Compass Minerals International, Inc. Stock

Thank you for joining us and welcome to Compass Minerals Fiscal Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Tripp Sullivan, Investor Relations. Please go ahead.

Thank you, operator. Good morning and welcome to the Compass Minerals Fiscal Third Quarter 2026 Earnings Conference Call. Today, we will discuss our most recent quarterly results. We will begin with prepared remarks from our President and CEO, Edward Dowling, and our CFO, Peter Fjellman. Joining in for the question-and-answer portion of the call will be Ben Nichols, our Chief Commercial Officer.

Before we get started, I will remind everyone that the remarks we make today reflect financial and operational outlooks as of today's date, August 6, 2026. Outlooks entail assumptions and expectations that involve risks and uncertainties that could cause the company's actual results to differ materially. A discussion of these risks can be found on our SEC filings located online at investors.compassminerals.com. Our remarks today also include certain non-GAAP financial measures. You can find reconciliations of these items in our earnings release or in our presentation, both of which are also available online.

And with that, I'll now turn the call over to Ed.

Thank you, Tripp. Good morning, everyone. I'll start with the Plant Nutrition business because it's earned the lead. At Ogden, we produced segment-adjusted EBITDA of $15 million in the quarter on improved pricing and lower per-unit costs. We again raise our full year guidance for this business. Operational improvements we put in place 2 years ago are compounding. Team who was determined to restore the business to the $40 million to $50 million adjusted EBITDA range per year and have now exceeded that level.

We continue to invest in Ogden with the dryer project underway that we expect to complete by the end of next fiscal year. That investment will allow us to improve product yield, further improve production volume and cost profile of this operation, as well as finished good product quality We're excited about the continued momentum at our Ogden site, solidifying our position as the leading North American producer of sulfate of potash.

In our salt business, the commercial story is strong. We realized meaningful price gains in the highway de-icing during the quarter and beginning to see a constructive pricing environment in our C&I product line as well. These are encouraging and I want to put them into context. When comparing the salt costs in our P&L between periods, there are a number of factors that must be considered, including production costs, logistic costs, regional and product mix. As a winter unfolds, where we sell our products, where they are produced, how it is shipped to the customer and our production costs all have various levels of impact, particularly in a season like this past one where inventory levels became very tight.

Production tons at our mine are up year over year. That's a positive. But costs, while lower than last year as original guidance had anticipated, have not come down the way we expected. And I want to address that directly. There are three factors driving higher than anticipated production costs. First, despite the above, we're not hoisting enough tons out of Goderich at the cost we had planned. Second, we have increased our maintenance spending at both U.S. mines to improve operational uptime and stability, which has been guided by the implementation of a preventative maintenance system. Lastly, we've increased the headcount to maximize every opportunity to produce more tons out of the mines.

In terms of logistics, our total cost metric was burdened by global fuel costs and increased rates due to tightening of truck capacity. We have three accelerator teams working at Goderich focused on specific operational improvements. We're working on improving our cut times and rates, and investing in training required to sustain those improvements as well as overall mine design and sequencing. Our maintenance program is delivering results, focused on quicker turnarounds and improved equipment availability. Let me be direct about the trade-off that we're making. We're spending incremental dollars on labor and maintenance in the current period cost for longer term operational stability, production volumes, and profitability.

This is the right decision for the business, but also means that our cost metrics have not yet reflected the efficiency gains we're targeting. In addition, we have other accelerator teams working on logistics and enterprise-wide improvements, including network optimization, procurement efficiency, contract management. All of these are focused on sustainable cost improvement and risk mitigation. As we think about the future of the company and the sustainable improvement, we have made an operational leadership change. Patrick Merrin is no longer with the company, and I'd like to thank Pat for his service and wish him the best.

Brandon Risner Has been promoted to Chief Operating Officer. He's led impressive operational improvements in our Plant Nutrition segment, and in the operational leadership of our C&I product line. Combination of prior mining experience and a track record of leading positive outcomes make him a natural fit to lead our operations.

Turning to the bid season, the '26-'27 highway de-icing bid season has been very constructive. In our core U.S. markets, we're seeing substantial price improvement year over year, in some cases well into the double digits. With consistent growth in demand tenders. North American highway de-icing markets remain structurally tight. Inventories across the industry are low following the past winter, and it is supporting both pricing and tender sizes. As we look forward into fiscal 2027, let me give a sense of what we are thinking about volume.

The 2025-'26 winter season trended ahead of seasonal averages with snowfall events in our key markets higher than the recent past. That strong demand, coupled with our disciplined approach to working capital and the current production constraints at Goderich has left us and the industry with historically low inventories across the system. Given those realities, along with an assumption of more normalized winter weather, we expect to commit to a reduced demand profile for fiscal 2027 relative to the past seasons. We will provide tighter guidance when we report fourth quarter results. But pricing gains we have secured for the business, combined with continued focus on production increases, and cost per ton improvement should position us to improve our per unit margins headed into next year.

Let me address tariffs briefly. As you're aware, tariffs on Canadian goods shipped to the United States are set to take effect on August 19th. A large majority of the gross annualized exposure relates to the highway de-icing salt shipped from our Goderich mine into the United States. Through proactive measures within our commercial agreements, including pass-through provisions that are now standard in several of our key contracts, we believe we meaningfully reduce our exposure to those risks. The situation remains fluid and we're closely monitoring it. We believe that we're in a stronger position to manage this than a year ago, given our proactive measures, constructive pricing environment, and our improved balance sheet.

In addition to potential impact to tariffs, we're closely monitoring the variability within the fuel market, which is incorporated into our 2026 guidance. We expect to provide clear understanding of the anticipated fuel impact and sensitivity within our detailed 2027 guidance when we report Q4, but we wanted to note our current focus on mitigation efforts moving into next year. On capital projects, as part of our ongoing investment in the future of Goderich, we have been planning to construct the new mill. Given the complexity of executing a project of this scale within an operating underground mine, we're taking additional time to evaluate the engineering, sequencing, and timing as well as establishing appropriate project governance. We cannot afford disruption to the production during a period where we're focused on improving output and rebuilding inventory. We expect to provide more detailed update on the project timeline early next year.

I'd like to take a quick moment to clarify some news that was issued earlier in the quarter about a potential Utah lithium project. To be clear, we have no plans to get back into the lithium market. The announcement with EnergyX was a non-binding MOU where we're evaluating leasing them land and brine used in our Utah operations. We have no capital commitment or operational expenses. Nothing in these negotiations has been finalized.

Turning to the balance sheet, net leverage has declined to 2.8x from 4.3x a year ago. Total net debt is down 13% year over year. A recent credit upgrade from S&P is a direct reflection of the work we've done to reduce debt and strengthen the business. I know there are questions about how we plan to allocate capital going forward, and I want to signal how we're thinking about it. Our near-term priorities are clear. Investment in our assets, continued debt reduction where it makes sense, as our balance sheet strengthens and our operations stabilize, the opportunity to consider other uses of capital become more real. The Board is engaged in this discussion and we expect to share more on this topic when we report full-year results.

Before I hand it over to Peter, let me step back for a moment. Two years ago, we laid out a back-to-basics framework on what we're going to improve this company. At Ogden, the process of delivering the results then speaks for themselves. In Salt, commercial execution is strong. The market is constructive. The balance sheet is in a very different position than it was even a year ago. Work in our mining operations is taking longer than planned, and we are being direct about that. The process is the same. The team is engaged. The work will continue. We are really excited about the future of this business and organic opportunities this work has created.

Thanks, Ed. Good morning, everyone. I'll walk through our third quarter results and the updated outlook. All comparisons are to the prior year quarter unless otherwise noted. For the third quarter, total company adjusted EBITDA was $39.9 million compared with $41 million in the prior year. We reported a net loss of $5.7 million compared to a net loss of $7.7 million in the prior year. $17 million in the prior year.

In Salt, third quarter revenue increased 5% year over year to $173.9 million. Segment pricing was up 9% overall, and highway pricing was up 8%, and C&I pricing was up 6%. Highway sales volumes declined 6% while C&I volumes increased 3%. Salt adjusted EBITDA was $38.9 million for the quarter, down 15%, and operating earnings decreased 25% to $21.2 million. The decline reflects lower highway sales volumes and higher per-unit production and distribution costs within the segment, partially offset by the pricing gains.

In Plant Nutrition, revenue was $37.6 million for the quarter, down 16% compared to the prior year period. The decrease is primarily driven by a 19% decrease in sales volumes attributable to the Wynyard SOP asset sale in March 2026, partially offset by 4% increase in an average sales prices, excluding the impacts of the Wynyard sales volumes increased approximately 4% year over year. Despite the sale, operating earnings were $7.8 million, up 50% from $5.2 million a year ago. Adjusted EBITDA improved 32% to $15 million from $11.4 million. Both product costs and distribution costs declined on a per-unit basis year-over-year, driving the margin expansion at Ogden that Ed described earlier.

Turning to cash flow in the balance sheet, operating cash flow for the first 9 months was $162.8 million compared to $204.6 million in the prior year period. Capital expenditures for 9 months totaled $62.1 million compared to the $53.8 million in the prior year, reflecting planned investments across our operations. Total debt as of June 30th was $716.6 million, down from $825.3 million a year ago. Net debt was $660.3 million, a reduction of $85.6 million year over year. The total liquidity was $328.1 million consisting of $56.3 million in cash and $271.8 million of availability under our revolving credit facility. As Ed noted, our net leverage ratio improved to 2.8x from 4.3x a year ago.

