Compass Minerals Business Overview...Plant Nutrients Chemical Solutions Specialty and semi -...
Transcript of Compass Minerals Business Overview...Plant Nutrients Chemical Solutions Specialty and semi -...
September 2020
Compass Minerals Business Overview
Forward-Looking StatementsCertain statements in this presentation, including without limitation statements about the Goderich mine plan, including its keyfeatures and ability to increase efficiency, decrease maintenance needs and provide greater optionality; bid season results, including earnings impact; innovation pipeline, including ability to increase ROI; applications and planted acres; grower economics and agriculture product sales outlook; strategic priorities, including the Plant Nutrition South America business strategic assessment and ability to deliver on commitments and build a sustainable culture; enterprise-wide optimization, including expected benefits; liquidity, free cash flow, improving balance sheet, expenditures and leverage ratio; ability to set stage for future; pricing; sales mix; foreign currency rates; and the company’s outlook for the second half of 2020 and full-year 2020, including revenue, EBITDA, sales volumes, corporate and other expense, interest expense, depreciation, depletion and amortization, capital expenditures and tax rate, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-lookingstatements are those that predict or describe future events or trends and that do not relate solely to historical matters. We use words such as “may,” “would,” “could,” “should,” “will,” “likely,” “expect,” “anticipate,” “believe,” “intend,” “plan,” “forecast,” “outlook,” “project, ” “estimate” and similar expressions suggesting future outcomes or events to identify forward-looking statements or forward-looking information. These statements are based on the company's current expectations and involve risks and uncertainties that could cause the company's actual results to differ materially. The differences could be caused by a number of factors, including without limitation (i) impacts of the COVID-19 pandemic, (ii) weather conditions, (iii) pressure on prices and impact from competitive products, (iv) foreign exchange rates and the cost and availability of transportation for the distribution of the company’s products, (v) any inability by the company to successfully implement its strategic priorities or its cost saving or enterprise optimization initiatives, and (vi) the outcome of the company’s strategic evaluation of the Plant Nutrition South America business. For further information on these and other risks and uncertainties that may affect the company’s business, see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the company’s Annual Report on Form 10-K for the year ended December 31, 2019 and its Quarterly Reports on Form 10-Q for the quarter ended March 31 and June 30, 2020, filed with the SEC. The company undertakes no obligation to update any forward looking statements made in this presentation to reflect future events or developments. Because it is not possible to predict or identify all such factors, this list cannot be considered a complete set of all potential risks or uncertainties.
Water treatment and industrial uses in Brazil
Highway deicing in North America and U.K.
Compass Minerals: An Essential, Diversified Global Minerals Company
3* Non-GAAP measure. See appendix for reconciliation.
Salt and Magnesium Chloride
Plant Nutrients
Chemical Solutions
Specialty and semi-specialty in North and
South America
Consumer and industrial end uses in North America
Total Sales$1.5 BILLION
2Q20TTM Financial Highlights
Adjusted EBITDA*$343 million
Adjusted EBITDA* Margin23%
2Q20TTM GROSS SALES BY MARKET
Plant Nutrition 36%
Deicing 39%
Consumer & Industrial25%
2Q20 Highlights
4
$233.9M
EBITDA**
$17.6M*Operating Earnings
44%
1H20 Cash Flow from
Operations
vs. 2Q19
*2Q19 excludes $2.8 million of unusual logistics expense related to Mississippi river flooding.**Earnings before interest, taxes, depreciation and amortization and adjusted for special items. See appendix for reconciliations.
• Resilient performance and improved execution achieved while addressing COVID-19 challenges
• Maintaining our COVID-19 focus:
- Health and safety of employees and communities
- Meeting customers needs for our essential products
- Intensified liquidity and risk management
109%vs. 1H19
vs. 2Q19
Our Salt Business
5
• Unique attributes - Recession-resistant and non-cyclical- Relatively low cost to end-users- Transportation costs favor domestic
producers
• Compass Minerals is well-positioned in North American and U.K. markets
Our Salt Business: Well-Positioned in Unique Commodity Industry
6
Deicing
Consumer non-deicing
Industrial
Chemical
6
Primary served highway deicing marketsAdjacent market growth potential
* Non-GAAP measure. See appendix for reconciliation.
