Brent Collins; Vice President - Investor Relations; Compass Minerals International Inc
Edward Dowling; President, Chief Executive Officer, Director; Compass Minerals International Inc
Hello and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Compass Minerals fiscal fourth quarter and full year 2024 earnings call. (Operator Instructions)
I would now like to turn the conference over to Brent Collins, Vice President, Treasurer, and Investor Relations. Please go ahead.
Thank you, operator. Good morning and welcome to the Compass Minerals fourth quarter and full year 2024 earnings conference call. Today, we'll discuss our recent results and provide our outlook for fiscal 2025.
We will begin with prepared remarks from our President and CEO, Edward Dowling; and our CFO, Jeffrey Cathey. Joining in for the question-and-answer portion of the call will be Ben Nichols, our Chief Sales Officer; and Jenny Hood, Chief Supply Chain Officer.
Before we get started, I will remind everyone that the remarks we'll make today reflect financial and operational outlooks as of today's date, December 17, 2024. These outlooks entail assumptions and expectations that involve risks and uncertainties that could cause the company's actual results to differ materially. The discussion of these risks can be found in our SEC filings located online at investors.compassminerals.com.
Our remarks today also include certain non-GAAP financial measures. You can find reconciliations of these items in our earnings release or in our presentation, both of which are available online. I'll now turn the call over to Ed.
Thank you, Brent. Good morning, everyone, and thank you for joining us on our call today. It's good to be speaking to you again after we've had to take a pause as we went through our restatements.
I want to begin my remarks today by providing a brief recap of the year. To say fiscal 2024 was an eventful and transitional year for the company would be a major understatement. The transition began in November 23 when we announced the suspension of our lithium project in Utah, which was formally terminated a few months later in February.
This was a significant pivot for the company that aligned with our renewed strategy and commitment to focus efforts on improving performance on our core salt and plant nutrition businesses. We all know that different jobs require different skill sets and it's only amplified when it involves a shift in strategy.
As the company reordered towards the back-to-basics strategy, changes were made in our senior leadership team including my appointment in January as President and CEO, and across the organization to ensure they have the right team in place to execute effectively. In the midst of these changes and directions of leadership, we experienced within our served markets one of the weakest North American highway deicing seasons of the last quarter century.
There were very clearly financial and operations ramifications that arose from that, which led us to discontinue our dividend, curtail production at Goderich Mine and other mines, and to take a hard look at and take actions to improve our cost structure.
There was also a pause that we had to take in the development of Fortress for our (inaudible) business as well as financial reporting restatement issue we had to work our way through in the recent months. Clearly, we had our fair share of challenges in fiscal '24 and it's a year we'll be happy to have behind us.
However, I'm reminded of the saying: it's darkest before the dawn, and I think it's applicable here at Compass Minerals. The fact remains unchanged that we have the privilege of operating high-quality advantage salt plant nutrition assets with long-standing established markets. Certain of those assets are quite frankly irreplaceable and could not be replicated today. For example, in Goderich, Ontario, we operate the world's largest underground salt line located 1,800 feet below Lake Huron.
The geological attributes of this mine and the fact that it has access to a deep-water port positions Goderich to be a low-cost producer for much of the Great Lakes region. In Ogden, Utah, we operate the largest sulfate of potash facility of its kind in the Western hemisphere. When done correctly, our use of naturally occurring processes to extract essential minerals from the Great Salt Lake allows us to produce SOP at a lower cost and more environmentally friendly manner than other production processes.
The location of our Ogden facility is also beneficial given its relative close proximity to major producing areas on the West Coast of high value, chloride-sensitive crops such as fruits and nuts.
Our back-to-basics strategy is focused on maximizing the potential of these and our other assets. Through this renewed focus, I'm confident that we could do a better job managing these [assets] to improve operations efficiency and reduce capital intensity.
These efforts are already underway. As an example, at the Goderich Mine, the [East Mains] project, which is part of our mill relocation effort, will allow for a reconfiguration of the mines operations we expect to provide a number of benefits over time.
