Compass Minerals Reports Significant Financial Challenges, Net Loss of $157.8 Million for Nine Months Ended June 30, 2024

Compass Minerals International, Inc. reported significant financial challenges for the nine months ended June 30, 2024, compared to the same period in the previous year. Total revenue decreased by 6%, or $62.5 million, to $908.6 million, primarily driven by lower sales in the Salt segment. For the three months ended June 30, 2024, revenue was $202.9 million, down from $207.6 million in the prior year.

The company experienced a substantial net loss of $157.8 million for the nine months, a stark contrast to a net income of $14.5 million in the same period of 2023. The diluted net loss per share for the nine months was $(3.83), compared to earnings of $0.35 per share in the previous year. The losses were attributed to significant impairment charges totaling $175.8 million, including $51.0 million related to the Plant Nutrition segment and $32.0 million from the Fortress operations.

Operating income for the nine months ended June 30, 2024, was reported as a loss of $87.0 million, a decline of $162.2 million from the operating income of $75.2 million in the prior year. The Salt segment's gross profit decreased by $2.9 million due to lower sales volumes and higher per-unit costs, despite a 9% increase in average sales prices. The Plant Nutrition segment also faced challenges, with gross profit declining by $19.0 million due to lower average sales prices.

In terms of strategic developments, Compass Minerals acquired the remaining 55% interest in Fortress for an initial cash payment of $18.9 million in May 2023. However, the Fortress business faced setbacks, including the U.S. Forest Service's decision not to award a contract for magnesium chloride-based fire retardants for the 2024 fire season. Additionally, the company terminated its lithium development project in January 2024 due to adverse regulatory changes and inadequate returns.

As of June 30, 2024, total assets decreased to $1.6 billion from $1.8 billion in September 2023, while total liabilities decreased to $188.4 million from $274.6 million. Long-term debt increased to $868.8 million, up from $800.3 million. The company reported a liquidity position of approximately $220.8 million, including $12.8 million in cash and $208.0 million available under a revolving credit facility.

The company also faced legal challenges, including a putative securities class action lawsuit related to misleading statements about its fire retardant business. Despite these challenges, management remains focused on cash flow generation and debt reduction, having decided not to declare dividends for the foreseeable future.