COMPASS MINERALS INTERNATIONAL INC

Previous wording

As discussed in Item 1, Note 1 of our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, on March 25, 2025, we took measures to align our cost structure to our current business needs as part of a larger strategic refocus to improve the profitability of our core Salt and Plant Nutrition businesses, including the process of exiting the Fortress North America, LLC (“Fortress”) fire retardant business and terminating the employment of all Fortress employees.

Current wording

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

Previous wording

As a result of the above items impacting Fortress, we determined that there were indicators of impairment with the associated Fortress intangible assets. Therefore, we tested these intangibles for impairment. As there were no future cash flows expected related to these intangible assets, customer relationships was determined to have a fair value of zero using an income approach under ASC 820, Fair Value Measurement (Level 3 inputs, see Item 1, Note 12). Consequently, we recognized a full impairment loss of $53.0 million, recorded in Loss on impairments, net on the Consolidated Statements of Operations for the three and six months ended March 31, 2025.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

In May 2023, we completed the purchase of Fortress, a fire retardant company working to develop long-term aerial and ground fire retardant products to help combat wildfires. As discussed above in Critical Accounting Policies and in Item 1, Note 1 of our Consolidated Financial Statements, we are exiting the fire retardant business and recognized a $53.0 million loss on impairment of long-lived assets during the three and six months ended March 31, 2025.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

•Total sales increased 36%, or $130.6 million, due to higher Salt and Plant Nutrition segment sales. The increase in sales for Salt reflected higher deicing sales volumes, which was partially offset by lower average sales prices. Plant Nutrition sales increased from the prior year due to an increase in sales volumes, partially offset by lower average sales prices.

Current wording

•Total sales increased 6%, or $11.7 million, due to higher Salt and Plant Nutrition segment sales. The increase in sales for Salt reflected higher deicing and consumer and industrial sales volumes, which was partially offset by lower combined average sales prices. Plant Nutrition sales increased from the prior year due to an increase in sales volumes, partially offset by lower average sales prices.

Previous wording

•Diluted net loss per common share of $0.77 improved by $0.17 from net loss of $0.94 per common share in the prior-year period.

Current wording

•Diluted net loss per common share of $0.41 improved by $0.64 from $1.05 loss per common share in the prior-year period.

Previous wording

•Total sales increased 14%, or $96.1 million, due to higher Salt and Plant Nutrition segment sales, partially offset by lower sales by the Fortress fire retardant business. The increase in Salt sales was primarily driven by higher sales volumes, partially offset by lower average sales prices. The increase in Plant Nutrition sales from the prior year primarily reflects higher sales volumes, partially offset by lower average sales price. We recognized $14.6 million in sales related to the completion of 2023 contract with the U.S. Forest Service in the prior-year period. On March 25, 2025, we began the process of exiting the Fortress fire retardant business, terminating the employment of all Fortress employees.

Current wording

•Total sales increased 12%, or $107.8 million, due to higher Salt and Plant Nutrition segment sales, partially offset by lower sales by the Fortress fire retardant business. The increase in Salt sales was primarily driven by higher sales volumes, partially offset by lower combined average sales prices. The increase in Plant Nutrition sales from the prior year primarily reflects higher sales volumes, partially offset by lower average sales price. The results of operations of the Fortress business include sales of $14.6 million for the nine months ended June 30, 2024, and no sales in fiscal 2025. On May 30, 2025, we completed the sale of the Fortress fire retardant assets.

Previous wording

•Operating loss of $2.6 million decreased $90.3 million from operating loss of $92.9 million in the prior-year period, primarily reflecting the impairment related to the exit of the Fortress fire retardant business (see Item 1, Note 1). Corporate and Other operating loss decreased from the prior year primarily due to the prior year $74.8 million lithium asset impairment and $50.0 million of goodwill, long-lived asset and inventory impairments related to the Fortress business, partially offset by the current year Fortress long-lived asset impairment of $53.0 million. The operating losses were partially offset by the net non-cash reduction in our Fortress-related contingent consideration of $7.9 million in the current year and $22.2 million in the prior year. Plant Nutrition operating loss decreased due primarily to a prior year $51.0 million goodwill impairment, higher current year sales prices and lower per-unit product costs, which were partially offset by higher distribution costs. In addition, Salt operating earnings decreased due to lower average sales prices and higher per-unit product costs, which were partially offset by higher Salt sales volumes.