Those benefits will include improved access to development areas, improved ventilation, abandonment of higher ground cost control areas of the mine, and added flexibility in the production of operations.
All of those have potential to improve the profitability of the mine, all things being equal. These and similar efforts across the platform should ultimately lower the cost structure of the company and improve the profitability of our operations, resulting in higher levels of cash generation for the company that can be used to reduce the absolute levels of debt of the company.
Despite the challenging year, there are also some positives we should not lose sight of. First, we continue to build on and reinforce our culture of zero harm across the operations. Safety is a top priority for us because it's the right thing to do for our people and it's the right thing to do for our business. Safety is also a leading indicator of operational performance. The past three years have been the safest of Compass Minerals history.
We've seen a significant reduction in high potential incident. We have a number of complex operating environments here, accomplishments, also; and I'm incredibly proud of our people for the focus and care they give to work every day.
The fact that we've been able to drive our reportable and lost time accidents to these levels demonstrates the commitment of our employees to safety. In early September, the company also executed a binding voluntary agreement with the State of Utah that outlines water and conservation commitments we are making to benefit the sustainability of the Great Salt Lake.
We work collaboratively with the State to arrive at an agreement that meaningful supports efforts by policymakers and other diverse stakeholders in Utah to ensure the long-term health of the lake. In that environment. this agreement is also an important step towards the company, and it provides better predictability of our future water use allotment at Ogden and enables the avoidance of increased tax burden on mineral extraction enacted by the recent legislation in the state.
Moving to our plans in fiscal 2025, I'll make a few comments on priorities for the year. In the salt business, consistent with prior comments we've made, our goal will be to reduce inventory levels and harvest cash that is hung up in working capital following last year's weak winter. As I mentioned earlier, last year, we curtailed production at Goderich Mine to address this inventory overhang.
We'll revisit production levels for the mine in the coming months after we've had a chance to gauge the highway deicing activity. In plant nutrition business, our effort will be focused on advancing restoration of the pond complex at Ogden. This has been discussed in the past. This is a multiyear process I've been engaged with for a couple of years.
The team in Ogden is working on developing and implementing processes to improve consistent grade of SOP raw materials going into the plant. This should allow for more efficient, less costly operations. Our plan to supplement our produced tons with purchased potash or KCl this year will provide a couple of benefits.
First, it will ease the harvest demands on our ponds to provide them more time to recover and regenerate. Our early efforts in implementing this are going well. Second, it would prove the quality of the feedstock for the plant. We have several efficiency initiatives underway that we think will allow us to see all-in product cost decline this year.
At Fortress, our plan is to finalize discussions with the US Forest Service regarding the potential for a 2025 contract for our non-magnesium chloride-based aerial fire retardant product.
Regarding our capital allocation process after environmental health and safety, dollars will be directed to the highest rank projects. We've organized capital plan to flex up and down like our operations depending on how the highway deicing season progresses. This process was implemented last year and is proven helpful.
Other new improvement initiatives are underway. We'll increasingly highlight them as they progress. With respect to the balance sheet, we expect to refinance the debt stack this year with the intention of structuring in a way that better aligns with our current strategy. We believe that we will be able to move into a structure that provides more flexibility around covenants. Jeff will comment on this more in detail in a moment.
Back to our second-quarter call, I shared my vision for the company over the coming years. My goal, which is shared by our Board and the senior leadership team, is to gear the company such that it generates free cash flow even in mild winters; strong free cash flow in normal winters, and outstanding free cash flow in strong winters. That vision has not changed and we're aggressively taking steps to achieve that goal.
With that, I'll turn the call over to Jeff.
Jeffrey Cathey
Thanks, Ed. I'll begin my remarks by discussing our quarter and year-end financial performance before providing perspective around our outlook for 2025. For the fourth quarter, consolidated revenue was $209 million, down 11% year over year. The weak winter we experienced in our served markets led to a decrease in prefill activity compared to what we would typically see in the fourth quarter after average winter activity.