Now let me walk you through our updated fiscal 2026 outlook. We are raising our full-year consolidated adjusted EBITDA guidance midpoint to $230 million, with a range of $218 million to $242 million. Plant Nutrition we're raising segment-adjusted EBITDA guidance to a range of $49 million to $57 million, up from $43 million to $47 million previously. Primarily reflecting the continuous strength in our pricing and cost performance at Ogden.

In Salt, our current adjusted EBITDA guidance range is $225 million to $236 million. Narrowed from $225 million to $240 million previously to reflect the mix dynamics, inflationary pressures and the pace of operational improvements that Ed previously discussed. Our expectations for corporate and other costs remain unchanged in the range of $51 million to $56 million for the full year, along with full-year capital expenditures in the range of $90 million to $110 million.

In closing, I'd like to note that we are in a stronger financial position and Plant Nutrition is outperforming our expectations. Salt pricing and demand remain very constructive, and we are laser focused on converting operational work at Goderich into sustainable cost improvement across the platform. We're also continuing to deploy capital with discipline, including reducing leverage where it makes sense. That concludes our prepared remarks. Operator, we're ready to take some questions.

Thank you. [Operator Instructions] Your first question comes from the line of Joel Jackson with BMO Capital Markets. Your line is open. Please go ahead.

Just talking about your guidance around bid season early in '27 here. When you think about how well salt bid season's going -- Rock salt bid seasons going here, does that imply when you think about your entire business, maybe high single digit price growth next year, maybe mid to high? It seems like you're saying that volumes might be a little bit lower if you get normalized weather, what you're actually going to sell. And then what are costs looking like in '27? Should we see costs up a little? It's really speaking about more net back expansion, so we think about price versus cost things.

Good morning, Joel. Nice to hear your voice when you're unmuted. Appreciate the question. The bid season has been really great, really based on the previous winter and really the inventory management and discipline that's been established in the market. Most of the bids of course are transparent. And we see a wide range of outcomes depending on where you are. Our focus has really been to really dive in and really try to serve those markets who we maximize our margin with and not trying to serve everything everywhere, albeit we do try to spread it out just because you never know exactly where winter is going to be. You know, it'd be safe to say overall, you know, we're kind of around double digits in price increase.

Okay, with regard to looking at cost, etc. going forward, this is an important point. We're working really hard on our mine costs. You know, we've got this fantastic mine, Goderich mine, the world's largest underground salt mine. And, you know, the cost production is up, costs are down, these are unit costs are down. On the logistics side, we're battling fuel and truck carrier a bit, but we're laser-focused on this. We'll provide guidance in the fourth quarter.

Okay. It seemed like in your prepared remarks you were speaking about you would expect with normal weather that '27 volumes could be lower based on the reasons you gave. There's been a lot of churn at the CEO level at Compass the last number of years. You have a lot of objectives that you came in with, right? Lower costs, you had a lot of things to do, working capital management, inventory management, things weren't great when you took over a few years ago. And you've got some aggressive targets on cost. But like I said, you've had a lot of churn at the COO level and you're talking about delaying some of the decisions on the mill project, not getting the cost as fast as you wanted. I can't help but think it's all tied together. Can you sort of speak about your journey here and what has to get done to achieve what you wanna do?

Yes, look, appreciate the question. The you know, we're first of all, let me just say we're very grateful for Pat and the service and wish him the best in the future. This is Pat Merrin. But we're really pushing hard and we need to have an organization that's really fit for purpose. And we're really focused on our costs. Brandon Risner, I don't know whether you've had a chance to meet him yet, but we'll make sure you do. But Brandon, has been leading the efforts with Plant Nutrition, which is a fantastic story for the company. In addition, he's been our operational leader in our C&I product line. Also done a really good job in increasing the earnings from that part of our business.

Just even before he brings a history of success, whether it was in Compass, he's the guy that started really the way we look at capital allocation for capital investment, project capital investment. And even before that with Peabody, it's a great track record of operational improvements. That's what we need right now. And so, you know, as much as I like Pat, you know, the needs of the company are more important than any individual. So that's what we're doing.

With regard to the project, it'd be one thing if we're building this mill in a parking lot and it'd be pretty easy. But given the fact that we're doing this in an operating underground mine, and with all materials, everything coming down the same shaft as our operating people and our operating materials, it's very complex. And so we need to make sure that we have a very high degree of front-end loading in terms of our engineering, our project execution plan, all of the logistics that go around that. We have a rock solid owner's team. We really need to put this all in place before I'm ready to take it to the board of directors. Okay. I think I hit your points, Joel.

[Operator Instructions] We'll now go to David Silver of Freedom Capital Markets. Your line is open. Please go ahead.

Questions here maybe let's just start with the progress at Plant Nutrition. So, you know, first of all, I mean, congratulations. I mean, there's especially most recently there's been a significant kind of step down in, I mean, cash costs, I'll call it. But, you know, to achieve those, I had a couple of questions. To what extent is the plan there to just rely on pond-based tons and how much of maybe the bottom line progress to date has been, you know, from supplementing with purchased potash? And then maybe bigger picture, again, my models go back, you know, more than a decade here. But is the progress to date maybe would you say it reflects kind of getting back to the operating environment that was in effect let's say in the late 2010s or very early 2020s or you know is there something qualitatively different being done to kind of significantly boost the per ton economics -- production economics.

Okay. David, thanks. Great question. Look, it's been a fantastic story for the company in terms of the restoration of that business to where it really should be. And recognize that before when we reported Plant Nutrition also included our Wynyard mine up in Canada. These results are without Wynyard. And so it's really a great story for our Utah partners and our colleagues out there in terms of restoring this business. And there's more to go because we're, as you know, we're executing the dryer compaction plant where we lose, we have a lot of yield loss there. We're executing a project there, which will be done about this time next year really make a better product so we'll see additional yield come from that well that'll happen at a lower cost basically it's an incremental cost we either put the product and today you put the product into what we sell or blows away as dust and that's not quite right way to say it but we lose it.

But we'll capture that going forward and we'll produce a much higher quality product for our customer base. So the improvement, we expect that to continue to improve at least through, and we should start seeing that, about this time next year. Let's see, in terms of the last part of your question, you know, I wasn't here 10 years ago, but we restored the outcomes to that, but they're all, it's really, the answer to that is, if you've got that back to where it was, the answer to that's yes, but are you doing anything different? The answer to that's yes, too. And it's a way that we, manage our harvest the tons and Brandon, for example, led that. It's the way that we manage that from a stockpile into the plant, really reducing variability in the plant. It's some things that we've done within the plant itself to improve recovery beyond sort of historical level. So it's really a number of things that we've done to make this improvement over and above the success of the company had in the past.

And then maybe just a comment on the plan to supplement pond-based tons with purchased potash or just ...

Thanks, David. Yes, we are, thanks for reminding me of that. We are supplementing this year with KCl, and we've never really guided on this, but I think from your thinking, you know, we're going to be doing that. You know, we'll be, our plan is to do about the same amount next year. Okay.

Yes, David, this is Ben, and just to add to what Ed said, the utilization of MOP in our process is always going to be a part of what we do. I think to Ed's point, what we're doing differently is we better understand the leading indicators on the chemistry of the pond. And so our ability to flex that utilization and that cost profile is much tighter than it has been. Historically, and so that's, you know, hence the confidence in where we're headed.

Okay, great. I'd like to ask you, I guess, maybe more of a, I don't know, philosophical question about the bid season results to date. But, you know, I always assume that, you know, your company probably has pretty much, you know, encyclopedic knowledge of, you know, your marketing areas and bid histories and, you know, competitor tendencies and things like that. And, you know, based on the, you know, mostly qualitative, you know, discussion thus far, I mean, it seems like, you know, you've identified some pockets where either volume or price or both, you know, can be pushed a little more and further last point my assumption is that to a certain extent you are responding to what you see, you know, in the bid season results to date.

In other words, competitor behavior. So, for the balance of the bid season, you know, which should be mostly done, I guess, next, by September. You know, is this the case where, you know, you'll be able to bid a little more aggressively for the balance of the season? Or are you maybe altering or what's the word, structuring your bidding profile, both tons and price, based on your mining plan? In other words, what's going into your kind of virtual or in-season kind of bidding strategy?

Okay, let me try to field that and I'll have Ben help me out as well. We do have a deep understanding of our markets and really the distribution network really looking at our focus in terms of our every year we come up with a bid strategy. Part of our strategy this year was to really maximize the margins, recognize that the market was really tight. Where do we really want to serve that we can maximize our margins? And that's really what we've been doing. So that's sort of, you know, delivered costs, you know, subtracted from the price. That's worked out well. And we'll see what winter does and how we're able to bring that home. As you know, we have the variability due to mix and regional sales. But our focus at this point, we're largely through our big state contracts, albeit there's still some states that are coming back and rebidding areas that they weren't able to fill. There shouldn't be any surprise about that. And largely our focus right now are really our commercial customers, which we should be wrapping up in the next couple of weeks. Ben, you want to add something to that?

No, yes, thanks, Ed, and David, thanks for the question. I think, you know, going into this bid season, our overwhelming focus was the value of our product in the market, and coming off of a big winter like the last season, we were excited to see the market had a renewed understanding of how important our product is relative to public safety. And so, you know, focus number one was value of every ton that we sell.

