaker 3: For salt, we expect adjusted EBITDA in the range of 230 to 270 million. This is, again, based on the assumption that we have an average winter.

Speaker 2: During our first quarter earnings call in February of 2024, we expect to update investors on where the SALT segment is tracking against the range of outcomes shown on slide 14 of our earnings presentation.

Speaker 3: Then, during our second quarter earnings call in May, we will revisit our SALT guidance following the completion of the winter season.

Speaker 2: The outlook for plant nutrition EBITDA is in the range of $20 to $40 million, despite meaningfully higher sales volume.

Speaker 2: This level of performance margin-wise is well below our targeted potential for this business at this stage in the industry pricing cycle. And I'll now take a moment to discuss why that's the case.

Speaker 3: From a top line perspective, sales are projected to be higher year over year at roughly 300,000 tons.

Speaker 3: primarily driven by a restoration of more normal West Coast demand conditions, assuming the extraordinary weather conditions that occurred last year don't repeat themselves, and higher production out of Ogden.

Speaker 2: Two factors, the continuation of elevated cash costs and lower pricing year over year are offsetting the sharp sales increase.

Speaker 3: From a pricing perspective, we are assuming an average SOP price next year of around $660 per ton, which is roughly 4% or around $30 below levels we experienced in the fourth quarter of 23.

Speaker 2: From a cost perspective, although cash unit costs are projected to decline year over year, they are still roughly $100 per ton higher than our targeted performance level.

Speaker 3: The reason for this is that while we have a production strategy supportive of restoring sales volumes back toward historical levels, and you see that in our sales guide.

Speaker 2: the naturally occurring pond tons, which have the lowest unit costs, remain below historical level.

Speaker 3: We expect this to enable us to achieve the yields and volumes required to deliver higher sales tons, but at a higher unit cost.

Speaker 2: Over time, assuming current demand levels persist, using potassium chloride is expected to allow us to maximize evaporation seasons and enable the replenishment of our stockpile, resulting in lower cost pond-based tons rising as a percentage of our production mix over time and potassium chloride use declining over time, resulting in lower unit costs as that happens.

Speaker 2: Now that we have a production strategy that we expect to allow us to deliver sales tons in line with historical levels.

Speaker 2: a key operational initiative in 2024 will be to identify additional cost reduction strategies to lower our unit costs.

Speaker 2: Such actions are not reflected in our guidance. However, we are committed to identifying a path to restoring the unit cost of this business closer to historical levels by lowering the cost in the short run and producing more pond-based tons longer term.

Speaker 3: Turning to our corporate guidance, we expect this segment to come in at a range of between minus $55 million and minus $65 million. As a reminder, corporate is comprised of three components, Fortress, Lithium, and Other.

Speaker 2: Other includes costs unrelated to the salt and plant nutrition segments and the impact of our Deep Store documented records management business.

Speaker 3: As it relates to Fortress, we are currently working closely with the U.S. Forest Service to establish a contract for Cal of the Year 2024. However, an agreement is not expected to be finalized until late December 2023 or early January 2024.

Speaker 3: As a result, our initial guidance only includes the approximately $12 million in adjusted EBITDA related to the 2023 contract that we will recognize in the current quarter.

Speaker 2: However, our current expectation is that we will achieve at least a similar level of profit for our 2024 contract.

Speaker 3: When our negotiations have concluded, and we have a finalized contract, we'll update our guidance accordingly.

Speaker 2: Lithium-related expenses are projected to be in the range of $5 million and $10 million for fiscal 2024. These costs will be heavily influenced by whether adequate regulatory clarity in Utah is achieved to resume lithium development.

Speaker 3: Total CapEx is expected to be in a range of $125 to $140 million, and it's comprised of...

Speaker 2: Sustaining CAPEX related to salt and plant nutrition of approximately 90 to 100 million.

Speaker 3: CapEx of between 25 and 30 million related to the orderly suspension of the lithium project. And fortress-related growth CapEx of approximately 10 million.

Speaker 2: In closing, our company remains well-positioned financially and operationally with strong competitive positions in the production of essential minerals with few viable economic stocks.

Speaker 2: As Kevin alluded to in his remarks, we made several positive steps across the business in fiscal 23 that set us up well for success in 2024, as we continue focusing on maximizing the performance of our high quality salt, plant nutrition, and emerging fire retardant business.

Speaker 3: With that said, I will turn it back to the operator to open the lines for Q&A. Operator?

Speaker 1: And as a reminder, if you would like to ask a question, press star and then the number one on your telephone keypad.

Speaker 1: If you would like to withdraw your question, press star 1 a second time.

Speaker 1: To be able to take as many of your questions as possible, we do ask that you please limit yourself to one question and one follow-up. And we'll pause for just a moment to compile the Q&A roster.

Speaker 1: We will take our first question from Joel Jackson with BMO Capital Markets. Your line is open.

Speaker 4: Good morning, everyone. I have a few questions. I'll go one by one.

Speaker 4: this year's contribution from Fortress to be at least similar to $12 million.

Speaker 4: What, so I assume what's going to happen in 24 is there'll be a bit of double counting, right? You have the 23 earnings that comes at 24 and the 24, just trying to think what a normalized 24 earnings would be like. It sounds like it'd be a little bit higher than $12 million contribution. And how would you expect that business to ramp into 25, fiscal 25? How the business is going to ramp?

Speaker 2: So I'll start and then ask Jamie. So we did book about $4 or $5 million of workers' profit in 2023, and 12.

Speaker 2: will roll into next year. And so you add those together, you get kind of 15 and change. And it all depends on the level of profitability that we see in this upcoming contract. Jamie, you want to elaborate? Yeah, I think, yeah, so you think about normalized 23 was about $15 million or so, $15, $16 million.

Speaker 5: Lauren's prepared remarks said we expect in 24 to achieve something at least at that level. So.

Speaker 5: The negotiations are ongoing. We're figuring out which bases what what it looks like.

Speaker 3: It's likely that it won't be a take or pay scenario next year. So, that's about all the incremental color we can give you right now. And Joel, rather than speculate, we just felt it'd be better to let the dust settle and then update you in February .

Speaker 6: Right, OK, so really this guidance number is.

Speaker 6: fair case guidance for Fortress. It's going to be better because I'm a normalized person.

Speaker 4: Okay, I'm on caught on the cell business looking at cost. I could be wrong. 1st blush. It looks like maybe you're.

Speaker 6: your guidance projecting maybe about a dollar per ton increase in salt cost. Is that right? If I'm not let me know and tell me what's driving salt cost this year.

Speaker 3: Yeah, from a cash cost perspective, salt costs are about flattish around, I don't know, roughly sort of $40 a ton, and EBITDA per ton is actually up about a dollar. And so I'm not sure what you're seeing, but salt is up from an EBITDA per ton perspective and roughly flat from a cash ton perspective year over year.

Speaker 4: Maybe then in that flat environment before I pass the baton on, maybe talk about what our costs are up and what our costs are down. Thanks.

Speaker 3: So from a fuel perspective, which is important for that business, and the first half of this year is where we'll consume most of the fuel, we're assuming Brent kind of in the mid 80s, and if you look you over a year that's kind of roughly flattish from from from that point of view. And then.

Speaker 5: We are going to benefit from what we hope will be the absence of natural gas spike that we saw last year at a high level. Jamie, anything else you want to share? I would say on the operating side, on the cash cost itself, you know, we saw some unplanned downtime in 2023, items like that not expected to repeat. So we've got some inflationary pressure on the input side still.

Speaker 7: And we'll take our next question from David Begleiter with Deutsche Bank. Your line is open. Thank you. Good morning, Kevin. On lithium, on lithium. Are you is there a time frame where you would say these negotiations?

Speaker 7: taking too long and we're gonna move on and it's not pursue lithium is there is it six months as he is a year the longer that would be helpful thank

Speaker 3: Yeah, I mean, look, that's a good question, David. It's kind of hard to pin it down, but what I'll tell you, I mean, there's kind of two work streams in terms of kind of how we're thinking about this.

Speaker 5: I think as everybody knows, they released the draft rules that were promulgated as part of House Bill 513. Those need to get sorted, so they're out for public comment, I think. We've made our comments on those.

Speaker 3: we'll work with the state to come up with a set of draft rules that govern how lithium could be extracted on the lake. And, you know, we have some concerns about the way they were released and...

Speaker 3: will be at the table trying to bend that outcome in a way that works for us as well as folks in Utah. And then secondarily, there's the legislative session coming up after the first of the year that we'll obviously be involved in. So I think all that will kind of settle.

Speaker 3: But maybe the April time frame, and I think that'll give us the kind of clarity we need to make a decision on whether this thing still got legs or put it on the shelf for for another time. So I would kind of direct you to that April , May time frame next year.

Speaker 7: No, very, very helpful. And just on plant nutrition, what do you think is normalized earnings in this segment? I think the last four years averaged maybe 55 or 60 million of EBITDA. Is that a good number or could it even be higher in terms of normalized?

Speaker 3: Yeah, we're we're $100 below where we expect this business to be on a cash cost basis. If you look back over the past five years, you multiply that times are times and you get $30 million. This business is ought to be in that in the range you just referred to, and that's going to be a focus of our efforts in the coming years.

Speaker 3: from the long-term perspective, as we harvest less and let the ponds just deposit and concentrate, we expect that we'll get better yields over that two or three year deposition process, but we're not gonna just wait for that. We're also looking at the cost base at Ogden in terms of things we can do in the near term to improve the cost base as we wait for the ponds to regenerate.

Speaker 5: We will take our next question from Greg Lewis with BTIG. Your line is open. Yes. Thank you. And good morning. And thanks for taking my question. You know, my first one was what I did want to go back on.

Speaker 5: So, as we think about freight, it seems like that could be pulling back a little bit. Any way to kind of gauge how much of your freight costs are fixed, or if at all, when we could see those agreements, I guess, recontracted or reset?

Speaker 2: Hey, Greg, we you're garbled up there. Could you please repeat your question for us?

Speaker 5: It was around the cost, but I'm trying to gauge if we were to see a freight cost generally across North America move lower. Like, how should we think about the company benefiting from that impact? I, you know, as you look at your freight exposure, how much of it's, you know, kind of spot contracted kind of that is my question. The first one.

Speaker 5: When we look at truck for 2024, we think the truck market's actually bottoming out now, maybe first quarter, and would be expected to rise, given

Speaker 5: given some of the freight supply rationalization, Conway, Yellow, bankruptcies. So we think the supply picture of freight is shrinking actually. And with the post-pandemic.

Speaker 5: de-stocking behind us, we think there's demand increase in retail over the next year. So we've baked into our plan and for 2024, increased truck rate really in the back half of the year. Now, that is significant. It is a significant increase. Think of it as 15%.

Speaker 5: But if that does not occur, and the bottom stays in longer, and freight rates don't rise, we would stand to benefit from that. Versus our current operating.

Speaker 5: Okay, perfect. Super helpful. And then I did want to realizing that it

Speaker 5: You know, we need to kind of move forward in the project, but but when we think about a strategic partner, you know, you mentioned on the listing side, I mean, really, you know, with with the project.

Speaker 5: Largely funded at least phase 1, like, when we think about a strategic partner, is that is that just really an offtake partner? Is that is that kind of a fair way to think about it or or any kind of rough? How you're thinking about, like, what you're looking for in terms of that partner and and really just given what's, you know, the.

Speaker 5: I don't know, landscape in Utah, is that something where we probably won't see that partner until we kind of get more clarity and can move forward?

Speaker 5: And know we have a better line of sight on what we could see, you know, I guess the lithium project move forward.

Speaker 3: Yeah, so I think in terms of conditions precedent to having a partner, it would have to be regulatory legislative clarity in Utah where you've got a horizon that is suitable for making long term investments.

Speaker 3: So clearly, as I mentioned earlier, when David asked his question, there's work there to be done.

Speaker 3: And then secondarily, we still have we still want to prove out the dust guard unit to demonstrate to the world that that is a scalable technology at at commercial level. So anything that we would do with a partner would be conditioned upon those two criteria having been met. And then in terms of the type of the partner where we'd be looking for I mean, clearly a balance sheet to

Speaker 3: reduce our capital exposure at the project level. And then, you know, ideally it'd be nice to have a partner that's got some sort of prowess in that domain space, lithium or the EV world itself. So that gives you kind of some sense of how we're thinking about it. Okay, super helpful. Thank you very much.

Speaker 1: And as a reminder, if you would like to ask a question, press star one on your telephone keypad.

Speaker 1: And we will take our next question from Vincent Anderson with Spiefel. Your line is open.

Speaker 8: Yeah, thanks. Good morning. Going back to the drivers of salt margin expectations. I mean, you hit on the variable components. Super helpful, but I was hoping you can maybe frame the season on season changes in fixed cost leverage and then any incremental net back positive positives or negatives based on the geographical mix of your commitments this year versus last year.

Speaker 2: Well, um, to the extent that our volumes increase as a result of a normalized winter, just

Speaker 3: the cost of fueling, the sheer leverage from a 3, 4% increase in the tonnage on the same cost base will improve the tons. That's what you're seeing. As it relates to fuel, as I said, to the extent that that is sort of flattish, you overhear, and we have taken some efforts that we referred to in the last call in terms of cost

Speaker 2: following our efforts at the corporate center to reduce costs, those are the kind of things that if they hang in there should allow us to see a dollar or two increase in profit per ton, and that's what's in the midpoint of our guidance.

Speaker 8: Okay. Okay. That's helpful. And then just turning over to Fortress, just a two-parter here. So, first, does the CapEx budget reflect any on-base investments? And then kind of related to that, you said you expect this year likely won't have take-or-pay contracts, but as I understand it, those are in place to help support initial commercialization of a new product. So, should I interpret that as you expecting a high enough level of organic base wins that you'll no longer qualify for that?

Speaker 5: Yeah, it's not a matter of qualification, Vincent, this is Jamie, it's.

Speaker 5: It's a matter of how the the agreement unfolds. You know, the take or pay element of last year's contract was related to gallon.

Speaker 5: There are a number of elements in a contract that give us security around daily daily rate

Speaker 5: our delivery mechanisms is that they're fundamentally mobile. So even though we get assigned a base on a permanent basis, so to speak, we have mobility.

Speaker 5: We're investing for the future, that's the $10 million in capital. And we have flexibility to put that, to manufacture that, get it ready.

Speaker 5: and then deploy it to the bases that were awarded. So.

Speaker 5: It's less capital intensive than a typical situation. We're not burying pipes and

Speaker 5: pouring concrete and investing in infrastructure at bases, we have more of a mobile structure. And I

Speaker 2: When we do provide guidance on this business will approach it similar to what you see in our earnings deck today, with regard to solve this, to the extent it's not take or pay, this will be a business that is subject to the wildfire season. And so you should expect us to come out with a range that tells you what we think a normal

Speaker 2: wildfire season would look like and the bell curve for that on both sides. And so I just want to underscore that you will have that dimension.

Speaker 8: No, that's helpful. I appreciate that. If I could sneak one more in for Kevin, actually, if I'm not mistaken, 2024 will put you on the back nine of your Godrich overhaul. I was just hoping to get an update on priorities for this year and maybe any larger projects planned for that March turnaround.

Speaker 3: yeah back so like the maybe the 11th hole of the back kind

Speaker 3: Just to be specific, but yeah, fair. We continue to drive our.

Speaker 3: main entryways. George is not here. I don't have an exact percentage, but we're probably 65-67% of the way.