Salt Production LocationsUnderground salt miningMechanical evaporationSolar evaporationPackaging plant
2Q20TTM Salt Sales
$880M
Salt Segment 2Q20TTM Snapshot (in millions)
Sales $880
EBITDA* $251
Adjusted EBITDA* margin 29%
Strong Fundamental Attributes of Our Salt Business
• Scale of rock salt mines enables production efficiencies
• High-quality, lower-cost salt and magnesium chloride assets
Superior Assets
• Convenient access to water transportation• Deep-water port at Goderich mine• Extensive depot network
Logistical Advantages
• Transportation costs limit imports• New mine development rarely economically
feasible
Insulated Markets
• Vertically integrated raw materials for specialty products
• Lower-cost rock salt advantage in packaged deicing products
Strong Deicing Portfolio
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$43
$84
$0$15$30$45$60$75$90
Average Selling Price ($ per ton)
Salt: A Resilient History With Margin Improvement Underway
8
Salt Segment Sales Reflect Snow Activity
153
204
92
175
226
150160169
111
189186
143134127163177
134
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Sales Volume Estimated Snow Days*
Steady Price Improvement Despite Winter Variability
+4% CAGR
*The sum of days with one or more inches (~2.5 cm) of snow in 11 selected U.S. and Canadian cities in Compass Minerals’ service area, as reported by the NOAA National Weather Service, Environment Canada. **2019 excludes $2.8 million of unusual logistics expense related to Mississippi river flooding. ¥Non-GAAP measure. See appendix for data and reconciliation.
(tons, in thousands)
13.5
% 20.0
%
19.3
% 26.1
%
OPERATING MARGIN**
EBITDA MARGIN
FY18 FY19 Target Margin Range
Progress Toward Margin Improvement
¥
Paving the Way for Long-Term Success at Goderich Mine
• Long-term mine plan implementation underway
• Expected to increase efficiency of mining systems, decrease maintenance needs of previously mined space and provide greater optionality to address potential variability in geology and deposit quality
• Key features include:- Built-for-purpose roadways to
mining area which are designed for 50-year life span, have lower ceilings and require less scaling
- Five-year panels designed to be shuttered with minimal long-term maintenance
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Note: Not to scale, for illustrative purposes only.
Long-Term Goderich Mine Illustration
Improved Execution Lifting Salt Segment Earnings
• Strong year-over-year increases in average selling prices for North American highway deicing mostly offset reduced sales volumes due to mild winter weather
• Improved Goderich production results and lower logistics costs drove increased earnings despite lower revenue
- 1H20 Goderich production tons up 16% vs. 1H19
- Logistics costs lower due to reduced fuel cost and early enterprise-wide optimization benefits
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Adjusted EBITDA*
24%
1H20 vs. 1H19 :
19%
*2Q19 excludes $2.8 million of unusual logistics expense related to Mississippi river flooding.*Earnings before interest, taxes, depreciation and amortization and adjusted for special items. See appendix for reconciliations.
Revenue
Operating Earnings
2%
Challenging North American Highway Deicing Bid Season
• A challenging 2020-2021 North American highway deicing bid season following a mild winter
- Mid-teens percentage decline in requested bid volumes in our served market
• Disciplined effort to re-establish market position within North America using low-cost Goderich salt
• With 75% of season compete*, expecting ~8% awarded bid volume growth, average awarded bid pricing declining ~11% vs. prior bid season
• Earnings impact expected to be less than the top line price result, assuming average winter weather
- Better production at Goderich mine replacing imported salt cost
- Logistics benefits from lower fuel cost and optimization efforts Partially offset by barge and vessel rate
increases11
North America Highway Deicing Market Remains Resilient Market
+14%Net Average
Awarded Bid Price 2017 – 202020
17 av
erag
e aw
arde
d bi
d pr
ice
2020
aver
age
awar
ded
bid
pric
e
*As of August 4, 2020.
