Compass Minerals International Inc: Form 10-Q for the period ended Dec 31, 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; variables impacting effective inventory management may adversely impact our performance; 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, 2025 (“2025 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

For 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 Estimates" in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 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 December 31, 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+®.

We continue to monitor the current tariff landscape including the effects of the tariffs imposed by the U.S. administration beginning in the second quarter of 2025, the reciprocal tariffs and retaliatory tariffs imposed by other countries, the developments of the upcoming joint review of the United States-Mexico-Canada (“USMCA”), and the impact on our business. Our salt and fertilizer production in Canada is qualified under the 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. While the Company will realize some benefits from the relaxing of interest deduction limitations, the Company does not view the OBBBA to significantly impact its income tax profile.

Consolidated Results of Operations

The following is a summary of our consolidated results of operations for the three months ended December 31, 2025 and December 31, 2024, respectively. The following discussion should be read in conjunction with the information contained in our condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q.

THREE MONTHS ENDED DECEMBER 31

Commentary: Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

• Total sales increased 28.9%, or $88.9 million, due to higher Salt segment sales. The increase in sales for Salt was primarily due to higher deicing sales volumes of 43.5% and higher consumer and industrial sales volumes of 13.6%, with the combined average sales price remaining essentially flat between the two periods. Plant Nutrition sales decreased 1.0% from the prior year due to the decrease in sales volumes, partially offset by higher average sales prices.
• Operating income of $36.6 million improved $36.1 million from $0.5 million in the prior-year period, primarily reflecting higher Salt and Plant Nutrition operating income. Salt operating income increased $19.7 million primarily due to higher sales volumes and lower per-unit product costs. Plant Nutrition operating income was $5.4 million and improved from a prior period operating loss of $3.1 million, primarily due to higher average sales prices and lower per-unit product costs, partially offset by lower sales volumes and higher per-unit distribution costs.
• Diluted net income per common share of $0.43 improved by $1.00 from $0.57 net loss per common share in the prior-year period.
• Net income was $18.6 million for the three months ended December 31, 2025, compared to a net loss of $23.6 million for the three months ended December 31, 2024. The increase in net income was primarily due to increases in operating income of $36.1 million and a decrease in income tax expense of $11.9 million, partially offset by increases in total other expense of $5.8 million, primarily due to a loss on foreign exchange expense.

THREE MONTHS ENDED DECEMBER 31

Commentary: Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

Gross Profit: Increased 84.3%, or $28.9 million; Gross Margin increased 4.8 percentage points to 16.0%

• Salt segment gross profit increased $19.0 million, primarily due to higher sales volumes and lower per-unit product costs. Total Salt segment pricing was relatively flat for the three months ended December 31, 2025, compared to three months ended December 31, 2024, despite realizing higher highway deicing and consumer and industrial sales prices of 6.4% and 2.0%, respectively.
• The gross profit of the Plant Nutrition segment increased $8.5 million due to higher average sales prices (see Plant Nutrition operating results) and lower per-unit product costs, which were partially offset by lower sales volumes and higher per-unit distribution costs.

OTHER EXPENSES AND INCOME

Commentary: Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

SG&A: Decreased $6.7 million; or 4.1 percentage points as a percentage of sales from 10.8% to 6.7%

• The decrease in selling, general and administrative expense was primarily due to a reduction in corporate compensation expense and corporate professional services.

Other Operating Expense: Decreased $0.5 million from $0.5 million to $0

• Other operating expense was $0 in the current period, compared to $0.5 million in the prior period.

Interest Income: Decreased $0.1 million to $0.3 million

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

Interest Expense: Increased $1.2 million to $18.1 million

• Interest expense was $18.1 million, for the three months ended December 31, 2025, compared to $16.9 million, for the three months ended December 31, 2024.

Loss (Gain) on Foreign Exchange: Increased $7.3 million from a $5.2 million gain in the prior-year period to a $2.1 million loss

• Foreign exchange loss was $2.1 million during the three months ended December 31, 2025, compared to a gain of $5.2 million in the same quarter of the prior-year period, primarily reflecting the translation of Canadian dollars to U.S. dollars.

