COMPASS MINERALS INTERNATIONAL INC

8. Commitments and Contingencies:

On October 21, 2022, a putative securities class was filed in the United States District Court for the District of Kansas. The lawsuit alleges that the Company and certain former executives of the Company made misleading statements and that shareholders were damaged by these statements. Plaintiffs filed an Amended Complaint on March 13, 2023; the Company filed

a Motion to Dismiss on May 12, 2023. On December 12, 2023, the court granted and denied in part the Company’s Motion to Dismiss. On December 29, 2023, the Company filed a request for an interlocutory appeal and a request for a stay of discovery. On March 15, 2024, the Court denied the Company’s request for an interlocutory appeal. The parties participated in a mediation on November 19, 2024; the parties did not resolve the matter at mediation. On February 7, 2024, the parties reached an agreement in principle to resolve the matter and filed a motion to stay discovery. The agreement is preliminary and subject to final documentation, preliminary court approval and final approval after a court hearing. At this time, based on currently available information and its applicable insurance coverage, the Company believes any settlement to be paid will be covered by insurance and does not believe any losses will have a material adverse effect on its results of operations or cash flows in future periods. Additionally, the Company has recorded an estimated liability and estimated insurance recoveries in its Consolidated Balance Sheets as of December 31, 2024.

On February 1, 2023, a shareholder derivative lawsuit was filed in the District of Kansas by an individual shareholder, purportedly on behalf of the Company. The lawsuit alleges that certain directors and executives breached their fiduciary duties to shareholders by failing to prevent the dissemination of misstatements and omissions from October 30, 2017, to November 18, 2018. The parties have stipulated to stay this matter through the discovery stage of the putative securities class action. On October 30, 2024, an additional shareholder derivative lawsuit was filed in the District of Kansas by an individual shareholder, purportedly on behalf of the Company. The lawsuit alleges that certain directors and executives breached their fiduciary duties to shareholders by willfully or recklessly causing the Company to make false and/or misleading statements and/or omissions of material fact from October 31, 2017, to October 21, 2022.

The Company is also involved in legal and administrative proceedings and claims of various types from the ordinary course of the Company’s business.

Management cannot predict the outcome of legal claims and proceedings with certainty. Nevertheless, management believes that the outcome of legal proceedings and claims, which are pending or known to be threatened, even if determined adversely, will not, individually or in the aggregate, have a material adverse effect on the Company’s results of operations, cash flows or financial position, except as otherwise described in Note 6 and this Note 8.

The Company also has contingent consideration liabilities related to the Fortress North America, LLC (“Fortress”) acquisition. Refer to Note 12 for additional information.

On October 25, 2024, the Company issued a recall fornine production lots of food-grade salt produced at its Goderich Plant following a customer report of a non-organic, foreign material in its product. The products recalled included both products sold prior and subsequent to September 30, 2024. The Company followed recall protocol and notified its BRCGS Global Standard for Food Safety certifying body, the Canadian Food Inspection Agency (“CFIA”) and the U.S. Food and Drug Administration (“FDA”). The Company has been working to obtain and assess the reported foreign material, complete the necessary investigation, and determine the next steps. For the three months ended December 31, 2024, the Company recognized $0.9 million for costs related to the recall on the Consolidated Statements of Operations, a portion of which the Company believes is reimbursable by insurance. Additionally, as of December 31, 2024, the Company has recorded a liability of $35.0 million and estimated insurance recoveries of $35.0 million in its Consolidated Balance Sheets associated with customer claims.

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

9. Operating Segments:

The Company’s reportable segments are strategic business units that offer different products and services, and each business requires different technology and marketing strategies. For the three months ended December 31, 2024 and 2023, the Company has presentedtwo reportable segments in its Consolidated Financial Statements: Salt and Plant Nutrition. The Salt segment produces and markets salt, consisting of sodium chloride and magnesium chloride, for use in road deicing for winter roadway safety and for dust control, food processing, water softening and other consumer, agricultural and industrial applications. The Plant Nutrition segment produces and markets various grades of SOP. The results of operations for the Company’s fire retardant and records management businesses are included in Corporate and Other in the tables below.