Additionally, when making a comparison to our prior-year results, it's important to remember that the fiscal 2023 fourth quarter included a contribution from Fortress from the US Forest Service contract. As a result of these and other factors, we posted a consolidated operating loss of $30 million, which includes a non-cash impairment of approximately $18 million related to the writedown of certain water rights in our plant nutrition segment.
Consolidated net loss was $48 million and adjusted EBITDA was approximately $16 million for the quarter. For the full fiscal year, consolidated revenue was $1.1 billion, which was down 7% year over year. Again, the extremely mild winter that we experienced this past year clearly had an impact on the topline.
Reported operating loss of $117 million includes $191 million of non-cash impairments in our lithium fire retardant and plant nutrition businesses. We posted a net loss of $206 million, which included the impairments I just referred to as well as the non-cash gain related to the Fortress contingent consideration liability, and adjusted EBITDA for the year was $206 million.
Drilling down into the segment results, in the salt business, revenue in the fourth quarter was $163 million compared to $187 million a year ago. Pricing was up 10% year over year to $107.66 per ton. However, volumes were down 21% compared to the prior-year period. Lower highway deicing volumes related directly to the muted prefill program that I referred to a moment ago.
Net revenue per ton, which accounts for distribution costs, increased 9% to a little over $78 per ton. On a per ton basis, operating earnings came in lower year over year at $13.90 per ton, down 7%, while adjusted EBITDA per ton increased 9% to $25.22.
It's worth noting that because our company records depreciation on a straight-line basis without regard to sales volumes, the trends in low sales volume quarters for adjusted EBITDA can look a bit odd because of the significant DD&A per ton add back that you get in those quarters.
For the full fiscal year, revenue totaled $908 million, down 10% year over year. As Ed and I have both referenced, this past fiscal year, we experienced one of the mildest winters that we've seen in our served markets over the last 25 years, which had a meaningful impact on the segment's results. Highway deicing volumes were down 20% year over year to 7.5 million tons. And C&I volumes, which includes consumer deicing products, were down 7% over the same period to 1.9 million tons.
Total salt segment volumes were down 18% year over year. We did achieve positive pricing dynamics year over year with highway deicing and C&I prices, both increasing by approximately 6% in 2024. Despite the significant volume declines that we navigated this past year, absolute operating earnings and adjusted EBITDA were only down 4% and 1% respectively.
Operating earnings for the year were $164 million and adjusted EBITDA was $228 million. Both of those measures saw margin expansion in 2024 with operating margin increasing to 18% and adjusted EBITDA margin increasing to a little over 25%. Adjusted EBITDA per ton for the fiscal year increased 20% to $24.50.
Moving on to our plant nutrition segment. As some of you may recall, calendar year 2023 saw very abnormal weather conditions that impacted sales throughout the year, which creates noise in the comparisons to the prior-year period. On a positive note, demand has continued to normalize compared to what we saw last year. I'll speak about quarterly results for this segment first.
For the fourth quarter, volumes were up 33% from the prior-year period. We had seen sequential quarterly price increases over the last year. But unfortunately, that streak was broken this past quarter. The pricing dynamic for SOP continues to track with global trade of potassium-based fertilizer, which led to a 10% decrease in price per ton year over year to $623 per ton.
The net effect of higher volumes and lower sales pricing resulted in an increase in plant nutrition revenue of 20% year over year. As a reminder, a significant portion of the plant nutrition business distribution costs are fixed. So the increase in sales volumes benefited distribution costs per ton in the quarter, which declined roughly 10% to $88 per ton year over year.
As noted in our press release yesterday, we recognized a noncash impairment of certain water rights in the plant nutrition segment of approximately $18 million during the quarter. Excluding the impairment, all-in product costs per ton were up approximately 8% year over year.
The net impact of these drivers is that fourth-quarter adjusted EBITDA declined to a loss of roughly $4 million. For the full year, volumes within the segment were 273,000 tons, which is a 25% increase year over year. Average pricing for the year was down approximately 16% to $663 per ton.
