Good day everyone, and welcome to the Compass Minerals Fourth Quarter Earnings Conference. Today's conference is being recorded.At this time, I would like to turn the conference over to Ms. Theresa Womble, Director of Investor Relations. Please go ahead, ma’am.

Thank you and good morning. Today our CEO; Kevin Crutchfield, CFO; Jamie Standen will review Compass Minerals' fourth quarter and full year results and our outlook for 2020, as well as some key strategic items. Also on the call today are our Chief Operating Officer; George Schuller and our Chief Commercial Officer; Brad Griffith, and they will be available for questions following our prepared remarks.Before I turn the call over to Kevin, let me remind you that today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company's expectations as of today's date February 11, 2020 and involve risks and uncertainties that could cause the company's actual results to differ materially. A discussion of these risks can be found in our SEC filings, located online at investors.compassminerals.com.Our remarks today also include non-GAAP financial measures, which we feel are important to provide a full understanding of our businesses and our operating conditions. You can find reconciliations of these measures in our earnings release or in our earnings presentation, both of which are also available at investors.compassminerals.com.With that housekeeping out of the way, I'll now turn the call over to Kevin.

Thanks, Theresa and good morning, everyone. I'd like to start today by broadly summarizing our financial and operational results for 2019, before providing some thoughts on our continued evaluation of the company's strategic direction.This has been a year of challenges, recovery and evaluation for Compass Minerals. Our salt business delivered substantial improvements in operating earnings and EBITDA, for both the 2019 fourth quarter and the full year. While our plant nutrition businesses lagged full year 2018 results, both generated modest improvement in the fourth quarter. The improvement in full year salt results was primarily driven by a combination of increased average selling prices, and improved salt production and lower costs at the Goderich mine.Plant Nutrition North America, reported a 9% dip in 2019 EBITDA, as SOP sales that were lost to poor weather conditions, early in the year only partially recovered in the fall and micronutrients demand weakened. While volumes were lower versus 2018, our SOP-only price remained steady compared to 2018, and we achieved strong Pond-only SOP production at our Utah facility.Our Plant Nutrition South America business was pressured by agriculture trade uncertainty, that ultimately resulted in growers being less likely to purchase higher value crop inputs. Even with that pressure, we delivered double-digit growth in our direct-to-grower agriculture sales channel. On a consolidated basis, the strength in the Salt business more than offset Plant Nutrition weakness, and boosted our full year operating earnings 26%, and EBITDA about 12% above 2018 results.Of course, these financial numbers only tell a part of our 2019 story. As we discussed on our last quarterly call, we've engaged in significant efforts to improve performance at our Goderich Mine and the impact has been very positive. On a year-over-year basis, the mine produced 40% more tons in 2019 compared to 2018 results, and we've…

Thanks, Kevin, and good morning, everyone. I'll start on Slide 8 with a review of our Salt segment results. Fourth quarter 2019 salt revenue increased 9% from prior year results, 4% volume growth, 5% higher average selling prices.Looking first at our highway deicing performance. We reported 4% higher sales volumes and our average selling price for highway deicing products increased 10% from fourth quarter 2018 levels. These sales volume results may seem a little light given the above average winter, we experienced in parts of our North American market. However, our UK sales declined more than 50% due to warm winter weather, which offset a portion of the improved results in North America.Our Consumer and Industrial sales volumes grew 5% from 2018 fourth quarter results, while average selling prices for these products dip 3%, a year-over-year change in product sales mix was the primary driver for the decline. For example, because of Goderich Mine improvements, we sold a higher proportion of bulk-salt product this year, which has a lower average selling price in some of our other product categories like water conditioning salt.The Salt segment as a whole, generated significant growth in both operating earnings and EBITDA, 41% and 36% respectively. In addition to improved selling prices, and lower per unit salt costs lifting fourth quarter 2019 earnings, prior year results were negatively impacted by approximately $15 million, Goderich strike related impact.Before turning to some comments on full year results, I'd like to note that the EBITDA margin for the salt segment at 31%, is the highest we've achieved since transitioning to continuous mining and haulage at the Goderich Mine, and beyond that a highest since the third quarter of 2016. This is a strong indication that we're executing better across the entire salt business, not just at Goderich.For the…

Thank you. [Operator Instructions] Here, first today from Mark Connelly with Stephens.