Speaker 5: driven there. So as we've shared before, connecting up those new

Speaker 3: entries with the shaft bottom and the new sections in the west of the mine will then promote our ability then to kind of close the old section of the mine.

Speaker 3: Because spending money, you know, holding roof up and ventilating and lighting and all that sort of thing. So that's kind of first phase.

Speaker 3: And then we continue to develop the panels out in the West and some new panel infrastructure up into the kind of the North North part of the mind. So you'll see the results can gradually start to filter through.

Speaker 3: on a cost side over the next two, three years, as we've talked about before. There's not gonna be some magic moment where all of a sudden costs precipitously fall. It'll be gradual, but you'll start to see that as soon as we connect those roadways up. So I think we've still got.

Speaker 3: probably close to a year or so before we do get those connected up. But that's when you'll start to see things begin to change at Goddard Benson.

Speaker 5: We will take our next question from David Silver with CL King. Your line is open. Yeah, hi, good morning.

Speaker 9: A couple of questions, I think first I'd like to ask.

Speaker 9: About the inventory levels at September 30, you know, I think it's one of the higher totals in recent, you know, in recent years, and it is up pretty substantially year over year.

Speaker 9: So just wondering if you could kind of talk about maybe the cost versus volume elements in there. Is this kind of a carryover from, you know, a sub subpar or below average winter season last year? Just how to think about that that inventory level at September 30 or maybe if you could update it for, you know, November 15th or something. I'll stop there. Thank you.

Speaker 2: Hi David, it's it's Lauren. And when you look at 930 on a year over year basis, you're right, it is higher. And it's roughly half related to salt and half plant nutrition.

Speaker 3: for a normal winter. And only an 80% winter actually happens. And so those are two reasons for the inventory to be higher. With that said, if you look back over the last four or five years from a unit's perspective,

Speaker 3: Our units of inventory are only up about 5% versus that average, 5 to 10%.

Speaker 3: for that same unit that has risen. And one of the things that Kevin has talked about is this notion that our customers understand that the cost of holding this inventory has gotten more expensive. And I don't know, Kevin, if you want to elaborate, but we've restored the profitability of the business EBITDA per ton. But working capital is more expensive to carry.

Speaker 9: Okay, thank you for that. I'd also just ask you for an update, I guess, on your

Speaker 9: business realignment or your cost reduction program. You know, you had some targets in terms of lowering the fixed cost base as of the kickoff, I guess, of fiscal year 24. So, if you could just update us on that, that would be great. Thanks.

Speaker 3: Yeah, when we did it, we did an AK where we laid out about 15 to 20 million of costs that we were going after last year. And those were split roughly 50% SG&A, 50% cost of goods sold, maybe half sold.

Speaker 3: quarter plant nutrition, et cetera. And so we've captured those costs and they are reflected in this, the guidance that you see. Of course, there are offsets like merit that would eat into some of that along with other factors but we feel good about what we've accomplished and it's reflected in our guidance.

Speaker 9: OK, great and then maybe just a last one. I would like to go back to fortress.

Speaker 9: And I understand there's quite a few moving parts on how your first fire season went and timing issues and whatnot.

Speaker 9: But I believe you had some longer term, I guess, market share targets for, you know, how your product might be might be positioned once it's fully accepted in the market and any thoughts about.

Speaker 9: you know, your market share shook out this first year, and whether, you know, the expectation is that that share would be maintained or increased over the next year. Thank you.

Speaker 5: Yeah, sure, David. This is, this is Jamie.

Speaker 5: We were right around the 3% to 5% share as it relates to the U.S. Forest Service total contract.

Speaker 5: in 2023. We expect that to grow that year on year. We absolutely expect to increase our base count and expected volumes as we negotiate this contract here this month, hopefully to be resolved later this month or early January . And then we'll build from there. Our expectation is to continue to reinvest in the business.

Speaker 5: add bases, add share, and grow over the next several years. So nothing on that front has changed. That was part of the investment thesis when we made the acquisition. And we feel good about how we're positioned and we can deliver on that plan.

Speaker 1: We'll take our next question from Chris Kapsch with Loop Capital Markets. Your line is open.

Speaker 8: Yeah, good morning. I had 1 on the salt business and specifically around the 3% pricing outcome from the fiscal 24 contract bidding season and maybe juxtapose against the back at 23. so you specifically use the words like referring to your, your value over volume strategy in 23, but I don't think I have heard those words before.

Speaker 10: reflecting 24. So I'm curious about the outcome this year was.

Speaker 10: Is it partly a function of that strategy still, or is it more simply a function of other considerations like whether it's the inflation, for example, you flag the interest rates and the higher bearing cost of inventories or other residual inflationary costs or some other dynamic like the Windsor mine strike. Just wondering if you could provide additional color on that, on the, you know, the value over volume strategy, if that's persisting, thanks.

Speaker 5: Let me hit that at a high level. Kristen and Jamie probably want to add some color. But, you know, we we approach the bid season again with the same mindset, which is value over volume. Let's focus on areas that are geographically advantaged.

Speaker 3: From a delivery and transport costs, that last mile is tough in this business like any business. And we stayed very disciplined through the whole marketing season.

Speaker 3: You know, competitors do what competitors do, and they're driven by different things. But our goal was to promote value in the marketplace, which is what we did. And, you know, I'd like to just hand kudos to the team for delivering 3% price up in the face of a, or on the heels of an 80% winner, which is kind of unprecedented when you think about it. So our team did.

Speaker 3: good I think in terms of kind of promoting that value in the marketplace and I would tell you that you can expect that strategy to continue going forward as we try to march above $20 a ton and continue to move that number up.

Speaker 10: Okay, that's helpful. Thanks. And then just one quick follow-up on Fortress. And I believe there was some incentive or premium pricing that was applicable, maybe even a government statute to incentivize alternative suppliers when there's like a sole source situation. So, I'm curious if that will apply to the fiscal 24 supply agreements when they're more definitive.

Speaker 5: Yes, our the open solicitation currently is a sole source. So it's our competitor has a.

Speaker 5: as a sole source contract, as do we for twenty twenty four. So, yes, that continues into twenty twenty four. The terms could be a little bit different than they were in twenty three. But fundamentally, it's the same structure. And then ultimately, over time, we expect this to move away from that.

Speaker 5: that mechanism and move more into a competitive environment with bidding, regional bidding occurring from year to year.

Speaker 10: Okay. And then, sorry, could you just, then the follow-up is just on the situation in Canada. I think they were effectively piggybacking off the U.S. approval for this product. Is there, you just provide any color on how that's progressing as well. Thank you.

Speaker 5: Yep, yep. The Canadians use the US Forest Service QPL. You know, our focus in North America for the for the early days of this business are the US Forest Service contract, Cal Fire and then Canada. So, yes, we are able to to compete up there. But our focus right now is is in the US.

Speaker 1: And as a reminder, if you would like to ask a question, press star 1.

Speaker 2: And we will take our next question from Jeff Zekowskis with J.P. Morgan. Your line is open. Thanks very much. Can you briefly discuss how management comp changed in or incentive comp changed in 2023 versus 2022 and how it might change in 2022?

Speaker 5: So there are a couple of components of incentive compensation, Jeff. One is kind of the cash bonus.

Speaker 5: annual incentive plan, and I'm sitting here.

Speaker 3: thinking, but I don't think that changed from one year to the next.

Speaker 3: It's driven off of cash flow, safety, and some shared goals and ESG activities, that kind of thing. The long-term incentive plan, which is a stock-based plan,

Speaker 3: um did change have we disclosed that yet no so you'll you'll read about that coming coming up

Speaker 3: here shortly. So the short term incentive plan didn't change the

Speaker 3: long-term incentive plan, the stock-based plan, is going to change modestly from one year to the next. And you'll read about that in the upcoming proxy.

Speaker 2: You talked about looking for a partner in your lithium project. So, if it turned out that regulatory development

Speaker 2: Would would you then begin spending as you did before and look for a partner or would you wait for a partner before you spent more?

Speaker 2: Or if you didn't have a partner, would you continue to spend? Can you just clarify?

Speaker 2: and the timing of the selection of a partner if things resume.

Speaker 3: Wow, that's a lot to unpack in there, Jeff. I mean, I think the ideal outcome for us is to have a partner at the project level for Lithium, again, to allay some of that capital risk. And, you know, as I mentioned earlier, to the extent that they have domain expertise, that's a nice bonus. But in terms of timing, you know, as I mentioned earlier on.

Speaker 3: important that we resolve matters in Utah in a way that are favorable to our our project and you know that's going to be a fine balance between what the legislators are looking for and what the regulators are looking for but what we have to have in terms of regulatory legislative clarity to make such long-term investments.

Speaker 3: So that's kind of condition number one condition number two is we'd like to finish out.

Speaker 3: the DustGuard unit to demonstrate to the world that that is a commercially viable, scalable technology, and we have every belief that it will be, but I think that's an important proof point, and I think doing something on a partnership level prior to those criteria having been met is going to, you know, jeopardize project valuation, obviously, because it's

Speaker 3: creates uncertainty. So those would be two valuable conditions precedent to getting anything done with a with a partner but you can expect us in the meantime to be continuing to collaborate and work closely with the folks in Utah but work on these other things in parallel as well. So hopefully that's responsive to your question.

Speaker 1: And there are no further questions at this time, so I will now turn the call back to Mr. Kevin Crutchfield for closing remarks.

Speaker 3: Thank you. We apologize sincerely for the call abruptly stopping and everybody having to dial back in but we thank you for your interest and continued interest in Compass Minerals and look forward to keeping you updated as time progresses. So thank you for dialing in today.

Speaker 1: And ladies and gentlemen, this concludes today's call and we thank you for your participation. You may now disconnect.

Quarter end fiscal 2023 earnings conference call.

Being recorded in all lines have been placed on mute to prevent any background noise.

Today's conference is being recorded in all lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session.

If you would like to ask a question during that time simply press the star key followed by the number one on your telephone keypad.

If you would like to withdraw your question Press Star one a second time.

Thank you and I will now turn the conference over to Brent Collins, Vice President of Investor Relations. Mr. Cohen, you may begin.

Thank you and I will now turn the conference over to Brent Collins, Vice President of Investor Relations. Mr. Collins, you may begin.

Thank you operator, good morning, and welcome to the Compass minerals fourth quarter and fiscal 2023 earnings conference call.

Today, we will discuss our recent results as well as our outlook for 2024.

We will begin with prepared remarks from our president and CEO Kevin Crutchfield.

And our CFO Lorin Crenshaw.

Joining us for the question and answer portion of the call will be Jamie Standen, our chief commercial officer.

And our CFO Lorin Crenshaw.

Joining us for the question and answer portion of the call will be Jamie Standen, our chief commercial officer.

And Christian Bayle, our head of lithium.

George Schuller, our Chief operating officer is away today.

And Christian Bayle, our head of with him.

George Schuller, our Chief operating officer is away today.

Before we get started I will remind everyone that the remarks, we make today.

Reflect financial and operational outlooks as of today's date November 17 2023.

These outlooks Intel assumptions.

Ladies and gentlemen, good morning, My name is Abby and I'll be your conference operator today.

Expectations that involve risks.

These outlooks until assumptions and.

And uncertainties that could cause the company's actual results to differ materially.

Expectations that involve risks.

At this time I would like to welcome everyone to the Compass Minerals' fourth quarter and fiscal 2023 earnings conference call.

And uncertainties that could cause the company's actual results to differ materially.

A discussion of these risks can be found in our SEC filings located online at.

Today's conference is being recorded in all lines have been placed on mute to prevent any background noise.

Investors Dot compass minerals dot com.

Our remarks also include certain non-GAAP financial measures you can find reconciliations of these items in our earnings release.

Investors Dot compass minerals dot com.

After the Speakers' remarks, there will be a question and answer session.

Our remarks today also includes certain non-GAAP financial measures you can find reconciliations of these items in our earnings release.

If you would like to ask a question during that time simply press the star key followed by the number one on your telephone keypad.

And in our presentation, both of which are also available online.

The results in our earnings release issued last night and presented during this call reflect only the continuing operations of the business.

If you would like to withdraw your question Press Star one a second time.

The results in our earnings release issued last night and presented during this call reflect only the continuing operations of the business other.

Other than amounts pertaining to the condensed consolidated statements of cash flows or unless noted otherwise I'll now turn the call over to Kevin.

Thank you and I will now turn the conference over to Brent Collins, Vice President of Investor Relations. Mr. Cohen, you may begin.

Other than amounts pertaining to the condensed consolidated statements of cash flows or unless noted otherwise I will now turn the call over to Kevin.

Thank you Brent good morning, everyone and thank you for joining us on our call today.

Thank you operator, good morning, and welcome to the Compass minerals fourth quarter and fiscal 2023 earnings conference call.

Thank you Brent good morning, everyone and thank you for joining us on our call today.

Over the course of fiscal 2023, we advanced the ball on a number of important strategic fronts.

Today, we will discuss our recent results as well as our outlook for 2024.

Unfortunately, the positive strides we've made across several areas. This year have been wholly overshadowed by sustained uncertainty surrounding our lithium project in Utah, which is weighed heavily on our share price.

We will begin with prepared remarks from our president and CEO Kevin Crutchfield.

And our CFO Lorin Crenshaw.

Joining us for the question and answer portion of the call will be Jamie Standen, our chief commercial officer.

I'll come back to our strategic achievements in just a moment.

But I first want to provide some commentary on our operations in Utah and on our lithium projects specifically as a reminder, we've been operating in the state of Utah for more than half a century currently providing approximately 370 local jobs at our Ogden facility.

I'll come back to our strategic achievements in just a moment.

And Christian Bayle, our head of lithium.

George Schuller, our Chief operating officer is the way today.

Before we get started I will remind everyone that the remarks, we make today.

Reflect financial and operational outlooks as of today's date November 17 2023.

We've been engaged corporate citizen in the community for decades.

These outlooks Intel assumptions and expectations that involve risks.

We've been engaged corporate citizen in the community for decades.

Our plan to lithium project with builds upon the successful sulfate of potash.

And uncertainties that could cause the company's actual results to differ materially.

Our plan to lithium project with builds upon the successful sulfate of potash sodium chloride and magnesium chloride businesses that currently operate on the lake and would not require any additional Brian draw from the great Salt Lake.

ODM chloride and magnesium chloride businesses that currently operate on the lake and would not require any additional Brian draw from the great Salt Lake.

A discussion of these risks can be found in our SEC filings located online at.

Investors Dot compass minerals dotcom.

The current process draws mineral rich lightwater or brine from the great Salt Lake into a series of solar evaporation ponds, which the Brian moves through over a two to three year evaporation cycle.

Our remarks also include certain non-GAAP financial measures you can find reconciliations of these items in our earnings release.

The current process draws mineral rich lightwater or brine from the great Salt Lake into a series of solar evaporation ponds, which the Brian moves through over a two to three year evaporation cycle.

And in our presentation, both of which are also available online.

As the water content of the Brian evaporate in the mineral concentration increases some of those minerals naturally precipitate out of the brine and are deposited on the plant floors.

The results in our earnings release issued last night and presented during this call reflect only the continuing operations of the business other than amounts pertaining to the condensed consolidated statements of cash flows or unless noted otherwise I will now turn the call over to Kevin.

As the water content of the Brian evaporate in the mineral concentration increases some of those minerals naturally precipitate out of the brine and are deposited on the plant floors.

These deposits provide the minerals necessary for processing into Sop.

Thank you Brent good morning, everyone and thank you for joining us on our call today.

Sodium chloride and magnesium chloride.

Those three products make up our core Ogden business today.

