COMPASS MINERALS INTERNATIONAL, INC. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements relate to future events or our future financial
performance, and involve known and unknown risks, uncertainties, and other
factors that may cause our actual results, levels of activity, performance or
achievements to be materially different from future results, levels of activity,
performance or achievements expressed or implied by these forward-looking
statements. Factors that could cause actual results to differ materially from
those expressed or implied by the forward-looking statements include, but are
not limited to, the following: our mining and industrial operations; geological
conditions; dependency on a limited number of key production and distribution
facilities and critical equipment; weather conditions; uncertainties in
estimating our economically recoverable reserves and resources; strikes, other
forms of work stoppage or slowdown or other union activities; the inability to
fund necessary capital expenditures or successfully complete capital projects;
supply constraints or price increases for energy and raw materials used in our
production processes; our indebtedness and inability to pay our indebtedness;
restrictions in our debt agreements that may limit our ability to operate our
business or require accelerated debt payments; tax liabilities; the inability of
our customers to access credit or a default by our customers of trade credit
extended by us or financing we have guaranteed; our payment of any dividends;
financial assurance requirements; risks related to the potential phasing out of
LIBOR; the impact of competition on the sales of our products; risks associated
with
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our international operations and sales, including changes in currency exchange rates and inflation risks; increasing costs or a lack of availability of transportation services, equipment, raw materials or other supplies; the seasonal demand for our products; the impact of anticipated changes in plant nutrition product prices and customer application rates; conditions in the sectors where we sell products and supply and demand imbalances for competing products; our rights and governmental authorizations to mine and operate our properties; risks related to unanticipated litigation or investigations or pending litigation or investigations or other contingencies; compliance with foreign andUnited States ("U.S.") laws and regulations related to import and export requirements and anti-corruption laws; compliance with environmental, health and safety laws and regulations; environmental liabilities; product liability claims and product recalls; changes in laws, industry standards and regulatory requirements; misappropriation or infringement claims relating to intellectual property; inability to obtain required product registrations or increased regulatory requirements; the impact of the COVID-19 pandemic, or other outbreaks of infectious disease or similar public health threats; our ability to successfully implement our strategies including the timing and outcome of the potential sale of ourBrazil chemical solutions business; plans to develop our lithium resource, including market entry; the useful life of our mine properties; our expectation of extending theGoderich mineral lease; conversion of mineral resources into mineral reserves; risks related to labor shortages and the loss of key personnel; a compromise of our computer systems, information technology or operations technology or the inability to protect confidential or proprietary data; climate change and related laws and regulations; our ability to expand our business through acquisitions, integrate acquired businesses and realize anticipated benefits from acquisitions; the impact ofBrazil currency changes on the earn-out consideration we may be entitled to receive with respect to the sale of ourSouth America specialty plant nutrition business; domestic and international general business and economic conditions; and other risks referenced from time to time in this report and our other filings with theSecurities and Exchange Commission (the "SEC"), including Part I, Item 1A, "Risk Factors" of our Transition Report on Form 10-KT for the transition period endedSeptember 30, 2021 . In some cases, you can identify forward-looking statements by terminology such as "may," "might," "will," "should," "could," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," the negative of these terms or other comparable terminology. Forward-looking statements include without limitation statements about our outlook, including expected sales volumes and prices; existing or potential capital expenditures; capital projects and investments; the industry and our competition; projected sources of cash flow; potential legal liability; proposed legislation and regulatory action; the seasonal distribution of working capital requirements; our reinvestment of foreign earnings outside theU.S. ; payment of future dividends and ability to reinvest in our business; our ability to optimize cash accessibility, minimize tax expense and meet debt service requirements; future tax payments and tax refunds; funding obligations for ourUnited Kingdom ("U.K.") pension plan; outcomes of matters with taxing authorities; the effects of currency fluctuations and inflation; the seasonality of our business; the effects of climate change; and the impact of the COVID-19 pandemic on us. These forward-looking statements are only predictions. Actual events or results may differ materially. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We undertake no duty to update any of the forward-looking statements after the date hereof or to reflect the occurrence of unanticipated events. Unless the context requires otherwise, references to the "Company," "Compass Minerals ," "our," "us" and "we" refer toCompass Minerals International, Inc. ("CMI," the parent holding company) and its consolidated subsidiaries. Except where otherwise noted, references toNorth America include only the continentalU.S. andCanada , and references to theU.K. include onlyEngland ,Scotland andWales . Except where otherwise noted, all references to tons refer to "short tons" and all amounts are inU.S. dollars. One short ton equals 2,000 pounds.Compass Minerals and Protassium+ and combinations thereof, are trademarks of CMI or its subsidiaries in theU.S. and other countries.