Our Plant Nutrition Business
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Our Plant Nutrition Business: Providing Efficient Solutions for Sustainable Agriculture
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Specialty plant nutrients help farmers maximize the genetic potential of their crops
AMERICAS FOCUSED
Compass Minerals has unique and focused specialty plant nutrition
portfolio and capability in theWestern Hemisphere
To meet the global need for sustainably produced food
Plant Nutrition North America
Plant Nutrition South America Agriculture
Plant Nutrition South America Chemical Solutions
2Q20TTMPlant Nutrition Sales
$622M
Total Plant Nutrition 2Q20TTM Snapshot (in millions)
Sales $ 622
EBITDA* $ 144
EBITDA* margin 23%* Non-GAAP measure. See appendix for reconciliation.
• #1 producer and marketer of sulfate of potash (SOP)
• Leading micronutrients platform • Focused innovation and product
development capabilities
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Inorganic Salts
What is Specialty Plant Nutrition?
C H O
N P K
Ca Mg S
Bio-stimulants
N P K
Chelates
Oxides
Adjuvants
Microbes
Com
pass
Min
eral
s
Biologicals Nutritional and biological potential enhancers Stress relief and fortification Diverse molecular structures and nutritional
formulations Provided in minute dosages (g/Ha or ml/Ha)
Specialty NPK blends Building blocks of the plant system Provided in large dosages (kg/Ha or % of dry
matter)
Micronutrients Catalyzers of biological processes Provided in minute dosages (g/Ha or ppm of dry
matter)Secondary nutrients Building blocks of the plant system Provided in large dosages (kg/Ha or % of dry
matter)
Adjuvants Chemistries to optimize tank mix compatibility
and active ingredient effectiveness
Macro fertilizers Building blocks of the plant system (commodities)
Provided in large dosages (Tons/Ha or % of dry matter)
Base of the NPK fertilizer industry
Naturally available elements Structural elements
Provided by nature and generally not subject to shortages
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15
The Importance of Specialty Plant Nutrition and the Yield Gap
Contributors to “The Yield Gap”
Adverse ClimateLack of RainfallSub-Optimal GeneticsPoor Plant Fertility
Poor Soil HealthWeed PressureInsect PressureDisease Pressure
Yield Gap – Average Bushels per Acre is Substantially Below Yield Winner
~85 bu/ac$850/ac
140
53
133
51
020406080
100120140160
Yield Winner National Average
Bush
els/
Acre
US BRZ
542
176
0
100
200
300
400
500
600
Yield Winner National AverageBu
shel
s/Ac
re ~366 bu/ac$1,281/ac
Soy*
Corn*
Advanced seed technology requires more nutrient investment• Growers are investing in NPK but
overlooking micronutrient needs
• The right specialty nutrition at the right time and rate maximizes the potential ROI for every seed
• The “Law of the Minimum” states that performance is rate limited by the most limited nutrient
• Important to ensure micronutrients are not neglected
15* Sources: USDA; National Corn Growers Association; American Soybean Association; Brazilian Soybean Strategic Committee
Seed Treatment
Coated Fertilizer Slow Release - NPK Blends Solubles Foliars Biologicals
COMMODITY FERTILIZER
N P K
SPECIALTY PLANT NUTRITIONSPECIALTY K
SOP, SOPM & KTS, KNO3
Plant Nutrition Market Landscape
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ICL
Haifa ChemicalSQM
Nutrien
COMPASS MINERALS
KochStoller
Mosaic
Yara
Koch
High Volume / Low Margin
Moderate Margin Low Volume / High Margin
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K+S
Global Market Size ~$160 BILLION
9%3%
18%
41%
20%
9%
Specialty Fruits, Nuts and Vegetables
Our Core Geographic Presence Today
Locations advantaged to serve key agriculture markets in Western Hemisphere
• SOP production well-positioned to serve specialty crops
• Access to key agricultural markets in Brazil
• Brazil sites accessible to ports
• Locations serve producers of corn, soybeans, coffee, tree nuts, oranges, sugarcane and other specialty crops
• R&D facilities in North and South America
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Plant Nutrition Production Locations
Agriculture production facility
Water Treatment & Chemicals production facility
Research & development facility
Toll Manufacturing Providers
30% 25%
15%20%
10%
Compass Minerals’ North American Crop Mix
Other, including turf and horticulture
Tree nuts
Vegetables
Fruits
Cereals and Other Row Crops
SugarcaneCorn
Compass Minerals’ South American Crop Mix
Coffee and Cocoa
Soybeans
Sources: FAO, USDA, Compass Minerals estimates.