Thanks. Last quarter, Kevin, you said that we will hear more about the improvement opportunities in the salt business. And you said today that, we're nowhere near the potential. Can you give us some sense of how we should think about where we are in that progression? And, given the heavy seasonality, is it reasonable to expect, clear and consistent year-over-year improvement, or is this going to be a lot lumpier than that?

Now, look, I think it's a progression Mark. As we talked about, I mean, Goderich I mean, we always end up talking about Goderich, but it was up 40% '18 to '19. We expect another 15% to 20% increase this year. And, we'll start to level up after a while, but I think it'll be a steady progression as we integrate this new equipment, as we begin implementing the new mine plan. I think a lot of it will be, frankly, invisible from the outside looking in. But it will be a steady progression. And as I've said before, I think in our served salt areas will probably run out of market before we run out of capability at Goderich.

Okay. And just a question on SOP, we were surprised by the size of the margin improvement there. Can you help us understand what went right in Plant Nutrition and whether you see this as you know, a good operating quarter, or is this a step change in performance at that asset?

Yes, I mean, I think, kudos to the team out there despite kind of a slow start to the year, doing an excellent job of controlling input costs and running well. Some of it's a function of the internal improvement initiatives that we've talked about, but kudos to the team for really controlling that and finishing the year very strong, especially in the phase of all the potash anguish that we saw across the rest of the industry. We were able to hold firm on price control costs and maintain margins and even grow it in the fourth quarter of the year. So, it was a nice finish.

Very good. I'll come back. Thanks.

Thank you.

We'll hear next from Christopher Parkinson with Credit Suisse.

Great, thank you. In your strategic priorities slide, you mentioned an evolution of core competencies in the adjacency strategies. Can you just offer a little more color on your initial thoughts on how you see portfolio evolution12, 24, 36 months out, as well as including any preliminary views of where you want the balance sheet to be? Thank you.

Sure. Look, I think from a priority standpoint, you've heard me pretty consistently say that, the top three priorities are Goderich and then after that it's delivering on our full potential across the enterprise. So, we have a lot of work there to do, a lot of upside potential just across the existing platform. So, that's really job one. And then of course, we've announced a strategic review of our Brazil assets, great team, great set of assets, that's going to take up time. And we want to really, really concentrate our focus in those two areas and not get distracted.But, at the senior management team in the Board, as part of this process will now begin to kind of phase in and start to think about, what adjacency strategies do look like to take advantage of existing core competencies, and work towards the formulation of a longer-term strategic plan, which I think I referenced on the last call that we'd be ready to start talking about midyear, maybe third quarter sometime and in that time frame.But what I want to do is not create distraction for anybody. We've got our hands full with the priorities that we set forth on. We think there's just an extraordinary amount of internal opportunity for improvement across the platform, and we want to stay focused on that, and then running a thorough fulsome process with respect to Brazil.

Great. And just as a quick follow-up. When it comes to the SOP premium versus MOP, just how do you see this evolving in '20 given some MOP price pressure, but alternatively, specialty crop economics seem a little bit better off versus real crops. So, in terms of your price for value strategy, can you just give us a little more color on how you're thinking about this going forward? Thank you.

Yes. So, I'll address that at a very high level and then turn it over to the expert, Brad who is sitting here with me. I guess there's a belief that there's a correlation between MOP and SOP pricing. And I guess, overtime, there has been some correlation. But, when we look at the plants that need SOP, they just need SOP. There is no price at which MOP works, because of the damage or potentially damaging the rig structure via the chloride content.And, as everybody knows, we have a very dominant position in that marketplace, and we think we ask fair value for our products. Now, you get into little competition as are some of the vegetables around the margin that are a little more sensitive to MOP price vis-à-vis where SOP price is. But our strategy is to continue to run Ogden well, stay focused on cost, supply the folks that need their plants fed with the good stuff. And that's the kind of price that we believe is fair value for that. But, for more color, I'd look to Brad to augment that.