Discontinued Operations
During 2020, we initiated an evaluation of the strategic fit of certain of our businesses. OnFebruary 16, 2021 , we announced our plan to restructure our former Plant Nutrition South America segment to enable targeted and separate sales processes for each portion of the former segment, including our chemicals and specialty plant nutrition businesses along with our equity method investment in Fermavi Eletroquímica Ltda. ("Fermavi"). Concurrently, to optimize our asset base inNorth America , we evaluated the strategic fit of ourNorth America micronutrient product business. OnMarch 16, 2021 , the Board of the Directors approved a plan to sell ourSouth America chemicals and specialty plant nutrition businesses, our investment in Fermavi and ourNorth America micronutrient product business (collectively, the "Specialty Businesses") with the goal of reducing our leverage and enabling increased focus on optimizing our core businesses.
As described further in Item 1, Note 2 to the Consolidated Financial
Statements, on
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North America micronutrient business and our Fermavi investment, respectively. TheSouth America specialty plant nutrition business sale closed onJuly 1, 2021 , theNorth America micronutrient sale closed onMay 4, 2021 , and the sale of our Fermavi investment closed onAugust 20, 2021 . We continue to actively pursue the sale of theSouth America chemicals business, and we believe this sale is probable to occur within the next twelve months. We believe there is a single disposal plan representing a strategic shift that will have a material effect on our operations and financial results. Consequently, the Specialty Businesses qualify for presentation as assets and liabilities held for sale and discontinued operations in accordance withU.S. generally accepted accounting principles ("U.S. GAAP"). Accordingly, current and noncurrent assets and liabilities of the Specialty Businesses are presented in the Consolidated Balance Sheets as assets and liabilities held for sale for both periods presented and their results of operations are presented as discontinued operations in the Consolidated Statements of Operations for each period presented.
Fiscal Year
During 2021, we transitioned to aSeptember 30 fiscal year end. The nine-month period fromJanuary 1, 2021 toSeptember 30, 2021 , served as a transition period, and we filed one-time, nine-month transitional financial statements for the transition period in a Transition Report on Form 10-KT filed with theSEC onNovember 30, 2021 . Prior to the transition period, our fiscal year was the calendar year ending onDecember 31 . Our fiscal year 2022 (or "fiscal 2022") commenced onOctober 1, 2021 and ends onSeptember 30, 2022 .
Critical Accounting Estimates
Preparation of our consolidated financial statements in accordance withU.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management believes the most complex and sensitive judgments result primarily from the need to make estimates about matters that are inherently uncertain. Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Part II, Item 8, Note 2 to the Consolidated Financial Statements included in our Transition Report on Form 10-KT for the transition period endedSeptember 30, 2021 , describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. For a further description of our critical accounting policies, see Item 1, Note 1 of our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Actual results in these areas could differ from management's estimates.
