Ladies and gentlemen, good morning. My name is Abby and I'll be your conference operator today. At this time, I would like to welcome everyone to the Compass Minerals Fourth Quarter and Fiscal 2023 Earnings Conference Call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. And I will now turn the conference over to Brent Collins, Vice President of Investor Relations. Mr. Collins, you may begin.

Thank you, operator. Good morning and welcome to the Compass Minerals Fourth Quarter and Fiscal 2023 Earnings Conference Call. Today, we will discuss our recent results as well as our outlook for 2024. We'll begin with prepared remarks from our President and CEO, Kevin Crutchfield, and our CFO, Lorin Crenshaw. Joining in for the question-and-answer portion of the call will be Jamie Standen, our Chief Commercial Officer, and Chris Yandell, our Head of Lithium. George Schuller, our Chief Operating Officer is away today. Before we get started, I'll remind everyone that the remarks we make today reflect financial and operational outlooks as of today's date, November 17, 2023. 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. The results in our earnings release issued last night and presented during this call reflect only the continuing operations of the business, other than amounts pertaining to the condensed consolidated statements of cash flows or unless noted otherwise. I'll now turn the call over to Kevin.

Thank you, Brent. Good morning everyone and thank you for joining us on our call today. Over the course of fiscal 2023, we advanced the ball on a number of important strategic fronts. Unfortunately, the positive strides we've made across several areas this year have been wholly overshadowed by sustained uncertainty surrounding our lithium project in Utah, which has weighed heavily on our share price. I'll come back to our strategic achievements in just a moment, but I first wanted to provide some commentary on our operations in Utah and on our lithium projects specifically. As a reminder, we've been operating in the State of Utah for more than half a century, currently providing approximately 370 local jobs at our Ogden facility. We've been an engaged corporate citizen in the community for decades; our planned lithium project would build upon the successful sulfate of potash, sodium chloride, and magnesium chloride businesses that currently operate on the lake and would not require any additional brine draw from the Great Salt Lake. The current process draws mineral-rich lake water or brine from the Great Salt Lake into a series of solar evaporation ponds, through which the brine moves over a two-to-three-year evaporation cycle. As the water content of the brine evaporates and the mineral concentration increases, some of those minerals naturally precipitate out of the brine and are deposited on the pond floors. These deposits provide the minerals necessary for processing into SOP, sodium chloride, and magnesium chloride. Those three products make up our core Ogden business today. Our lithium development would simply entail extracting a fourth mineral salt out of the brine that we're already processing. Our project would add over 100 incremental local high-paying jobs and drive substantial additional royalty and tax receipts to the local economy. In our view, that's a win-win situation, and we continue to patiently educate all relevant parties and decision-makers on the positive attributes of this project. Utah House Bill 513 was enacted to establish a regulatory framework for how lithium would be developed and to introduce some updated rules on management of the Great Salt Lake. We’re acutely aware of the recent concerns and sensitivities related to the Great Salt Lake; maintaining the health and sustainability of the lake is a shared goal for all stakeholders in the community. We are no different, and in fact, we've worked hard to be part of the solutions to maintain and improve the health of the lake for the long term. Several weeks ago we announced our intention to suspend indefinitely any further investment in our lithium project in Utah until we achieve regulatory clarity with the State. We did not make this decision lightly. A critical linchpin to making investments on the order of magnitude we're considering here and have now paused is regulatory certainty. Without such certainty, it's essentially impossible to have confidence in the projected returns on invested capital over the next 30 years. Therefore, to move forward prudently, we must have confidence that the regulatory environment will include a set of rules that are reasonable now and will be stable and predictable over the coming decades. The March passage of House Bill 513 and particularly the subsequent rulemaking process have introduced uncertainty around the regulatory environment we will be operating in, as well as the timing of how development could proceed. Since the inception of House Bill 513, Compass Minerals has actively engaged with the State of Utah, in a collaborative attempt to ensure the provisions of the legislation are implemented in a way that will not slow or halt the progress the Company has made to date regarding its pursuit of developing a sustainable lithium salt resource to service the burgeoning North American advanced battery market. Despite the active and ongoing best efforts by all parties, we concluded that it's in the best interest of our shareholders to suspend further investment in our lithium project beyond certain already committed items associated with the early stages of construction of the commercial scale DLE demonstration unit that we've talked about in the past. I want to share some additional thoughts about how we're thinking about the project. First, to be perfectly clear, we will not move forward with the project at any cost. We'll continue to refine our engineering estimates on Phase 1 and we'll incorporate the proposed financial