Minerals Technologies Inc.

Good morning, everyone, and welcome to Minerals Technologies 2026 Investor Day. We're broadcasting today from our Bethlehem, Pennsylvania, which is the center for R&D for crystal engineering, technology, and also corporate offices. Please note that some of the statements may be forward-looking within the meaning of federal securities laws. There is a cautionary statement that you can find on this page in the presentation. Also, some of the numbers in the presentation might be non-GAAP. There is a reconciliation to GAAP financials at the appendix of this presentation. At the end of this presentation, that's also available online. Today's agenda, we will start with company overview presented by Doug Dietrich, our chairman and chief executive officer, followed by a presentation about our financial targets and our performance and strategy going forward, presented by Erik Aldag, our chief financial officer, and then two of our product line leaders will present There are growth strategies as well as innovative pipeline for specialty additives and crystal engineering as well as high temperature technologies focusing on steelmaking and metallization. Followed their presentation, we'll have time for Q&A. For those who are online, you can type in your question and I will read it will try to answer as many as possible. Once we conclude webcast presentation, we will have an in-person R&D tour of our labs where our leaders of our R&D for crystal engineering and steel making metallization will have a special presentation. Now I'll introduce Doug, please.

Thank you, Lydia. Thanks, Lydia. And thanks, really, for everyone joining today. And it's really good for those that have joined online as well. We're really excited, actually, to do this here today. I know we did a couple of years ago at our Hoffman Estates laboratories. We showed you a couple of our product lines and our bentonite-based businesses. This will be a little bit different. This is the other side of the company. This is our high temperature technologies refractories portion. We're going to take you through some of those technologies and pipelines today and also our crystal engineering, which is associated with our specialty additives product line. A little bit about Bethlehem, Pennsylvania. We have four buildings on this campus. This one you're in is our research and development campus or research and development building. About 120 people reside here. No manufacturing, but R&D. We have our back offices, some of our business unit leaders, as you see here, commercial. Marketing and some of the shared services and accounting are here. So about 120 people, it's been a long-standing place, one of the largest centers of people for minerals technologies in the U.S. Let's get started. One thing I wanted to, I know many of you are familiar with the company and those online might not be, but I wanted to take you through just a quick overview of the company before I hand it over to the product line managers. First couple things, key differentiators for MTI. We talk about this all the time, but it's our balanced portfolio of consumer and industrial businesses and leading market positions that we have driven by the value we provide by some of the technologies you're going to see today that give us these leading positions in our markets, right? I'm going to take you more into why that balance of consumer industrial matters to our long-term growth. But it's also founded on our vertical integration of our natural resources. We have mines throughout the world. These are world class mines. And that provides that stability to be able to provide local content, local solutions to customers, which actually is becoming more important these days with supply chain disruptions. But we're able to operate around the world with these technologies, giving us these leading positions in the markets we serve. Minerals Technologies. Technologies has always been in our name. We are very focused on innovation and new product development. You're going to see some of that today. But being able to apply these core technologies that we call them to these mineral reserves to provide valuable solutions in multiple markets, and I'll take you through that. But another key differentiator of us, so not just vertically integrated, balanced portfolio, leading positions in our markets, we're very financially stable. We generate a lot of cash flow, significant cash flow, about 6-7% of our revenue goes to free cash flow every year. That enables us to fund the organic growth, fund returns to shareholders, fund inorganic growth as well, so a lot of optionality to the company. And it's that growth that we're going to show you today, the profit margin improvement, that cash flow that provides the resources for the company to continue this and continue to drive value through that cash flow. Okay, let me just take you, probably you don't realize that every day from the time you get up to the time you go to bed, you're probably coming across one of our products, I mean throughout your day. Whether you're actually consuming it, we have some products over here, you're consuming it in a calcium fortified beverage or a candy or food or some sort of pharmaceutical, You might be consuming it if you have a cat as a cat litter product, a cat on the shelf. But it might also be in something that you're consuming every day. But it all starts with these unique global resources. We have, as I mentioned, resources around the world. but it's really only two main minerals that we supply. We have global bentonite reserves. We're the largest bentonite producer