Company Overview
Compass Minerals is a leading producer of essential minerals, including salt, sulfate of potash ("SOP") specialty fertilizer and magnesium chloride. As ofDecember 31, 2021 , we operated 12 production and packaging facilities (excluding 3 production facilities inSouth America that are part of our discontinued operations), including: •The largest rock salt mine in the world inGoderich, Ontario, Canada ; •The largest dedicated rock salt mine in theU.K. inWinsford ,Cheshire ; •A solar evaporation facility located nearOgden, Utah , which is both the largest sulfate of potash specialty fertilizer production site and the largest solar salt production site in the Western Hemisphere; and •Several mechanical evaporation facilities producing consumer and industrial salt. InMarch 2021 , we concluded that certain of our assets met the criteria for classification as held for sale and discontinued operations. As a result, we are now presenting two reportable segments in continuing operations, Salt andPlant Nutrition (which was previously known as thePlant Nutrition North America segment) in this Form 10-Q. See Item 1, Note 10 to the Consolidated Financial Statements for more information. Unless otherwise indicated, the information and amounts provided in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" pertain to continuing operations. Our Salt segment provides highway deicing salt to customers inNorth America and theU.K. as well as consumer deicing and water conditioning products, ingredients used in consumer and commercial food preparation, and other salt-based products for consumer, agricultural and industrial applications inNorth America . In theU.K. , we operate a records management business utilizing excavated areas of ourWinsford salt mine with one other location inLondon, England . Our Plant Nutrition segment produces and markets SOP products in various grades worldwide to distributors and retailers of crop inputs, as well as growers and for industrial uses. We market our SOP under the trade name Protassium+. 23 -------------------------------------------------------------------------------- Table of Contents COMPASS MINERALS INTERNATIONAL,
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Consolidated Results of Continuing Operations
The following is a summary of our consolidated results of continuing operations
for the three months ended
THREE MONTHS ENDED DECEMBER 31
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* Refer to " -Reconciliation of Net Earnings from Continuing Operations to
EBITDA and Adjusted EBITDA " for a reconciliation to the most directly
comparable
COMMENTARY: THREE MONTHS ENDED
•Total sales increased 7%, or$22.3 million , due to an increase in our Salt segment, which was partially offset by a decrease in our Plant Nutrition segment. •Operating earnings decreased 27%, or$7.7 million , partially due to an increase in corporate SG&A expenses which include executive transition costs, costs related to our lithium project and increased legal expenses related to theSEC investigation and a decrease in our Salt segment's operating earnings. An increase in Plant Nutrition operating earnings partially offset the decrease in total operating earnings. •Earnings before interest, taxes, depreciation and amortization ("EBITDA")* adjusted for items management believes are not indicative of our ongoing operating performance ("Adjusted EBITDA")* decreased 6%, or$3.6 million . •Diluted net loss per share decreased$0.19 to$0.23 . 24 --------------------------------------------------------------------------------
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THREE MONTHS ENDED DECEMBER 31
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COMMENTARY: THREE MONTHS ENDED
Gross Profit: Increased 2%, or$1.4 million ; Gross Margin decreased 1 percentage point to 18% •Salt segment gross profit decreased$4.2 million primarily due to higher per-unit logistics and consumer and industrial product costs, which were partially offset by higher sales volumes. •The gross profit of the Plant Nutrition segment increased$5.3 million due to higher average sales prices, which were partially offset by lower sales volumes and higher per-unit logistics and product costs.
OTHER EXPENSES AND INCOME
COMMENTARY: THREE MONTHS ENDED
SG&A: Increased$9.1 million ; increased 2.1 percentage points as a percentage of sales from 9.8% to 11.9% •The increase in SG&A expense was primarily due to executive transition costs, costs related to our lithium project and increased legal expenses related to theSEC investigation.
Interest Expense: Decreased
(Gain) Loss on Foreign Exchange: Decreased$6.6 million from a loss of$6.2 million to a gain of$0.4 million •We realized foreign exchange gains of$0.4 million in the first quarter of fiscal 2022 compared to losses of$6.2 million in the same quarter of the prior fiscal year primarily due to changes in foreign currency exchange rates on our nonU.S. dollar denominated intercompany loans between ourU.S. and foreign subsidiaries.