No, those are great comments, Kevin. And Christopher, I think as you know, the fertilizer category in general, retail customers, certainly in 2020 are bullish. And we saw a little bit of that bullishness at the conclusion of 2019. So, despite some of the challenges in the NPKs versus prior year, specifically around price, in contrast, our SOP pricing has remained steady throughout the year.I think your question around why? There is that premium that growers are willing to pay. As Kevin said, there's certainly the chloride free premium as we call it. But there is also the sulfur component that is really overlooked, I think. You remember, our rating is 0050 parts of K and 17 parts of S. And sulfur is a critical component for a number of the crops that Kevin mentioned. It's responsible for chlorophyll production and also nitrogen metabolism.So, in the absence of good, as you can put down as much in, and you're not going to get the agronomic benefits. I think producers see that in their specialty crops in particular. And I think specialty crops right now too when you look at year-over-year view on almonds, they've held, it's held in terms of price, it's held in terms of volumes. So, our in-use customers are doing quite well in the specialty category as well.

It’s a great color. Thank you.

From Deutsche Bank, we'll hear next from David Begleiter.

Hey, this is David Kwon here, for Dave. I guess, first on your Slide 6, of all the focus areas you're aligned. Can you just talk about the priorities for each year? And I noticed that commercial is the second largest source of your improvement. Can you also talk about what kinds of actions you plan to take to realize the improvement there?

Yes, I think I heard; our volume was suffering there for just a moment. I think, I heard most of the question but, on the operating side I think I gave a pretty good example of - it's one of the better examples obviously, of the compaction at Goderich to improve the fines content in term material that we previously left underground to turn that into product. We've already incurred the cost to mine it and all you have to do is compact it and pay a royalty on it, and get it out from underground to be able to realize almost the full benefit of the FOB price there at the mine.So, I think that's a real good example of one of the operating examples on the logistics side. I think, as we talked about before, we move product around all over the place and it's around maximizing water hauls, lake hauls and trying to minimize rail and over the road that last miles, the most difficult piece and we got some initiatives underway. I don't want to say too much just again that is fairly sensitive, but we've got some internal initiatives underway that we think we can optimize around that and save a fair amount of money.And then just in terms of commercial, I guess the way I look at it is, we're on a path here for Goderich to become the long-term low cost swing supplier in the served market, where we operate. And we're going to have a lot of opportunities on the commercial side to expand our market reach, just given the cost profile that's there, there's a bunch of import tons sloshing around in our served market which, we think as they have a target on their back as it relates to Goderich as we continue to ramp it up. So, we think there's a lot of opportunity there and that's kind of one of the areas that we would call the commercial opportunity.

Great. And second one I guess, just seeing a salt EBITDA guidance for the first-half, you mentioned primarily driven by pricing. Do you expect to see any operational improvement in first-half or would that be primarily in the second half?

No. We'll see, as I mentioned earlier and George is here and I'll ask him to comment on it. But we'll see a steady improvement, we'll see a step function change when we get the new unit underground in the second quarter. It's underground now being assembled. But we'll see a step function change when we move that new unit into salt and take one of the other units to start developing our long-term roadways.So, I think just in terms of cost and be kind of flattish for the first-half, but as we work through some of that higher cost inventory and get that flushed out of the system, you'll start to see good cost improvement in back-half of the year. And we've talked in terms of salt margins, we think we're going to be pushing 30% all year and in 2021 we will be comfortably in that three handle zip code which we've talked about previously. You think you'd like to add George, just on the productive side of Goderich?

Yes, thanks, Kevin. I think maybe just a couple comments, again, probably coming off a very strong quarter, probably or without that our strongest three months since we went to mechanize mining. Again, there is good operational improvement. Kevin, you highlighted the workforce here. We're going to walk through the operational excellence, operational opportunities. I do think, as you go through there, we're trying to reduce that variability that we see in the production.So, again, day-to-day, week-to-week, month-to-month, we're going to see that continue improvement in production as we go through the year. And, I do think it'll be more second-half loaded, but by the same token, that group and that team up with Goderich doing an incredible job. So, I think we'll continue to see that effort. Thank you.

Thank you.