Segment information is as follows (in millions):

Disaggregated revenue by product type is as follows (in millions):

(a)Corporate and Other includes corporate entities, records management operations, the Fortress fire retardant business, equity method investments, prior-year lithium costs and other incidental operations and eliminations. Operating earnings (loss) for corporate and other includes indirect corporate overhead, including costs for general corporate governance and oversight, prior-year lithium-related expenses, as well as costs for the human resources, information technology, legal and finance functions.

(b)Corporate operating results were impacted by costs related to a product recall of $0.9 million for the three months ended December 31, 2024. Corporate operating results were also impacted by a net loss of $1.6 million related to an increase in the valuation of the Fortress contingent consideration for the three months ended Dec. 31, 2023.

(c)As a result of the Company’s decision to cease the pursuit of the lithium development, the Company recognized an impairment of long-lived assets of $74.8 million for the three months ended December 31, 2023. The Company also recognized severance of $2.5 million related to the termination of the lithium development and $1.1 million related to other restructuring, which impacted operating results for the three months ended December 31, 2023.

The Company’s revenue by geographic area is as follows (in millions):

(a)United States sales exclude product sold to foreign customers at U.S. ports.

10. Stockholders’ Equity and Equity Instruments:

Equity Compensation Awards

In May 2020, the Company’s stockholders approved the 2020 Incentive Award Plan (as amended, the “2020 Plan”), which authorized the issuance of 2,977,933 shares of Company common stock. In February 2022, the Company’s stockholders approved an amendment to the 2020 Plan authorizing an additional 750,000 shares of Company stock. In March 2024, the Company’s stockholders approved an amendment to the 2020 Plan authorizing an additional 3,000,000 shares of Company stock. Since the date the 2020 Plan was approved, the Company ceased issuing equity awards under the 2015 Incentive Award Plan (as amended, the “2015 Plan”). Since the approval of the 2015 Plan in May 2015, the Company ceased issuing equity awards under the 2005 Incentive Award Plan (as amended, the “2005 Plan”). The 2005 Plan, the 2015 Plan and the 2020 Plan allow for grants of equity awards to executive officers, other employees and directors, including restricted stock units (“RSUs”), performance stock units (“PSUs”), stock options and deferred stock units. For additional information regarding equity awards issued under the Company’s incentive plans refer to “Note 15 – Stockholder’s Equity and Equity Instruments” within Part II, Item 8 of its 2024 Form 10-K.

During the three months ended December 31, 2024, the Company reissued the following number of shares from treasury stock:108,023 shares related to the release of RSUs which vested and 10,224 shares issued for Board of Director compensation. In fiscal 2024, the Company issued 222,155 net shares from treasury stock. The Company withheld a total of 34,955 shares with a fair value of $0.5 million related to the vesting of RSUs during the three months ended December 31, 2024. The fair value of the shares was valued at the closing price at the vesting date and represent the employee tax withholding for the employee’s compensation. The Company recognized tax expense of $0.5 million from its equity compensation awards during the three months ended December 31, 2024. During the three months ended December 31, 2024 and 2023, the Company recorded

$3.9 million and $11.9 million, respectively, of compensation expense pursuant to its stock-based compensation plans. No amounts have been capitalized.

PSUs

During the three months ended December 31, 2024, the Company issued new PSUs based upon performance criteria and metrics (“Scorecard PSUs”). The actual number of shares of common stock that may be earned with respect to Scorecard PSUs is calculated based upon the attainment of certain thresholds for free cash flow and return on capital employed during each year of thethree-year performance period and may range from 0% to 200% for each measure. Additionally, a modifier will increase or decrease the payout by 20% based upon relative total shareholder return against the Company’s peer group.

The following table summarizes stock-based compensation activity during the three months ended December 31, 2024:

(a)Until the performance period is completed, PSUs are included in the table at the target level at their grant date and at that level representone share of common stock per PSU.

(b)Common stock issued for exercised options and for vested and earned RSUs and PSUs was issued from treasury stock.

Accumulated Other Comprehensive Loss (“AOCL”)

The Company’s comprehensive income (loss) is comprised of net loss, net amortization of the unrealized loss of the pension obligation, the change in the unrealized gain in other postretirement benefits, the change in the unrealized gain (loss) on natural gas and foreign currency cash flow hedges and currency translation adjustment (“CTA”). The components of and changes in AOCL are as follows (in millions):

(a)With the exception of the CTA, for which no tax effect is recorded, the changes in the components of AOCL presented in the tables above are reflected net of applicable income taxes.