Other Expense: Increased
Income Tax Benefit: Decreased$7.2 million from$8.4 million to$1.2 million •Income tax benefit decreased in the first quarter of fiscal 2022 compared to the same quarter of the prior fiscal year due primarily to the release of domestic tax reserves in the prior fiscal year exceeding the tax reserves released in the first quarter of fiscal 2022. •Our effective tax rate decreased from a benefit of 133% in the prior fiscal year to a benefit of 18% in the first quarter of fiscal 2022. Our effective tax rate in the prior fiscal year was impacted by the release of domestic tax reserves due to statute expirations. Our effective tax rate in the first quarter of fiscal 2022 was impacted by the release of domestic and foreign tax reserves due to statute expirations and a shift in the mix of income between theU.S. andCanada . •Our income tax provision in both periods differs from theU.S. statutory rate primarily due toU.S. statutory depletion, state income taxes, nondeductible executive compensation, foreign income, mining and withholding taxes, executive compensation and interest expense recognition differences for tax and financial reporting purposes. 25 -------------------------------------------------------------------------------- Table of Contents COMPASS MINERALS INTERNATIONAL,
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Net (Loss) Earnings from Discontinued Operations: Decreased from income of$13.4 million to loss of$5.5 million •The net loss from our discontinued operations includes only the results from our chemical business inSouth America for the three months endedDecember 31, 2021 , but includes the results of all theSouth America businesses and the specialty plant nutrition businesses in the same period of the prior fiscal year. Refer to Item 1, Note 2 for additional details.
Operating Segment Performance
The following financial results represent consolidated financial information with respect to the operations of our Salt and Plant Nutrition segments. The results of operations of the records management business and other incidental revenues, include sales of$3.0 million and$2.5 million for the three months endedDecember 31, 2021 and 2020, respectively. These revenues are not material to our consolidated financial results and are not included in the following operating segment financial data. Salt THREE MONTHS ENDED DECEMBER 31 [[Image Removed: cmp-20211231_g8.jpg]] 2021 2020 Salt Sales (in millions)$ 273.9 $ 228.5 Salt Operating Earnings (in millions)$ 39.4 $ 44.5 Salt Sales Volumes (thousands of tons) Highway deicing 2,807 2,204 Consumer and industrial 633 579 Total tons sold 3,440 2,783 Average Salt Sales Price (per ton) Highway deicing$ 58.34 $ 59.20 Consumer and industrial$ 174.00 $ 169.30 Combined$ 79.63 $ 82.10
COMMENTARY: THREE MONTHS ENDED
•Salt sales increased 20%, or$45.4 million , primarily due to higher Salt sales volumes. •Average sales prices decreased 3% due to the higher proportion of highway deicing salt but contributed$0.5 million to the increase in Salt sales due to higher average sales prices for consumer and industrial products, which were offset by lower highway deicing average sales prices. •Highway deicing average sales prices decreased 1% primarily due to lower North American highway deicing contract prices for the fiscal 2022 winter season. Consumer and industrial average sales prices increased 3% due to product sales mix and an increase in sales prices in the first quarter of 2022 taken to offset the impact of inflation. •Salt sales volumes increased 24%, or 657,000 tons, which contributed$44.9 million to the sales increase. Highway deicing sales volumes increased 27%, primarily as a result of higher commitment volumes for the fiscal 2022 winter season and higher sales volumes in theU.K. in the first quarter of 2022. Consumer and industrial sales volumes 26 -------------------------------------------------------------------------------- Table of Contents COMPASS MINERALS INTERNATIONAL,
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increased 9%, primarily due to higher deicing sales volumes as the impact of the COVID-19 pandemic negatively impacted sales volumes in the same period of the prior fiscal year. •Salt operating earnings decreased 11%, or$5.1 million , primarily due to higher per-unit shipping and handling costs, consumer and industrial product costs and lower average sales prices, partially offset by higher sales volumes. We are experiencing higher freight costs and inflationary pressures for certain materials and supplies that were not recovered through increased sales prices during the period. Plant Nutrition THREE MONTHS ENDED DECEMBER 31 [[Image Removed: cmp-20211231_g9.jpg]] 2021 2020 Plant Nutrition Sales (in millions)$ 54.6 $ 78.2 Plant Nutrition Operating Earnings (in millions)$ 9.5 $ 3.3 Plant Nutrition Sales Volumes (thousands of tons) 83 143 Plant Nutrition Average Sales Price (per ton)$ 660 $ 548
COMMENTARY: THREE MONTHS ENDED
•Plant Nutrition sales decreased 30%, or$23.6 million due to lower sales volumes, which were partially offset by higher average sales prices. •Plant Nutrition sales volumes were lower than the same period of the prior fiscal year as the prior period volumes were higher than average and feedstock inconsistencies over the past year have reduced available inventory levels. The decline in sales volume reduced sales by$32.9 million . •Plant Nutrition average sales prices increased 20%, which offset the decrease in sales by$9.3 million . •Plant Nutrition operating earnings increased$6.2 million to$9.5 million primarily due to higher average sales prices, which were partially offset by higher per-unit logistics costs and higher per-unit product costs resulting primarily from higher energy and other input costs.
