Minerals Technologies Inc.

Good day, everyone, and welcome to the fourth quarter 2022 Minerals Technologies Earnings Call. Today's call is being recorded. At this time, I'd like to turn the call over to Lydia Kapilova, Head of Investor Relations for Minerals Technologies. Please go ahead, Ms. Kapilova.

Thank you, Anna. Good morning, everyone, and welcome to our fourth quarter 2022 Earnings Conference Call. Today's call will be led by Chairman and Chief Executive Officer Doug Dietrich and Chief Financial Officer Eric Alda. Following Doug and Eric's prepared remarks, we'll open it up to questions. As a reminder, some of the statements made during this call may constitute forward-looking statements within the meaning of the federal securities laws. Please note the cautionary language about forward-looking statements contained in our earnings release and on this slide. Our ACC filings disclose certain risks and insurgencies which may cause our actual results to differ materially from this forward-looking statement. Please also note that some of our comments today refer to non-GAAP financial measures. Reconciliation of GAAP financial measures can be found in our earnings release, which is posted on the website. Now I'll turn it over to Doug.

Thanks, Lydia, and good morning, everyone. Thanks for joining the call. First off, I'd like to welcome and congratulate both Lydia Kapulova and Eric Aldag on their new roles. Lydia is Vice President of Investor Relations, and Eric is Senior Vice President of Finance and our Chief Financial Officer. Many of you have met Eric over the past few years, and I know Lydia looks forward to meeting our investors and coverage analysts in the coming months. Okay, we've got quite a bit to go over today, so let's get started. A quick outline for today's call. I'll begin by giving you some context on the fourth quarter and then review the highlights of our full year. Eric will take you through the details of our financial results by segment and give you a look into the first quarter. As you saw from our press release, we'll be reporting on new segments and product lines starting in the first quarter. I'd like to take you through this change and how this structure better defines the minerals technologies of today. After that, I'll give you some perspectives on the year ahead and open it up for questions. Let's start with the quarter. As you saw in our press release, this was a challenging one with several acute factors that impacted our results. The positive side, sales levels remained healthy in most of our end markets, And compared to last year, sales increased 13% on a constant currency basis. We saw continued strong sales in metal casting and PCC, driven primarily by strength in North America foundry and paper markets. We also saw continued growth across our consumer-oriented product areas. These areas of strong demand were offset by a few markets that slowed through the quarter. If you recall, we saw signs of weakness at the end of the third quarter in our construction and steel end markets, plus generally slow economic conditions in China and Europe. The slowing trend continued through the fourth quarter, and in the case of China, deteriorated further in December. As the quarter progressed, we also began to see orders in a few other businesses begin pushing into January. Our customers' inventory levels are healthier now than they were last year, which gives them more flexibility to manage the timing of their orders to us, and we believe they exercised some of this flexibility in December. In addition to these market changes and the dynamics taking place in our order book, the most significant impact on our quarter came from three other areas. First, the cold weather experienced in the U.S. in December impacted our mining and processing plant operations and shipments leading to increased costs and delayed sales. Our operations managed through these issues and have since recovered, though we still have some catching up to do on mining. The bottleneck of rail transportation that was created is now beginning to return to normal. Second was the rapid increase in COVID infections in China in December. COVID swept through our facilities and our customers' operations, which slowed demand and created significant operating and shipment challenges. Thankfully, our employees in China have all recovered, persevering through a challenging few weeks. At this point, we've not yet seen volumes recover in China, and our outlook is for market conditions to remain weak for most of Q1 and to see more meaningful recovery to begin late in March or early in the second quarter. Third, we experienced a significant increase in energy and sea freight costs in Europe. The level of these increases was higher than expected. We absorbed them in the quarter and are adjusting pricing to recapture them. Despite these challenges, our teams around the world did an amazing job swiftly navigating these issues to keep our plants operating safely and our customers supplied. This quarter was an unusual one for MTI as we faced some unique challenges. Except for the continued slow conditions in China, these issues were isolated in the quarter. We've made the necessary adjustments and demand remains relatively healthy across most of our markets. As a result, we see a significantly improved first quarter, which Eric will take you through in a moment. Outside of the fourth quarter, 2022 was an otherwise strong year for MTI. We posted three record quarters, and our teams around the world demonstrated their agility, perseverance, and focus on our priorities through 2022. We continue to execute on our growth strategy positioning our businesses in faster-growing markets and geographies, accelerating the development of new products and technologies, acquiring companies that fit our core markets and which position us in higher-growth markets. This year was somewhat a tale of two halves. The first half started with extremely robust demand across each of our businesses, customer orders hitting record levels. The second half of the year, demand began to moderate in a few of our end markets, and inflation pressures became a bigger weight. It was a robust sales year for MTI, with growth of 14%. It was 20% on a constant currency basis. We saw continued organic growth in our consumer-driven product lines, like cat litter, edible oil purification, and health and beauty products. We expanded our core positions in growing geographies, securing two satellite contracts in China, One is a traditional PCC filler satellite and the other for a GCC packaging application. Metal casting business continued to grow in India. We've established ourselves as the green sand bond technology leader there. Refractories business secured $100 million in sales over the next five years to deploy our new Scantrol refractory application technology. Our environmental products business continued to grow through several large sediment capping projects and the continued trial and commercialization of our Fluorazorb, our unique PFAS water remediation technology. New product development continues to have a larger impact on our sales growth. We commercialized 63 new products this year, and sales of new products commercialized over the past five years increased 42% to over $300 million. We completed the integration of Normerica, establishing ourselves as the largest private label cat litter manufacturer in North America. We acquired Concept Pet, establishing ourselves as a leader in Europe. As I mentioned, inflation was a major factor this year, and it will continue to be through the first half of 2023. We absorbed $190 million of inflationary increases in 2022 and worked diligently to offset them with $210 million of price increases. Margins were impacted as a result, but higher margins will return as inflation flattens and lagging contractual price adjustments kick in. Our ability to change prices reflects the value that we deliver to our customers every day and is a testament to having the right technologies and applications to enhance our customers' products and help them generate higher value in their markets. In addition, as we always do, we continued our focus on maintaining the highest level of productivity and on diligent cost and expense control. As an organization, we gained a lot of speed and agility this past year. Our teams overcame several challenges and reacted decisively to maintain strong momentum. This momentum will serve us well as we go into 2023. And with that, I'll pass it to Eric to review the financials in more detail. Eric?