UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~July 2, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-11430

MINERALS TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

Delaware		25-1190717
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

622 Third Avenue, New York, New York 10017-6707

(Address of principal executive offices, including zip code)

(212) 878-1800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, $0.10 par value	MTX	New York Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒

No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒

No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or and emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒	Accelerated Filer ☐
Non-accelerated Filer ☐	Smaller Reporting Company ☐
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐

No ☒

As of ~~October~~July 20, ~~2022,~~2023, there were ~~32,450,263~~32,543,754 shares of common stock, par value of $0.10 per share, of the registrant outstanding.

MINERALS TECHNOLOGIES INC.

INDEX TO FORM 10-Q

		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Income for the three-month and ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022 (Unaudited)	3

	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three-month and ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022 (Unaudited)	4

	Condensed Consolidated Balance Sheets as of ~~October~~July 2, ~~2022~~2023 (Unaudited) and December 31, ~~2021~~2022	5

	Condensed Consolidated Statements of Cash Flows for the ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022 (Unaudited)	6

	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three-month periods ended ~~October~~July 2, ~~2022,~~ 2023 and April 2, 2023 and July 3, 2022 and April 3, 2022 ~~and October 3, 2021, July 4, 2021 and April 4, 2021~~ (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	98

	Report of Independent Registered Public Accounting Firm	2018

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2119

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3228

Item 4.	Controls and Procedures	3329

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3329

Item 1A.	Risk Factors	3329

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3329

Item 3.	Default Upon Senior Securities	3329

Item 4.	Mine Safety Disclosures	3329

Item 5.	Other Information	3429

Item 6.	Exhibits	3430

Signature		3531

PART 1. FINANCIAL INFORMATION

ITEM 1. Financial Statements

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
(millions of dollars, except per share data)	Oct. 2, 2022			Oct. 3, 2021			Oct. 2, 2022			Oct. 3, 2021
(in millions of dollars, except per share data)													Jul. 2, 2023			Jul. 3, 2022			Jul. 2, 2023			Jul. 3, 2022

Net sales	$	541.9		$	473.2		$	1,617.9		$	1,381.4		$	551.5		$	557.0		$	1,097.6		$	1,076.1
Cost of goods sold		423.6			359.9			1,250.6			1,040.9			423.5			429.7			848.9			827.1
Production margin		118.3			113.3			367.3			340.5			128.0			127.3			248.7			249.0

Marketing and administrative expenses		46.0			45.5			143.6			139.9			51.8			48.8			104.1			97.6
Research and development expenses		5.1			4.6			15.2			14.5			5.6			5.0			10.9			10.1
Acquisition related transaction and integration costs		0.5			1.5			4.7			1.9
Litigation costs		31.1			—			32.6			—
Restructuring and other items, net		—			1.1			—			1.1			6.6			—			6.6			—
Acquisition-related expenses														0.2			2.6			0.3			4.2
Litigation expenses														13.9			1.5			13.9			1.5

Income from operations		35.6			60.6			171.2			183.1			49.9			69.4			112.9			135.6

Interest expense, net		(11.0	)		(9.2	)		(31.2	)		(28.2	)		(14.5	)		(10.4	)		(28.7	)		(20.2	)
Debt extinguishment expenses		(6.9	)		—			(6.9	)		—
Non-cash pension settlement charge		(0.2	)		(0.8	)		(1.7	)		(3.0	)		—			(1.5	)		—			(1.5	)
Other non-operating income (deductions), net		(0.4	)		(0.1	)		(2.0	)		0.3
Other non-operating deductions, net														(1.4	)		(1.2	)		(2.5	)		(1.6	)
Total non-operating deductions, net		(18.5	)		(10.1	)		(41.8	)		(30.9	)		(15.9	)		(13.1	)		(31.2	)		(23.3	)

Income before tax and equity in earnings		17.1			50.5			129.4			152.2			34.0			56.3			81.7			112.3
Provision for taxes on income		3.2			8.9			25.8			27.6			7.5			11.4			18.0			22.6
Equity in earnings of affiliates, net of tax		0.7			0.8			1.4			1.8			1.1			0.6			2.0			0.7

Consolidated net income		14.6			42.4			105.0			126.4
Net income														27.6			45.5			65.7			90.4
Less:
Net income attributable to non-controlling interests		1.2			1.0			2.6			3.2			1.0			0.6			2.1			1.4
Net income attributable to Minerals Technologies Inc.	$	13.4		$	41.4		$	102.4		$	123.2		$	26.6		$	44.9		$	63.6		$	89.0

Earnings per share:

Basic:
Income attributable to Minerals Technologies Inc.	$	0.41		$	1.24		$	3.12		$	3.66
Net income attributable to Minerals Technologies Inc.													$	0.82		$	1.37		$	1.96		$	2.70

Diluted:
Income attributable to Minerals Technologies Inc.	$	0.41		$	1.22		$	3.11		$	3.63
Net income attributable to Minerals Technologies Inc.													$	0.82		$	1.36		$	1.96		$	2.69

Cash dividends declared per common share	$	0.05		$	0.05		$	0.15		$	0.15		$	0.05		$	0.05		$	0.10		$	0.10

Shares used in computation of earnings per share:
Basic		32.5			33.5			32.8			33.7			32.5			32.8			32.5			33.0
Diluted		32.6			33.8			32.9			33.9			32.6			32.9			32.5			33.1

See accompanying Notes to Condensed Consolidated Financial Statements.

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
(millions of dollars)	Oct. 2, 2022			Oct. 3, 2021			Oct. 2, 2022			Oct. 3, 2021
(in millions of dollars)													Jul. 2, 2023			Jul. 3, 2022			Jul. 2, 2023			Jul. 3, 2022

Consolidated net income	$	14.6		$	42.4		$	105.0		$	126.4
Net income													$	27.6		$	45.5		$	65.7		$	90.4
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(52.0	)		(14.9	)		(111.5	)		(41.8	)		(26.1	)		(51.3	)		(16.0	)		(59.4	)
Pension and postretirement plan adjustments		0.9			2.2			4.3			9.0			0.4			2.3			0.9			3.4
Unrealized gains (losses) on derivative instruments		7.1			2.6			16.4			6.5			0.5			6.2			(1.9	)		9.3
Total other comprehensive loss, net of tax		(44.0	)		(10.1	)		(90.8	)		(26.3	)		(25.2	)		(42.8	)		(17.0	)		(46.7	)
Total comprehensive income (loss) including non-controlling interests		(29.4	)		32.3			14.2			100.1
Comprehensive (income) loss attributable to non-controlling interests		(0.1	)		(1.1	)		0.3			(3.0	)
Comprehensive income (loss) attributable to Minerals Technologies Inc.	$	(29.5	)	$	31.2		$	14.5		$	97.1
Total comprehensive income including non-controlling interests														2.4			2.7			48.7			43.7
Comprehensive income (loss) attributable to non-controlling interests														0.1			1.2			(1.3	)		0.4
Comprehensive income attributable to Minerals Technologies Inc.													$	2.5		$	3.9		$	47.4		$	44.1

See accompanying Notes to Condensed Consolidated Financial Statements.

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(millions of dollars)	Oct. 2, 2022*			Dec. 31, 2021 **
(in millions of dollars)							Jul. 2, 2023*			Dec. 31, 2022 **
ASSETS

Current assets:
Cash and cash equivalents	$	224.1		$	299.5		$	247.1		$	247.2
Short-term investments		2.3			4.9			8.3			5.6
Accounts receivable, net		430.6			367.8			419.8			404.0
Inventories		344.6			297.7			354.7			348.8
Prepaid expenses and other current assets		71.9			58.6			49.9			64.9
Total current assets		1,073.5			1,028.5			1,079.8			1,070.5

Property, plant and equipment		2,251.7			2,296.4			2,293.9			2,288.6
Less accumulated depreciation and depletion		(1,213.4	)		(1,247.3	)		(1,243.3	)		(1,238.2	)
Property, plant and equipment, net		1,038.3			1,049.1			1,050.6			1,050.4
Goodwill		912.2			907.5			914.3			914.8
Intangible assets		243.5			251.6			235.9			241.9
Deferred income taxes		22.2			23.0			24.5			24.4
Other assets and deferred charges		97.6			114.5			103.1			99.6
Total assets	$	3,387.3		$	3,374.2		$	3,408.2		$	3,401.6

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Short-term debt	$	118.5		$	80.0		$	107.1		$	119.7
Current maturities of long-term debt		0.7			0.8			14.5			14.5
Accounts payable		210.1			196.1			204.3			193.8
Other current liabilities		164.2			142.9			146.3			174.6
Total current liabilities		493.5			419.8			472.2			502.6

Long-term debt, net of unamortized discount and deferred financing costs		944.9			936.2			921.2			928.1
Deferred income taxes		194.5			188.1			177.4			180.4
Accrued pension and post-retirement benefits		102.2			114.3			62.7			63.5
Other non-current liabilities		116.6			136.3			113.2			113.8
Total liabilities		1,851.7			1,794.7			1,746.7			1,788.4

Commitments and contingencies

Shareholders’ equity:
Common stock		4.9			4.9			4.9			4.9
Additional paid-in capital		483.3			474.2			490.6			487.6
Retained earnings		2,266.3			2,168.9			2,344.9			2,284.6
Accumulated other comprehensive loss		(421.4	)		(333.6	)		(382.8	)		(366.5	)
Less common stock held in treasury		(831.1	)		(775.1	)		(831.1	)		(831.1	)

Total Minerals Technologies Inc. shareholders’ equity		1,502.0			1,539.3			1,626.5			1,579.5
Non-controlling interests		33.6			40.2			35.0			33.7
Total shareholders’ equity		1,535.6			1,579.5			1,661.5			1,613.2
Total liabilities and shareholders’ equity	$	3,387.3		$	3,374.2		$	3,408.2		$	3,401.6

Unaudited

**	Condensed from audited financial statements

See accompanying Notes to Condensed Consolidated Financial Statements.