Sodium chloride and magnesium chloride.

Over the course of fiscal 2023, we advanced the ball on a number of important strategic fronts.

Those three products make up our core Ogden business today.

Our lithium development would simply entail extracting a fourth mineral salt out of the Brian that we're already processing.

Our lithium development with simply entail extracting a fourth mineral salt out of the Brian that we're already processing.

Our project would add over 100 incremental local high paying jobs and drive substantial additional royalty in tax receipts to the local economy.

I'll come back to our strategic achievements in just a moment.

In our view that's a win win situation and we continue to patiently educate all relevant parties and decision makers on the positive attributes of this project.

But I first wanted to provide some commentary on our operations in Utah and on our lithium projects specifically as a reminder, we've been operating in the state of Utah for more than half a century currently providing approximately 370 local jobs at our Ogden facility.

In our view that's a win win situation and we continue to patiently educate all relevant parties and decision makers on the positive attributes of this project.

Utah House Bill $5 13 was enacted to establish a regulatory framework for how lithium would be developed as well as introduce some updated rules on management of the great Salt Lake.

Yeah.

Utah House Bill $5 13 was enacted to establish a regulatory framework for how lithium would be developed as well as introduce some updated rules on management of the great Salt Lake.

We've been engaged corporate citizen in the community for decades.

We're acutely aware of the recent concerns and sensitivities related to the great Salt Lake maintaining.

Our plan to lithium project would build upon the successful sulfate of potash sodium chloride and magnesium chloride businesses that currently operate on the lake and would not require any additional Brian draw from the great Salt Lake.

We're acutely aware of the recent concerns and sensitivities related to the great Salt Lake maintaining.

Maintaining the health and sustainability of the Lake is a shared goal for all stakeholders in the community.

We are no different and in fact, we've worked hard to be part of the solutions to maintaining and improving the health of the lake for the long term.

The current process draws mineral rich like water or Brian from the great Salt Lake into a series of solar evaporation ponds, which the Brian moves through over a two to three year evaporation cycles.

We are no different and in fact, we've worked hard to be part of the solutions to maintaining and improving the health of the lake for the long term.

Several weeks ago, we announced our intention to suspend indefinitely any further investment in our lithium project in Utah until we achieve regulatory clarity with the state we.

As the water content of the Brian to evaporate in the mineral concentration increases some of those minerals naturally precipitate out of the Brian and are deposited on the plant floors.

We did not make this decision lightly.

A critical linchpin to making investments on the order of magnitude we're considering here.

We did not make this decision lightly.

A critical linchpin to making investments on the order of magnitude we're considering here.

And have now paused as regulatory certainty.

These deposits provide the minerals necessary for processing into S. O P sodium chloride and magnesium chloride.

And have now paused as regulatory certainty.

Without such certainty, it's essentially impossible to have confidence in the projected returns on invested capital over the next 30 years.

Those three products make up our core Ogden business today.

Therefore to move forward prudently, we must have confidence that the regulatory environment will include a set of rules that are reasonable now and will be stable and predictable over the coming decades.

Our lithium development would simply entail extracting a forced mineral salt out of the Brian that we're already processing.

Our project would add over 100 incremental local high paying jobs and drive substantial additional royalty in tax receipts to the local economy.

March passage of House, Bill $5, 13, and particularly the subsequent rulemaking process have introduced uncertainty around the regulatory environment will be operating in as well as the timing of how our development could proceed.

The March passage of House, Bill $5, 13, and particularly the subsequent rulemaking process have introduced uncertainty around the regulatory environment will be operating in as well as the timing of how our development could proceed.

In our view that's a win win situation and we continue to patiently educate all relevant parties and decision makers on the positive attributes of this project.

Since the inception of House Bill 513, Compass minerals has actively engaged with the state of Utah and a collaborative attempt to ensure the provisions of the legislation are implemented in a way that will not slow or halt the progress. The company has made to date regarding its pursuit of developing a sustainable lithium salt resource to <unk>.

Utah House Bill $5 13 was enacted to establish a regulatory framework for how lithium would be developed as well as introduce some updated rules on management at the great Salt Lake.

Since the inception of house Bill $5 13, Compass minerals has actively engaged with the state of Utah and a collaborative attempt to ensure the provisions of the legislation are implemented in a way that will not slow or halt the progress. The company has made to date regarding its pursuit of developing a sustainable lithium salt resource to.

We're acutely aware of the recent concerns and sensitivities related to the great Salt Lake maintaining.

Service, the burgeoning North American advanced battery market.

Maintaining the health and sustainability of the Lake is a shared goal for all stakeholders in the community.

Service, the burgeoning North American advanced battery market.

Despite the active and ongoing best efforts by all parties. We concluded that it's in the best interest of our shareholders to suspend further investment in our lithium project beyond certain already committed items associated with the early stages of construction of the commercial scale DLD demonstration unit that we've talked about in the past.

We are no different and in fact, we've worked hard to be part of the solutions to maintaining and improving the health of the lake for the long term.

Several weeks ago, we announced our intention to suspend indefinitely any further investment in our lithium project in Utah until we achieve regulatory clarity with the state we.

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I wanted to share some additional thoughts about how we're thinking about the project.

We did not make this decision lightly.

Yes.

I wanted to share some additional thoughts about how we're thinking about the project.

A critical linchpin to making investments on the order of magnitude we're considering here.

First to be perfectly clear, we will not move forward with the project at any cost.

And have now paused as regulatory certainty.

We'll continue to refine our engineering estimates on phase one and will incorporate the proposed financial terms from the state when we receive them.

Without such certainty, it's essentially impossible to have confidence in the projected returns on invested capital over the next 30 years.

We will continue to refine our engineering estimates on phase one and will incorporate the proposed financial terms from the state when we receive them.

And we'll have a better view of the economics of the project.

Then we will have a better view of the economics of the project.

We will only proceed if we're convinced that the long term returns justify the investment.

We'll only proceed if we're convinced that the long term returns justify the investment.

Second if we do advanced lithium will do so in a manner that is financially prudent.

As projected capital for the lithium program has increased.

<unk> about how we will fund the program have taken on greater importance.

Questions about how we will fund the program have taken on greater importance.

<unk>, bringing a partner in at the asset level will help answer at least part of that question by reducing our share of the capital cost.

Clearly, bringing a partner in at the asset level will help answer at least part of that question by reducing our share of the capital cost.

We still have some work to do on this but the one thing I want to stress today is that we're firmly committed to not using common equity to fund our share of any future lithium development.

We believe there are numerous other viable sources of funds at considerably lower cost of capital and do not dilute the ownership of existing shareholders.

Service, the burgeoning North American advanced battery market.

Third, whereas previously we were on a path towards commencing operations in the fiscal 2025 timeframe, we have to acknowledge that our time line today is different than when we started this project.

Third, whereas previously we were on a path toward commencing operations in the fiscal 2025 timeframe, we have to acknowledge that our time line today is different than when we started this project.

I am hopeful that we will be able to chart a path forward with the state of Utah that will allow this resource to be responsibly develop for the great benefit of all stakeholders, including the state in a timely manner.

I'm hopeful that we will be able to chart a path forward with the state of Utah that will allow this resource to be responsibly develop for the great benefit of all stakeholders, including the state in a timely manner.

Yes.

I wanted to share some additional thoughts about how we're thinking about the project.

First to be perfectly clear, we will not move forward with the project at any cost.

But we have to believe that we know the rules of the game and are standing on solid ground before we can credibly talk about timing again, and we are there yet.

We will continue to refine our engineering estimates on phase one and will incorporate the proposed financial terms from the state when we receive them.

I'll comment now on the progress we made on our 2023 strategic objectives.

Then we will have a better view of the economics of the project.

Loren will then review our financial performance for the year, and we will discuss our outlook for 2024.

We'll only proceed if we are convinced that the long term returns justify the investment.

Loren will then review our financial performance for the year, and we will discuss our outlook for 2024.

We talked about it a lot this year, but restoration of the profitability of the salt business to historic levels was an important goal for the company in fiscal 'twenty three.

Second if we do advanced lithium will do so in a manner that is financially prudent.

We talked about it a lot this year, but restoration of the profitability of the salt business to historic levels was an important goal for the company in fiscal 'twenty three.

As projected capital for the lithium program has increased.

Year over year full year, adjusted EBITDA per ton for salt increased by approximately 40% to $20 38 compared to $14 59.

<unk> is about how we will fund the program have taken on greater importance.

Year over year full year, adjusted EBITDA per ton for salt increased by approximately 40% to $20 38 compared to $14 59.

Clearly, bringing a partner in at the asset level will help answer at least part of that question by reducing our share of the capital cost.

Last fiscal year.

Adjusted EBITDA margin percentage also increased over the same period.

Last fiscal year.

We still have some work to do on this but the one thing I want to stress today is that we're firmly committed to not using common equity to fund our share of any future lithium development.

<unk> adjusted EBITDA margin percentage also increased over the same period.

Up to nearly 23% from 18% a year ago.

This improvement was driven by better pricing as we saw increases of 12% and 6% and price for highway Deicing and C&I, respectively year over year, we did a great job getting back to the basics and focusing on winning markets that we can effectively and profitably service.

We believe there are numerous other viable sources of funds at considerably lower cost of capital and do not dilute the ownership of existing shareholders.

Third, whereas previously we were on a path toward commencing operations in the fiscal 2025 timeframe, we have to acknowledge that our time line today is different than when we started this project.

I'm also happy to note that despite the recent bidding season occurring on the heels of a winter that within the North American markets that we served had only 80% of the average number of snow days, our base plan for 2024 shows us continuing to improve solid profitability on both an EBITDA per ton and <unk>.

EBITDA margin basis.

But we have to believe that we know the rules of the game and are standing on solid ground before we can credibly talk about timing again, and we are there yet.

Fiscal 'twenty three was also an exciting year for our emerging fire retardant business.

Margin basis.

Fiscal 'twenty three was also an exciting year for our emerging fire retardant business.

After a rigorous multi year process to core fortress products were added to the U S. Forest service qualified product list in December of 2022.

I'll comment now on the progress we made on our 2023 strategic objectives.

After a rigorous multi year process to core fortress products were added to the U S. Forest service qualified product list in December of 2022.

Loren will then review our financial performance for the year, and we will discuss our outlook for 2024.

This open the door to allow governmental agencies to purchase fortress fire retardant products, which were the first new products to enter the market in nearly two decades.

This open the door to allow governmental agencies to purchase fortress fire retardant products, which was the first new products to enter the market in nearly two decades.

We talked about it a lot this year, but restoration of the profitability of the salt business to historic levels was an important goal for the company in fiscal 'twenty three.

Fortress was awarded its first contract in May.

And we consolidated our ownership of the company shortly thereafter.

Fortress was awarded its first contract in May.

Year over year full year, adjusted EBITDA per ton for salt increased by approximately 40% to $20 38 compared to $14 59.

And we consolidated our ownership of the company shortly thereafter.

In June 23.

We achieved another milestone when we dropped our first commercial product.

In June 23.

We achieved another milestone when we dropped our first commercial product.

The feedback that we've received on the efficacy of the products and the operational performance of the team has been excellent.

Last fiscal year.

Adjusted EBITDA margin percentage also increased over the same period.

Feedback that we've received on the efficacy of the products and the operational performance of the team has been excellent for <unk>.

We're currently in the process of finalizing our contract with the U S Forest service for 2024, we're off to a good start with fortress and we're excited about the high margin counter seasonal growth potential that this business can provide for the company.

Up to nearly 23% from 18% a year ago.

Currently in the process of finalizing our contract with the U S Forest service for 2024.

We're off to a good start with fortress and we're excited about the high margin counter seasonal growth potential that this business can provide for the company.

We also improved the balance sheet and financial standing of the company during the fiscal year, which was another of our strategic goals.

We also improved the balance sheet and financial standing of the company during the fiscal year, which was another of our strategic goals early in the fiscal year in October we successfully closed on our strategic equity partnership with Coke minerals and trading to help fund phase one of our lithium project and to pay down debt.

I'm also happy to note that despite the recent bidding season occurring on the heels of a winter that within the North American markets that we served had only 80% of the average number of snow days, our base plan for 2024 shows us continuing to improve <unk> profitability on both an EBITDA per ton and <unk>.

Early in the fiscal year in October we successfully closed on our strategic equity partnership with Coke minerals and trading to help fund phase one of our lithium project and to pay down debt.

We also improved our debt maturity profile in may with a successful refinancing that pushed our nearest maturity out to 2027.

EBITDA margin basis.

As a result of our focused execution on this goal year over year, we saw an improvement in our available liquidity a decline in our net debt outstanding and a lengthening of our debt maturities.

Fiscal 'twenty three was also an exciting year for our emerging fire retardant business.

As a result of our focused execution on this goal year over year, we saw an improvement in our available liquidity a decline in our net debt outstanding and a lengthening of our debt maturities.

After a rigorous multi year process to core fortress products were added to the U S. Forest service qualified product list in December of 2022.

The last strategic goal that I'll touch on today relates to safety and our efforts to build a culture of zero harm.

This open the door to allow governmental agencies to purchase fortress fire retardant products, which were the first new products to enter the market in nearly two decades.

Say this almost every earnings call due to its importance.

We make safety a top priority because it's the right thing to do for our people and it's the right thing to do for our business.

Fortress was awarded its first contract in May.

We make safety a top priority because it's the right thing to do for our people and it's the right thing to do for our business.

And we consolidated our ownership of the company shortly thereafter.

Safety is often a leading indicator of operational performance and if you can't do the basics of keeping yourself and your colleagues safe.

In June 23.

Safety is often a leading indicator of operational performance and if you can't do the basics of keeping yourself and your colleagues safe.

We achieved another milestone when we dropped our first commercial product.

How can you, possibly operate reliably and efficiently.

The feedback that we've received on the efficacy of the products and the operational performance of the team has been excellent.

Our employees have clearly embraced the culture, we're building here around zero harm and it shows in our results.

How can you, possibly operate reliably and efficiently.

Our employees have clearly embraced the culture, we're building here around zero harm and it shows in our results.

Specifically, our total recordable injury rate dropped approximately 8% to $1, one seven and our lost time injury rate declined from 0.93 from a 1.0 to four 9% in the comparable year ago period.

We also improved the balance sheet and financial standing of the company during the fiscal year, which was another of our strategic goals.

Those are outstanding numbers, particularly in the complex operating environments that we have here at compass minerals.

Early in the fiscal year in October we successfully closed on our strategic equity partnership with Coke minerals and trading to help fund phase one of our lithium project and to pay down debt.

Want to extend my thanks to all the employees across the company for their commitment to safety and contribution to these outstanding results.

As I reflect on the year, it's disappointing to know that the solid steps forward, we made across our business were drowned out by noise and uncertainty that arose in Utah around our planned lithium project.

We also improved our debt maturity profile in may with a successful refinancing that pushed our nearest maturity out to 2027.

As a result of our focused execution on this goal year over year, we saw an improvement in our available liquidity a decline in our net debt outstanding and a lengthening of our debt maturities.

We're determined to resolve those questions as soon as possible and we remain engaged with Utah leaders on that front.

We are determined to resolve those questions as soon as possible and we remain engaged with Utah leaders on that front.

Compass minerals has unique high quality assets that have tremendous value.

The last strategic goal that I'll touch on today relates to safety and our efforts to build a culture of zero harm.

Compass minerals has unique high quality assets that have tremendous value.

I am confident that the intrinsic value of the company will be recognized with continued strong execution.

Say this almost every earnings call due to its importance.

