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Corporate Credit > U.S. High Yield
Compass Minerals Updated: November 6, 2015
Trade Idea:
0 Buy Compass Minerals 4.875%Sr Notes due 2024
Investment Rationale:
0 Compass Minerals produces minerals including salt, sulfate of potash specialty fertilizer (SOP) and magnesium chloride.
o Company operates 12 packaging and production facilities including the largest rock salt mine in the world in Goderich, Ontario, Canada
and the largest rock salt mine in the U.K. in Winsford, Cheshire.
o Fundamentals are not significantly impacted by macro global economic conditions as —80% of revenues are derived from the salt
segment which is used largely for road de-icing purposes.
0 While the company is unlikely to achieve investment grade ratings due to the relatively limited scope and size of the business, Compass
Minerals maintains a very strong credit profile with leverage <2.0x and very strong liquidity and FCF generation.
o Company generates mid-20% EBITDA margins, with fairly significant seasonality to the business.
o Key risks include weak winter weather patterns in customer geographic regions and an - $90MM annual dividend (- 26% of LTM EBITDA)
o Debt is cushioned by an —$2.8Bn equity market capitalization (total debt $625MM)
Recommendation(s):
Ratings Issue Cash
View trade Puritan ticker gin Maturity SNP Moody's Cry Site VIW OAS Price target I ass III N
1 6 Montns OVP 375% 7/15/2024 BB B82 050 250 I 5.13% 295 98.250 101 90 US1C451NAE13
Levels as of 9/8/2015
Deutsche Asset 47
& Weah Management
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