Echoing what I said a moment ago about distribution costs per ton, we saw these improve by approximately 7% year over year as there were more volumes to support the fixed costs. All-in product costs for the year include the water rights impairment mentioned earlier as well as a $51 million impairment we recognized in the second quarter, reflecting a more tempered long-term financial outlook for our plant nutrition business while we continue the pond restoration process Ed mentioned in his remarks.
Operating loss for the year was $86 million and adjusted EBITDA was $17 million. Next, I'll quickly summarize our balance sheet. At quarter end, we had liquidity of $190 million comprised of $20 million of cash and revolver capacity of around $170 million. Additionally, the consolidated total net leverage ratio was 4.9 times within the company's net leverage covenant of 6.5 times.
Ed mentioned our intention to refinance our debt in calendar 2025. I'll provide some thoughts on how we're thinking about that. The structure that we have in place with an RCS and Term Loan A is a little unusual. It was put in place when the company was pursuing the lithium program. The idea was that there would be a more comprehensive reordering of the capital stack as the lithium project was closer to completion.
Clearly, we're in a different position today post lithium. For where the company is today, we think we need a structure that provides more flexibility around covenants to accommodate our back-to-basics strategy, recognizing we operate a business that is highly seasonal with variability around weather. As we've spoken to credit investors and banks, we think there are a number of options that would allow us to move into a more covenant light structure early in calendar 2025.
Finally, moving to our outlook for fiscal 2025. Starting with salt, despite a decrease in commitments, we are expecting an increase in sales volumes year over year based on trailing historical sales to commitment ratios. I should note that those ratios take into account the recent weak winters that we've experienced.
At the midpoint of our guidance, we are expecting an increase in sales volumes of around 9%. As a result, we are forecasting adjusted EBITDA somewhere between $225 million and $250 million. As Ed mentioned during his comments, a key focus this year is rightsizing our inventory levels and realizing the positive working capital release associated with drawing down inventory. And currently, we will continue to closely monitor winter activity and adjust our production schedule accordingly as we progress through the deicing season.
Shifting to plant nutrition, the outlook for plant nutrition adjusted EBITDA is in the range of $14 million to $20 million. Stating the obvious, declining prices are not conducive to improving profitability. And unfortunately, that is what we are seeing this year based on the current MOP market dynamics.
There are, however, positive developments in the business. We are expecting sales volumes to increase by approximately 8% year over year and we are expecting all-in product costs to be down roughly 9% in 2025. Ed mentioned our plans to utilize KCl to help restore the ponds out in Ogden, which is important for the long-term health of those assets.
Moving on to corporate. Our corporate expense includes everything not related to our salt and plant nutrition segments. So it does include our corporate overhead, DeepStore, and Fortress, both cost and any expected revenue.
We are continuing to work with the US Forest Service on a contract for this coming [fire] season. As those discussions are ongoing, for guidance purposes, we have not included any revenue from Fortress in our fiscal 2025 outlook, although there is a small amount of G&A related to that business. We will update the market as appropriate when we have concluded those discussions.
Total capital expenditure for the company in fiscal 2025 are expected to be within a range of $100 million to $110 million. This includes non-recurring amounts of $10 million to $15 million for larger capital projects, including preparation work for the mill relocation at Goderich Mine and refurbishment of silos at Ogden.
In preparing our capital program for this fiscal year, we scheduled that investment in a manner that would allow scaling back of expenditures in the back half of the year as needed in the event of a mild winter. To echo Ed's comments, it was clearly a challenging year for our company and we are focused on taking the necessary actions to set ourselves up for improved performance moving forward.
With that, I'll turn the call over for questions.
Operator
(Operator Instructions) Joel Jackson, BMO Capital Markets.
Joel Jackson
Hi, good morning. First question I want to ask is -- thanks for the '25 outlook. Can you talk about -- so if I look at your guidance for '25, you're suggesting that salt EBITDA margins will contract about 100 basis points in '25. Can you roll through sort of when you compare '24, '25, some of the drag that's causing that?
