Compass Minerals International Inc: Form 10-Q for the period ended Jun 30, 2025

All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: our mining and industrial operations; geological conditions; weather conditions; our continued ability to access ambient lake brine in the Great Salt Lake; dependency on a limited number of key production and distribution facilities and critical equipment; the inability to fund necessary capital expenditures or successfully complete capital projects; uncertainties in estimating our economically recoverable reserves and resources; the useful life of our mine properties; conversion of mineral resources into mineral reserves; strikes, other forms of work stoppage or slowdown or other union activities; supply constraints or price increases for energy and raw materials used in our production processes; our indebtedness and inability to pay our indebtedness; restrictions in our debt agreements that may limit our ability to operate our business or require accelerated debt payments; tax liabilities; the inability of our customers to access credit or a default by our customers of trade credit extended by us; financial assurance requirements; our payment of any dividends; the seasonal demand for our products; the impact of anticipated changes in potash product prices and customer application rates; the impact of competition on the sales of our products; inflation risks; increasing costs or a lack of availability of transportation services; risks associated with our international operations and sales, including the impact of any tariffs and changes in currency exchange rates; conditions in the sectors where we sell products and supply and demand imbalances for competing products, including the impact of any tariffs; our rights and governmental authorizations to mine and operate our properties; risks related to unanticipated litigation or investigations or pending litigation or investigations or other contingencies; compliance with environmental, health and safety laws and regulations; environmental liabilities; compliance with foreign and United States (“U.S.”) laws and regulations related to import and export requirements and anti-corruption laws; changes in laws, industry standards and regulatory requirements, including any changes in tariffs imposed; product liability claims and product recalls; misappropriation or infringement claims relating to intellectual property; inability to obtain required product registrations or increased regulatory requirements; our ability to successfully implement our strategies; risks related to labor shortages and the loss of key personnel; a compromise of our computer systems, information technology or operations technology or the inability to protect confidential or proprietary data; climate change and related laws and regulations; our ability to expand our business through acquisitions and investments, realize anticipated benefits from acquisitions and investments and integrate acquired businesses; outbreaks of contagious disease or similar public health threats; domestic and international general business and economic conditions; our ability to successfully remediate the material weakness in our internal controls over financial reporting disclosed in this Form 10-Q; and other risks referenced from time to time in this report and our other filings with the Securities and Exchange Commission (the “SEC”), including Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the annual period ended September 30, 2024 (“2024 Form 10-K”).

In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” the negative of these terms or other comparable terminology. Forward-looking statements include without limitation statements about our outlook, including expected sales volumes and costs; existing or potential capital expenditures; capital projects and investments; the industry and our competition; projected sources of cash flow; potential legal liability; proposed or recently enacted legislation and regulatory action; the seasonal distribution of working capital requirements; our reinvestment of foreign earnings outside the U.S.; payment of future dividends and ability to reinvest in our business; our ability to optimize cash accessibility, minimize tax expense and meet debt service requirements; future tax payments, tax refunds and valuation allowances; leverage ratios; realization of potential savings from our restructuring activities; outcomes of matters with taxing authorities; the effects of currency fluctuations and inflation, including our ability to recover inflation-based cost increases; the seasonality of our business; and the effects of climate change. These forward-looking statements are only predictions. Actual events or results may differ materially.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We undertake no duty to update any of the forward-looking statements after the date hereof or to reflect the occurrence of unanticipated events.

Unless the context requires otherwise, references to the “Company,” “Compass Minerals,” “our,” “us” and “we” refer to Compass Minerals International, Inc. (“CMI,” the parent holding company) and its consolidated subsidiaries. Except where otherwise noted, references to North America include only the continental U.S. and Canada, and references to the United Kingdom (“U.K.”) include only England, Scotland and Wales. Except where otherwise noted, all references to tons refer to “short tons” and all amounts are in U.S. dollars. One short ton equals 2,000 pounds and one metric ton equals 2,204.6 pounds. Compass Minerals and Protassium+ and combinations thereof, are trademarks of CMI or its subsidiaries in the U.S. and other countries.

Critical Accounting Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting practices (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the reporting date and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from these estimates. We have identified the critical accounting policies and estimates that we believe are most important to the portrayal of our financial condition and results of operations. The policies set forth below require significant subjective or complex judgments by management, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

On March 25, 2025, we took measures to align our cost structure to our current business needs as part of a larger strategic refocus to improve the profitability of our core Salt and Plant Nutrition businesses, including the process of exiting the Fortress North America, LLC (“Fortress”) fire retardant business and terminating the employment of all Fortress employees.

As a result of the above items impacting Fortress, we determined that there were indicators of impairment with the associated Fortress intangible assets. Therefore, we tested these intangibles for impairment. As there were no future cash flows expected related to these intangible assets, customer relationships was determined to have a fair value of zero using an income approach under ASC 820, Fair Value Measurement (Level 3 inputs, see Note 12. Fair Value Measurements in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q). Consequently, we recorded an impairment loss of $0 and $53.0 million, recorded in Loss on impairments, net on the Consolidated Statements of Operations for the three and nine months ended June 30, 2025, respectively.

Additionally, we performed an impairment test on the remaining Fortress asset group (including property, plant, and equipment (“PP&E”), inventory and in-process research and development (“IPR&D”)), with a carrying amount of $19.7 million. The impairment test under ASC 360, Property, Plant Equipment and Other Assets, compared the asset group’s undiscounted cash flows to its carrying amount. We determined the fair value of the asset group using a market approach under ASC 820, Fair Value Measurement. The fair value of the asset group was based on relevant third-party non-binding offers received for the specific asset group (Level 2 inputs, see Note 12. Fair Value Measurements in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q). The asset group (PP&E, inventory and IPR&D) was not impaired as its fair value, based on market indications, approximated or exceeded its carrying value. The fair value estimates involved significant estimates and assumptions, which may differ from actual outcomes. At June 30, 2025, the Company performed an impairment test on the remaining Fortress asset group related to property, plant, and equipment and recorded a loss on impairment, net of $0.7 million, during the three and nine months ended June 30, 2025.