Other Expense, net: Decreased $2.8 million to $0.3 million

• Other expense for the three months ended December 31, 2024, was primarily due to fees paid to modify our credit agreement in December of 2024.

Income Tax (Benefit) Expense: Decreased $11.9 million from $9.7 million to $(2.2) million

• Tax expense decreased by $11.9 million for the three months ended December 31, 2025, versus the three months ended December 31, 2024, primarily due to discrete tax benefits related to a foreign provincial tax settlement for the three months ended December 31, 2025. See Note 5. Income Taxes in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q.
• Our effective tax rate was (13.6)% for the three months ended December 31, 2025, which is primarily driven by discrete tax benefits as a result of a foreign provincial tax settlement. See Note 5. 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 three months ended December 31, 2025 and December 31, 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, and discrete tax benefits related to a foreign provincial tax settlement.

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 consolidated records management business and other incidental revenues include sales of $3.8 million and $3.6 million for the three months ended December 31, 2025 and December 31, 2024, respectively. These sales are not material to our consolidated financial results and are not included in the following operating segment financial data.

Salt Segment

Commentary: Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

• Salt sales increased $89.3 million, or 36.9%, primarily due to higher sales volumes and higher average sales price for Highway deicing sales and for Consumer and industrial sales.
• Salt sales volumes increased 37.4% in total, or 933,000 tons. Highway deicing sales volumes increased 43.5%, reflecting an increase in sales volumes to highway and liquid magnesium chloride customers. Consumer and industrial sales volumes increased 13.6%.
• Combined average sales prices were essentially flat between the two periods, reflecting changes in sales price mix.
• Highway deicing average sales price increased 6.4% reflecting sales mix. Consumer and industrial average sales price increased 2.0%.
• Salt operating income increased $19.7 million, driven by higher sales volumes and lower per-unit production costs.

Plant Nutrition Segment

Commentary: Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

• Plant Nutrition sales decreased 1.0%, or $0.6 million, due to a 12.7% decrease in sales volumes year over year, partially offset by an increase of 14.0% in average sales prices over the same period.
• Plant Nutrition operating income increased $8.5 million to $5.4 million from an operating loss in the prior-year period of $3.1 million. Plant Nutrition operating income for the three months ended December 31, 2025, compared to the three months ended December 31, 2024, was impacted by higher average sales prices and lower per-unit product cost, partially offset by lower sales volumes attributable to the Company not pursuing lower margin export opportunities and higher-per unit distribution costs.

Reconciliation of Net Income (Loss) to EBITDA and 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 income (loss) and cash flows generated by operating activities, management uses income 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 income (loss). 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 income (loss), 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, if any, such as 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.

Net income increased $42.2 million for the three months ended December 31, 2025, compared to the three months ended December 31, 2024, primarily due to increases in operating income of $36.1 million and a decrease in income tax expense of $11.9 million, partially offset by an increase in total other expense of $5.8 million, primarily due to a loss on foreign exchange. Adjusted EBITDA increased $33.2 million for the three months ended December 31, 2025, compared to the three months ended December 31, 2024, primarily due to increases in sales and gross profit and a reduction 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) Costs relate to a recall of food-grade salt produced at our Goderich plant. Refer to Note 7. 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.

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 to March 2027 with a capacity, which is subject to certain conditions, of up to $100.0 million. As of December 31, 2025, we had liquidity of approximately $341.7 million, comprised of $46.7 million of cash and cash equivalents and $295.0 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 December 31, 2025, we had $25.0 million of cash and cash equivalents that was either held directly or indirectly by foreign subsidiaries. In fiscal 2025, 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 December 31, 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. In November 2025, we reached a settlement with a Canadian provincial tax authority regarding a tax dispute. The settlement resolved the dispute for tax years 2002 through 2018 for a total cash outlay of $8.2 million, net of federal refunds and deductions associated with the agreed upon tax and interest, and was paid during the three months ended December 31, 2025. With the settlement, the performance bonds of $157.4 million posted as collateral for the 2002 through 2018 period were released. See Note 5. 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 December 31, 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 three months ended December 31, 2025, no change in additional valuation allowance has been recorded to recognize 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 December 31, 2025, we had $896.5 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, $10.0 million of borrowings outstanding under our revolving credit facilities under the Credit Agreement, and $86.5 million of outstanding loans under the accounts receivable financing facility (“AR Securitization Facility”) (see Note 6. 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 $20.0 million as of December 31, 2025 further reduced available borrowing capacity under our revolving credit facility to $295.0 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 first lien net leverage ratio and consolidated 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 July 2030, which limit the amount of dividends we can pay to our stockholders.