terms from the state when we receive them. Then we'll have a better view of the economics of the project. We'll only proceed if we're convinced that the long-term returns justify the investments. Second, if we do advance lithium, we'll do so in a manner that is financially prudent. As projected capital for the lithium program has increased, questions about how we'll fund the program have taken on greater importance. Clearly, bringing a partner in at the asset level will help to answer at least part of that question by reducing our share of the capital cost. We still have some work to do on this, but the one thing I want to stress today is that we're firmly committed to not using common equity to fund our share of any future lithium development. We believe there are numerous other viable sources of funds at considerably lower costs of capital and do not dilute the ownership of existing shareholders. Third, whereas previously we were on a path towards commencing operations in the fiscal 2025 timeframe, we have to acknowledge that our timeline today is different than when we started this project. I'm hopeful that we will be able to chart a path forward with the State of Utah that will allow this resource to be responsibly developed for the great benefit of all stakeholders, including the State, in a timely manner. But we have to believe that we know the rules of the game and are standing on solid ground before we can credibly talk about timing again and we aren't there yet. I'll comment now on the progress we made on our 2023 strategic objectives. Lorin will then review our financial performance for the year and we'll discuss our outlook for 2024. We talked about it a lot this year, but restoration of the profitability of the Salt business to historic levels was an important goal for the company in fiscal '23. Year-over-year, full-year adjusted EBITDA per ton for salt increased by approximately 40% to $20.38 compared to $14.59 last fiscal year. Salt adjusted EBITDA margin percentage also increased over the same period, up to nearly 23% from 18% a year ago. This improvement was driven by better pricing, as we saw increases of 12% and 6% in price for highway deicing and C&I respectively year-over-year. We did a great job getting back to the basics and focusing on winning markets that we can effectively and profitably service. I'm also happy to note that despite the recent bidding season occurring on the heels of a winter that within the North American markets we served had only 80% of the average number of snow days, our base plan for 2024 shows us continuing to improve salt profitability on both an EBITDA per ton and EBITDA margin basis. Fiscal '23 was also an exciting year for our emerging Fire Retardant business. After a rigorous multi-year process, two core Fortress products were added to the US Forest Service qualified product list in December of 2022. This opens the door to allow governmental agencies to purchase Fortress' fire retardant products, which was the first new products to enter the market in nearly two decades. Fortress was awarded its first contract in May and we consolidated our ownership of the company shortly thereafter. In June '23, we achieved another milestone when we launched our first commercial product. The feedback that we've received on the efficacy of the products and the operational performance of the team has been excellent. We're currently in the process of finalizing our contract with the US Forest Service for 2024. We're off to a good start with Fortress and we're excited about the high-margin counter-seasonal growth potential that this business can provide for the company. We also improved the balance sheet and financial standing of the company during the fiscal year, which was another of our strategic goals. Early in the fiscal year, in October, we successfully closed on a strategic equity partnership with Koch Minerals & Trading to help fund Phase 1 of our lithium project and to pay down debt. We also improved our debt maturity profile in May with a successful refinancing that pushed our nearest maturity out to 2027. As a result of our focused execution on this goal, year-over-year we saw an improvement in our available liquidity, a decline in our net debt outstanding, and a lengthening of our debt maturities. The last strategic goal that I'll touch on today relates to safety and our efforts to build a culture of zero harm. I say this almost every earnings call due to its importance. We make safety a top priority because it's the right thing to do for our people and it's the right thing to do for our business. Safety is often a leading indicator of operational performance and if you can't do the basics of keeping yourself and your colleagues safe, how can you possibly operate reliably and efficiently? Our employees have clearly embraced the culture we're building here around zero harm and it shows in our results. Specifically, our total recordable injury rate dropped approximately 8% to 1.17 and our lost-time injury rate declined to 0.93 from a 1.02 or 9% in the comparable year-ago period. Those are outstanding numbers, particularly in the complex operating environments that we have here at Compass Minerals. I want to extend my thanks to all the employees across the company for their commitment to safety and contribution to these outstanding results. As I reflect on the year, it's disappointing to know that the solid steps forward we made across our business were drowned out by noise and uncertainty that arose in Utah around our planned lithium project. We're determined to resolve those questions as soon as possible and we remain engaged with Utah leaders on that front. Compass Minerals has unique high-quality assets that have tremendous value. I'm confident that the intrinsic value of the company will be recognized with continued strong execution. So with that, I'll now turn the call over to Lorin.

