Minerals Technologies Inc.

Please stand by. We're about to begin. Good day, everyone, and welcome to the third quarter 2021 Minerals Technology Earnings Conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Erik Aldag, Head of Investor Relations for Mineral Technologies. Please go ahead, Mr. Aldag.

Thanks, Cody. Good morning, everyone, and welcome to our third quarter 2021 Earnings Conference call. Today's call will be led by Chairman and Chief Executive Officer Doug Dietrich, and Chief Financial Officer Matt Garth. Following Doug and Matt's prepared remarks, we'll open it up to questions. I'd like to remind you that beginning on page 15 of our 2020 10-K, we list the various risk factors and conditions that may affect our future results. And I'll also point out the safe harbor disclaimer on this slide. Statements related to future performance by members of our team are subject to these limitations, cautionary remarks and conditions. Now I'll turn the call over to Doug. Doug?

Thanks, Erik. Good morning, everyone. I appreciate you joining today's call. I'll go through our third quarter results at a high level, including our sales performance and how we managed through a variety of challenging dynamics. I'll then take some time to describe the progress we're making with our growth initiatives and our team's solid execution on several fronts. I'll then turn it over to Matt to discuss our financial results in more detail. and expectations for the fourth quarter. And then we'll open the call to questions. Let me start with a recap of the quarter. First and foremost, market demand has remained robust across all of our product lines and geographies. We delivered strong results marked by another record quarter of earnings per share of $1.30. Performance was achieved while managing through a challenging operating landscape Thank you for joining us today. contributed approximately 5% to our organic growth in the quarter. Said another way, about 5% of our growth was delivered from new projects and technologies initiated over the past year, 12% from market growth, and 5% from the acquisition of Normerica. Strength of our operating capabilities is reflected in how we successfully managed through the external conditions we faced this quarter, which enabled us to generate $63 million of operating income A 23% increase over last year. Performance was achieved within the context of a myriad of external issues, including rising costs, truck, rail, and shipping logistics challenges, difficulties finding talented people to support expanding production, significant energy cost increases that became more pronounced during the quarter, and continued challenges presented from the COVID pandemic. Despite these issues, We kept our inventory and supply positions for key raw materials and commodities in good shape. We acted quickly to solidify our pricing leadership across our product portfolio and to address the inflationary cost pressures that accelerated over the past few months. And we tightly controlled expenses and continued to drive productivity improvements. Not to be forgotten, we navigated everything while also seamlessly integrating Noramerica into our company. Cash flow remains strong and through the first nine months of the year, cash from operations is up 10% compared to 2020. Completed our share repurchase authorization, last week we initiated a new one-year $75 million program. Strong cash flow and solid balance sheet gives us the flexibility to continue to allocate capital to shareholders while also investing in attractive organic and inorganic growth opportunities. Overall, we had a very strong quarter in terms of financial and operational performance. Needless to say, there was a high level of activity this quarter. Our execution speaks to the capabilities of our team. We did a great job operating the company safely and efficiently while remaining focused on delivering for our customers. Now let me take you through some of the year-to-date sales highlights, outline the contribution from our recent growth projects, and describe the initiatives that will further advance our sales trajectory. We've discussed with you the initiatives we've executed over the last year, which have been key contributors to our growth in 2021. We've also advanced several new projects this quarter that will support further sales growth going forward. We're very encouraged with our continued progress on our growth strategy, which is focused on geographic expansion, new product development, and acquisitions. Demand trends are favorable across our markets. but sales growth demonstrated in our businesses has been further bolstered by our new projects aimed toward higher growth markets and also from investments we've made to strengthen our portfolio of value-added products. Let me provide some perspective on what we've realized through the third quarter from these projects and then detail our new initiatives, new technologies, and recent acquisitions that will accelerate growth. I'll start with our household and personal care and specialty product line. Our broad portfolio of consumer-oriented businesses continues to perform very well, resulting in organic sales growth of 13% year-to-date and 20%, including the recent addition of Normerica. This growth is a result of our leading position in structurally growing and stable markets, but it's been enhanced through our investments in new products, capacity expansions, and by extending the geographical reach of each of these businesses. Our global pet care business is an example of this, with its portfolio of premium products, new online sales channels, and broad global presence, which has led to above market growth rates. We're also realizing significant sales increases in other consumer specialty applications, such as edible oil purification and personal care. These are businesses where we've made targeted investments to enhance our technology portfolio and expand our manufacturing capabilities to reach a broader customer base in Europe and Asia. Our global metal casting business remains on its consistent growth track with sales up 30% year to date, driven by strong demand from both North America and Asia foundries, serving a diverse customer base in automotive, heavy truck and agriculture markets. Specifically, penetration of our blended products continues to expand in Asia as sales increased 30% compared to last year with 29% growth in China alone. While much of our growth is driven by our penetration in China, we continue to demonstrate our value proposition in other countries with attractive long-term growth fundamentals. In India, which is the second largest gray-inductile iron casting market globally, sales of our blended products are up 50% over 2020. Our PCC business has been delivering a strong performance this year. Sales are up 17% year-to-date as uncoated free