Minerals Technologies Inc.

Good day, everyone, and welcome to the first quarter 2023 Minerals Technologies Earnings Call. Today's call is being recorded. At this time, I would like to turn the call over to Lydia Kopilova, Head of Investor Relations for Minerals Technologies. Please go ahead, Ms. Kopilova.

Thank you, Keri. Good morning, everyone, and welcome to our first quarter 2023 Earnings Conference Call. Today's call will be led by Chairman and Chief Executive Officer Doug Dietrich, and Chief Financial Officer Eric Aldag. 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 law. Please note the cautionary language about forward-looking statements contained in our earnings release and on this slide. Our SEC filings disclose certain risks and uncertainties, 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. A reconciliation to GAAP financial measures can be found in our earnings release, which is posted on our website. Now I will turn it over to Doug. Doug?

Thanks, Lydia. Good morning, everyone, and thank you for joining. Let me give you a quick outline for today's call. I'll start with a first quarter summary. And as you may have noted from the press release, we're reporting this quarter on our two new segments, consumer and specialties, and engineered solutions. This is a big change in how we present the company, so I'm going to give a quick refresher on these two new segments and how we've organized them from a product, market, and technology standpoint. Eric will then take you through the financial details for the quarter and our outlook for the second, and after that, we'll open it up for questions. Let's go through a quick summary of the first quarter. We delivered what we expected in terms of sales, operating income, and earnings per share. After a challenging end to last year, we remained focused on growth, margin recovery, and improved cash flows, and we delivered on all three. We posted record first quarter sales for MTI with growth across both segments and in all four product lines. Revenues increased 8% sequentially and 8% year-over-year on a constant currency basis. It was achieved amidst a backdrop of mixed market and economic conditions. Despite these mixed conditions, we continued our growth trajectory, which points to the stability that our portfolio can provide. Sales in household and personal care increased 7%, driven by strong demand in all regions for pet litter, edible oil purification, and animal health products. The specialty additives product line, we benefited from higher volumes of paper PCC in Asia, from our newest satellites, and from improved market conditions. This was offset partially by the continued weakness we are seeing in residential construction markets, which has impacted demand for ground calcium carbonate and specialty PCC compared to last year. Demand in the engineered solution segment was driven mainly by the varied economic conditions we're seeing across our regions. For high-temperature technologies, market conditions remained relatively strong in North America, and sales for foundry and refractory products remained robust. This was offset by continued weak conditions in European steel and China foundry markets. We expected some modest improvement in the China foundry market as we moved through the quarter, and we did see some improvement in March. However, conditions remained well below the levels we saw last year. In the environmental and infrastructure product line, demand remained relatively stable in all regions for our water remediation technologies and infrastructure drilling products. We also benefited from two large sediment capping projects in the United States. Sequential operating income increased 43% to $63 million, and margins expanded 290 basis points. We implemented additional pricing actions, growth productivity gains, and operating conditions improved in the areas that were impacted last quarter. Margin growth is a key focus area this year. We expect margins to continue to expand throughout 2023 as our pricing actions catch up with the cost inflation we experienced in the second half of last year. Cash flow and maintaining a strong balance sheet are always priorities for us. First quarter cash flow returned to historically normal levels, and our balance sheet remained solid from a liquidity and net leverage standpoint. An additional highlight for the quarter is that we completed the resegmentation and reorganization of our businesses. It's a significant change, and I want to take you through a couple of slides to review the new structure. If you've followed us over the past few years, you've seen how we've targeted acquisitions in pet litter, invested in new, higher margin products, and moved into adjacent, faster growing markets. We've transformed from a company which historically served industrial markets in North America and Europe to one with greater involvement in less cyclical and growing consumer, environmental, and agriculture markets, together with an increased presence in higher growth regions. The word technology has always been part of our company's name. Going forward, you'll hear more about what we call our core technologies and capabilities. They're a foundational part of what our company does and a central part of how we have established and how we maintain our leading market positions. Our innovation pipeline draws on these core technologies, and the advancements we've made in new product development over the past few years have been another dramatic transformation at MTI. Today, we're generating almost three times more revenue from new products than we did five years ago, and we have a new product pipeline currently in place to drive this higher. Our company culture is based on continuous improvement, and in keeping with that culture, we saw that moving