And then if we normalize the '26 with things that you're doing, assuming the [never] happening, an average winter, what could '26 margins like if we do get a normal winter in normal situations as your work propagates down to margins?
Jeffrey Cathey
Yeah, Joel. This is Jeff. I think the big driver when you're looking at 2025 EBITDA margins vis-a-vis 2024 is that's really being reflected by the curtailment of the Goderich Mine resulting in higher cost of inventory as we move into fiscal year 2025. And that's largely the big driver there.
And with respect to 2026, obviously, that'll be impacted by decisions that we make around production based on what we see in terms of winter weather here as we progress throughout the balance of the year.
Joel Jackson
Okay, thanks. So there was some headlines a month or so ago that there may be -- Compass might be in play, you guys might be looking to sell the company or people are interested. I realize the sense of topics, but where are you right now on working through the company, trying to improve it? Do you think you've done enough improvement that it's ready for sale? How do you see you guys as stewards of this company longer term?
Edward Dowling
Hi, Joel, this is Ed. As a policy, we don't really comment on markets or speculations or rumors. And I'll just point out that our management and Board are competent, regularly evaluate tactical and strategic matters. As a public company, we're for sale every day if somebody wants to invest in the company.
What we're really doing is working hard to make this a better business. That's expanding our margins and our profitability. A number of activities going on that, some of which we've been transparent about in the past, others that are new and that we'll be speaking more about as we start bringing some of these benefits to bear over the course of this year.
Joel Jackson
Okay. Thank you.
Operator
David Begleiter, Deutsche Bank.
David Begleiter
Thank you. Good morning. Ed, on highway deicing, can you help us with the -- committed volumes are down 9%. The forecasting volumes to be sold being up at 9%. And I know this is the average sales to commemoration, but can you help bridge that gap between down 9% on the commitments but up 9% on the actual sales.
Edward Dowling
Yeah, we use what we call sales and commitment calculation. And that number is sort of a moving average based on sort of past performance. And because we've really had two kind of weak, one particularly weak winters, that number is much lower. And when we look at what that means, so that's really the answer that pops out when you look at it because it's basically using a different divisor in our calculation.
So that's really what it is. I'll just say that we are very focused -- the bidding season, of course, it was competitive, but we're all about value over volume. And we think we've got great assets and we're not going to be chasing tons at any price, okay?
Ben Nichols
And David, this is Ben. I would just also point to the fact that the '23, '24 season was the lightest winter within the last 25 years. And so when you do a year-over-year comparison against what is kind of an artificially low number, that's where you're seeing the growth.
David Begleiter
Got it. And then just on Fortress, has the team been able to develop a new formulation that solve the problems with the prior formulation? Has that been fully -- has that been tested out?
Jenny Hood
Hey there, David. So we're not going to speak about our magnesium chloride-based products. That's, of course, undergoing evaluation by the [NTSP] and this, so we're not going to speak to those products.
David Begleiter
But we can gather that since negotiations are continuing, there has been some progress made on your part. Is that fair?
Jenny Hood
Yes. So we do have an alternate product that's under development and under consideration. And that is what we're talking about through the script this morning.
David Begleiter
Okay. And would you expect some resolution on these negotiations in the first half of '25?
Jenny Hood
It's too soon for me to comment on the Fortress [services] process. We're following their process and as we said in the script, we'll update everyone as that process continues to unfold.
David Begleiter
Understood. Thank you.
Operator
David Silver, CL King.
David Silver
Yeah, thank you. Couple of questions. I guess, just to start with the plant nutrition segment. I would like to maybe kind of ask -- pose this question from a longer-term perspective, but you harvest brine in year one and it's a two- to three-year production or evaporation and separation process. So keeping that in mind, I mean, when I look at the fourth-quarter results and I strip out the pricing change and whatnot, it does look like there is a meaningful shift, I guess, in the overall production cost structure.