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended						Six Months Ended
(millions of dollars)	Oct. 2, 2022			Oct. 3, 2021

(in millions of dollars)							Jul. 2, 2023			Jul. 3, 2022
Operating Activities:

Consolidated net income	$	105.0		$	126.4
Net income							$	65.7		$	90.4

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		71.2			71.0			47.2			47.9
Non-cash pension settlement charge		1.7			3.0			—			1.5
Reduction of right of use asset		9.5			9.2			7.0			6.2
Non-cash debt extinguishment expenses		6.9			—
Asset impairment charges		—			0.7
Other non-cash items, net								10.1			10.5
Pension plan funding		(5.3	)		(7.6	)		—			(2.3	)
Other non-cash items		15.1			10.2
Net changes in operating assets and liabilities		(140.5	)		(49.8	)		(50.8	)		(121.0	)
Net cash provided by operating activities		63.6			163.1			79.2			33.2

Investing Activities:

Purchases of property, plant and equipment, net		(59.4	)		(63.0	)		(45.9	)		(40.2	)
Cash paid for acquisitions, net of cash acquired		(22.4	)		(186.9	)
Payments related to acquisition of business, net of cash acquired								(1.8	)		(22.3	)
Proceeds from sale of assets		1.0			0.4			0.2			0.3
Proceeds from sale of short-term investments		6.1			7.8			7.0			5.5
Purchases of short-term investments		(2.8	)		(5.2	)		(9.1	)		(2.0	)
Other investing activities		1.6			2.2			0.3			1.6
Net cash used in investing activities		(75.9	)		(244.7	)		(49.3	)		(57.1	)

Financing Activities:

Long-term debt issuance		550.0			—
Deferred financing costs		(3.2	)		—
Repayment of long-term debt		(548.7	)		(1.0	)		(7.4	)		(0.5	)
Proceeds from issuance of short-term debt		38.5			100.5			—			30.0
Repayment of short-term debt								(12.7	)		—
Purchase of common stock for treasury		(56.0	)		(62.9	)		—			(40.7	)
Proceeds from issuance of stock under option plan		3.5			10.6			0.2			1.1
Excess tax benefits related to stock incentive programs		(3.3	)		(2.8	)		(2.8	)		(3.3	)
Dividends paid to non-controlling interests		(6.3	)		(1.6	)		—			(6.3	)
Cash dividends paid		(4.9	)		(5.1	)		(3.3	)		(3.3	)
Net cash provided by (used in) financing activities		(30.4	)		37.7
Net cash used in financing activities								(26.0	)		(23.0	)

Effect of exchange rate changes on cash and cash equivalents		(32.7	)		(13.9	)		(4.0	)		(17.9	)
��

Net decrease in cash and cash equivalents		(75.4	)		(57.8	)		(0.1	)		(64.8	)
Cash and cash equivalents at beginning of period		299.5			367.7			247.2			299.5
Cash and cash equivalents at end of period	$	224.1		$	309.9		$	247.1		$	234.7

Supplemental disclosure of cash flow information:
Interest paid	$	35.1		$	32.4		$	39.2		$	29.7
Income taxes paid	$	28.9		$	34.0		$	26.4		$	24.4

Non-cash financing activities:
Treasury stock purchases settled after period end	$	—		$	0.6

Non-cash financing activities:
Treasury stock purchases settled after period end		$	—			$	0.7

See accompanying Notes to Condensed Consolidated Financial Statements.

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN ~~SHAREHOLDERS’~~ SHAREHOLDERS' EQUITY

(Unaudited)

	Equity Attributable to Minerals Technologies Inc.																				Equity Attributable to Minerals Technologies Inc.
(millions of dollars)	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Non-controlling Interests			Total
Balance as of December 31, 2021	$	4.9	$	474.2		$	2,168.9		$	(333.6	)	$	(775.1	)	$	40.2		$	1,579.5
(in millions of dollars)																					Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Non-controlling Interests			Total
Balance as of December 31, 2022																					$	4.9	$	487.6		$	2,284.6		$	(366.5	)	$	(831.1	)	$	33.7		$	1,613.2

Net income		—		—			44.1			—			—			0.8			44.9			—		—			37.0			—			—			1.1			38.1
Other comprehensive income (loss)		—		—			—			(4.0	)		—			0.1			(3.9	)
Other comprehensive income, net																						—		—			—			7.7			—			0.4			8.1
Dividends declared		—		—			(1.6	)		—			—			—			(1.6	)		—		—			(1.6	)		—			—			—			(1.6	)
Dividends paid to non-controlling interests		—		—			—			—			—			(0.1	)		(0.1	)
Issuance of shares pursuant to employee stock compensation plans		—		0.9			—			—			—			—			0.9			—		0.2			—			—			—			—			0.2
Purchase of common stock for treasury		—		—			—			—			(16.7	)		—			(16.7	)
Stock-based compensation		—		2.8			—			—			—			—			2.8			—		2.7			—			—			—			—			2.7
Conversion of RSU's for tax withholding		—		(2.8	)		—			—			—			—			(2.8	)		—		(2.7	)		—			—			—			—			(2.7	)
Balance as of April 3, 2022	$	4.9	$	475.1		$	2,211.4		$	(337.6	)	$	(791.8	)	$	41.0		$	1,603.0
Balance as of April 2, 2023																					$	4.9	$	487.8		$	2,320.0		$	(358.8	)	$	(831.1	)	$	35.2		$	1,658.0

Net income		—		—			44.9			—			—			0.6			45.5			—		—			26.6			—			—			1.0			27.6
Other comprehensive loss		—		—			—			(40.9	)		—			(1.9	)		(42.8	)
Other comprehensive loss, net																						—		—			—			(24.0	)		—			(1.2	)		(25.2	)
Dividends declared		—		—			(1.6	)		—			—			—			(1.6	)		—		—			(1.7	)		—			—			—			(1.7	)
Dividends paid to non-controlling interests		—		—			—			—			—			(6.2	)		(6.2	)
Issuance of shares pursuant to employee stock compensation plans		—		0.2			—			—			—			—			0.2
Purchase of common stock for treasury		—		—			—			—			(24.0	)		—			(24.0	)
Stock-based compensation		—		2.8			—			—			—			—			2.8			—		2.8			—			—			—			—			2.8
Balance as of July 3, 2022	$	4.9	$	478.1		$	2,254.7		$	(378.5	)	$	(815.8	)	$	33.5		$	1,576.9

Net income		—		—			13.4			—			—			1.2			14.6
Other comprehensive loss		—		—			—			(42.9	)		—			(1.1	)		(44.0	)
Dividends declared		—		—			(1.8	)		—			—			—			(1.8	)
Issuance of shares pursuant to employee stock compensation plans		—		2.4			—			—			—			—			2.4
Purchase of common stock for treasury		—		—			—			—			(15.3	)		—			(15.3	)
Stock-based compensation		—		2.8			—			—			—			—			2.8
Balance as of October 2, 2022	$	4.9	$	483.3		$	2,266.3		$	(421.4	)	$	(831.1	)	$	33.6		$	1,535.6
Balance as of July 2, 2023																					$	4.9	$	490.6		$	2,344.9		$	(382.8	)	$	(831.1	)	$	35.0		$	1,661.5

	Equity Attributable to Minerals Technologies Inc.
(in millions of dollars)	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Non-controlling Interests			Total
Balance as of December 31, 2021	$	4.9	$	474.2		$	2,168.9		$	(333.6	)	$	(775.1	)	$	40.2		$	1,579.5

Net income		—		—			44.1			—			—			0.8			44.9
Other comprehensive income (loss), net		—		—			—			(4.0	)		—			0.1			(3.9	)
Dividends declared		—		—			(1.6	)		—			—			—			(1.6	)
Dividends paid to non-controlling interests		—		—			—			—			—			(0.1	)		(0.1	)
Issuance of shares pursuant to employee stock compensation plans		—		0.9			—			—			—			—			0.9
Purchase of common stock for treasury		—		—			—			—			(16.7	)		—			(16.7	)
Stock-based compensation		—		2.8			—			—			—			—			2.8
Conversion of RSU's for tax withholding		—		(2.8	)		—			—			—			—			(2.8	)
Balance as of April 3, 2022	$	4.9	$	475.1		$	2,211.4		$	(337.6	)	$	(791.8	)	$	41.0		$	1,603.0

Net income		—		—			44.9			—			—			0.6			45.5
Other comprehensive loss, net		—		—			—			(40.9	)		—			(1.9	)		(42.8	)
Dividends declared		—		—			(1.6	)		—			—			—			(1.6	)
Dividends paid to non-controlling interests		—		—			—			—			—			(6.2	)		(6.2	)
Issuance of shares pursuant to employee stock compensation plans		—		0.2			—			—			—			—			0.2
Purchase of common stock for treasury		—		—			—			—			(24.0	)		—			(24.0	)
Stock-based compensation		—		2.8			—			—			—			—			2.8
Balance as of July 3, 2022	$	4.9	$	478.1		$	2,254.7		$	(378.5	)	$	(815.8	)	$	33.5		$	1,576.9

See accompanying Notes to Condensed Consolidated Financial Statements.

~~MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY~~

~~(Unaudited)~~

Equity Attributable to Minerals Technologies Inc.
(millions of dollars)
Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Treasury
Stock

Non-controlling
Interests
Total
Balance as of December 31, 2020 $ 4.9 $ 453.3 $ 2,011.3 $ (308.3 ) $ (700.4 ) $ 37.9 $ 1,498.7

Net income — — 39.9 — — 1.1 41.0
Other comprehensive loss — — — (21.0 ) — (0.5 ) (21.5 )
Dividends declared — — (1.7 ) — — — (1.7 )
Dividends paid to non-controlling interests — — — — — (0.1 ) (0.1 )
Issuance of shares pursuant to employee stock compensation plans — 5.8 — — — — 5.8
Purchase of common stock for treasury — — — — (20.0 ) — (20.0 )
Stock-based compensation — 2.8 — — — — 2.8
Conversion of RSU's for tax withholding — (2.6 ) — — — — (2.6 )
Balance as of April 4, 2021 $ 4.9 $ 459.3 $ 2,049.5 $ (329.3 ) $ (720.4 ) $ 38.4 $ 1,502.4

Net income — — 41.9 — — 1.1 43.0
Other comprehensive income — — — 5.0 — 0.3 5.3
Dividends declared — — (1.7 ) — — — (1.7 )
Dividends paid to non-controlling interests — — — — — (0.6 ) (0.6 )
Issuance of shares pursuant to employee stock compensation plans — 4.6 — — — — 4.6
Purchase of common stock for treasury — — — — (16.9 ) — (16.9 )
Stock-based compensation — 2.8 — — — — 2.8
Balance as of July 4, 2021 $ 4.9 $ 466.7 $ 2,089.7 $ (324.3 ) $ (737.3 ) $ 39.2 $ 1,538.9

Net income — — 41.4 — — 1.0 42.4
Other comprehensive loss — — — (10.1 ) — — (10.1 )
Dividends declared — — (1.6 ) — — — (1.6 )
Dividends paid to non-controlling interests — — — — — (0.9 ) (0.9 )
Issuance of shares pursuant to employee stock compensation plans — 0.1 — — — — 0.1
Purchase of common stock for treasury — — — — (26.0 ) — (26.0 )
Stock-based compensation — 2.8 — — — — 2.8
Balance as of October 3, 2021
$ 4.9 $ 469.6 $ 2,129.5 $ (334.4 ) $ (763.3 ) $ 39.3 $ 1,545.6

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared by management of Minerals Technologies Inc. (the “Company”, “MTI”, “we”, or “us”) in accordance with the rules and regulations of the United States Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for a fair presentation of the financial information for the periods indicated, have been included. The results for the three-month and ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023.

