Compass Minerals International Q1 2025 Earnings Report

Compass Minerals International EPS Results

• Actual EPS: -$0.55
• Consensus EPS: -$0.05
• Beat/Miss: Missed by -$0.50
• One Year Ago EPS: N/A

Compass Minerals International Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $293.90 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Compass Minerals International Announcement Details

• Quarter: Q1 2025
• Date: 2/10/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, February 11, 2025
• Conference Call Time: 9:30AM ET

Compass Minerals International (NYSE:CMP), provides essential minerals in the United States, Canada, the United Kingdom, and internationally. It operates through two segments, Salt and Plant Nutrition. The Salt segment produces, markets, and sells sodium chloride and magnesium chloride, including rock salt, mechanically and solar evaporated salt, and brine and flake magnesium chloride products; and purchases potassium chloride and calcium chloride to sell as finished products or to blend with sodium chloride to produce specialty products. This segment provides products for use as a deicer for roadways, consumer, and professional use; as an ingredient in chemical production; for water treatment, human, and animal nutrition; and for various other consumer and industrial uses, as well as records management services. The Plant Nutrition segment produces sulfate of potash specialty fertilizers in various grades that are used in broadcast spreaders, direct application, and liquid fertilizer solutions under the Protassium+ brand name; turf products used by the turf and ornamental markets, as well as for blends used on golf course greens; organic products; and develops and produces a portfolio of magnesium chloride-based aerial and ground fire retardant products. This segment provides its products to distributors and retailers of crop inputs, as well as growers. The company was formerly known as Salt Holdings Corporation and changed its name to Compass Minerals International, Inc. in December 2003. Compass Minerals International, Inc. was founded in 1844 and is headquartered in Overland Park, Kansas.

Compass Minerals International Q1 2025 Earnings Call Transcript

Presentation

[Operator]

and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Compass Minerals First Quarter Fiscal twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

We kindly ask that you limit your questions to one and one follow-up. I would now like to turn the conference over to Brent Collins, Vice President, Investor Relations and Treasurer. Please go ahead.

[Brent Collins, VP - Investor Relations at Compass Minerals International]

Thank you, operator. Good morning, and welcome to the Compass Minerals fiscal twenty twenty five first quarter earnings conference call. Today, we will discuss our recent results and update our outlook for fiscal twenty twenty five. We will begin with prepared remarks from our President and CEO, Edward Dowling and our CFO, Peter Feldman. Joining in for the question and answer portion of the call will be Ben Nichols, our Chief Sales Officer and Jenny Hood, Chief Supply Chain Officer.

[Brent Collins, VP - Investor Relations at Compass Minerals International]

Before we get started, I will remind everyone that the remarks we make today reflect financial and operational outlooks as of today's date, 02/11/2025. These outlooks entail assumptions and expectations that involve risks and uncertainties that could cause the company's actual results to differ materially. The 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.

[Brent Collins, VP - Investor Relations at Compass Minerals International]

I will now turn the call over to Ed.

[Edward Dowling, President & CEO at Compass Minerals International]

Thank you, Brent. Good morning, everyone, and thank you for joining us on our call today. Before I begin, I want to make a few comments about the senior leadership positions we announced a couple of weeks ago. An important aspect of executing on our back to basics strategy is operational discipline and intense focus on continued improvement. The appointments of Pat Marron and Peter Feldman as COO and CFO, respectively, bring two executives to Compass Minerals with proven track records of leading teams and building cultures focused on disciplined operational management.

[Edward Dowling, President & CEO at Compass Minerals International]

Pat will join the company officially in early March. Peter has been with the company a short time and is quickly getting up to speed. He's with us on the call today. I am excited about these additions and these two leaders to our core team and look forward to their contributions to the company. Peter is succeeding Jeff Kathy, who stepped down for personal reasons, but we will continue to benefit from his knowledge as he serves in in the consulting world for the next several months.

[Edward Dowling, President & CEO at Compass Minerals International]

Jess first served as our Chief Accounting Officer and then as CFO, and he was instrumental in leading the finance and accounting organization through a number of important matters. On behalf of Compass Minerals, I want to thank Jeff for his many contributions to the company and wish him well in his future endeavors. I'll start with making a few comments on the business, beginning with our Salt business. Consistent with prior comments we made, one important area of focus this year has been to flexibly manage the business and to reduce our absolute inventory levels of highway de icing salt. You'll recall that this was a key driver in our decision to curtail production at Goderich Mine in 2024.