Corn, Soybean and other Row Crops
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Leading Producer of High-Value SOP in the Americas
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• Only North American SOP producer and largest in the Americas
- Unique asset at Ogden with low-cost solar evaporation SOP production with ~325,000 tons annual capacity Unique capability to expand annual production by
~200,000 tons by adding muriate of potash (MOP)
- Typically hold 70% to 80% of North American SOP market Import competition primarily from Europe and
South America
About 50% of global SOP production uses high-cost chemical conversion process that begins with MOP
• SOP improves the economics of growing many high-value and chloride-sensitive crops
- Strengthens root systems - Increase nutrient uptake- Increase total yield and yield quality- Provides plant-ready sulfur, an important
nutrient supporting crop yield, quality and marketability
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~60% of Compass Minerals SOP sales
Tree nuts
Citrus
Tobacco
Strawberries
High Low
Avocado
Lettuce
Grapes
Other berries
Potatoes
Alfalfa
Tomato
Crop Chloride Sensitivity
Diversified End-Market Insulate From Commodity Row Crops
Soybeans Strawberries AlmondsU.S. acres ~90M ~60K ~1.25M
Input costs/acre $473 $67,674 $6,241
Fertilizer cost /acre $41 $688 $490
No. of field passes 5 16 7
Net return/acre $67 $30,325 $9,309
Compass Minerals product fit
Rocket Seeds™Wolf Trax™ProAcqua®
Abundance Organic
Protassium+®
Wolf Trax™ProAcqua®
Abundance Organic
Protassium+®
Wolf Trax™ProAcqua®
Abundance Organic
19Sources: Estimated Cost of Crop Production in Iowa, Iowa State University Extension and Outreach (2018); 2017 Farm Budgets, University of Illinois FarmDocDaily; University of California Agriculture and Natural Resources Cooperative Extension and Agricultural Issues Center.
Go-to-Market Approach Tailored to Accelerate Growth
Plant Nutrition South America Plant Nutrition North America
• Comprehensive commercial strategy allows access to all farmers in Brazil
• Direct reach to over 4,300 farmers in Cerrados region
• Large farms averaging 8,000 hectares• Utilize distributors in southern Brazil• Broad experience across diverse crop offerings
• Strong account management team with long-standing relationships with leading distributors
• Diverse, experienced sales force• Broad portfolio that enables systems-selling
approach• Cross-selling two Brazil brand families in North
America today• Capable of both product and equipment solutions
20
Regional sales rep and manager count by concentration
> 20
10 to 20
< 10
21
0%
20%
40%
60%
80%
100%
2013 2014 2015 2016 2017 2018 2019
Products launched before 2013
Importance of New Product Launches in Direct-to-Grower Sales Channel in Brazil
Focused Innovation Pipeline with 31 projects
in 201913 11
Phase 1 – Discovery Phases 2-3 Phase 4 –Launch
9
• Stage-gate R&D process and prioritization methodology promotes projects that are projected to increase internal ROI
• Customer intimacy with on-the-ground sales force raises hit rate with new product introductions
• Dual-hemisphere research accelerates development and increases go-to-market opportunities
• Track record of success with 16 new product lines introduced since 2017 in North and South America
% o
f Pla
nt N
utrit
ion
Sout
h Am
eric
a Ag
ro
sale
s by
pro
duct
intro
duct
ion
Products launched in 2013 and later
Innovation Pipeline Focused on Specialty Plant Nutrition
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Attractive, Complementary Chemical Solutions Business in Brazil
22
• Water treatment products for municipal and industrial clients to treat waste water and control odor
- Products include polymers, coagulants, flocculants and green sand
- Growth market given current status of Brazil’s water and waste treatment infrastructure
- Shared production facilities with agriculture products
• Specialty chemicals for industrial customers, including oil and gas, mining, pulp and paper and others
