INVESTOR PRESENTATION...American SOP market - Logistically favorable to key high-value specialty...
Transcript of INVESTOR PRESENTATION...American SOP market - Logistically favorable to key high-value specialty...
P R O S P E R I T Y T H R O U G H I N V E S T M E N T
I N V E S TO R P R E S E N TAT I O N
F E B R U A R Y 2 2 - 2 3 , 2 0 1 7
F O RWA R D - L O O K I N G S TAT E M E N T S
This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995, including without limitation statements about introducing Produquímica products into North America, capital
spending and capital projects; the company’s ability to develop best-in-class safety, ensure asset longevity, drive
efficiency, build on its base, achieve more balanced business, improve its strategies and maximize potential; SOP
pricing; the highway deicing industry; and the company’s outlook for the first half of 2017 and the full year of 2017,
including its expectations regarding earnings per share (“EPS”), volumes, average selling prices, operating earnings
margin, corporate and other expense, interest expense, capital expenditures, depreciation, depletion and amortization
and tax rates. The company uses 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) weather
conditions, (ii) the impact of competition on the sales of our products, (iii) the inability to fund necessary capital
expenditures or successfully complete capital projects, (iv) foreign exchange rates, (v) increasing costs or a lack of
availability of transportation services, and (vi) the ability to integrate acquired businesses and realize anticipated benefits
from acquisitions. 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, 2016 and its
Quarterly Report on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2016 filed or to be 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.
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Salt
Plant Nutrition
A L E A D E R I N S T R O N G , D I V E R S E
M A R K E T S W I T H U N I Q U E A S S E T B A S E
• A leading supplier of deicing products
in North America and the U.K.
• Advantaged rock salt mining assets
- World’s largest North American mine
strategically located on deep-water port and
largest dedicated salt mine in the U.K.
• A key producer of high-quality salt for
consumers and industry in North America
• A growing specialty plant nutrition
business
- The largest sulfate of potash (SOP)
specialty fertilizer producer in the Western
Hemisphere
- A micronutrient business based on patented
technology
- Acquired Brazilian specialty plant nutrition
company Produquímica Indústria e
Comércio (Produquímica) in October 2016
3
2016 adjusted EBITDA*
2 0 1 6 S A L E S = $ 1 . 1 B I L L I O N
$275 million
2016 adjusted
EBITDA* margin
24%
*Non-GAAP measure. See appendix for reconciliation.
O U R S A LT B U S I N E S S
• Highway deicing
- Rock salt and other deicers sold to municipal, county and state/provincial governments
- Rock salt sold to chemical producers
• Consumer and industrial
- A broad range of non-seasonal packaged and bulk products
Water conditioning
Animal nutrition
Many industrial applications, including food
- Packaged deicers
Basic, blended and premium products
• Advantaged assets - Goderich, Ontario
World’s largest rock salt mine
Size and geology enable mining efficiencies
Deep-water port and distribution network support efficient shipping
- Winsford, Cheshire, U.K.
U.K.’s largest dedicated rock salt mine
Geology and environment support storage businesses
4
Great Britain
Salt Production Locations
Primary highway deicing markets
Underground salt mining
Mechanical evaporation
Solar evaporation
Packaging plant
Highway Deicing
Consumer &Industrial
2 0 1 6 S a l t S e g m e n t S a l e s
b y P r o d u c t
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
93
175
226
150 160
169
111
189 186
143 134
5
Salt Segment Price & Volume
Short Tons Sold Snowfall Events** Average Sales Price
(Dollars per ton)
*Non-GAAP measure. See appendix for reconciliation.
**The sum of days with one or more inches (~2.5 cm) of snow in 11 selected U.S. and Canadian cities in
CMP’s service area, as reported by the NOAA National Weather Service, Environment Canada.
