Compass Minerals reported a net loss from continuing operations of $4.9 million on sales of $249.4 million for the fourth quarter, compared to the year-ago loss of $4.6 million on sales of $211.7 million. Adjusted EBITDA from continuing operations was $35.0 million, above the year-ago $33.0 million.
The company’s fiscal fourth quarter results, changed to end Sept. 30 from the company’s year-ago calendar-year accounting in 2022, capped a year of “significant headwinds,” said Compass President and CEO Kevin S. Crutchfield, including inflationary pressures and SOP production challenges, which combined to impact both the company’s Salt and Plant Nutrition segments.
“The inflationary pressures that all industries had to deal with in 2022 had a particularly acute impact on our Salt segment, as the contract architecture of our North American highway business does not allow for the passthrough of inflationary costs in real time,” said Crutchfield. “As a result, our profitability was severely tampered by historic levels of inflation, resulting in higher distribution and production costs.”
He said the company took actions throughout the year to partially offset some of those effects, primarily through raising prices within the consumer and industrial businesses. However, he said ultimately the impact of these efforts fell far short in comparison to the inflationary effect, causing the profitability of the Salt segment to come in well below the inherent earnings potential for this business.
Including discontinued operations, the company posted a fourth-quarter net loss of $6.9 million, compared to a year-ago net loss of $56.0 million. Adjusted EBITDA was $35.0 million, down from $40.0 million.
Fourth-quarter operating earnings for the Plant Nutrition segment were $12.6 million on sales of $57.8 million, rising from a year-ago $200,000 loss on $49.3 million, respectively, while EBITDA tracked at $21.8 million, above the year-ago $8.7 million. Average fertilizer prices were $929/st with a selling volume of 62,000 st, compared to $627/st and 79,000 st, respectively, posted one year earlier.
Twelve-month Plant Nutrition operating earnings stood at $37.1 million on sales of $222.3 million, shifting from the year-ago $9.1 million and $235.0 million, respectively. EBITDA was $72.7 million, up from $44.9 million. The average selling price was $777/st on volumes of 286,000 st sold, compared to the year-ago $583/st and 403,000 st, respectively.
Compass noted average fiscal-year 2022 SOP selling prices increasing by 33% year-over-year, although that increase was partially eaten by a 29% decline in sales volumes compared to the previous year. Consolidated operating earnings of $44.4 million, down $62.7 million year over year, and adjusted EBITDA of $187.1 million, off $53.7 million from the year-ago, were impacted by increased production and distribution costs, partially offset by the favorable impact of increased pricing in the Plant Nutrition segment, the company said.
“Our Plant Nutrition business had a strong year from a profitability perspective, with EBITDA per ton of approximately $245 above the long-run average for this business,” said Crutchfield. “However, we continue to be challenged throughout the year to deliver production volumes in line with historical levels. (By) that measure, we fell short of what we believe is the inherent potential for this business.”
Operating earnings for the Salt segment in the fourth quarter were $16.3 million on sales of $188.9 million, a change from $22.4 million on $159.5 million, respectively. EBITDA was $33.1 million, below the prior-year $40.1 million. The average sales price was $89.79/st, above the year-ago $87.42/st.
“On a segment basis, Salt revenue totaled $188.9 million for the fourth quarter, up 18% year-over-year, driven by 15% growth in sales volume and a 3% increase in average selling price,” said Compass CFO Loren Crenshaw. “Despite higher revenue, Salt operating earnings declined 27% to $16.3 million for the quarter, and by 34% to a $117.4 million for the full year, as increased production and distribution costs more than offset revenue growth.”
Twelve-month operating earnings in the Salt segment were $117.4 million on sales of $1.01 billion, compared to the year-ago $177.7 million and $899.6 million, respectively. EBITDA was $181.9 million, down from $248.4 million. Average sales prices were $80.45/st, up from the year-ago $79.67/st.
“From a cost perspective, roughly two-thirds of the full-year increase was driven by higher shipping and handling costs, which rose 19% to roughly $28 per ton, and one-third by … production costs, which rose 7% to roughly $43 per ton,” Crenshaw said. “The increase in cash cost was primarily driven by inflationary impacts and higher maintenance costs. The increase in shipping and handling costs primarily reflected the combination of inflationary impacts, such as fuel surcharges and higher costs to serve our markets due to geographic mix.”
Compass posted a 12-month net loss from continuing operations of $36.7 million on sales of $1.24 billion, compared to the year-ago income of $35.6 million and $1.15 billion, respectively. Adjusted EBITDA was $187.1 million, off from $240.8 million, within the $175-$195 million guidance issued in the company’s third-quarter earnings report.
The company realized a 12-month net loss of $24.5 million compared to the year-ago loss of $185.2 million. Adjusted EBITDA including discontinued operations was $206.1 million, falling from $292.7 million.
Looking ahead to 2023, the company expects full-year Plant Nutrition sales volumes to fall in a 265,000-295,000 st range. Revenue is projected at $200-$240 million, with EBITDA at $55-$70 million.
The company expected average fertilizer sales prices to rise moderately year-over-year, with prices moderating sequentially throughout 2023. Sales volumes are anticipated to be comparable to 2022.
Full-year Salt sales volumes for 2023 are expected to run 11.35-12.20 million st, with revenue projected at $990 million-$1.07 billion and EBITDA at $215-$255 million.
“We expect (Salt segment ) pricing in 2023 to rise on the order of 15%, and volumes to decline on the order of 9%,” Crutchfield said. “I’m pleased with these efforts and expect to see substantial progress in (fiscal-year 2023) as measured by EBITDA per ton rising to match or exceed the $20 per ton in EBITDA the Salt segment has delivered on average over time, up from approximately $15 EBITDA per ton as delivered in (fiscal-year 2022).”
| Plant Nutrition (millions) | Three months ended Sept. 30, 2022 | Three months ended Sept. 30, 2021 |
| Sales | 57.8 | 49.3 |
| Operating Earnings (loss) | 12.6 | (0.2) |
| EBITDA | 21.8 | 8.7 |
| Sales Volumes (000 tons) | 62 | 79 |
| Avg. Sales Price ($/ton) | 929 | 627 |
| Salt (millions) | Three months ended Sept. 30, 2022 | Three months ended Sept. 30, 2021 |
| Sales | 188.9 | 159.5 |
| Operating Earnings | 16.3 | 22.4 |
| EBITDA | 33.1 | 40.1 |
| Sales Volumes (000 tons) | 2,103 | 1,825 |
| Avg. Sales Price ($/ton) | 89.79 | 87.42 |