In addition to that, you know, we've spent a lot of time working with our key customers on our terms and ensuring that the way we operate our business fits the terms that we need specifically around minimum takes and having a higher level of confidence in what we commit and what's going to move through the pipeline. So we're really excited about the results we've seen. The market has a lot of momentum and we're looking forward to the next season.

Okay, and then one last one, maybe kind of a clarification on how you're thinking about the looming tariffs on Canadian shipments to the U.S. But I don't know, I guess a little over a year ago, there was another round of tariffs that were going going to impact cross-border trade, Canada and the U.S. It turned out, I guess, because of the essential nature of the products or other steps that you or others took, those tariffs were kind of negated. They didn't apply to Goderich shipments to the U.S. Is there something qualitatively different about this round of tariffs? You know, in other words, what has to happen for, you know, a repeat, in other words, the cross-border trade from Goderich not being impacted by this latest announced round of tariffs.

Yes, the real difference from a year ago to today, from the tariff standpoint is the USMCA, the United States-Mexico-Canada Trade Agreement, where certain cross-border materials, et cetera, were exempted from tariffs and things like that. So once that was clarified a year ago, or more than a year ago, a year and a quarter ago, you know, we really just started up the ramp up at Goderich mine. What's also different is recognize that potential exposure. Our commercial team and the company here has been working on how do we minimize the impact on the company if something like that happens again. So, you know, Ben and his team have been really looking at contract terms. He just mentioned in terms of the market, how, you know, we're trying to tighten up min-maxes and those sort of things and having success on that. But really being able to pass through costs like this to customers has really been the focus.

And so we understand exposure. We look at, we've looked at ways to mitigate that and you know a big part of that has been mitigated. We continue to work to try to really underscore the message to the government about we have this great amazing asset in Ontario which is critical to interstate commerce, public safety in the United States. And you know, that the market in the United States cannot be served without Goderich mine, fully served without Goderich mine. And that it is a truly essential and critical mineral for our economies. And you know, we're highly engaged in that effort right now.

Okay, great. And I'm just going to sneak one last one in if that's okay. But this relates to the outlook and guidance for the Salt segment in particular for 2026. And I'll just say for the highway de-icing volumes, you did bump up the low end of your guidance range by 150,000 tons. Should I assume that that's all just going to be pre-buy or pre-season shipment increases from your bid season customers or is there some chemical volume in there or something else? You know, kind of unusual for the salt volume -- the highway salt volumes to move up, you know, third quarter to fourth quarter. Just a comment on that, please.

We don't really talk about that sort of stuff generally, but what we're doing is, remember our warehousing -- many of them were scraped clean last year. You know, been a long time since that's happening. And so we're really, part of the normal course of business here. We're working very hard to re-establish inventories where they need to be to serve the contracts that we've committed to. And so there's really nothing unusual about that in our plan here.

There appear to be no further questions. I will now turn the call back to Ed Dowling for closing remarks.

Okay, thank you all for joining us and we're excited about the future here at Compass Minerals and we look forward to speaking to you again. You know, when we have a chance to catch up. And we have a number of investor calls coming up. I'm sure we'll be chatting with many of you here over the next couple of days. Thanks very much.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone, and thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Compass Minerals Second Quarter Fiscal 2026 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Brent Collins, Vice President, Treasurer and Investor Relations. Brent, please go ahead.

Thank you, operator. Good morning, and welcome to the Compass Minerals Fiscal Second Quarter 2026 Earnings Conference Call. Today, we will discuss our most recent quarterly results. We will begin with prepared remarks from our President and CEO, Edward Dowling; and our CFO, Peter Fjellman. Joining in for the question-and-answer portion of the call will be Ben Nichols, our Chief Commercial Officer; and our Chief Operations Officer, Pat Merrin.

Before we get started, I will remind everyone that the remarks we make today reflect financial and operational outlook as of today's date, May 7, 2026. These outlooks entail assumptions and expectations that involve risks and uncertainties that could cause the company's actual results to differ materially. A discussion of these risks can be found in our SEC filings located online at investors.compassminerals.com.

Our remarks today also include certain non-GAAP financial measures. You can find reconciliations of these items in our earnings release or in our presentation, both of which are also available online. And with that, I will now turn the call over to Ed.

Thank you, Brent. Good morning, everyone, and thank you for joining us today. I'll get right to it. In the second quarter, we retired our remaining $150 million of the 2027 senior unsecured notes earlier than anticipated. We continue to push on operational improvements at Goderich and elsewhere. We had a strong winter across much of North America, and our salt business delivered on high level of sale commitments while continuing to build on the foundation we have put in place. We are making progress, and we recognize that we have more work to do.

In the Plant Nutrition, we are showing outstanding momentum of the objectives we outlined 2 years ago. With the winter season behind us, it's worth looking at how much the first half of this year has improved from last year. In both the Salt and Plant Nutrition businesses, revenues are up, operating margins are up. EBITDA is up. Company-wide debt is down and SG&A is down. And we completed new collective bargaining agreements with 2 of our sites, including the Goderich mine. That's quite a great start to the year.

Now let's talk about what we're doing in each of our businesses. The improvement processes that we successfully deployed within our SOP business is the same approach that we are using in the salt business, starting with our larger operations. A focus on restoring good long-term operating practice is critical to improving performance. This requires that we focus on key metrics that will drive performance, safety, utilization, equipment availability, production and development rates and improved mining planning process, all of which are advancing.

This is a key part of our Back to Basics framework. Production cost per ton in the salt business moved up year-over-year, and I want to explain why. The reported number reflects several factors: regional weather activity, the product mix, the pace of our operational improvements. During the quarter, we began selling production from the current year's production, which flows through the P&L. While the production cost per ton within the mines are improving, we've not yet met the efficiency gains we've expected. Pete will walk you through this in more detail.

As I noted earlier, we recently completed a new CBA with the workforce at Goderich. It was a fair agreement for everyone and reflects a genuine partnership between the company and our workforce. This mutually beneficial arrangement allows us to continue building on the safe reliable operation while allowing us the mine's efficiency and flexibility.

We've also concluded CBA at another site in the process of completing negotiation at others. While the highway deicing season is behind us, our focus turns to building inventory and preparing for next year's deicing bid season. Our production and inventory planning will be informed in part by the commitments we win in the upcoming bid season.

The North American highway deicing market remains structurally tight. Inventories across the system are low following the past winter, which is constructive from both the pricing and tender size growth. We are moving into the bid season within this framework firmly in mind. We'll be focused on maximizing the value of every ton we commit for the next season.

The market conditions are constructive, and we will approach the upcoming bid season with the same discipline that we've brought to the market in recent years that has allowed us to see growth in pricing and margins. Based on our first half performance, the current operational plans, we've updated our full year adjusted EBITDA guidance within the midpoint essentially unchanged.

We have adjusted the segment outlook. Plant Nutrition is running ahead, and we have moderated salt to reflect the impact of regional product mix sales as well as the pace of operational improvements I described earlier. Pete will walk you through the updated ranges. Consistent with our Back to Basics framework, as announced earlier this year, we simplified our portfolio with the sale of our Wynyard SOP operation, which was completed during the quarter.

The sale strengthened our cash position and now allows Plant Nutrition business to focus on our world-class Ogden facility. Turning to the balance sheet. At the end of March, we redeemed the remaining $150 million of our 2027 senior unsecured notes. We funded the paydown from cash on hand and removed our nearest maturity.

This represents a significant deleveraging milestone and provides us with more financial flexibility. Reducing debt remains one of our top priorities and strengthening our balance sheet as a result. This is what investors expect, and it's what we're doing. Before I hand it over to Peter, I want to briefly note the recent changes to our Board. We've added 4 new directors over the past year.

Each brings deep knowledge and relevant experience in the industrial and manufacturing businesses, some of which have direct experience in salt and plant nutrition industries. The Board is aligned with our strategy and brings operating and financial expertise we need for this phase of the company's development.

With that, I'll turn the call over to Peter to walk you through the numbers and our outlook.

Thanks, Ed. I'll walk through our financial results as well as our updated outlook. For the second quarter of fiscal 2026, consolidated revenue was $453 million, down $41 million or 8% versus prior year Q2. The decrease is primarily due to lower highway deicing sales in the current quarter. Adjusted EBITDA was $86 million compared to $84 million in the prior year Q2 or up 3.3% over prior year. Adjusted EBITDA margin was 19.1% compared to 17.0% in the prior year.

The improvement reflects adjusted EBITDA margin growth in both the salt and the plant nutrition business as well as lower SG&A expense year-over-year. In the Salt business, revenue was $383 million compared to $433 million in the prior year Q2. Tons sold were 4.1 million, down 19% versus prior year, which is a function of timing and velocity of the winter weather. On a per ton basis, operating earnings were $15.85 per ton, up 21% versus $13.10 per ton in the prior year Q2.

The per ton progression reflects price realization, offset partially by increased distribution and product costs. As Ed mentioned, the sales mix dynamic in Q2 warrants some additional commentary. Our salt business serves customers and end uses across several businesses from multiple production facilities across different geographies. In any given year, the volume each facility contributes depends significantly on where winter weather occurs.