S A LT: S T R O N G F I N A N C I A L AT T R I B U T E S
D E S P I T E W E AT H E R VA R I A B I L I T Y
• Geology of rock salt mines enables production efficiencies
• High-quality, low-cost salt and magnesium chloride assets
Superior Assets
• Convenient access to water transportation
• Deep-water port at Goderich
• Extensive depot network
Logistical Advantages
• Transportation costs limit imports
• Significant barriers to entry
Insulated Markets
• Vertically integrated raw-materials for specialty products
• Low-cost rock salt advantage in packaged deicing products
Strong Deicing Portfolio
Salt Segment 2016 Snapshot
(in millions)
Sales $812
EBITDA* $247
EBITDA* margin 31%
(Thousands of tons)
B U I L D I N G A L E A D I N G S P E C I A LT Y
P L A N T N U T R I T I O N B U S I N E S S
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Plant Nutrition 2016 Snapshot* (Pro forma, in millions)
Sales $560
Adjusted EBITDA** $125
Adjusted EBITDA** margin 22%
*Includes unaudited amounts for full-year Plant Nutrition North America and the three months ended December 31, 2016 for Plant Nutrition South
America combined with pro forma revenue and EBITDA from Produquimica for nine-months ending September 30, 2016 See slide 20.
**Non-GAAP measure. See appendix for reconciliation.
Purchased Wolf Trax in 2014, leader in dry dispersible powder
micronutrients
Expanded into Brazil with acquisition of Produquímica
Largest producer of SOP in Western hemisphere
Plant NutritionNorth America
Plant NutritionSouth America
2 0 1 6 P l a n t N u t r i t i o n S a l e s
b y S e g m e n t
Now two segments:
Plant Nutrition North America
Plant Nutrition South America
VA L U E TO E N D - U S E R S D R I V E S
S P E C I A LT Y P L A N T N U T R I E N T D E M A N D
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• 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 for crop yield, quality
and marketability
• Micronutrients and other specialty
plant nutrients promote:
- Stronger, larger roots
- More consistent early-stage growth
- Better stress tolerance
- Enhanced color and flowering
50% to 60% of Compass Minerals SOP sales
Tree nuts
Citrus
Tobacco
Strawberries
High Low
Avocado
Lettuce
Grapes
Other berries
Potatoes
Alfalfa
Tomato
Chloride Sensitivity
SOP Production Sites
Ogden, UT
Wynyard,
Saskatchewan
C O M PA S S M I N E R A L S C O M P E T I T I V E
A D VA N TA G E I N P R E M I U M P O TA S S I U M
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Fruit,
Potatoes
Fruit,
Vegetables,
Nuts, Turf Fruit, Vegetables,
Turf
Turf,
Tobacco
30% 25%
15%
30%
North American SOP Consumption*
Other, including
turf and horticulture
Tree nuts
Vegetables
Fruits
*Annual consumption based on company estimates.
• Only North American SOP producer
- Unique asset at Ogden with low-cost solar evaporation SOP production
Can expand production by adding muriate of potash (MOP)
• Historically hold 70% to 80% of North American SOP market
- Logistically favorable to key high-value specialty crop markets
• Import competition from Europe and South America
- Can vary depending upon foreign exchange rates, fuel costs and MOP price
- About 50% of global SOP production uses high-cost chemical conversion process that begins with MOP
M I C R O N U T R I E N T S : K E Y E L E M E N T S F O R
P L AN T H E ALT H
• Essential minerals that maximize
the health of all crops
• Highly fragmented market in North
America and Brazil
• Nutrient-deficient soil profile in
Brazil requires comprehensive
plant nutrient mix to ensure yield
- Brazilian growers increasingly turn
to technology-driven solutions
- Specialty product application rates
growing at higher rate than
NPK fertilizers
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Cu B
Cl Mo
Ni
Zn
Co
Mn
Mg S
Ca
N K
P
P L A N T N U T R I T I O N S O U T H A M E R I C A :
AT T R A C T I V E P R O D U C T P O R T F O L I O
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Agriculture
Agriculture = 73% of 2016 revenue
*Includes new products introduced since 2010.