(b)The Company recorded foreign exchange gain (loss) of $5.4 million and $(2.3) million in the three months ended December 31, 2024 and 2023, respectively, in AOCL related to intercompany notes which were deemed to be of a long-term investment nature.

The amounts reclassified from AOCL to expense (income) for the three months ended December 31, 2024 and 2023, are shown below (in millions):

11. Derivative Financial Instruments:

The Company is subject to various types of market risks, including interest rate risk, foreign currency exchange rate transaction and translation risk and commodity pricing risk. Management may take actions to mitigate the exposure to these types of risks, including entering into forward purchase contracts and other financial instruments. The Company manages a portion of its commodity pricing risks and foreign currency exchange rate risks by using derivative instruments. From time to time, the Company may enter into foreign exchange contracts to mitigate foreign exchange risk. The Company does not seek to engage in trading activities or take speculative positions with any financial instrument arrangement. The Company enters into natural gas derivative instruments and foreign currency derivative instruments with counterparties it views as creditworthy. However, the Company does attempt to mitigate its counterparty credit risk exposures by, among other things, entering into master netting agreements with some of these counterparties. The Company records derivative financial instruments as either assets or liabilities at fair value in its Consolidated Balance Sheets. The assets and liabilities recorded as of December 31, 2024 and September 30, 2024 were not material.

Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the derivative instrument and the related change in value of the underlying hedged item. Depending on the exposure being hedged, the Company must designate the hedging instrument as a fair value hedge, a cash flow hedge or a net investment in foreign operations hedge. For the qualifying derivative instruments that have been designated as cash flow hedges, the effective portion of the change in fair value is recognized through earnings when the underlying transaction being hedged affects earnings, allowing a derivative’s gains and losses to offset related results from the hedged item in the Consolidated Statements of Operations. Any ineffectiveness related to these instruments accounted for as hedges was not material for any of the periods presented. For derivative instruments that have not been designated as hedges, the entire change in fair value is recorded through earnings in the period of change.

Natural Gas Derivative Instruments

Natural gas is consumed at several of the Company’s production facilities, and changes in natural gas prices impact the Company’s operating margin. The Company seeks to reduce the earnings and cash flow impacts of changes in market prices of natural gas by fixing the purchase price of up to 90% of its forecasted natural gas usage. It is the Company’s policy to consider hedging portions of its natural gas usage up to 36 months in advance of the forecasted purchase. As of December 31, 2024, the Company had entered into natural gas derivative instruments to hedge a portion of its natural gas purchase requirements through September 2026. As of December 31, 2024 and September 30, 2024, the Company had agreements in place to hedge forecasted natural gas purchases of 2.6 millionand 2.3 million MMBtus, respectively. All natural gas derivative instruments held by the Company as of December 31, 2024 and September 30, 2024 qualified and were designated as cash flow hedges. As

of December 31, 2024, the Company expects to reclassify from AOCL to earnings during the next twelve months $1.7 million of net losses on derivative instruments related to its natural gas hedges. Refer to Note 12 for the estimated fair value of the Company’s natural gas derivative instruments as of December 31, 2024 and September 30, 2024.

The following tables present the fair value of the Company’s derivatives (in millions):

(a)The Company has master netting agreements with its commodity hedge counterparties and accordingly has netted in its Consolidated Balance Sheets $0.6 million of its commodity contracts that are in receivable positions against its contracts in payable positions.

(a)The Company has master netting agreements with its commodity hedge counterparties and accordingly has netted in its Consolidated Balance Sheets $0.6 million of its commodity contracts that are in receivable positions against its contracts in payable positions.

12. Fair Value Measurements:

The Company’s financial instruments are measured and reported at their estimated fair values. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction. When available, the Company uses quoted prices in active markets to determine the fair values for its financial instruments (Level 1 inputs) or, absent quoted market prices, observable market-corroborated inputs over the term of the financial instruments (Level 2 inputs). The Company does not have any unobservable inputs that are not corroborated by market inputs (Level 3 inputs), except as stated below.

The Company holds marketable securities associated with its defined contribution and pre-tax savings plans, which are valued based on readily available quoted market prices. The Company utilizes derivative instruments to manage its risk of changes in natural gas prices and foreign exchange rates (see Note 11). The fair values of the natural gas and foreign currency derivative instruments are determined using market data of forward prices for all of the Company’s contracts.