With different pricing and cost structures, volume shifts in a given season can impact comparably. So the reported cost per ton reflects 3 things: the geographic mix driven by weather, product mix and the production cost dynamics at the facility level. In the Plant Nutrition segment, revenue was $67 million compared to $58 million in the prior year Q2. Adjusted EBITDA was $17 million, up 202% year-over-year with the adjusted EBITDA margin improving to 25.2% in the current quarter from only 9.6% a year ago.

I want to note that we closed on the sale of our SOP operations at Wynyard during the quarter. Q2 '26 only reflects a partial contribution from that asset prior to the sale, which makes the year-over-year comparison even more impressive. The Ogden story continues to be strong. We're achieving year-over-year cost favorability from better operational execution and strong asset utilization.

On a year-to-date basis, first half adjusted EBITDA was $152 million compared to $116 million in the first half of last year, a 32% increase year-over-year. Adjusted EBITDA margin for the first half of the year was 17.9% compared to 14.5% for the first half a year ago. These combined results show that the plan we put in place is working. We are working hard to maximize value, control costs and manage working capital and inventory.

And the result is that we are enhancing profitability and delevering the balance sheet simultaneously. Switching to the balance sheet. As Ed noted, we redeemed the remaining $150 million of our 2027 senior unsecured notes. The redemption, which was funded from cash, extends our maturity profile and delevers the balance sheet. We also renewed our accounts receivable securitization facility during the quarter on improved terms.

Combined with the retirement of the 2027 notes, our significant debt maturity is now in 2028, which gives us meaningful runway to continue executing on our operational priorities without near-term refinancing pressure. At quarter end, total net debt was $639 million, down $119 million versus Q2 prior year.

Our leverage ratio was 2.7x on a trailing 12-month basis compared to 4.6x last year. We are focused on continuing to strengthen that balance sheet. Liquidity at the quarter end was $379 million, comprised of cash of $74 million and revolver capacity of around $305 million. We are updating our full year adjusted EBITDA guidance range of $212 million to $236 million with a midpoint of $224 million. We have adjusted Salt segment outlook.

The midpoint is now $233 million compared to the previous midpoint of $241 million. The adjustment reflects the factors I mentioned above. Plant Nutrition adjusted EBITDA is now $43 million to $47 million compared with the midpoint of $45 million, up from the prior midpoint. Volumes are up, pricing is favorable and Ogden is delivering strong cost performance. This is a straightforward story and a reflection of the commitment we made 2 years ago to restore the business to historical levels of financial performance.

The range of our corporate adjusted EBITDA, capital expenditures, depreciation, depletion and amortization and the effective income tax rate remain unchanged. Interest expense net is now lower at $62 million to $67 million to reflect the paydown of the 2027 senior unsecured notes. Operator, we're now ready for questions.

[Operator Instructions] Our first question comes from the line of Joel Jackson with BMO Capital Markets.

It's Evan on for Joel. Just a couple here. If you could talk about what we can expect from salt costs over the next couple of years before the potential mill project comes online at Goderich?

We don't generally guide on costs. But as we work our way through our operational improvements, those unit costs at the mine should continue to decrease from where we are now and to really our performance at the mine, if you look at some of the key KPIs reaching a point heretofore not done at the mine. We need to do that because we're still facing headwinds with regard to where we sit in the mine plan.

Great. And in the full year guide for this year, in salt specifically, you raised volumes, but you lowered your margins. Can you talk about some of the puts and takes there? I understand some issues at Goderich, but you're also raising the volumes. So just some color on that would be great.

Yes. Let me just pass that off to Peter, if that's great.

Sure. Thanks for the question, right? Overall, it's really coming down to the reported cost per ton reflects those 3 things that we mentioned in our opening comments. It is geographic mix. It is production dynamics at a facility level and product mix. And this year, it's simply the heavier winter proportion of winter sales get into our served markets, including limited winter impact out West and volume and higher cost served markets as well as kind of mix within our C&I business, always carry different cost profiles. So our guidance is updated to reflect basically those factors.

Can I sneak one more in? I know it's early, but are you seeing any specific trends in the bid season coming up in terms of volumes and bids and prices for the rock salt bid season? And any color on channel inventories?

Yes. So Joel, thanks for the question. It's early days in the bid season here for us, very early days. But as we said before, we expect the market to be constructive. And we're focused - that said, our primary focus is always value over volume. And we're focused on maximizing value on every ton of production across all of our facilities. We'll have much better visibility to this and be able to report on it at our Q3 earnings call.

Our next question comes from the line of David Silver with Freedom Capital Markets.

I guess I would like to follow up maybe on Ed's comments in the press release where I'm just going to quote you, but you said, "We know we still have - we know what we have to do. We still have work to do in terms of addressing salt mine production efficiency." Could you just kind of highlight what's included in the work that you have to do there?

Yes. Thanks, David. I appreciate the question. This is really core to what we're really focused on in the company is really driving our costs everywhere, not just at Goderich, but everywhere into a more competitive position. And these are things like improving maintenance practices so that we can improve the availability of the equipment to actually run more hours in the day and actually take advantage of that through our utilization.

We're seeing really good inputs on that kind of elimination of waste, improvements in our mine planning efforts and other things. We've got a handful of teams underway working on this very diligently, and there's more to come here. Later this month, we'll be commissioning a bunch of other teams to really tackle some really great enterprise opportunities for us. Let me just ask Pat if there's anything else he'd like to add to that.

David, this is Pat. I think Ed hit those points well. We're focused on the basic fundamentals of how mines operate. And that comes down to at Goderich, are the machines getting fixed and are they available? Are we using them? And are we using them the way we should be? And then optimization of our mine planning process, all of which has been underway for a year or so. And so we're seeing benefits of that. They're just not coming in as quickly as we would have liked, but the improvements are continuing.

Thanks for that, Pat. We are seeing some really great shoots coming up from this effort. I feel pretty good about that. And we'll be reporting more and more on this as time goes by.

And then if I could just follow up on your comments about the new collective bargaining agreements. And in particular, I'm going to ask you, well, whatever is most important, but I was thinking Goderich first. And in particular, I know that over a longer period of time, there has been some meaningful changes in how you go about things and allocate labor at the mine. Does the current collective bargaining agreement that you highlighted, does that include any greater flexibility on your part in terms of how you can deploy labor and equipment just in the normal day-to-day operation of Goderich?

Yes. The simple answer to that is yes, that it's a mutually beneficial agreement. And we're all incented, including the workforce to improve performance. Let me pass it off to Pat, and he can give you a little more color on that, but we want to keep this pretty high level.

Yes. David, we can't get too far into the details. But what I will say is that we have spent a lot of time over the last 18 months or so working on the relationship with our union, which has improved dramatically. And I think the CBA reflects our desire and their desire to see the site succeed. And we're looking forward to continuing to work with our workforce in driving improvements from safety, costs and tonnage, and we think the CBA is going to allow us to do that.

Okay. And I appreciate you keeping it high level. One last question for me, and it would be regarding Ogden and the very strong improvement there on your SOP business. When I look at the results, I mean, there's a number of highlights, but I'm just kind of scratching my head and wondering is the meaningful improvement there in, let's say, per ton margins, really all the metrics.

But how much of the improvement there is related to, let's say, accessing more brine-based tons or more brine-based potassium as opposed to supplemental purchases of KCI. So how much of it is maybe just nuts and bolts of operating the evaporation ponds and everything versus maybe tapping into a richer source of brine with more potassium in the original brine?

Yes, David, that's a great question. And it depends where you really start the clock of looking at it. We turn the clock back a couple of years. Remember, our earnings out of that tire business, including Wynyard was something in the mid-teens. And now we're going back to sort of historical levels of about $50 million a year, which is really kind of $40 million to $50 million is what we said was our target.

We're there and with more improvement to come. A lot of that improvement is exactly what you said. It's about managing the ponds correctly and building up the salt at the right grade. Remember, we talked about the harvest to production ratio and all those sort of details, getting that right and then putting sufficient inventory in front of our wet plant so that we can manage and stabilize the plant in a better way. So that's been a great success for us. We'll continue to do that. And I just want to remind you that - and we'll continue to supplement as appropriate with KCI.

But the big improvement over the last couple of years is really just managing the ponds better, restoring that. Remind you that we're not done yet that we've got an important capital project to execute, which will be done later next year, where we're going to - which is really the dryer compaction plant where we have yield losses and other things, very high circulating loads, inefficient operations, make a product that we could want to improve the quality of and we'll execute that project, and we'll see more capacity at lower cost, all things being equal with a better quality than what we're producing right now.

And we have a question from David Silver of Freedom Capital Markets.

Okay. Great. I did want to ask a question, I guess, about your particular tax situation here as you look at fiscal 2026. And in particular, I would love to maybe get Peter's comments on what kind of cash tax liability maybe in a reasonable range we should expect. I mean it's a very complicated tax analysis to do with the different geographies. And on top of that, the big settlement with the government of Ontario, I guess. So in thinking about kind of - we're trying to do our cash flow work here, free cash flow work, what could you point us to in terms of a cash tax liability for this year?

Okay. Well, look, it is a complicated question. The short answer is within our guidance, everything is built into that, nothing has really changed. In terms of the details, let me pass it off to Peter to try to address your question with a little more substance.

Sure. Thank you. David, thanks for the question. Look, as we spoke before, right, the tax at Compass here swings in our effective tax rate is what happens, right? It's based on relatively income in Canada, losses in the U.S. and a relatively small number for income tax purposes, right? So as we think through how that's compared and comparability, that number will tend to fluctuate quite a bit from an effective tax rate.