**Source: Company estimates.
Chemical
Solutions
• Soil nutrients: micronutrients,
secondary nutrients and other
supplements
• Technology products: controlled
and slow release formulations
• Nutritional supplements for cattle
poultry and dairy cows
Chemical solutions = 27% of 2016 revenue
• Caustic soda and chlorine for
municipal and industrial clients to
treat waste water
• Process chemicals for industrial
customers, including oil and gas,
mining, pulp and paper and others
Almost ½ of
Brazil’s population
lacks access to
sewage systems**
Less than 40% of
sewage in Brazil
currently treated**
AGRICULTURE
PRODUCT SALES
~65% DIRECTLY TO
FARMS
50% of 2016 agriculture
revenue from
NEW PRODUCTS*
E X PA N D E D P L A N T N U T R I T I O N
B U S I N E S S O F F E R S M O R E B A L A N C E
• Completing Produquímica acquisition is a key step to becoming a global leader in specialty plant nutrition
- Expands product portfolio
- Diversifies geographic footprint and served markets
- Enhances research and development capabilities
- Establishes new reporting segment, Plant Nutrition South America
• Brazil’s plant nutrition strength balances weaker fundamentals in the U.S. in 2016
- Strong U.S. currency benefits Brazilian farm income while challenges U.S. commodity prices
• Expect to begin introducing Produquímica products into North American markets over next 12 months
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11
33
334
1447
Number of Product Categories Number of SKUs
59%
41%
78%
22%
Salt
After PDQ Acquisition
Revenue by Business
2015 Pro Forma 2016
Plant Nutrition
Before PDQ Acquisition
N E A R I N G C O M P L E T I O N O F M A J O R
C A P I TA L P R O J E C T S
• Peak period of capital spending complete
- Expect approximately 25% reduction in
capex for 2017 vs. 2016
• Goderich mine: continued commissioning
of additional continuous miners
- Expect to be complete by end of 2017
- Anticipate $30 million in annual cost
savings once fully implemented
• Goderich Mine: one shaft lining complete
- Second expected to be complete in 2018
• Ogden: new SOP compaction plant
expected to be commissioned in 1Q17
• Ogden: new expanded crystallizer in SOP
facility expected to be commissioned mid-
year 2017
12
$0
$40
$80
$120
$160
$200
2016 2017 2018
Base MOB Plant Nutrition South America
Special MOB Investment Capital
~25%
($ in millions)
2016-2018 Capital Plan
~25%
P L AT F O R M F O R G R O W T H
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BUILD ON ESSENTIAL
MINERALS BASE;
ACHIEVE MORE
BALANCED BUSINESS
DEVELOP BEST-IN-CLASS
SAFETY; ENSURE
LONGEVITY OF KEY
ASSETS
DRIVE EFFICIENCY
THROUGHOUT OPERATIONS
STRENGTHEN GROW
IMPROVE IMPROVE GO-TO-MARKET
STRATEGIES; MAXIMIZE
MARGIN POTENTIAL
P R O S P E R I T Y T H R O U G H I N V E S T M E N T
2017 OUTLOOK
( A S O F F E B R U A RY 8 , 2 0 1 7 )
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W I N T E R W E AT H E R R E T U R N E D T O S O M E
K E Y N O R T H AM E R I C A N M AR K E T S
• Stronger snow events in 4Q16 vs. prior year
- Snow events tracked by company in 11 key cites were up 194% vs. very mild 4Q15
- Regional variances in weather with most snow occurring in northern markets
Average to below-average winter weather in central and southern U.S. markets and the U.K.
• Profitability remained robust despite mild winter impact on volumes and price throughout 2016
- Lower per-unit logistics costs
- Improved profitability in consumer and industrial business
- Improvements offset partially by higher production cost in 4Q16 due to lower operating rates at salt mines and unplanned downtime at Goderich mine
15
17.9% 19.7% 20.8%
25.3% 24.7%
2012 2013 2014 2015 2016
Salt Segment Adjusted Operating Margin**
42.2
17
50
10 Year Avg
2015
2016
4th Quarter Snow Events*
*The number of snow events in 11 cities in Compass Minerals’ primary North American deicing region compared with the 10-year average number of snow events, which is the
mean number of snow events for the periods ended in the 2015-2016 season. For more information, please see the Investor Resources section of the company’s investor
relations site at www.compassminerals.com
**Non-GAAP measure. See appendix for reconciliations.
P L A N T N U T R I T I O N : S T R O N G F I N I S H TO
2 0 1 6 I N N O R T H A M E R I C A A N D B R A Z I L
• Demand in North America sparked by
increased affordability
- 4Q16 sales volumes increased 53%
vs. 4Q15
- 2016 SOP imports down 28% from
2015; pricing remains stable but
competitive
• Brazil plant nutrition market maintained
strength
- 2016 sales volumes increased 9% from
prior year
- Supported by strong crop economics
and good growing conditions
16
20
40
60
80
100
$0
$150
$300
$450
$600
$750
1Q16 2Q16 3Q16 4Q16
Average price per ton Sales volumes
2015 2016
-28%
SOP Pricing Stabilizing
SOP Imports into North America*
*Source: Compass Minerals research; Datamyne.