And I'm just wondering about the path back from your perspective in plant nutrition. In other words, is it as simple as making sure the original brine that you pump out is appropriately, I don't know, saturated with the right minerals? Or is there something more that needs to be done? In other words, maybe just a thought on the path back for the plant nutrition, I guess the cost structure or economics back to where it has been in the past?
Edward Dowling
Okay, I'll start out here. This is Ed, and I'll ask Ben to comment as well. We're working hard on the restoration efforts at Ogden. There's really sort of two fronts of that, the first of which you call the pond restoration; and that's occurring. We are adding a potash to the mix, which helps with the improvement of the quality and the volumes which should improve over time.
And then there's some capital projects we need to do in the dry plant in terms of a dryer and dust collector and we're working on the engineering on that to really, really speak about that. But what I would say is that we're seeing good progress on this restoration plan. Our volumes are improving. Costs are improving but remain too high. These are really critical to get back to our sort of profitability.
Pricing is a little lower year over year. I'll ask Ben to speak about that. But we are moving along according to plan. Ben, do you want to come up?
Ben Nichols
Yeah, I think the pricing dynamic is exactly what Ed said. It's moved back to more historical norms, following a run-up with the Ukraine, Russia impact a couple of years ago. And so, we really believe in this business. We have a very established customer base. I think you're seeing that in the volumes returning over the last couple of quarters. And so we're working hard to return the cost profile to where it should be. That's how we deliver the profitability we believe this business can generate year over year.
David Silver
Okay. Thank you. My next question relates to the 2025 guidance, I guess, from an overall perspective. And I'm thinking ultimately about free cash flow. So, if we take the midpoint of the company, EBITDA may be $189 million and layer in $110 million for CapEx and $70 million for interest. There is some room there, and of course, contingencies based on kind of winter deicing volume.
But that's kind of the starting point, and I'm kind of scratching my head and I'm thinking about interest, but I think maybe more on the tax line. So can you remind me, apart from the nominal rate, can you talk about what the cash tax liability might look like if you were to hit the midpoints of your guidance ranges for 2025?
I noticed in the fourth quarter there was a small credit, which I wasn't expecting. Assuming that you do hit your guidance midpoints under that scenario, what happens on the tax line? Will you be able to maybe get some credits there? Or is this the case where the valuation allowances and other things mean that there will be a cash tax liability?
Jeffrey Cathey
Yeah, so I would say how the cash taxes play out will ultimately depend on kind of the mix. But what I will say from a 2025 perspective is, you're right, based on our base case guidance, we do anticipate delivering free cash flow this coming year and then maybe I'll touch a little bit on the effective tax rate because it does look a little bit nonsensical and I think you hit on it a little bit there.
But to remind everyone, we have book losses on the US side that are being offset by growing income in our foreign jurisdictions. And so as that spread narrows and the aggregate book loss becomes closer and closer to zero, any increase in income tax in those foreign jurisdictions throws off a pretty nonsensical answer in the effective tax rate.
David Silver
So I guess what you're saying is it depends, right? But, okay. I know it's pretty complicated, multiple jurisdictions. Thank you. I'll get back in the queue.
Operator
David Silver, CL King.
David Silver
Okay. Just one more and apologies if I'm making you repeat yourself. But I have noted the strength in the salt margins over the past year or so. And I believe, just in my records, that the margin per ton in the fourth quarter here was the highest, I think, going back to at least 2016. Not sure about that.
And I'm also aware that the salt, certainly on the deicing side, can be a very volume-sensitive, high-fixed cost, low-variable cost operation. So to me, I mean, it's interesting that the volumes are lower, but the margins have actually improved.
Just a couple of things. But firstly, you are still doing some things underground at Goderich. And I would like, maybe if you could comment on -- give us an update on that and what you're expecting the impact of relocating some equipment, some facilities and equipment underground could do to your cost position there?