Moving onto Jeff Zekauskas with JPMorgan.

Thanks very much. Can you talk about weather conditions and snowfall through January or up until February 10 year-over-year or versus your longer-term averages?

Yes, I think Jamie and Brad here too, but I think, through the end of the year it was about normal, maybe a little bit above average, in terms of - and I mean bad to our benefit. Obviously, January was a little soft, February's off to a pretty good start, but I think overall, you'd have to characterize the winter season is about average that fair, Brad?

It is.

Yes, so we're open for but we'll control what we can control, and the weather is going to do what it's going to do.

Okay. And in terms of your sort of strategic change, you're interested in exploring sale of the South American Nutrient business, not the North American Nutrient business. Why strategically South America rather than North America? And, I think you talked about wanting to be more of a mining company going forward. Does that mean owning more salt assets or bentonite assets or other minerals? Can you elaborate your strategy a little bit more?

Yes, look, I think with respect to South America, and again, with no negativity at all towards the team and the asset down there, that's a great asset. It really is. I just question ultimately, whether we're the right owner for it, and we're going to run a fulsome process. And I'm not going to really say anything about timing or what the outcome might be, we're going to run a fulsome process with the Board and our internal team and our external advisors. And we'll keep everybody posted as that progresses.But, look, at the end of the day, we're not emotional about any of our assets, when it comes down to it, if they're worth more to somebody else than they are to what we think that we can deliver on from an execution standpoint, there ought to be a conversation. I think that's the fair value proposition in any scenario.So, as we move ahead, I think maybe, I would just like to correct what you said, about becoming a mining company. I think we are a mining company. I think we are a mining company, and historically always have been, kind of lost our way there for a while. But we're restoring that operational excellence on a day-by-day basis. And I think our ability to mine, transport and market essential materials is going to be key to how we think about our strategy going forward. I don't want to imply what those minerals might or might not be, right now, it's still premature.But again, as I said earlier, our focus is executing internally. We've got lots of value that can be created internally just by delivering on our full potential and focusing on a running a very fulsome and thoughtful South American process. So, that's the near-term focus.

Great. Thank you so much.

You are welcome.

We will hear next from Vincent Anderson with Stifel.

Yes, thanks. I just wanted to kind of dig into the timing of the strategic review. I mean, the assets aren't exiting the year on the best, and up until now, your focus has been on Goderich and these companywide improvement efforts. With the timing, is it that you've already received some pretty significant interest or did you look at the cost assessment of your new Goderich plan and decide that maybe you want to deleverage more aggressively before undertaking large scale change to that mine?

Yes, with respect to timing, I think it's a decision from a strategic point of view. It's a great asset, it's going to have great value in any market. And I would want to very quickly dissuade you of the notion that our interest in exploring options with respect to Brazil has absolutely nothing to do with what we're planning at Goderich.I think I've been pretty clear so far that our plan at Goderich will largely be invisible from the outside, looking in we will be able to absorb the cost of the new mine plan, inside of previously given CapEx guidance, with the exception of the mill. We're still working through that, because we want to be able to utilize things that are at the mine and reuse them and not spend extra money, but we could have a little bit of expense associated with the mill. But not something that will cause you to sell an asset to be able to pay for it. We will be able to handle that comfortably, within the bounds of our existing cash flow. So there's no connection between the two. Absolutely none.

Alright, great. It's good to hear. Just switching gears, this was kind of addressed earlier. But the strategy in SOP for a while now has been to try to grow into that flex capacity, that you have above and beyond the existing pond capacity. And that's generally been by targeting the marginal SOP consumer. So, specifically with regards to 2020 with whereas MOP prices are today, do you look at the market right now, and those spreads and say you're going to continue to fight for share at these spreads or do you dial that back a bit?