Tons in thousands
1 H 1 7 A N D F Y 1 7 O U T L O O K ( A S O F F E B . 8 , 2 0 1 7 )
2017 OUTLOOK:
FULL YEAR EPS - $3.20 to $3.70
Salt Segment 1H17 FY17
Volumes 6.1 million to 6.5 million tons 11.8 million to 12.6 million tons
Average Selling Price (per ton) $66 to $70
Operating Earnings Margin 16% to 18%
Plant Nutrition North America Segment
Volumes 145,000 to 165,000 tons 300,000 to 330,000 tons
Average Selling Price (per ton) $615 to $645
Operating Earnings Margin 11% to 13%
Plant Nutrition South America Segment
Volumes 360,000 to 390,000 tons 800,000 to 1.1 million tons
Average Selling Price (per ton) $380 to $410
Operating Earnings Margin break-even
Corporate
Corporate and Other Expense ~$60 million
Interest Expense ~$52 million
Capital Expenditures $125 million to $140 million
Depreciation, depletion and amortization ~$125 million
Effective Tax Rate ~28%
17
P R O S P E R I T Y T H R O U G H I N V E S T M E N T
APPENDIX
18
P R O S P E R I T Y T H R O U G H I N V E S T M E N T
PLANT NUTRITION SOUTH AMERICA
SUPPLEMENTAL INFORMATION
P R O F O R M A Q U A R T E R LY 2 0 1 6 P L A N T
N U T R I T I O N S O U T H A M E R I C A R E S U LT S *
20
Three months ended
(US$, in millions except foreign exchange rate) March 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016 Segment sales $ 61.3 $ 71.8 $ 110.1 $ 113.5
Sales excluding shipping and handling 57.8 68.1 104.9 107.2
Operating earnings 2.9 6.1 21.7 8.0
Operating margin 4.7% 8.5% 19.7% 7.0%
Adjusted operating earnings** 2.9 6.1 21.7 16.4
Adjusted operating margin** 4.7% 8.5% 19.7% 14.4%
EBITDA** 7.4 10.8 26.3 13.3
EBITDA margin** 12.1% 15.0% 23.9% 11.7%
Adjusted EBITDA** 7.7 11.1 26.6 21.7
Adjusted EBITDA margin** 12.5% 15.5% 24.2% 19.1%
Sales volumes (in thousands of tons)
Agriculture 67 101 169 122
Chemical solutions 88 86 83 72
Total sales volume 155 187 252 194
Average selling price (per ton)
Agriculture $555 $474 $518 $713
Chemical solutions $272 $281 $269 $372
Total Plant Nutrition South America $394 $385 $436 $587
Assumed US$-to-R$ per quarter 3.59 3.59 3.59 3.27
*Three months ended March 31, June 30, and September 30, 2016 are unaudited, pro forma amounts for the historical results of Produquímica. These
amounts assume Compass Minerals acquired Produquímica on January 1, 2016, and include the effects of acquisition accounting for those periods.