So with that I'll now turn the call over to Laura.

We make safety a top priority because it's the right thing to do for our people and it's the right thing to do for our business.

Thanks, Kevin I'll begin my remarks by discussing our fiscal 'twenty three performance before providing perspective around our outlook for fiscal 'twenty four.

So with that I'll now turn the call over to Laura.

Thanks, Kevin I'll begin my remarks by discussing our fiscal 'twenty three performance before providing perspective around our outlook for fiscal 'twenty four.

<unk> is often a leading indicator of operational performance and if you can't do the basics of keeping yourself and your colleagues safe.

Starting at the consolidated level fourth quarter results, primarily reflect weaker plant nutrition sales offset by improved profitability in the salt business year over year Consol.

Starting at the consolidated level fourth quarter results, primarily reflect weaker plant nutrition sales offset by improved profitability in the salt business year over year.

How can you, possibly operate reliably and efficiently.

Our employees have clearly embraced the culture, we're building here around zero harm and it shows in our results.

Consolidated revenue declined 6% year over year to $233 6 million.

Specifically, our total recordable injury rate dropped approximately 8% to 1.17 and our lost time injury rate declined from 0.93 from a 1.0 to four 9% in the comparable year ago period.

Consolidated operating earnings declined to $3 9 million, while adjusted EBITDA was slightly lower year over year at $33 million.

Net loss for the quarter narrowed to $2 5 million from a net loss of $5 $5 million year over year.

Those are outstanding numbers, particularly in the complex operating environments that we have here at compass minerals.

For the full year are below average highway deicing season, and the impact of adverse weather conditions in California on the plant nutrition business negatively impacted the company's revenue.

Want to extend my thanks to all the employees across the company for their commitment to safety and contribution to these outstanding results.

However, the salt business demonstrated improved profitability that allow for gains in consolidated operating earnings and adjusted EBITDA year over year.

Consolidated revenue was 3% lower at just over $1 2 billion Consol.

Consolidated revenue was 3% lower at just over $1 2 billion.

Consolidated operating earnings were $79 1 million up $36 $2 million year over year, and adjusted EBITDA of $200 8 million rose $12 3 million year over year.

We're determined to resolve those questions as soon as possible and we remain engaged with Utah leaders on that front.

Consolidated operating earnings was $79 1 million up $36 $2 million year over year, and adjusted EBITDA of $200 8 million rose $12 3 million year over year.

Compass minerals has unique high quality assets that have tremendous value.

Net income from continuing operations was $15 5 million versus a net loss of $37 3 million in the prior year.

I am confident that the intrinsic value of the company will be recognized with continued strong execution.

Net income from continuing operations was $15 5 million versus a net loss of $37 3 million in the prior year.

So with that I'll now turn the call over to Laura.

Our full year effective income tax rate came in at 53%, which is influenced by the fact that throughout the year, we book valuation allowances on U S deferred tax assets.

Thanks, Kevin I'll begin my remarks by discussing our fiscal 'twenty three performance before providing perspective around our outlook for fiscal 'twenty four.

Our full year effective income tax rate came in at 53%, which is influenced by the fact that throughout the year, we book valuation allowances on U S deferred tax assets.

Moving the impact of valuation allowances, our full year effective income tax rate was roughly 22%, which is below the range, we guided to last quarter.

Starting at the consolidated level fourth quarter results, primarily reflect weaker plant nutrition sales offset by improved profitability in the salt business year over year.

Moving the impact of valuation allowances, our full year effective income tax rate was roughly 22%, which is below the range, we guided to last quarter.

The rate came in below our expectation primarily due to lower estimated income associated with fortress earnings slipping into the first quarter and the refinement of certain foreign tax estimates.

Consolidated revenue declined 6% year over year to $233 6 million.

The rate came in below our expectation primarily due to lower estimated income associated with fortress earnings slipping into the first quarter and the refinement of certain foreign tax estimates.

Holidayed operating earnings declined to $3 9 million, while adjusted EBITDA was slightly lower year over year at $33 million.

Moving to the salt business.

On a quarterly basis segment revenue was essentially flat year over year.

Moving to the salt business.

Net loss for the quarter narrowed to $2 5 million from a net loss of $5 $5 million year over year.

On a quarterly basis segment revenue was essentially flat year over year at.

At $186 7 million, resulting from a 9% increase in price offset by a 9% decrease in total sales volumes, which declined for both the highway deicing and C&I salt businesses.

For the full year are below average highway deicing season, and the impact of adverse weather conditions in California on the plant nutrition business negatively impacted the company's revenue.

Highway Deicing price rose, 11% year over year, while C&I price increased 8%, reflecting continued pricing power across both product lines.

However, the salt business demonstrated improved profitability that allowed for gains in consolidated operating earnings and adjusted EBITDA year over year.

Highway Deicing price rose, 11% year over year, while C&I price increased 8%, reflecting continued pricing power across both product lines.

Quarterly distribution cost per ton decreased 8% year over year due to favorable freight rates within the C&I business, while all in product cost per ton increased 4% year over year, driven by the impact of unplanned downtime.

Consolidated revenue was 3% lower at just over $1 2 billion consolidated.

Operating earnings were $79 1 million up $36 $2 million year over year, and adjusted EBITDA of $208 million rose $12 $3 million year over year.

Operating earnings increased 91% to $28 8 million, while adjusted EBITDA improved 29% to $44 4 million year over year.

Net income from continuing operations was $15 5 million versus a net loss of $37 3 million in the prior year.

Operating earnings increased 91% to $28 8 million, while adjusted EBITDA improved 29% to $44 4 million year over year.

For the full year Salt segment revenue was flat year over year at approximately $1 billion.

Our full year effective income tax rate came in at 53%, which is influenced by the fact that throughout the year, we book valuation allowances on U S deferred tax assets.

For the full year Salt segment revenue was flat year over year at approximately $1 billion.

Well below average highway deicing season in our served markets in North America was the leading cause of a 10% decrease in total sales volumes with highway deicing volumes down, 11% and C&I volumes down 6%.

Moving the impact of valuation allowances, our full year effective income tax rate was roughly 22%, which is below the range, we guided to last quarter.

Higher highway Deicing and C&I salt pricing led to an increase in overall salt segment pricing of 11% year over year the.

The rate came in below our expectation primarily due to lower estimated income associated with fortress earnings slipping into the first quarter and the refinement of certain foreign tax estimates.

Higher highway Deicing and C&I salt pricing led to an increase in overall salt segment pricing of 11% year over year the.

The decline in volumes and increase in price were consistent with the value over volume strategy that we pursued in 2023.

The decline in volumes and increase in price were consistent with the value over volume strategy that we pursued in 2023 and.

Moving to the salt business.

And was the driver of this business has improved profitability.

On a quarterly basis segment revenue was essentially flat year over year.

And was the driver of this businesses improved profitability.

On a per ton basis, both distribution and all in product costs.

At $186 7 million, resulting from a 9% increase in price offset by a 9% decrease in total sales volumes, which declined for both the highway deicing and C&I salt businesses.

On a per ton basis, both distribution and all in product costs.

Modest increases year over year.

Of 2% and 6% respectively.

Modest increases year over year.

The Salt segment generated $170 7 million in operating earnings and adjusted EBITDA of $230 7 million up, 47% and 26% respectively year over year.

A 2% and 6% respectively.

The Salt segment generated $170 7 million in operating earnings and adjusted EBITDA of $230 7 million up, 47% and 26% respectively year over year.

The icing price rose, 11% year over year, while C&I price increased 8%, reflecting continued pricing power across both product lines.

Importantly, the segment saw adjusted EBITDA margins improved by over 400 basis points year over year, and adjusted EBITDA per tonne recovered to over $20 per ton, which as Kevin mentioned was an important strategic objective for us this year.

Turning to our plant nutrition segment fourth quarter revenue totaled $35 3 million down 39% year over year, driven by a combination of a 26% decrease in price and an 18% decline in sales volume.

Operating earnings increased 91% to $28 8 million, while adjusted EBITDA improved 29% to $44 4 million year over year.

Turning to our plant nutrition segment fourth quarter revenue totaled $35 3 million down 39% year over year, driven by a combination of a 26% decrease in price and an 18% decline in sales volume.

For the full year Salt segment revenue was flat year over year at approximately $1 billion.

The decrease in price reflected the deterioration of global potassium fertilizer prices throughout the year.

This influence purchase our behavior as.

Throughout the year.

This influence purchase our behavior as.

Buyers didn't want to hold inventory and generally weighted to byproduct until needed.

As throughout the year.

Buyers didn't want to hold inventory and generally weighted to byproduct until needed.

Distribution cost per ton increased by 6%.

Higher highway Deicing and C&I salt pricing led to an increase in overall salt segment pricing of 11% year over year the.

Distribution costs per ton increased by 6%.

Year over year due to the timing of market demand and associated railcar storage fees, while all in product cost per ton declined 2%.

The decline in volumes and increase in price were consistent with the value over volume strategy that we pursued in 2023 and was the driver of this business has improved profitability.

The segment had an operating loss of $1 6 million for the quarter.

Down $14 $2 million year over year.

Adjusted EBITDA declined.

Down $14 $2 million year over year.

On a per ton basis, both distribution and all in product costs.

$15 1 million to $6 7 million.

Adjusted EBITDA declined.

Modest increases year over year.

As we've discussed throughout the year highly unusual weather in California was the primary driver of the decrease in full year sales volumes year over year.

$15 1 million to $6 7 million.

Of 2% and 6% respectively.

As we've discussed throughout the year highly unusual weather in California was the primary driver of the decrease in full year sales volumes year over year.

The Salt segment generated $170 7 million in operating earnings and adjusted EBITDA of $230 7 million up, 47% and 26% respectively year over year.

For the full year, the segment generated $172 $1 million in revenue down 23% year over year, primarily due to a 23% decrease in sales volumes.

For the full year the segment generated $172 1 million in revenue down 23% year over year, primarily due to a 23% decrease in sales volumes.

Distribution cost per ton rose, 6% year over year due to the impact of lower sales volumes on our fixed distribution costs, while all in product cost per ton were up 15%.

Turning to our plant nutrition segment fourth quarter revenue totaled $35 3 million down 39% year over year, driven by a combination of a 26% decrease in price and an 18% decline in sales volume.

Operating earnings for the full year totaled $11 2 million and adjusted EBITDA totaled $45 5 million.

I would now like to provide a bit of color on fortresses results for the year.

Fortress had its first sales in 2023, so we recognize modest positive contributions from the business to revenue operating earnings and adjusted EBITDA. This period of $10 4 million $3 2 million.

The decrease in price reflected the deterioration of global potassium fertilizer prices throughout the year.

Fortress had its first sales in 2023, so we recognize modest positive contributions from the business to revenue operating earnings and adjusted EBITDA. This period of $10 4 million $3 2 million.

This influence purchaser behavior as.

Throughout the year.

Buyers didn't want to hold inventory and generally weighted to byproduct until needed.

$4 6 million respectively.

Our initial contract with the U S Forest service was largely structured as take or pay and cover the calendar year ending in December 'twenty three.

$4 $6 million respectively.

Distribution costs per ton increased by 6%.

Our initial contract with the U S Forest service was largely structured as take or pay and cover at the calendar year ending in December 'twenty three.

Year over year due to the timing of market demand and associated railcar storage fees, while all in product cost per ton declined 2%.

We expected to recognize the vast majority of the value of the contract during our fiscal year ended in September based on historic patterns of wildfire activity.

The segment had an operating loss of $1 6 million for the quarter.

$14 2 million year over year.

However, wildfire activity in the final quarter of our fiscal year, which included heavy rain in the Western U S from tropical storm Hillary was unusually mild specifically calendar year to date through September.

Adjusted EBITDA declined.

However, wildfire activity in the final quarter of our fiscal year, which included heavy rain in the Western U S from tropical storm Hillary was unusually mild specifically.

$15 1 million to $6 7 million.

As we've discussed throughout the year highly unusual weather in California was the primary driver of the decrease in full year sales volumes year over year.

Acres burned from wildfires in the U S.

Calendar year to date through September.

For the full year, the segment generated $172.1 million in revenue down 23% year over year, primarily due to a 23% decrease in sales volumes.

We're approximately 36% of the 10 year average according to the National Interagency Fire Center.

Acres burned from wildfires in the U S.

We're approximately 36% of the 10 year average according to the National Inter Agency Fire Center.

As a result, while the ultimate value of the initial calendar 'twenty three contract is unchanged.

Distribution cost per ton rose, 6% year over year due to the impact of lower sales volumes on our fixed distribution costs, while all in product costs per ton were up 15%.

The bulk of the revenue recognition related to the take or pay portion of the contract will occur in the current quarter three months later than our original expectation.

Bulk of the revenue recognition related to the take or pay portion of the contract will occur in the current quarter.

Accordingly, approximately $12 million and adjusted EBITDA that we had expected to impact the fourth quarter of 'twenty three will slide into the current quarter.

Three months later than our original expectation.

Operating earnings for the full year totaled $11 2 million and adjusted EBITDA totaled $45 5 million.

Accordingly, approximately $12 million and adjusted EBITDA that we had expected to impact the fourth quarter of 'twenty three will slide into the current quarter.

Overall, we were encouraged by the operating performance we saw at fortress in its initial year of commercial operations.

I would now like to provide a bit of color on fortresses results for the year.

Overall, we were encouraged by the operating performance we saw at fortress in its initial year of commercial operations.

Fortress had its first sales in 2023, so we recognize modest positive contributions from the business to revenue operating earnings and adjusted EBITDA. This period of $10 4 million $3 2 million.

Turning to our balance sheet at quarter end.

Liquidity of $317 million comprised of roughly $39 million of cash and revolver capacity of around $278 million.

Turning to our balance sheet at quarter end.

Liquidity of $317 million comprised of roughly $39 million of cash and revolver capacity of around $278 million.

$6 million respectively.

Net debt to adjusted EBITDA stood at three seven times at the end of the quarter.

Our initial contract with the U S Forest service was largely structured as take or pay and cover the calendar year ending in December 'twenty three.

Net debt to adjusted EBITDA stood at three seven times at the end of the quarter.

Moving on to our outlook for fiscal 'twenty four.

The latest North America Highway Deicing bidding season has concluded and.

Moving onto our outlook for fiscal 'twenty four.

We expected to recognize the vast majority of the value of the contract during our fiscal year ended in September based on historic patterns of wildfire activity.

The latest North America Highway Deicing bidding season has concluded and.

And we expect the average comp track price for the upcoming North America winter season to be up by roughly 3% versus the prior year's bid season results and total committed bid volumes to decline by approximately 5% year over year.

Despite the 5% decrease in commitments, we are expecting an increase in sales volumes year over year based on historical sales to commitment ratios and assuming we experienced average winter weather activity.

Acres burned for wildfires in the U S.

We're approximately 36% of the 10 year average according to the National Interagency Fire Center.

Snow days during last year's winter within our North America served markets were only approximately 80% of the long run average as a result simply having an average winter should drive more than enough volume year over year to offset lower commitment levels for.

As a result, while the ultimate value of the initial calendar 'twenty three contract is unchanged. The bulk of the revenue recognition related to the take or pay portion of the contract will occur in the current quarter three months later than our original expectation.

First of all we expect adjusted EBITDA in the range of $230 to $270 million. This.

Accordingly, approximately $12 million and adjusted EBITDA that we had expected to impact the fourth quarter of 'twenty three will slide into the current quarter.

For Salt, we expect adjusted EBITDA in the range of $230 million to $270 million. This is again based on the assumption that we have an average winter.

