Q2 2025 Compass Minerals International Inc Earnings Call

Operator: Thank you for standing by.

Thank you for standing by my name is Carly and I will be your conference operator today.

Carly: My name is Carly, and I will be your conference operator today.

Carly: At this time, I would like to welcome everyone to the Compass Minerals second quarter fiscal 2025 earnings call. All lines have been placed on mute to prevent any background noise.

At this time I would like to welcome everyone to the Compass minerals second quarter fiscal 'twenty 25 earnings call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

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

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

I would like to withdraw your question Press Star one again.

Brent Collins: I would now like to turn the call over to Mr. Brent Collins, Vice President, Treasurer, and Investor Relations. Please go ahead. Thank you, operator.

Speaker Change: I would now like to turn the call over to Mr. Brent Collins, Vice President Treasurer, and Investor Relations. Please go ahead.

Brent Collins: Thank you operator, good morning, and welcome to the Compass minerals fiscal second quarter earnings Conference call.

Brent Collins: Good morning and welcome to the Compass Minerals fiscal second quarter earnings conference. Today, we will discuss our recent results and provide an update of our outlook for fiscal 2025. We will begin with prepared remarks from our President and CEO, Edward Dowling, and our CFO, Peter Fjellman. Joining in for the question and answer portion of the call will be Pat Marin, our Chief Operations Officer, and Ben Nichols, our Chief Commercial Officer. Before we get started, I will remind everyone that the remarks we make today reflect financial and operational outlooks as of today's date, May 8, 2025.

Brent Collins: David will discuss our recent results and provide an update of our outlook for fiscal 2025.

Speaker Change: We will begin with prepared remarks from our president and CEO, Edward Kelly and our CFO Peter Feldman.

Speaker Change: Joining in for the question and answer portion of the call will be Pat Merrin, Our Chief operations Officer, and Ben Nichols, Our Chief commercial officer.

Speaker Change: Before we get started I will remind everyone that the remarks, we make today reflect financial and operational outlook as of today's date may eight 2025.

Brent Collins: These outlooks entail assumptions and expectations that involve risks 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 investors.compassminerals.com. Our remarks today also include certain non-GAAP financial measures.

Speaker Change: These outlooks entail assumptions and expectations that involve risks and uncertainties that could cause the company's actual results to differ materially.

Speaker Change: Discussion of these risks can be found in our SEC filings located online at investors Doc Compass minerals Dot com.

Speaker Change: Our remarks today also include certain non-GAAP financial measures you can find reconciliations of these items in our earnings release or in our presentation. Both of which are also available online.

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

Edward Dowling: I will now turn the call over to Thank you, Brent. Good morning, everyone, and thank you for joining us on our call today. After a disappointing first quarter, the second quarter was much better in terms of winter weather. This, in turn, has unlocked the benefits of the strategy we embarked upon a year ago. Last year, the company made the strategic pivot to refocus its efforts on the core business. Our goal is to improve the cash flow generating capability of our business by optimizing business practices and structures, lowering capital intensity of our assets, and improving the efficiency of our operations.

Ed: I'll now turn the call over to Ed.

Speaker Change: Thank you Brian Good morning, everyone and thank you for joining us on our call today.

Speaker Change: After a disappointing first quarter second quarter was much better in terms of winter weather.

Speaker Change: Turn unlock the benefits of the strategy, we embarked upon a year ago.

Speaker Change: Last year the company made the strategic pivot to refocus its efforts on our core business.

Speaker Change: Our goal is to improve the cash flow generating capability of our business, while optimizing business practices and structures.

Speaker Change: During capital intensity of our assets.

Speaker Change: The efficiency of our operations.

Edward Dowling: Because of the nature of our seasonal business, the steps we take to achieve these goals sometimes take quarters to play out. I was pleased to share that we continue to make progress on our back-to-basics strategy. Almost exactly a year ago, we shared our plan on how we intended to rationalize the North American highway de-icing inventory levels that had grown too large after consecutive mild winter The primary goal of this initiative was to free up cash that was hung up on working capital and use that cash to reduce debt. Additionally, we knew that salt inventories across the broader system were high, which has impact on the supply demand balance in the market.

