MINERALS TECHNOLOGIES INC Q3 FY2024 earnings call

• Record third quarter with operating income at a record, on track for a record year. Balanced portfolio helped offset industrial market softness in Engineered Solutions with growth in consumer-based businesses. - Progress on key initiatives: launched global B2B brand SIVO in household and personal care, expanded sustainable specialty additives, deployed MINSCAN LSC automation in Engineering Solutions, made progress with FLUORO-SORB PFAS remediation, and highlighted AI applications and Investor Innovation Day in September.

Consumer and Specialties: Third quarter sales increased 1% to $280 million. Household sales were $131 million, up 2% year-over-year. Specialty additives sales were 1% higher. Operating income was $42 million, up 9%, with an operating margin of 14.9% of sales. Engineered Solutions: Third quarter sales were $244 million, down 5% year-over-year. Operating income was $39 million, down 4%, with an operating margin of 15.9% of sales.

• Fourth quarter outlook: overall sales expected to be similar sequentially; Consumer and Specialties expected to see growth from cat litter and paper/packaging; Engineered Solutions expected lower sales due to soft industrial markets and seasonality. - Full-year expectations: on track for record operating income and EPS, with full-year operating margin close to 15%, ahead of the 14% target.

• General slowdown across industrial markets, particularly impacting Engineered Solutions. - Uncertainty in industrial market conditions, especially for high-temperature technologies and environmental/infrastructure product lines. - Impact of interest rate trends on end-markets, particularly commercial construction and environmental projects.

Q: Good morning, Doug. Good morning, Erik. Thanks for taking the questions. I'll start with prepared remarks. If I heard right, I think you said you mentioned your end-markets and new products set you up well for mid-to-high single-digit growth next year across Consumer and Specialties. Did I hear that right? Number one. Number two. Can you break that down a little bit by category and what are the key new products or innovations that give you that confidence?

A: Yes. So the comment in the remarks was in reference to household and personal care. And the fact that the growth was, I think low-single digits in the third quarter and October is looking pretty strong for pet care, and we feel good about the fourth quarter and heading into next year. And generally, we've been seeing good growth out of that Consumer and Specialty segment and in particular, the household and personal care product line. It's not just the pet care, but it's the high-margin specialties that we're talking about, the bleaching earth, edible oil purification, renewable fuel purification, personal care, fabric care, animal health. There's a lot of product lines in there that we feel confident about. And so that's what the statement around mid-to-high single-digit growth for next year was about.

Q: Hi. Good morning. I was hoping that we could maybe dig in a little bit on the HPC business. We've had a couple of softer quarters there. I think last quarter, we were talking about some changeovers that impacted the pet care business. This quarter, as you went through the different product lines within that business, it seemed like everything was kind of growing pretty nicely except fabric care. And I'm just kind of curious how we got to a 1% or 2% type of growth number if everything else was growing and it was really just fabric care that was soft. Can you give us some more details on what you were seeing in that business?

A: Sure. Let me kick it off, Mike, and then I'll pass it to D.J. to give you some more color. Yes, a couple of areas. I mean, look, this product line is still set up really well. It's growing. These are some of our newest products. Yes, a bit of a softer couple of months in pet care in the slow season, a slower than normal, but rebounding nicely. And I think the fabric care was a little bit of an order pattern change and shift largely to some of our Asian customers. So I don't think it's anything there. It's -- but these businesses have a lot going for them and going ahead. Let me give D.J., you want to take them through the product lines and what you're seeing.