in the world. Sodium bentonite is a very unique form of that bentonite and calcium carbonate. Now there's limestone everywhere, but to have a global kind of a world-class mine is very different because having these unique resources, you have to have the right type of mineral. You have to have the right size and particle shape. You have to have the right chemistry and many types of the right color. and so to be able to apply these minerals to these diverse end markets, they have to be world-class in nature and we have many, many years of supply of them. So it starts with really unique global resources, but more than that, you have to apply technologies to make them applicable and valuable in what they go into for our customers. And we have four core technologies. We're going to talk deeper about two of them today. Those core technologies are functional additives, crystal engineering, engineered blends, and particle surface modification. We can go deeper into all of them today, but when we apply those kind of core capabilities to our global mineral reserves, it enables us to be valuable in many different products. And so at home, when you wake up, your toothpaste, A lot of the articles in your house, your cat litter, as I mentioned, your household products, maybe your fabric care products, building materials all throughout your house, personal care, your boxes, the box that comes decorated, the Amazon box that you come, that top surface is something that we probably participated in as well. We're outside. We're in your agriculture. We're in agriculture material or products that are helping with crop enhancement. We're in livestock in terms of taking toxins out of livestock stomachs with feed additives. Water Purification, as you know, with our PFAS remediation. Treatment, remediation, landfill lining systems. We're in printing and paper, commercial buildings, cars and trucks, foundry steel, you name it. But you're probably coming across something directly we've produced or using something that we've helped our customer manufacture every day. Just a quick framework of the company. Many of you know this. $2.1 billion in sales. There's the balance between consumer, about 50% consumer-oriented, 50% industrial. These are our main markets that we serve, largest being consumer applications, as I mentioned, 18% into paper and more so into packaging, steel production, construction, that's residential, and commercial construction. Automotive and Transportation, this comes in the form of also steel but foundry products, so the cars you drive and the heavy trucks that are delivering your products are coming with cast parts made from our green sand bonds. Largely United States-based or North America-based, 56% here, 24% our second largest region, EMEA, and a growing 17% in Asia, Asia defined as China, Southeast Asia, India. Oh, I wanted to mention, I'll go back, but I wanted to mention 4,000 employees, again, global company, 34 countries, and as we mentioned, innovation is key to us, so 12 R&D centers, this being one of them. You visited one in Chicago last year, two years ago, and we have one about 10 miles down the road in Easton, Pennsylvania. Here's the balance. Here's how we report ourselves in terms of structure with the two segments, consumer and specialties and engineered solutions, both about a billion dollars of the company in terms of revenue. Four product lines, the household and personal care and specialty additives, that's in consumer and specialties. and why do we put them this way? Well, these are in the consumer and specialty side, these are functional components in a variety of consumer and industrial goods, meaning these are things that you're either consuming directly or they're in something that you're using, a product you're using. On the other side, the engineered solutions is not something you're necessarily consuming directly that we make. We're making something that helps our customers manufacture something. So think of steel, think of a lining system for environmental or wastewater treatment, horizontal directional drilling, foundry products that you're using in your car. So engineered solutions for manufacturing, consumer products or additives that you're consuming in your day. We're going to go through two of these today. First, I'm going to take you to our growth strategy. I'm going to describe these product lines in a little more detail. So the way we grow the company, it's a pretty basic strategy, but it has some depth in how we go about that. And the first thing was we looked to grow the company in a balanced way through these engineered solutions and consumer products and into higher growth markets. And the consumer piece is one of those. So we purposely put ourselves into higher growth consumer markets about five years ago, acquisition of pet litter companies, combining to be the largest private label pet litter company to move ourselves into higher growth markets. We've also innovated in natural ingredients for personal care. Again, higher growth consumer market. Putting ourselves in higher growth geographies. In Asia, cat litter. Innovating around renewable fuels. We'll talk a lot about, we've talked a lot about sustainable aviation fuel, and then also putting ourselves in Asia for metal casting, which is an under-penetrated region for our supply, or our product. And so these are higher growth markets, either themselves or in geographies that we've put ourselves into to drive growth higher in the company. The second piece of this, though, is deepening positions in our core markets. We are leading positions around the world in many of our