Company Operations

The Company is a ~~resource- and technology-based~~leading, technology-driven specialty minerals company that develops, produces, and markets ~~worldwide~~ a broad range of ~~specialty minerals,~~mineral and mineral-based ~~and synthetic mineral~~ products, ~~and supporting~~related systems and services. The Company serves globally a wide range of consumer and industrial markets, including household, food and pharmaceutical, paper, packaging, automotive, construction, and environmental.

In the first quarter of 2023, the Company realigned its business reporting structure into two segments to better align our business and technologies with our customers and end markets and create a more efficient and effective management structure which reflects the way performance is evaluated and resources are allocated.

The Company now has ~~three~~two reportable segments: ~~Performance Materials, Specialty Minerals~~Consumer & Specialties and ~~Refractories.~~Engineered Solutions.

–

The ~~Performance Materials~~Consumer & Specialties segment ~~is a leading global supplier of bentonite~~serves consumer end markets directly, and ~~bentonite-related products and leonardite. This segment~~ also provides mineral-based solutions and technologies that are essential to our customers’ products. The two product lines in this segment are Household & Personal Care - our mineral-to-shelf products ~~for non-residential~~that serve pet care, personal and household care, fluid purification and other consumer oriented businesses, and Specialty Additives, delivering functional additives to a variety of consumer and industrial end markets including paper, packaging, construction, ~~environmental~~automotive, and ~~infrastructure projects worldwide, serving customers engaged in a broad range of construction~~consumer markets including food and ~~remediation projects as well as offers a range of patented and unpatented technologies, products and services to the upstream and downstream oil and gas sector throughout the world.~~pharmaceuticals.

–

The ~~Specialty Minerals~~Engineered Solutions segment ~~produces~~combines all engineered systems, mineral blends, and ~~sells the synthetic mineral product precipitated calcium carbonate (“PCC”) and processed mineral product quicklime (“lime”), and mines mineral ores then~~technologies that are designed to aid in customer processes and ~~sells natural mineral products, primarily limestone~~projects. The two product lines in this segment are High-Temperature Technologies – combining all of our mineral-based blends, technologies, and ~~talc.~~

–

~~The Refractories segment produces~~systems serving the foundry, steel, glass, aluminum and ~~markets monolithic~~other high-temperature processing industries, and ~~shaped refractory materials~~Environmental & Infrastructure, which includes environmental and ~~specialty products, services~~remediation solutions such as geosynthetic clay lining systems, water remediation technologies as well as drilling, commercial building and ~~application and measurement equipment, and calcium metal and metallurgical wire~~infrastructure-related products.

Use of Estimates

The Company employs accounting policies that are in accordance with U.S. generally accepted accounting principles and require management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Significant estimates include those related to revenue recognition, valuation of long-lived assets, goodwill and other intangible assets, income taxes, including valuation allowances, contingent liabilities, and pension plan assumptions. Actual results could differ from those estimates.

Recently Issued Accounting Standards

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. All recently issued ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2. Revenue from Contracts with Customers

On a regular basis the Company reviews its segments and the approach used by the chief decision maker to assess performance and allocate resources. Effective January 1, 2023, the Company realigned its business reporting structure and reorganized into two reportable segments, Consumer & Specialties and Engineered Solutions.

The following table disaggregates our revenue by major source (product line) for the three and ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021:~~2022:

(millions of dollars) Three Months Ended Nine Months Ended
Net Sales
Oct. 2,
2022

Oct. 3,
2021

Oct. 2,
2022

Oct. 3,
2021

Household, Personal Care & Specialty Products $ 141.5 $ 121.8 $ 424.1 $ 333.9
Metalcasting 85.4 72.9 254.4 235.0
Environmental Products 47.7 39.8 138.0 105.8
Building Materials 15.8 15.9 45.6 45.0
Performance Materials 290.4 250.4 862.1 719.7

Paper PCC 97.7 89.5 286.4 264.9
Specialty PCC 25.5 18.2 77.7 57.1
Ground Calcium Carbonate 28.6 25.0 84.0 74.5
Talc 14.2 14.2 45.2 40.9
Specialty Minerals 166.0 146.9 493.3 437.4

Refractory Products 68.9 58.3 203.9 175.1
Metallurgical Products 16.6 17.6 58.6 49.2
Refractories 85.5 75.9 262.5 224.3

Total $ 541.9 $ 473.2 $ 1,617.9 $ 1,381.4

(in millions of dollars)	Three Months Ended				Six Months Ended
Net Sales	Jul. 2, 2023		Jul. 3, 2022		Jul. 2, 2023		Jul. 3, 2022

Household & Personal Care	$	125.5	$	118.9	$	254.7	$	239.3
Specialty Additives		164.8		164.3		332.9		327.4
Consumer & Specialties Segment		290.3		283.2		587.6		566.7

High-Temperature Technologies		182.6		186.7		361.2		356.6
Environmental & Infrastructure		78.6		87.1		148.8		152.8
Engineered Solutions Segment		261.2		273.8		510.0		509.4

Total	$	551.5	$	557.0	$	1,097.6	$	1,076.1

Note 3. Acquisitions

~~Normerica Inc.~~

On July 26, 2021, the Company completed the acquisition of Normerica Inc., a leading North American supplier of premium pet care products. Normerica has production facilities in Canada, the U.S. and Thailand. As a leader in the pet product industry, Normerica provides premium products, both branded and private label to world-class retailers. Its product portfolio consists primarily of bentonite-based cat litter products which are supplied from a network of strategically located manufacturing facilities in Canada and the United States. The results of Normerica are included within our Household, Personal Care & Specialty Products product line in our Performance Materials segment. The fair value of the total consideration transferred, net of cash acquired, was $~~187.5~~ ~~million.~~

The acquisition has been accounted for using the acquisition method of accounting, which requires, among other things, that we recognize the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. ~~As of~~ ~~October 2, 2022, the purchase price allocation has been finalized.~~

~~MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following table summarizes the Company’s final amounts recognized for assets acquired and liabilities assumed for the Normerica acquisition, which did not change from the amounts previously reported on the Company’s Form 10-K for the year ended December 31, 2021.

(millions of dollars) Final Allocation

Accounts receivable $ 8.4
Inventories 5.1
Other current assets 1.4
Property, plant and equipment 21.2
Goodwill 104.5
Intangible assets 68.1
Total assets acquired 208.7
Accounts payable 12.8
Accrued expenses 8.4
Total liabilities assumed 21.2
Net assets acquired $ 187.5

The Company used the income, market, or cost approach (or a combination thereof) for the valuation and used valuation inputs and analyses that were based on market participant assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability. For certain items, the carrying value was determined to be a reasonable approximation of fair value based on the information available.

Goodwill was calculated as the excess of the consideration transferred over the assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill is primarily attributable to fair value of expected synergies from combining the MTI and Normerica businesses and is allocated to the Performance Materials segment.

Intangible assets acquired mainly include tradenames and customer relationships. Tradenames have an estimated useful life of approximately 15 years and customer relationships have an estimated useful life of approximately 20 years.

The Company incurred $0.5 million and $4.7 million of acquisition related transaction and integration costs during the three and nine-month periods ended October 2, 2022, respectively and $1.5 million and $1.9 million in the three and nine-months period ended October 3, 2021, respectively, which are reflected within the acquisition-related expense line of the Condensed Consolidated Statements of Income.

Concept Pet Heimtierprodukte GmbH

On April 29, 2022, the Company completed the acquisition of Concept Pet Heimtierprodukte GmbH (“Concept Pet”), a European supplier of pet litter products. The purchase of Concept Pet supports the expansion of our European pet care business, as well as ~~provides~~providing additional mineral reserves. The purchase price was $28.0 million and acquisition was financed through cash on hand. The fair value of the total consideration transferred, net of cash acquired, was $22.4 million. In the second quarter of 2023, an additional $1.8 million of hold back consideration was paid. The results of Concept Pet are included within our Household & Personal Care ~~& Specialty Products~~ product line in our ~~Performance Materials~~Consumer & Specialties segment. The acquisition has been accounted for using the acquisition method of accounting, which requires, among other things, that we recognize the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The Company has recorded goodwill of $~~9.2~~9.3 million and intangible assets of $4.3 million relating to this acquisition.

~~MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~The Company incurred $0.2 million and $0.3 million of acquisition related transaction and integration costs during the three and six-month periods ended July 2, 2023 and $2.6 million and $4.2 million in the three and six-month periods ended July 3, 2022, which are reflected within the acquisition-related expenses line of the Condensed Consolidated Statements of Income.

Note 4. Earnings per Share (EPS)

Basic earnings per share are based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share are based upon the weighted average number of common shares outstanding during the period assuming the issuance of common shares for all potentially dilutive common shares outstanding.

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
(in millions, except per share data)	Oct. 2, 2022		Oct. 3, 2021		Oct. 2, 2022		Oct. 3, 2021		Jul. 2, 2023		Jul. 3, 2022		Jul. 2, 2023		Jul. 3, 2022

Net income attributable to Minerals Technologies Inc.	$	13.4	$	41.4	$	102.4	$	123.2	$	26.6	$	44.9	$	63.6	$	89.0

Weighted average shares outstanding		32.5		33.5		32.8		33.7		32.5		32.8		32.5		33.0
Dilutive effect of stock options and stock units		0.1		0.3		0.1		0.2
Dilutive effect of stock options and deferred restricted stock units										0.1		0.1		—		0.1
Weighted average shares outstanding, adjusted		32.6		33.8		32.9		33.9		32.6		32.9		32.5		33.1

Basic earnings per share attributable to Minerals Technologies Inc.	$	0.41	$	1.24	$	3.12	$	3.66	$	0.82	$	1.37	$	1.96	$	2.70

Diluted earnings per share attributable to Minerals Technologies Inc.	$	0.41	$	1.22	$	3.11	$	3.63	$	0.82	$	1.36	$	1.96	$	2.69

Of the options outstanding of ~~1,460,734~~1,607,833 and ~~1,409,110~~1,524,368 for the three-month and ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, respectively, options to purchase ~~1,106,596~~1,289,235 shares and ~~526,956~~728,322 shares of common stock for the three-month and ~~nine-month~~six-month periods ending ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive, as the exercise prices of the options were greater than the average market price of the common shares.

Note 5. Restructuring and Other Items, net

In the ~~third~~second quarter of ~~2021, PCA Corporation discontinued~~2023, the ~~use~~Company initiated a restructuring and cost savings program to further streamline our cost structure as a result of ~~PCC at their mill in Jackson, Alabama.~~organizational efficiencies gained through our recent resegmentation. As a result, the Company recorded a ~~non-cash asset write-down~~charge of ~~$0.7~~$6.6 million ~~and $0.4 million in severance related~~for restructuring and other ~~closure costs for its Paper PCC satellite facility at this mill.~~charges related to severance and other costs.