A discussion of our critical accounting estimates used in preparation of our consolidated financial statements is presented under the heading "Management’s Discussion of Critical Accounting Policies and Estimates" in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Form 10-K.

Company Overview

Compass Minerals is a leading global provider of essential minerals, including salt, sulfate of potash (“SOP”) specialty fertilizer and magnesium chloride. As of June 30, 2025, we operate 12 production and packaging facilities, including:

• The largest rock salt mine in the world in Goderich, Ontario, Canada;
• The largest dedicated rock salt mine in the U.K. in Winsford, Cheshire;
• A solar evaporation facility located near Ogden, Utah, which is both the largest sulfate of potash specialty fertilizer production site and the largest solar salt production site in the Western Hemisphere; and
• Several mechanical evaporation facilities producing consumer and industrial salt.

Our Salt segment provides highway deicing salt to customers in North America and the U.K. as well as consumer deicing and water conditioning products, ingredients used in consumer and commercial food preparation, and other salt-based products for consumer, industrial, chemical and agricultural applications in North America. In the U.K., we operate a records management business utilizing excavated areas of our Winsford salt mine with one other location in London, England.

Our Plant Nutrition segment produces and markets SOP products in various grades worldwide to distributors and retailers of crop inputs, as well as growers and for industrial uses. We market our SOP under the trade name Protassium+®.

In May 2023, we completed the purchase of Fortress, a fire retardant company working to develop long-term aerial and ground fire retardant products to help combat wildfires. As discussed in Note 1. Accounting Policies and Basis of Presentation in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q, we exited the fire retardant business and recorded a $0 and $53.0 million loss on impairment of long-lived assets during the three and nine months ended June 30, 2025, respectively. At June 30, 2025, the Company performed an impairment test on the remaining Fortress asset group related to property, plant, and equipment and recorded a loss on impairment, net of $0.7 million, during the three and nine months ended June 30, 2025.

We continue to monitor the effects of the recent tariffs imposed by the U.S. administration during the second quarter of 2025, the reciprocal tariffs and retaliatory tariffs imposed by other countries, and the impact on our business. Our salt and fertilizer production in Canada is qualified under the United States-Mexico-Canada (“USMCA”) trade agreement. Accordingly, our exports from Canada into the United States are exempt from tariffs at this time.

On July 4, 2025, the U.S. enacted a budget reconciliation package known as the “One Big Beautiful Bill Act of 2025” (“OBBBA”), which includes both tax and non-tax provisions. We are evaluating the effects of these changes and other provisions of this legislation on our consolidated financial statements; however, we do not expect the changes resulting from the tax provisions in OBBBA will have a material impact on the Company’s results of operations due to the timing of our fiscal year reporting.

Consolidated Results of Continuing Operations

The following is a summary of our consolidated results of continuing operations for the three and nine months ended June 30, 2025 and June 30, 2024, respectively. The following discussion should be read in conjunction with the information contained in our consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q.

THREE AND NINE MONTHS ENDED JUNE 30

Commentary: Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

• Total sales increased 6%, or $11.7 million, due to higher Salt and Plant Nutrition segment sales. The increase in sales for Salt reflected higher deicing and consumer and industrial sales volumes, which was partially offset by lower combined average sales prices. Plant Nutrition sales increased from the prior year due to an increase in sales volumes, partially offset by lower average sales prices.
• Operating income of $15.9 million improved $10.0 million from $5.9 million in the prior-year period, primarily reflecting higher Salt and Plant Nutrition operating earnings. Salt operating earnings increased $2.2 million as higher sales volumes and lower per-unit product costs were partially offset by lower average sales prices. Plant Nutrition operating income improved from a prior period operating loss primarily due to higher sales volumes and lower per-unit product costs, which were partially offset by lower average sales prices and higher per-unit distribution costs.
• Diluted net loss per common share of $0.41 improved by $0.64 from $1.05 loss per common share in the prior-year period.

Commentary: Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024

• Total sales increased 12%, or $107.8 million, due to higher Salt and Plant Nutrition segment sales, partially offset by lower sales by the Fortress fire retardant business. The increase in Salt sales was primarily driven by higher sales volumes, partially offset by lower combined average sales prices. The increase in Plant Nutrition sales from the prior year primarily reflects higher sales volumes, partially offset by lower average sales price. The results of operations of the Fortress business include sales of $14.6 million for the nine months ended June 30, 2024, and no sales in fiscal 2025. On May 30, 2025, we completed the sale of the Fortress fire retardant assets.
• Operating income of $13.3 million increased $100.3 million from an operating loss of $87.0 million in the prior-year period, primarily reflecting the impairment related to the exit of the Fortress fire retardant business (see Note 1. Accounting Policies and Basis of Presentation in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q). Corporate and Other operating loss decreased from the prior year primarily due to the prior year $74.8 million lithium asset impairment and $50.0 million of goodwill, long-lived asset and inventory impairments related to the Fortress business, partially offset by the current year Fortress asset impairments of $53.7 million. These operating losses were partially offset by the net non-cash reduction in our Fortress-related contingent consideration of $7.9 million in the current year and $23.1 million in the prior year. Plant Nutrition operating loss decreased due primarily to a prior year $51.0 million goodwill impairment, higher current year sales prices and lower per-unit product costs, which were partially offset by higher distribution costs. In addition, Salt operating earnings decreased due to lower average sales prices and higher per-unit product costs, which were partially offset by higher Salt sales volumes.
• Diluted net loss per common share of $1.74 decreased by $2.09 from $3.83 loss per common share in the prior-year period.

