Compass Minerals International : Fiscal 2024 Second-Quarter Business Update

Fiscal 2024 Second-Quarter Business Update

// May 7, 2024

Forward-Looking Statements and Other Disclaimers

This presentation may contain forward-looking statements, including, without limitation, statements about future valuations, cash generation, production and inventory levels, cost structure, capital intensity and allocation, debt levels, balance sheet improvement, and SG&A costs; the company's fire retardant business, including its economics, potential customers, products in development, any operational field evaluations with the USFS, and capital requirements; and the company's outlook for 2024, including its expectations regarding demand, sales volumes, revenue, Adjusted EBITDA, corporate and other expense, depreciation, depletion and amortization, interest expense, tax rates, and capital expenditures. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. The company uses words such as "may," "would," "could," "should," "will," "likely," "expect," "anticipate," "believe," "intend," "plan," "forecast," "outlook," "project," "estimate" and similar expressions suggesting future outcomes or events to identify forward-looking statements or forward-looking information. These statements are based on the company's current expectations and involve risks and uncertainties that could cause the company's actual results to differ materially. The differences could be caused by a number of factors, including without limitation (i) weather conditions, (ii) inflation, the cost and availability of transportation for the distribution of the company's products and foreign exchange rates, (iii) pressure on prices and impact from competitive products, (iv) any inability by the company to successfully implement its strategic priorities or its cost saving or enterprise optimization initiatives, and (v) the risk that the company may not realize the expected financial or other benefits from its ownership of Fortress North America. For further information on these and other risks and uncertainties that may affect the company's business, see the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the company's Annual Report on Form 10-K for the period ended Sept. 30, 2023 and its Quarterly Reports on Form 10-Q for the quarters ended Dec. 31, 2023 and Mar. 31, 2024, filed or to be filed with the SEC, as well as the company's other SEC filings. The company undertakes no obligation to update any forward-looking statements made in this press release to reflect future events or developments, except as required by law. Because it is not possible to predict or identify all such factors, this list cannot be considered a complete set of all potential risks or uncertainties.

2

Strategic Focus

Path to Valuation Recovery

Intense Focus

on Cash Generation

• Increase cash available for debt reduction through discontinuing dividend
• Optimize working capital and increase cash flow by lowering production, allowing company to benefit from lower inventory levels in coming deicing season

Intensified Cost & Capital Discipline

• Improve cost structure across the organization
• Reduce the capital intensity of our operating assets
• Drive standardization of MRO evaluation methods across all operating sites to optimize investments

Strengthen Balance

Sheet

• Reduce absolute debt levels
• Lower interest expense and improve borrowing costs over time

Return Capital to

Shareholders

• When deleveraging targets are achieved, return capital to shareholders via share repurchases and/or dividends

4

Cash Flow-Enhancing Actions

Immediate: Discontinue Dividend Payments

• Board of directors has determined it is in the best interest of shareholders to cease paying a quarterly dividend, freeing approximately $25 million annually

Underway: Curtail Production to Monetize Inventory

• Production has been curtailed at Goderich mine to position the company to substantially reduce inventory levels in the coming deicing season; each 10-day reduction in days of inventory outstanding (DIOs) represents an opportunity to harvest $20 to $25 million in cash
• Approximately 22% of the mine's represented workforce has been temporarily laid off as part of this initiative to reduce production in a cost-effective manner
• Curtailment done in such a way as to optimize production and operating schedules to allow greater flexibility in production levels in the future

Underway: Advance SG&A Rationalization

• The company has begun a multifaceted restructuring initiative to reduce selling, general and administrative (SG&A) costs with a focus on achieving industry cost competitiveness by year-end fiscal 2025
• Efforts include recent headcount reductions at the corporate headquarters and rationalization of corporate and functional support costs across the organization

Ongoing: Revamp Capital Investment Framework

• Implement a governance structure and prioritization process that will improve capital efficiency and

standardize MRO capex prioritization methods across all operating sites	5

Second-Quarter Fiscal 2024 Results

Second-Quarter Fiscal 2024 Overview

1 Adjusted EBITDA is a non-GAAP financial measure. See appendix for reconciliation to net income (loss), the most directly comparable GAAP financial measure.

• Total operating loss of $45.8 million in the second quarter, compared to operating income of $47.9 million in the prior-year quarter
• Reported net loss of $48.0 million in second quarter compared to a net loss of $21.6 million in the prior year
• Adjusted EBITDA1 increased 13% year over year to $87.3 million, which includes a non-cash gain of $24.3 million related to the decline in the valuation of the Fortress contingent liability discussed below
• The Salt segment reported a 9% and 7% decrease year over year in both operating earnings and adjusted EBITDA1, respectively, led by 21% lower sales volumes; per- unit profitability improved with adjusted EBITDA per ton increasing 19% to $23.95
• Plant Nutrition sales volume increased 23% year over year to 74 thousand tons, reflecting the normalization of demand in core West Coast markets
• Recognized a quarterly loss on impairments, of $106.6 million related primarily to write downs of goodwill and intangible assets related to the Fortress business and a goodwill impairment in the Plant Nutrition segment
• Reported other operating income of $21.2 million during the quarter, which primarily reflects the decline in the valuation of the contingent consideration liability

associated with the Fortress acquisition given recent challenges facing the
magnesium chloride-based product line in the fire-retardants business	7

