Minerals Technologies Inc.

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

Thank you, Shelly. Good morning, everyone, and welcome to our fourth quarter 2023 Earnings Conference Calls. This call will be led by Chairman and Chief Executive Officer Doug Dietrich and Chief Financial Officer Eric Alduck. 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 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. Their reconciliation to GAAP financial measures can be found in our earnings release in an appendix of this presentation, which are posted on our website. Now I'll turn it over to Doug. Doug?

Thanks, Lydia. Good morning, everyone, and thanks for joining today. Let me start by giving you a quick outline for today's call. First, I'll take you through our fourth quarter and full year highlights, and as I do so, I'll walk you through the main drivers of our results and how they align with our long-term strategic initiatives. As you saw in our press release, we had a strong finish to a record year, and I'm excited to share more details in the coming slides. I'm also going to take a few minutes to give you an update on innovation at MTI and highlight a few new products that made an impact on our year, and then we'll continue to do so going forward. Eric will then review the financials and provide an outlook for the next quarter, and I'll close out with an outlook for 2024. We'll be sure to leave plenty of time to take your questions after our remarks. Let's get started with the fourth quarter. Overall, it was another great quarter for us, and I'm happy to report that we set a few performance records. We generated record sales levels for a fourth quarter with broad-based growth across our portfolio. Our strategic positions in higher growth, consumer markets, and geographies more than offset the softness we saw in a few of our end markets. Sales for the quarter were up 3%, with growth coming from both our segments. Excluding the deconsolidation of Barrett's Minerals, Inc. this quarter, our underlying sales for the remainder of the company were up 6%, better illustrating the performance of the ongoing business. Within the consumer and specialty segments, the household and personal care product line continues its stable growth trajectory across all geographies. In the engineered solutions, our high-temperature technologies product line drove this segment to another solid quarter. Operating margins expanded to 13.2% this quarter, a 450 basis point improvement over last year. Margins expanded in both segments as we captured input cost savings improved productivity in our operations, and tightly managed expenses. Our record level of sales in these expanded margins yielded $69 million of operating income, significantly higher than last year, and earnings per share came in at $1.28, which is another record for a fourth quarter. We continue to demonstrate the company's strong cash generation profile, delivering $95 million in cash from operations. Another highlight for the quarter is that we announced a doubling of our dividend and at the same time initiating a one-year $75 million share repurchase program. Let me move on to summarize the full year. And as I do so, you'll see how these similar themes of balanced growth, margin expansion, and cash flow generation light out throughout the year and how they combine to yield a record performance. 2023 was an eventful year for us. We started it by realigning our business segments with our key markets and core technologies to better reflect the MTI of today. This was a major change for the company and undertaken to unlock our hidden potential. Throughout the year, the realignment drove organizational efficiencies, tighter collaboration, and faster decision making, all leading to higher levels of performance. Back in May, We held an investor day where we outlined MTI's potential for you and communicated our five-year growth and performance targets. One year in, we're right on track to achieve those targets and we made progress across each of the priority areas. Let's start with sales. Sales for the full year were a record for MTI and driven by growth in both segments. Consumer and specialty segment experienced the strongest sales expansion with high single digit and double digit growth in our cat litter, animal health, and edible oil and renewable fuel filtration products. These products have strong positions in steadily growing markets, driven by macro trends like expanding pet ownership, increased demand for natural animal feed additives, and the growing demand for renewable fuels. Growth in the engineered solutions segment is primarily driven by refractories, environmental wastewater remediation, and infrastructure drilling products. Sales of these products were driven by the deployment of our newest technologies to support the growing demand for safer and more efficient manufacturing processes, environmental water cleanup, and an increase in infrastructure projects globally. Due to the nature of some of the markets we serve and the geographies in which we serve them, we'll see fluctuations in demand as economic cycles and other local factors play through. We experienced a few softer markets this year, but despite these pockets, the portfolio performed as expected. Sales from our positions and higher growth consumer markets and geographies more than offsetting these areas of temporary lower demand. Our long-term growth should average 5% per year, with economic and local market factors moving that number up or down slightly in any given year. It's a great example of what we call our balanced portfolio and how we see our top line performing over the long term. We emphasized how improving margins was a priority focus area for us, and this year, operating margins increased by 100 basis points. We continue to create value for our customers, leverage synergies from the reorganization, capture input cost savings, and drive productivity improvements. Worth noting is that our operating margin for the second half of the year averaged 13.6% above the target we communicated earlier in the year. Record sales this year were leveraged through these expanded margins to deliver record operating income of $280 million, up 11%, and record EBITDA of $370 million, up 8% over last year. Earnings per share were $5.21, another record for the company. Full-year cash flows improved significantly, and we delivered $234 million in cash from operations, more than double last year, and $140 million in free cash flow. Use this cash to strengthen the balance sheet, reducing our net leverage to 1.9 times EBITDA, and, as I mentioned earlier, to return capital to shareholders. To drive our strategy and deliver consistent performance, it takes a dedicated and engaged team, a strong operating culture, and an unwavering adherence to our values. Our team did a great job this year on all fronts. We have a very strong culture of operational excellence here at MTI. We built an environment of continuous improvement thinking and have equipped employees with the tools and training they need to see, analyze, and remove waste from any manufacturing or business process. Our teams conduct over 30 problem solving Kaizen events every day around the world and provide suggestions at an extraordinarily high level. This engagement and continuous improvement by our employees is the essence of our high performance culture and something that sets MTI apart. In summary, 2023 was a transformational year for MTI. Our foundation is solid in every aspect and we intend to build on this year's record performance to deliver another one in 2024. There are a number of key drivers supporting our long-term growth. One of them is innovation. Innovation has always been a part of MTI's DNA, and we've developed new technologies that are becoming an influential part of our story. I want to take a moment to highlight some of the tremendous work that's happening at MTI and point out a few of our newest products aimed at large market opportunities that offer us significant growth potential. For the past several years, We've refined our new product development process to accelerate innovation at MTI, shortening the time from ideation to commercialization. We drove closer collaboration with our customers and focused our efforts on developing the highest value products to meet their needs. Results of our efforts are evident on the chart in the middle, with the percentage of sales from our newest products reaching 18% this year, a record level for the company. On the right, you can see how balanced the distribution of our innovation pipeline is across all four product lines. Let me highlight several of these new products and the trends that have driven their development. In the household and personal care product line, we're creating new cat litter formulas aligned with the latest consumer trends and that offer better home hygiene, improved odor control, and help owners with litter box training. We're developing natural feed additives to improve farm animal health and higher-performing filtration products targeted at the growing demand for renewable fuels. Specialty additives, we're expanding our sustainable recycling technologies for white and brown packaging and developing natural mineral-based barrier coatings for food packaging. In high-temperature technologies, our new MINSCAN ScanTrol robotic units are transforming the refractory application process and electric arc steel furnaces. And in association with these units, we're developing a software system to provide customers with real-time process data analytics. In the environmental and infrastructure product line, we continue to improve our Florisorb technology aimed at removing forever chemicals in water and soil around the world. And we're developing new drilling fluid additives to support the growing demand for critical infrastructure projects like grid hardening and geothermal energy systems. Collectively, we have over 500 products at various development stages in our pipeline, representing over $1 billion in potential future sales. Not every idea makes it all the way through, but the new products I've highlighted today are good examples of products that came through this development pipeline, leveraging our core technologies and applications expertise to create valuable solutions for large challenges in today's evolving marketplace. Now I'd like to turn it over to Eric to review the details of the financials. Eric?