The following table outlines the amount of restructuring charges recorded within the Consolidated Statements of Income and the segment they relate to:

	Three Months Ended				Six Months Ended
(in millions of dollars)	Jul. 2, 2023		Jul. 3, 2022		Jul. 2, 2023		Jul. 3, 2022

Consumer & Specialties	$	0.6	$	—	$	0.6	$	—
Engineered Solutions		3.2		—		3.2		—
Corporate		2.8		—		2.8		—
Total restructuring and other items, net	$	6.6	$	—	$	6.6	$	—

At ~~October~~July 2, ~~2022,~~2023, the Company had ~~$1.9~~$6.6 million included within ~~accrued~~other current liabilities in the Condensed Consolidated Balance Sheet for cash expenditures needed to satisfy remaining obligations under workforce reduction initiatives. The Company expects to pay these amounts by ~~the~~ end of ~~2022.~~the second quarter of 2024.

The following table is a reconciliation of our restructuring liability balance as of ~~October~~July 2, ~~2022:~~2023:

(millions of dollars)
Restructuring liability, December 31, 2021 $ 2.2
Additional provision —
Cash payments (0.3 )
Restructuring liability, October 2, 2022
$ 1.9

(in millions of dollars)
Restructuring liability, December 31, 2022	$	—
Additional provision		6.6
Cash payments		—
Restructuring liability, July 2, 2023	$	6.6

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6. Income Taxes

Provision for taxes was ~~$3.2~~$7.5 million and ~~$25.8~~$18.0 million during the three-month and ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022.~~2023. Provision for taxes was ~~$8.9~~$11.4 million and ~~$27.6~~$22.6 million ~~for~~during the three-month and ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021.~~2022. The effective tax rate was ~~18.7%~~22.1% for the three months ended ~~October~~July 2, ~~2022~~2023, as compared with ~~17.6%~~20.2% for the three months ended ~~October~~July 3, ~~2021.~~2022. The effective tax rate was ~~19.9%~~22.0% for the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, as compared with ~~18.1%~~20.1% for the ~~nine~~six months ended ~~October~~July 3, ~~2021.~~2022. The higher tax rate was primarily due to a change in the mix of earnings ~~and a reduced depletion benefit.~~resulting in higher taxes on foreign earnings, as compared to the prior year.

As of ~~October~~July 2, ~~2022,~~2023, the Company had approximately ~~$5.1~~$2.8 million of total unrecognized income tax benefits. Included in this amount were a total of ~~$3.5~~$2.1 million of unrecognized income tax benefits that, if recognized, would affect the Company’s effective tax rate. While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company.

~~MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The Company’s accounting policy is to recognize interest and penalties accrued relating to unrecognized income tax benefits as part of its provision for income taxes. The Company had a net ~~increase~~addition of approximately $0.1 million during the three-month period ended ~~October~~July 2, ~~2022~~2023 and had an accrued balance of ~~$1.2~~$0.5 million of interest and penalties as of ~~October~~July 2, ~~2022.~~2023.

The Company operates in multiple taxing jurisdictions, both within and outside the U.S. In certain situations, a taxing authority may challenge positions that the Company has adopted in its income tax filings. The Company, with a few exceptions (none of which are material), is no longer subject to income tax examinations by tax authorities for years prior to 2015.

Note 7. Inventories

The following is a summary of inventories by major category:

(millions of dollars)	Oct. 2, 2022		Dec. 31, 2021

(in millions of dollars)					Jul. 2, 2023		Dec. 31, 2022
Raw materials	$	172.5	$	136.6	$	158.1	$	163.4
Work-in-process		14.8		10.7		19.3		15.6
Finished goods		103.9		99.4		120.3		114.0
Packaging and supplies		53.4		51.0		57.0		55.8
Total inventories	$	344.6	$	297.7	$	354.7	$	348.8

Note 8. Goodwill and Other Intangible Assets

Goodwill and other intangible assets with indefinite lives are not amortized, but instead are assessed for impairment, at least annually. The carrying amount of goodwill was ~~$912.2~~$914.3 million and ~~$907.5~~$914.8 million as of ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The net change in goodwill from December 31, ~~2021~~2022 to ~~October~~April 2, ~~2022~~2023 is primarily attributable to the ~~purchase of Concept Pet (see Note 3 to the Condensed Consolidated Financial Statements) and~~ effects of foreign exchange.

As a result of the reorganization of the Company's segments in the first quarter of 2023, our goodwill is required to be reallocated amongst the new operating segments. The allocation of goodwill is a complex process that requires, among other things, that we determine the fair value of each reporting unit under both our old and new management structures and the portions being transferred. Our allocation of goodwill to each reporting unit has not been completed and, accordingly, has not been presented. We expect to complete the reallocation of goodwill in the current year.

Intangible assets subject to amortization as of ~~October~~July 2, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows:

			Oct. 2, 2022				Dec. 31, 2021						Jul. 2, 2023				Dec. 31, 2022
(millions of dollars)	Weighted Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization

(in millions of dollars)											Weighted Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Tradenames		34	$	221.0	$	50.4	$	221.6	$	44.9		34	$	221.6	$	55.2	$	221.2	$	52.2
Technology		13		18.8		12.2		18.8		11.2		13		18.8		13.4		18.8		12.6
Patents and trademarks		19		6.4		6.4		6.4		6.4		19		6.4		6.4		6.4		6.4
Customer relationships		21		76.6		10.3		75.2		7.9		21		78.4		14.3		78.4		11.7
		29	$	322.8	$	79.3	$	322.0	$	70.4		29	$	325.2	$	89.3	$	324.8	$	82.9

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The weighted average amortization period for acquired intangible assets subject to amortization is approximately 29 years. Estimated amortization expense is ~~$3.0~~$6.5 million for the remainder of ~~2022, $51.2~~2023, $47.8 million for ~~2023–2026~~2024–2027 and ~~$189.3~~$181.6 million thereafter.

Note 9. Derivative Financial Instruments

As a multinational corporation with operations throughout the world, the Company is exposed to certain market risks. The Company uses a variety of practices to manage these market risks, including, when considered appropriate, derivative financial instruments. The Company’s objective is to offset gains and losses resulting from interest rates and foreign currency exposures with gains and losses on the derivative contracts used to hedge them. The Company uses derivative financial instruments only for risk management and not for trading or speculative purposes.

By using derivative financial instruments to hedge exposures to changes in interest rates and foreign currencies, the Company exposes itself to credit risk and market risk. Credit risk is the risk that the counterparty will fail to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty, and therefore, it does not face any credit risk. The Company minimizes the credit risk in derivative instruments by entering into transactions with major financial institutions.

~~MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, currency exchange rates, or commodity prices. The market risk associated with interest rate and forward exchange contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the Company records the effective portion of the gain or loss in accumulated other comprehensive income (loss) as a separate component of shareholders’ equity. The Company subsequently reclassifies the effective portion of gain or loss into earnings in the period during which the hedged transaction is recognized in earnings.

The Company utilizes interest rate swaps to limit exposure to market fluctuations on floating-rate debt. In the second quarter of 2018, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million. This interest rate swap matured in May 2023. In the second quarter of 2023, the Company entered into a new floating to fixed interest rate swap for a notional amount of $150 million. The fair value of this swap is an asset of ~~$1.2~~$1.8 million at ~~October~~July 2, ~~2022~~2023 and is recorded in ~~prepaid expenses~~other assets and ~~other current assets~~deferred charges on the Condensed Consolidated Balance Sheet. This interest rate swap is designated as a cash flow hedge. As a result, the gains and losses associated with this interest rate swap isare recorded in accumulated other comprehensive income (loss).

Net Investment Hedges

For derivative instruments that are designated and qualify as net investment hedges, the Company records the effective portion of the gain or loss in accumulated other comprehensive income (loss) as a separate component of shareholders’ equity.

To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, the Company from time to time hedges a portion of our net investment in one or more of our foreign subsidiaries. During the second quarter of 2018, the Company entered into a cross currency rate swap with a total notional value of $150 million to exchange monthly fixed-rate interest payments in U.S. dollars for monthly fixed-rate interest rate payments in Euros. This contract ~~matures~~matured in May 2023 and ~~requires~~required the exchange of Euros and U.S. dollar principal payments upon maturity. ~~The fair value of this swap is an asset of $25.3 million at October 2, 2022 and is recorded in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheet.~~Changes in the fair value of this financial instrument ~~are~~were recognized in accumulated other comprehensive income (loss) to offset the change in the carrying amount of the net investment being hedged. At maturity, the Company realized, in comprehensive income, from inception, an after-tax gain of $7.6 million. Amounts are reclassified out of accumulated other comprehensive income (loss) into earnings when the hedged net investment is either sold or substantially liquidated.

Assets and liabilities measured at fair value are based on one or more of three valuation techniques. The three valuation techniques are as follows:

●	Market approach - prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

●	Cost approach - amount that would be required to replace the service capacity of an asset or replacement cost.

●	Income approach - techniques to convert future amounts to a single present amount based on market expectations, including present value techniques, option-pricing and other models.

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company primarily applies the income approach for interest rate derivatives for recurring fair value measurements and attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value of our interest rate and cross currency rate swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets and are categorized as Level 2.

~~MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Note 10. Long-Term Debt and Commitments

The following is a summary of long-term debt:

(millions of dollars)	Oct. 2, 2022		Dec. 31, 2021

(in millions of dollars)					Jul. 2, 2023		Dec. 31, 2022
Secured Credit Agreement:
Term Loan due 2027, net of unamortized deferred financing costs of $3.1 million and $0 million	$	546.9	$	0
Previous Secured Credit Agreement:
Term Loan due 2024, net of unamortized discount and deferred financing costs of $0 million and $8.8 million		0		539.2
Term Loan due 2027, net of unamortized deferred financing costs of $2.7 million and $3.1 million					$	536.9	$	543.5

Senior Notes:
5.00% due 2028, net of unamortized deferred financing costs of $5.1 million and $5.4 million		395.1		394.6
5.00% due 2028, net of unamortized deferred financing costs of $4.3 million and $4.7 million						395.7		395.3
Other debt		3.6		3.2		3.1		3.8
Total		945.6		937.0		935.7		942.6
Less: Current maturities		0.7		0.8		14.5		14.5
Total long-term debt	$	944.9	$	936.2	$	921.2	$	928.1

On August 11, 2022, the Company entered into a Refinancing Facility Agreement (the “Amendment”) to amend the Company’s previous credit agreement (the “Previous Credit Agreement”; the previous credit agreement, as amended by the Amendment, being the “Amended Credit Agreement”). The Amendment provides for, among other things, a new senior secured revolving credit facility with aggregate commitments of $300 million (the “Revolving Facility”), a portion of which may be used for the issuance of letters of credit and swingline loans, and a new senior secured term loan facility with aggregate commitments of $550 million (the “Term Loan Facility” and, together with the Revolving Facility, the “Senior Secured Credit Facilities”). The Revolving Facility and the Term Loan Facility ~~replace~~replaced the facilities under the Previous Credit Agreement, which provided for, among other things, a $788 million senior secured floating rate term loan facility and a $300 million senior secured revolving credit facility. The maturity date for loans under the Senior Secured Credit Facilities is August 11, 2027.