Speaker Change: Because of the nature of our seasonal business the steps we take to achieve these goals, sometimes take quarters to play out what was it. Please.

Speaker Change: He used to assure that we continue to make progress on our back to basic strategy.

Speaker Change: Almost exactly a year ago, we shared our plan on how we intended to rationalize the North American Highway Deicing.

Speaker Change: Inventory levels that have grown two large after consecutive mild winters.

Speaker Change: Primary goal of this initiative was to free up cash that was hung up in working capital and use that cash to reduce debt.

Speaker Change: Additionally, we knew that salt inventories across the water system were high which is impact from the supply demand balance in the market.

Edward Dowling: We didn't want to further exacerbate that dynamic. We decided to curtail production at Godrich Mine and to a lesser extent at Cote Blanche, with the view that with some help from winter, we'd see a meaningful drawdown in our salt inventories and realize significant working capital release out of inventory. As a result of that curtailment, we knew that we'd experienced some short-term margin compression due to a higher fixed cost absorption, but it was the right business decision for the long-term success to move our business to lower inventory levels. Fast forward a year, you can see that we executed well on the plan.

Speaker Change: We didn't want to further exacerbate that dynamic.

Speaker Change: We decided to curtail production of Doddridge County, and to a lesser extent a coup watch with a view that with some help from winter would see a meaningful drawdown on our salt inventories and realized significant working capital release out of inventory.

Speaker Change: All of that can tell them, we knew that we would experience. Some short term margin compression due to a higher fixed cost absorption, but the rate was the right business decision for the long term success to move our business to lower inventory levels.

Speaker Change: Fast forward a year you can see that we executed well on the plan a.

Edward Dowling: A few points to help that bear that out. North American Highway de-icing inventory values are down 47% year over year. North American Highway de-icing inventory volumes are down 59% year over year. Across our depot network, we saw a number of depots being fully depleted by the end of the highway de-icing season, and throughout the season, there were multiple media reports about shortages of salt in some of the markets, which suggests there's some tightness in the market during the winter. Successful execution of our plan allowed us to realize approximately $145 million working capital release out of inventory alone.

Speaker Change: A few points to help that bear that out.

North American highway de icing inventory values are down 47% year over year.

Speaker Change: North American highway de icing inventory volumes are down 59% year over year.

Speaker Change: Across our depot network, we saw a number of depots being fully depleted by the end of the highway deicing season and throughout the season. There are multiple media reports about shortages of salt in some of the markets would suggest there's some tightness in the market during the winter.

Speaker Change: Successful execution of our plan and allowed us to realize approximately 145 million working capital release out of inventory alone.

Edward Dowling: which in turn helped us reduce our total debt in the quarter by more than $170 million. The drawdown in inventory across our network was significant this season. We also believe that competitors and customers saw similar drawdowns in their respective Against this backdrop of low system-wide inventories, the company is well positioned to optimize production inventory levels as we approach the 2025-2026 North American Highway de-icing bid season. During the second quarter, there's obviously a lot of noise around tariffs and we needed to see where these things landed before forming up our production plans for the coming year.

Speaker Change: Which in turn helped us reduce our total debt in the quarter by more than $170 million.

Speaker Change: They're all down in inventory across our network with significant precision. We also believe that competitors and customers saw similar dropdowns in their respective networks.

Speaker Change: Against this backdrop of a low system wide inventories the company is well positioned to optimize production and inventory levels as we approach the 'twenty five 'twenty six North American Highway Deicing bid season.

Speaker Change: During the second quarter or sorry, there's a lot of noise around tariffs.

Speaker Change: We needed to see where these things Atlanta before forming up our production plans for the coming year.

Edward Dowling: The salt and fertilizer products that we produce in Canada are qualified under the USMCA trade agreement. As a result, they're currently exempt from any tariffs that have been implemented or proposed. With that huge question mark seemingly addressed, the company is in the process of ramping up production, which should have a favorable impact on our per unit cost, all things being equal. From a pricing perspective, the setup is constructive as we enter North American bid season. There's a psychological component to the highway de-icing. It worked against us when we had mild winters for a couple of winters, the customers could look in their sheds and see that they were full of salt.

Speaker Change: The salt and fertilizer products that we produce in Canada are qualified and other U S. MCA trade agreement as a result, they are currently exempt from any tariffs that have been implemented or proposed.