Thanks, Kevin. I'll begin my remarks by discussing our fiscal '23 performance before providing perspective around our outlook for fiscal '24. Starting at the consolidated level, fourth quarter results primarily reflect weaker Plant Nutrition sales offset by improved profitability in the Salt business year-over-year. Consolidated revenue declined 6% year-over-year to $233.6 million. Consolidated operating earnings declined to $3.9 million, while adjusted EBITDA was slightly lower year-over-year at $33 million. Net loss for the quarter narrowed to $2.5 million from a net loss of $5.5 million year-over-year. For the full year, a below-average highway deicing season and the impact of adverse weather conditions in California on the Plant Nutrition business negatively impacted the company's revenue. However, the Salt business demonstrated improved profitability that allowed for gains in consolidated operating earnings and adjusted EBITDA year-over-year. Consolidated revenue was 3% lower at just over $1.2 billion, consolidated operating earnings was $79.1 million, up $36.2 million year-over-year, and adjusted EBITDA of $200.8 million rose $12.3 million year-over-year. Net income from continuing operations was $15.5 million versus a net loss of $37.3 million in the prior year. Our full-year effective income tax rate came in at 53%, which is influenced by the fact that throughout the year, we booked valuation allowances on US deferred tax assets. Excluding the impact of valuation allowances, our full-year effective income tax rate was roughly 22%, which is below the range we guided to last quarter. The rate came in below our expectations, primarily due to lower estimated income associated with Fortress earnings slipping into the first quarter and the refinement of certain foreign tax estimates. Moving to the Salt business, on a quarterly basis, segment revenue was essentially flat year-over-year at $186.7 million, resulting from a 9% increase in price, offset by a 9% decrease in total sales volumes, which declined for both the highway deicing and C&I salt businesses. Highway deicing price rose 11% year-over-year, while C&I price increased 8% reflecting continued pricing power across both product lines. Quarterly distribution costs per ton decreased 8% year-over-year due to favorable freight rates within the C&I business, while all-in product costs per ton increased 4% year-over-year, driven by the impact of unplanned downtime. Operating earnings increased 91% to $28.8 million while adjusted EBITDA improved 29% to $44.4 million year-over-year. For the full year, Salt segment revenue was flat year-over-year at approximately $1 billion, a below-average highway deicing season in our served markets in North America was the leading cause of a 10% decrease in total sales volumes, with highway deicing volumes down 11% and C&I volumes down 6%. Higher highway deicing and C&I salt pricing led to an increase in overall Salt segment pricing of 11% year-over-year. The decline in volumes and increase in price were consistent with the value-over-volume strategy that we pursued in 2023 and was the driver of this business' improved profitability. On a per-ton basis, both distribution and all-in product costs saw modest increases year-over-year, up 2% and 6% respectively. The Salt segment generated $170.7 million in operating earnings and adjusted EBITDA of $230.7 million, up 47% and 26% respectively year-over-year. Importantly, the segment saw adjusted EBITDA margins improve by over 400 basis points year-over-year and adjusted EBITDA per ton recovered to over $20 per ton which, as Kevin mentioned, was an important strategic objective for us this year. Turning to our Plant Nutrition segment, fourth quarter revenue totaled $35.3 million, down 39% year-over-year, driven by a combination of a 26% decrease in price and an 18% decline in sales volume. The decrease in price reflected the deterioration of global potassium fertilizer prices throughout the year. This influenced purchaser behavior as throughout the year, buyers didn't want to hold inventory and generally waited to buy product until needed. Distribution costs per ton increased