[Edward Dowling, President & CEO at Compass Minerals International]

Reducing inventory obviously has the benefit of freeing cash that is hung up in working capital. It also helps remove supply demand balance in the market that is long on supply following last year's weak winter. Salt is like any other commodity. When there's too much of it in the system, it will weigh on price, all things being equal. We're making good progress in reducing our inventory volumes with North American Highway de icing inventory volumes down approximately 10% year over year and that is despite the fact that winter began slower than we had hoped in October and November.

[Edward Dowling, President & CEO at Compass Minerals International]

We typically see both pre fill activity of replenishment early in the fiscal first quarter generated by early snow events. Unfortunately, we really didn't see any weather in our served markets early in the quarter to drive our orders given that a large part of our customer base had adequate inventory following last year's exceptionally mild winter. December saw an increase in winter weather that was consistent with the ten year average in our served markets and is significantly above what we saw last year. Looking outside the quarter, we saw winter weather further strengthened in January, which allowed us to claw back some of the shortfall from the first quarter. We'll see how the rest of the winter de icing season progresses and that will inform our production plans for the coming year.

[Edward Dowling, President & CEO at Compass Minerals International]

One new factor that could influence production plan is the tariff on Canadian imports that the U. S. Administration announced and then quickly paused last week and the impact that this would have on both SALT and SOP produced in Canada and sold in The U. S. Should the tariff eventually be implemented.

[Edward Dowling, President & CEO at Compass Minerals International]

There's obviously a lot of details to work through, but I'll share a few of our initial thoughts. Regarding our highway de icing business, we don't expect the tariff would materially impact the current year's de icing season as the inventory is largely forward deployed and available for our customers. It does have the potential impact next year as we will need to produce and then move salt across our deep wet network. We're evaluating options to minimize the more immediate impact such a tariff could have on our C and I, chemical and vineyard served SOP business. As we see, this matter will likely be very dynamic for some time and we will continue to monitor it closely.

[Edward Dowling, President & CEO at Compass Minerals International]

As the situation continues to evolve and settle out, we will update the investment community as appropriate. In the plant nutrition business, we've talked in the past about the goal of restoring the pond complex at Ogden. This is a multiyear process that we engaged with for several years and focus is improving consistency of the grade of SOP raw materials going to the plant. Acknowledging that this has not been a quick recovery process, they are beginning to see positive results from these efforts, which are having an impact on our cost structure. The site has been focused on finding opportunities to improve operational efficiency.

[Edward Dowling, President & CEO at Compass Minerals International]

While pricing in the quarter was a little weaker than expected, we had stronger sales volumes and lower costs that allowed us to exceed forecast and this turn is enabling us to increase guidance for this segment. At Fortress, we continue to evaluate all options for the business, including ongoing discussions with The U. S. Forest Service regarding the evaluation and testing of the company's conditionally qualified, technical grade orthophosphate based aerial fire retardant, Quella. With respect to guidance, we're moving the range for total adjusted EBITDA down by roughly $15,000,000 The main driver of this change is a lighter start in sales in our salt business attributable to the mild weather in October and November I mentioned earlier.

[Edward Dowling, President & CEO at Compass Minerals International]

Again, January came in better than forecast and included some of that outperformance into our revised guidance. Plant Nutrition is up by about $4,000,000 based on the factors previously mentioned. Corporate EBITDA is unchanged from what we guided in December. To offset this reduction in adjusted EBITDA, the company is reducing the range of capital guidance by approximately $25,000,000 When we laid out our guidance for the year in our last earnings call, we noted that we had sculpted the CapEx program such that we can modify our spend to adjust it to how the de icing season shaped up and we're pulling that lever as a vision. I'll note that the operational initiatives are underway to improve reliability and lower costs, which will have a positive impact on CapEx over time.

