Minerals Technologies Inc. Q3 FY2025 earnings call

• Q3 Financials: Sales were $532 million, up 1% both sequentially and year-over-year. Operating income was $78 million, and earnings per share were $1.55. Cash flow was strong, up 24% year-over-year. Balance sheet was strengthened, and a 9% dividend increase was announced. - Market Conditions: Mixed end market conditions; pet litter stable in NA/EU but strong growth in Asia; Specialty Additives had mixed conditions with North America weaker; High-temperature technologies stable in US but weaker in Europe; Environmental & Infrastructure slow in commercial construction but strong in drilling. - Investments: Pet care investments in plants in TN, ON, and China; Turkey Bleaching Earth expansion for renewable fuels; Paper & Packaging securing new contracts in Asia; Engineered Solutions with 18th MINSCAN contract and 6 new units to be installed.

Consumer & Specialties: Third quarter sales were $277 million, flat sequentially and down 1% from last year. Household & Personal Care saw a 2% sequential increase, driven by cat litter and consumer specialty growth. Specialty Additives were 2% lower sequentially due to softer residential construction demand. Engineered Solutions: Third quarter sales increased by 2% sequentially and 4% from prior year to $255 million. High-temperature technologies had sales of $179 million, similar to prior quarter. Environmental & Infrastructure saw a 5% sequential increase and 9% year-over-year growth, driven by offshore services and infrastructure drilling products.

• Fourth quarter sales expected to be approximately 2% to 4% lower sequentially, ranging from $510 million to $525 million. - Operating income expected to be between $65 million and $70 million, with earnings per share between $1.20 and $1.30. - Growth initiatives in Household & Personal Care and edible oil purification are positive, but seasonality and order pattern uncertainties impact the guidance.

• Tariff policy uncertainty, which could impact customer order patterns. - Mixed market conditions affecting top-line growth. - Temporary cost impacts from investments in facilities, such as logistics expenses and lower volumes due to discounting.

Q: How should we think about pet care business returning to mid-single-digit growth rate?

A: The pet care business has seen adjustments to market dynamics, volume improvements, and investments to support growth. It is expected to revert to the long-term growth rate of 3%-4% in NA and 6%-8% in Asia, with investments positioning it for growth.

Q: What about the investments in Turkey with Bleaching Earth for renewable fuel?

A: The expansion in Turkey is an incremental step within the current footprint, expanding capacity by about 30% to meet growing demand for renewable fuels, with the market opportunity significant and expected to grow further.

Q: Update on Talc litigation expenses?

A: Litigation expenses averaged $3M-$4M per quarter, with efforts to establish a 524G trust ongoing. The reserve on the balance sheet is sufficient, and expenses are expected to revert to the average range.