Compass Minerals’ Plant Nutrition segment posted a second-quarter operating loss of $700,000 on sales of $47.7 million, down from the year-ago operating earnings of $4.4 million and $54.3 million, respectively. Adjusted EBITDA was $7.8 million, down from $13.2 million. While fertilizer prices were up 8% to $796/st from the year-ago $736/st, volumes were off 19% to 60,000 st from 74,000 st, with the company citing the wet weather in California.
“The amount of precipitation that California has received this year is frankly amazing,” said Kevin Crutchfield, Compass President and CEO told analysts, “ranking as the 7th wettest year over the last 129.”
Company-wide, Compass reported a second-quarter net loss of $21.6 million on sales of $411.1 million, compared to a year-ago loss of $12.1 million on sales of $448.5 million. The net loss from continuing operations was also $21.6 million, down from the year-ago $29 million. Adjusted EBITDA from continuing operations was $77.4 million, up from $64.8 million.
Compass sales and adjusted EBITDA for the second quarter beat the average analyst estimates (Bloomberg Consensus). Sales topped the $401.8 million estimate, while adjusted EBITDA surpassed the analysts’ $74.3 million. Analysts missed that Compass would report a net loss, instead seeing a positive $22.1 million.
Compass reported that it has eliminated approximately 49 full-time positions and other consulting and overhead costs. As a result, it expects a $17-$18 million annual improvement in operating expenses beginning in fiscal 2024.
The company reported a small belt fire at its Ogden production facility during the quarter that cost it $2 million. “The added repairs added some incremental operating costs in the quarter,” said Crutchfield. “We were able to quickly implement a temporary system that allowed us to have minimal downtime.”
As for the company’s plans to extract lithium from the Great Salt Lake, it cautioned that recent legislative actions in Utah have altered certain aspects of the regulatory regime that will govern lithium development at the lake, some of which will require rulemaking in the coming months. As a result, Compass said it is deferring the disclosure of any project-related economic and engineering estimates on the project until the impact of these actions can be better assessed.
Salt was a bright spot for Compass during the second quarter, posting increased operating earnings of $73.1 million on sales of $360.5 million, up from the year-ago $49.3 million and $391.3 million, respectively. Adjusted EBITDA was $88.9 million up from $65.5 million.
Plant Nutrition was in the black for the first six months at $10.3 million on sales of $89.3 million, but still down 26% from the year-ago $13.9 million and $108.9 million, respectively. Adjusted EBITDA was $27.1 million, down from $31.5 million. Fertilizer prices were up significantly to $851/st from $696/st, however, volumes fell to 105,000 st from 157,000 st.
Compass said its 2023 full-year outlook for Plant Nutrition remains unchanged from its prior guidance range, which reflected the unfavorable year-over-year volume impact of a suboptimal 2022 evaporation season, the heightened uncertainty regarding sulfate of potash fertilizer pricing, higher production costs, and extraordinary weather impacts in several core markets, primarily California. Sales volumes for the year are put at 205,000-270,000 st, with Adjusted EBITDA of $30-$60 million on revenues of $155-$225 million.
Company-wide, Compass reported a six-month net loss of $21.9 million on sales of $763.5 million, up from the year-ago loss of $9.7 million and $780 million, respectively. The net loss from continuing operations was $21.9 million versus a year-ago loss of $21.1 million. Adjusted EBITDA from continuing operations was $139.2 million, up from the year-ago $123.2 million.
Salt reported six-month operating income of $120.2 million on sales of $668.6 million, up from the year-ago $88.7 million and $665.2 million. Adjusted EBITDA was $149.9 million, up from $121.1 million.
Assuming normal weather, Compass projects 2023 Salt segment adjusted EBITDA of $215-$255 million on revenues of $990-$1,065 million.