**Non-GAAP measure. See reconciliation section of presentation.
Product
Soy
Coffee
Sugar
Orange
Corn
Meat
Exports
#2
#1
#1
#1
#2
#1
Production
#2
#1
#1
#1
#3
#3
Source: USDA, FAO
62
161 121 107
157 112
48 43 38 23 36
328 108
99 88
12
26
36 33 33 26 12
Arable Land Unavailable Arable Land Available
B R A Z I L A G R I C U LT U R E F U N D A M E N TA L S
21
Brazil’s Leading Position in
Key Products (2014/2015)
Source: 2015 estimates from FAO, Embrapa, Conab, MAPA
Abundant Land Available
for Cultivation (in hectar millions)
P R O S P E R I T Y T H R O U G H I N V E S T M E N T
HIGHWAY DEICING INDUSTRY IN
NORTH AMERICA
23
G O V E R N M E N T- D I R E C T E D S E L L I N G
P R O C E S S O V E RV I E W
• 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
• 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
B I D AWA R D T I M E L I N E S H A P E S
S T R AT E G Y
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/opened 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/opened 10
Govt. C RFQ
issued 12
13 Govt. B Bids
awarded 15 16 17 18 19
20 21 22 23 24 Govt. C Bids
due/opened 26
27 28 Govt. C Bids
awarded 30 31 1 2
Illustration of Bid Timeline
24
• Timing is different for each government customer
• Compass Minerals evaluates bid results and adjusts strategy accordingly
• Compass Minerals prepares thousands of bids
T H E G O V E R N M E N T- D I R E C T E D P R O C E S S
P R O H I B I T S P R I C E N E G O T I AT I O N
• Bid requests usually include
several delivery points
• 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
Capability
Percentage
Range
Dover 2,000 1,700 2,300 85% - 115%
Fairview 6,500 5,200 7,800 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 of
Winning
Bid*
Illustration of
Bid Winner*
Dover 2,000 $50.00 Competitor A
Fairview 6,500 $53.50 Competitor A
Franklin 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.
25
A C T U A L S A L E S O C C U R M O N T H S
L AT E R
26
• 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
11 9 8 10
2.4
4.3 3.6
4.2
0
2
4
6
8
10
12
14
16
Compass Minerals* K+S** Cargill All Others
S T R O N G P O S I T I O N I N A C O M P E T I T I V E
I N D U S T RY
27 SOURCE: Roskill Information Services 2015 information and company estimates.
* Reflects Goderich mine at 8.0 million tons of current capacity, not its 9.0 million-ton potential capacity.
** Also imports salt from South America and the Bahamas.
Rock Salt Evaporated Salt
North American salt production capacity in millions of tons
L O G I S T I C S I S A C O M P E T I T I V E
S T R E N G T H
28
Mines
Depots
P R O S P E R I T Y T H R O U G H I N V E S T M E N T
NON-GAAP FINANCIAL
RECONCILIATIONS
29
R E C O N C I L I AT I O N O F N O N - G A A P
I N F O R M AT I O N
30
Reconciliation for EBITDA and Adjusted EBITDA (unaudited) (in millions)
12 months ended December, 31 2016
Revenue $ 1,138.0
Net earnings 162.7
Interest expense 34.1
Income tax expense 34.6
Depreciation, depletion and amortization 90.3
EBITDA $ 321.7
Adjustments to EBITDA
Gain from remeasurement of equity method investment (59.3)
Business acquisition-related items(1) 8.4
Indefinite-lived intangible asset impairment 3.1
Other income, net(2) 1.1
Adjusted EBITDA $ 275.0
Adjusted EBITDA margin 24%
(1) Primarily includes additional expense recognized from the sale of finished goods inventory, which had its cost basis increased to fair value as a
result of the acquisition of Produquímica.
(2) Primarily includes interest income and foreign exchange gains and losses. The 12 months ended December 31, 2016, include a charge of $3.0
million related to the refinancing of the company’s debt.
R E C O N C I L I AT I O N O F N O N - G A A P
I N F O R M AT I O N : S A LT
31
Reconciliation for Salt Segment EBITDA and Adjusted EBITDA (unaudited) (in millions)
12 months ended December 31, 2016
Segment sales $ 811.9
Segment operating earnings 200.6
Depreciation, depletion and amortization 46.7
Segment EBITDA $ 247.3
EBITDA margin 30.5%
Reconciliation for Salt Segment Adjusted Operating Earnings (unaudited) (in millions)
12 months ended December 31,
2012 2013 2014 2015 2016
Segment sales $ 703.4 $ 920.5 $ 1,002.6 $ 849.0 $ 811.9
Segment operating earnings 126.0 181.3 291.4 215.2 200.6
Gain from insurance settlement(1) - - (82.4) - -
Adjusted segment operating
earnings $ 126.0 $ 181.3 $ 209.0 $ 215.2 $ 200.6
Adjusted segment operating margin 17.9% 19.7% 20.8% 25.3% 24.7%
(1) In the third quarter of 2014, the company reported a gain from an insurance settlement relating to damage sustained by the company as a result
of a tornado that struck the company’s rock salt mine and evaporated-salt plant in Goderich, Ontario.