Speaker Change: That huge question marks seemingly address the company is in the process of ramping up production, which should have a favorable impact on our per unit cost all things being equal.

Speaker Change: From a pricing perspective, when you set up as constructive as we enter north American bid season.

Speaker Change: There's a psychological component to the highway Deicing business worked against US when we have mild winters for a couple of winters customers could looking at ourselves and say that they were full of salt.

Edward Dowling: The recently completed de-icing season was a good reminder that winters do in fact happen. It's not unreasonable to think that the pendulum could sweep back in our favor this bid season and allow for some stronger prices. We could see a positive impact on volume commitments in the coming season as well. Our efforts over a year ago are bearing fruit and positioned us well to maximize value of our highway de-icing business in the coming year. We will continue to maintain flexibility in our operations and capital. so that we can appropriately respond to the market conditions. I'll now move to actions we took during the second quarter that I expect to have benefits in future periods.

Speaker Change: Certainly completed de icing season was a good reminder, that winners do in fact tap it.

Speaker Change: Well I think that the pendulum can swing back to not flavor.

Speaker Change: Susan allow for some stronger pricing.

Speaker Change: We can see positive impact on volume commitments coming Susan as well.

Speaker Change: Our efforts over a year ago are bearing fruit.

Speaker Change: And as well to maximize value of our highway deicing business in the coming year, we will continue to maintain flexibility in our operations and capital plans. So that we can appropriately respond to the market conditions.

Speaker Change: I'll now move to actions, we took during the second quarter.

Speaker Change: To have benefits in future periods.

Edward Dowling: In March, we announced that we're eliminating over 10% of our corporate work. This is an extension of our efforts to align our cost structure with our current business needs. We're working on advancing additional cost improvement projects as we continue to focus on driving down costs across the platform.

Speaker Change: In March we announced that we're eliminating over 10% of our corporate workforce. This is an extension of our efforts to align our cost structure with our current business needs. We're working on advancing additional cost improvement projects as we continue to focus on driving down costs across the platform.

Edward Dowling: We also announce that we begin to wind down Fortress North American business. These actions simplify our business, allow the company to generate additional cash flow and accelerate the leverage.

Speaker Change: We also announced that we'd begin to wind down the fortress North American business.

Speaker Change: Actions simplify our business allowed the company to generate additional cash flow and accelerate deleveraging.

Peter Fjellman: With that, I'll turn the call over to Peter for a review of our quarterly results. Thanks, Ed. I'll comment briefly on the financial results for the quarter before turning the call over for Q&A. For the second quarter, consolidated revenue was $495 million, up 36% year-over-year. Operating loss for the quarter was $3.1 million, which was an improvement from the operating loss of $39.3 million last year. consolidated net loss was 32 million compared to a net loss of 38.9 million in the prior period. These results include impairments taken on Fortress in both periods, as well as the impairment in the plant nutrition business last year.

Peter Feldman: With that I'll turn the call over to Peter for a review of our quarterly results.

Peter Feldman: Thanks, Ann I'll comment briefly on the financial results for the quarter before turning the call over for Q&A.

Peter Feldman: For the second quarter consolidated revenue was $495 million up 36% year over year operating.

Peter Feldman: Operating loss for the quarter was $3 1 million, which was an improvement from the operating loss of $39 3 million last year.

Peter Feldman: Consolidated net loss was $32 million compared to a net loss of 38 9 million in the prior period.

Peter Feldman: These results include impairment taken unfortunately in both periods as well as the impairment in the plant nutrition business last year.

Peter Fjellman: Adjusted EBITDA for the quarter was $84.1 million, which compares to $95.7 million a year ago. As noted in our press release yesterday, the treatment of the contingent consideration liability for Fortress impacts the comparability of adjusted EBITDA between periods. When that is taken into account, modified adjusted EBITDA was $76.2 million in the quarter, compared to $71.9 million in the second quarter of 2024. In the salt business, revenue in the second quarter was $433 million compared to $310 million a year ago. Pricing was down 5% year over year to approximately $85 per ton, with volumes up 47% compared to the prior period.