Then secondly, I mean, I do not mean this in a glib way, but what is the current team at Compass doing correctly or right that maybe was not done or was done differently maybe over the past three to five years? In other words, what were you able to find or what were you able to innovate through your production and delivery system that has created a much greater margin performance?
And then I would ask you what you think, maybe the potential as -- if you look out a year or two. As someone else said, on a more normalized winter volume year, for instance. Thank you.
Edward Dowling
Okay. That's kind of a three-part question here. So first, I'm going to salt margins and -- some of that is things are better and other part of it is related to timing. You want to talk about that second -- flow through inventory?
Jeffrey Cathey
We touched on this. This is Jeff. We touched on this a little bit in our prepared remarks. But the one thing that we wanted to point out and make sure that was understood is the impact that the DD&A had that has in low volume quarters, which is what you're seeing really in the fourth quarter.
The company records depreciation on a straight-line basis. And what gets added back to EBITDA is current-year depreciation inclusive of amounts that are capitalized to inventory on the balance sheet. And so what you get in a low-volume quarter is a higher DD&A addback per ton that is pushing that number up a little bit.
Edward Dowling
Okay. And David, you were asking about the Goderich mill relocation. And it was first -- I would just say that that project is underway. What we're doing is where we're going to be relocating the mill right now. We're doing the reinforcement areas in terms of ground control, making sure that's stable for the decades of foreseeable future in a particular area of the mine that's particularly stable.
We're starting a bit of the excavation work. We've got the equipment on site, do excavation work for storage, et cetera. Engineering is moving ahead. We're looking at a couple of different sort of ways to skin the cat, so to speak. We'll be more transparent on that once we've had a chance to dig in that more deeply. That would probably be some point in the spring. So the advantage is that the springs are quite a few.
I mean, first of all, it's going to be a -- once the east main drive ties into the shaft, we'll have a couple of things that helps us with -- one is quicker access to the working areas rather than going all the way around the mine, showing people in and out materials, in and out around the mine to really the working areas. The mill is located between that and the exit of the mine.
I think importantly, ventilation will be able to be managed better at the mine. That allows us some flexibility to look at different sort of mining methods and a kind of a combination perhaps between continuous mining and some drilling and blasting of behavior. I think we will ultimately abandon the complete south side of the mine where we have a lot of ground control expenses that -- and capital that we spend, invest, really to keep the roof up, I think.
I don't know what the exact number was for fiscal year '24 yet, but it's probably approaching $2 a ton in terms of ground control costs and just from that part of the mine. And so we abandoned that mine. All these things together, we're going to have a much simpler and lower-cost mine. So we're not going to stick a stake in the ground or make any promises about what that is, but I think you could see it's going to be much better.
Then I think the question here, the last question is, what's happened? Well, first of all, I think the company was headed off in a different direction in terms of looking at lithium and other sort of downstream diversification strategies in the past. And that may have diverted some focus from really back to the basic, which is really what our strategy is now.
We've changed the team out a lot. That's occurred at a number of levels. We continue to work, for example, a COO, get that in place. We're being very careful about that. I think, really the benefit that what you're seeing, the differences is that's to really focus on what's important here right now, where maybe management -- and I'm just speculating on this, might have been a bit distracted on some of these other things that were going on.
So David, I hope that helps. We have a very clear focus about what we're out for, okay?
David Silver
Yeah. No, I appreciate all you shared there, a lot of great color. Okay, thank you very much. That's it for me. I appreciate it.
Operator
Joel Jackson, BMO Capital Markets.
Joel Jackson
Hi, just trying to think about Compass' sort of normalization over time. I think your guidance is a little over 8 million tons for probably the items line this year. What is a normal -- what should be normal volume? Is it kind of 9.5 million tons, probably deicing? I think like, I'm trying to look over different averages and what do you guys think is sort of what is normal?
Ben Nichols
Joel, are you asking on a demand basis?
Joel Jackson
Yeah, exactly. I'm not asking about Goderich capacity. I'm asking, when I look back sort of historically, it seemed like maybe 9.5 million tons, (inaudible) deicing is kind of a normal run rate in a normal winter. Again, those are very elusive goals, but a normal winter will happen.