- Products include caustic soda, chlorine products and others
• Business provides steady sales volumes throughout the year
22
Plant Nutrition South America Revenue Profile
Agro ~70%
Chemical Solutions
~30%
Plant Nutrition South America Chemical Sales Volumes by Quarter(in thousands of tons)
0
50
100
1Q 2Q 3Q 4Q2017 2018 2019 2020
Strong Start to 2020 With Demand Recovery in Both North and South America
050
100150200250300350400
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Sales Volumes (in thousands, short tons)
Plant Nutrition North America Plant Nutrition South America
• Improved grower economics and fertilizer affordability boosted agriculture product sales
• Rest-of-year outlook remains strong for agriculture product sales due to robust grower economics
Sales Volumes (in thousands, short tons)
• Sales volumes up 41% vs. prior year on strong SOP and micronutrient demand
• Favorable application and planting conditions compared to prior year
• Substantial increase in row crop acres expected to be planted in North America versus 2019
050
100150200250300350400
1H18 1H19 1H20
Chemical Solutions Agriculture
0100200300400500600700800900
FY18 FY19 FY20E1H18 1H19 1H20 FY18 FY19 FY20E
Our Path Forward
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25
Our Key Strategic Priorities
25
Strategic Assessment
Deliver on Commitments
Build Sustainable Culture
• Strategic review of Plant Nutrition South America business remains on hold
• Ongoing evaluation of core strengths and opportunities to leverage advantaged assets
• Meet then exceed customer expectations, even in this challenging time
• Continue operational improvements at mines and plants• Full commitment to optimization effort across enterprise• Enhance balance sheet flexibility
• Drive Zero Harm imperative for our people and the environment
• Increase employee engagement and build execution muscle
Enterprise-Wide Optimization ImplementationContinues
• Bottom-up process used to identify improvement opportunities in key focus areas
- More than 1,200 initiatives identified and more than 500 business cases defined
- Centralized support structure established to ensure execution milestones are delivered
- Employee culture and engagement a key component to success
• Some benefits expected in 2020, ramping up through 2022
- Logistics and working capital initiatives providing early benefits in 2020
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Operations
Expected Benefit by Value Stream
Operations
Logistics
Strategic sourcing
Commercial
Working capital
Increase production with greater efficiency
Leverage transportation footprint across businesses
Partner with key supplies to more effectively source globallyImprove customer experience;
identify new markets
Improve order-to-cash processes
Focus Areas
Maintaining Strong Liquidity Position and Improving Balance Sheet
• $67 million of cash on hand and more than $300 million of total liquidity at end of 2Q20
• Entered into U.S. A/R securitization facility to further enhance liquidity
• Proactively reducing cap ex and discretionary spending as part of balance sheet risk management
• Anticipate ending 2020 with adjusted net-debt-to-EBITDA leverage ratio of ~3.9x
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$175 $130
$175
$225 to $250
$2$52
$102$152$202$252$302
2017 2018 2019 2020E
Total Year-End Liquidity(in millions)
Expected FY20 FCF Range =$125 million to $150 million
Stage is Set for a Bright Future
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Strong leadership team in place with relentless focus on safety, employee engagement and execution
Goderich mine achieving production targets and moving forward with long-term mine plan
Sizable organic growth plan defined by enterprise-wide optimization effort
Free cash flow increasing and balance sheet improvements underway
Appendix
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Highway Deicing Industry in North America