From a cash standpoint, which is your question, remember that we did make some OMT related to the Ontario mining matter and a resolution of that in previous quarters and working through that, but obviously have adjusted our balance sheet and our cash payments in previous quarters, and we're working through that as well. So at this point, there's not a lot to guide on cash tax, and we'll have a better update here in Q3 and Q4.

Yes. Thanks, Peter. Just let me just close here with that thought, which back a year or 2, we have a lot of sort of non business issues in the company and getting these matters behind us in terms of the refinancing that we've done, the Ontario mining tax, a number of legal issues, we've really cleared much of this out of the company. And the great news there, it's allowed us to really focus on more on what's important.

Okay. Great. And just last one for me, but just at a very high level, I mean, I do have a question about your thinking heading into this current bid season. And I know it's very, very early days and whatnot. But when I think about how the past winter played out, I mean, when we spoke, I don't know, 2, 2.5 months ago, it was really kind of hand to mouth or very tight supply across your primary marketing region. And the way the winter worked out, I mean, the last month or so was pretty calm or pretty mild, I guess, you'd say. A

nd I'm just kind of wondering, do you think the industry is still kind of in a scarcity mode? Or has the mild March weather, I mean, given a chance for the situation to kind of normalize? Just last year, you got single digits or low single digits on volume and price. And I'm just kind of scratching my head. I'm pretty sure you're trying to - you're interested in improving upon that result. But maybe just some comments from the field what you think the winter ending inventories look like maybe at the key customers and yourselves?

Let me just make an early comment. It's always important to - when we talk about inventories to talk about where. We had a really strong winter in much of our, how to call it, northern system and inventories remain tight there. We've had better winter in the South. That's part of what's driving the mix and cost.

But in the U.K. and out West, particularly where our lowest cost salts actually produce, it was less so. So there's inventories remain higher there. So it's really important to kind of understand where you are. Within that context, our objective is to maximize value. Let me pass it off to Ben here for some comments.

David, this is Ben. I think as I stated, we think that the scenario is very constructive for value moving forward. We see the industry is thin on inventories coming out of the last season, all things being equal. While it is early in the bid process, the few data points that we have seen are positive and support the thesis that we've stated. So we're excited about the bid season. The team is very focused on driving value for every ton that we sell, and we'll have a lot more detail for you when we get together about a quarter from now.

With no additional questions in the queue, I'll turn it back to Ed Dowling, President and CEO, for closing remarks.

Well, thank you all for your questions and your interest in Compass Minerals. I'm going to leave you with this. We had a strong quarter, but the journey isn't finished. Some of the hard work has continued to drive operational improvements and we are. Some is continuing to improve the plant nutrition business, and we are.

Some of it is retiring debt to improve our balance sheet, and we are. And some of it disciplined execution on our commercial side. We're doing that, too. The direction is right. strategy is sound. The team is committed. We look forward to updating you on our next call.

Thank you. This concludes today's conference call. You may now disconnect.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Compass Minerals' First Quarter Fiscal 2026 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Brent Collins, VP, Treasurer & Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to the Compass Minerals' Fiscal First Quarter 2026 Earnings Conference Call. Today, we will discuss our most recent quarterly results. We will begin with prepared remarks from our President and CEO, Edward Dowling; and our CFO, Peter Fjellman. Joining in for the question-and-answer portion of the call will be Ben Nichols, our Chief Commercial Officer; and our Chief Operations Officer, Pat Merrin.

Before we get started, I'll remind everyone that the remarks we make today reflect financial and operational outlooks as of today's date, February 5, 2026. These outlooks entail assumptions and expectations that involve risks and uncertainties that could cause the company's actual results to differ materially. A discussion of these risks can be found in our SEC filings located online at investors.compassminerals.com. Our remarks today also include certain non-GAAP financial measures. You can find reconciliations of these items in our earnings release or in our presentation, both of which are available online.

I'll now turn the call over to Ed.

Thank you, Brent. Compass Minerals had a strong start to the year. For the first time since 2023, we're reporting positive quarterly net income. For the first quarter of 2026, reported net income of $0.43 compared with a net loss of $0.57 a year ago. Adjusted EBITDA doubled to $65 million. We took leverage down year-on-year by nearly 2 turns to 3.6x, and we raised the midpoint of our full year adjusted EBITDA guidance range to $224 million based on solid results in the Salt business and positive momentum in the Plant Nutrition, partly offset by the planned sale of our Wynyard SOP operation. Absent the Wynyard sale, the midpoint of our revised guidance would have been up about 4%.

Let me begin today where we are in the Salt business. There's been steady winter weather this year across many of our North American markets we serve, excluding the Western part of the U.S. Year-over-year, Compass Minerals saw sizable increases in sales volumes. We also benefited from price increases in both highway deicing and C&I parts of the business. With a strong start to the winter, short-term market for the entire salt industry is really tight. Compass Minerals continues to focus on efficient and safe delivery of every ton of salt possible, understanding the critical role that we and others in the industry play in the communities we serve.

In any given season, our ability to service excess market demand in season can be limited by the compressed timing of regional winter weather and any associated demand surge. We forward deploy salt throughout the year across our depot network as there is meaningful lead time across our production and supply chain to reach many of the regions we serve, particularly mid-season.

For reasons I'll discuss more in a moment, our ability to meet excessive demand if it materialize in this specific season was always going to be limited. We do not plan our business assuming that we will have above-average winters, and we've been very clear about our commitment to managing inventories, maintaining financial discipline and focusing on value over volume. I'll make a few comments on the changes to our outlook in the Salt segment as we recognize that they may not be intuitive to the midst of a strong winter.

What I want to make clear upfront is that our guidance does not represent "a new normal for this kind of winter." Our plans for the business are expected to allow for more flexible operations in the future, and we have more work to do to get there. I'd first reiterate why we put our back-to-basic strategy in place beginning in '24. The company's prior approach was to operate so that never missed the big winner. I won't bore you this morning with the details of how that ended, but suffice to say that it directly led to excess inventory over multiple years, a stressed balance sheet with all the adverse impacts on market value we expect it to bring. We're committed not to repeat the mistakes of the past.

We made the right decision to align the business more closely with anticipated market demand and have managed inventories accordingly. Over time as the balance sheet continues to improve and market dynamics adjust to historical norms, the optionality within our inventory management strategy will evolve. We've been very open that our inventory management plan could preclude our ability to meet excessive demand in fiscal 2026.

Our inventory production planning are informed by 3 factors: the first 2 I just discussed. First, the customer level commitments and our desire to keep inventory levels closely aligned to market demand; and second, effective placement of salt inventories via our salt supply chain. Third factor is production reach and capabilities at the mines, which I'll now comment to. Goderich mine is in a period of high development. The mine is currently developing a number of new mining panels, which require the construction of new underground infrastructure and ground support.

New development panels inherently have higher costs and lower production rates than panels that are in full production. This is not a new issue and was incorporated in our initial guidance for the year. The development sequence is important as it governs our ability to produce at the higher end of historic production levels. Advancing these development panels will improve the optionality and flexibility within the production plan at Goderich mine. But in the near term, the mine's ability to produce at the higher end of the historical rates will be limited. Within this context, the production ramp-up at Goderich mine in mid-fiscal 2025 later than anticipated due to uncertainties around the applicability of the USMCA and subsequent hiring and qualifying our miners.

Currently, Goderich is producing significantly higher rates year-on-year, and we're generally pleased with the direction of travel regarding our production level. That being said, we have some more work to mitigate greater than anticipated unplanned downtime as well as to further improve operating efficiencies. These factors are somewhat limiting in our ability to service incremental in-season demand, creating headwinds for production cost per ton, working our way through these issues, including improvements to preventive maintenance and overhaul programs to name a few. Despite these challenges, we still have a solid quarter in salt.

Moving over to Plant Nutrition business. We continue to see momentum in our story. Over the last year or so, we've talked a lot about improving the performance of the business, which is largely premised on restoring the health of the pond complex at Ogden. This is succeeding. As the pond complex continues to improve, the quality of the feedstock that goes into Ogden also improves, provides benefits on how the plant operates, drive cost down. We continue to make progress on this initiative, and we've seen product costs trend down.

On the pricing front, our team has done a good job for maintaining market value of our SOP portfolio. We're seeing a $20 improvement in price compared to our expectation. The decrease in anticipated sales volume relates to us prioritizing having SOP available to pursue additional domestic business over lower-margin export opportunities. We announced in our press release yesterday that we have entered into an agreement to sell our Wynyard SOP operation in Canada for $30.8 million, subject to customary closing conditions.

Considering the improvements we're seeing in our Ogden operation, coupled with our read on future market conditions, we believe now is an opportune time to pursue this transaction, allowing us to further focus our efforts on North American leading producer of SOP.

Improvements that we're seeing at Ogden are allowing us to increase our adjusted EBITDA guidance for the Plant Nutrition business by 8% in a midpoint of $37 million, despite the sale of the Wynyard operation. We've talked before about the importance of returning this business to a level where it consistently carries a $40 million EBITDA handle. Absence of Wynyard sale, we would have grinded to this value in this quarter. We think that we have line of sight to getting there in the coming quarters without Wynyard.