This is again based on the assumption that we have an average winter.

During our first quarter earnings call in February of 2024, we expect to update investors on where the Salt segment is tracking against the range of outcomes shown on slide 14 of our earnings presentation.

Overall, we were encouraged by the operating performance we saw at fortress in its initial year of commercial operations.

Turning to our balance sheet at quarter end.

Liquidity of $317 million comprised of roughly $39 million of cash and revolver capacity of around $278 million.

Then during our second quarter earnings call in May.

Then during our second quarter earnings call in May we will revisit our salt guidance following the completion of the winter season.

We'll revisit our salt guidance following the completion of the winter season.

The outlook for plant nutrition EBITDA is in the range of $20 million to $40 million, despite meaningfully higher sales volumes.

Net debt to adjusted EBITDA stood at three seven times at the end of the quarter.

The outlook for plant nutrition EBITDA is in the range of $20 million to $40 million, despite meaningfully higher sales volumes.

Moving onto our outlook for fiscal 'twenty four.

This level of performance margin wise is well below our targeted potential for this business at this stage in the industry pricing cycle and I will now take a moment to discuss why that's the case.

The latest North America Highway Deicing bidding season has concluded and.

This level of performance margin wise is well below our targeted potential for this business at this stage in the industry pricing cycle and I will now take a moment to discuss why that's the case.

From a top line perspective sales are projected to be higher year over year at roughly 300000 tonnes.

Primarily driven by a restoration of more normal west coast demand conditions, assuming the extraordinary weather conditions that occurred last year don't repeat themselves and higher production out of Ogden.

Two factors the continuation of elevated cash costs and lower pricing year over year are offsetting the sharp sales increase.

From a pricing perspective, we are assuming an average sop price next year of around $660 per ton, which is roughly 4% around $30 below levels, we experienced in the fourth quarter of 'twenty three.

From a pricing perspective, we are assuming an average sop price next year of around $660 per ton, which is roughly 4% or around $30 below levels, we experienced in the fourth quarter of 'twenty three.

For Salt, we expect adjusted EBITDA in the range of $230 million to $270 million.

From a cost perspective, although cash unit costs are projected to decline year over year. They are still roughly $100 per ton higher than our targeted performance levels.

This is again based on the assumption that we have an average winter.

Reason for this is that.

While we have a production strategy supportive of restoring sales volumes back toward historical levels and youll see that in our sales guidance the.

The reason for this is that while we have a production strategy supportive of restoring sales volumes back toward historical levels and you see that in our sales guidance.

Then during our second quarter earnings call in May we will revisit our salt guidance following the completion of the winter season.

The naturally occurring pond tons, which have the lowest unit costs remain below historical levels there.

The naturally occurring pond tons, which have the lowest unit costs remain below historical levels.

The outlook for plant nutrition EBITDA is in the range of $20 million to $40 million, despite meaningfully higher sales volumes.

Therefore, just as we did in 2023 this year, we intend to continue supplementing our production process with potassium chloride, a higher cost input to close the gap and cheaper pond tons available.

This level of performance margin wise is well below our targeted potential for this business at this stage in the industry pricing cycle and I will now take a moment to discuss why that's the case.

We expect this to enable us to achieve the yields and volume is required to deliver higher sales tons.

From a top line perspective sales are projected to be higher year over year at roughly 300000 tonnes.

But at a higher unit cost than historical average.

But at a higher unit cost than the historical average.

Over time, assuming current demand levels persist using potassium chloride is expected to allow us to maximize evaporation seasons and enabled the replenishment of our stockpile.

Over time, assuming current demand levels persist.

Potassium chloride is expected to allow us to maximize evaporation seasons and enabled the replenishment of our stockpile, resulting in lower cost pond based tons rising as a percentage of our production mix overtime and potassium chloride used declining over time, resulting in lower unit costs as they are.

<unk> and lower cost pond based tons rising as a percentage of our production mix over time and potassium chloride use declining over time, resulting in lower unit costs as that happens.

Two factors the continuation of elevated cash cost and lower pricing year over year are offsetting the sharp sales increase.

From a pricing perspective, we are assuming an average sop price next year of around $660 per ton, which is roughly 4% around $30 below levels, we experienced in the fourth quarter of 'twenty three.

Now that we have a production strategy that we expect to allow us to deliver sales tons in line with historical levels. Our key operational initiatives in 2024 will be to identify additional cost reduction strategies to lower our unit costs.

It happens.

From a cost perspective, although cash unit costs are projected to decline year over year. They are still roughly $100 per ton higher than our targeted performance levels.

Such actions are not reflected in our guidance. However, we are committed to identifying a path to restoring the unit cost of this business closer to historical levels by lowering the cost in the short run and producing more pond based tons longer term.

The reason for this is that while we have a production strategy supportive of restoring sales volumes back toward historical levels and you'll see that in our sales guidance.

Turning to our corporate guidance, we expect this segment to come in.

The naturally occurring pond tons, which have the lowest unit costs remain below historical levels there.

Turning to our corporate guidance, we expect this segment to come in at a range of between minus $55 million and minus $65 million.

At a range of between minus $55 million and minus $65 million.

Therefore, just as we did in 2023 this year, we intend to continue supplementing our production process with potassium chloride, a higher cost input to close the gap and cheaper pond tons available.

As a reminder, corporate is comprised of three components portraits lithium and other other.

As a reminder, corporate is comprised of three components fortress lithium and other.

Other includes cost unrelated to the salt and plant nutrition segments and the impact of our deep store document in our records management business.

We expect this to enable us to achieve the yields and volume is required to deliver higher sales tons.

As it relates to fortress. We are currently working closely with the U S Forest service to establish a contract for calendar year 2024.

But at a higher unit cost than the historical average over.

Over time, assuming current demand levels persist using potassium chloride is expected to allow us to maximize evaporation seasons and enabled the replenishment of our stockpile, resulting in lower cost pond based tons rising as a percentage of our production mix over time and potassium chloride used.

However, an agreement is not expected to be finalized until late December 2023.

Or early January 2024.

As a result, our initial guidance only includes the approximately $12 million and adjusted EBITDA related to the 2023 contract that we will recognize in the current quarter.

Our early January 2024.

As a result, our initial guidance only includes the approximately $12 million and adjusted EBITDA related to the 2023 contracts that we will recognize in the current quarter.

Declining over time, resulting in lower unit costs as that happens.

However, our current expectation is that we will achieve at least a similar level of profit for our 2024 contracts.

But our negotiations have concluded and we have a finalized contract we'll update our guidance accordingly.

Lithium related expenses are projected to be in the range of five and $10 million for fiscal 2000 and for these.

These costs will be heavily influenced by weather adequate regulatory clarity and Utah is achieved to resume lithium development.

Total capex is expected to be in a range of $125 million to $140 million.

And is comprised of three parts.

Turning to our corporate guidance, we expect this segment to come in at a range of between minus $55 million and minus $65 million.

Staining capex related to salt and plant nutrition of approximately $90 million to $100 million.

And is comprised of three parts.

Staining capex related to salt and plant nutrition of approximately $90 million to $100 million.

Capex of between 25 and $30 million related to the orderly suspension of the lithium project.

As a reminder, corporate is comprised of three components fortress lithium and other other.

Capex of between 25 and $30 million related to the orderly suspension of the lithium project.

And fortress related growth capex of approximately $10 million.

Other includes cost unrelated to the salt and plant nutrition segments and the impact of our deep store document our records management business.

Fortress related growth capex of approximately $10 million.

In closing our company remains well positioned financially and operationally with strong competitive positions and the production of essential minerals with few viable economic substitutes.

As it relates to fortress. We are currently working closely with the U S Forest service to establish a contract for calendar year 2024.

As Kevin alluded to in his remarks, we made several positive steps across the business in fiscal 'twenty three that set us up well for success in 2024, as we continue focusing on maximizing the performance of our high quality salt plant nutrition and emerging fire retardant businesses.

However, an agreement is not expected to be finalized until late December 2023.

As Kevin alluded to in his remarks, we made several positive steps across the business in fiscal 'twenty three that set us up well for success in 2024, as we continue focusing on maximizing the performance of our high quality salt client nutrition and emerging fire retardant businesses with.

Our early January 2024.

As a result, our initial guidance only includes the approximately $12 million and adjusted EBITDA related to the 2023 contract that we will recognize in the current quarter.

With that said I will turn it back to the operator to open the lines for Q&A.

However, our current expectation is that we will achieve at least a similar level of profit for our 2024 contracts.

Operator.

Thank you.

And as a reminder, if you would like to ask a question press Star and then the number one on your telephone keypad.

Operator.

Thank you.

And as a reminder, if you would like to ask a question Press Star then the number one on your telephone keypad.

But our negotiations have concluded and we have a finalized contract we'll update our guidance accordingly.

If you would like to withdraw your question Press Star one a second time.

To be able to take as many of your questions as possible. We do ask that you. Please limit yourself to one question and one follow up we'll pause for just a moment to compile the Q&A roster.

Lithium related expenses are projected to be in the range of five and $10 million for fiscal 'twenty for these.

To be able to take as many of your questions as possible. We do ask that you. Please limit yourself to one question and one follow up.

These costs will be heavily influenced by weather adequate regulatory clarity and Utah is achieved to resume lithium development.

Pause for just a moment to compile the Q&A roster.

Yeah.

We will take our first question from Joel Jackson with BMO capital markets. Your line is open.

Total capex is expected to be in a range of $125 million to $140 million.

Yeah.

And we will take our first question from Joel Jackson with BMO capital markets. Your line is open.

Good morning, everyone I have a few questions I'll go one by one.

And is comprised of three parts.

Good morning, everyone I have a few questions I'll go one by one.

Dining capex related to salt and plant nutrition of approximately $90 million to $100 million.

Okay.

On the 24 guidance and fortress. So thank you for the color that you would expect this.

Yeah.

On the 24 guidance and fortress. So thank you for the color that you would expect this.

Capex of between 25 and $30 million related to the orderly suspension of the lithium project.

This year's contribution from fortress to be at least similar to $12 million.

And fortress related growth capex of approximately $10 million.

What so I assume what's going to happen in 2004, it will be a bit of double counting right. You have the 23 earnings that come to 'twenty four and the 24, just trying to think about a normalized 24 earnings would be like.

In closing our company remains well positioned financially and operationally with strong competitive positions and the production of essential minerals with few viable economic substitutes.

What so I assume it's going to happen in 'twenty four it will be a bit of double counting right. You have the 23 earnings that come to 'twenty four and the 24, just trying to think what a normalized 24 earnings would be like.

It sounds like it'd be a little bit higher than $12 million contribution.

It sounds like it would be a little bit higher than $12 million contribution.

And how would you expect that business to ramp to 25 fiscal 'twenty five and just how the mix is going to ramp.

And how would you expect that business to ramp to 25 fiscal 'twenty, but just how the business is going to ramp.

So I'll start and then ask Jamie So we did book about $45 million of fortress profit in 2023 and 12.

We will roll into next year, and so you add those together you get kind of 15 and change.

With that said I will turn it back to the operator to open the lines for Q&A.

Will roll into next year, and so you add those together you get kind of 15 and change.

And it all depends on the level of profitability that we see in this upcoming contract Jamie you want to elaborate yes, I think yes. So you think about normalized 23 was about $15 million or so.

Operator.

Thank you.

And it all depends on the level of profitability that we see in this upcoming contract Jamie you want to elaborate yes, I think yes. So you think about normalized 23 was about $15 million or so.

And as a reminder, if you would like to ask a question Press Star then the number one on your telephone keypad.

If you would like to withdraw your question Press Star one a second time.

$15 million to $16 million.

To be able to take as many of your questions as possible. We do ask that you. Please limit yourself to one question and one follow up.

Laurence prepared remarks that we expect in 'twenty four to achieve something at least at that level.

$15 million to $16 million.

Laurence prepared remarks that we expect in 'twenty four to achieve something at least at that level.

Pause for just a moment to compile the Q&A roster.

So.

The negotiations are ongoing we're figuring out which bases.

So.

The negotiations are ongoing we are figuring out which bases.

What it looks like.

We will take our first question from Joel Jackson with BMO capital markets. Your line is open.

It's likely that it wont be a take or pay scenario next year.

What it looks like.

It's likely that it wont be a take or pay scenario next year.

So that's about all the incremental color. We can give you right now and youll rather than speculate we just felt it would be better to let the dust settle and then update you in February.

Good morning, everyone I have a few questions I'll go one by one.

So that's about all the incremental color. We can give you right now and youll rather than speculate we just felt it would be better to let the dust settle and then update you in February.

On the 24 guidance and forecast so thank you for the color that you would expect.

This year's contribution from fortress.

Yeah.

Right. Okay. So really this guidance number is.

At least similar to $12 million.

Right. Okay. So really this guidance number is.

What so I assume that's going to happen in 'twenty four it will be a bit of double counting 23 earnings that come to 'twenty four and the 24, just trying to think about a normalized 24 earnings would be like.

Bear case guidance for <unk>, I think it's going to be better because.

The.

Bear case guidance for <unk>, I think it's going to be better because.

On a normalized exactly right okay.

From a normalized exactly right okay.

Okay.

Excuse me on the salt business looking at costs.

Okay.

It sounds like it would be a little bit higher than $12 million contribution.

I could be wrong at first blush, it looks like maybe your.

<unk> excuse me on the salt business looking at costs.

I could be wrong at first blush, it looks like maybe your.

And your guidance projecting maybe about a dollar per ton increase in solid cost is that right. If I'm not let me know and tell me, what's driving salt costs. This year.

And how would you expect that business to ramp into 'twenty five fiscal 'twenty five and just how this is going to ramp. Thanks.

And your guidance projecting maybe you got a dollar per ton increase in solid cost is that right. If I'm not let me know and tell me, what's driving salt costs. This year.

Yes.

I'll start and then ask Jamie So we did book about $4 5 million of <unk> profit in 2023 and 12.

Yes from a cash cost perspective, so all costs are about flattish around I don't know roughly sort of $40 a ton and EBITDA per ton is actually up about $1 and so I'm not sure. What you are seeing but salt is from an EBITDA per ton perspective and roughly.

We will roll into next year, and so you add those together you get kind of 15 and change and it all depends on the level of profitability that we see in this upcoming contract Jamie you want to elaborate yes, I think yes. So you think about normalized 23 was about $15 million or so.

From a cash perspective year over year.

On an EBITDA per ton perspective, and roughly flat from a cash perspective year over year.

[noise].

Maybe then in that flat environment before I pass the baton on maybe talk about what I'm costs are up in water costs are down thanks to make it flat.

$16 million.

Laurence prepared remarks said, we expect in 'twenty four to achieve something at least at that level.

Maybe then in that flat environment before I pass the baton on maybe talk about what I'm costs are up what our costs are down thanks to make it flat.

So.

The negotiations are ongoing we are figuring out which base is.

So from a fuel perspective, which is important for that business and the first half of this year is where it will consume most of the fuel we're assuming Brent kind of in the mid eighties, and if you look year over year, that's kind of roughly flattish.

It looks like.

So from a fuel perspective, which is important for that business in the first half of this year is where it will consume most of the fuel we're assuming Brent kind of in the mid eighties, and if you look year over year, that's kind of roughly flattish.

It's likely that it wont be a take or pay scenario next year.

So that's about all the incremental color. We can give you right now and Joel rather than speculate we just felt it would be better to let.

From that point of view and then.

Dust settle and then update you in February.

This relates.

From that point of view and then.