by 6% year-over-year due to the timing of market demand and associated railcar storage fees, while all-in product costs per ton declined 2%. The segment had an operating loss of $1.6 million for the quarter, down $14.2 million year-over-year. Adjusted EBITDA declined $15.1 million to $6.7 million. As we've discussed throughout the year, highly unusual weather in California was the primary driver of the decrease in full-year sales volumes year-over-year. For the full year, the segment generated $172.1 million in revenue, down 23% year-over-year, primarily due to a 23% decrease in sales volumes. Distribution costs per ton rose 6% year-over-year due to the impact of lower sales volumes on our fixed distribution costs, while all-in product costs per ton were up 15%. Operating earnings for the full year totaled $11.2 million and adjusted EBITDA totaled $45.5 million. I would now like to provide a bit of color on Fortress' results for the year. Fortress had its first sales in 2023. So, we recognized modest positive contributions from the business to revenue, operating earnings, and adjusted EBITDA this period of $10.4 million, $3.2 million, and $4.6 million respectively. Our initial contract with the US Forest Service was largely structured as take-or-pay and covered the calendar year ending in December '23. We expect to recognize the vast majority of the value of the contract during our fiscal year ended in September based on historic patterns of wildfire activity. However, wildfire activity in the final quarter of our fiscal year, which included heavy rain in the Western US from Tropical Storm Hilary, was unusually mild. Specifically, calendar year-to-date through September, acres burned from wildfires in the US were approximately 36% of the 10-year average, according to the National Interagency Fire Center. As a result, while the ultimate value of the initial calendar '23 contract is unchanged, the bulk of the revenue recognition related to the take-or-pay portion of the contract will occur in the current quarter, three months later than our original expectation. Accordingly, approximately $12 million and adjusted EBITDA that we had expected to impact the fourth quarter of '23 will slide into the current quarter. Overall, we were encouraged by the operating performance we saw at Fortress in its initial year of commercial operations. Turning to our balance sheet, at quarter-end, we had liquidity of $317 million, comprised of roughly $39 million of cash and revolver capacity of around $278 million. Net debt to adjusted EBITDA stood at 3.7 times at the end of the quarter. Moving onto our outlook for fiscal '24. The latest North America highway deicing bidding season has concluded and we expect the average contracted price for the upcoming North America winter season to be up by roughly 3% versus the prior year's bid season results and total committed bid volumes to decline by approximately 5% year-over-year. Despite the 5% decrease in commitments, we are expecting an increase in sales volumes year-over-year based on historical sales-to-commitment ratios and assuming we experience average winter weather activity. Snow days during last year's winter within our North America served markets were only approximately 80% of the long-run average. As a result, simply having an average winter should drive more than enough volume year-over-year to offset lower commitment levels. For Salt, we expect adjusted EBITDA in the range of $230 million to $270 million. This is again based on the assumption that we have an average winter. During our first-quarter earnings call in February of 2024, we expect to update investors on where the Salt segment is tracking against the range of outcomes shown on Slide 14 of our earnings presentation. Then during our second-quarter earnings call in May, we will revisit our Salt guidance following the completion of the winter season. The outlook for Plant Nutrition EBITDA is in the range of $20 million to $40 million, despite meaningfully higher sales volumes. This level of performance margin-wise is well below our targeted potential for this business at this stage in the industry pricing cycle.