The estimated fair values for each type of instrument are presented below (in millions):

(a)Includes mutual fund investments of approximately 25% in common stock of large-cap U.S. companies,5% in common stock of small to mid-cap U.S. companies,10% in bond funds,20% in short-term investments and 40% in blended funds.

(a)Includes mutual fund investments of approximately 35% in the common stock of large-cap U.S. companies,5% in the common stock of small to mid-cap U.S. companies,5% in the common stock of international companies,10% in bond funds,5% in short-term investments and 40% in blended funds.

Cash and cash equivalents, receivables (net of allowance for doubtful accounts) and accounts payable are carried at cost, which approximates fair value due to their liquid and short-term nature. The Company’s investments related to its non-qualified retirement plan of $3.4 million at December 31, 2024 and $3.1 million at September 30, 2024, are stated at fair value based on quoted market prices. As of December 31, 2024 and September 30, 2024, the estimated fair value of the Company’s fixed-rate 6.75% Senior Notes due December 2027, based on available trading information (Level 2), totaled $492.5 million and $497.0 million, respectively, compared with the aggregate principal amount at maturity of $500.0 million. The fair value at December 31, 2024 and September 30, 2024 of amounts outstanding under the Company’s term loans and revolving credit facility, based upon available bid information received from the Company’s lender (Level 2), totaled approximately $416.8 million and $379.1 million, respectively, compared with the aggregate principal amount at maturity of $422.1 million and $383.9 million, respectively.

In connection with the acquisition of Fortress on May 5, 2023, the Company entered into a contingent consideration arrangement for up to $28 million to be paid in cash and/or Compass Minerals common stock upon the achievement of certain performance measures over the next five years, and a cash earn-out based on volumes of certain Fortress fire retardant products sold over a 10-year period. The fair value of the milestone contingent consideration is estimated using a probability-weighted discounted cash flow model with significant inputs not observable in the market and is therefore considered a Level 3 measurement while the earn-out is valued using a Monte Carlo simulation, also a Level 3 measurement. For the three months ended December 31, 2024, the total fair value of the contingent consideration did not change. For the three months ended December 31, 2023, the Company recorded an expense of $1.6 million. The change in the three months ended December 31, 2023 was reflective of updated financial performance, changes in discount rates and the passage of time. The change is recorded in other operating (income) expense in the Consolidated Statements of Operations to reflect the contingent consideration liability at its fair value as of December 31, 2023. The Company will continue to recognize remeasurement changes in the estimated fair value of contingent consideration in earnings at each reporting date until all contingencies are resolved.

The following table presents the fair value of the Company’s total contingent consideration arrangement (in millions):

The Company has certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. Refer to Note 5 for details of the Company’s remaining goodwill.

13. Earnings per Share:

On April 22, 2024, the Board of Directors determined not to declare dividends for the foreseeable future in order to align the Company’s capital allocation priorities with its corporate focus on accelerating cash flow generation and debt reduction. The Company calculated earnings per share using the treasury stock method during the three months ended December 31, 2024. The following table sets forth the computation of basic and diluted earnings per common share (in millions, except for share and per-share data):

(a)Weighted participating securities include RSUs and PSUs that receive non-forfeitable dividends and consist of 1,116,000 weighted participating securities for the three months ended December 31, 2024 and 777,000 weighted participating securities for the three months ended December 31, 2023.

(b)For the calculation of diluted net earnings (loss) per share, the Company uses the more dilutive of either the treasury stock method or the two-class method to determine the weighted-average number of outstanding common shares. In addition, the Company had 1,184,000 weighted-average equity awards outstanding for the three months ended December 31, 2024, and 1,572,000 weighted-average equity awards outstanding for the three months ended December 31, 2023, that were anti-dilutive.

14. Related Party Transactions:

During both the three months ended December 31, 2024 and 2023, the Company recorded SOP sales of approximately $1.1 million and $0.8 million, respectively, to certain subsidiaries of Koch Industries, Inc. As of December 31, 2024 and September 30, 2024, the Company had approximately $0.6 million and $0.3 million, respectively, of receivables from related parties on its Consolidated Balance Sheets. There wereno amounts payable outstanding as of December 31, 2024.