In the third quarter of 2022, the Company recorded $6.9 million in non-cash debt extinguishment expenses related to the refinancing of our credit facilities, which represents the difference between the redemption payment and the carrying value of the debt at the refinancing date. All lenders under the previous facility were repaid in full.

Loans under the Senior Secured Credit Facilities will bear interest at a rate equal to, at the election of the Company, Term SOFR plus a credit spread adjustment equal to 0.100% plus an applicable margin equal to 1.500% per annum or a base rate plus an applicable margin equal to 0.500% per annum, subject in each case to (a) an increase of 25 basis points in the event that, and for so long as, the net leverage ratio (as defined in the Amended Credit Agreement) is greater than or equal to 3.00 to 1.00 as of the last day of the preceding fiscal quarter, (b) a decrease of 12.5 basis points in the event that, and for so long as, the net leverage ratio is less than 2.00 to 1.00 and greater than or equal to 1.00 to 1.00 as of the last day of the preceding fiscal quarter and (c) an decrease of 25 basis points in the event that, and for so long as, the net leverage ratio is less than 1.00 to 1.00 as of the last day of the preceding fiscal quarter. The Company will pay certain fees under the Amended Credit Agreement, including (a) a commitment fee of 0.250% per annum on the undrawn portion of the Revolving Facility (subject to a step-up to 0.300% and step-downs to 0.175% and 0.150% at the same levels described above), (b) a fronting fee of 0.125% per annum on the average daily undrawn amount of, plus unreimbursed amounts in respect of disbursements under, letters of credit issued under the Revolving Facility and (c) customary annual administration fees. The obligations of the Company under the Senior Secured Credit Facilities are unconditionally guaranteed jointly and severally by, subject to certain exceptions, all material domestic subsidiaries of the Company (the “Guarantors”) and secured, subject to certain exceptions, by a security interest in substantially all of the tangible and intangible assets of the Company and the Guarantors.

As of ~~October~~July 2, ~~2022,~~2023, there were ~~$115.0~~$105.0 million in loans and ~~$10.3~~$10.6 million in letters of credit outstanding under the Revolving Facility.

1513

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On June 30, 2020, the Company issued $400 million aggregate principal amount of 5.0% Senior Notes due 2028 (the “Notes”). The Notes were issued pursuant to an indenture, dated as of June 30, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”). The Notes bear an interest rate of 5.0% per annum payable semi-annually on January 1 and July 1 of each year, beginning on January 1, 2021. The Notes are unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly owned domestic restricted subsidiaries that is a borrower under or that guarantees the Company’s obligations under its Senior Secured Credit Facilities or that guarantees the Company’s or any of the Company’s wholly owned domestic subsidiaries’ long-term indebtedness in an aggregate amount in excess of $50 million.

~~At any time and from time to time prior to~~ ~~July 1, 2023, the Company may redeem some or all of the Notes for cash at a redemption price equal to~~ ~~100%~~ ~~of their principal amount, plus the “make-whole” premium described in the Indenture and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Beginning on~~ ~~July 1, 2023, the~~The Company may redeem some or all of the Notes at any time and from time to time at the applicable redemption prices listed in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. ~~In addition, at any time and from time to time prior to~~ ~~July 1, 2023, the Company may redeem up to~~ ~~40%~~ ~~of the aggregate principal amount of the Notes with funds from~~ ~~one~~ ~~or more equity offerings at a redemption price equal to~~ ~~105%~~ ~~of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.~~

If the Company experiences a change of control (as defined in the indenture), the Company is required to offer to repurchase the Notes at 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Amended Credit Agreement and the Indenture both contain certain customary affirmative and negative covenants that limit or restrict the ability of the Company and its restricted subsidiaries to enter into certain transactions or take certain actions, as well as customary events of default. In addition, the Amended Credit Agreement contains financial covenants that require the Company to maintain, as of the last day of any fiscal quarter, (x) a maximum net leverage ratio (as defined in the Amended Credit Agreement) of 4.00 to 1.00 for the four fiscal quarter period preceding such day (subject to an increase to 5.00 to 1.00 for four quarters in connection with certain significant acquisitions) and (y) a minimum interest coverage ratio (as defined in the Amended Credit Agreement) of 3.00 to 1.00. The Company is in compliance with all the covenants contained in the Amended Credit Agreement throughout the period covered by this report.

As part of the Sivomatic acquisition, the Company assumed $10.7 million in long-term debt, recorded at fair value, consisting of two term loans, one of which matured in the third quarter of 2020 and the ~~other~~ ~~of which matured in the first quarter of 2022. During the first quarter of 2022, the Company repaid the remaining $0.2 million on this loan.~~

The Company has a committed loan facility in Japan. As of ~~October~~July 2, ~~2022, $2.0~~2023, $1.6 million was outstanding under this loan facility. Principal will be repaid in accordance with the payment schedule ending in 2026. The Company repaid ~~$0.4~~$0.2 million on this facility during the first ~~nine months~~half of ~~2022.~~2023.

As part of the Concept Pet acquisition, the Company assumed $1.9 million in long-term debt, recorded at fair value, consisting of two terms loans, one that matures in 2025 and one that matures in 2027. Both loans have annual payments and carry a variable interest rate. The Company repaid $0.4 million on these loans during the first half of 2023.

As of ~~October~~April 2, ~~2022,~~2023, the Company had ~~$24.6~~$25.4 million in uncommitted short-term bank credit lines, of which ~~$3.5~~$2.1 million were in use.

Note 11. Benefit Plans

The Company and its subsidiaries have pension plans covering eligible employees on a contributory or non-contributory basis. The Company also provides postretirement health care and life insurance benefits for eligible U.S. retired employees. Disclosures for the U.S. plans have been combined with those outside of the U.S. as the international plans do not have significantly different assumptions, and together represent less than ~~22%~~20% of our total benefit obligation.

Components of Net Periodic Benefit Cost

	Pension Benefits
	Three Months Ended						Six Months Ended
(in millions of dollars)	Jul. 2, 2023			Jul. 3, 2022			Jul. 2, 2023			Jul. 3, 2022

Service cost	$	1.2		$	1.8		$	2.3		$	3.6
Interest cost		3.9			2.3			7.9			4.7
Expected return on plan assets		(4.6	)		(5.7	)		(9.1	)		(11.4	)
Amortization:
Prior service cost		0.1			—			0.1			0.1
Recognized net actuarial loss		0.6			1.6			1.2			3.1
Settlement loss		—			1.5			—			1.5
Net periodic benefit cost	$	1.2		$	1.5		$	2.4		$	1.6

1614

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~Components of Net Periodic Benefit Cost~~

Pension Benefits
Three Months Ended Nine Months Ended
(millions of dollars)
Oct. 2,
2022

Oct. 3,
2021

Oct. 2,
2022

Oct. 3,
2021

��
Service cost $ 1.6 $ 1.8 $ 5.2 $ 5.9
Interest cost 3.1 1.9 7.8 5.9
Expected return on plan assets (5.1 ) (5.6 ) (16.5 ) (16.4 )
Amortization:
Prior service cost — — 0.1 0.2
Recognized net actuarial loss 1.0 2.2 4.1 9.3
Settlement loss 0.2 0.9 1.7 3.0
Net periodic benefit cost $ 0.8 $ 1.2 $ 2.4 $ 7.9

	Post-Retirement Benefits												Post-Retirement Benefits
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
(millions of dollars)	Oct. 2, 2022			Oct. 3, 2021			Oct. 2, 2022			Oct. 3, 2021
(in millions of dollars)													Jul. 2, 2023			Jul. 3, 2022			Jul. 2, 2023			Jul. 3, 2022

Service cost	$	—		$	—		$	—		$	0.1		$	—		$	—		$	—		$	—
Interest cost		—			0.1			—			0.1			—			—			—			—
Amortization:
Recognized net actuarial (gain) loss		(0.1	)		(0.2	)		(0.3	)		(0.6	)		(0.1	)		(0.1	)		(0.2	)		(0.2	)
Net periodic benefit cost	$	(0.1	)	$	(0.1	)	$	(0.3	)	$	(0.4	)	$	(0.1	)	$	(0.1	)	$	(0.2	)	$	(0.2	)

Amortization amounts of prior service costs and recognized net actuarial losses are recorded, net of tax, as increases to accumulated other comprehensive income.

The Company expects to contribute approximately ~~$10.1~~$10.0 million to its pension plans and $0.5 million to its other postretirement benefit plans in ~~2022.~~2023. As of ~~October~~July 2, ~~2022, $5.3~~2023, $2.2 million has been contributed to the pension plans and ~~approximately $0.1 million has~~no contributions have been ~~contributed~~made to the other postretirement benefit plans.

Note 12. Comprehensive Income

The following table summarizes the amounts reclassified out of accumulated other comprehensive loss attributable to the Company:

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
(millions of dollars)	Oct. 2, 2022			Oct. 3, 2021			Oct. 2, 2022			Oct. 3, 2021
(in millions of dollars)													Jul. 2, 2023			Jul. 3, 2022			Jul. 2, 2023			Jul. 3, 2022

Amortization of pension items:
Pre-tax amount	$	1.1		$	2.9		$	5.6		$	11.9		$	0.7		$	3.0		$	1.2		$	4.5
Tax		(0.2	)		(0.7	)		(1.3	)		(2.9	)		(0.3	)		(0.7	)		(0.4	)		(1.1	)
Net of tax	$	0.9		$	2.2		$	4.3		$	9.0		$	0.4		$	2.3		$	0.8		$	3.4

The pre-tax amounts in the table above are included within the components of net periodic pension benefit cost (see Note 11 to the Condensed Consolidated Financial Statements) and the tax amounts are included within the provision for taxes on income line within the Condensed Consolidated Statements of Income.