markets, but we can do more to gain share in those markets, and we've done that by moving ourselves into packaging. We're going to talk about that today, into steelmaking. We're going to show you how we've done that today with refractory formulations and automation and intelligent systems. We've deepened our positions in North America metal casting with new formulations for our customers here and also developing and deepening in environmental solutions as that market continues to grow for need for solutions that we provide. But underpinning all of this are new solutions and innovative products. And so we're seeing these markets and we're seeing these opportunities and we're seeing opportunities to create products that are higher margin and putting ourselves deeper into these two geographies or into growth markets. And we've done that with, you'll see today, with electric arc furnaces and steelmaking and PFAS remediation, repurposing waste stream in the paper market. We're going to talk a lot about new yield and how we're looking at Extending that technology into other markets and other revenue streams. And then I mentioned with sustainable aviation fuel, which is a very quickly growing market, and our product operates very well in that solution. So let's talk about innovation a bit. What is our strategy? We've really changed the nature of how we innovated MTI over the past five, six years. I mentioned this a lot about six years, seven years ago, about 10% of our products, our revenue was generated from new products. That's now almost 20%. So we've doubled the impact on our top line from new product development. How do you do that? And it used to take us about four years to develop a new product. That's down to 14 months. And so what we're doing is we're really speeding up the engine of innovation in the company. We're moving quickly through the process, making sure if it's going to work, we're going to focus on it. If it's not going to work, let's stop working on it. So we've really cranked up the innovation engine. Our pipeline right now, and this is a representation of our four product lines, is about $1.4 billion in potential value. and how do we get there? We work closely with our customers. Certainly we do not want to be working on something that our customers don't want to buy and so we focus heavily on our voice of the customer activities to make sure that we're innovating something that they want or they need and they're willing to buy. So it's close collaboration, but we're also looking for next generation. We're also looking for ways to apply our core technologies in new ways to solve solutions. And so we're looking for that next generation of core solutions. And we're going to describe two of them today that are in this pipeline. And we're going to show you how we've done that more recently and what's going to be continuing to drive growth for this company over the next coming years. But we're also focusing on, as I mentioned earlier, moving ourselves into high growth markets and also into higher margin products. And so Erik's going to show you how that's driving our growth further and also lifting the margins of the company to make a more valuable company. Just like I mentioned, a couple of stats. 19% of our sales in 2025 were from new products created over the past five years. We've launched and commercialized over 300 products over that period in five years. We've got the pipeline, and there it is. 80% of our projects are developed with input from customers and what they're asking for in many cases. is sustainable solutions. So 67% of what's in that pipeline is something that's helping us save energy, our customers' energy, recycling, some sort of renewable, sustainable benefit. And so that is becoming a very big piece of what we develop and how we innovate in the company. Okay, with that, that's a quick overview. What you're going to see today, I'm going to pass it over to Erik, take you through a couple of financials, and then we'll move on with some technologies. Erik.

Thanks, Doug. Good afternoon, everybody. Great to be here with you today in Bethlehem. First, I want to remind everybody of the targets that we set for ourselves in 2023. That's organic sales growth of 5% on average through the cycle, operating margin of 15%, free cash flow at 7% of sales, a strong balance sheet with flexibility for M&A, and all of this should result in an ROIC of 12%. and today we're reiterating these targets for you. The company is set up well to deliver on all of these targets. Over the next few slides, I'm going to share performance against these targets over the last five years and also what gives us confidence that we're set up well with these targets over the next five years. So first on revenue performance. This bridge is first looking back over the last five years. You can see we've delivered a net top line CAGR of around 4%. And that's in a relatively challenging macro environment, I would say. That really speaks to the resilience of the portfolio and the durability of our products. You can see that our organic growth strategy has delivered $540 million or about 5% CAGR over that time period. And as Doug mentioned, the growth strategy has really been to expand in higher growth markets like the consumer-oriented markets, deepening our positions in core markets and geographies, and in commercializing new products and solutions. and Inorganic Growth over this time period delivered $100 million. That's added about 1% to the CAGR over that time period. Just to remind you, this was the full year impact of Normerica. That was a cat litter acquisition. This was a