THREE AND NINE MONTHS ENDED JUNE 30

Commentary: Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Gross Profit: Increased 26%, or $8.6 million; Gross Margin increased 3 percentage points to 19%

• Salt segment gross profit increased $2.2 million primarily due to higher sales volumes and lower per-unit product costs, which were partially offset by lower combined average sales prices (see Salt operating results).
• The gross profit of the Plant Nutrition segment increased $5.9 million due to higher sales volumes and lower per-unit product costs, which were partially offset by higher distribution costs and lower average sales prices (see Plant Nutrition operating results).

Commentary: Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024

Gross Profit: Decreased 13%, or $23.2 million; Gross Margin decreased 4 percentage points to 15%

• Salt segment gross profit decreased $17.9 million, primarily due to lower average sales prices and higher per-unit product costs, partially offset by higher sales volumes (see Salt operating results).
• The gross profit of the Plant Nutrition segment increased $4.7 million due to higher sales volumes and lower per-unit product costs, partially offset by lower average sales prices and higher per-unit distribution costs (see Plant Nutrition operating results).
• Gross profit was also unfavorably impacted by earnings in the prior period related to the Fortress fire retardant business in May 2023.

OTHER EXPENSES AND INCOME

Commentary: Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

SG&A: Decreased $3.5 million; Decreased 2.4 percentage points as a percentage of sales from 13.6% to 11.2%

• The decrease in SG&A expense was primarily due to lower corporate professional services and compensation.

Loss on Impairments, net: $0.7 million during the current period

• We recorded an impairment loss of $0.7 million for the three months ended June 30, 2025 related to the exit of the Fortress fire retardant business (see Item 1, Note 1).

Other Operating (Expense) Income: Changed $1.4 million from income of $0.8 million to an expense $0.6 million

• The decrease in other operating (expense) income was primarily the result of lower restructuring charges in the current period.

Interest Income: Increased $0.1 million to $0.3 million

• The increase in interest income during the current period is primarily due to the higher average cash balance in the current year.

Interest Expense: Decreased $0.9 million to $16.3 million

• Interest expense decreased $0.9 million due to lower credit facility levels in the current period.

Loss (Gain) on Foreign Exchange: Rose $8.9 million from a $0.5 million gain in the prior-year period to an $8.4 million loss

• We realized a loss on foreign exchange of $8.4 million in the third quarter of fiscal 2025 compared to a gain of $0.5 million in the same quarter of the prior-year period, primarily reflecting the translation of our intercompany loans from Canadian dollars to U.S. dollars.

Loss on Extinguishment of Debt: $7.6 million in the current period

• We realized a loss on extinguishment of debt of $7.6 million in the third quarter of fiscal 2025 comprised of a $3.9 million prepayment premium related to the partial redemption of 2027 Notes and a $3.7 million write-off of unamortized deferred financing costs related to the partial redemption of 2027 Notes and repayment of the term loan. Refer to Note 8. Long-Term Debt and Finance Lease Liabilities in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information.

Other (Income) Expense, net: Changed $2.8 million to income of $2.5 million

• The change is due primarily to the gain related to the sale of the Fortress assets in the current period.

Income Tax Expense: Decreased $29.3 million from $32.7 million to $3.4 million

• Tax expense decreased by $29.3 million for the three months ended June 30, 2025 versus the three months ended June 30, 2024 primarily due to a year to date catch up recorded in the three months ended June 30, 2024 for the change in the annual effective tax rate calculations with the US loss jurisdiction having a separate annual effective tax rate applied to US losses and a foreign annual effective tax applied to foreign income. The change in the annual effective tax rate calculation began with the interim period ended June 30, 2024.
• Our effective tax rate was (25.0)% for the three months ended June 30, 2025, which is primarily driven by the income mix by country with income recognized in foreign jurisdictions, for which tax expense was recorded, offset by losses recognized in the U.S. for which a valuation allowance has been recorded against the U.S. tax benefit carryforward.
• Our income tax provision for the three months ended June 30, 2025 and June 30, 2024 differs from the U.S. statutory rate primarily due to U.S. statutory depletion, state income taxes, nondeductible executive compensation, foreign income, mining and withholding taxes, valuation allowance expense and base erosion and anti-abuse tax.

Commentary: Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024

SG&A: Decreased $19.6 million; Decreased 3.2 percentage points as a percentage of sales from 11.7% to 8.5%

• The decrease in SG&A expense was primarily due to lower corporate compensation and lower lithium expenses.

Loss on Impairments, net: Decreased $119.7 million to $53.7 million

• We recorded an impairment loss of $53.7 million for the nine months ended June 30, 2025 related to the exit of the Fortress fire retardant business (see Note 1. Accounting Policies and Basis of Presentation in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q).
• During the nine months ended June 30, 2024, we recorded goodwill impairments of $51.0 million related to our Plant Nutrition segment and $32.0 million related to our Fortress operations (within the Corporate and Other segment). The Plant Nutrition impairment was primarily the result of reduced cash flow assumptions impacting expected profitability of the Plant Nutrition segment. The Fortress impairment was primarily related to uncertainty surrounding our magnesium chloride-based fire retardants which impacted projected future revenues and cash flows. Also, during the nine months ended June 30, 2024, we recorded a $15.6 million long-lived asset impairment, net, related to Fortress magnesium chloride-based products.
• We recorded an impairment loss of $74.8 million for the nine months ended June 30, 2024 related to the termination of the lithium development.

Other Operating Income: Decreased $15.8 million from $17.4 million to $1.6 million

• The decrease in other operating expense was due to a decrease in the contingent consideration related to the Fortress acquisition, partially offset by severance costs resulting from the decision to discontinue the pursuit of the lithium development and corporate restructuring charges in the current period.

Interest Income: Increased $0.1 million to $0.9 million

• The increase in interest income during the current period is primarily due to the higher average cash balance in the current year.

Interest Expense: Increased $0.8 million to $51.2 million

• Interest expense increased due to higher debt levels and higher interest rates in the current year-to-date period.

Loss (Gain) on Foreign Exchange: Changed by $4.2 million from a gain of $1.1 million in the prior-year period to a loss of $3.1 million

• We realized a loss on foreign exchange of $3.1 million in the nine months ended June 30, 2025, compared to a gain of $1.1 million in the same period of the prior fiscal year, due primarily reflecting the translation of our intercompany loans from Canadian dollars to U.S. dollars.

