Compass Minerals moved into the plus column for the third quarter ending June 30, posting net earnings of $39.9 million, compared to a year-ago loss of $7.9 million. Sales were $207.6 million, down from $214.7 million, while adjusted EBITDA was $28.6 million, down from $32 million.
The company said the increase was driven by a $42.7 million tax benefit in the current quarter reflecting the impact of the recent acquisition of Fortress North America (GM May 12, p. 1) and recent changes in Canadian tax law. In addition, an increase in Salt operating earnings more than offset a dip in those from Plant Nutrition.
“The third quarter demonstrates tangible progress toward executing upon several strategic priorities that we believe over time will accelerate our growth and enhance the value of the enterprise,” said Kevin S. Crutchfield, President and CEO. “We are pleased with the results across our businesses, most notably the continued improvement in profitability per ton in our Salt business.
“In addition, we are forging ahead on important elements of our lithium project, including the completion of a binding supply agreement with Ford and the advancement of the commercial-scale demonstration DLE unit in Ogden,” Crutchfield continued. “This quarter we also saw Fortress release its first commercial product, with outstanding feedback regarding efficacy and delivery performance.”
Third-quarter Plant Nutrition operating earnings were $2.5 million on sales of $47.5 million compared to the year-ago $10.6 million and $55.6 million, respectively. Adjusted EBITDA was $11.7 million, down from $19.4 million.
Sales volumes were off 6%, to 63,000 st from 67,000 st, while average price per ton dropped 9%, to $752/st from $827/st. Compass cited the improved availability of potassium-based fertilizers around the world as well as lingering effects from extraordinary weather events in key markets earlier in the year that adversely impacted sales volumes.
Per-unit distribution costs decreased year-over-year due to changes in sales mix, the company said. All-in product costs increased 6% per ton, and included the impact of operational measures taken to mitigate the impact of a below-average 2022 evaporation season and higher natural gas costs experienced earlier in the year.
Crutchfield told analysts that Plant Nutrition has seen a number of headwinds this year. “From a macro point of view, buyers are simply being very cautious,” he said. “Our sentiment has clearly shifted toward a fear of getting stuck with higher-cost inventory and we are seeing lots of just-in-time purchasing. Whereas a year-ago, growers were concerned about being able to secure supply. Today, there is no concern on that front.”
He said these dynamics have been further exacerbated by the lack of demand caused by abnormal weather in California. “This is frankly a rough part of the cycle and we simply have to manage our way through it,” he said. Crutchfield added that operationally things are going well at the Ogden production facility, and the company expects demand will revert to more normal levels next year.
Salt posted third-quarter operating earnings of $21.7 million on sales of $155.5 million, up from the year-ago $12.4 million and $156.2 million. Adjusted EBITDA was $36.4 million, up from $27.7 million. While volumes were down at 1.49 million st from 1.68 million st, average prices climbed to $104.28/st from $92.83/st.
Company-wide nine-month net earnings were $18 million on sales of $971.1 million, up from the year-ago loss of $17.6 million and $994.7 million, respectively. Adjusted EBITDA was $167.8 million, off from $171.1 million.
Plant Nutrition nine-month operating earnings were $12.8 million on sales of $136.8 million, down from the year-ago $24.5 million and $164.5 million, respectively. Adjusted EBITDA slipped to $38.8 million from $50.9 million. Sales volumes were off 25%, to 168,000 st from 224,000 st while the average price was up 11%, to $814/st from $735/st.
Salt posted nine-month operating earnings of $141.9 million on sales of $824.1 million, up from the year-ago $101.1 million and $821.4 million, respectively. Adjusted EBITDA was $186.3 million, up from $148.8 million. Sales were off at 9.41 million st from 10.45 million st, but prices averaged $87.53/st, up from $78.58/st.
For the full fiscal year 2023, Compass narrowed Plant Nutrition sales volume projections to 200,000-225,000 st from 205,000-270,000 st, revenue to $160-$175 million from $155-$225 million, and adjusted EBITDA to $40-$50 million from $30-$60 million.
Compass now anticipates total Salt volumes of 11.0-11.55 million st versus the earlier estimate of 11.35-12.2 million st, revenue of $985 million-$1.025 billion versus $990 million-$1.065 billion, and adjusted EBITDA of $220-$235 million compared to $215-$255 million.