As of December 31, 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.

Historical Cash Flows

The table below provides a summary of our sources and uses of cash (in millions):

As of December 31, 2025, we had cash and cash equivalents of $46.7 million, compared to $59.7 million as of September 30, 2025.

Cash Flows from Operating Activities

Net cash used by operating activities, as reflected in the Condensed Consolidated Statements of Cash Flows, were $37.0 million, for the three months ended December 31, 2025, as compared to $4.1 million, for the three months ended December 31, 2024.

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 both the three months ended December 31, 2025 and December 31, 2024, reflect the seasonal increase in accounts receivable and accounts payable and the decrease in inventories due to the beginning of the winter season. During the three months ended December 31, 2025, the decrease in the line item, Accounts payable and accrued expenses and other current liabilities, primarily relates to interest payments made in the period. In addition, changes in Other assets and Other liabilities during the three months ended December 31, 2025, primarily reflect the settlement of the tax dispute with the Canadian tax authorities, of which a previously recorded deposits were applied to the amount due at settlement. See Note 5. Income Taxes in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q, for further information.

Cash Flows from Investing Activities

Net cash used in investing activities, as reflected in the Condensed Consolidated Statements of Cash Flows, were $23.3 million and $22.2 million, during the three months ended December 31, 2025 and December 31, 2024, respectively. Cash outflows from investing activities for capital expenditures during the three months ended December 31, 2025 and December 31, 2024 were $22.8 million and $21.8 million, respectively. We estimate that our cash outflows for capital expenditures will be approximately $90 million to $110 million for the fiscal year ended September 30, 2026.

Cash Flows from Financing Activities

Net cash provided by financing activities, as reflected in the Condensed Consolidated Statements of Cash Flows, were $47.1 million, for the three months ended December 31, 2025, as compared to net cash provided in financing activities of $53.1 million, for the three months ended December 31, 2024, primarily due to borrowings under the Revolving Credit Facility and AR Securitization Facility.

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 our product. We subsequently expanded the voluntary recall to include food products from the Goderich Plant between September 18, 2024 and November 6, 2024. We followed recall protocol and notified the BRCGS Global Standard for Food Safety certifying body, the Canadian Food Inspection Agency (“CFIA”) and the U.S. Food and Drug Administration (“FDA”). We completed our investigation and continue to assess the scope and magnitude of customer claims related to the recall. 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. The recall in the United States, supervised by the FDA, is complete, and the matter is closed with FDA. The CFIA has conducted a follow-up inspection of the Goderich Plant to verify compliance with regulatory requirements and identified no non-compliances. See Note 7. 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.

Other Matters

See Note 5. Income Taxes and Note 7. 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 2025 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 products are 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 2026. 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 2025 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, 2025.

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 December 31, 2025.

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 Condensed 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 and our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, 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 have and 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 fraud and the impact of significant changes in the business on the identification of risks and the related impacts to the design of controls.
• We 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 and procedures.
• We implemented internal controls to ensure that all journal entries are properly approved, specifically we redesigned and implemented process level control activities over journal entries. We plan to test the operating effectiveness of these controls in the fiscal year ended September 30, 2026.
• We are redesigning and implementing a balance sheet account reconciliation controls, including an approval process and additional process level controls, that includes the appropriate level of precision, 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 in the process of 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 ending December 31, 2025 that has materially affected, or are reasonably likely to materially affect, our 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 fiscal year ended September 30, 2025.