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Sep 30, 2023
Compass Minerals Q4 2023 Earnings Report
Reported fiscal fourth-quarter and full-year 2023 results, with a focus on Salt profitability restoration and Fortress achievements, while addressing challenges in the lithium project.
Key Takeaways
Compass Minerals reported a 6% year-over-year decline in consolidated revenue for Q4 2023, totaling $233.6 million. Operating earnings decreased to $3.9 million, and adjusted EBITDA fell by 9% to $33.0 million. The Salt business showed improved profitability, offsetting weaker Plant Nutrition sales. For the full fiscal year, consolidated revenue was down 3% to $1.2 billion, but operating earnings increased to $79.1 million, and adjusted EBITDA rose to $200.8 million due to improved Salt business profitability.
Net income reached $15.5 million for fiscal 2023, a significant improvement from the previous year's net loss of $37.3 million.
Total company adjusted EBITDA increased by 7% year-over-year, despite reduced sales volumes in both the Salt and Plant Nutrition segments.
The Salt business restored full-year fiscal 2023 profitability, achieving an adjusted EBITDA per ton exceeding $20.
Compass Minerals acquired the remaining 55% ownership of Fortress North America and commenced initial commercial sales during the 2023 fire season.
Compass Minerals
Compass Minerals
Forward Guidance
Compass Minerals provided its financial outlook for fiscal year 2024, anticipating increased Salt sales volumes, normalized Plant Nutrition demand, and ongoing development in the Fire Retardant business.
Positive Outlook
- Salt sales volumes are expected to increase 3% to 5% in fiscal 2024, assuming average winter weather conditions.
- The company completed a better-than-expected 2023-2024 bid season, with North American highway deicing prices up 3% despite a 5% decrease in committed volumes.
- Meaningful increase in Plant Nutrition sales volumes expected for the full year as demand in California reverts to normal levels.
- Fortress is expected to contribute approximately $12 million of adjusted EBITDA related to its initial Compass Minerals
- Lithium-related period expenses are projected to be in the range of $5 million and $10 million for fiscal 2024.
Challenges Ahead
- Lower Plant Nutrition profitability is expected year-over-year, driven by lower sulfate of potash (SOP) pricing despite strong sales volume rebound.
- Pricing is projected to decline year-over-year as global potassium prices have normalized below the elevated levels in calendar 2022 and early 2023.
- Cash unit costs are projected to decline year-over-year but remain above historical levels due to fewer low-cost, pond-based tons.
- The final agreement with the USFS is not expected to be finalized until late December 2023 or early January 2024.
- Total capital expenditures for the company in fiscal 2024 are expected to be within a range of $125 million to $140 million.