BETTER. STRONGER. Compass Minerals Analyst Luncheon DECEMBER 11, 2008

Transcription

1 BETTER. STRONGER. Compass Minerals Analyst Luncheon DECEMBER 11,

2 Angelo Brisimitzakis PRESIDENT AND CEO Welcome and Overview 2

3 Forward-Looking Statements This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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 those factors identified in Compass Minerals International's annual report on form 10-K filed with the Securities and Exchange Commission on February 22, The Company undertakes no obligation to update any forward-looking statements made in this presentation to reflect future events or developments. 3

4 Salt Specialty Fertilizer North American Highway Consumer & Industrial CMP-UK SOP Deicing DeepStore Keith Clark Jerry Bucan Ron Bryan 4

5 CMP Strategy Leverage our advantaged assets Proactive pricing built on commercial excellence Profitable new products, applications and markets Operational excellence everywhere Improve financial structure Strategic, synergistic acquisitions Profitable Growth + Operational Excellence 5

6 Sales and Operating Earnings (dollars in millions) $1,200 16% CAGR $250 Sales $1,000 $800 $600 $400 21% CAGR $200 $150 $100 Operating Earnings $200 $50 $ Months Ended $0 Sales Op Earnings Consistent long-term performance 6

7 Salt Segment Sales (dollars in millions) $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 13% CAGR 10% CAGR Months Ended $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Operating Earnings Sales Op Earnings Solid foundation even with winter weather variability 7

8 Specialty Fertilizer Segment Sales (dollars in millions) $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 34% CAGR 70% CAGR Months Ended $100 $80 $60 $40 $20 $0 Operating Earnings Sales Op Earnings SOP enjoying strong market fundamentals positive outlook 8

9 More Balanced (Percentage of operating earnings contributed by segment) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 7% 93% 14% 18% 21% 20% 86% 82% 70% 80% 36% 64% Months Ended Salt Specialty Fertilizer Increasing CMP earnings balance from Specialty Fertilizer Segment emergence 9

10 Less Seasonal (Percentage of operating earnings) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 19% 19% 18% 20% 24% 81% 81% 82% 75% 76% 36% 64% Months Ended Winter (1Q + 4Q) Non-Winter (2Q + 3Q) Reduced CMP winter dependence from non-winter / non-seasonal growth (C&I, SOP, DeepStore, etc.) 10

11 Keith Clark Vice President and General Manager North American Highway Business

12 The North American Highway Business Market Size ~ 29MM tons/year in North America ~ 21MM tons/year in our served markets North American Market 1% - 2% volume growth per year 3% - 4% price growth per year Capacity constraints in the Great Lakes region cause supply shortfall in severe winters CMP Customer Dynamics (typical year) 4,700 bids prepared 9,100 customer ship-to locations 200,000 transactions Tons sold Revenue Highway Business * 12 Months Ended 9/30/08 Average selling price Revenue CAGR 2003 TTM 9/30/08 12,117,000 $41.89 / ton $507.6 million 13% * Includes the U.K. 12

13 Compass Minerals North American Highway Business Principal Applications (approximate percentage of tons sold annually) Highway Deicing Specialty Products (Magnesium chloride and treated salt) ~ 10% ~ 70% ~ 20% Chemical #1 highway deicing producer in North America Goderich mine: largest salt mine operation in North America #1 magnesium chloride producer in North America 13

14 Depot Network / Strategic Strength Strong in Great Lakes snow belt region Extensive distribution network of 77 depots would be difficult to replicate Strategically located to minimize delivery cost Breadth of geography mitigates regional weather variability Rock / Solar Salt Source Depot Served area 14

15 Goderich Mine Shaft Cross-section 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1, Goderich mine produces high-quality rock salt 1,800 feet under Lake Huron A-2 salt mining level has ~ 100 thick seam of high purity salt CN Tower Toronto, ON 1,815 feet tall A2 Salt Mining Level Clear Salt 15

16 Goderich Mine Provides Competitive Advantage How We Mine Advantaged Great Lakes rock salt deposit Thicker salt seam three times the volume for every foot of advancement vs. competition Salt quality / purity competitive advantage in chemical markets Bench mining process leverages our reserve base by allowing a mining horizon of 60 in height 16

17 North American Highway Strategy Goderich expansion and upgrade Leverages our mine reserve (thickness and purity) Allows capture of organic growth in the Great Lakes region as weather / market allows Provides for incremental sales during severe winters Improves production efficiencies Cost-effective innovation specialty products Targeted responses to market opportunities 17

18 Phase I Goderich Mine Expansion 750,000 tons of additional annual capacity in 2009 Opens up new sections of ore body Result will be 7.25 millions of tons of total annual capacity Phase I mine expansion increases on-stream time and ore flow to surface operations 18