Fiscal 2022 Outlook as of
•We expect Salt segment sales volumes for fiscal 2022 to range from 11.8 million tons to 12.8 million tons. •Plant Nutrition segment sales volumes for fiscal 2022 are expected to range from 280,000 tons to 320,000 tons. •Fiscal 2022 capital expenditures are expected to be in the$100 million to$110 million range.
Liquidity and Capital Resources
Historically, our cash flows from operating activities have generally been
adequate to fund our basic operating requirements, ongoing debt service and
sustaining investment in our property, plant and equipment. We have also used
cash generated from operations to fund capital expenditures which strengthen our
operational position, pay dividends, fund smaller acquisitions and repay our
debt. To a certain extent, our ability to meet our short- and long-term
liquidity and capital needs is subject to general economic, financial,
competitive, legislative, regulatory and weather conditions, effects of climate
change, geological variations
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in our mine deposits and other factors that are beyond our control.
Historically, our working capital requirements have been the highest in the
first fiscal quarter (ending
We have been able to manage our cash flows generated and used acrossCompass Minerals to permanently reinvest earnings in our foreign jurisdictions or efficiently repatriate those funds to theU.S. As ofDecember 31, 2021 , we had$16.4 million of cash and cash equivalents (in our Consolidated Balance Sheets) that was either held directly or indirectly by foreign subsidiaries. As a result ofU.S. tax reform, we revised our permanently reinvested assertion and we now expect to repatriate approximately$150 million of unremitted foreign earnings on which$4.7 million of income tax expense has been recorded for foreign withholding tax and state income taxes as ofDecember 31, 2021 . Additionally, we changed our permanently reinvested assertion and repatriated$42.5 million of unremitted foreign earnings from ourU.K. operations inSeptember 2021 on which$0.1 million of income tax expense was recorded during fiscal 2021. Due to our ability to generate adequate levels ofU.S. cash flow on an annual basis, it is our current intention to continue to reinvest the remaining undistributed earnings of our foreign subsidiaries indefinitely. We review our tax circumstances on a regular basis with the intent of optimizing cash accessibility and minimizing tax expense. In addition, the amount of permanently reinvested earnings is influenced by, among other things, the profits generated by our foreign subsidiaries and the amount of investment in those same subsidiaries. The profits generated by ourU.S. and foreign subsidiaries are impacted by the transfer price charged on the transfer of our products between them. During fiscal 2018, we reached a settlement agreement with federal Canadian andU.S. tax authorities on transfer pricing and management fees as part of an advanced pricing agreement covering our fiscal 2013-2021 tax years. Canadian provincial taxing authorities continue to challenge our transfer prices of certain items. The final resolution of these challenges may not occur for several years. We currently expect the outcome of these matters will not have a material impact on our results of operations. However, it is possible the resolution could materially impact the amount of earnings attributable to our foreign subsidiaries, which could impact the amount of permanently reinvested foreign earnings. See Item 1, Note 7 of our Consolidated Financial Statements for a discussion regarding our Canadian tax reassessments. Cash and cash equivalents as ofDecember 31, 2021 , of$28.9 million included cash held by ourSouth America chemical business held for sale of$8.6 million . We used$14.3 million of operating cash