Loss on Extinguishment of Debt: $7.6 million in the current period

• We realized a loss on extinguishment of debt of $7.6 million in the nine months ended June 30, 2025 comprised of a $3.9 million prepayment premium related to the partial redemption of 2027 Notes and a $3.7 million write-off of unamortized deferred financing costs related to the partial redemption of 2027 Notes and repayment of the term loan. Refer to Note 8. Long-Term Debt and Finance Lease Liabilities in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information.

Other Expense, net: Increased $0.1 million to $2.0 million

• The increase is due primarily to fees paid and the write-off of previously capitalized fees when we modified our debt agreements in the current period, partially offset by the gain related to the sale of the Fortress assets.

Income Tax Expense: Increased $2.5 million from $20.4 million to $22.9 million

• The increase in income tax expense was primarily driven by the increase in foreign book income in the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. Additionally, the majority of the impairments recorded in the nine months ended June 30, 2025 and June 30, 2024 were either not tax deductible or the tax benefit was offset by tax expense for a valuation allowance on the related deferred tax asset.
• Our effective tax rate of (46%) for the nine months ended June 30, 2025 is primarily driven by the income mix by country with income recognized in foreign jurisdictions offset by losses recognized in the U.S., for which a valuation allowance has been recorded against the U.S. tax benefit carryforward. Additionally, the majority of the impairments recorded in the nine months ended June 30, 2025 and June 30, 2024 were either not tax deductible or the tax benefit was offset by tax expense for a valuation allowance on the related deferred tax asset. See Note 6. Income Taxes in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q.
• Our income tax provision for the nine months ended June 30, 2025 and June 30, 2024 differs from the U.S. statutory rate primarily due to U.S. statutory depletion, state income taxes, base erosion and anti-abuse tax, nondeductible executive compensation, foreign income, mining and withholding taxes and valuation allowance expense.

Operating Segment Performance

The following financial results represent consolidated financial information with respect to the operations of our Salt and Plant Nutrition segments. Sales primarily include revenue from the sales of our products, or “product sales,” and the impact of shipping and handling costs incurred to deliver our salt and plant nutrition products to our customers.

The results of operations of the Fortress business include sales of $0 and $14.6 million for the three and nine months ended June 30, 2024, respectively, and no sales in fiscal 2025. The results of operations of the consolidated records management business and other incidental revenues include sales of $3.8 million and $3.5 million for the three months ended June 30, 2025 and June 30, 2024, respectively, and $11.0 million and $10.1 million for the nine months ended June 30, 2025 and June 30, 2024, respectively. These sales are not material to our consolidated financial results and are not included in the following operating segment financial data.

Salt Results

Commentary: Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

• Salt sales increased $5.4 million, or 3%, primarily due to higher sales volumes, partially offset by lower average sales prices for our consumer and industrial products.
• Salt sales volumes increased 4% in total, or 61,000 tons, which increased sales by approximately $5.3 million. Highway deicing sales volumes increased 5%, reflecting an increase in sales volumes to highway and liquid magnesium chloride customers. Consumer and industrial sales volumes increased 2%, primarily due to higher non-deicing volumes.
• Combined average sales prices decreased 1%, partially offsetting the volume increase by approximately $0.1 million driven by a decrease in consumer and industrial product average sales prices.
• Highway deicing average sales price increased 1% reflecting product sales mix. Consumer and industrial average sales price decreased 1% reflecting non-deicing product sales.
• Salt operating earnings increased $2.2 million, as higher sales volumes, lower per-unit production costs and lower per-unit distribution costs were offset by lower average sales prices.

Commentary: Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024

• Salt sales increased $95.6 million, or 13%, primarily due to higher sales volumes, partially offset by lower combined average sales prices.
• Salt sales volumes increased 17%, increasing sales by approximately $101.3 million. Highway deicing sales volumes increased 21% reflecting more winter weather events in the second quarter of 2025 compared to the same period of the prior year. Consumer and industrial sales volumes increased 2% primarily due to higher consumer deicing volumes.
• Combined average sales prices decreased 4%, partially offsetting the volume increase by approximately $5.7 million driven by a decrease in highway average sales prices.
• Highway deicing average sales prices decreased 3% across all product categories. Consumer and industrial average sales prices increased 4% due to price increases taken to offset inflation realized in prior years. The lower average sales prices are also reflective of sales mix.
• Salt operating earnings decreased $18.2 million, due primarily to lower combined average sales prices and higher per-unit product costs, partially offset by higher sales volumes and lower per-unit distribution costs.

Plant Nutrition Results

Commentary: Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

• Plant Nutrition sales increased 15%, or $6.0 million, due to higher sales volumes, partially offset by lower average sales prices.
• Plant Nutrition sales volumes increased 21% year over year driven by more consistent production which has allowed for increased sales. The higher sales volumes increased sales by approximately $8.2 million.
• Plant Nutrition average sales prices decreased 5%, which contributed approximately $2.2 million to the decrease in sales. Global supply and demand dynamics for fertilizer products resulted in weakening average sales prices versus the comparable prior year period.
• Plant Nutrition operating earnings increased $6.6 million to $5.2 million from an operating loss in the prior-year period of $1.4 million. Plant Nutrition operating earnings were impacted by higher sales volumes and lower per-unit product cost, partially offset by lower average sales prices and higher per-unit distribution costs.

Commentary: Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024

• Plant Nutrition sales increased 19%, or $25.9 million, due to higher sales volumes, partially offset by lower average sales prices.
• Plant Nutrition sales volumes increased 28%, or 58,000 tons, which resulted in a $39.3 million increase in sales driven by more consistent production which allowed for increased sales.
• Plant Nutrition average sales prices decreased 8%, partially offsetting the increase in sales volume by $13.4 million. Average sales prices decreased due to supply conditions of potassium-based fertilizers globally.
• Plant Nutrition operating loss decreased $57.0 million to operating earnings of $0.3 million, primarily reflecting the 2024 write-off of goodwill, lower average sales prices, higher per-unit distribution costs and higher per-unit product costs, partially offset by higher sales volumes.