19 Phase II Goderich Mine Upgrade Increases hoisting capacity material handling, storage and load out capabilities ~ $70 million investment underway Result will be approximately 8.25 million tons of total annual capacity in 2010 Additional face mining equipment will increase annual capacity to 9.0 million tons in 2012 New and updated infrastructure creates platform for scalable future growth Get ahead and stay ahead of supply / demand curve even in harsh winters 19

20 Specialty Products Overview Product Formulation Application Benefits Liquid Magnesium Chloride DustGard FreezGard Zero FreezGard Zero CI+ Magnesium chloride Purified magnesium chloride Purified magnesium chloride with corrosion inhibitor Dust control, soil stabilization Deicing Deicing Complementary product offering Access to new North American markets Vertical integration leverages assets Higher dollar margin per ton Treated Salt Thawrox Salt mixed with FreezGard and an all-natural viscosity modifier and corrosion inhibitor Premium deicing product Leverages existing sales / marketing channels Innovation drives profitable growth 20

21 Jerry Bucan Vice President and General Manager Consumer & Industrial

22 Consumer & Industrial Market North American market is ~ 11 million tons per year (U.S. & Canada) Principal product types: rock, evaporated and solar salts Principal applications: food, water conditioning, deicing, agricultural, fishery, pharmaceutical, and various industrial Category volume growth averages ~ 1% to 3% per year Five principal North American players Compass Minerals Morton Cargill United Salt Corp. US Salt Large market, many categories Consumer & Industrial Business 12 Months Ended 9/30/08 Tons sold Average selling price Revenue Revenue CAGR 2003 TTM 9/30/08 2,780,000 $ / ton $371.5 million 12% 22

23 CMP Consumer & Industrial Business Applications Water conditioning Deicing Food Agricultural Fishery General Industrial Brands and private label National distribution Broad retail channel distribution Seven production and packaging facilities Most raw materials sourced internally Evaporated C&I solution mines Solar GSL Rock Highway business Innovation and leadership in wide range of attractive, recession-resistant niche segments 23

24 Consumer & Industrial Strategy Superior quality and service Cost-effective innovation Higher value-add products that address key user needs Build and leverage key brands Opportunity to selectively increase category growth and profitability 24

25 Home Water Care STRATEGY: INNOVATION, VALUE-ADD, BRANDS Nature s Own brand water conditioning Products: Potassium, Potassium-enriched, Rust Fighter, Resin Clean Positioning: premium quality and pricing Differentiation: Patented, ergonomically friendly, two-handled bag Patented K/Na formulation Upscale packaging and design Family concept Superior merchandising potential Target User Female between the ages of 35-54, married with children present, highly motivated by health and wellness for herself and family Water Conditioning Home Water Care 25

26 Consumer and Professional Deicing STRATEGY: INNOVATION, VALUE-ADD, BRANDS Safe Step brand deicing Broad product line addresses all principal applications NaCl KCl Home series MgCl 2 CaCl 2 Blends Positioning: premium quality and pricing Differentiation Patented additive Breadth of branded product line Packaging facilitates purchase decision Superior merchandising potential Target User Professional series Segment leadership Home Series: male homeowners highly motivated by family safety and pride of home ownership Pro Series: targets janitorial and sanitation professionals who place a premium on reliable performance 26

27 Food STRATEGY: INNOVATION, VALUE-ADD, BRANDS Sifto brand specialty salts (Canada) Products: Kosher Sea Salt Low-Sodium Salt Substitute Positioning: premium quality and pricing Target User Health-conscious home gourmets seeking premium, all-natural seasonings free of unnecessary additives and high in purity to bring out the natural, wholesome flavors of their favorite recipes Value added opportunities in both branded and private label areas 27

28 Pool STRATEGY: INNOVATION, VALUE-ADD, BRANDS Pristiva brand salt water pool care system Two high-value products launched: Primer, Activator Additional products in development Positioning: premium, highest value-add Differentiation Created Pristiva first system of products designed to meet the specific needs of salt water pools Patented, user-verified formulation and ergonomically superior bag Target Users Professional pool builders, pool retailers, and pool service companies (residential pools) Owners of residential salt water pools Opportunity well beyond Pool Salt part of $1.3 billion U.S. pool chemical market 28