So C&I from a natural gas perspective, we are going to benefit from what we hope will be the absence of natural gas fight that we saw last year at a high level, Jamie anything else, you'll watch here I would say on a on an offer on the operating side and the cash cost itself.

Right. Okay. So really this guidance number is.

This relates.

So C&I from a natural gas perspective, we are going to benefit from what we hope will be the absence of natural gas fight that we saw last year at a high level, Jamie anything else you want here I would say on a on an offer on the operating side on the cash cost itself.

The.

Bear case guidance for <unk>, I think it's going to be better because.

From a normalized <unk> right okay.

Okay.

We saw we saw some unplanned downtime in 2023.

Excuse me on the salt business looking at costs.

I could be wrong at first blush, it looks like maybe your.

We saw we saw some unplanned downtime in 2023.

Items like that not expected to repeat so we.

And your guidance projecting maybe about a dollar per ton increase in salt cost is that right. If im not let me know and tell me, what's driving salt costs. This year.

Items like that not expected to repeat so.

<unk> got some inflationary pressure on the input side still.

We've got some inflationary pressure on the input side still.

But that's being offset by.

Improved production levels as we go into 2024.

But that's being offset by.

Yes from a cash cost perspective, salt costs are about flattish around I don't know roughly sort of $40 a ton and EBITDA per ton is actually up about $1 and so I'm not sure. What you are seeing but salt is from an EBITDA per ton perspective, and roughly flat.

Improved production levels as we go into 2024.

On salt.

Thank you.

Saul.

And we'll take our next question from David Begleiter with Deutsche Bank. Your line is open.

Thank you.

Yes.

And we'll take our next question from David Begleiter with Deutsche Bank. Your line is open.

Thank you good morning.

Kevin David lithium on lithium or is there a timeframe where you would say these negotiations is just taking too long and we're going to move on and just not pursue lithium is there is it six months is as he is eight years or longer.

Thank you good morning, Ken.

Kevin David lithium on lithium or is there a timeframe where you would say these negotiations is just taking too long or we can move on and just not pursue lithium is there is it six months is as he is at years or longer.

Our cash time perspective year over year.

Maybe then in that flat environment before I pass the baton on maybe talk about what our costs are up water costs are down thanks to make it flat.

It would be helpful. Thank you.

Yes, I mean look that's a good question, David it's kind of hard to pin it down, but what I can tell you I mean, there's kind of two two work streams in terms of kind of how we're thinking about this.

It would be helpful. Thank you.

So from a fuel perspective, which is important for that business and the first half of this year is where we will consume most of the fuel we're assuming Brent kind of in the mid eighties, and if you look year over year, that's kind of roughly flattish.

Yes, I think as everybody knows they released the draft rules that were promulgated as part of House Bill 513.

Those need to get sorted so they are out for public comment I think we've made our comments on those and we.

Those need to get sorted so they are out for public comment I think we've made our comments on those and.

From that point of view.

We will work with the state to come up with a set of draft rules that govern our lithium could be extracted on the lake.

And then.

This relates.

So C&I from a natural gas perspective, we are going to benefit from what we hope will be the absence of natural gas fight that we saw last year at a high level, Jamie anything else you last year I would say on a on an offer on the operating side and the cash cost itself.

We will work with the state to come up with a set of draft rules that govern our lithium could be extracted on the lake and.

We have some concerns about the way they were released and.

We will be at the table trying to bend that outcome in a way that works for us as well as folks in Utah, and then secondarily there is legislative session coming up in.

We will be at the table trying to bid that outcome in a way that works for us as well as folks in Utah, and then secondarily there is legislative session coming up in.

We saw we saw some unplanned downtime in 2023.

After the after the first of the year that will obviously be involved in so I think all of that will kind of settle in.

Items like that not expected to repeat so.

After the after the first of the year that will obviously be involved in so I think all of that will kind of settle in.

We've got some inflationary pressure on the input side still.

Maybe the April time frame and I think that will give us the kind of clarity we need to make a decision on whether this this things still got legs or.

But that's being offset by.

Maybe the April time frame and I think that will give us the kind of clarity we need to make a decision on whether this thing is still got legs or.

Improved production levels as we go into 2024.

That's all.

Put it on the shelf for another time, so I would kind of direct you to that April may timeframe next year.

Thank you.

Put it on the shelf for another time, so I would kind of direct you to that April may timeframe next year.

And we'll take our next question from David Begleiter with Deutsche Bank. Your line is open.

Very helpful and just sort of plant nutrition, but what do you think is normalized earnings in this segment I think the last four years averaged maybe 55 to 60 million of EBITDA is that.

Very helpful and just on the plant nutrition, but what do you think is normalized earnings in this segment I think the last four years average may be 55 to 60 million of EBITDA is that good number or maybe even be higher in terms of normalized.

Thank you good morning, Ken.

A good number or crazy even be higher in terms of normalized.

Yes.

Don was below where we expect this business to be on a cash cost basis. If you look back over the past five years, you multiply that times are times, when you get $30 million. This business ought to be in that in the range you just referred to and Thats going to be a focus of our efforts in the coming years.

Yes.

Don was below where we expect this business to be on a cash cost basis. If you look back over the past five years, you multiply that times are times, when you get $30 million. This business ought to be in that in the range. You just referred to and that's going to be a focus of our efforts in the coming years.

Yes, I mean look that's a good question, David it's kind of hard to pin it down, but what ill tell you I mean, there's kind of two two work streams in terms of kind of how we're thinking about this.

Yes, I think as everybody knows they released the draft rules that were promulgated as part of House Bill 513.

From a long term perspective as we are.

Those need to get sorted so they are out for public comment I think we've made our comments on those.

Harvest less and let the ponds just deposit and.

From a long term perspective as we are.

Harvest less and let the ponds just deposit and.

Concentrate we expect it will get better yields over that two or three year deposition process, but we're not going to just wait for that we're also looking at the cost base at Ogden.

We will work with the state to come up with a set of draft rules that govern our lithium could be extracted on the lake and we have some concerns about the way they were released.

Centuri, we expect it will get better yields over that two or three year deposition process, but we're not going to just wait for that we're also looking at the cost base at Ogden.

In terms of things, we can do in the near term to improve the cost base as we wait for the pons to regenerate.

We will be at the table trying to bid that outcome in a way that works for us as well as folks in Utah.

In terms of things, we can do in the near term to improve the cost base as we wait for the pons to regenerate.

Very good thank you.

And then secondarily there is legislative session coming up in.

Yeah.

Very good thank you.

We will take our next question from Greg Lewis with <unk>. Your line is open.

After the after the first of the year that will obviously be involved in so I think all of that will kind of settle in.

Yeah.

We will take our next question from Greg Lewis with BT I G. Your line is open.

Yes, Thank you and good morning, and thanks for taking my questions.

Yes, Thank you and good morning, and thanks for taking my questions. My first one was what I did want to go back.

My first one was what I did want to come back.

Maybe the April time frame and I think that will give us the kind of clarity we need to make a decision on whether this thing is still got legs or.

Thanks.

So as we think about gray.

Thanks.

And it seems like that could be pulled.

So as we think about.

Any way to kind of gauge how much of it.

Put it on the shelf for another time, so I would kind of direct you to that April may timeframe next year.

And it seems like that could be Poland.

Any way to kind of gauge how much of it.

Great.

That fall.

Very helpful and just on the plant nutrition.

While we could see like.

Great call.

Next fall.

It does.

Do you think is normalized earnings in this segment I think the last four years averaged maybe 55 to 60 million of EBITDA is that.

While we could see like there.

Agreement I.

I guess re contracts that are reset.

Those agreements.

<unk>.

Agreements I guess re contracted or reset.

Hey, Greg.

A good number or credit to even be higher in terms of normalized.

You're garbled up there could you. Please repeat your question for us.

Hey, Greg.

You're garbled up there could you. Please repeat your question for us.

Yes.

Don was below where we expect this business to be at a cash cost basis. If you look back over the past five years, you multiply that times are times, when you get $30 million this business ought to be in that in the range you just referred to.

So it was around cost.

Yeah.

Okay.

So it was around cost.

If we were to see.

Freight costs generally across North America move lower.

Okay.

If we were to see.

Freight costs generally across North America move lower.

How should we think about the company benefiting from that impact I E.

And thats going to be a focus of our efforts in the coming years.

How should we think about the company benefiting from that impact I E.

As you look at your freight exposure how much of it.

From a long term perspective as we.

Kind of spot contracted kind of that is my question. The first one.

As you look at your freight exposure how much of it.

Harvest less and let the ponds just deposit and.

Kind of spot contracted.

Concentrate we expect that we will get better yields over that two or three year deposition process, but we're not going to just wait for that we're also looking at the cost base at Ogden in.

Sure Greg This is Jamie.

That is my question the first one.

So in and then we've assumed.

Sure Greg This is Jamie.

We've talked about it in different buckets.

So in and then we've assumed.

On the on the vessel and barge side for 2024, we're going to see typical inflationary pressure a lot of those are those are fixed.

We've talked about it in different buckets.

In terms of things, we can do in the near term to improve the cost base as we wait for the pons to regenerate.

On the on the vessel and barge side for 2024, we're going to see typical inflationary pressure a lot of those are those are fixed.

When we look at truck for 2024, we think the truck market's actually bottoming out now maybe first quarter than would be expected to rise.

Very good thank you.

When we look at truck for 2024, we think the truck market's actually bottoming out now may be first quarter and would be expected to rise.

We will take our next question is from Greg Lewis with <unk>. Your line is open.

Yes, Thank you and good morning, and thanks for taking my questions.

Given <unk>.

Given the some of the straight supply rationalization Conway yellow bankruptcies. So we think the supply picture afraid is shrinking actually and with the post pandemic.

Given.

My first one was what I did want to come back.

Given the some of the straight supply rationalization Conway yellow bankruptcies. So we think the supply picture afraid is shrinking actually and with.

Yes.

So as we think about three.

It seems like that could be pulling back a little bit.

Any way to kind of gauge how much of it.

Stocking behind US we think there is demand increase.

The post pandemic.

Great.

Destocking behind US we think there is demand increase in retail over the next year. So we've baked into our plan.

Thanks, Paul.

In retail over the next year or so we've baked into our plan.

While we can see like.

It does.

<unk> I.

And for 2024 increased truck rates really in the back half of the year now that is significant it is a significant increase I think of it is 15% or so.

I guess <unk>.

And for 2024 increased truck rate really in the back half of the year now that is significant it is a significant increase I think of it is 15% or so.

Hey, Greg.

You're garbled up there could you. Please repeat your question for us.

So it was around cost.

But if that does not occur in the bottom stays in longer and freight.

Okay.

But if that does not occur in the bottom stays in longer and <unk>.

If we were to see.

Freight rates don't rise we would stand.

Freight costs generally across North America move lower.

To benefit from that versus our current operating plan.

Freight rates don't rise, we would stand to benefit from that versus our current operating plan.

How should we think about the company benefiting from that impact I E.

Okay perfect Super helpful. And then I did want to realizing that it's you know what.

Okay perfect Super helpful. And then I did want to realizing that.

As you look at your freight exposure how much of it.

We need to kind of move forward in the project, but when we think about a strategic partner.

Spot contract.

We need to kind of move forward in the project, but when we think about a strategic partner.

That is my question the first one.

You mentioned on the lithium side.

Sure Greg This is Jamie.

Really.

You mentioned on the lithium side.

The project largely funded at least phase one like it but when we think about the strategic partner is that is that just really an off take partner that has that kind of a fair way to think about it or any kind of rough how youre thinking about like what youre looking for in terms of that partner and really just given whats.

So in and then we've assumed.

Really.

With the projected largely funded at least phase one like it but when we think about a strategic partner is that is that just really an off take partner that has that kind of a fair way to think about it or any kind of rough how youre thinking about like what youre looking for in terms of that partner and really just given what's.

We talked about it in different buckets.

On the on the vessel and barge side for 2024, we're going to see typical inflationary pressure a lot of those are those are fixed.

When we look at truck for 2024, we think the truck market's actually bottoming out now maybe first quarter than would be expected to rise.

The ongoing.

I don't know landscape in Utah is that something where we probably wont see that partner until we kind of get more clarity and can move forward.

The ongoing.

I don't know landscape in Utah is that something where we probably wont see that partner until we kind of get more clarity and can move forward.

Given <unk>.

Given the some of the great supply rationalization Conway yellow bankruptcies. So we think the supply picture of freight is shrinking actually and with the post pandemic.

And we have a better line of sight.

When we could see.

And we have a better line of sight when we could see.

I used to lithium project move forward.

Yes.

I guess, the lithium project move forward.

Stocking behind US we think there is demand increase.

So I think in terms of conditions precedent to.

Yes.

In retail over the next year, so we've baked into our plan.

So I think in terms of conditions precedent to.

Having a partner who would have to be regulatory legislative clarity and Utah, where you've got a horizon that is suitable for long, making long term investments. So clearly as I mentioned earlier when David asked his question there's work to be done.

And for 2024 increased truck rates really in the back half of the year now that is significant it is a significant increase think of it is 15% or so.

But if that does not occur in the bottom stays in longer and freight.

And then secondarily, we still have we still want to prove out the dusk guard unit to demonstrate to the world that that is a scalable technology at commercial levels. So anything that we would do with a partner would be conditioned upon those two criteria having been met and then in terms of the.

Freight rates don't rise we would stand.

To benefit from that versus.

Our current operating plan.

Okay perfect Super helpful. And then I did want to realizing that.

We need to kind of move forward in the project, but when we think about a strategic partner.

Tied to the partner, where we'd be looking for I mean, clearly our balance sheet too.

You mentioned on the lithium side.

Really.

Reduce our capital exposure at the.

With the projected largely funded at least phase one like it but when we think about the strategic partner is that is that just really an off take partner is that is that kind of a fair way to think about it or any kind of rough how youre thinking about like what youre looking for in terms of that partner.

Reduce our capital exposure at the.

Project level, and then ideally it would be nice to have a partner that's got some sort of prowess.

The project level, and then ideally it would be nice to have a partner that's got some sort of prowess.

In that domain space.

Lithium or the EV world itself. So that gives you some sense of how we're thinking about it.

In that domain space.

Lithium or the EV world itself. So that gives you kind of some sense of how we're thinking about it.

Really just given whats.

Okay Super helpful. Thank you very much.

The ongoing.

I don't know landscape in Utah is that something where we probably wont see that partner until we kind of get more clarity and can move forward.

Thank you.

Okay Super helpful. Thank you very much.

And as a reminder, if you would like to ask a question press star one on your telephone keypad.

Yes.

<unk>.

As a reminder, if you would like to ask a question press star one on your telephone keypad.

And we will take our next question from Vincent Anderson with Stifel. Your line is open.

We have a better line of sight of when we could see.

And we will take our next question from Vincent Anderson with Stifel. Your line is open.

Yes, thanks, good morning.

I guess, the lithium project move forward.

Going back to the drivers of Salt margin expectations. I mean, you hit on the variable components Super helpful. But I was hoping you could maybe frame the season on season changes in fixed cost leverage and then any incremental net back pauses positives or negatives based on the geographical mix of your commitments this year versus last year.

Yeah. Thanks, good morning.

Yes.

So I think in terms of conditions precedent to.

Going back to the drivers of Salt margin expectations. I mean, you hit on the variable components Super helpful. But I was hoping you could maybe frame the season on season changes in fixed cost leverage and then any incremental net back positive positives or negatives based on the geographical mix of your commitments this year versus last year.

Having a partner who would have to be regulatory legislative clarity.

In Utah, where you've got a horizon that is <unk>.

Suitable for long, making long term investments.

So clearly as I mentioned earlier when David asked his question Theres work to be done.

Well.

To the extent that our volumes increase as a result of a normalized winter just the sheer leverage from a three 4% increase in the tonnage on the same cost base.

Well.

And then secondarily, we still have we still want to prove out the dusk guard unit to demonstrate to the world that that is a scalable technology.

To the extent that our volumes increase as a result of a normalized winter just the sheer leverage from a three 4% increase in the tonnage on the same cost base.

Prove the tons and Thats, what youre seeing.

Commercial level, so anything that we would do with a partner would be conditioned upon those two criteria having been met and then in terms of the type of the partner.

As it relates to fuel as I said to the extent that that in fact is sort of flattish year over year and we have taken some efforts that we referred to in the last fall.

Improve the tons and Thats, what youre seeing.

As it relates to fuel as I said to the extent that that in fact is sort of flattish year over year and we have taken some efforts that we referred to in the last call in terms of cost reductions, we referred to efforts at the sites to reduce cost.

We'd be looking for I mean, clearly our balance sheet too.

In terms of cost reductions, we referred to efforts at the sites to reduce cost.

Reduce our capital exposure at the.

Project level, and then ideally it would be nice to have a partner that's got some sort of prowess.

Following our efforts at the corporate center to reduce cost those are the kinds of things that if we can.

Following our efforts at the corporate center to reduce cost.

In that domain space.

If they hang in there should allow us to see a dollar or two increase in profit per ton and thats whats in the midpoint of our guidance.

Lithium or the EV world itself. So that gives you some sense of how we're thinking about it.

These are the kinds of things that if we can.

Hang in there should allow us to see a dollar or two increase in profit per ton and thats whats in the midpoint of our guidance.

Okay Super helpful. Thank you very much.

Okay. Okay no that's helpful.

Thank you.

And then just turning over to fortress just a two parter here. So first is the capex budget reflect any on base investments.

Okay. Okay no that's helpful.

As a reminder, if you would like to ask a question press star one on your telephone keypad.

And then just turning over to fortress just a two parter here. So first is the capex budget reflect any on base investments and then kind of related to that you said you expect this year likely won't have take or pay contracts, but as I understand it those are in place to help support initial commercialization of a new product so should I and.

And we will take our next question from Vincent Anderson with Stifel. Your line is open.

And then kind of related to that you said you expect this year likely won't have take or pay contracts, but as I understand it those are in place to help support initial commercialization of new products. So should I interpret that as you're expecting a high enough level of organic base wins that you'll no longer qualify for that.

Yes, thanks, good morning.

Going back to the drivers of Salt margin expectations. I mean, you hit on the variable components Super helpful. But I was hoping you could maybe frame the season on season changes in fixed cost leverage and then any incremental net back positive positives or negatives based on the geographical mix of your commitments this year versus last year.

<unk> that is you're expecting a high enough level of organic base wins that you will no longer qualify for that.

Yes, it's not a matter of qualification Vincent this is Jamie.

It's a matter of how the the agreement unfolds.

The take or pay element of last year's contract was related to gallons.

It's a matter of how the the agreement unfolds.

Well.

To the extent that our volumes increase as a result of a normalized winter just the sheer leverage from a three 4% increase in the tonnage on the same cost base.

Or pay element of last year's contract was related to gallons.

There are a number of elements in a contract that give us security around daily daily rate.

So there are a lot of moving parts and that's why we've kind of said hey, we're going to wait and let this kind of give you. Some transparency. After we we finalized the contract. So there are quite a few things moving.

So there are a lot of moving parts and that's why we've kind of said hey, we're going to wait.

Proved the tons and Thats, what youre seeing.

As it relates to fuel as I said to the extent that that in fact is sort of flattish year over year and we have taken some efforts that we referred to in the last fall.

And let this kind of give you some transparency after we finalize the contracts. So there are quite a few things moving.

As it relates to investment.

One of the neat things about our.

As it relates to investment.

Our per hour delivery mechanisms is it they are fundamentally mobile so even though we get a signed a base on a permanent basis so to speak.

One of the neat things about our.

In terms of cost reductions, we referred to efforts at these sites to reduce cost.

Our per hour delivery mechanisms is that theyre fundamentally mobile so even though we get a signed a base on a permanent basis so to speak.

Following our efforts at the corporate center to reduce cost those are the kind of things that if we can.

We have mobility. So we are investing for the future that's the $10 million in capital and we have flexibility to put that.

We have mobility, so we're investing for the future that's the $10 million in capital and we have flexibility to put that to manufacturer that get it ready and then deploy it to the bases that were awarded so.

Hang in there should allow us to see a dollar or two increase in profit per ton and thats whats in the midpoint of our guidance.

Manufacturer that get it ready and then deploy it to the bases that were awarded so.

Okay. Okay. That's helpful.

And then just turning over to fortress just.

It's not it's a less capital intensive than in a typical situation, we're not bearing pipes and pouring concrete and investing in infrastructure at basis, we have a more of a mobile structure.

Two parter here. So first is the capex budget reflect any on base investments.

It's not it's a less capital intensive than in a typical situation, we're not bearing pipes.

Pouring concrete and investing in infrastructure at basis, we have more of a mobile structure.

And I would just add and we didn't provide.

When we do provide guidance on this business, we will approach it similar to what you see in our earnings deck today with regard to solve this to the extent, it's not take or pay.

And I would just add we do provide.

When we do provide guidance on this business, we will approach it similar to what you see in our earnings deck today with regard to solve this to the extent, it's not take or pay.

Yes, it's not a matter of qualification Vincent this is Jamie.

This will be a business that is subject to the wildfire season, and so you should expect us to come out with a range that tells you. What we think of normal wildfire season would look like and the bell curve for that on both sides and so I just wanted to.

It's a matter of how the the agreement unfolds, the take or pay element of last year's contract was related to gallons.

There are a number of elements in a contract that give us security around daily daily rates.

Underscore that you will have that dimension.

So there are a lot of moving parts and that's why we've kind of said hey, we're going to wait and let this kind of give you. Some transparency after we finalize the contract. So there are quite a few things moving.

Underscore that you will have that dimension.

No that's helpful.

Appreciate that if I can sneak one more in for Kevin.

No. That's helpful. I appreciate that if I could sneak one more in for Kevin.

<unk>.

If I'm not mistaken 2024, we'll put you on the back nine of your cartridge overhaul.

Actually if I'm not mistaken 2024, we'll put you on the back nine of your God Rich overhaul I was just hoping to get an update on priorities for this year and then maybe any larger projects planned for the March turnaround.

As it relates to investment.

Just hoping to get an update on priorities for this year and then maybe any larger projects planned for the March turnaround.

One of the neat things about our.

Our per hour delivery mechanisms is it theyre fundamentally mobile so even though we get assigned based on a permanent basis so to speak.

Yeah.

Like the maybe the 11 all of the background just speak just to be specific Vincent.

Yeah, so like the maybe the 11 all of the background just speak vis vis specific Vincent.

But yes, we continue to drive our <unk>.

We have mobility, so we're investing for the future that's the $10 million in capital and we have flexibility to put that to.

But yes fair, we continue to drive our <unk>.

Main entry ways.

George is not here I don't have an exact percentage, but we're probably 65, 67% of the way driven there. So as we've shared before connecting up those new entries with the shaft bottom.

Main entry ways.

George is not here I don't have an exact percentage, but we're probably 65, 67% of the way driven there. So as we've shared before connecting up those new entries with the shaft bottom.

Manufacturer that get it ready and then deploy it to the bases that were awarded so.

It's not it's a less capital intensive than in a typical situation, we're not bearing pipes and pouring concrete and investing in infrastructure at basis, we have more of a mobile structure.

New sections in the West of the mine will then.

Our ability to kind of close the old section of the mine.

Stop.

Spending money Couldnt.

Roof up and been lighting and lighting and all that sort of thing. So that's kind of first phase.

And I would just add and we didn't provide.

Stop.

Spending money.

When we do provide guidance on this business, we will approach it similar to what you see in our earnings deck today with regard to solve this to the extent it is not take or pay.

Roof up and been lighting and lighting and all that sort of thing. So that's kind of first phase.

And then we continue to develop the panels out in the west and some new federal infrastructure up into the kind of the north north part of the mine. So youll see the results congratulates start to filter through.

And then we continue to develop the panels out in the west and some new.

Infrastructure up into the kind of the north north part of the mine. So you will see the results can gradually start to filter through.

On a on a cost side over the next two to three years as we've as we've talked about before there is not going to be some magic moment, where all of a sudden cost precipitously fall it.

On a on a cost side over the next two to three years as we've as we've talked about before there's not going to be some magic moment, where all of a sudden cost precipitously fall it.

It'll be it'll be gradual but youll start to see that as soon as we connect those road roadways up so I think we've still got <unk>.

Underscore that you will have that dimension.

It'll be it'll be gradual but youll start to see that as soon as we connect those road roadways up so I think we still got.

No. That's helpful. I appreciate that if I can sneak one more in for Kevin.

Probably close to a year or so before we do get those collected up but thats when youll start to see things begin to change at goderich.

<unk>.

Probably close to a year or so before we do get those connected up but thats when youll start to see things begin to change at goderich.

If im not mistaken 2024, we'll put you on the back nine of your God Rich overhaul I was just hoping to get an update on priorities for this year and then maybe any larger projects planned for the March turnaround.

Sure no very helpful. Thanks again, everyone.

We will take our next question from David Silver with CL King Your line is open.

Yeah, so like the maybe the 11 all of the background just speak just to be specific Vincent.

And we will take our next question from David Silver with CL King Your line is open.

Yeah.

Yes, hi, good morning, Thank you.

Okay.

Yeah, Hi, good morning, Thank you.

Yes fair, we continue to drive our main entry ways.

Couple of questions I think first I'd like to ask.

George is not here I don't have an exact percentage, but we're probably $65, 67% of the way driven there. So as we've shared before connecting up those new <unk>.

About the inventory levels at September 30.

It's one of the higher totals.

And <unk>.

It's one of the higher totals.

In recent years and it is up pretty substantially year over year.

Entries with the shaft bottom and the new sections in the west of the mine will then.

And Reese.

In recent years and it is up pretty substantially.

So just wondering if you could kind of talk about maybe the cost versus volume elements in there or is this kind of a carryover.

<unk> year over year.

Promote our ability to kind of close the old section of the mine.

So just wondering if you could kind of talk about maybe the cost versus volume elements in there or is this kind of a carryover from <unk>.

Carryover from a sub.

Stop.

Spending money open roof up and been lighting and lighting and all that sort of thing. So that's kind of first phase.

Sub par or below average winter season last year.

Sub.

Sub par or below average winter season last year.

Just how to think about that.

And then we continue to develop the panels out in the west and some new panel infrastructure up into the kind of the north north part of the mine So youll see.

Inventory level at September 30, or maybe if you could update it for November 15th or something.

Just how to think about that that inventory level at September 30, or maybe if you could update it for November 15th or something.

I'll stop there thank you.

The results congratulate start to filter through.

Hi, David It's Lauren and when you look at 930 on a year over year basis Youre right. It is higher and it's roughly half related to salt and plant nutrition in terms of plant nutrition Ogden performed very well production wise throughout last year.

I'll stop there thank you.

On a on a cost side over the next two.

Two or three years as we've as we've talked about before there's not going to be some magic moment, where all of a sudden cost precipitously fall it.

It'll be it'll be gradual but youll start to see that as soon as we connect those road roadways up so I think we've still got.

In the face of a sales environment that was severely diminished and so we restored our inventory levels at plant nutrition.

Probably close to a year or so before we do get those connected up but thats when youll start to see things begin to change at goderich.

In the face of a sales environment that was severely diminished and so we restored our inventory levels at plant nutrition.

The levels are frankly, more normal and if there's any silver lining that was that was it.

Sure no very helpful. Thanks again, everyone.

The levels are frankly, more normal and if there's any silver lining that was that was it.

From a salt perspective, we ran goderich for a normal winter and only an 80% winter actually happen.

And we will take our next question from David Silver with CL King Your line is open.

From a salt perspective, we ran goderich for a normal winter and only an 80% winter actually happen.

Yes, hi, good morning, Thank you.

And so those are two reasons for the inventory to be higher.

A couple of questions I think first I'd like to ask.

And so those are two reasons for the inventory to be higher.

With that said if you look back over the last four or five years from a volume from a units perspective.

About the inventory levels at September 30.

<unk>.

Our units of inventory are only up about 5% versus that average 5% to 10%.

It's one of the higher totals.

Our units of inventory are only up about 5% versus that average 5% to 10%.

And <unk> and.

In recent years and it is up pretty substantially year over year.

It's inflation.

For that same unit that has risen and one of the things that Kevin has talked about is this notion that our customers understand that the cost of holding this inventory.

It's inflation.

So just wondering if you could kind of talk about maybe the cost versus volume elements in there or is this kind of a carryover.

For that same unit.

It has risen.

And one of the things that Kevin has talked about is this notion that our customers understand that the cost of holding this inventory.

Carryover from a sub.

Has gotten more expensive and I don't know, Kevin if you want to elaborate but we've restored the profitability of the business EBITDA per ton.

Sub par or below average winter season last year.

It has gotten more expensive.

Just how to think about that that inventory level at September 30, or maybe if you could update it for November 15th or something.

I don't know, Kevin if you want to elaborate but we've restored the profitability of the business EBITDA per ton, but working capital is more expensive to carry.

Working capital is more expensive to carry.

I'll stop there thank you.

Okay.

For that I also just ask you for an update I guess on your.

Okay.

Thank you for that I also just ask you for an update I guess on your.

Business realignment or your cost reduction program.

You had some targets.

In terms of lowering the fixed cost base as of the kickoff I guess for fiscal year 'twenty four.

You had some targets.

In the face of a sales environment that was severely diminished and so we restored our inventory levels at plant nutrition.

In terms of lowering the fixed cost base as of the kickoff I guess for fiscal year 'twenty four.

So if you could just update us on that that would be great. Thank you.

Yes, when we did and we did an 8-K, where we laid out about 15.

The levels are frankly, more normal and if there's any silver lining that was that was it.

Yes, when we did it we did an 8-K, where we laid out about 15.

$20 million of cost that we were going after last year and those are split roughly 50% SG&A, 50% cost of goods sold maybe half salt.

From a soft perspective, we ran goderich for a normal winter and only an 80% winter actually happen.

$20 million of costs that we were going after last year and those are split roughly 50% SG&A, 50% cost of goods sold maybe half salt.

And so those are two reasons for the inventory to be higher.

Quarter plant nutrition et cetera, and so we've captured those costs and they are reflected in the guidance that you see of course, there are offsets like merit.

With that said if you look back over the last four or five years from a volume from a units perspective.

Our units of inventory are only up about 5% versus that average 5% to 10%.

That would eat into some of that along with other factors, but we.

Its inflation.

We feel good about what we've accomplished and it's reflected in our guidance.

For that same unit that has risen and one of the things that Kevin has talked about is this notion that our customers understand that the cost of holding this inventory.

We feel good about what we've accomplished and it's reflected in our guidance.

Okay, Great and then maybe just a last one I would like to go back to fortress.

Has gotten more expensive and I don't know, Kevin if you want to elaborate but we've restored the profitability of the business EBITDA per ton.

And I understand there's quite a few moving parts on how your your first fire season when.

Working capital is more expensive to carry.

And timing issues and whatnot.