~~MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The major components of accumulated other comprehensive loss, net of related tax, attributable to MTI are as follows:

(millions of dollars)
Foreign Currency
Translation Adjustment

Unrecognized
Pension Costs

Net Gain (Loss)
on Derivative Instruments
Total

Balance as of December 31, 2021
$ (269.8 ) $ (69.6 ) $ 5.8 $ (333.6 )

Other comprehensive income (loss) before reclassifications (108.5 ) — 16.4 (92.1 )
Amounts reclassified from AOCI — 4.3 — 4.3
Net current period other comprehensive income (loss) (108.5 ) 4.3 16.4 (87.8 )
Balance as of October 2, 2022
$ (378.3 ) $ (65.3 ) $ 22.2 $ (421.4 )

(in millions of dollars)	Foreign Currency Translation Adjustment			Unrecognized Pension Costs			Net Gain (Loss) on Derivative Instruments			Total

Balance as of December 31, 2022	$	(345.7	)	$	(34.4	)	$	13.6		$	(366.5	)

Other comprehensive loss before reclassifications		(15.2	)		—			(1.9	)		(17.1	)
Amounts reclassified from AOCI		—			0.8			—			0.8
Net current period other comprehensive income (loss)		(15.2	)		0.8			(1.9	)		(16.3	)
Balance as of July 2, 2023	$	(360.9	)	$	(33.6	)	$	11.7		$	(382.8	)

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 13. Contingencies

The Company is party to a number of lawsuits arising in the normal course of our business. The Company and certain of the Company’s subsidiaries are among numerous defendants in a number of cases seeking damages for alleged exposure to asbestos-containing materials related to talc products sold by the Company’s subsidiary Barretts Minerals Inc. As of ~~October~~July 2, ~~2022,~~2023, we had ~~451~~501 open asbestos cases related to certain talc products previously sold by Barretts Minerals Inc., which is an increase in volume from previous years. These claims typically allege various theories of liability, including negligence, gross negligence and strict liability and seek compensatory and, in some cases, punitive damages, but most of these claims do not provide adequate information to assess their merits, the likelihood that the Company will be found liable, or the magnitude of such liability, if any. We are unable to state an amount or range of amounts claimed in any of these lawsuits because state court pleading practices do not require the plaintiff to identify the amount of the claimed damage. The Company’s position, as stated publicly, is that the talc products sold by Barretts Minerals Inc. are safe and do not cause cancer.

The Company records accruals for loss contingencies associated with legal matters, including talc-related litigation, when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors, including whether damages sought in the proceedings are unsubstantiated or indeterminate, the stage of the litigation, the factual and legal matters in dispute, the ability to achieve comprehensive settlements, the availability of co-defendants with substantial resources and assets participating in the litigation, and our evaluation of the unique attributes of each claim.

While costs relating to the defense of talc-related cases has increased concurrently with the volume, the majority of these costs have historically been borne by Pfizer Inc. pursuant to the terms of certain agreements entered into in connection with the Company’s initial public offering in 1992. The Company is entitled to indemnification, pursuant to agreement, for liabilities ~~related to~~arising from sales prior to the initial public offering. The Company continues to receive information with respect to potential costs associated with the defense and/or settlement of talc-related cases not subject to indemnification from ~~Pfizer.~~Pfizer Inc. Although the Company believes that the talc products are safe and that claims to the contrary are without merit, Barretts Minerals Inc. opportunistically settled certain talc-related cases in 2022 and 2023. In the third quarter ~~and fourth quarter~~ of ~~2022. As~~2022, as a result of ~~these~~the settlements and defense costs incurred to date, the Company reviewed its estimates of the probability and amount of losses in connection with its existing talc-related cases and recorded $31 million for litigation costs ~~in the third quarter of 2022~~ to defend against, opportunistically settle, and establish a reserve for claims associated with certain talc products from Barretts Minerals Inc. In the second quarter of 2023, the Company reviewed its estimates of the probability and amount of losses in connection with its current talc-related cases and recorded a charge of $13.9 million for litigation costs and to restore its reserve.

The broader litigation and regulatory environments for talc-related claims continue to evolve. Given this ongoing evolution, it is reasonably possible that the Company will incur a loss for liabilities associated with future talc claims in excess of the amount currently recognized. This risk is based on the potential for new talc-related claims that could eventually be filed against the Company together with their associated disposition cost and related legal costs, taking into account the portion of such hypothetical claims that may be subject to indemnification by Pfizer Inc. These factors are unknown and may vary depending upon, among other things, changes in the regulatory and litigation environments for talc-related claims. Further, the Company has announced that it will exit the talc business following a strategic review of its operations and amidst the backdrop of the escalating talc-related litigation environment. However, the effect of an exit from the talc business on future litigation is unknown. Accordingly, the Company is currently unable to provide an estimate or range of the magnitude of the Company’s potential loss related to future talc claims.

~~MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Note 14. Segment and Related Information

On a regular basis the Company reviews its segments and the approach used by the chief decision maker, the Company's Chief Executive Officer, to assess performance and allocate resources. Effective January 1, 2023, the Company realigned its business reporting structure and reorganized into two segments, Consumer & Specialties and Engineered Solutions. Following the realignment, the two new segments consist of the following businesses:

The Consumer & Specialties segment serves consumer end markets directly, and provides mineral-based solutions and technologies that are essential to our customers’ products. The two product lines in this segment are Household & Personal Care - our mineral-to-shelf products that serves pet care, personal and household care, fluid purification and other consumer oriented businesses, and Specialty Additives, delivering functional additives to a variety of consumer and industrial end markets including paper, packaging, construction, automotive, and consumer markets including food and pharmaceuticals.

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Engineered Solutions segment combines all engineered systems, mineral blends, and technologies that are designed to aid in customer processes and projects. The two product lines in this segment are High-Temperature Technologies – combining all of our mineral-based blends, technologies, and systems serving the foundry, steel, glass, aluminum and other high-temperature processing industries, and Environmental & Infrastructure, which includes environmental and remediation solutions such as geosynthetic clay lining systems, water remediation technologies as well as drilling, commercial building and infrastructure-related products.

We believe the new structure better aligns our businesses and technologies with our customers and end markets and creates a more efficient and effective management structure that reflects the way performance is evaluated and resources are allocated.

The Company has ~~three~~two reportable segments: ~~Performance Materials, Specialty Minerals~~Consumer & Specialties and ~~Refractories.~~Engineered Solutions. See Note 1 to the Condensed Consolidated Financial Statements. Segment information for the three and ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021~~2022 is as follows:

Three Months Ended Nine Months Ended
(millions of dollars)
Oct. 2,
2022

Oct. 3,
2021

Oct. 2,
2022

Oct. 3,
2021

Net Sales
Performance Materials $ 290.4 $ 250.4 $ 862.1 $ 719.7
Specialty Minerals 166.0 146.9 493.3 437.4
Refractories 85.5 75.9 262.5 224.3
Total $ 541.9 $ 473.2 $ 1,617.9 $ 1,381.4

Income (loss) from Operations
Performance Materials $ 37.9 $ 32.0 $ 108.5 $ 96.5
Specialty Minerals (14.2 ) 17.3 24.4 58.4
Refractories 12.4 13.2 45.1 36.9
Total $ 36.1 $ 62.5 $ 178.0 $ 191.8

	Three Months Ended				Six Months Ended
(in millions of dollars)	Jul. 2, 2023		Jul. 3, 2022		Jul. 2, 2023		Jul. 3, 2022

Net Sales
Consumer & Specialties	$	290.3	$	283.2	$	587.6	$	566.7
Engineered Solutions		261.2		273.8		510.0		509.4
Total	$	551.5	$	557.0	$	1,097.6	$	1,076.1

Income from Operations
Consumer & Specialties	$	19.4	$	31.6	$	51.6	$	62.9
Engineered Solutions		35.2		41.7		70.5		79.0
Total	$	54.6	$	73.3	$	122.1	$	141.9

A reconciliation of the totals reported for the operating segments to the applicable line items in the condensed consolidated financial statements is as follows:

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
(millions of dollars)	Oct. 2, 2022			Oct. 3, 2021			Oct. 2, 2022			Oct. 3, 2021
(in millions of dollars)													Jul. 2, 2023			Jul. 3, 2022			Jul. 2, 2023			Jul. 3, 2022

Income from operations for reportable segments	$	36.1		$	62.5		$	178.0		$	191.8		$	54.6		$	73.3		$	122.1		$	141.9
Acquisition related transaction and integration costs		(0.5	)		(0.9	)		(4.7	)		(1.3	)
Litigation costs		—			—			(1.5	)		—
Restructuring and other items, net														(2.8	)		—			(2.8	)		—
Acquisition-related expenses														(0.2	)		(2.6	)		(0.3	)		(4.2	)
Litigation expenses														—			(1.5	)		—			(1.5	)
Unallocated and other corporate expenses		—			(1.0	)		(0.6	)		(7.4	)		(1.7	)		0.2			(6.1	)		(0.6	)
Consolidated income from operations		35.6			60.6			171.2			183.1			49.9			69.4			112.9			135.6
Non-operating deductions, net		(18.5	)		(10.1	)		(41.8	)		(30.9	)		(15.9	)		(13.1	)		(31.2	)		(23.3	)
Income before tax and equity in earnings	$	17.1		$	50.5		$	129.4		$	152.2		$	34.0		$	56.3		$	81.7		$	112.3

The Company’s sales by product category are as follows:

Three Months Ended Nine Months Ended
(millions of dollars)
Oct. 2,
2022

Oct. 3,
2021

Oct. 2,
2022

Oct. 3,
2021

Household, Personal Care & Specialty Products $ 141.5 $ 121.8 $ 424.1 $ 333.9
Metalcasting 85.4 72.9 254.4 235.0
Environmental Products 47.7 39.8 138.0 105.8
Building Materials 15.8 15.9 45.6 45.0
Paper PCC 97.7 89.5 286.4 264.9
Specialty PCC 25.5 18.2 77.7 57.1
Ground Calcium Carbonate 28.6 25.0 84.0 74.5
Talc 14.2 14.2 45.2 40.9
Refractory Products 68.9 58.3 203.9 175.1
Metallurgical Products 16.6 17.6 58.6 49.2
Total $ 541.9 $ 473.2 $ 1,617.9 $ 1,381.4

	Three Months Ended				Six Months Ended
(in millions of dollars)	Jul. 2, 2023		Jul. 3, 2022		Jul. 2, 2023		Jul. 3, 2022

Household & Personal Care	$	125.5	$	118.9	$	254.7	$	239.3
Specialty Additives		164.8		164.3		332.9		327.4
High-Temperature Technologies		182.6		186.7		361.2		356.6
Environmental & Infrastructure		78.6		87.1		148.8		152.8
Total	$	551.5	$	557.0	$	1,097.6	$	1,076.1

1917

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

Minerals Technologies Inc.:

Results of Review of Interim Financial Information

We have reviewed the condensed consolidated balance sheet of Minerals Technologies Inc. and subsidiaries (the Company) as of ~~October~~July 2, ~~2022,~~2023, the related condensed consolidated statements of income and comprehensive income ~~(loss)~~ for the three-month and ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, the related condensed consolidated statements of cash flows for the ~~nine-month~~six-month periods ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, the related condensed consolidated statements of changes in ~~shareholders’~~shareholders' equity for the three-month periods ended ~~October~~July 2, ~~2022,~~2023 and April 2, 2023 and July 3, 2022 and April 3, 2022, ~~and October 3, 2021, July 4, 2021 and April 4, 2021,~~ and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, ~~2021,~~2022, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February ~~18, 2022,~~17, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2021,~~2022 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

New York, New York

~~October~~July 28, ~~2022~~2023

2018

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Our consolidated sales for the ~~third~~second quarter of ~~2022~~2023 were ~~$541.9~~$551.5 million, ~~an increase~~a decrease of ~~15%~~1% as compared with ~~$473.2~~$557.0 million in the prior year. Included in sales for the third quarter of 2022 were $4.9 million in sales related to our acquisition of Concept Pet in the second quarter of 2022. Foreign exchange had an unfavorable impact on sales of approximately $33 million, or 7 percentage points as compared with prior year. Income from operations was ~~$35.6~~$49.9 million and represented ~~6.6%~~9.0% of sales, as compared with ~~$60.6~~$69.4 million and ~~12.8%~~12.5% of sales in the prior year. Included in income from operations for the ~~third~~second quarter of 2023, were $6.6 million of restructuring charges, $0.2 million of acquisition-related expenses and $13.9 million of litigation expenses. Included in income from operations for the second quarter of 2022 were ~~$0.5~~$2.6 million of ~~acquisition related transaction~~acquisition-related expenses and ~~integration costs and $31.1~~$1.5 million ~~recorded for~~of litigation ~~costs to defend against, opportunistically settle, and establish a reserve for claims associated with certain talc products from the Company’s Barretts Minerals Inc. subsidiary.~~expenses. Net income was ~~$13.4~~$26.6 million, as compared to ~~$41.4~~$44.9 million in the ~~third~~second quarter of ~~2021.~~2022. Diluted earnings in the ~~third~~second quarter ended ~~October~~July 2, ~~2022~~2023 were ~~$0.41~~$0.82 per share, as compared with ~~$1.22~~$1.36 per share in the ~~third~~second quarter of ~~2021.~~2022.

~~Third~~Second quarter ~~2022~~2023 results were ~~strong~~solid as the Company continued to deliver on its strategic growth initiatives driven by multi-year advancements in new product development, positioning in growth markets and geographies, geographic penetration and growth from acquisitions.

~~The Company refinanced its revolving credit facility and term loan in~~ In the ~~third~~second quarter of ~~2022. In connection,~~2023, the Company ~~incurred $6.9 million~~announced that it will exit the talc business following a strategic review of ~~debt extinguishment expenses.~~its operations and amidst the backdrop of the escalating talc-related litigation environment.

Our balance sheet continues to be strong. Cash, cash equivalents and short-term investments were ~~$226.4~~$255.4 million as of ~~October~~July 2, ~~2022~~2023 and the Company had more than $400 million of available liquidity, including cash on hand as well as availability under its revolving credit facility. We believe that these factors will allow us to meet our anticipated funding requirements.

Outlook

The Company will also continue to focus on innovation and new product development and other opportunities for sales growth from our existing businesses in ~~2022,~~2023, as follows:

●

~~Increase our presence and gain penetration of our bentonite-based foundry customers for the Metalcasting industry in emerging markets, such as China and India.~~

Consumer & Specialties Segment

●

Increase our presence and market share in global pet ~~care~~litter products, particularly in emerging markets.

●

Deploy new products in pet care such as lightweight litter.

●

Increase our sales of calcium carbonate products by further penetration into filling and coating applications in the paper and packaging markets.

●

Promote the Company's expertise in crystal engineering by developing crystal morphologies that help our customers achieve functional benefits.

●

Deploy new calcium carbonate products in paint, coating and packaging applications.

●

Continue developing products and processes for waste management and recycling opportunities to reduce the environmental impact for our customers by reducing energy consumption and improve the sustainability of their products.

●

Continue to develop innovative applications for our bleaching earth products for edible oil and biofuel industries.

●

Develop new mineral-based solutions for personal care applications.

●

Increase our presence and market share in ~~Asia~~globally for retinol delivery technology for personal care applications.

●

Expand our bentonite product solutions for animal health applications.

●

Increase our presence and market share in fabric care, particularly in emerging markets.

Engineered Solutions Segment

●

Increase our presence and gain penetration of our bentonite-based foundry customers for the ~~global powdered detergent market.~~metalcasting industry in emerging markets, such as China and India.

●

Deploy value-added formulations of refractory materials that not only reduce costs but improve performance.

●

Deploy our laser measurement technologies into new applications.

●

Expand our refractory maintenance model to other steel makers globally.

●

Continue the development of our FLUORO-SORB^®products which remediate contamination of Per-and polyflouroalkyl substances (PFAS) and Perflourooctane sulfanate (PFOS).

●

Pursue opportunities for our products in environmental and building and construction markets in the Middle East, Asia Pacific and South America regions.

●

Increase our presence and market share for geosynthetic clay liners ~~within the Environmental Products product line.~~globally.

●

Continue ~~the development~~expansion of our ~~proprietary products for agricultural applications worldwide.~~drilling product solutions, including geothermal alternative energy project applications.

●

~~Develop multiple high-filler technologies under~~ ~~the~~ ~~FulFill~~^® ~~platform of products, to increase the fill rate in freesheet paper and continue to progress with commercial discussions and full-scale paper machine trials.~~

All Segments

●

Develop products and processes for waste management and recycling opportunities to reduce the environmental impact of the paper mill, reduce energy consumption and improve the sustainability of the papermaking process, including our NewYield^® ~~and ENVIROFIL~~^® ~~products.~~

●

Further ~~penetration into the packaging segment of the paper industry.~~

●

~~Increase our sales of PCC for paper by further penetration of the markets for paper filling at both freesheet and groundwood mills, particularly in emerging markets.~~

●

~~Expand the Company’s PCC coating product line using the satellite model.~~

●

~~Promote the Company’s expertise in crystal engineering, especially in helping papermakers customize PCC morphologies for specific paper applications.~~

●

~~Expand PCC produced for paper filling applications by working with industry partners to develop new methods to increase the ratio of PCC for fiber substitutions.~~

●

~~Develop unique calcium carbonate and talc products used in the manufacture of novel biopolymers, a new market opportunity.~~

●

~~Deploy new talc and GCC products in paint, coating and packaging applications.~~

●

~~Deploy value-added formulations of refractory materials that not only reduce costs but improve performance.~~

●

~~Deploy our laser measurement technologies into new applications.~~

●

~~Expand our refractory maintenance model to other steel makers globally.~~

●

~~Deploy~~ operational excellence principles into all aspects of the organization, including system infrastructure and lean principles.

●

Continue to explore selective acquisitions to fit our ~~core~~ competencies in minerals and ~~fine particle technology.~~our core technologies.

However, there can be no assurance that we will achieve success in implementing any one or more of these opportunities.

Results of Operations

Three months ended ~~October~~July 2, ~~2022~~2023 as compared with three months ended ~~October~~July 3, ~~2021~~2022

Consolidated Income Statement Review

	Three Months Ended									Three Months Ended
(millions of dollars)	Oct. 2, 2022			Oct. 3, 2021			% Change

(in millions of dollars)										Jul. 2, 2023			Jul. 3, 2022			% Change
Net sales	$	541.9		$	473.2			15	%	$	551.5		$	557.0			(1	)%
Cost of sales		423.6			359.9			18	%		423.5			429.7			(1	)%
Production margin		118.3			113.3			4	%		128.0			127.3			1	%
Production margin %		21.8	%		23.9	%					23.2	%		22.9	%

Marketing and administrative expenses		46.0			45.5			1	%		51.8			48.8			6	%
Research and development expenses		5.1			4.6			11	%		5.6			5.0			12	%
Acquisition related transaction and integration costs		0.5			1.5			(67	)%
Litigation costs		31.1			—			*
Restructuring and other items, net		—			1.1			*			6.6			—			*
Acquisition-related expenses											0.2			2.6			*
Litigation expenses											13.9			1.5			*

Income from operations		35.6			60.6			(41	)%		49.9			69.4			(28	)%
Operating margin %		6.6	%		12.8	%					9.0	%		12.5	%

Interest expense, net		(11.0	)		(9.2	)		20	%		(14.5	)		(10.4	)		39	%
Debt extinguishment expenses		(6.9	)		—			*
Non-cash pension settlement charge		(0.2	)		(0.8	)		(75	)%		—			(1.5	)		*
Other non-operating deductions, net		(0.4	)		(0.1	)		*			(1.4	)		(1.2	)		17	%
Total non-operating deductions, net		(18.5	)		(10.1	)		83	%		(15.9	)		(13.1	)		21	%

Income before tax and equity in earnings		17.1			50.5			(66	)%		34.0			56.3			(40	)%
Provision for taxes on income		3.2			8.9			(64	)%		7.5			11.4			(34	)%
Effective tax rate		18.7	%		17.6	%					22.1	%		20.2	%

Equity in earnings of affiliates, net of tax		0.7			0.8			(13	)%		1.1			0.6			83	%

Consolidated net income		14.6			42.4			(66	)%
Net income											27.6			45.5			(39	)%

Net income attributable to non-controlling interests		1.2			1.0			20	%		1.0			0.6			67	%
Net income attributable to Minerals Technologies Inc.	$	13.4		$	41.4			(68	)%	$	26.6		$	44.9			(41	)%

*	Not meaningful

Net Sales

Three Months Ended
Oct. 2, 2022

Three Months Ended
Oct. 3, 2021

(millions of dollars) Net Sales % of Total Sales % Change Net Sales % of Total Sales

U.S. $ 279.9 51.7 % 14 % $ 245.5 51.9 %
International 262.0 48.3 % 15 % 227.7 48.1 %
Total sales $ 541.9 100.0 % 15 % $ 473.2 100.0 %

Performance Materials Segment $ 290.4 53.6 % 16 % $ 250.4 53.0 %
Specialty Minerals Segment 166.0 30.6 % 13 % 146.9 31.0 %
Refractories Segment 85.5 15.8 % 13 % 75.9 16.0 %
Total sales $ 541.9 100.0 % 15 % $ 473.2 100.0 %

	Three Months Ended Jul. 2, 2023								Three Months Ended Jul. 3, 2022
(in millions of dollars)	Net Sales		% of Total Sales			% Change			Net Sales		% of Total Sales
U.S.	$	294.7		53.4	%		(3	)%	$	303.1		54.4	%
International		256.8		46.6	%		1	%		253.9		45.6	%
Total sales	$	551.5		100.0	%		(1	)%	$	557.0		100.0	%

Consumer & Specialties Segment	$	290.3		52.6	%		3	%	$	283.2		50.8	%
Engineered Solutions Segment		261.2		47.4	%		(5	)%		273.8		49.2	%
Total sales	$	551.5		100.0	%		(1	)%	$	557.0		100.0	%

Worldwide net sales ~~increased 15%~~decreased 1% to ~~$541.9~~$551.5 million in the ~~third~~second quarter from ~~$473.2~~$557.0 million in the prior year. ~~Included in the net sales in the quarter are $4.9 million of net sales for Concept Pet.~~ Foreign exchange had an unfavorable impact on sales of ~~$33~~$8 million, or 71 percentage ~~points.~~point.