29 Ron Bryan Vice President and General Manager Great Salt Lake Minerals and Compass Minerals U.K.

30 CMP U.K. Salt Union Ltd. Highway Deicing U.K. s largest supplier of natural rock salt for highway deicing Three principal suppliers Salt Union Cleveland Potash Irish Salt Market parameters ~ 130 local and highway authorities request bids 3-7 year contracts ~ 40 bids come up each year DeepStore Records Management Leverages virtually unlimited low-cost storage capacity in Winsford mine Two above-ground locations in London area for active storage Business offers attractive non-seasonal growth opportunities Estimated U.K. market: ~ 300MM (~ $500MM) Improving financial and seasonal balance in U.K. businesses 30

31 SOP Specialty Fertilizer Market Worldwide SOP market: ~ 7 million tons annually SOP largely used on high-value, chloride-sensitive specialty crops Vegetables, fruits, nuts, turf, and nursery Category growth (volume) averages ~ 3% per year The Financial Power of High Value Crops 3.7% of total harvested acreage 37% of total revenue Commodity Crops Specialty Crops Source: Agriculture and Applied Economics Association 31

32 Customer Dynamics Average Revenues per Acre $2,750-$5,550 Impact of Specialty Fertilizer Price Increase (per $100/short ton change) Almonds 0.38% $0.007 change at selling price of $1.85 per pound Grapes 0.36% $2.00 change at selling price of $ per ton Specialty Crops Fertilizer cost $245-$585 Commodity Crops Source: Agricultural & Applied Economics Association and GSL estimates Potatoes 0.3% $0.038 change at selling price of $12.00 per 100 pounds 32

33 Customer Dynamics Farmers can afford SOP Yield increases exceed incremental SOP cost Title X of U.S. Food, Conservation, and Energy Act of 2008 (Farm Bill) is specifically targeted to specialty crops Q4-to-date average selling price of $946 per ton Expect full-year 2008 sales volume of ~ 400,000 to 410,000 tons ~ 75% U.S. / ~ 25% export 33

34 SOP Competitive Dynamics Country Company Capacity short tons Production Methods Distribution Regions USA GSL Minerals 450,000 Lake brine extraction U.S., Mexico, Latin America, Japan, Australia, New Zealand Germany K+S Kali GmbH 1,400,000 Conversion of KCl and Kieserite Europe, Middle East, Africa, Asia, U.S., Latin America Belgium Tessenderlo 1,200,000 Chemical conversion of KCI with sulfuric acid Europe, Middle East, Africa, Asia, U.S. Chile SQM 300,000 Lake brine extraction Latin America, Pacific Rim, U.S. China Various 2,800,000 combined Mostly chemical conversion of KCI with sulfuric acid; some lake brine extraction China, some in Japan Various All Others (17) 1,050,000 Mostly chemical conversion of KCI with sulfuric acid Various 34

35 About Great Salt Lake Minerals Corp. First company to commercialize economical potassium extraction from brines Location on the Great Salt Lake in Ogden, Utah allows us to capitalize on nutrient availability, solar evaporation, and superior freight logistics Multiple channels of distribution (blenders, dealers, distributors, agents, retailers) Organically approved Specialty Fertilizer Business 12 Months Ended 9/30/08 Tons sold Average selling price 447,000 $479.8 / ton Revenue Revenue CAGR 2003 TTM 9/30/08 $214.5 million 34% 35

36 How We Make SOP High-salinity brine is drawn into shallow ponds After one year of solar evaporation, concentrated brine flows to final evaporation ponds via underwater trench Two years of evaporation leaves a dry bed of minerals Minerals are processed into high-quality SOP and other natural products 36

37 Specialty Fertilizer Strategy Increase production and profitability through plant efficiencies and expansion of low-cost solar-pond-based capacity Grow the market and increase market share through crop expansion Higher value potassium product Leverage dual nutrient and chloride-free aspect of SOP Respond to supply/demand imbalance with proactive pricing Leveraging value advantages of SOP 37

38 Increasing SOP capacity to meet future demand Goal: One million tons/year of SOP capacity Phase I: No plans to increase MOP purchases 100,000 tons additional annual capacity by 2011 ~ $40 million investment Investment scope enables future expansion Phase II: Adds up to 70,000 acres (+ ~ 160%) of new solar ponds Additional annual capacity of up to 350, ,000 tons can be brought on as demand warrants Lengthy federal permitting process underway At least five years until any new production will be available Investment plan still in development Phase III: Evaluating several opportunities Phase II Great Salt Lake, Utah Phase II Leveraging advantaged asset Phase I Plant 38

39 Crop Expansion Strategy Targeting those crops that now use SOP (e.g., potatoes) in those states that don t use SOP Targeting select crops that should show benefit with SOP Sugarcane Sweet potatoes Blueberries Strawberries Other fruits Solid fundamentals drive strong future outlook 39

40 BETTER. STRONGER. Thank you.