[Edward Dowling, President & CEO at Compass Minerals International]

We're already seeing benefits in some of that work. With respect to the balance sheet, our plan remains to refinance our debt stack this year with the intention of restructuring in a way that better aligns with our current strategy. We believe that we'll be able to move forward with the structure that provides more flexibility around our covenants. Our vision for Compass Minerals remains unchanged to build a company that generates free cash flow even in mild winters, strong free cash flow during normal winters and outstanding cash flow and strong winters. We have more work to do to get there, but the company has made important strides over the past several quarters for improving areas that we have the most ability to influence.

[Edward Dowling, President & CEO at Compass Minerals International]

Said differently, we're doing a better job at controlling the controllables. I'll expect our progress on this front to continue and accelerate with the arrival of Patent Peter. We remain focused on delivering on our back to basic strategy. I'm excited about the progress we're making in the organization to execute on that goal. With that, I'll turn the call over to Peter.

[Peter Fjellman, Chief Financial Officer at Compass Minerals International]

Thanks, Ed. Good morning to everyone. I'm extremely excited to be joining Compass Minerals and working with the team here. My background and skill set align well with the back to basics strategy that the company has embarked on. I want to echo the sentiments shared by Ed earlier about Jeff.

[Peter Fjellman, Chief Financial Officer at Compass Minerals International]

He's been incredibly helpful and generous with his time and knowledge as we transition the role. I'll comment briefly on the financial results for the quarter before turning the call over for Q and A. For the first quarter, consolidated revenue was $3.00 $7,000,000 down 10% year over year. It's important to remember that the fiscal first quarter of twenty twenty four included contribution related to Fortress from the U. S.

[Peter Fjellman, Chief Financial Officer at Compass Minerals International]

Forest Service contract we had in that year. From an operating earnings perspective, we essentially broke even in the current quarter. Consolidated net loss was $24,000,000 and adjusted EBITDA was approximately $32,000,000 for the quarter. Drilling down into the segment results, in the Salt business, revenue in the first quarter was $242,000,000 compared to $274,000,000 a year ago. Pricing was up 1% year over year to approximately 97 per tonne with volumes down 13% compared to the prior year period.

[Peter Fjellman, Chief Financial Officer at Compass Minerals International]

Net revenue per tonne, which accounts for distribution costs, increased 3% to over $68 On a per tonne basis, operating earnings came in lower year over year at $11.79 per tonne, down 34%, while adjusted EBITDA per tonne decreased 17% to $19.17 The decrease in margin reflects an increase in production cost per tonne due to the curtailment of production at Goderich Mine last year. In the Plant Nutrition business, revenue for the first quarter was $61,000,000 which is up 24% year over year from $50,000,000 Sales volumes were up 36% from prior year period, while pricing was down 9%. Distribution cost per ton decreased 2% to around $91.15 per tonne and all in production cost per tonne decreased 10%. At quarter end, we had liquidity of $126,000,000 comprised of $46,000,000 of cash and a revolver capacity of around $80,000,000 At quarter end, the consolidated net leverage ratio was 5.9 times within the company's net leverage covenant of 6.5 times. Last week, the company had approximately $195,000,000 of liquidity with $65,000,000 of cash and $130,000,000 of revolver capacity.

[Peter Fjellman, Chief Financial Officer at Compass Minerals International]

With that, I'll turn the call over

[Operator]

We'll take our first question from the line of David Begleiter with Deutsche Bank. Please go ahead.

[David Begleiter, Managing Director at Deutsche Bank]

Thank you. Good morning. Ed, given the recent winter weather activity, can you kind of frame the outlook for highway de icing volumes in both Q2 as well as the full year?

[Edward Dowling, President & CEO at Compass Minerals International]

Well, we're in the February now. January was I mean, as we said, October and November were not good months for us. The winter really didn't materialize in our served markets. December was a really solid month for us, really being relatively equal to our ten year average. January was really great and really mainly in our Southern markets, where the storm tracks largely in the South.

[Edward Dowling, President & CEO at Compass Minerals International]

And of course, now what we've been seeing more recently, the storm tracks are really into our core serve markets and we hope that sort of continues. The we'll see so February is looking pretty good so far. We'll have to see how March lays out and we'll and that effect on inventory. We'll do our production planning based on really how we sort of wrap up the season kind of at the March.

[David Begleiter, Managing Director at Deutsche Bank]

Very good. And just on Fortress, when you say conditionally qualified, what does that actually mean?