R E C O N C I L I AT I O N O F N O N - G A A P
I N F O R M AT I O N
32
Reconciliation for 2016 Plant Nutrition North America and Plant Nutrition South America EBITDA
(unaudited) (in millions)
Plant Nutrition North
America Segment
Pro Forma Plant Nutrition
South America Segment(1)
Pro Forma
Combined Plant
Nutrition(1)
Segment sales $ 203.0 $ 356.7 $ 559.7
Segment operating earnings 21.1 38.7 59.8
Depreciation, depletion and amortization 33.4 18.8 52.2
EBITDA $ 54.5 $ 57.5 $ 112.3
Adjustments to EBITDA:
Indefinite-lived intangible asset impairment 3.1 - 3.1
Earnings in equity investee - 1.2 1.2
Business acquisition-related items(2))\\ - 8.4 8.4
Adjusted Segment EBITDA $ 57.6 $ 67.1 $ 125.0
Adjusted Segment EBITDA Margin 28.4% 18.8% 22.3%
(1) Nine months ended September 30, 2016 are pro forma results, assuming Compass Minerals acquired Produquímica on January 1,
2016 and include the effects of acquisition accounting for those periods.
(2) Primarily includes additional expense recognized from the sale of finished goods inventory, which had its cost basis increased to fair
value as a result of the acquisition of Produquímica.
R E C O N C I L I AT I O N O F N O N - G A A P
I N F O R M AT I O N : P L AN T N U T R I T I O N
S O U T H AM E R I C A
33
Reconciliation for Plant Nutrition South America Segment Adjusted Operating Earnings (unaudited) (1)
(in millions)
Three months ended
March 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
Reported GAAP segment operating earnings $ 2.9 $ 6.1 $ 21.7 $ 8.0
Business acquisition-related items(2) - - - 8.4
Segment adjusted operating earnings $ 2.9 $ 6.1 $ 21.7 $ 16.4
Segment sales 61.3 71.8 110.1 113.5
Segment adjusted operating margin 4.7% 8.5% 19.7% 14.4%
(1) Three months ended March 31, June 30, and September 30,2016 are unaudited, pro forma amounts for the historical results of Produquímica.
These amounts assume Compass Minerals acquired Produquímica on January 1, 2016, and include the effects of acquisition accounting for
those periods.
(2) Primarily includes additional expense recognized from the sale of finished goods inventory, which had its cost basis increased to fair value as a
result of the acquisition of Produquímica.
R E C O N C I L I AT I O N O F N O N - G A A P
I N F O R M AT I O N : P L AN T N U T R I T I O N
S O U T H AM E R I C A
34
Reconciliation for Plant Nutrition South America EBITDA (unaudited) (1)
(in millions)
Three months ended
March 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
Plant nutrition S.A. segment GAAP operating earnings $ 2.9 $ 6.1 $ 21.7 $ 8.0
Depreciation, depletion and amortization 4.5 4.7 4.6 5.0
Segment EBITDA $ 7.4 $ 10.8 $ 26.3 $ 13.0
Earnings in equity method investee 0.3 0.3 0.3 0.3
Business acquisition-related items(2) - - - 8.4
Adjusted segment EBITDA $ 7.7 $ 11.1 $ 26.6 $ 21.7
Segment sales 61.3 71.8 110.1 113.5
Adjusted segment EBITDA margin 12.5% 15.5% 24.2% 19.1%
(1) Three months ended March 31, June 30 and September 30, 2016 are unaudited, pro forma amounts for the historical results of Produquímica.
These amounts assume Compass Minerals acquired Produquímica on January 1, 2016, and include the effects of acquisition accounting for
those periods.
(2) Primarily includes additional expense recognized from the sale of finished goods inventory, which had its cost basis increased to fair value as a
result of the acquisition of Produquímica.