sheet paper demand continues to improve in all regions. We've also benefited from the ramp-up of 200,000 tons of new capacity that we've brought online over the past year, which includes a 150,000 ton facility in China and another 50,000 ton satellite in India. Production at our 40,000 ton expansion for a packaging application in Europe was also just commissioned in the third quarter. For perspective, sales realized from these latest satellites were responsible for 5% of the 17% PCC growth so far this year. Our fourth quarter PCC volumes are currently projected to be above where they were in 2019, more than absorbing the volume loss from our four paper machine shutdowns that occurred since then. Moving forward, we have several other new satellite projects under construction that set this business up for continued sales growth next year. In addition to the capacity I just mentioned, another 40,000 ton satellite in India will start up this quarter, and we've begun building another 50,000 ton satellite in China, which should be operational in the first half of next year. We've also just reached an agreement and expect to sign a contract over the next couple of weeks with a new customer in India for another 22,000 ton satellite. It will be our ninth satellite in India after entering the market with our PCC technology 10 years ago. In total, with the satellites just commissioned and ramping up, combined with these three new satellites, we see the 5% growth rate from new satellites continuing through next year. Pipeline of new satellite projects remains robust. We're expanding our addressable market opportunities with new products and technologies for the packaging market, which I'll describe in a moment. I'll finish up the year-to-date growth highlights with our refractory segment. It's been a very impressive year for this segment, with growth of 22%, marked by steel utilization rates noticeably improving over last year. Growth also reflects this team's success in capturing new business. Over the past six months, We've secured seven contracts worth $100 million over the next five years, two of which were signed during the third quarter. We've been able to secure these new contracts in the electric arc furnace market through the deployment of our new portfolio of differentiated refractory products and high-performance laser measurement solutions, which reduce costs and improve furnace safety for our customers. I've discussed how we're investing in several new technologies, and I want to share with you how they're beginning to pay off. Specifically, a few areas where we've broadened our product offering to enter adjacent growing markets. I'll highlight two significant areas. First, our paper PCC business has been developing new technologies, processes, and products to accelerate our growth beyond high value filler for uncoated free sheet paper and into the adjacent packaging market. We've made significant progress over the past two years deploying PCC into white top liner board. More recently, we've been developing new products for other packaging applications, including ground calcium carbonate for white carton board and alternate mineral products for brown packaging. These are attractive and growing packaging markets, and we're developing a more comprehensive product portfolio to reach this broader customer base. We're working to finalize a long-term contract with a premier white carton board customer in China that would represent a significant step for us into this adjacent market. Also recently concluded customer trials with our alternative mineral products for brown packaging here in the U.S. With an expanding product portfolio and a pipeline of potential customers, we believe the packaging market represents a real avenue for new long-term growth. Excuse me a second. Thank you. Another project in our technology pipeline that we're very encouraged with is Florazorb, which addresses PFAS contamination in groundwater. Last call, I shared with you details about our first major commercialization for a large-scale project at a North American Department of Defense location. This project went well. and its success has helped to advance our other opportunities. In fact, we're currently working to secure several other large projects in the drinking water and soil stabilization markets. As this sector continues to develop and regulatory bodies focus on implementing changes, we're well positioned to capture new opportunities with our patented technology. To finish up the discussion on our growth for the future, I'll take you through how we've strengthened our business through recent acquisitions. First, we completed the Normerica acquisition during the quarter and the integration is progressing well. The team has been in place working on a variety of activities with our new colleagues to integrate all facets of the business and deploy our culture of safety and operational excellence. Everyone has done a tremendous job making this a seamless transition. We're still in the early stages, but the knowledge we've gained over the past three months has only further validated our thesis when we acquired Noramerica. We've identified significant opportunities in the North America cat litter market for our broader portfolio of private label products, and we see a clear pathway to drive higher growth rates and profits in our pet care business. In addition, yesterday we acquired the specialty PCC assets from Mississippi Lime Company. This bolt-on transaction helps expand our manufacturing reach into the Midwest United States and gives us a strategic logistics footprint at a key point along the Mississippi River. The strategy is to leverage our latest technologies such as rheology modifiers for sealant applications throughout our specialty PCC plant system in the U.S. Let me leave you with a few takeaways. We continue to build MTI into a stronger company on all fronts We take actions to balance our portfolio to generate higher, more sustainable growth. Our sales mix has evolved over the past few years, with 30% of our revenue now coming from stable and growing consumer-oriented markets. The projects I described to you demonstrate how we're leveraging our newest technologies to drive growth in our current markets and enter attractive adjacent markets. They also underscore how we continue to drive penetration of our core product lines in growing geographies. Our recent acquisitions further supplement this momentum, and all taken together, we have meaningfully shifted our sales trajectory going forward. Specifically for next year, we see our sales growth moving north of 10%. This sales trajectory, along with our strong operating capabilities, provides a powerful combination for significant long-term value generation. With that, let's turn it over to Matt to go through our quarter performance in more detail. Matt?