Current wording

•Operating income of $13.3 million increased $100.3 million from an operating loss of $87.0 million in the prior-year period, primarily reflecting the impairment related to the exit of the Fortress fire retardant business (see Note 1. Accounting Policies and Basis of Presentation in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q). Corporate and Other operating loss decreased from the prior year primarily due to the prior year $74.8 million lithium asset impairment and $50.0 million of goodwill, long-lived asset and inventory impairments related to the Fortress business, partially offset by the current year Fortress asset impairments of $53.7 million. These operating losses were partially offset by the net non-cash reduction in our Fortress-related contingent consideration of $7.9 million in the current year and $23.1 million in the prior year. Plant Nutrition operating loss decreased due primarily to a prior year $51.0 million goodwill impairment, higher current year sales prices and lower per-unit product costs, which were partially offset by higher distribution costs. In addition, Salt operating earnings decreased due to lower average sales prices and higher per-unit product costs, which were partially offset by higher Salt sales volumes.

Previous wording

•Diluted net loss per common share of $1.34 decreased by $1.43 from net loss of $2.77 per common share in the prior-year period.

Current wording

•Diluted net loss per common share of $1.74 decreased by $2.09 from $3.83 loss per common share in the prior-year period.

Previous wording

Gross Profit: Decreased 22%, or $31.8 million; Gross Margin decreased 6 percentage points to 14%

Current wording

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

Previous wording

•Salt segment gross profit increased $2.1 million primarily due to higher sales volumes, which were partially offset by lower average sales prices and higher per-unit product costs (see Salt operating results).

Current wording

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

Previous wording

•The gross profit of the Plant Nutrition segment decreased $0.1 million due to higher distribution costs and lower average sales prices, which were partially offset by higher sales volumes and lower per-unit product costs (see Plant Nutrition operating results).

Current wording

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

Previous wording

Gross Profit: Increased 7%, or $5.0 million; Gross Margin decreased 4 percentage points to 16%

Current wording

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

Previous wording

•Salt segment gross profit decreased $20.1 primarily due to lower average sales prices and higher per-unit product costs, which were partially offset by higher sales volumes (see Salt operating results).

Current wording

•Salt segment gross profit decreased $17.9 million, primarily due to lower average sales prices and higher per-unit product costs, partially offset by higher sales volumes (see Salt operating results).

Previous wording

•The gross profit of the Plant Nutrition segment decreased $1.2 million due to lower average sales prices and higher per-unit distribution costs, which were partially offset by lower per-unit product costs and higher sales volumes (see Plant Nutrition operating results).

Current wording

•The gross profit of the Plant Nutrition segment increased $4.7 million due to higher sales volumes and lower per-unit product costs, partially offset by lower average sales prices and higher per-unit distribution costs (see Plant Nutrition operating results).

Previous wording

SG&A: Decreased $16.1 million; Decreased 3.4 percentage points as a percentage of sales from 11.2% to 7.8%

Current wording

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

Previous wording

•We realized a gain on foreign exchange of $0.1 million in the second quarter of fiscal 2025 compared to a gain of $2.5 million in the same quarter of the prior-year period, primarily reflecting the translation of our intercompany loans from Canadian dollars to U.S. dollars.

Current wording

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

Previous wording

•Tax expense increased by $25.7 million for the three months ended March 31, 2025 versus the three months ended March 31, 2024 primarily due to a change in the annual effective tax rate calculations with the US loss jurisdiction having a separate annual effective tax rate applied to US losses and a foreign annual effective tax applied to foreign income. The change in the annual effective tax rate calculation began with the interim period ended June 30, 2024.

Current wording

•Tax expense decreased by $29.3 million for the three months ended June 30, 2025 versus the three months ended June 30, 2024 primarily due to a year to date catch up recorded in the three months ended June 30, 2024 for the change in the annual effective tax rate calculations with the US loss jurisdiction having a separate annual effective tax rate applied to US losses and a foreign annual effective tax applied to foreign income. The change in the annual effective tax rate calculation began with the interim period ended June 30, 2024.

Previous wording

•Our effective tax rate was (44%) for the three months ended March 31, 2025, which is primarily driven by the income mix by country with income recognized in foreign jurisdictions, for which tax expense was recorded, offset by losses recognized in the U.S. for which a valuation allowance has been recorded against the U.S. tax benefit carryforward.

Current wording

•Our effective tax rate was (25.0)% for the three months ended June 30, 2025, which is primarily driven by the income mix by country with income recognized in foreign jurisdictions, for which tax expense was recorded, offset by losses recognized in the U.S. for which a valuation allowance has been recorded against the U.S. tax benefit carryforward.

Previous wording

SG&A: Decreased $3.7 million; Decreased 3.1 percentage points as a percentage of sales from 9.1% to 6.0%

Current wording

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

Previous wording

•During the six months ended March 31, 2024, we recognized goodwill impairments of $51.0 million related to our Plant Nutrition segment and $32.0 million related to our Fortress operations (within the Corporate and Other segment). The Plant Nutrition impairment was primarily the result of reduced cash flow assumptions impacting expected profitability of the Plant Nutrition segment. The Fortress impairment was primarily related to uncertainty surrounding our magnesium chloride-based fire retardants which impacted projected future revenues and cash flows. Also, during the six months ended March 31, 2024, we recognized a $15.6 million long-lived asset impairment, net, related to Fortress magnesium chloride-based products.

Current wording

•During the nine months ended June 30, 2024, we recorded goodwill impairments of $51.0 million related to our Plant Nutrition segment and $32.0 million related to our Fortress operations (within the Corporate and Other segment). The Plant Nutrition impairment was primarily the result of reduced cash flow assumptions impacting expected profitability of the Plant Nutrition segment. The Fortress impairment was primarily related to uncertainty surrounding our magnesium chloride-based fire retardants which impacted projected future revenues and cash flows. Also, during the nine months ended June 30, 2024, we recorded a $15.6 million long-lived asset impairment, net, related to Fortress magnesium chloride-based products.

Previous wording

•We recognized an impairment loss of $74.8 million for the six months ended March 31, 2024 related to the termination of the lithium development.

Current wording

•We recorded an impairment loss of $74.8 million for the nine months ended June 30, 2024 related to the termination of the lithium development.

Previous wording

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

Current wording

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

Previous wording

•We realized a gain on foreign exchange of $5.3 million in the six months ended March 31, 2025, compared to a loss of $0.6 million in the same period of the prior fiscal year, due primarily reflecting the translation of our intercompany loans from Canadian dollars to U.S. dollars.

Current wording

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

Previous wording

Other Expense, net: Increased $0.5 million to $1.4 million

Current wording

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

Previous wording

•The increase is due primarily to fees paid and the write-off of previously capitalized fees when we modified our debt agreements in the current period, which was partially offset by losses on cash flow hedges.

Current wording

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

Previous wording

•The increase in income tax expense was due primarily due to a change in the annual effective tax rate calculations with the US loss jurisdiction having a separate annual effective tax rate applied to US losses and a foreign annual effective tax applied to foreign income. The change in the annual effective tax rate calculation began with the interim period ended June 30, 2024. Additionally, the majority of the impairments recorded in the six months ended March 31, 2025 and March 31, 2024 were either not tax deductible or the tax benefit was offset by tax expense for a valuation allowance on the related deferred tax asset.

Current wording

•The increase in income tax expense was primarily driven by the increase in foreign book income in the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. Additionally, the majority of the impairments recorded in the nine months ended June 30, 2025 and June 30, 2024 were either not tax deductible or the tax benefit was offset by tax expense for a valuation allowance on the related deferred tax asset.

Previous wording

•Our effective tax rate of (54%) for the six months ended March 31, 2025 is primarily driven by the income mix by country with income recognized in foreign jurisdictions offset by losses recognized in the U.S., for which a valuation allowance has been recorded against the U.S. tax benefit carryforward. Additionally, the majority of the impairments recorded in the six months ended March 31, 2025 and March 31, 2024 were either not tax deductible or the tax benefit was offset by tax expense for a valuation allowance on the related deferred tax asset. See Item 1, Note 6 to the Consolidated Financial Statements.

Current wording

•Our effective tax rate of (46%) for the nine months ended June 30, 2025 is primarily driven by the income mix by country with income recognized in foreign jurisdictions offset by losses recognized in the U.S., for which a valuation allowance has been recorded against the U.S. tax benefit carryforward. Additionally, the majority of the impairments recorded in the nine months ended June 30, 2025 and June 30, 2024 were either not tax deductible or the tax benefit was offset by tax expense for a valuation allowance on the related deferred tax asset. See Note 6. Income Taxes in the Notes to the Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q.

Previous wording

•Our income tax provision for the six months ended March 31, 2025 and 2024 differs from the U.S. statutory rate primarily due to U.S. statutory depletion, state income taxes, base erosion and anti-abuse tax, nondeductible executive compensation, foreign income, mining and withholding taxes and valuation allowance expense.

Current wording

•Our income tax provision for the nine months ended June 30, 2025 and June 30, 2024 differs from the U.S. statutory rate primarily due to U.S. statutory depletion, state income taxes, base erosion and anti-abuse tax, nondeductible executive compensation, foreign income, mining and withholding taxes and valuation allowance expense.

Previous wording

The results of operations of the Fortress business include sales of $0.1 million and $14.6 million for the three and six months ended March 31, 2024 and no sales in fiscal 2025. The results of operations of the consolidated records management business and other incidental revenues include sales of $3.6 million and $3.4 million for the three months ended March 31, 2025 and 2024, respectively, and $7.2 million and $6.6 million for the six months ended March 31, 2025 and 2024, respectively. These sales are not material to our consolidated financial results and are not included in the following operating segment financial data.

Current wording

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

Previous wording

•Salt sales increased $122.3 million, or 39%, primarily due to higher sales volumes, which was partially offset by lower average sales prices for our highway deicing products.

Current wording

•Salt sales increased $5.4 million, or 3%, primarily due to higher sales volumes, partially offset by lower average sales prices for our consumer and industrial products.

Previous wording

•Salt sales volumes increased 47% in total, or 1,639,000 tons, which increased sales by approximately $134.9 million. Highway deicing sales volumes increased 51%, reflecting an increase winter weather events when compared to the prior period. Consumer and industrial sales volumes increased 24% primarily due to higher non-deicing volumes.

Current wording

•Salt sales volumes increased 4% in total, or 61,000 tons, which increased sales by approximately $5.3 million. Highway deicing sales volumes increased 5%, reflecting an increase in sales volumes to highway and liquid magnesium chloride customers. Consumer and industrial sales volumes increased 2%, primarily due to higher non-deicing volumes.

Previous wording

•Average sales prices decreased 5% partially offsetting the volume increase by approximately $12.6 million with decreases in combined average sales prices.

Current wording

•Combined average sales prices decreased 1%, partially offsetting the volume increase by approximately $0.1 million driven by a decrease in consumer and industrial product average sales prices.

Previous wording

•Salt operating earnings increased $1.1 million, as higher sales volumes and lower per-unit distribution costs were offset by lower average sales prices and higher per-unit product costs.

Current wording

•Salt operating earnings increased $2.2 million, as higher sales volumes, lower per-unit production costs and lower per-unit distribution costs were offset by lower average sales prices.

Previous wording

•Salt sales volumes increased 20% increasing sales by approximately $95.3 million. Highway deicing sales volumes increased 24% reflecting more winter weather events in the second quarter of 2025 compared to the same period of the prior year. Consumer and industrial sales volumes increased 2% primarily due to higher consumer deicing volumes.

Current wording

•Salt sales volumes increased 17%, increasing sales by approximately $101.3 million. Highway deicing sales volumes increased 21% reflecting more winter weather events in the second quarter of 2025 compared to the same period of the prior year. Consumer and industrial sales volumes increased 2% primarily due to higher consumer deicing volumes.

Previous wording

•Average sales prices decreased 4% partially offsetting the volume increase by approximately $5.1 million with decreases in highway average sales prices.

Current wording

•Combined average sales prices decreased 4%, partially offsetting the volume increase by approximately $5.7 million driven by a decrease in highway average sales prices.

Previous wording

•Highway deicing average sales prices decreased 3% across all product categories. Consumer and industrial average sales prices increased 5% due to price increases taken to offset inflation realized in prior years. The lower average sales prices are also reflective of sales mix.

Current wording

•Highway deicing average sales prices decreased 3% across all product categories. Consumer and industrial average sales prices increased 4% due to price increases taken to offset inflation realized in prior years. The lower average sales prices are also reflective of sales mix.

Previous wording

•Salt operating earnings decreased $20.4 million, due primarily to lower combined average sales prices and higher per-unit product costs, which were partially offset by higher sales volumes for both highway and consumer and industrial products and lower per-unit distribution costs.

Current wording

•Salt operating earnings decreased $18.2 million, due primarily to lower combined average sales prices and higher per-unit product costs, partially offset by higher sales volumes and lower per-unit distribution costs.

Previous wording

•Plant Nutrition sales volumes increased 26% year over year driven by a return to more normalized sales volumes following a year in which customers delayed or reduced purchases. The higher sales volumes increased sales by approximately $13.3 million.

Current wording

•Plant Nutrition sales volumes increased 21% year over year driven by more consistent production which has allowed for increased sales. The higher sales volumes increased sales by approximately $8.2 million.