flows during the three months endedDecember 31, 2021 , reflecting increases in our working capital. During the period endedDecember 31, 2021 , we used cash on hand and availability under our revolving credit facility and AR securitization to invest$28.2 million in an equity investment, to fund capital expenditures of$14.5 million and pay dividends on our common stock of$5.3 million . Cash and cash equivalents from continuing operations of$20.3 million increased$2.2 million fromSeptember 30, 2021 . Cash flows used in continuing operations totaled$19.3 million during the three months endedDecember 31, 2021 , including income from continuing operations of$7.9 million which included depreciation, depletion and amortization of$28.3 million , and a net working capital increase of$60.9 million driven by the seasonality of our Salt business. Our working capital increase primarily reflected the higher level of receivables as ofDecember 31, 2021 compared toSeptember 30, 2021 primarily due to the effect of seasonality on our Salt business as the higher level of sales during the winter season begins in the first quarter (endingDecember 31 ) of each fiscal year, which increases ourDecember 31 receivables balance. As ofDecember 31, 2021 , we had$1.01 billion of outstanding indebtedness, consisting of$250.0 million outstanding under our 4.875% Senior Notes due 2024,$500.0 million outstanding under our 6.75% Senior Notes due 2027,$205.5 million of borrowings outstanding under our senior secured credit facilities, consisting of$77.5 million of term loans and$128.0 million borrowed against our revolving credit facility), and$59.3 million of outstanding loans under the accounts receivable financing facility (see Item 1, Note 8 of our Consolidated Financial Statements for more detail regarding our debt). Outstanding letters of credit totaling$13.4 million as ofDecember 31, 2021 , reduced available borrowing capacity under our revolving credit facility to$158.6 million . OnMarch 23, 2021 , we entered into a definitive agreement to sell ourSouth America specialty plant nutrition business to ICL Brasil Ltda., a subsidiary of ICL Group Ltd. The transaction closed onJuly 1, 2021 . Upon closing we received gross proceeds of approximately$421.1 million , following a reduction in proceeds of$6.2 million in working capital adjustments (finalized during the quarter endedSeptember 30, 2021 ), comprised of cash in the amount of approximately$318.4 million and an additional$102.7 million in net debt assumed byICL Brasil Ltd. The terms of the definitive agreement provide for an additional earn-out payment of up toR$88 million Brazilian reais, payable in fiscal 2022 and calculated on a sliding scale, if theSouth America specialty plant nutrition business achieves certain full-year 2021 EBITDA performance targets. The Brazilian debt was deducted from gross proceeds from the transaction. 28 --------------------------------------------------------------------------------
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OnJune 28, 2021 , we entered into a definitive agreement to sell our investment in Fermavi forR$45 million Brazilian reais (includingR$30 million Brazilian reais of deferred purchase price due in annual installments throughAugust 2025 ). The transaction closed onAugust 20, 2021 , and we received cash proceeds of approximately$2.9 million . We recorded a loss on the sales of the South American specialty plant nutrition business and investment in Fermavi totaling approximately$209.8 million and a non-cash impairment loss for the remaining chemical business of approximately$98.6 million which includes the effect of the significant weakening of the Brazilian real against theU.S. dollar. These losses were partially offset by approximately$30.6 million gain from the sale of a component of theNorth America micronutrient business.