So I'll start and then ask, Jamie. So, we did book about $4 million, $5 million of Fortress profit in 2023 and $12 million will roll into next year. And so you add those together, you get, kind of $15 million and change and it all depends on the level of profitability that we see in this upcoming contract.

That's a good question, David. It's somewhat difficult to pinpoint. However, there are two main areas we're focusing on. As you know, the draft rules from House Bill 513 have been released and are currently open for public comment. We have submitted our feedback and will collaborate with the State to develop draft rules for lithium extraction in the lake. We have some concerns regarding how these were released and will engage in discussions to influence the outcome favorably for us and the people in Utah. Additionally, there is a legislative session coming up after the first of the year that we will actively participate in. I expect these matters to clarify around April, which should help us determine whether we can move forward or postpone this initiative. So, I would suggest looking towards the April-May timeframe next year for more clarity.

Yeah, we're $100 below where we expect this business to be on a cash-cost basis. If you look back over the past five years, you multiply that times our tons when you get $30 million. These businesses ought to be in that range you just referred to. And that's going to be a focus of our efforts in the coming years. From a long-term perspective, as we harvest less and less the ponds, just deposit and concentrate, we expect that we will get better yields over that two or three-year deposition process, but we're not going to just wait for that. We're also looking at the cost base at Ogden in terms of things we can do in the near term to improve the cost base as we wait for the ponds to regenerate.

Hey, Greg. We couldn't hear you clearly. Could you please repeat your question for us?

Sure. Greg, this is Jamie. So, we've assumed we talked about it in different buckets. On the vessel and barge side for 2024, we're going to see typical inflationary pressure, a lot of those are fixed. When we look at truck for 2024, we think the truck market is actually bottoming out now, maybe first quarter, and would be expected to rise. Given some of the freight supply rationalization, Conway, Yellow bankruptcies, so we think the supply picture of freight is shrinking actually. And with the post-pandemic destocking behind us, we think there's demand increase in retail over the next year. So, we've baked into our plan, and for 2024 increased truck rates really in the back half of the year. Now that is significant. It is a significant increase. Think of it as 15% or so.

Well, to the extent that our volumes increase as a result of a normalized winter, just the sheer leverage from a 3%, 4% increase in the tonnage on the same cost base will improve the tons and that's what you're seeing.

Thank you. Good morning. Kevin, regarding lithium, is there a point in time when you would consider the negotiations too lengthy and decide to move on from pursuing lithium? Is it six months, a year, or possibly longer? That information would be helpful. Thank you.

That's a good question, David, and it's difficult to pinpoint an exact timeline. However, there are two main aspects to consider. First, as you know, the draft rules stemming from House Bill 513 have been released and are currently open for public comment. We've submitted our feedback and will collaborate with the State to develop a set of rules for lithium extraction from the lake. We have some concerns regarding the initial release and will engage in discussions to ensure a favorable outcome for us and other stakeholders in Utah. Secondly, there is a legislative session starting after the new year, which we will participate in. All of this should clarify the situation by around April. That timeframe will help us decide whether to continue pursuing this opportunity or put it on hold for now. So, I would suggest looking towards April-May next year for more clarity. So, yeah, I mean we've kind of laid out our criteria to have clarity on the regulatory environment to have a partner that is going to help us reduce our financial exposure to the project and to have this DustGuard unit refined to where it demonstrates commercial viability. Those are the criteria we need to hit before we can thoughtfully think about progress.

Thank you. We'll take our first question from Joel Jackson with BMO Capital Markets. Your line is open.

Good morning, everyone. I have a few questions that I will ask one by one. Regarding the '24 guidance for Fortress, I appreciate the information provided about expecting this year's contribution from Fortress to be at least similar to $12 million. I anticipate that in '24, there may be some double counting, as we have the '23 earnings contributing in '24 and the earnings from '24. I'm trying to understand what the normalized earnings for '24 might look like. It seems like the contribution might be slightly higher than $12 million. Additionally, how do you expect that business to develop into fiscal '25? Thank you.

So I'll start and then ask, Jamie. So, we did book about $4 million, $5 million of Fortress profit in 2023 and $12 million will roll into next year. And so you add those together, you get, kind of $15 million and change and it all depends on the level of profitability that we see in this upcoming contract. Jamie, you want to elaborate?

Yeah, I think. Yes. So you think about normalized '23 was about $15 million or so, $15 million, $16 million. Lorin's prepared remarks said we expect in '24 to achieve something at least at that level. So, the negotiations are ongoing. We are figuring out which basis, what it looks like. It's likely that it won't be a take-or-pay scenario next year. So, that's about all the incremental color we can give you right now.

Exactly. From a cash cost perspective, Salt costs are about flat around roughly sort of $40 a ton and EBITDA per ton is actually up about $1. So, I'm not sure what you're seeing but Salt is up from an EBITDA per ton perspective and roughly flat from a cash ton perspective year-over-year.

Maybe then in that flat environment before I pass the baton on, maybe talk about what costs are up, what costs are down, thanks, to make it flat?