Next phase of improvement involves capital project to upgrade the dryer compaction plant at Ogden, which we expect to boost operational efficiency and financial performance. As we look to the remainder of the year, we are focused on people, processes and systems and focused on executing our back-to-basics framework. This approach is anchored in 5 core priorities: improving operational efficiencies and capabilities to enhance performance and reliability across the organization; reducing capital intensive by deploying resources in a disciplined manner; simplifying processes and eliminating unnecessary complexity to accelerate decision-making and improve accountability; maximize cash flow generation to support long-term value creation; and reducing leverage to reinforce financial resiliency and provide capital allocation flexibility.

The balance sheet and financial health of the company continue to improve. So I mentioned at the beginning of my remarks, our leverage ratio has improved significantly over the last year.

We've grown confidence in continuing improvement in our leverage profile. We plan to begin conversations with the Board about approaches around capital allocation. This is all consistent with the progression of our back-to-basics framework. As the first quarter results demonstrate, we are clearly making positive strides in improving our operational, commercial and financial performance. Some of these improvements are visible now, such as the strong results we're seeing in Plant Nutrition business, and the continuing improvement in our leverage profile.

Some, as fully optimized production in our Salt mines, will take more time to fully manifest themselves. We're committed to becoming a top-tier operator, grounded in financial strength and operational excellence. As a leadership team, we're focused on building a company with resiliency and flexibility to thrive over the long term. Our responsibility is to deliver consistency against our back-to-basics framework. Journey isn't finished, but progress is unmistakable. We're moving confidently towards the organization we know we can be.

With that, I'll turn the call over to Peter for a review of our first quarter results.

Thanks, Ed. I'll begin by discussing our quarterly financial performance. As Ed noted earlier, this quarter marked the first time in several years that the company has reported quarterly net income and adjusted EBITDA more than doubled from the year before.

In the Salt segment, operating earnings improved year-over-year to $14.33 per ton, up $2.54 or 22% and adjusted EBITDA per ton increased 2% to $19.61. Total salt volumes were up 37% compared to the prior year period. Highway deicing volumes increased 43% year-over-year, while C&I volumes increased 14% over the same period. A higher proportion of highway deicing sales volume in the current period resulted in overall Salt segment pricing being relatively flat year-over-year, despite realizing higher highway deicing and C&I sales prices of 6% and 2%, respectively, year-over-year.

Salt segment revenue in the first quarter was $332 million compared to $242 million a year ago. Product cost per ton declined 7% to $50.20, while distribution cost per ton increased 6%. SG&A attributable to the Salt segment improved by $1 million.

Moving on to the Plant Nutrition segment, where we had a very positive business performance that is resulting in strong financial results. Year-over-year, operating earnings increased approximately $9 million, while adjusted EBITDA improved by $8 million. This was driven by improvements in both pricing and cost structure, despite the anticipated decrease in sales tons we saw year-over-year. In addition, the average SOP sales price was up 13% to $687 per ton. Product cost per ton declined 2% to $520, while distribution cost per ton increased 2% to $93.

Corporate overhead year-over-year was down 24% to $19 million for the quarter and is a reflection of the momentum in our multiyear cost control and continuous improvement initiatives focusing on back-to-basic process optimization and system utilization.

Moving on to the balance sheet. The previously announced settlement related to Ontario mining tax dispute resulted in some meaningful changes on the balance sheet at the end of December. The increase in other current assets and the decrease in other noncurrent assets and other noncurrent liabilities are a result of that settlement. Those movements also impacted changes in working capital in the statement of cash flows.

With respect to the company's financial position, at quarter end, we had liquidity of $342 million, comprised of $47 million of cash and revolver capacity of around $295 million.

Ed mentioned our focus of delevering, and we continue to make good progress there. The ratio of total net debt to trailing 12-month adjusted EBITDA at the end of the quarter was 3.6x. It's Down from 5.3x from the comparable prior period. Looking ahead, I'll now make a few comments on the updated guidance for 2026.

The range for Salt segment adjusted EBITDA in 2026 is now $230 million to $252 million. Ed previously commented on the operational dynamics within the Salt segment. Our guidance reflects an increase in expected sales tons, the benefit of which is being muted by headwinds and production costs mentioned earlier. Additionally, severe winters tend to put pressure on distribution costs as surges in network demand create suboptimal logistical conditions. It's important to note that notwithstanding these factors, adjusted EBITDA margin is expected to increase by approximately 200 basis points year-over-year.

For the Plant Nutrition segment, the range for adjusted EBITDA in 2026 is now up to $34 million to $39 million on stronger margins and an improved cost structure, partially offset by lower expected sales volume and the impact of the Wynyard sale. At the midpoint of the guidance, we expect a more than 300 basis point improvement in adjusted EBITDA margin year-over-year.

The guidance range for adjusted EBITDA related to corporate overhead is unchanged as is the range for our capital expenditures. As a result of these changes, the range for guidance for total company adjusted EBITDA for 2026 is up to $208 million to $240 million or a 2% increase at the midpoint.

I'll now turn the call over for questions.

[Operator Instructions] Your first question comes from the line of Evan McCall with BMO Capital Markets.

It's Evan on for Joel Jackson. Just wondering about the salt market and if the market is well supplied for the strong winter? Or are we seeing a rush for any imports? And is there a larger spot market than normal? And does Compass have any excess tons to sell into it?

This is Ed. As we said in our release and our just completed call that the market is very tight as a result of winter so far. When we do our planning, there's a variety of things that we consider in terms of our -- how we manage that, which could include some imports from time to time. Ben, do you want to pick that up?

Yes. Evan, I think the market is exactly what Ed said. It's become tight. Winter has certainly trended ahead in terms of a straight calendarization. So that's something that the market hasn't seen in quite a few seasons. The ability for imports and opportunistic supply to play a role mid-season is difficult just given the lead time of supply in transit. And so I think our anticipation is if the winter continues as it has up to date, the market will remain tight.

If I could sneak one more in. How are the plans progressing for the new mill at Goderich? And also, when would you make a decision on this? And has the strong winter emboldened your decision to make the investment?

Well, there's really 3 projects associated with the new mill at Goderich mine. The first that we've been working on for some years is the -- what we call the East Mine Drive, where we connect the current mining areas directly driving access directly to the East to tie into existing infrastructure. The second -- and that's been going on for some period of time, some years.

Second is what we call the [ 3B108 ] project, which is really connecting the shafts and the infrastructure itself to the East Maine Drive. That project is really just getting underway and it will take a little while to complete that, but that's moving ahead.

In terms of the new mill itself, it's in engineering. We've got a project team coming together on that. We're currently in the value engineering stage of that, and we should have things that we can talk about here over the next quarters.

[Operator Instructions] Your next question comes from the line of David Silver with Freedom Capital Markets.

I wanted to maybe start with a question about the Salt segment economics during the quarter and in particular, on the cost side. So if I was to kind of lay things out on a per ton basis, I guess, production costs and also shipping and handling or logistics were higher, I guess, than a year earlier despite the higher volume. And I think you did in your prepared remarks, Ed, I think you talked about the development panels and whatnot. But I was curious, I mean, what would be driving up the logistics costs, the shipping and handling such that it seemed to have kind of a meaningful impact on your per ton margins this quarter? Was there anything going unusual there? Or is that something that will improve, I guess, as we move through the balance of the winter?

Thanks, David. Appreciate that. Let me just say, as long as we're in the development sequence, which you measure in quarters, not years and start improving the production to development ratio in the mine, this is normal course things for mining. And the costs are always going to be a little bit higher just because of what we do to set up infrastructure, et cetera. But for the quarter itself, to answer your question directly, unit costs that were down about 6% in terms of production and distribution costs were up about 6%. I'll pass this over to Peter and Ben to see if they've got anything else they'd like to add.

David, I think as you look at the distribution cost, there's 2 factors in play. One are just some basic inflationary pressures on rates, which was clearly identified in our guidance. The other big thing that's occurring is because Q1 of this year was so robust compared to prior year, we're shipping salt across a much wider network to service the business. And so essentially, we're pushing salt and shipping it to further away destinations to meet the demand, which results in a little higher rates. So that's what you're seeing come together.

And just to follow up on that briefly, but you don't have to scan news sources very long before you read about salt shortages in particular metropolitan areas, in December and January in particular. And I'm just wondering if that had an unusual kind of impact. In other words, were you forced -- did you find yourself without enough salt in the right locations? Or were you supporting maybe another supplier who was tapped out and maybe tapped into your supply or whatever in a pinch? Just anything unusual in the field that you would call out that might have impacted the margin profile this -- the per ton margin profile this quarter, but especially on the logistics side.

Ben just spoke a little bit to the logistics side and really the delivery from further places away. We take a lot of pride in meeting our obligations as a company in terms of serving our customer base. And we operate to meet the commitments that we've made, shortages, et cetera, and we have a lot of people who would be approaching us for more salt. I think the net result of that is we'll see how the rest of the winter shakes out. But looking forward, then kind of, let's just say, industry-wide, deicing inventories, which are low, is very constructive as we look forward and start planning for '26, '27 winter.

Okay. If I could just ask a question, I guess, about tax rates, and I guess that would be both nominal and also cash tax as well. So during the quarter, you did have the unusual situation where your tax rate was, I guess, negative in the first quarter. And I know you've got kind of an evolving tax situation from the point of view of you should be solidly profitable this year. On a reported basis, a little bit different than the last couple of years. But can you just speak to kind of how you see your tax positioning evolving this year? I'm thinking about the valuation allowances, will you be able to claim some offsets, some profit with losses that maybe in the last couple of years you weren't able to do? And if you had an idea of what your cash tax situation looks like for full year 2026, that would be great.