our organization to one that was structured around our core technologies, similar market types, and customer dynamics was a more powerful way to run our business. This new organization has more clarity of purpose, will foster faster decision-making, improve execution, and drive closer collaboration on innovation and technology, together fueling higher earnings potential. It's also added a spark to the organization and brought new energy to the team. Let's take a quick dive into these two segments and their respective product lines. The first item I'll point out is that these two new segments and four product lines are well balanced. Balanced in terms of size, growth, types of end markets, and long-term growth drivers. First, let me take you through the consumer and specialty segment and its two product lines, household and personal care, and specialty additives. Products sold in the household and personal care are consumer products or components of consumer products that you would find in your home, like cat litter, edible oils, over-the-counter skin care products, and laundry detergent. Products are developed primarily through the application of one of our core technologies called functional additives, where we specifically design, classify, or create a particle to perform a specific function, such as absorb odors, remove impurities, or act as a delivery system. The consumer markets served in this product line have similarities such as common service models, innovation timelines, and macro growth trends. By organizing these products together into one product line, we can better leverage these similarities to drive innovation and growth opportunities. Specialty Additives product line contains our mineral-based products that become functional components of items such as paper and packaging, sealants and adhesives, paints and coatings, and food and pharmaceuticals. These products were developed through the application of a core technology called crystal engineering, where we design crystal morphologies for specific function such as strength, optical brightness, gloss, calcium fortification, and CO2 sequestration. We can also further adapt these crystals to provide enhanced functionality like rheology modification. The markets served in this product line share the common growth strategy of penetrating growing geographies by using our application's expertise to offer customers a higher value solution. As an example, we've been driving penetration of PCC into the Asia market for many years by offering customers production cost savings recycling options for waste streams, and brighter or glossier surfaces. The region has become our largest for volumes of paper PCC, and there's still room for continued growth. At this point this week, we announced three new long-term supply agreements in Asia for our PCC filler technology, one of them for our newest recycling product called New Yield LO. Similarly, our specialty PCC products are growing globally, and we see opportunities to penetrate sealant and adhesive markets outside the United States. Next, let's go through the engineered solutions segment, which contains products and solutions designed for our customers' manufacturing processes. In the high-temperature technologies product line, we are leaders in providing consumable materials and process solutions primarily for the foundry and steelmaking industries. products are developed through the application of a core technology called engineered blends we use our deep understanding of our customers process to formulate products that deliver benefits such as improved dimensional stability and surface finish increased production efficiency and safety and lower emissions growth in this product line is driven primarily by the substitution of lower performing products in large and growing markets for example We continue to drive penetration of our green sand bond systems in China and India, and deploy our new scan troll measurement and application system in North America and Europe. The fourth product line is environmental and infrastructure, which is home to many of our unique, innovative products and solutions for infrastructure, water remediation, and environmental waste containment. Here, we apply a core technology called particle surface modification. where we physically alter or adapt the surface of a substrate particle to perform a specific function. These modified particles are used in bulk to create waste barriers, scavenge impurities from water, waterproof large construction projects, and enhance drilling fluids. Our products support important projects in communities around the world like wastewater and drinking water cleanup, sediment capping, industrial landfill containment, and infrastructure projects. Growth in this product line is driven by the increased demand for environmental remediation solutions, commercial construction and infrastructure spending, and the global need for clean water. Lastly, it's important to mention that each of these product lines is supported and supplied by our own world-class mineral reserves. The quality, quantity, and strategic locations of our mineral reserves, combined with our leading technologies and applications expertise, provides long-term supply stability and tremendous value for our customers. It's the reason we're the leader in many of the markets we serve and what makes MTI truly unique. With that, I hope you have a better understanding of the segments and product lines and can see how they fit together and how they better reflect the MTI of today. I'll certainly take you through more details on these segments and product lines, technologies, and our strategies at our Investor Day in May, and we look forward to doing so. Now I'll hand it over to Eric to provide more financial details. Over to you, Eric.