Outlook

• We expect Salt segment sales volumes and adjusted EBITDA to range from 10.7 million to 11.0 million tons and $220 million to $229 million, respectively, in fiscal year 2025.
• Approximately 70% of the company's North American highway deicing bidding process for the upcoming winter season has been completed. Based on regional bid results to date, we expect our average contract selling price for the coming season to be approximately 2% to 4% higher than prices in fiscal 2025. Committed bid volumes are expected to be up approximately 3% to 5% compared to fiscal 2025, which is consistent with expectations following a stronger North American highway deicing season compared to recent history.
• Plant Nutrition segment sales volumes are expected to improve to a range of 320,000 to 325,000 tons in fiscal year 2025. Positive production trends in 2025 have allowed us to pursue business beyond normally serviced markets, leading to incremental sales. For fiscal year 2025, we are expecting adjusted EBITDA in a range of $24 million to $27 million.
• Fiscal year 2025 capital expenditures are expected to be in the $75 million to $85 million range.

Adjusted EBITDA

Management uses a variety of measures to evaluate our performance. While our consolidated financial statements, taken as a whole, provide an understanding of our overall results of operations, financial condition and cash flows, we analyze components of the consolidated financial statements to identify certain trends and evaluate specific performance areas. In addition to using U.S. GAAP financial measures, such as gross profit, net earnings and cash flows generated by operating activities, management uses earnings before interest, taxes, depreciation and amortization (“EBITDA”) adjusted for items management believes are not indicative of our ongoing operating performance (“Adjusted EBITDA”). Both EBITDA and Adjusted EBITDA are non-GAAP financial measures used to evaluate the operating performance of our core business operations because our resource allocation, financing methods, cost of capital and income tax positions are managed at a corporate level, apart from the activities of the operating segments, and our operating facilities are located in different taxing jurisdictions, which can cause considerable variation in net earnings. We also use EBITDA and Adjusted EBITDA to assess our operating performance and return on capital against other companies, and to evaluate potential acquisitions or other capital projects. EBITDA and Adjusted EBITDA are not calculated under U.S. GAAP and should not be considered in isolation or as a substitute for net earnings, cash flows or other financial data prepared in accordance with U.S. GAAP or as a measure of our overall profitability or liquidity.

EBITDA and Adjusted EBITDA exclude interest expense, income taxes and depreciation and amortization, each of which are an essential element of our cost structure and cannot be eliminated. Furthermore, Adjusted EBITDA excludes other cash and non-cash items, including stock-based compensation, interest income, (gain) loss on foreign exchange, other (income) expense, net and other significant items that management does not consider indicative of normal operations. Other significant items, such as executive transition costs, restructuring charges and impairment charges involve distinct initiatives that are not reflective of core operating activities and affect the comparability of our operational results across reporting periods. Our borrowings are a significant component of our capital structure and interest expense is a continuing cost of debt. We are also required to pay income taxes, a required and ongoing consequence of our operations. We have a significant investment in capital assets and depreciation and amortization reflect the utilization of those assets in order to generate revenues. Our employees are vital to our operations and we utilize various stock-based awards to compensate and incentivize our employees. Consequently, any measure that excludes these elements has material limitations. While EBITDA and Adjusted EBITDA are frequently used as measures of operating performance, these terms are not necessarily comparable to similarly titled measures of other companies due to the potential inconsistencies in the method of calculation.

Adjusted EBITDA increased 25.0%, or $8.2 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to an increase in gross profit and a reduction in selling, general and administrative expenses. Adjusted EBITDA decreased by 18%, or $33.5 million for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024, primarily due to a reduction in gross profit and a reduction in gain related to the Fortress contingent consideration of $15.2 million, partially offset by a decrease in selling, general and administrative expenses.

The calculation of EBITDA and Adjusted EBITDA as used by management is set forth in the table below (in millions):

(a) We recorded costs related to a recall of food-grade salt produced at our Goderich plant. Refer to Note 8. Commitments and Contingencies in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional details.

(b) We incurred severance and related charges due to reductions in workforce and changes to executive leadership and additional restructuring costs related to the exit of the Fortress fire retardant business during the three and nine months ended June 30, 2025. We also incurred severance and related charges for the three and nine months ended June 30, 2024, related to reductions in workforce and changes to executive leadership and additional restructuring costs related to the termination of our lithium development project.

(c) For the three and nine months ended June 30, 2025, we recorded impairments of property, plant, and equipment during the three months ended June 30, 2025 and intangible assets and property, plant, and equipment for the nine months ended June 30, 2025, both related to the exit of the Fortress fire retardant business. For the three and nine months ended June 30, 2024, we recorded impairments of long-lived assets related to the termination of the lithium development project; Fortress goodwill, intangible assets and inventory; and Plant Nutrition goodwill.

Liquidity and Capital Resources

Historically, our cash flows from operating activities have generally been adequate to fund our basic operating requirements, ongoing debt service and sustaining investment in our property, plant and equipment. We have also used cash generated from operations to fund capital expenditures, pay dividends, fund smaller acquisitions and repay our debt. To a certain extent, our ability to meet our short- and long-term liquidity and capital needs is subject to general economic, financial, competitive and weather conditions, effects of climate change, geological variations in our mine deposits and other factors that are beyond our control. Historically, our working capital requirements have been the highest in the first fiscal quarter (ending December 31) and lowest in the third fiscal quarter (ending June 30). When needed, we may fund short-term working capital requirements by accessing our $325 million revolving credit facility and our revolving AR Securitization Facility with a capacity, which is subject to certain conditions, of up to $100.0 million. As of June 30, 2025, we had liquidity of approximately $388.7 million, comprised of $79.4 million of cash and cash equivalents and $309.3 million of availability under our $325 million revolving credit facility.