[Edward Dowling, President & CEO at Compass Minerals International]

There are several steps that the Forest Service uses to prove products. The first step is sort of a lab based product to conditionally qualify it. There's several, really things that go into that. Once that is conditionally qualified, which it is, then you take it into the field through what's called an operational field evaluation OFE, and that's what we're talking to the portion right now. Jenny, you want to add anything to that?

[Jenny Hood, Chief Supply Chain Officer at Compass Minerals International]

I'll just add as part of the field evaluation, the OFE that Ed just mentioned, during that process, they'll also be doing integration testing with the legacy retardants that are in the market. Thanks.

[David Begleiter, Managing Director at Deutsche Bank]

And does this mean you've solved the corrosion issues you highlighted last year, what they highlighted last year?

[Edward Dowling, President & CEO at Compass Minerals International]

It's a different base chemistry. Initially, the chemistry was a magnesium chloride based chemistry. And that's where we were all surprised about this time last year to learn when we were very close to having a contract that inspection of the airplanes found the corrosion. That investigation is still going on. We can't comment on it because it's going on within the NTSB.

[Edward Dowling, President & CEO at Compass Minerals International]

What we're talking about with Quella, it is a different chemistry based on a phosphate type chemistry and has been through the testing and evaluation, which is obviously getting a lot more scrutiny given where we ended up last year. So anything you want to add to that?

[Jenny Hood, Chief Supply Chain Officer at Compass Minerals International]

No. Thanks, Ed.

[David Begleiter, Managing Director at Deutsche Bank]

Thank you very much.

[Operator]

Our next question comes from the line of Joel Jackson with BMO Capital Markets. Please go ahead.

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

Hi, good morning. Thanks for doing the call, Ed and team. First question, surprised that you lowered your full year volume guidance since it is snowing a fair bit. I live in Toronto, as you know, I'm shopping a lot, we're all shopping a lot and talking about it. American Rock sells production, right?

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

It seems like there's some shortages in Western New York. Understand that we started light at the beginning of the winter in December, but I'm surprised that you lowered your volume guidance considering everything going on. Can you talk about that?

[Edward Dowling, President & CEO at Compass Minerals International]

Well, this is what we've done is we're not weather forecasters that can't project going forward. What we're doing in the past, you'll recall, we were using more of a distributed approach to guidance. What we're doing is, as we've talked about in the past, a little different approach to it now where we're given the shortfall in the first quarter, we're really we've taken that and we've added a little bit back in January and that's kind of what we're saying right now. Now if we have knockout February and knockout March, we'll probably adjust it back up. But we're just being careful about it.

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

Okay. My second question could be two parts. The first part we're following up on that. But you gave guidance in the December and it's only snowed very strongly since then. That's why I'm surprised you lowered your volume guide.

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

And the second question is Ed, talk about what you're doing on SG and A because that's been a big focus of yours when you came in about a year or fifteen months ago. And SG and A in the first quarter was extremely flat with SG and A in fiscal quarter of fiscal Q1 of twenty twenty four. So what progress are you making and can you make on SG and A?

[Edward Dowling, President & CEO at Compass Minerals International]

Yes. We have made progress in SG and A. If you think about sort of the headcount, we are down probably about 80% running with a team of about 80% of the number of people that we had here not too distant past. What's been offsetting us are things like legal costs associated with some of the class action lawsuits and things like that has been offsetting sort of SG and A. It remains a really important focus for it.

[Edward Dowling, President & CEO at Compass Minerals International]

It's a very active discussion going on with management as we speak.

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

And just about the front end of the year?

[Edward Dowling, President & CEO at Compass Minerals International]

Yes, look, and just that

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

You gave that in December, right?

[Edward Dowling, President & CEO at Compass Minerals International]

Yes. I was just going to say, in the December, to kind of follow-up on that, we really was we did that mid December. We'd only closed in October before that, right?

[Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets]

Okay. Thank you.

[Operator]

Our next question comes from the line of Jeff Zekauskas with JPMorgan. Please go ahead.

[Jeffrey Zekauskas, Analyst at JP Morgan]

Thanks very much. Can you talk about what's going on in your accounts receivable line? And where you expect that to go? And likewise, do you have targets for where you want to bring your inventories down to?