But I believe you had some longer term I guess market share Tom.

Timing issues and whatnot.

But I believe you had some longer term I guess market share targets for her.

<unk> four.

Okay.

For that I don't know.

How your product might be might.

Just ask you for an update I guess on your.

Might be positioned once it's fully accepted in the market.

How your product might be.

Business realignment or your cost reduction program.

Might be positioned once it's fully accepted in the market.

And any thoughts about where.

Your market share shook out. This this first year and whether the expectation is that that share would be maintained or increased over the next year. Thank you.

And any thoughts about where.

You had some targets.

Your market share shook out. This this first year and whether the expectation is that that share would be maintained or increased over the next year. Thank you.

In terms of lowering the fixed cost base as of the kickoff I guess of fiscal year 'twenty four.

So if you could just update us on that that would be great. Thank you.

Yes sure David This is Jamie.

Yes, when we did it we did an 8-K, where we laid out about 15.

We were we were right around the 3% to 5% share as it relates to the U S Forest service total total contract.

Yes sure. David This is this is Jamie.

We were we were right around the 3% to 5% share as it relates to the U S Forest service total total contract.

$20 million of costs that we were going after last year and those are split roughly 50% SG&A, 50% cost of goods sold maybe half so.

In 2023, we expect to grow that year on year, we absolutely expect to increase our base count and expected volumes as we negotiate this contract here. This month hopefully to be resolved later this month.

Quarter plant nutrition et cetera, and so we've captured those costs and they are reflected in the guidance that you see of course, there are offsets like merit.

Early January and then we'll build from there our expectation is to continue to reinvest in the business.

That would eat into some of that along with other factors, but we.

We're early January and then we'll build from there our expectation is to continue to reinvest in the business.

Add basis add share and grow over the next several years. So nothing on that front has changed that was part of the investment thesis when we made the acquisition and we feel good about where how we're positioned and we can deliver on that plan.

We feel good about what we've accomplished and it's reflected in our guidance.

Add basis add share and grow over the next several years. So nothing on that front has changed that was part of the investment thesis when we made the acquisition and.

Okay, Great and then maybe just a last one I would like to go back to fortress.

And I understand there's quite a few moving parts on how your your first fire season when.

We feel good about where how we're positioned and we can deliver on that plan.

That's great. Thank you very much.

Okay.

And timing issues and whatnot.

That's great. Thank you very much.

We will take our next question from Chris Capps with loop capital markets. Your line is open.

But I believe you had some longer term I guess market share Tom.

We'll take our next question is from Chris Capps with loop capital markets. Your line is open.

<unk> four.

Yes, good morning, I had one on the salt business and.

How your product might be might.

Might be positioned once it's fully accepted in the market.

Yes, good morning, I had one on the salt business and.

Specifically around the 3% pricing outcome from the fiscal 'twenty four contract bidding season, and maybe juxtaposed against them back at 23. So you specifically use the words like referring to your value over volume strategy in 2003, but I don't think I have heard those words, reflecting 24, so I'm curious about the outcome this year.

Specifically around the 3% pricing outcome from the fiscal 'twenty four contract bidding season, and maybe juxtaposed against the fact that 23 to you.

And any thoughts about where.

Your market share shook out. This this first year and whether the expectation is that that share would be maintained or increased over the next year. Thank you.

Specifically used the words like referring to your value over volume strategy in 'twenty, three but I don't think I have heard those words, reflecting 24, so I'm curious about the outcome. This year was.

There was.

Yes sure. David This is this is Jamie.

Is it partly a function of that strategy is still or is it more simply a function of.

We were we were right around the 3% to 5% share as it relates to the U S Forest service total total contract.

Is it partly a function of that strategy is still or is it more simply a function of.

Other considerations like whether it's the inflation for example, you flagged the interest rates and higher bearing cost of inventories or other residual inflationary costs or some other dynamic like the Windsor.

Mine strike just wondering if you could provide additional color on that on the.

The value over volume strategy, if that's persisting. Thanks.

Early January and then we'll build from there our expectation is to continue to reinvest in the business.

Let me hit that at a high level Christian and Jamie probably want to add some color, but we approach the bid season again with the same mindset, which is value over volume, let's focus on areas that we are geographically advantaged.

From a delivery and transport costs that last mile stuff in this business like like any business.

We stayed very disciplined through the hole.

That's great. Thank you very much.

We stayed very disciplined through the whole.

Hitting season.

[noise] competitors do what competitors do and they're driven by different things, but.

We will take our next question from Chris Capps with loop capital markets. Your line is open.

Marketing season.

[noise] competitors do what competitors do and they're driven by different things, but.

Our goal was to promote value in the marketplace, which is what we did.

Yes, good morning, I had one on the salt business and.

Our goal was to promote value in the marketplace, which is what we did and I.

I'd like to just hand, kudos to the team for delivering 3% price up in the face of or on the heels of an 80% winter, which is kind of unprecedented when you. When you think about it. So our team did good I think in terms of kind of promoting that value in the marketplace and I would tell you that you can expect that strategy to continue.

Specifically around the 3% pricing outcome from the fiscal 2000 and for contract bidding season, and maybe juxtaposed against the look back at 23.

I'd like to hand, kudos to the team for delivering 3% price up in the face of or on the heels of an 80% winter, which is kind of unprecedented when you. When you think about it. So our team did good I think in terms of kind of promoting that value in the marketplace and I would tell you that you can expect that strategy to continue.

Specifically used the words like referring to your value over volume strategy in 2003, but I don't think I have heard those words, reflecting 24, so I'm curious about the outcome. This year was.

Going forward as we try to March above $20, a ton and continue to move that number up over time.

Is it partly a function of that strategy is still or is it more simply a function of of other considerations like whether it's the inflation. For example, you flagged the interest rates and higher bearing cost of inventories or other residual inflationary costs or some other dynamic like the Windsor.

Going forward as we try to March above $20, a ton and continue to move that number up over time.

Okay. That's helpful. Thanks, and then just one quick follow up on fortress and.

Believed there was some.

Incentive or premium pricing that was applicable maybe even the government statutes incentivize alternative suppliers when there's like a sole source situation. So I'm curious if that.

I believe there is some.

Incentive or premium pricing that was applicable maybe even the government statute to incentivize alternative suppliers when there's like a sole source situation. So I'm curious if that.

Mine strike just wondering if you could provide additional color on that on the.

If that will apply to the fiscal 'twenty four supply agreements when when they're more definitive.

The value over volume strategy, if thats persisting. Thanks.

If that will apply to the fiscal 'twenty four supply agreements when when they're more definitive.

Let me hit that at a high level of Crystal and Jamie probably want to add some color, but we approached the bid season again with the same mindset, which is value over volume, let's focus on areas that we are geographically advantaged.

Yes.

The open solicitation currently as a sole source. So it's our competitor has a has a sole source contract as do we for 2024.

Yes.

The open solicitation currently as a sole source. So it's our competitor has a.

Sole source contract as do we for 2024.

So yes that continues into 2024, the terms could be a little bit different than they were in 'twenty three but fundamentally its the same structure.

From a delivery and transport costs that last mile stuff in this business like like any business.

So yes that continues into 2024, the terms could be a little bit different than they were in 'twenty three but fundamentally its the same structure.

And we stayed very disciplined through the hole.

And then ultimately over time, we expect this to move away from that.

<unk> season.

And then ultimately over time, we expect this to move away from that.

Competitors do what competitors do and they're driven by different things, but.

Mechanism and move more into a competitive environment with.

That mechanism and move more into a competitive environment with.

Our goal was to promote value in the marketplace, which is what we did.

With bidding regional bidding occurring from year to year.

Okay and then.

Sorry could you just then the follow up is just on the.

Okay and then.

Sorry could you just then the follow up is just on the.

Situation in Canada, I think they were effectively piggybacking off the U S approval for this product is there can you just provide any color on how that's progressing as well. Thank you.

Going forward as we try to March above $20, a ton and continue to move that number up over time.

Yep Yep, the Canadians use the use the U S Forest service.

Yes, yes, the Canadians use the use the U S Forest service.

GPL.

Our focus in North America for the for the early days of this business are the U S Forest service contract Cal Fire and then Canada. So yes.

Okay. That's helpful. Thanks, and then just one quick follow up on <unk>.

GPL.

Our focus in North America for the for the early days of this business are the U S Forest service contract Cal Fire and then Canada. So yes.

I believe there is some.

Incentive or premium pricing that was applicable maybe even the government statutes incentivize alternative suppliers when there's like a sole source situation. So I'm curious if that.

Yes, we are able to compete up there but.

Our focus right now is is in the U S.

If that will apply to the fiscal 'twenty four supply agreements when when they're more definitive.

Our focus right now is in the U S.

Thank you.

Okay.

Thank you.

And as a reminder, if you would like to ask a question press Star one.

Yes.

Okay.

The open solicitation currently as a sole source. So it's our competitor has a as a sole source contract as do we for 2024.

And as a reminder, if you would like to ask a question press Star one.

And we will take our next question from Jeff Zekauskas with J P. Morgan Your line is open.

Thanks very much.

Can you briefly discuss.

So yes that continues into 2024, the terms could be a little bit different than they were in 'twenty three but fundamentally its the same structure.

Thanks very much.

How management comp changed.

Can you briefly discuss.

Our incentive comp changed.

How management comp changed.

2023 versus 2022.

Our incentive comp changed.

And then ultimately over time, we expect this to move away from that.

And how it might change in 2024.

2023 versus 2022.

And how it might change in 2024.

That mechanism and move more into a competitive environment.

So there are a couple of components.

<unk>.

With bidding regional bidding occurring from year to year.

Incentive compensation, Jeff one is kind of a cash bonus.

So there are a couple of components.

Incentive compensation, Jeff one is kind of a cash bonus.

Okay and then.

Annual incentive plan.

Sorry could you just then the follow up is just on the.

Sitting here.

Annual incentive plan.

<unk>.

But I don't think that changed from one year to the next.

Situation in Canada, I think they were.

Sitting here.

<unk>.

<unk> piggybacking off the U S approval for this product is there can you just provide any color on how that's progressing as well. Thank you.

But I don't think that changed from one year to the next.

Driven off.

Cash flow EBITDA.

Driven off.

Ft in some some shared goals in ESG.

Cash flow EBITDA.

Yes, yes.

Activities that kind of thing.

Ft in some some shared goals in ESG.

<unk> use the use the U S Forest service.

Our long term incentive plan, which stock based plan.

Activities that kind of thing.

GPL.

Did change and we disclose that yet so.

Our long term incentive plan, which is stock based plan.

Our focus in North America for the for the early days of this business are the U S Forest service contract Cal Fire and then Canada. So yes.

Did change and we disclose that yet so.

So you'll read about that coming up here.

Here shortly so the short term at St plan didn't change.

So you'll be worried about that coming up here.

Here shortly so the short term it's St plan didn't change.

Long term incentive play and plan to stock based plan as some change modestly from one year to the next.

Yes, we are able to to compete up there but.

Long term incentive play and plan to stock based plan as some change modestly from one year to the next.

Our focus right now is is in the U S.

Read about that in the upcoming proxy.

You'll read about that in the upcoming proxy.

Thank you.

Okay.

You talked about looking for a partner and your lithium project.

Okay.

And as a reminder, if you would like to ask a question press Star one.

You talked about looking for a partner and your lithium project. So if it turned out that.

If it turned out that.

And we will take our next question from Jeff Zekauskas with JP Morgan Your line is open.

Regulatory developments are favorable.

Would you then beacon spending as you did before.

Thanks very much.

Can you briefly discuss.

Would you then begin spending as you did before.

And look for a partner.

How management comp changed.

Or would you wait for a partner before you spent more.

Look for a partner or would you wait for a partner before you spent more.

Our incentive comp changed in.

Or if you Couldnt if you didnt have a partner would you continue to spend.

2023 versus 2022 and.

Or if you Couldnt if you didnt have a partner would you continue to spend.

And how it might change in 2024.

Can you just clarify the importance.

And the timing of the selection of a partner.

Can you just clarify the importance.

So there are a couple of components.

And the timing of the selection of a partner.

Things Brazil.

Incentive compensation.

Things Russo.

Wow, that's a lot to unpack in there.

One is kind of a cash bonus.

I mean, I think the ideal outcome for us is to have a partner at the project level.

Wow, that's a lot to unpack in there.

Annual incentive plan.

Jeff I mean, I think the ideal outcome for us is to have a partner at the project level.

Sitting here.

<unk> lithium again to allay some of that capital risk.

<unk>.

But I don't think that changed from one year to the next.

<unk> lithium again to allay some of that capital risk.

Driven off.

As I mentioned earlier to the extent that they have domain expertise.

Okay cash flow EBITDA.

And some some shared goals in ESG.

As I mentioned earlier to the extent that they have domain expertise.

That's a nice bonus but in terms of timing.

Activities that kind of thing.

That's a nice bonuses, but in terms of timing.

As I mentioned earlier.

The long term incentive plan, which stock based plan.

On the another question.

As I mentioned earlier.

Did change if we disclose that yet so.

It's important that we resolved matters in Utah in a way that are favorable to our project and that's.

On the another question.

So you will read about that coming up here.

It is important that we resolved matters in Utah in a way that are favorable to our project.

Here shortly so the short term at St plan didn't change the.

That's going to be a fine balance between.

Long term incentive play and play in the stock based plan has changed modestly from one year to the next.

What the legislators are looking for what the regulator is looking for but what we have to have in terms of regulatory legislative clarity to make.

Gonna be a fine balance between.

What the legislators are looking forward with what the regulators are looking for but what we have to have in terms of regulatory legislative clarity to make.

Read about that in the upcoming proxy.

Such long term investments, so that's kind of condition.

Okay.

Such long term investments.

You talked about looking for a partner and your lithium project.

Number one condition number two is we'd like to finish out.

So that's kind of condition number one condition number two is we'd like to finish out.

The desk guard units to demonstrate to the world that that is a commercially viable scalable technology and we have every belief that it will be but I think thats, an important proof point and I think doing something on a partnership level prior to those criteria, having been met is going to jeopardize project.

If it turned out that.

Regulatory developments are favorable.

Would you then begin spending as you did before.

And look for a partner.

Or would you wait for a partner before you spent more.

Or if you Couldnt if you didnt have a partner would you continue to spend.

Valuation, obviously visits it creates uncertainty so those would be too valuable the conditions precedent to getting anything done.

Can you just clarify the importance.

Valuation, obviously visits it creates uncertainty so those would be too valuable the conditions precedent to getting anything done.

And the timing of the selection of a partner if things Brazil.

With a partner, but you can expect us in the meantime to be continuing to collaborate and work closely with the folks in Utah, but work on these other things and in parallel as well so hopefully that's responsive to your question.

Wow, that's a lot to unpack in there.

I mean, I think the ideal outcome for us is to have a partner at the project level.

<unk> lithium again to allay some of that capital risk.

Yeah.

And there are no further questions at this time, so I will now turn the call back to Mr. Kevin Crutchfield for closing remarks.

Yeah.

As I mentioned earlier to the extent that they have domain expertise.

And there are no further questions at this time, so I will now turn the call back to Mr. Kevin Crutchfield for closing remarks.

That's a nice.

Thank you, we apologize sincerely for the call.

Abruptly stopping and everybody having to dial back in but we thank you for your interest in <unk>.

Continued interest in compass minerals and look forward to keeping you updated as time progresses. So thank you for dialing in today.

Yeah.

And ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.

Yeah.

Ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.

Q4 2023 Compass Minerals International Inc Earnings Call

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