Government-directed Selling Process Overview• Each government issues a Request for
Quotation (RFQ) for blind, sealed bids- RFQs are typically issued between April
and October- Each government’s RFQ specifies a
volume or volume range, a bid due date and a bid open date
• All bids are made public on the bid-open date
- Creates a transparent process
• Contract is awarded to the lowest bidder- Negotiation and relationship building are
prohibited
• Contract is for a 12-month period … sometimes longer
- Price cannot change during 12-month contract period
31
Bid Award Timeline Shapes Strategy
• Timing is different for each customer
• Compass Minerals evaluates each bid result and adjusts strategy accordingly
• Thousands of bids are prepared each year
Sun Mon Tue Wed Thur Fri Sat
1 2 3 4 5 6 7
8 Govt. A RFQ issued 10 11 12 13 14
15 16 17 18 19 20 21
22 Govt. A Bids due 24 Govt. B RFQ issued
Govt. A Bids awarded 27 28
29 30 1 2 3 4 5
6 7 8 Govt. B Bids due/ 10 Govt. C RFQissued 12
13 Govt. B Bids awarded 15 16 17 18 19
20 21 22 23 24 Govt. C Bids due 26
27 28 Govt. C Bidsawarded 30 31 1 2
Illustration of Bid Timeline
32
The Government-directed ProcessProhibits Price Negotiation
• Bid requests usually include several delivery points
• Amount requested often reflects prior-winter snow activity
• Most U.S. customers guarantee a minimum purchase and require maximum delivery
• Suppliers’ bid prices include delivery
• Contracts are awarded on a delivery-point by delivery-point basis
• Sets price for entire winter season
Illustration of a Government Bid Request*
Delivery Location
Requested Quantity
Guaranteed Minimum Purchase
Required Delivery
CapabilityPercentage
Range
Dover 2000 1700 2300 85% - 115%Fairview 6500 5200 7800 80% - 120%Franklin 175 122.5 210 70% - 120%Greenville 10,075 8,060 12,090 80% - 120%Hudson 350 262.5 455 75% - 130%
Illustration of a Government Bid Award*
Delivery Location
Requested Quantity
Illustration ofWinning
Bid*Illustration of Bid Winner*
Dover 2000 $50.00 Competitor AFairview 6500 $53.50 Competitor AFranklin 175 $54.50 Competitor B Greenville 10,075 $57.35 Competitor C Hudson 350 $51.00 Competitor D
* For illustration purposes only. This is not an actual bid request.
33
Actual Sales Occur Months Later
• Deliveries begin in late fall and end in early spring
• Typically, governments keep only enough rock salt on hand for two or three applications
- Highway deicing salt is too bulky for most governments to store in large quantities
• Governments reorder as their supply is used- Supplies are shipped from the nearest depot- Each delivery creates a new sales transaction
• After mild winters, suppliers have most of the extra supply
- Very little inventory is held by the customer
34
Logistics is a Competitive Strength
35
Mines
Depots
2Q20 Financial Results and Outlook (as of August 4, 2020)
36
2Q20 Segment Summary
37
Salt Segment Plant Nutrition North America
Plant Nutrition South America
$15
$32$30
$47
Operating earnings
EBITDA**
2Q19* 2Q20
$1.7
$7.2$8.9
$13.5
Operating earnings
EBITDA*
2Q19 2Q20
• Improved highway deicing pricing and sales volumes boosted sales vs. prior year, more than offsetting impact of COVID-19 on non-deicing salt sales
• Strong performance at North America mines as well as lower logistics costs
• Sales volumes up 20% vs. prior year on strong sulfate of potash (SOP) and micronutrient demand
• Favorable application and planting conditions compared to prior year
• Improved grower economics and fertilizer affordability boosted agriculture product sales
• Solid quarter for chemical solutions business driven by demand for chlor-alkali products
$4.6
$15.5
$5.1
$15.3
Operating earnings
EBITDA**
2Q19 2Q20(In millions of U.S. dollars)
*2Q19 Salt results excludes $2.8 million of unusual logistics expense related to Mississippi river flooding.**Earnings before interest, taxes, depreciation and amortization and adjusted for special items. See appendix for reconciliations.