We have been able to manage our cash flows generated and used across Compass Minerals to indefinitely reinvest earnings in our foreign jurisdictions or efficiently repatriate those funds to the U.S. As of June 30, 2025, we had $29.6 million of cash and cash equivalents that was either held directly or indirectly by foreign subsidiaries. In fiscal 2024, we did not repatriate any unremitted foreign earnings. During the second quarter of fiscal 2025, we revised our permanently reinvested assertion. We are expecting to repatriate approximately $11 million of unremitted foreign earnings from our U.K. operations on which there was no income tax impact as of June 30, 2025. It is our current intention to continue to reinvest the remaining undistributed earnings of our foreign subsidiaries indefinitely. We review our tax circumstances on a regular basis with the intent of optimizing cash accessibility and minimizing tax expense.

In addition, the amount of permanently reinvested earnings is influenced by, among other things, the profits generated by our foreign subsidiaries and the amount of investment in those same subsidiaries. The profits generated by our U.S. and foreign subsidiaries are impacted by the transfer price charged on the transfer of our products between them. Canadian provincial taxing authorities continue to challenge our transfer prices of certain items. The final resolution of these challenges may not occur for several years. We currently expect the outcome of these matters will not have a material impact on our results of operations. However, it is possible the resolution could materially impact the amount of earnings attributable to our foreign subsidiaries, which could impact the amount of permanently reinvested foreign earnings. See Note 6. Income Taxes in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q, for a discussion regarding our Canadian tax reassessments.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred in the U.S. over the three-year period ended June 30, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future income. On the basis of this evaluation, during the nine months ended June 30, 2025, an additional valuation allowance of $29.0 million has been recorded to recognize only the portion of the U.S. deferred tax assets that are more likely than not to be realized. The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased or reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for income.

Indebtedness

As of June 30, 2025, we had $839.7 million of outstanding indebtedness, consisting of $650.0 million outstanding under our 8.00% Senior Notes due 2030, $150.0 million outstanding under our 6.75% Senior Notes due 2027, $0 of borrowings outstanding under our senior secured credit facilities under the Credit Agreement (term loans and our revolving credit facility), and $39.7 million of outstanding loans under the accounts receivable financing facility (“AR Securitization Facility”) (see Note 7. Long-Term Debt and Finance Lease Liabilities in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for more detail regarding our debt). Outstanding letters of credit totaling $15.7 million as of June 30, 2025 further reduced available borrowing capacity under our revolving credit facility to $309.3 million.

We may borrow amounts under the revolving credit facility or enter into additional financing to fund our working capital requirements, potential acquisitions and capital expenditures, and for other general corporate purposes.

Our ability to make scheduled interest and principal payments on our indebtedness, to modify our indebtedness, to fund planned capital expenditures, and to fund acquisitions will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, climate-related, regulatory and other factors that are beyond our control. Based on our current level of operations, we believe that cash flow from operations and available cash, together with available borrowings under our revolving credit facility, will be adequate to meet our liquidity needs over the next 12 months.

Our debt service obligations could, under certain circumstances, materially affect our financial condition and prevent us from fulfilling our debt obligations. As a holding company, CMI’s investments in its operating subsidiaries constitute substantially all of its assets. Consequently, our subsidiaries conduct substantially all of our consolidated operating activities and own substantially all of our operating assets. The principal source of the cash needed to pay our obligations is the cash generated from our subsidiaries’ operations and their borrowings. Furthermore, we must remain in compliance with the terms of the 2023 Credit Agreement governing our credit facilities, including the consolidated total net leverage ratio and interest coverage ratio, in order to pay dividends to our stockholders. We must also comply with the terms of our indentures governing our 6.75% Senior Notes due December 2027 and our 8.00% Senior Notes due June 2030, which limit the amount of dividends we can pay to our stockholders.

On June 16, 2025, we issued $650.0 million aggregate principal amount of our 8.00% Senior Notes due 2030 in a private offering, pursuant to an indenture, dated June 16, 2025 (the “2030 Notes”), among us, the subsidiary guarantors named therein and Computershare Trust Company, N.A., as trustee. The 2030 Notes are senior unsecured obligations, with interest payable semi-annually on January 1 and July 1, commencing January 1, 2026. The Notes are guaranteed by certain of our domestic subsidiaries. The 2030 Notes will mature on June 16, 2030. We incurred $13.3 million in deferred financing costs, including arrangement, legal and other fees, and will be amortized to interest expense method over the 5-year term of the 2030 Notes.

We used the net proceeds from the 2030 Notes to (i) repay all outstanding amounts under its senior secured credit facility, including $43.5 million under the revolving credit facility and $191.3 million under the term loan, (ii) redeem approximately $350.0 million of its outstanding 6.75% Senior Notes due 2027 (the “2027 Notes”) at a redemption price of 101.125% of the principal amount, plus accrued and unpaid interest, (iii) pay transaction-related fees and expenses, (iv) increase cash on its balance sheet, and (v) for general corporate purposes. The redemption, completed on June 17, 2025, resulted in a loss on debt extinguishment of $5.7 million, included in Loss on extinguishment of debt in the Consolidated Statements of Operations for the three and nine months ended June 30, 2025. The loss was comprised of a $3.9 million prepayment premium and a $1.8 million write-off of unamortized deferred financing costs. Following the redemption, $150.0 million of the 2027 Notes remain outstanding and continue to accrue interest, payable semi-annually on June 1 and December 1, with unamortized deferred financing costs of $0.8 million as of June 30, 2025.

