Minerals Technologies Inc.

Please stand by, we're about to begin. Good day, everyone, and welcome to the fourth quarter 2021 Minerals Technologies Earnings Call. Today's call is being recorded. At this time, I'd like to turn the call over to Eric Aldig, Head of Investor Relations for Minerals Technologies. Please go ahead, Mr. Aldig.

Thank you, Katie. Good morning, everyone, and welcome to our fourth 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, Eric. Good morning, everyone, and welcome to today's call. I'll walk you through our results for the fourth quarter and the full year of 2021. I'll also give you my insights on the year, focusing on our key financial and strategic highlights, as well as the various dynamics we faced and successfully managed through. Matt will then discuss our financial results in more detail and outline our first quarter outlook. Following that, I'll finish up by describing how we see 2022 shaping up as a strong year for us, touching on our key priorities, growth initiatives, and market conditions. Let me start by going through the takeaways for the fourth quarter, which concluded a very strong year for MTI. Market demand continued to remain robust, and we delivered sales of $477 million, 10% higher than last year, and earnings per share of $1.25. an increase of 16%. Despite the market conditions, this was by far the most difficult operating quarter of the year. We had to navigate through a variety of inflationary and logistics pressures, which became more pronounced late in the quarter. Cash flows remained solid through the fourth quarter, capping off a strong year. Operating cash flow was $69 million, and free cash flow was $46 million, and we made progress to lower our debt levels by paying down $20 million of debt. Let me share how the quarter played out from an operational perspective and the actions we put in place to address the rapidly changing conditions. Heading into the fourth quarter, we anticipated that inflationary costs and logistics and supply chain challenges would persist, and we had positioned ourselves to recover these costs through implemented pricing actions. While much of this transpired as expected, we experienced significant additional cost escalations, notably due to rapid energy price spike in Europe. We also saw an increase in supply chain disruptions, mainly due to truck and rail availability for shipments. This was exacerbated by COVID-related labor challenges, primarily in the last month of the quarter. A combination of these dynamics led to higher plant operating costs and delayed shipments, resulting in about $5 million of reduced income in the quarter. Despite these circumstances, our global team did a great job executing, adjusting operating schedules, securing freight logistics, and taking further pricing measures. Our order books remain robust, and the actions we've taken should more than recover the additional cost pressures we faced, setting us up for a stronger first quarter. On the growth and business development front, we had several highlights during the quarter. The integration of Normerica is progressing well, and we executed on significant opportunities in the quarter to grow our pet care business further in 2022. We also made a small acquisition of a specialty PCC assets in the Midwest US, which strengthens our logistics and manufacturing capabilities. In addition, we signed two new satellite contracts in Asia, one for a PCC facility in India and another with a packaging customer in China. All in all, it was a productive quarter from a growth perspective, and the operating and pricing adjustments we've already made position us well for a stronger start to 2022. Before Matt gets into the financial details for the quarter, I'd like to review some highlights from 2021. It was a strong year for MTI as our business recovered from the 2020 COVID demand lows to deliver record results. We accomplished this through a combination of operational execution and a focused commitment on advancing our key growth initiatives, which have meaningfully shifted our sales portfolio to be more balanced and stable. To demonstrate this transition, over the past few years, revenue from our consumer-oriented businesses has doubled, and today they comprise 30% of our total sales portfolio. It is this portion of our portfolio that's positioned in higher-growth, non-cyclical markets. First and foremost, we delivered record annual sales and earnings per share for our company. Sales increased 17% over last year to $1.9 billion. Operating income was up 13% to $241 million, and our earnings per share grew 26% to $5.02. Serving our customers and innovating to grow with them is what motivates our team. We continue to accomplish this, while navigating through complex and rapidly changing conditions during the year. We operated in an environment with sharply rising input costs, which required frequent operational adjustments, strong supply chain management, and process improvements. Our teams worked closely and transparently with our customers to manage through these dynamics, and we were successful in implementing a broad array of strategic pricing actions across our portfolio to offset the $50 million in extra costs we had to absorb. The past year required a significant amount of agility from our employees, and I'm proud how they engaged to drive