Peter Feldman: Adjusted EBITDA for the quarter was $84 1 million, which compares to $95 7 million a year ago as noted in our press release yesterday, the treatment of the contingent consideration liability for fortress impacts the comparability of adjusted EBITDA between periods. When that is taken into account modified adjusted EBITDA was 70.

Peter Feldman: $6 2 million in the quarter compared to $71 9 million in the second quarter of 2024.

Peter Feldman: In the Salt business revenue in the second quarter was $433 million compared to $310 million a year ago.

Peter Feldman: Pricing was down 5% year over year to approximately $85 per ton with volumes up 47% compared to the prior period.

Peter Fjellman: net revenue per ton, which accounts for distribution costs decreased 4% to $57. On a per ton basis, operating earnings came in lower year over year at $13.10 per ton, down 31%, while adjusted EBITDA per ton decreased roughly 30% to $16.75. The decrease in margins primarily reflects the increase in production costs per ton due to the curtailment of the production at the Godrich mine last year, and software pricing for highway de-ousing salt compared to last year. In the plant nutrition business, revenue for the second quarter was $58 million, which is up 16% year over year from 50 million.

Peter Feldman: Net revenue per tonne, which accounts for distribution costs decreased 4% to $57.

Peter Feldman: On a per ton basis operating earnings came in lower year over year at $13 10 per ton down 31%, while adjusted EBITDA per ton decreased roughly 30% to $16 75.

Peter Feldman: The decrease in margins primarily reflects the increase in production cost per ton due to the curtailment of production at the Goderich mine last year and softer pricing for highway deicing salt compared to last year.

Peter Feldman: In the plant nutrition business revenue for the second quarter was $58 million, which is up 16% year over year from 50 million sales volumes were up 26% from prior period, while pricing was down 8% from the same period.

Peter Fjellman: Sales volumes were up 26% from prior period while pricing was down 8% for the same period. Distribution costs per ton increased 13% to around $102 per ton and all in production costs per ton decreased by approximately 10% when adjusting for the impairment in the business last year. As Ed mentioned, we executed successfully on our plan to reduce North American Highway de-icing inventory levels, harvest cash, and pay down debt. The value of North American Highway de-icing inventory declined 47% year-over-year, and the volumes associated with that were down almost 60%. This allowed for a sequential decrease in total net debt of $171 million and an $81 million decline from last year's second quarter.

Peter Feldman: Distribution costs per ton increased 13% to around $102 per ton and all in production cost per ton decreased by approximately 10% when adjusting for the impairment in the business last year.

Ed: As Ed mentioned, we executed successfully on our plans to reduce North American highway Deicing inventory levels harvest cash and pay down debt the.

Ed: The value of North American Highway Deicing inventories declined 47% year over year and the volumes associated with that were down almost 60%. This allowed for a sequential decrease in total net debt of 171 million and an $81 million decline from last year's second quarter.

Peter Fjellman: At quarter end we have liquidity of $329 million, comprised of $51 million of cash and revolver capacity of around $279 million. From a guidance perspective, we increased our adjusted EBITDA guidance for the year. At the midpoint, we are now showing $188 million for the year, which is an increase from a midpoint of $173 million coming out of Q1 2025. The $188 million includes the gain related to the write-off of the Fortress Contingent Consideration Liability of approximately $8 million. Even adjusting for that item, we're showing improvements in guidance for SALT Incorporated. I would also point out that our guidance for capital expenditures was unchanged at a range of $75 to $85 million.

Ed: At quarter end, we had liquidity of $329 million comprised of $51 million of cash and revolver capacity of around $279 million.

Ed: From a guidance perspective, we increased our adjusted EBITDA guidance for the year.

Ed: At the midpoint, we are now showing $188 million for the year, which is an increase from a midpoint of $173 million coming out of Q1 'twenty five.

Ed: The 188 million includes the gain related to the write off the <unk> contingent consideration liability of approximately $8 million, even adjusting for that item, we're showing improvements in guidance for salt in corporate.

Ed: I would also point out that our guidance for capital expenditures was unchanged at a range of $75 to $85 million.

Peter Fjellman: As we continue executing on our back-to-basics strategies, we'll focus on controlling costs, managing inventory and working capital, and enhancing free cash flow.