In
In the quarter endedMarch 31, 2021 , we also made a$41.7 million required prepayment of our term loan for 2020 Excess Cash Flow (as such term is defined in the credit agreement). This prepayment, along with the prepayment made in the last quarter of fiscal 2021 described above, will reduce the future required term loan payments. As such, we do not have a scheduled term loan payment untilJanuary 2025 . In the future, including in fiscal 2022, we may borrow amounts under the revolving credit facility or enter into additional financing to fund our working capital requirements, potential acquisitions and capital expenditures and for other general corporate purposes. Our ability to make scheduled interest and principal payments on our indebtedness, to refinance our indebtedness, to fund planned capital expenditures and to fund acquisitions will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our current level of operations, we believe that cash flow from operations and available cash, together with available borrowings under our revolving credit facility, will be adequate to meet our liquidity needs over the next 12 months. Our debt service obligations could, under certain circumstances, materially affect our financial condition and prevent us from fulfilling our debt obligations. As a holding company, CMI's investments in its operating subsidiaries constitute substantially all of its assets. Consequently, our subsidiaries conduct substantially all of our consolidated operating activities and own substantially all of our operating assets. The principal source of the cash needed to pay our obligations is the cash generated from our subsidiaries' operations and their borrowings. Our subsidiaries are not obligated to make funds available to CMI. Furthermore, we must remain in compliance with the terms of our credit agreement governing our credit facilities, including the total leverage ratio and interest coverage ratio, in order to pay dividends to our stockholders. We must also comply with the terms of our indenture governing our 4.875% Senior Notes dueJuly 2024 and our 6.75% Senior Notes dueDecember 2027 , which limit the amount of dividends we can pay to our stockholders. Although we are in compliance with our debt covenants as ofDecember 31, 2021 , we can make no assurance that we will remain in compliance with these ratios nor can we make any assurance that the agreements governing the current and future indebtedness of our subsidiaries will permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund scheduled principal or interest payments on our debt when due. If we consummate an additional acquisition, our debt service requirements could increase. Furthermore, we may need to refinance all or a portion of our indebtedness on or before maturity; however, we cannot provide assurance that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. Principally due to the nature of our deicing business, our cash flows from operations have historically been seasonal, with the majority of our cash flows from operations generated during the first half of the calendar year. When we have not been able to meet our short-term liquidity or capital needs with cash from operations, whether as a result of the seasonality of our business or other causes, we have met those needs with borrowings under our revolving credit facility. We expect to meet the ongoing requirements for debt service, any declared dividends and capital expenditures from these sources. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We manage our capital allocation considering our long term strategic objectives and spending required to sustain our business. We announced onNovember 15, 2021 , that we reduced our dividend by approximately 80% to provide additional liquidity to 29 -------------------------------------------------------------------------------- Table of Contents COMPASS MINERALS INTERNATIONAL,
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support the business and invest in strategic expansion opportunities. We expect to reinvest the cash we anticipate retaining from this dividend reduction toward an expansion of our product portfolio, continued investment in our existing core assets and other uses. While our equipment and facilities are generally not impacted by rapid technology changes, our operations require refurbishments and replacements to maintain structural integrity and reliable production and shipping capabilities. When possible, we incorporate efficiency, environmental and safety improvement capabilities into our routine capital projects and we plan the timing of larger projects to balance with our liquidity and capital resources. Changes in our operating cash flows may affect our future capital allocation and spending. For fiscal 2022 we have allocated approximately$15 million of our planned capital spending to upgrade the barge dock at ourCote Blanche mine and have incorporated efficiency and safety features into the design. Additionally, we intend to continue to develop our recently identified lithium resource at ourOgden facility and have allocated approximately$15 million of capital in fiscal 2022 for the construction of a direct lithium extraction plant. These large projects are expected to be balanced with other sustaining and efficiency projects totaling approximately$100 to$110 million in fiscal 2022. We expect to achieve market entry with a lithium product by 2025 and expect significant capital and other expenditures would be required to achieve this market entry; however, the full amount of this expenditure is currently unknown and will depend on a number of factors, including the outcome of our strategic evaluation of development options for our lithium resource. For more information, refer to Part I, Item 1A, "Risk Factors" in our Form 10-KT for the for the transition period endedSeptember 30, 2021 . OnNovember 2, 2021 , we announced a$45 million equity investment inFortress North America, LLC ("Fortress"), building upon a previous$5 million investment. As ofDecember 31, 2021 , we had invested$32 million in Fortress and inJanuary 2022 , we invested the remaining$18 million of our planned$50 million investment bringing our Fortress ownership interest to 45%. Fortress is a development stage company that intends to achieve commercialization of its magnesium chloride-based fire-retardant products to help combat wildfires. We may make further investments in Fortress or make other acquisitions to grow our business.
The table below provides a summary of our cash flows by category, including cash flows from discontinued operations:
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