small specialty PCC acquisition in the U.S. and this was Concept Pet, another cat litter acquisition, relatively smaller cat litter acquisition. We have had a few of our end markets cycle lower over this time period, and we've talked a lot about these impacts, but namely, this has been the residential construction market, commercial construction, agricultural equipment, and heavy truck end markets. So on a net basis with the 4% CAGR, that brings us to around $2.2 billion this year. Made up of the 5% organic growth, 1% from inorganic, offset by 3% from market headwinds. So going forward, we do see that organic growth strategy playing out similarly, continuing at 5% growth. It's really a continuation of the same strategy. We've also got some new exciting opportunities. We're gonna be talking to you about a few of them here today. So this all gives us a lot of confidence that we can deliver this mid-single-digit top-line growth through the cycle, and that would take us from approximately $2.2 billion in revenue to $2.8 billion plus in five years. So next I want to share where we are on margin and where we're going. So we're at 13% for the first half of 2026. And like a lot of other companies, we've experienced higher energy linked costs starting in the first quarter of this year. And we've talked about how in a portion of our business, we've got a pricing lag of around 90 to 100 days, mainly in the consumer and specialty segment. But we do expect to recover this margin as soon as costs plane over. I do want to take a minute here just to comment on our shorter term outlook. So in the third quarter, probably comes as no surprise, we're experiencing higher energy linked costs than we expected in our guidance for the quarter, given where diesel and natural gas prices have trended. So right now we're expecting about a $5 million higher cost than we included in our guidance at the beginning of the quarter. That being said, we're continuing to adjust pricing, and we're confident that when these costs plane over, we'll recover this 75 to 100 basis points of margin that you see on the screen here. This is the same thing that we went through from 22 to 24, I should say 2022 to 2024, and on the back end of that, we expanded our margins, so we're in a pretty similar situation again today. I do want to highlight that the price-cost dynamic on this slide, that piece of the margin bridge, that's more transitory, but the next two margin levers here are more structural. And so these next two levers are driving structurally higher margins for the company. So just moving on to this volume leverage lever. As we continue to grow sales in the mid-single digits, we expect that volume leverage to improve margins by 75 to 100 basis points. This is because our incremental margins are at 30% and higher for some products. And we've got a very efficient fixed cost base to leverage those higher volumes in the higher operating margin. So as we continue to grow, we expect the growth to be margin accretive. And then lastly, the third lever here, the new products in our pipeline that we're going to be talking about today and really all the products that we've been commercializing over the last five years are higher margin on average and also the fastest growing product lines that we have are higher margin product lines. So we're expecting this continued margin uplift. We have about 50 basis points on the screen here as we continue to commercialize higher margin products and as our mix continues to shift toward higher margin products. The only other thing I'll mention here on this slide is that 15% is not a ceiling for the company. You can see that clearly from the fact that the engineered solutions segment is at 17% right now. They're already delivering a 17% operating margin. So as we continue to grow and innovate, and as we catch up on this temporary price-cost impact in consumer and specialties, we see 16% for the total company as a realistic long-term target. On the balance sheet and cash flow, the company has always been a strong cash flow generator. We target free cash flow in the 7% of sales range. You can see on the slide here in the top left, we've averaged free cash flow at 6% over the last five years. That's despite some challenging market conditions and some temporary margin pressures. We typically target returning approximately 50% of our free cash flow to shareholders when we're at or below two times net leverage. And so you can see over this time period, we've returned 56% of our free cash flow to shareholders right on target with what we've stated. In the meantime, we've also increased our dividend by 2.4 times over the last few years. Our balance sheet remains strong with net leverage around 1.6 times and liquidity over $700 million. So just to summarize here, we've delivered around 4% growth over the last five years, and that 5% target is well within reach. We delivered on our 15% target on operating margin back in 2024, and we've got a clear line of sight to return to that level and higher. We expect to generate free cash flow at a similarly strong rate, delivering a significant amount of cash flow over the next five years. And delivering on all these metrics will result in an ROIC of approximately 12%. On the slide here, we're showing 9% as an average of the last few years. Just to note, we were over 10% in 2024. combination of top line growth, margin improvement, continued disciplined capital deployment will all contribute to this 12% ROIC. So with that, I'm going to hand it back over to Doug to talk about the technologies and capabilities that we're going to be focusing on today.