[Edward Dowling, President & CEO at Compass Minerals International]

Yes. Well, we can tell you that, we talked inventories a lot. We are bringing them down. We'll bring them down to lower than historical norms that liberate the cash associated with that. Ben, do you want to add anything to that?

[Ben Nichols, Chief Sales Officer at Compass Minerals International]

No, I

[Ben Nichols, Chief Sales Officer at Compass Minerals International]

think that's right, Ed. Just we're the winner is tracking all things being equal. And if you kind of take the midpoint of our guidance, that's relative to last year, that's roughly 500,000 tonnes alone on the demand profile. So we're also taking actions at the mine that you've seen published and we anticipate to draw the inventories down significantly.

[Edward Dowling, President & CEO at Compass Minerals International]

Yes. We continue to run Godwerts at the curtailed rate, and we won't ramp it back up until we've got a better level on our inventory. Do you want to talk AR?

[Brent Collins, VP - Investor Relations at Compass Minerals International]

Yes, Jeff, it's Brent. So AR, that's just sales. So as we talked about in the prepared remarks, October and November were pretty light, but December was a strong month. So that's just the cash conversion cycle of things coming out in inventory, going up into accounts receivable and then we'll start collecting that here in the second quarter.

[Jeffrey Zekauskas, Analyst at JP Morgan]

Okay. And then it looks like you're I don't know if you're deferring $25,000,000 in CapEx or canceling $25,000,000 in CapEx. Can you talk about what it is that you're not spending and whether

[Jeffrey Zekauskas, Analyst at JP Morgan]

you'll see that

[Jeffrey Zekauskas, Analyst at JP Morgan]

in the future?

[Edward Dowling, President & CEO at Compass Minerals International]

Let me remind everybody that we last year, we've installed a more disciplined approach to capital where we rank projects based on really the risk associated with kind of not doing a project. And we're not going to cut environmental health or safety. Let's just say that. And we still get emergency capital requests that come through that we have to have a provision for.

[Edward Dowling, President & CEO at Compass Minerals International]

What we're talking about are projects that we've ranked from kind of higher risk to lower risk that are in the capital plan for 2025. And what we're planning at this point is not doing about $25,000,000 worth of that with the lower end of those projects which would have scored lower in terms of that risk profile. Now they'll probably show back up in 2026 and we'll go through that process again. So what the so we put the process in place last year. What we've done this year is organize our capital plan so that we could ramp it up or ramp it down depending on how the year went.

[Edward Dowling, President & CEO at Compass Minerals International]

Given the first quarter was behind plan, we've ramped it down accordingly.

[Jeffrey Zekauskas, Analyst at JP Morgan]

Great. Thank you.

[Brent Collins, VP - Investor Relations at Compass Minerals International]

Hey, Jeff, this is Brent. I did want to clarify one thing on the accounts receivable that I thinking about. So on the product recall that we announced that was disclosed last quarter, the way the accounting for that works is that you we expect that to be covered by insurance. The way that you have to handle that from the accounting perspective is you have to do a gross up of the claim and then the receivable. So that could be something that you're seeing there is that there's just a gross up on the balance sheet to reflect that.

[Jeffrey Zekauskas, Analyst at JP Morgan]

How much is that?

[Brent Collins, VP - Investor Relations at Compass Minerals International]

$35,000,000 grossed up.

[Jeffrey Zekauskas, Analyst at JP Morgan]

Okay. Thanks.

[Operator]

Our final question will come from the line of David Silver with CL King and Associates. Please go ahead.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

Yes. Hi. Thank you. I do have a couple of questions. So first one would be about your managing your salt business through the balance of the winter season.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

In reading through the press release, couple of words that I don't usually see there, Toggle and tariffs. And when I think about it, I'm guessing officially the tariffs would not kick in until, I don't know, March in a worst case scenario. And in the meantime, I'm guessing that you are leveraging the Cote Blanche production to kind of meet the needs in your target market area marketing radius to the greatest extent possible. But

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

could

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

you just kind of talk through why would the tariffs, at least for this winter, be an issue in kind of a worst case scenario? In other words, between now and March 4, you can produce and position and then you can run Cote Blanche or toggle, I guess, running Cote Blanche a little harder and moving product up the river. But between the toggles and the tariffs, what is kind of what do you fear, I guess, at least in terms of the current winter season through March 31 or April? My assumption is you should be able to get through unscathed, but is there kind of a worst case scenario there? Thank you.