Ed: As we continue executing on our back to basic strategies, we will focus on controlling costs, managing inventory and working capital and enhancing free cash flow.

Carly: I'll now open the floor for questions. Operator. I'd like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Ed: I will now open the floor for questions.

Ed: Operator.

Speaker Change: I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad well pause for just a moment to compile the Q&A roster.

David Silver: Your first question comes from David Silver with CL King. Yeah, hi, good morning. Not used to being called first. Okay. Thank you very much.

Speaker Change: Your first question comes from David Silver with CL King.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yes, hi, good morning.

Speaker Change: Not used to being called first okay.

Speaker Change: Thank you very much.

David Silver: You know, I do have a couple of questions regarding kind of the balance sheet and the cash flow statement in particular. And I understand there's a number of, you know, relatively different events kind of puts and takes. Can I just ask you, you know, unlike most March quarters, the accounts receivable level actually rose from December to March. And overall, I mean, I think it's at a very high level relative to you know, your sales or historical season ending levels. Um, is there something going on there or why shouldn't I think that this would be a significant source of incremental further, you know, incremental cash going forward?

Speaker Change: You know I do have a couple of questions regarding kind of the balance sheet and the cash flow statement in particular.

Speaker Change: And I understand there's a number of you know.

Speaker Change: Relatively.

Speaker Change: Current events.

Speaker Change: And then just kind of puts and takes.

Speaker Change: Can I just ask you you know unlike most march quarters, the accounts receivable level.

Speaker Change: Actually rose from December to March and overall, I mean, I think it's at a very high level relative to.

Speaker Change: You know your sales or historical.

Speaker Change: Season ending levels.

Speaker Change: Is there something going on there or why shouldn't I think that this would be.

Speaker Change: Significant source of incremental <unk>.

Speaker Change: Or are there incremental cash going forward just some comment on kind of the March and March month end level of accounts receivable. Please.

David Silver: Just some comment on kind of the March end, March month end level of accounts receivable, please.

Edward Dowling: Hi, David, this is Ed. Sometimes it's good to But the anyway, good to hear your voice.

Speaker Change: Hi, David This is Ed.

Speaker Change: Sometimes it's good to be first but.

Peter Fjellman: Let me pass this off to Peter Fjellman to address your question about the barrel sheet. Sure, this is Peter. There are a couple of insurance settlement matters within the AR and both the AP balances. And so you'll see psych gross up to both for the accounting. as well as as we continue to have a good quarter and we see those AR balances will continue to come down slightly related to just the the natural flow of the inventory.

Speaker Change: Anyway. Good to hear you were so let me pass off to Peter <unk> to address your question about the balance sheet.

Peter Feldman: Sure. This is Peter.

Peter Feldman: There are a couple of insurance settlement matters within the <unk> in both the AP balances and so youll see gross up to vote through the accounting.

Peter Feldman: As well as.

Peter Feldman: As we continue to have a good quarter.

Peter Feldman: And we see though they are balances will continue to come down slightly related to just the natural flow of inventory.

Peter Feldman: Sell through.

David Silver: Okay, very good.

Peter Feldman: Okay very good and then.

David Silver: And then maybe a business question, but, you know, I'm sure your team, this has to do with the upcoming bid season. And I'm sure your team is very proficient at kind of reading the tea leaves, I guess. But what can you say, or what can you divine, I guess, from the early requests for bids? In other words, have the volume commitments that the customers are seeking, have they noticeably increased versus the past year or two? Are the delivery points indicating areas of maybe the depot depletion, Ed, that maybe you cited in your remarks? I know it's early, but the bidding does start pretty early, or at least the bid process starts pretty early.

Peter Feldman: Maybe a business question, but.

Peter Feldman: I'm sure. Your team this has to do with the upcoming bid season and I'm sure. Your team is very proficient in kind of reading the tea leaves I guess.

Peter Feldman: But what can you say or what can you diebold divine I guess from the Earth.

Speaker Change: Early request for bids in other words.

Peter Feldman: The volume commitments.

Speaker Change: The customers are seeking has noticeably.

Speaker Change: Noticeably increased versus the past year or two are the delivery points, indicating areas of maybe the depot depletion that may be you cited in your remarks.

Speaker Change: I know, it's early but the bidding does start pretty early or at least the bid process starts pretty early what.

David Silver: What can you divine from what's available to you at this point?

Speaker Change: What can you define from from what's available to you at this point.

Edward Dowling: David, I'll make some general comments up front and then pass it off to Ben here. It is very early in the bidding season. We do think that the market, based on the difference between a year ago and now in terms of inventories in the winter that we served last year, is much more constructive than we've seen over the past several years. So that by itself gives an indication of potential price increases and potential volume increases, but recognize that not all areas are the same. That some areas experience more snow than others, so those sort of things will be different depending on the sort of current situation in the different locales.

Speaker Change: David I'll make some general comments upfront and then pass it off to bed.

Speaker Change: It is very early in the bidding season we.

Speaker Change: We do think that the.

Speaker Change: The market based on the.

Speaker Change: The difference between a year ago and now in terms of inventories in the winter that we served last year.

Speaker Change: More constructive than we've seen over asps.

Speaker Change: Yes several years.

Speaker Change: So it gives an indication of potential price increases and central volume increases, but recognize that not all areas of the SEC.

Speaker Change: Some areas experience, where snow than others. So those sort of things will be different depending on the sort of current situation.

Speaker Change: Different locales.

Ben Nichols: It's a setup that we understand reasonably well, so I'll pass that off to Ben Nichols here to see what else you might want to add. Yeah, good morning, David. This is Ben. I think what Ed alluded to, the regional nature of that is important to understand. I would also say we have some early data points on tender sizes, which is the municipal and state level indications of what they see their needs for the upcoming season. I would tell you that those are ranging to slightly up to significantly up in some regions. So all things being equal, we think the dynamic is going to be positive year over year moving forward, and I would tell you our team is very excited about that opportunity.

Speaker Change: Yes.

Speaker Change: Setup that we understand reasonably well so pass that off to Ben nickels here to see what else you might want to add.

Speaker Change: Yes. Good morning, David This is Ben I think what Ed alluded to the regional nature of that is important to understand I would also say we have some early data points on tender sizes, which is the municipal and state level indications of what they see their needs for the upcoming season and I would tell you that those are ranging to slightly.

Speaker Change: This significantly up in some regions.

Speaker Change: All things being equal we think the dynamics are going to be positive year over year moving forward and I would tell you. Our team is very excited about that opportunity.

David Silver: Okay, great.

David Silver: I'm just going to sneak in one more, but this would be related to your SOP business. And, you know, I just just as a note, I mean, to me, that business is still, you know, has a lot of potential to kind of improve the margins there. Especially, you know, given the pretty two consecutive quarters, I think of pretty high shipment levels.

Speaker Change: Okay, great and I'm, just going to sneak in one more but.

Speaker Change: This would be related to your S O P business.

Speaker Change: And I, just just as a note I mean.

Speaker Change: To me that business is still has a lot of potential to kind of improve the margins there.

Speaker Change: Especially given the pretty two consecutive quarters, they think of pretty high shipment levels.

Edward Dowling: Um, you know, Ed, you know, you've, I understand the salt segment and particularly the icing inventories was job one here. But what do you see over the next few quarters or next year or so in terms of restoring kind of that cash cost or cash production cost performance level to, I don't know, more, more historical levels and maybe driving some incremental cash flow from that part of your business? Yeah, it's an important objective for us, David. We outlined the efforts that we were initiating a year ago, and it's it's a multi-year effort. And it really starts with the brine chemistries and controlling the brine chemistries better as we go into our evaporation bonds to sort of repair and restore these ponds back towards sort of historical levels.

Speaker Change: You know.

Speaker Change: Ed.

Speaker Change: I understand the salt.

Speaker Change: Segment, and particularly the Deicing inventories was job one here, but.

Speaker Change: What what do you see over the next few quarters or next year or so in terms of restoring kind of that cash cost or cash production cost performance level to I don't know more at more historical levels and maybe driving some incremental cash flow from that part of your business.

Speaker Change: Yes, it's an important objective for us David.

Speaker Change: We outlined the efforts that we were initiating a year ago.

Speaker Change: It's a multiyear effort.

Speaker Change: And it really starts with the Brian Chemistries and controlling the Brian Chemistry is better as we go into our evaporation ponds, so sort of repair.