On June 16, 2025, we entered into the fifth amendment to its 2023 Credit Agreement, originally dated April 20, 2016, as amended (the “Amended and Restated 2023 Credit Agreement”). The amendment, among other things, (i) fixed the aggregate revolving commitments at $325.0 million, eliminating the automatic periodic step-downs previously included in the December 12, 2024, amendment to the 2023 Credit Agreement, which had scheduled reductions to $250.0 million by July 1, 2026, (ii) permitted the issuance of the 2030 Notes, with net proceeds used to prepay all outstanding loans under the Existing Amended and Restated Credit Agreement, including $43.5 million outstanding under the revolving credit facility and $191.3 million outstanding under the term loan, plus accrued and unpaid interest, (iii) permitted the Company to utilize certain baskets under covenants restricting the incurrence of indebtedness, liens, investments, dividends, and junior debt prepayments, and (iv) modified the financial maintenance covenants, which are tested on a quarterly basis, as follows: (A) replace the current leverage-based covenant, which required compliance with a maximum ratio of consolidated total net indebtedness to consolidated EBITDA of 6.50x (with a step-down to 5.75x on December 31, 2025, and a further step-down to 4.75x on March 31, 2026) with a leverage-based covenant which requires compliance with a maximum ratio of consolidated first lien net indebtedness to consolidated EBITDA of 2.75x (with a step-down to 2.50x on December 31, 2025) and (B) lower the required minimum ratio of consolidated EBITDA to consolidated interest expense from 2.00x (with a step-up to 2.25x on March 31, 2026) to 1.50x. In connection with the prepayment of the term loan, we recorded a loss on debt extinguishment of $1.9 million, included in Loss on extinguishment of debt on the Consolidated Statements of Operations for the three and nine months ended June 30, 2025, related to the write-off of unamortized deferred financing costs.

On December 12, 2024, we entered into the fourth amendment to our 2023 Credit Agreement, which, among other things, eased the restrictions of certain covenants contained in the agreement. The amendment included increasing the maximum allowed consolidated total net leverage ratio (as defined and calculated under the terms of the amended 2023 Credit Agreement) to 6.5x as of the last day of any quarter through the fiscal quarter ended September 30, 2025, then gradually stepping down to 4.50x for the fiscal quarter ended December 31, 2026 and thereafter. The amendment also decreased the Revolving Commitments (as defined in the Existing Credit Agreement) from $375 million to $325 million with additional reductions stepping down to $250 million on July 1, 2026.

As of June 30, 2025, we were in compliance with our debt covenants.

Capital Allocation

Principally due to the nature of our deicing business, our cash flows from operations have historically been seasonal, with the majority of our cash flows from operations generated during the first half of the calendar year. When we have not been able to meet our short-term liquidity or capital needs with cash from operations, whether as a result of the seasonality of our business or other causes, we have met those needs with borrowings under our revolving credit facility. We expect to meet the ongoing requirements for debt service, any declared dividends and capital expenditures from these sources. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We manage our capital allocation considering our long-term strategic objectives, required spending to sustain our business and focus on generating adequate returns on capital. On April 22, 2024, our Board of Directors determined not to declare dividends for the foreseeable future in order to align our capital allocation policy with our corporate focus on accelerating cash flow generation and debt reduction. While our equipment and facilities are generally not impacted by rapid technology changes, our operations require refurbishments and replacements to maintain structural integrity and reliable production and shipping capabilities. When possible, we incorporate efficiency, environmental and safety improvement capabilities into our routine capital projects and we plan the timing of larger projects to balance with our liquidity and capital resources. Changes in our operating cash flows may affect our future capital allocation and spending.

The table below provides a summary of our cash flows by category:

As mentioned above, our Salt segment’s business is seasonal and our Salt segment results and working capital needs are heavily impacted by the severity and timing of the winter weather, which generally occurs from December through March of each year. Customers tend to replenish their inventory prior to the start of the winter season and following snow events; consequently, the number and timing of snow events during the winter season will impact the amount of our accounts receivable and inventory at the end of each quarter. Our operating cash flows for the nine months ended June 30, 2025, reflect the seasonal decrease in inventory due to the end of the winter season. During the nine months ended June 30, 2024, we paid liabilities accrued as of September 30, 2023, including the remaining $10 million settlement payment to the SEC, accrued incentive compensation and other liabilities. Additionally, at the end of Fortress’ contract term with the USFS, we recognized revenue previously deferred in accrued liabilities and decreased our contingent consideration liability.

Product Recall

On October 25, 2024, we issued a recall for specific production lots of food-grade salt produced at our Goderich Plant following a customer report of a non-organic, foreign material in its product. We subsequently expanded the voluntary recall to include food products from the Goderich Plant between September 18 and November 6, 2024. The products recalled included both products sold prior and subsequent to September 30, 2024. We followed recall protocol and notified our BRCGS Global

Standard for Food Safety certifying body, the Canadian Food Inspection Agency (“CFIA”) and the U.S. Food and Drug Administration (“FDA”). We worked with the CFIA to obtain and assess the reported foreign material, complete the necessary investigation, and determine the next steps. The recall in the United States, supervised by the FDA, is complete and the matter is closed with FDA. Refer to Note 8. Commitments and Contingencies in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional details.

We continue to assess the scope and magnitude of additional customer claims. At this time, based on currently available information and our applicable insurance coverage, we do not believe any incremental losses will have a material adverse effect on our results of operations or cash flows in future periods.

Other Matters

See Note 6. Income Taxes and Note 8. Commitments and Contingencies in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for a discussion regarding labor, environmental and litigation matters.

Recent Accounting Pronouncements

See Note 1. Accounting Policies and Basis of Presentation in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for a discussion of recent accounting pronouncements.

Effects of Currency Fluctuations and Inflation

Our operations outside of the U.S. are conducted primarily in Canada and the U.K. Therefore, our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk whenever we or one of our subsidiaries enters into either a purchase or sales transaction using a currency other than the local currency of the transacting entity. With respect to currency translation risk, our financial condition and results of operations are measured and recorded in the relevant local currency and then translated into U.S. dollars for inclusion in our historical consolidated financial statements. Exchange rates between these currencies and the U.S. dollar have fluctuated significantly from time to time and may do so in the future. The majority of revenues and costs are denominated in U.S. dollars, with Canadian dollars and British pounds sterling also being significant. Significant changes in the value of the Canadian dollar or British pound sterling relative to the U.S. dollar could have a material adverse effect on our financial condition and our ability to meet interest and principal payments on U.S. dollar-denominated debt, including borrowings under our senior secured credit facilities.