And just (inaudible) for reasons we know. I'm just trying to figure out when you guys plan to look at the mine, you're looking at working capital, looking at union. I mean, what do you plan? What does a normal sales portfolio look like for highway deicing if winter weather was normal, inventories are normal?
Ben Nichols
Yeah, I think we think about our served markets and that 7.5 million to 8.5 million tons, obviously pending prior seasons. But I hate to give you too big of a range, but 7.5 million, 8 million, 8.5 million on a big year is probably appropriate.
Edward Dowling
Look, let me follow up on that, too. In terms of planning -- what we're planning that's different is we're planning on operating this business much more flexibly and focusing on cost so that we can expand margins. The highway deicing will flex up and down depending on the season. So we kind of have a base load and over time, you could look at averages and things like that, Joel.
But in any given year, that's just going to be what it is. So it's really our ability to control the things that we can control, which is sort of cost and operating the mines flexibly. So we've demonstrated the ability to be able to do that at Goderich. And the (inaudible) launch really try to attacked the fixed costs as we ramp things down a bit.
We've also organized our capital structure now this year. We will flex that up or down, depending on how the season goes and again, we're prepared to do that if we need to. So I think that's the important thing to take away from here. We're going to -- we're focused on cost and operations effectiveness, and we'll be talking more about that as the year goes on. But I think building flexibility in this business to meet our served markets is what's key. The market is going to be what it is.
Ben Nichols
And Joel, I should clarify, the number I gave you was the North American highway deicing business. We obviously also service our chemical business and then you have to include kind of an average for our UK business. So just a quick clarification.
Joel Jackson
Okay, great. Because I'm looking at highway deicing as a segment. So if you said 8 million, 8.5 million, and then chemical salt is like what, 2.5 million? Something like that. So we.
Ben Nichols
Roughly a million for chemical and then UK is just below 1 million, 600,000, 700,000.
Joel Jackson
Okay. So when I said 9.5 million of the full business, you're guiding to about 10 million, correct? That sounds about right? 10 million tons for the highway deicing business? Okay. Which makes sense and makes my next follow-up question not necessary. But the other question I wanted to ask and it's kind of a nuanced question, but I was actually looking at it this morning.
I was looking at what Compass used to sell for highway deicing volumes two decades ago, a decade ago. I was looking at what you've sold in the last bunch of years. What I've noticed is that there's a very clear downward trend in average December quarter volumes. So March quarter volumes looked similar as 20 years ago.
Is there something going on with the salt industry the last 10 years where December quarter sales just are lower? Is that we have lower average winter weather, so you have a lower pre-buying or pre-buying season or like, is there something going on with December quarters are weaker than historical versus March quarters? Do you get what I'm getting at?
Ben Nichols
Yeah, Joel. So I think it's a common question and as we look at the data and also, we discussed forecasting with our customers. We see that same trend. We're not trying to overreact to that, obviously. But there is a feeling that -- has winter shifted a little bit more towards calendar Q1, Q2 timeframe? And I don't think we would make a definitive statement on that, but we monitor that data as well.
Joel Jackson
Winter shifted. So not like -- so you're saying like December moved to April, something like that? Or there's more snowfall in early April? Is that what you're getting at?
Ben Nichols
There's some sense that that may have happened. I would tell you that there's not a definitive change in behavior or communication from the market around that type of shift. But if you just look at the trend out on a monthly basis, you're seeing the same thing we are.
Joel Jackson
Okay. Thanks for that.
Operator
And that will conclude our question-and-answer session. I'll turn the call back over to Ed Dowling, President and CEO, for closing remarks.
Edward Dowling
Okay. Thank you very much, Regina. And thank you all for your interest in Compass Minerals. Please don't hesitate to reach out to Brent if you have any follow-up questions. We look forward to speaking to you in the next quarter. Thanks very much.
Operator
And that concludes our call today. Thank you all for joining. You may now disconnect.