David, I think in part, you're asking about the impact of the Ontario mining tax settlement that we met earlier this year. Recall, that's been something hanging around the company for decades. We're very pleased to get that behind us. And that, of course, had impact on some of the footnotes you'll see in the release. Let me pass it over to Peter to give you a bit more detail on that.

Sure. And on that Ontario mining, you'll see it in both the balance sheet and cash flow and cash tax, which is where a lot of what you're referring to. As to the full year, obviously, we're still early in the year. We know that the swings in the effective tax rate, it's a function of income in Canada, losses in the U.S. and it's relatively a small number for tax purposes, right? And that's causing, obviously, lots of swing. We have to look at that post valuation allowance as well and then let that thing roll through. Still early in the season as to utilization and also looking at that valuation as well. So it's yet to be determined.

I will turn the call back over to Edward Dowling, CEO, for closing remarks.

Thank you, Kate. Thank you again for your interest in Compass Minerals. We're excited to see the advances that we're making under our back-to-basics framework. As I mentioned earlier, the company has had a solid quarter. We have positive momentum in a number of areas. We reported positive net income for the quarter, the first time in a long time. Quarterly adjusted EBITDA more than doubled. Total net trailing 12-month debt decreased by almost 2 turns. And lastly, we increased our guidance for the full year.

The journey isn't finished, but we're making unmistakable progress of being the company we know we can be. Please don't hesitate to reach out to Brent if you have any follow-up questions. We look forward to speaking to you next quarter, if not before. Make it a safe day. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, and welcome, everyone, to the Compass Minerals' Fiscal Fourth Quarter and Full Year 2025 Earnings Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Brent Collins, VP of Treasurer and Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to the Compass Minerals' Fiscal Fourth Quarter and Full Year 2025 Earnings Conference Call. Today, we will discuss our most recent quarterly and full year results and provide some commentary on our outlook for fiscal 2026. We will begin with prepared remarks from our President and CEO, Edward Dowling; our CFO, Peter Felman; and our Chief Operations Officer, Pat Merrin. Joining in for the question-and-answer portion of the call will be Ben Nichols, our Chief Commercial Officer. .

Before we get started, I'll remind everyone that the remarks we make today reflect financial and operational outlook as of today's date, December 9, 2025. These outlooks entail assumptions and expectations that involve risks and uncertainties and that could cause the company's actual results to differ materially. A discussion of these risks can be found in our SEC filings located online at investors.compassminerals.com. Our remarks today also include certain non-GAAP financial measures. You can find a reconciliation of these items in our earnings release or in our presentation, both of which are also available online.

I'll now turn the call over to Ed.

Thank you, Brent. Good morning, everyone, and thank you for joining us today. I'll begin our call this morning by recapping our accomplishments for fiscal 2025. Compass Minerals today is a significantly healthier, more focused company than it was a year ago. The story of 2025 is primarily one of improving our financial position of the company and providing the foundation to pursue its back-to-basic business model. You'll recall that the company began last year with an excess amount of North American highway deicing salt following 2 milder winters.

So just this issue, we made the deliberate decision to scale back on production ahead of the '24, '25 de-icing season. The section, combined with more normal winter weather across our service markets allowed inventory levels to revert to more sustainable levels and provide a substantial release of working capital. That working capital dividend in turn, allowed us to delever during the year and reduce our net debt by 14% or $125 million.

During the year, the company also took steps to rationalize its corporate cost base. In March, we carried out a sizable reduction in force and also made a strategic decision to wind down fortress, company's bioretardant business. These efforts contributed to a $25 million improvement in reported SG&A year-over-year, representing an 18% reduction. Our ability to demonstrate that we can generate cash reduced debt and cut costs contributed to a successful refinancing midyear that provided a number of positives for the company.

First, that allowed for an amendment to our credit agreement that enhances our liquidity and provides more financial flexibility; second, allow us to extend the maturity wall of our outstanding debt -- these improvements in our debt structure provide us with time and flexibility to support our back-to-basic strategy. While the action is being taken to improve our financial position and foundation have been at the forefront, we've also been taking steps to improve the operational and organizational aspects of the business. In the Salt segment, the decision to curtail rock salt production following the '23, '24 the icing season resulted in an adverse impact to margins during 2025 due to the higher per ton cost profile.

However, that negative margin impact is transitory and we have already ramped up both Goderich and Cote Blanche mines to more normal levels of production, which will result in a reduction of production cost per ton, all things being equal. Throughout the year, we progressed a number of initiatives to improve the operations of our salt assets in continuous improvement initiatives as Goderich mine and plant as well as an overhaul of our safety systems and program. The Plant Nutrition segment, our primary efforts have been centered on restoring the health of the pond complex it out of Ogden.

Our SOP operation in Utah is similar to any other manufacturing plant in the world that it operates better when higher quality feedstock is flowing through the facility. The restoration of the PON complex will improve the quality of the material that goes into Ogden which improves how the plant operates and helps drive down costs. Pat will speak more in a moment about some of the work that we have planned for 2026. We expect further enhancements of the operations in Utah. Our results in fiscal 2025 are already reflecting these improvements with sales volumes growing up by 19% year-over-year.

Adjusted EBITDA increasing by almost 107% during the same period to $35 million. From a leadership perspective, our executive structure and team have overhauled during the year. We took steps to simplify the organization as part of a reduction of force I referred to earlier, and we added the leaders to skill sets and experience better aligned with our back-to-basics framework. As we reflect on the year, I think 2025 will be remembered as a pivotal year for Compass Minerals. We successfully reset the organization and establish a foundation that enables us to sharpen our focus on improving operations, enhancing profitability and reducing debt.

Internally, we speak often about people, processes and systems. We are approaching all 3 of these with a mindset of continuous improvement and our focus on these will allow us to continue building on the progress we made this year. I am energized by the opportunities ahead and believe we're well positioned to build a sustainable value through back-to-basic framework. It's exciting time to be part of Compass Minerals. Before turning the call over to Peter, I want to acknowledge the efforts of our employees over the last year. Strategic pivots and transitions like the One Compass Minerals has been undertaking are both exciting and disruptive. Our workforce has embraced our new strategy, and I'm proud of how they've risen to the challenge.

With that, I'll turn the call over to Peter for a review of our fourth quarter and full year results as well as a quick summary of our 2026 guidance.

Thanks, Ed. I'll begin my remarks by discussing our quarter and year-end financial performance before providing perspective around our outlook for 2026. We posted consolidated operating earnings of $12 million for the quarter, which is an improvement from the operating loss of $30 million a year ago, which included noncash impairments in the Plant Nutrition segment of $18 million. Consolidated net loss was $7.2 million, which improved from $48 million net loss in the same period last year. Adjusted EBITDA grew significantly to $42 million for the quarter from roughly $16 million the year before.

For the full fiscal year, consolidated revenue was approximately $1.25 billion, which was up 11% year-over-year. The company reported operating income of $25 million compared to an operating loss of $117 million last year. We posted a consolidated net loss of $80 million versus a consolidated net loss of $206 million a year ago. Both periods include noncash impairments related to our now terminated Fortress fire retardant business and fiscal 2024 also includes impairments related to certain write-downs in our plant nutrition business.

Adjusted EBITDA for the year was $199 million compared to $206 million last year. The comparability of these numbers on a reported basis are impacted by the noncash gain related to fortress contingent consideration liability write-down. Adjusted for these items, a modified adjusted EBITDA increased by approximately 4% year-on-year from $184 million to $191 million. Drilling down into the segment results. Salt business revenue in the fourth quarter was $182 million. compared to $163 million a year ago. Total volumes were up 13% compared to the prior period. While total pricing for the segment was down 1% year-over-year to approximately $16.50 per ton due to a shift in product mix. Highway deicing volumes increased 20% year-over-year, while C&I volumes declined 3% over the same period.

From a pricing perspective, highway deicing and C&I prices increased 1% and 7%, respectively. Net revenue per ton, which accounts for distribution costs, decreased 1% to roughly $77.50. On a per ton basis, operating earnings came in lower year-over-year at $12.60 per tonne, down 9% and adjusted EBITDA per ton decreased 7% to $23.43. Both of these measures reflect the impact of higher cost production flowing through the income statement with current sales. Those higher cost tons, the result of our decision to temporarily curtail production of our highway deicing assets a end of last year's deicing season.

For the full fiscal year, revenue totaled a little over $1 billion, up 13% year-over-year. These results reflect a more average winter compared to the weak 2023, '24 deicing seasons that we experienced 2 years ago. Highway deicing volumes were up 20% year-over-year to 9 million tons and C&I volumes were up 1% over the same period to 1.9 million tons. Total Salt segment volumes were up 16% year-over-year. Pricing dynamics were mixed year-over-year with highway deicing prices down 2% and C&I prices up 4% in 2025.

Operating earnings for the year were $146 million, and adjusted EBITDA was $29 million. Both of these measures reflect the same adverse cost pressures related to our salt production curtailment I spoke about a moment ago. I'll speak to this more in a moment, but it is important to remember that since we ramped up highway deicing production, cost per tonnes are projected to improve as we benefit from improved fixed cost absorption resulting from higher production levels.