[Edward Dowling, President & CEO at Compass Minerals International]

Yes. Thanks, Jacob. In terms of the highway de icing, we don't really see much risk associated with tariffs for this fiscal year. As we said, most of our inventory is already forward from Goderich in Canada, is already forward deployed so that the customers can access it this year. We're going to have to see what happens with an in and if the tariffs are reinstated here in a month or so.

[Edward Dowling, President & CEO at Compass Minerals International]

So you need to be prepared for that. You mentioned one potential contingency, and this would be really more for next year, not this year, but some flexibility associated with Cote Blanche to serve some of our historical markets. And, but there would be over time a reordering that would happen within the served markets for all the salt producers. We just have to see what happens. And there's many, many, many potential scenarios that come out of that.

[Edward Dowling, President & CEO at Compass Minerals International]

We did mention that product made from like our SOP product and C and I product made in Canada and imported into The U. S. Could be affected through tariffs this year. And there are scenarios where that could be both negative obviously, but ironically could end up being positive for SOP produced in Utah. So we'll just have to see how it goes.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

Okay. Thank you for that. Next question would be maybe a follow-up to on a certain extent to the CapEx question, but then also about your SOP business in particular. So the wording in the press release indicated that I don't know, remediation or repair efforts, and I apologize, I forget the exact term. But you're doing things with the SOP ponds and whatnot that are generating some better results.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

You also talked about optimizing the use of KCL. So I'm kind of scratching my head, but within the context of knocking or taking $25,000 out of the CapEx budget, I mean, are the efforts or are the steps you're taking at Ogden on the SOP business, are those capital projects? Or is the spending that you're doing there actually flowing through the income statement by quarter? So just maybe a comment on what most recently you've done at Ogden and the SOP Ponds that are generating better results? And then then how does that kind of play into the capital budget that you've established as of this quarter?

[Edward Dowling, President & CEO at Compass Minerals International]

Jake, thanks for the question. We've been working for some time to restore the that's the word we're using, restore the health of the ponds that we mine, basically scrape up the material and to really control the brine chemistry more properly along with a prudent use of KCL, which does help that restoration. That's really the first step in terms of restoring this business to its historical level of business performance. And what we're really pointing out is after a year of work and of course, remember, this is a multi year cycle, we're seeing the benefits of that. What we're seeing is what we expected to see is higher grade SOP in the material that we mine and send to the plant.

[Edward Dowling, President & CEO at Compass Minerals International]

Now, there's two plants. There's a wet plant where we separate SOP from magnesium chloride, then the SOP then goes over to the dry plant. There will be some capital projects in that dry plant in the future to get the water, really the moisture in the SOP right for compaction with operating that plant for some period of time in a less optimal less than optimal process in terms of the moisture feeding compaction. And we suffer losses associated with that. So we're seeing benefits now to operating costs just by managing our business better.

[Edward Dowling, President & CEO at Compass Minerals International]

That's more just operating costs. In the future, we will have capital costs and this is not something that we want to defer. There are really two really critical sort of business projects that we want to do on the capital side. One, as I mentioned, the dry plant at Ogden, which will help us reduce our costs even more. The second, which is really a sustainability project is the real goal relocation at Godreich Mine, which will occur probably in 2027.

[Edward Dowling, President & CEO at Compass Minerals International]

So we're preparing to do those projects, doing the engineering and doing the engineering right. We are spending capital on those, but those projects themselves will be coming in the future.

[Operator]

And that will conclude our question and answer session. And with that, I'll turn the call back over to Ed Dowling for closing remarks.

[Edward Dowling, President & CEO at Compass Minerals International]

Okay. Thank you 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 to you in the next quarter. Thanks very much.

[Operator]

That will conclude today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Brent Collins, VP - Investor Relations
• Edward Dowling, President & CEO
• Peter Fjellman, Chief Financial Officer
• Jenny Hood, Chief Supply Chain Officer
• Ben Nichols, Chief Sales Officer

Analysts

• David Begleiter, Managing Director at Deutsche Bank
• Joel Jackson, Equity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets
• Jeffrey Zekauskas, Analyst at JP Morgan
• David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates