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OVERLAND PARK, Kan. - Compass Minerals (NYSE: CMP), a major provider of essential minerals with a market capitalization of $398 million and annual revenue of $1.08 billion, has announced significant cost-reduction measures aimed at enhancing free cash flow and reducing debt. According to InvestingPro data, the company operates with a significant debt burden of $974.4 million, making these measures particularly crucial. These measures include a reduction of more than 10% of its corporate workforce and the closure of its fire retardant business, Fortress North America.
These immediate actions resulted in the elimination of nearly 50 positions. Compass Minerals is also opting not to fill certain open and budgeted roles. The company is providing severance and outplacement services to the affected employees. Expected cash savings from these initiatives will contribute to the company’s financial strategy. While the company’s current ratio of 2.37 indicates sufficient liquidity to meet short-term obligations, InvestingPro analysis reveals several additional financial health indicators available to subscribers.
Edward C. Dowling Jr, President and CEO of Compass Minerals, stated that these difficult decisions were deemed necessary by the board and senior leadership to improve cash flow and accelerate debt reduction. He expressed gratitude to the departing employees and emphasized the company’s renewed focus on its core Salt and Plant Nutrition businesses.
This announcement follows previous cost control efforts by Compass Minerals, including aligning capital expenditures with business cash generation. The company plans to continue evaluating costs across all operations to identify further savings opportunities.
Compass Minerals estimates that, had the workforce reduction been implemented at the start of the trailing 12-month period ended December 31, 2024, the run-rate cost savings would range between $11 million and $13 million. However, actual savings will depend on various factors not reflected in this estimate.
Regarding the Fortress business, Compass Minerals anticipates recognizing a non-cash impairment for the write-off of related assets and a non-cash gain from the elimination of contingent consideration liability in its fiscal second-quarter results ending March 31, 2025.
Compass Minerals, with 12 production and packaging facilities and over 1,800 employees in the U.S., Canada, and the U.K., is known for its salt products used for deicing and various other applications, as well as its plant nutrition products that support sustainable agriculture.
This report is based on a press release statement from Compass Minerals. The company has cautioned that forward-looking statements in the press release involve risks and uncertainties that could cause actual results to differ materially from those projected.
In other recent news, Compass Minerals International has faced a downgrade from S&P Global Ratings, which lowered the company’s rating to ’B’ from ’B+’, citing increased leverage and a contraction in EBITDA. The ratings agency expects the company’s EBITDA to contract by 15%-20% in fiscal 2025 due to higher costs and lower prices in key segments. Additionally, Moody’s Ratings downgraded Compass Minerals’ corporate family rating to B2 from B1, with a revised outlook to negative, highlighting weakened credit metrics and strategic missteps. The company is anticipated to generate over $220 million in adjusted EBITDA for fiscal 2026, yet it is not expected to achieve positive free cash flow in fiscal 2025.
Meanwhile, Compass Minerals shareholders recently approved all items at the Annual Meeting, including executive compensation and the appointment of KPMG LLP as the independent auditor. The company has also enacted strategic changes, such as terminating the lithium project and eliminating dividends, to focus on core business and cash flow generation. Despite these challenges, Compass Minerals maintains a strong competitive position in the North American salt industry. The company continues to implement operational initiatives to improve cash flow and profitability over the next 24 months.
In contrast, Compass, Inc., a separate entity, reported a strong Q4 performance with revenue of $1.38 billion, surpassing estimates and reflecting a 25.9% increase year-over-year. The company provided optimistic guidance for Q1 2025, projecting revenue between $1.35 billion and $1.475 billion. Compass, Inc. ended the quarter with a cash balance of $223.8 million, contributing to positive investor sentiment.
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