Moving on to the plant nutrition segment. The fourth quarter saw volumes dip 9% from the prior year period. Pricing was up 8% to $670 per ton. As Ed mentioned, we made good progress on our initiatives aimed at improving the cost structure in the segment over the last year, and this has resulted in improvements in profitability. Operating earnings have improved to approximately $100 per ton year-over-year and adjusted EBITDA increased to approximately $218 per ton over the same period over the full year, volumes within the segment were 326,000 tonnes, which is a 19% increase year-over-year.

The improvement in operations in Utah is providing more consistency and higher productivity at the plant. and this allowed us to serve business beyond our core markets in the Western U.S. and to sell down inventory during the year. Average pricing for the year was down approximately 4% to $634 per ton. Operating income per ton was $20 for the year, and adjusted EBITDA per ton was $107.

I'll now spend a couple of moments commenting on the company's financial position before commenting on our guidance for 2026. To echo Ed's comment, the company is more stable today compared to a year ago. The key priority last year was rationalizing our North America highway de-icing inventory position. At the end of September, those inventory values and volumes were lower by 33% and 36%, respectively, compared to prior year. We've taken a thoughtful approach as we built inventory ahead of the 2025, '26 highway deicing season.

Our focus is on disciplined production planning and alignment within our sales forecast for the season. The refinancing transaction included in June, has set a financial foundation that will allow the company to build upon the organizational and operational initiatives that are already underway. The refinancing comprised of an amendment to our credit facility alongside a new note issuance. The amendment delivered 2 key benefits. First, it locked in the commitment level of the facility, $125 million for the full term of the agreement, eliminating the step downs that have been scheduled in the prior agreement. Second, it revised the leverage covenant from a total net debt calculation to a net first lien debt measure. Together, these changes enhance our liquidity and provide greater financial flexibility.

In addition, the note offering extends our maturity wall by several years and therefore, affording the company additional time to execute our improvement and efficiency initiatives. The company's stability has been further strengthened by the resolution of several legal and tax matters. In 2025, the long-running class action lawsuit related to the alleged disclosure issues was settled and was fully paid by insurance. Subsequent to year-end, we also reached an agreement to settle the Antero Mining tax dispute related to tax assessments from 2002 through 2018.

That segment resulted in approximately $10 million net cash outflow after accounting for refunds we expect to receive once impacted federal and provincial tax returns are amended and filed. The resolution of these matters removes uncertainties that had been a source of concern for some stakeholders and allows the company to redirect time and resources toward active basic efficiencies. At the quarter, we had liquidity of $365 million comprised of $60 million of cash and revolver capacity of around $305 million. Finally, moving to our outlook for fiscal 2026.

The range of guidance for total company adjusted EBITDA for 2026 is $200 million to $240 million. The range for Salt segment adjusted EBITDA in 2026 is $225 million to $255 million and reflects an expected improvement in adjusted EBITDA margins of approximately 200 to 300 basis points over full year 2025. This is being driven by stronger pricing and lower anticipated per tonne costs that are largely as a result of higher fixed cost absorption attributable to restoring production levels at the mines. The company defines these processes for forecasting salt volumes for this year. The company used a combination of factors, including historic relationships of sales to commitments, market data and historical weather-based trends for planning purposes.

The primary motivation for changing the process is to more tightly align our production, sales and inventory processes. Based on the company's current view of these factors, sales volumes are forecasted to decline approximately 8% at the midpoint of guidance. Ultimately, sales will be driven by winter weather and how that drives demand in served markets. For the Plant Nutrition segment, the range for adjusted EBITDA in 2026 is $31 million to $36 million. We are projecting lower sales volumes in 2026 for a couple of reasons. First, we think some market demand was pulled forward into 2025, which will result in a slightly softer market from a demand perspective in 2026.

Additionally, we continue to focus on restoring the health of the pond complex, ensuring that we do not overharvest the ponds for an unsustainable short-term uplift to production. Despite the decrease in sales, we expect to generate a similar level of adjusted EBITDA in 2026 on higher pricing and improved cost structure. The guidance range for adjusted EBITDA related to corporate overhead and other is negative $56 million to negative $51 million. These results reflect the cost rationalization efforts began in 2025, and the midpoint of guidance implies an improvement of corporate adjusted EBITDA of approximately 15% year-over-year when accounting for the impact of the $7.9 million gain recognized related to the write-off of the Fortress contingent consideration liability in 2025.

With respect to our capital program for 2026 Total capital expenditures for the company are expected to be within the range of $90 million to $110 million, assuming a winter in line with our forecast. This level of capital investment is what we consider to be normal for a business on a regular basis. The increase in 2026 reflect the fact that we reduced CapEx in 2025 due to the slow start we had to the 2024, 2025 deicing season and our desire to align capital spending with our ability to generate cash flow.

Balancing CapEx with cash flow remains important to us. and we'll continue to actively monitor that as the deicing season progresses. With the improved financial flexibility we have after last year's winter and refinancing, we now have the option to advance important capital projects even if winter is softer than our expectations. I'll now turn the call over to Pat, who will discuss some operational priorities related to our Back to Basic strategy for the year as well as some of the larger projects we have planned for fiscal 2026.

Thanks Peter. As part of our back basic strategy, we are focusing on a number of key operational systems in 2026. The first is implementing our fatal risk management system, which was launched in October. There is nothing more important than the safety of our employees and contractors, and this new system aligns with best practices in the industry. The next major effort we'll be working on is developing life of mine planning processes to give us a better ability to manage the capital and production plans, which will allow us to thoughtfully adjust production and costs based on market conditions. .

Lastly, we are implementing a maintenance system to focus on preventative maintenance and equipment reliability. These are all in an effort to create low-cost fit-for-purpose operations that can flex with the market conditions as required. On the capital front, at Goderich mine, the work planned for this year includes the continued construction of the Northeast bypass to allow for more direct access to the current production bases in the mine and the reopening of a utility corridor as well as completing the final mill design.

We've made the determination that we will build a new mill rather than move the existing mill as has been discussed as an option in the past. This decision was made to align the capabilities of the mill with market opportunities as well as reducing project execution risk. These initiatives at Goderich are being done to more centrally position the mill to the shafts, and to allow us to abandon higher-cost areas of the mine, both of which should improve cost per ton in the future, all things being equal. Other major projects this year include a project to install a new dryer in the compaction process at Ogden, which will improve the yield and quality out of that facility as well as a project related to a new head frame at Cote Blanche. The balance of our capital program is normal course maintenance capital.

With that, I'll now turn the call over for questions.

We will now begin the question-and-answer session. [Operator Instructions] We'll go first to David Begleiter at Deutsche Bank.

Could you address again the volume decline you're forecasting in highway deicing and whether that's a structural decline or maybe some sort of cyclical decline? Or how do you look at that number going forward? .

David, this is Ben. I appreciate the question. I think 2 things to note. One is our commitment levels year-over-year were slightly up, which we had communicated previously. -- the reason you're seeing a decline in the forecasted sales volume is it's just a reversion to more typical winter assumptions. The prior winter operated at, call it, 95-plus percent of commitment levels. And our guidance moving forward is just a move back to more typical weather.

Understood. In terms of the full year guidance range, what are the drivers do you think to get to the upper and lower end of that guidance, EBITDA band? .

Yes, David, Ben again. I think the primary driver would be upside in winter weather. That's going to be the biggest impact to getting to the upper end of the guidance. And then obviously, any efficiencies that come with better market demand.

And I would add -- David, this is Ed. I would add consistent operations and success with our improvement efforts that are ongoing at the different mines.

We'll move next to Jeff Zekauskas at JPMorgan.

Given that you expect your volumes as a base case to be lower in both segments year-over-year, does that mean that your inventories are unlikely to grow next year?

Yes, this is Peter. So we continue to align our inventories and our production levels. to meet those demands in that range of demand.

Yes, this is Ed, we'll comfortably continue to manage our inventory in the company. Our objective is to use cash and retire debt. And we'll ensure that we maintain the proper level of inventory as we proceed along that path over the course of the year. So we're not planning on building inventory over and above kind of where we are.

To put it a different way, do you expect to use working capital in 2026 or not?

Yes. So I think the -- Jeff, this is Ben. And I think the way to think about it is there's time frames within our core business. One is the inventory that you're carrying through this season. And so -- as we think about our inventory profile through this season, call it, end of March, we feel pretty confident that we're fully aligned to our sales forecast. At that point, we'll make the decision as to how the winter informs the next season. and we will adjust our production planning and inventory strategy accordingly. So that's how I would think about it.

And then in Plant Nutrition, why were volumes pulled forward? And how much of your volumes do you think were pulled forward? .

Yes, Jeff, this is Ben. The exact number would be hard to pin down. Really, it was just a function of the way the market behaves. And luckily, we were in a good place at Ogden from a production stability standpoint. -- we had the inventory in place to go ahead and serve the business and monetize in fiscal '25. So it was a significant portion of the delta between the year-over-year variance, but I wouldn't give you an exact number.

Were there onetime benefits in the fourth quarter in that your year-over-year your projection for EBITDA next year is really no different than what you earned in '25, and you had obviously a very, very strong second half. Why are you making more in Plant Nutrition next year as a base case?

Yes. Primarily, it's going to be the price side you see in the P&L.

[Operator Instructions] And at this time, we have no further questions. I would like to turn the conference back over to Ed Dowling for closing remarks.

Well, thank you all for your interest in Compass Minerals. Please don't hesitate to reach out to Brent, if you have any follow-up questions. We look forward to speaking with you over the next quarter.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.