Hey, Vincent, its Brad. Good, question. I think the way I look at it is number one, we need to serve our customers. We need to be their primary source of SOP, if not their exclusive source of SOP domestically. And so, we're going to focus on the needs of our customers and our key accounts, and ensure that our account management team, our logistics team, delivers our product when and where it matters.You've heard me also in prior calls and conversations, talk about the aspect of pricing dynamically. We will continue to price dynamically. We are the only producer of SOP in this hemisphere and we intend to maintain the strength and the share that we have in the United States and in USMCA, for that matter.So, that's what I'd say about share. And as it pertains to MOP, listen, the way that we win that one, Vincent is agronomy. And our team continues to put together very solid research trials across a number of specialty crops. And, I think that as we continue to get more competitive intelligence and agronomic intelligence on these crops, that's what's going to unlock additional opportunities.I'll give you one that we just really become aware of in recent weeks and that's really around apples, Honeycrisp apples to be precise. It's not been a focused crop for us on the specialty side of the business. But SOP makes a dramatic difference in the market ability and the potential waste for Honeycrisp apples for grocery and the entire grocery supply chain.So that's what we're going to do. We're going to continue when our customers and we're going to continue to really understand and expand the agronomy for our SOP and specialty potassium business.

That's very helpful. Thank you.

We will hear next from David Silver with CL King.

Yes, thanks very much. I had a question about the SOP business, but I was kind of maybe coming at it from a different angle. Over a longer period of time, I think your company has had a number of strategies to cokes more pond based tons out of that facility. And, given as other people have mentioned, the big value differential between a pond based ton and the alternative, what is the potential to maybe invest to either, I don't know, improve this feeling in the ponds or do some other steps to cokes more of those low, exceptionally low cost, high value tons out of that asset? Thank you.

David, this is Jamie. I would say back in 2015-16, we made, you know, significant investments in that facility to increase the capacity and improve the production efficiency there. And which is what really enabled us to have the 550,000 tons of total capacity, which is about 325,000 tons of pond based capacity. So, we used to be at a much lower level, we used to be 225. So, now we're 325.In order to increase the pond base capacity, it would take a significant amount of new acres in our ponds, which would be a significant cost of implementation of capital costs. Because we have the ability to go to the 550, using KCL as an input, and we're working hard to grow into that capacity over the next three to five years, that's just a decision for down the road. Brad, do you want to add to that?

Okay.

David it's Brad Griffith, how are you?

Good.

I'm going to tell on Jamie's comments if I could, I like your phrase "cokes more pond tons", I like that, I might use that. But as it pertains to 2018 and 2019 those were record pond based ton production years. And you know what, we expect 2020 to be a record pond based ton production year. So, while Jamie is absolutely correct, when we look at the kind of spec played on our assets, we would say that it's in that 325,000 ton range.Our team in Ogden, however, has been quick to correct both of us. And they feel like they can do more and we're going to let them do that. So, I'm not going to put a number on their head. I'm going to let them prove to us what they can do and George as well.What I would say is, it pertains to the enterprise-wide optimization plan that Kevin had spoken about, while its early days, there is an intersection of innovation advantaged asset like Ogden and grower need. And we're going to continue to work on additional mineral applications from our operations in Ogden and the position that we have is a specialty K provider in this hemisphere, if that helps.

Yes. No, that's great. And just as an aside, feel free to feel anything decent that I would say for your own news. I've been stealing from the other guys on these calls for a long time. Just one other question and I admit this is going to be kind of wonky. But it has to do with the $58 million of refunds, I guess or the settlement that you're due to receive from the Canadian authorities. And I was just wondering, if you could characterize that. In other words, I'm assuming that that's maybe a dispute that's been settled over resource taxes, which might be paid on a per ton of production basis.And again, that's just an assumption, I'm coming at this more recently. But, are there any implications for your efficiency or your cost the basis going forward from that settlement? In other words, where the basis for assigning let's say, resource taxes or other assessments changed in such a way that in 2020, 2021, there will be structurally lower assessments relative to what you were being charged before the dispute? In other words, are there some longer-term structural implications that we should model in based on that settlement? Thank you.

Thanks, David. I'll take that, I'll try to summarize that quickly. So, this goes back to a dispute in terms of our transfer price between the U.S. and Canada. We won that dispute. So, we had to pay taxes back in 2017 to Canada revenue and during '20 - I'm sorry, 2018. And now we're just now getting our U.S. refund. So, that's $58 million that's from a settlement that happened previously.So what that was, was transfer pricing and it comes down to where does the profit in our North American Salt system as it relates to highway deicing Salt, where is the profit accounted? Is it in the U.S. or is it in Canada? So, the only impact will be around the tax rate. So, it's all below the line. The part of that you can see in terms of our tax rate guidance for 2020, right around that 30%. It's already embedded in that. So, there's no further implication we would expect.