Second-Quarter Fiscal 2024 Consolidated Results

Commentary

• Consolidated financial results for the quarter reflect the impact of one of the mildest winters in 25 years in our served North American markets and challenges in fire-retardant business
• Reported 2Q24 adjusted EBITDA1 of $87.3 MM, which includes $24.3 MM of non- cash gain resulting from the revaluation of the Fortress contingent liability

Consolidated Results		2Q24
Revenue (y/y change)		-11%
Adjusted EBITDA1 (y/y change)		+13%
Adjusted EBITDA1 margin		24.0%

2Q24 Reported Adjusted EBITDA1

(in millions)

$77.4 $(5.9)

$16.7$87.3

$(0.9)

Historical TTM Adjusted EBITDA1 and Margin

2Q23	Salt	Plant	Corp. &	2Q24
		Nutrition	Other

2Q24 Adjusted EBITDA1, excl Gain on Reval. of Cont. Consideration Liab.

(in millions)

$77.4 $(5.9)

$(0.9)$(7.6)

$63.0

2Q23	Salt	Plant	Corp. &	2Q24
		Nutrition	Other

	$300			Adjusted EBITDA			Adjusted EBITDA Margin
	$250									40.0%
	$241
)
millions(	$150				$189					30.0%
	$200					$201	$208
										20.0%
	$100
	$50									10.0%
	$0									0.0%
	Sept. 30, 2021	Sept. 30, 2022	Sept. 30, 2023 Mar. 31, 2024

1	Adjusted EBITDA from continuing operations is a non-GAAP financial measure. See appendix for reconciliation to net income (loss), the most directly comparable GAAP financial measure.	8

Second-Quarter Fiscal 2024 Salt Results

($ in millions)	2Q24	2Q23	%Δ
Revenue	$310.4	$360.5	-13.9%

Sales Volumes

(in thousands of short tons)

Adj. EBITDA1	$83.0	$88.9	-6.6%
Adj. EBITDA1 margin	26.7%	24.7%	+2.0 pts
Average price per ton	$90/ton	$82/ton	9%

2Q24 Highlights

• Salt revenue down 14% year over year on lower sales volumes in

3,915

3,045

488

421

	both highway deicing and consumer and industrial (C&I) due
	primarily to mild winter weather across served North American
	markets
•	Salt segment average selling price up 9% year over year; highway
	deicing pricing up 7% and C&I pricing up 11%
•	All-in product costs per ton up 9% due to change in sales mix and
	lower sales volumes to absorb costs
•	Adjusted EBITDA1 per ton increased 19% on a per-ton basis year over
	year on higher average selling prices, reflecting successful execution
	of value-over-volume Salt commercial strategy
•	Improved adjusted EBITDA1 margin by 200 basis points compared to
	prior-year quarter

		Highway Deicing					Consumer &
														Industrial
								2Q24					2Q23
Historical TTM Adj. EBITDA1 and Margin
$300				EBITDA					EBITDA Margin	50%
$250
$200	$248							$231	$230		40%
(millions) $100	$183										30%
									20%
$150
$50																		10%
$0																		0%
		Sept. 30, 2021 Sept. 30, 2022		Sept. 30, 2023		Mar. 31, 2024

1 Non-GAAP financial measure. See appendix for reconciliation to net income (loss), the most directly comparable GAAP financial measure.

9

Second-Quarter Fiscal 2024 Plant Nutrition Results

($ in millions)		2Q24	2Q23	%Δ
Revenue		$50.1	$47.7	5.0%
Adj. EBITDA1		$6.9	$7.8	-11.5%
Adj. EBITDA1 margin		13.8%	16.4%	-2.6pts
Average price per ton		$680/ton	$796/ton	-15%

2Q24 Highlights

• Sales volumes increased 23% as demand normalized following abnormal weather in 2023 that adversely impacted sales
• Potassium-basedfertilizers continue to reflect a rebalancing of global supply and demand, resulting in an average sales price decline of 15% year over year; 2Q24 pricing rose sequentially after five consecutive quarters of declining prices
• Revenue improved 5% year over year on higher sales volumes despite lower sales prices
• Distribution costs per unit decreased 12% year over year due primarily to higher sales volumes driving better absorption
• Reported all-in product costs per ton reflect the non-cash $51 MM impairment of goodwill in the Plant Nutrition segment; excluding this charge, all-in product costs per ton were down 12% due to higher absorption of fixed costs on higher sales

Sales Volumes

(in thousands of short tons)

74
	60
2Q24	2Q23

Historical TTM Adj. EBITDA1 and Margin

	$80			EBITDA			EBITDA Margin	50%
	$60	$73
							40%
(millions)
$40	$45					30%
				$46
						20%
	$20					$31	10%
	$0							0%
	Sept. 30, 2021 Sept. 30, 2022	Sept. 30, 2023 Mar. 31, 2024

1	Non-GAAP financial measure. See appendix for reconciliation to net income (loss), the most directly comparable GAAP financial measure.	10