improvements, efficiently run our operations, and support our customers' evolving needs. Generating strong cash flow, further strengthening our balance sheet, and maintaining flexibility with how we deploy our capital are priorities. Our financial position gives us significant optionality to allocate capital to shareholders, while also investing in attractive growth opportunities. We demonstrated this in 2021 by deploying $86 million to fund high-return organic projects, as well as to maintain and improve the performance and safety of our facilities. We acquired Normerica and the specialty PCC assets, while also returning $82 million to our shareholders through share repurchases and dividends. Our balance sheet remained strong, and we kept our net leverage ratio near our target levels of two times EBITDA. Now let me take you through how we advanced a broad range of initiatives, which sets us up nicely for continued growth in 2022. I'll start with our consumer-oriented products. Most of these businesses are in our household personal care and specialty product line, and they performed very well with sales growth of 21%. This growth is a result of our positions in these structurally growing and stable markets and has been bolstered by our investments in new technologies, capacity expansions, and through extending the geographical reach of these businesses. Noramerica acquisition is one of those investments as it further expanded our pet care business in North America. We've also realized significant sales increases in other specialty applications, such as edible oil purification and personal care, which grew by 48% and 80% respectively last year. The next part of our growth strategy that we delivered on during the year was expanding our core product lines in faster growing geographies. Our metal casting business continues to grow globally, leveraging our blended bond system value proposition with customers in large foundry markets. Metal casting sales were up 21% in Asia, as we expanded our customer base and further penetrated into China with sales of our pre-blended products increasing by 20%. We continue to demonstrate our value in other countries, and specifically in India, where sales of our blended products were up nearly 40% in 2021. Our PCC business continues to grow geographically with a 22% sales increase in Asia, We benefited from 280,000 tons of new capacity that came online over the past year. In addition, we signed two new satellite contracts in 2021, totaling around 70,000 tons, which will be commissioned by the end of this year. And we're growing in our core markets. Our refractory segment is a great example of this, as we've captured significant new business in the electric arc furnace market. In 2021, we signed long-term contracts worth $100 million through the deployment of our new portfolio of differentiated refractory products and high-performance laser measurement solutions. Another area where we've successfully driven new profitable growth opportunities is by tapping into attractive adjacent markets through our broadened product offering. I'll highlight a couple of areas for you. We signed a long-term agreement in December to deploy ground calcium carbonate technology for a new coated paperboard mill in China with a premier packaging customer. And we're really excited about this one as it's MTI's first GCC satellite offering specifically tailored for packaging customers and represents a fundamental step in our ability to drive new growth opportunities in the white paperboard market. In addition, we have several trials underway with other technologies in both the white and brown packaging space. I've talked to you about our broad capabilities in water remediation and the traction we've made with Fluorosorb. our proprietary solution for remediating PFAS contamination in groundwater. In 2021, we completed our first major commercialization for a large-scale project, and we generated interest in several other large drinking water and soil stabilization projects. Our growth this past year in wastewater remediation was 15%, and we see this trajectory continuing in 2022. New product development is an integral part of our growth strategy, and we've made significant strides to improve the speed of execution, increase the number of products commercialized, and enhance the impact of our latest solutions. Over the past five years, we've cut the time from development to market in half, and during the same timeframe, we've increased the sales generated from new products by more than 60%. In addition, half of our new products are geared towards a sustainability solution for either MTI or our customers. And lastly, we strengthened our company through the acquisition of Normerica, which met all of our M&A criteria. The addition has made us one of the largest vertically integrated private label pet litter providers globally. And as the commercial and operational integration progresses, we see a clear pathway to drive higher growth rates and profits in our pet care business. All told, this is a really productive year for us on all fronts. I'll come back to share my perspectives on the year ahead, sum up that the sum of our growth achievements in the past year puts us in an advantageous position for a strong 2022. With that, I'll turn it over to Matt to take you through our financial results in more detail. Matt?