2H20 EBITDA
2H20 Outlook (As of Aug. 4, 2020)
• 2H20 Salt segment revenue and EBITDA expected to be similar to 2H19 with an increase in sales volumes offset by lower highway deicing prices
- Continue to expect $1/ton to $2/ton reduction in salt product cost in 2H20
• 2H20 Plant Nutrition North America segment revenue and EBITDA expected to be flat with 2H19 on slightly lower sales volumes offset by improved product sales mix vs. prior year
• Plant Nutrition South America anticipated to continue benefiting from strong grower economics in 2H20
- Expected revenue and EBITDA growth of approximately 15% in local currency vs. 2H19 Current 2H20 USD-BRL exchange rate assumption @ ~ 5.15
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Salt Plant Nutrition North America
Plant Nutrition South America
2H20 Revenue $450M $490M
$145M$125M
$110M
$37M $45M
$130M $200M
$40M $50M
$230M
2020 Full-Year Guidance Items(As of Aug. 4, 2020)
39
Key Metrics(in millions of dollars unless otherwise noted) Current vs. Prior Guidance
(May 5, 2020)
Segment Outlook Low High Low High
Salt Segment sales volumes (in millions of tons)10.7 11.1 unchanged
Plant Nutrition North America Segment sales volumes (in thousands of tons) 340 365 unchanged
Plant Nutrition South America Segment sales volumes (in thousands of tons) 800 900 unchanged
Consolidated and Corporate Outlook Low High Low High
Consolidated EBITDA $330 $370 unchanged
Corporate and other expense* $50 $52 $50 $55
Interest expense $76 $78 $77 $80
Depreciation, depletion and amortization $135 $138 unchanged
Capital expenditures $95 $100 $100 $110
Effective tax rate ~29% ~30%
*Excludes non-cash items of depreciation, amortization and stock-based compensation.
Non-GAAP Reconciliations
40
Reconciliation of Non-GAAP Information
41
Reconciliation for EBITDA and Adjusted EBITDA (unaudited)(in millions)
Twelve months ended June 30, 2020
Net earnings $ 96.0
Interest expense 71.6
Income tax expense 34.5
Depreciation, depletion and amortization 137.0
EBITDA $339.1
Adjustments to EBITDA:
Stock-based compensation - non cash 8.0
(Gain) loss on foreign exchange (5.3)
Executive transition costs(1) 2.3
Other (income) expense net(2) (1.0)
Adjusted EBITDA $343.1
Total Revenue $1,511.6Adjusted EBITDA Margin 22.7%
(1) The company incurred severance and other costs related to executive transition.(2) Primarily includes interest income..
Reconciliation of Non-GAAP Information
42
Reconciliation for Salt Segment EBITDA (unaudited)(in millions)
Twelve months ended June30, 2020
Segment GAAP operating earnings $187.7Depreciation, depletion and amortization 62.1Segment EBITDA $ 249.8Adjustments to EBITDAExecutive transition costs(1) 1.3
Adjusted EBITDA $ 251.1
Segment sales $ 880.1Segment Adjusted EBITDA margin 28.5%
Reconciliation for Salt Segment EBITDA (unaudited)(in millions)
Six months endedJune 30, 2020
Six months endedJune 30, 2019
Segment GAAP operating earnings $86.6 $ 66.9Depreciation, depletion and amortization 31.8 30.1Segment EBITDA $118.4 $ 97.0Adjustments to EBITDALogistics impact from flooding(2) - 2.8
Adjusted EBITDA $118.4 $ 99.8
Segment sales $409.6 $ 419.0Segment Adjusted EBITDA margin 28.9% 23.8%
(1) The company incurred severance and other costs related to executive transition.(2) The Company incurred additional logistics costs related to Mississippi River flooding.
Reconciliation of Non-GAAP Information
43
Reconciliation for Salt Segment EBITDA (unaudited)(in millions)
Twelve months ended Dec. 31,
2019 2018Segment GAAP operating earnings $ 168.0 $ 115.7
Depreciation, depletion and amortization 60.4 56.2
Segment EBITDA $ 228.4 $ 171.9Adjustments to EBITDA
Executive transition costs(1) 1.3 -Logistics impact from flooding(2) 2.8 -
Adjusted EBITDA $ 232.5 $ 171.9
Segment sales $ 889.5 $ 858.1Segment Adjusted EBITDA margin 26.1% 20.0%
(1) The company incurred severance and other costs related to executive transition.(2) The Company incurred additional logistics costs related to Mississippi River flooding.
Reconciliation of Non-GAAP Information
44
Reconciliation for Plant Nutrition North America and South America CombinedSegment EBITDA (unaudited)
(in millions)12 months ended
June 30, 2020Segment GAAP operating earnings $ 79.9Depreciation, depletion and amortizationEarnings in equity method investee
63.60.8
Segment EBITDA $ 144.3
Segment sales $621.6
Segment EBITDA margin 23.2%