Although inflation has not had a significant impact on our operations in the current period, our efforts to recover inflation-based cost increases from our customers may be hampered as a result of the structure of our contracts and the contract bidding process as well as the competitive industries, economic conditions and countries in which we operate. For more information, see Part I, Item 1A, “Risk Factors” in our 2024 Form 10-K.

Seasonality

We experience a substantial amount of seasonality in our sales, including our salt deicing product sales. Consequently, our Salt segment sales and operating income are generally higher in the first and second fiscal quarters (ending December 31 and March 31) and lower during the third and fourth fiscal quarters of each year (ending June 30 and September 30). In particular, sales of highway and consumer deicing salt and magnesium chloride products vary based on the severity of the winter conditions in areas where the product is used. Following industry practice in North America and the U.K., we seek to stockpile sufficient quantities of deicing salt throughout the first, third and fourth fiscal quarters (ending December 31, June 30 and September 30) to meet the estimated requirements for the winter season. Our plant Nutrition business is also seasonal. As a result, we and our customers generally build inventories during the plant Nutrition business’ low demand periods of the year (which are typically winter and summer, but can vary due to weather and other factors) to ensure timely product availability during the peak sales seasons (which are typically spring and autumn, but can also vary due to weather and other factors).

Climate Change

The potential impact of climate change on our operations, product demand and the needs of our customers remains uncertain. Significant changes to weather patterns, a reduction in average snowfall or regional drought within our served markets or at our Ogden facility could negatively impact customer demand for our products and our costs, as well as our ability to produce our products. For example, prolonged periods of mild winter weather could reduce the demand for our deicing products. Drought or excessive precipitation could similarly impact demand for our SOP products, as well as continue to impact the amount and quality of feedstock used to produce SOP at our Ogden facility due to changes in brine levels, mineral concentrations or other factors, which could have a material impact on our Plant Nutrition results of operations. Climate change could also lead to disruptions in the production or distribution of our products due to major storm events or prolonged adverse conditions, changing temperature levels, lake level fluctuations or flooding from sea level changes. Climate change or governmental initiatives to address climate change may affect our operations and necessitate capital expenditures in the future, although capital expenditures for climate-related projects are not expected to be material in fiscal 2025. For more information, see Part I, Item 1A, “Risk Factors” and Part I, Item 1 “Business—Environmental, Health and Safety and Other Regulatory Matters” in our 2024 Form 10-K.

Our business is subject to various types of market risks that include interest rate risk, foreign currency exchange rate risk and commodity pricing risk. Management has taken actions to mitigate our exposure to commodity pricing and foreign currency exchange rate risk by entering into natural gas derivative instruments and foreign currency contracts. We may take further actions to mitigate our exposure to interest rates, exchange rates and changes in the cost of fuel consumed at our production locations or the cost of transporting our products due to variations in our contracted carriers’ cost of fuel, which is typically diesel fuel. However, there can be no assurance that our hedging activities will eliminate or substantially reduce these risks. We do not enter into any financial instrument arrangements for speculative purposes. Our market risk exposure related to these items has not changed materially since September 30, 2024.

Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as amended (the Exchange Act) under the supervision and with the participation of the Company’s management. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as a result of the material weaknesses in internal control over financial reporting as described below, the Company’s disclosure controls and procedures were ineffective as of September 30, 2024.

Per Rules 13a-15(e) and 15d-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud due to inherent limitations of internal controls. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

In light of the material weaknesses described below, management performed additional analysis and other procedures to ensure that our consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP). Accordingly, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s Consolidated Financial Statements included in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness, as defined in Rule 12b-2 under the Exchange Act, is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

As disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, we previously identified material weaknesses in our internal control over financial reporting. The Company, due to a limited allocation of trained, knowledgeable resources, did not conduct an effective risk assessment process to identify and evaluate at a sufficient level of detail all relevant risks of material misstatement, including fraud risks associated with the necessary approval of transactions. Additionally, the Company did not have an effective information and communication process that identified and assessed the source of and controls necessary to ensure the reliability of information used in financial reporting and that ensured complete, reliable information was made available to financial reporting personnel on a timely basis to fulfill their roles and responsibilities. As a consequence of the material weaknesses described above, internal control deficiencies related to the design and operation of process-level controls were determined to be ineffective throughout the Company’s financial reporting processes.

Remediation Efforts and Status of Material Weakness

We are in the process of implementing a number of measures to address the material weaknesses that have been identified including the following:

• We are enhancing our risk assessment process to ensure it is sufficiently robust to identify and analyze all relevant risks of material misstatements, including the impact of significant changes in the business on the identification of risks and the internal control structure.
• We have hired additional accounting professionals who possess the requisite technical accounting and internal control over financial reporting knowledge.
• We are educating and training control owners regarding internal control processes to mitigate identified risks and to fulfill internal control over financial reporting responsibilities.
• We are implementing a policy and internal controls to ensure that all manual journal entries are properly approved, specifically we are redesigning and implementing process level control activities over manual journal entries.
• We are redesigning and implementing a balance sheet account reconciliation policy, including an approval process and additional process level controls, that includes the appropriate level of precision around aging, thresholds, support and documentation.
• We are establishing monitoring and oversight controls to identify non-recurring, complex transactions and designing and implementing process level controls to ensure the accuracy and completeness of our financial statements and related disclosures.
• We are redesigning our corporate organization structure to ensure effective information and communication across the organization and to support financial reporting processes and internal controls.

Changes in Internal Control Over Financial Reporting

Other than the remediation efforts noted above, there were no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

For a discussion of the risk factors applicable to Compass Minerals, please refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the annual period ended September 30, 2024.