And from Goldman Sachs, we'll move next to Bob Koort.

Hi, everyone. This is Tom Glinski on for Bob. So just first on capital allocation, if we assume that you generate say $100 million to $150 million in free cash next year and sell the South America business. Could you walk through maybe what your capital allocation priorities would be in that scenario?

Yes, I mean, let me hit it at a high level. I don't want to speculate too much and you to speculate that we will arrive at that as a conclusion. But, to the extent that we did divest Brazil, I mean, you can certainly expect to use a large portion of those proceeds to delever the balance sheet, at least around the prepayable side. And then from there, we would have to make the decision whether we want to warehouse the cash, have the discussion with the Board about proper allocation, the share repurchase et cetera. But clearly, if we did end up divesting South America deleveraging would be at the top of the list. Anything you'd like to add to that, Jamie?

No, it sounds great.

And then second on the interest expense guidance. Sorry, if this is a bit of a minor question, but it appears that you expect interest expense of plus $10 million or so year-over-year from 2019 to 2020. Could you just walk through the moving parts here and perhaps if this implies that you expect additional borrowing? Thanks.

No, the primary driver there is the incremental interest expense related to the bonds that we issued back in November. So we've got the new $500 million bonds and they carry a higher interest rate than debt that was previously financed with short-term bank debt. So, that transaction really boosted our liquidity by about $125 million. It extended our tenor and pushed all of our maturities out past 2024.

We'll move next to Joel Jackson with BMO Capital Markets.

Hi, good morning. Can you give us a sense of, obviously, 2018-19 were, I don’t know, if the right term is high drama at Goderich for lots of reasons. But when you look at what production is going to be at Goderich in 2020 and the cost? Can you comp that compare that to where you were at 2017, before you started transitioning continuous mining? Thanks.

I certainly couldn't do that, off the top of my head. But, I guess, really, we started first the M unit there what three years ago?

We've had to development miner for a while.

Yes, I would say when you look back at cash cost, look back to you said 2017-18 running $35 a ton, I think our expectation would be in 2020 to get down to that level. And then we'll take it down to the low $30 range in 2021 as we continue to make process improvements and improve production and efficiency there.

That's a fully loaded cost, noncash.

No, that's cash cost, cash cost down around 30 total salt I'm talking. Total salt cost, which includes our C&I business.

I guess, I was trying to production. So, like 2020 production Goderich versus say three years ago. Are we above that mark? Are we below that mark?

So we don't disclose Goderich Mine production.

Okay.

We disclose the total production annually.

So my last question would be it would seem like you've seen some good salt price improvement this year. We had some downtime from yourself, maybe a competitor. It seemed like maybe this year you're going after market share. I mean the winter you say the average, so I assume that what's embedded in your 2020 guidance average for good season. In that scenario, it seems like you're going after your market share this year. Maybe you could talk about that. Thanks.

Yes, I think the first step for us Joel, is we need to do a little bit of inventory replenishment. But importantly for us, we need to displace the ton and so that we've been importing andas a profound effect on margin improvement. And I don't think we've ever disclosed the amount of tonnage that we were importing, but it's not an insignificant amount. And then the next change from there would be targeting the rest of the imports that I talked about earlier that are sloshing around inside of our served market, because there'll be no way that they can compete with us really anywhere inside of that served market. So, we think there is the opportunity to do that. Overtime, it's not going to happen in one year, but our goal this year is to just push out all the tonnage that we've been importing and doing little bit of restocking getting ready for next winter season.

Thank you.

At this time, I'd like to turn things back to you all for closing remarks.

Thank you, Kelly. This is Teresa. Thank you all for joining our call today. If you have any follow-up questions please contact Investor Relations. You can find our contact information on the website. Thank you. Bye-bye.

Again, that does conclude today's conference. Thank you all for joining us.