Speaker Change: And restore these ponds back towards sort of historical levels, we talked about.

Edward Dowling: And, you know, we talked about sales to harvest ratios and, you know, the harvest to production ratios, excuse me, and other things. The early indications are very good in that regard. And you see that through the increased volumes that we're now producing in Utah. That's really just the first step that will continue for some period of time, but it really just the first step.

Speaker Change: Sales of harvest ratios.

Speaker Change: The harvest of production rabies ratios excuse me and other fixed the early indications are very good in that regard.

Speaker Change: You see that through the increased volumes that we are now producing.

Speaker Change: In Utah that is.

Speaker Change: Really just the first step that will continue.

Speaker Change: For some period of time, but it really just the first step the other big end of this as sort of the backend of the Sop production, which is related to what we call the dryer plant or the compaction plant.

Edward Dowling: The other big end of this is sort of the back end of the SOP production, which is related to what we call the dryer plant or the compaction plant, which requires a capital project and modification. That engineering work is well-advanced. We want to make sure that we're really spot on and able to manage this really well. But, you know, between those different efforts, we believe that we will be able to materially reduce the costs of of our SOP production.

Speaker Change: Which requires a capital project modification.

Speaker Change: Engineering work is well advanced.

Speaker Change: Want to make sure that we're really spot on and able to manage this really well.

Speaker Change: Between those different efforts, we believe that we will be able to materially reduce the cost of.

Speaker Change: Of our Sop production I'll hand, this off to Pat Merrin, a little bit if you'd like to add some additional comments there.

Pat Marin: I'll hand this off to Pat Barron a little bit, see if you'd like to add some additional comments there. Thanks, Ed.

Pat Marin: Hi, David. This is Pat. I've had a chance to get to Ogden a couple of times now. And certainly, we have a fantastic team there and a very unique asset. And on top of the projects that Ed has talked about, we certainly see some opportunities for us to drive improvements in how we run the business, but that's going to be incremental over time. But, you know, the two big projects that Ed has spoken about, the restoration of the ponds and the capital projects, will give us a step function going forward while we continue to drive improvements of the business.

Pat Merrin: Thanks, Ed Hi, David This is Ed this is Pat.

Speaker Change: I've had a chance to get to.

Speaker Change: A couple of times now and certainly we have a fantastic team there and a very unique asset.

Speaker Change: And on top of the projects that Ed has talked about.

Speaker Change: We certainly see some opportunities for us to drive.

Speaker Change: Improvements in how we run the business, but that's going to be incremental over time.

Speaker Change: But.

Speaker Change: The two big projects that Ed has spoken about the restoration of the ponds and the capital projects will give us a step function going forward, while we continue to drive improvements in the business.

David Silver: Okay, thanks very much. I'm going to get back in queue. Appreciate it. Okay. Thank you, David. Again, if you would like to ask a question, press star. followed by the number one on your telephone keypad. There are no further questions at this time.

Speaker Change: Okay. Thanks, very much I'm going to get back in queue I appreciate it.

Speaker Change: Thank you David.

Speaker Change: Again, if you would like to ask a question press star.

Speaker Change: Followed by the number one on your telephone keypad.

Speaker Change: Okay.

Speaker Change: There are no further questions at this time I will now turn the call back over to Edward Galang, President and CEO.

Edward Dowling: I'll now turn the call back over to Edward Dowling, President and CEO. Thank you, Carly, for the moderation here. Appreciate that. And thank you all again for your interest in Compass Minerals. We are focused on delivering on our back to basic strategy. We're making good progress in that regard. And I'm excited about the steps the company is making.

Speaker Change: Thank you currently further moderation here I appreciate that thank you all again for your interest in Compass minerals, we are focused on delivering on our back to basic strategy, we're making good progress in that regard and im excited about the steps. The company is making please don't hesitate to reach out to breath. If you have any follow up questions. We look forward to speaking to you in the next.

Edward Dowling: Please don't hesitate to reach out to Brent if you have any follow up questions. We look forward to speaking to you in the next quarter.

Speaker Change: Quarter.

Carly: Ladies and gentlemen, that concludes today's call. Thank you all for joining.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Operator: You may now disconnect.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.