Net sales in the United States were ~~$279.9~~$294.7 million in the ~~third~~second quarter of ~~2022,~~2023, as compared to ~~$245.5~~$303.1 million in the prior year, an ~~increase~~decrease of ~~14%~~3%. International sales increased ~~15%~~1% to ~~$262.0~~$256.8 million from ~~$227.7~~$253.9 million in the prior year.

Operating Costs and Expenses

Cost of sales was ~~$423.6~~$423.5 million and represented ~~78.2%~~76.8% of sales for the three month period ended ~~October~~July 2, ~~2022,~~2023, as compared with ~~$359.9~~$429.7 million and ~~76.1%~~77.1% of sales in the prior year. ~~The increase in cost of sales was primarily due to higher raw material, energy, and other manufacturing costs.~~ Production margin ~~decreased~~increased from ~~23.9%~~22.9% of sales in the prior year to ~~21.8%~~23.2% of sales in the ~~third~~second quarter of ~~2022. Margin was impacted by the timing of pricing actions relative to cost increases.~~2023.

Marketing and administrative costs were ~~$46.0~~$51.8 million and ~~8.5%~~9.4% of sales for the three months ended ~~October~~July 2, ~~2022,~~2023, as compared to ~~$45.5~~$48.8 million and ~~9.6%~~8.8% of sales in the prior year.

Research and development expenses were ~~$5.1~~$5.6 million and represented ~~0.9%~~1.0% of sales for the three months ended ~~October~~July 2, ~~2022,~~2023, as compared with ~~$4.6~~$5.0 million and ~~1.0%~~0.9% of sales in the prior year.

In the second quarter of 2023, the Company initiated a restructuring and cost savings program to further streamline our cost structure as a result of organizational efficiencies gained through our recent resegmentation. Accordingly, the Company recorded restructuring and other charges of $6.6 million related to severance and other costs. The Company also recorded ~~$0.5~~incremental litigation expenses of $13.9 million ~~of acquisition related transaction and integration costs~~ during the three months ended ~~October~~July 2, ~~2022. In addition, the Company recorded $31.1 million of litigation costs during the three months ended October 2, 2022 relating to costs~~2023 incurred to defend against, opportunistically settle, and ~~establish a~~restore our reserve for claims associated with certain talc products from the ~~Company’s~~Company's Barretts Minerals Inc. subsidiary.

The Company recorded litigation expenses of $1.5 million for the three months ended July 3, 2022. The Company recorded $0.2 million and $2.6 million of ~~acquisition related transaction and integration costs~~acquisition-related expenses during the three months ended ~~October~~July 2, 2023 and July 3, ~~2021. In addition, the Company recorded $1.1 million of restructuring and other items, net during the three months ended October 3, 2021.~~2022, respectively.

Income from Operations

The Company recorded income from operations of ~~$35.6~~$49.9 million as compared to ~~$60.6~~$69.4 million in the prior year. Operating income during the three months ended ~~October~~July 2, 2023 and July 3, 2022 includes ~~$0.5~~$0.2 million and $2.6 million of ~~acquisition related transaction~~acquisition-related expenses, respectively and ~~integration costs~~$13.9 million and ~~$31.1~~$1.5 million of litigation ~~costs. Operating income during~~expenses, respectively. In addition, the Company recorded restructuring charges of $6.6 million for the three months ended ~~October 3, 2021 includes $1.5 million of acquisition related transaction and integration costs and $1.1 million of restructuring and other items, net.~~July 2, 2023.

Other Non-Operating Income (Deductions), net

In the ~~third~~second quarter of ~~2022,~~2023, non-operating deductions were ~~$18.5~~$15.9 million, as compared with ~~$10.1~~$13.1 million in the prior ~~year.~~year, primarily relating to higher interest expense in the current year resulting from higher interest rates. Included in other non-operating deductions in the ~~third~~second quarter of ~~2022~~2023 was net interest expense of ~~$11.0~~$14.5 million, as compared to ~~$9.2~~$10.4 million in the prior year. The Company recorded debt extinguishment expenses of $6.9 million during the three month period ended October 2, 2022 related to the refinancing of our credit facilities. In addition, the Company recorded a non-cash pension settlement charge of $0.2 million and $0.8 million for the three month periods ended October 2, 2022 and October 3, 2021, respectively.

Provision for Taxes on Income

Provision for taxes on income was ~~$3.2~~$7.5 million and ~~$8.9~~$11.4 million for the three months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, respectively. The effective tax rate was ~~18.7%~~22.1% and ~~17.6%~~20.2% for the three months ended ~~October~~July 2, 2023 and July 3, 2022, ~~and October 3, 2021,~~ respectively. The higher tax rate was primarily due to a change in the mix of earnings resulting in higher taxes on foreign earnings, as compared to the prior year.

~~Consolidated~~ Net Income Attributable to MTI Shareholders

~~Consolidated net~~Net income was ~~$13.4~~$26.6 million for the three months ended ~~October~~July 2, ~~2022,~~2023, as compared with ~~$41.4~~$44.9 million in the prior year.

Segment Review

On a regular basis, the Company reviews its segments and the approach used by the chief decision maker to assess performance and allocate resources. Effective January 1, 2023, the Company realigned its business reporting structure and reorganized into two segments, Consumer & Specialties and Engineered Solutions. Following the realignment, the two new segments consist of the following businesses:

The Consumer & Specialties segment serves consumer end markets directly, and also provides mineral-based solutions and technologies that are essential to our customers’ products. The two product lines in this segment are Household & Personal Care - our mineral-to-shelf products that serves pet care, personal and household care, fluid purification and other consumer oriented businesses, and Specialty Additives, delivering functional additives to a variety of consumer and industrial end markets including paper, packaging, construction, automotive, and consumer markets including food and pharmaceuticals

~~Segment Review~~

The following discussions highlight the operating results for each of our ~~three~~two segments.

Three Months Ended
Performance Materials Segment
Oct. 2,
2022

Oct. 3,
2021

%
Change

(millions of dollars)
Net Sales
Household, Personal Care & Specialty Products $ 141.5 $ 121.8 16 %
Metalcasting 85.4 72.9 17 %
Environmental Products 47.7 39.8 20 %
Building Materials 15.8 15.9 (1 )%
Total net sales $ 290.4 $ 250.4 16 %

Income from operations $ 37.9 $ 32.0 18 %
% of net sales 13.1 % 12.8 %

	Three Months Ended
Consumer & Specialties Segment	Jul. 2, 2023			Jul. 3, 2022			% Change
	(in millions of dollars)
Net Sales
Household & Personal Care	$	125.5		$	118.9			6	%
Special Additives		164.8			164.3			—
Total net sales	$	290.3		$	283.2			3	%

Income from operations	$	19.4		$	31.6			(39	)%
% of net sales		6.7	%		11.2	%

Net sales in the ~~Performance Materials~~Consumer & Specialties segment increased ~~16%~~3% to ~~$290.4~~$290.3 million from ~~$250.4~~$283.2 million in the prior year. ~~Foreign exchange had an unfavorable impact on sales of $20 million or 8 percentage points.~~ Household & Personal Care ~~& Specialty Products~~ sales increased ~~16%~~6% to ~~$141.5~~$125.5 million, as compared with ~~$121.8~~$118.9 million in the prior year on continued strong demand for ~~consumer-oriented~~our pet litter products and ~~as a result of the Concept Pet acquisition. Included in the net sales in the quarter are $4.9 million of net sales of Concept Pet.~~favorable pricing actions. Sales in ~~Metalcasting~~Specialty Additives increased ~~17% as stronger sales~~slightly primarily driven by contractual price increases which offset weaker demand for construction applications and paper & packaging products in North America and the rest of the world offset a slower than expected rebound in China following COVID-19 restrictions. Environmental Products sales increased 20% as compared with prior year on strength in remediation, wastewater, and filtration activities. Building Materials sales decreased 1%, as higher levels of project activity in North America offset slower activity levels in Europe.America.

Income from operations was ~~$37.9~~$19.4 million and ~~13.1%~~6.7% of sales, as compared to ~~$32.0~~$31.6 million and ~~12.8%~~11.2% of sales in the prior year. Included in income from operations for the three months ended ~~October~~July 2, 2023 and July 3, 2022 ~~were $0.3~~are litigation expenses of $13.9 million and $1.5 million, respectively. In addition, there are $0.6 million of ~~acquisition related transaction and integration costs. Margin was impacted by~~restructuring charges for the ~~timing~~three months ended July 2, 2023. For the three months ended July 3, 2022, there were $0.5 million of ~~pricing actions relative to cost increases and operational efficiencies.~~acquisition-related expenses included in income from operations.

Three Months Ended
Specialty Minerals Segment
Oct. 2,
2022

Oct. 3,
2021

%
Change

(millions of dollars)
Net Sales
Paper PCC $ 97.7 $ 89.5 9 %
Specialty PCC 25.5 18.2 40 %
PCC Products $ 123.2 $ 107.7 14 %

Ground Calcium Carbonate $ 28.6 $ 25.0 14 %
Talc 14.2 14.2 0 %
Processed Minerals Products $ 42.8 $ 39.2 9 %

Total net sales $ 166.0 $ 146.9 13 %

Income (loss) from operations $ (14.2 ) $ 17.3 *
% of net sales * 11.8 %

	Three Months Ended
Engineered Solutions Segment	Jul. 2, 2023			Jul. 3, 2022			% Change
	(in millions of dollars)
Net Sales
High-Temperature Technologies	$	182.6		$	186.7			(2	)%
Environmental & Infrastructure		78.6			87.1			(10	)%
Total net sales	$	261.2		$	273.8			(5	)%

Income from operations	$	35.2		$	41.7			(16	)%
% of net sales		13.5	%		15.2	%

Net sales in the Engineered Solutions segment decreased 5% to 261.2 million from $273.8 million in the prior year. High-Temperature Technologies sales decreased 2% to $182.6 million, as compared with $186.7 in the prior year, primarily driven by soft steel market conditions in Europe. Environmental & Infrastructure sales decreased 10% to $78.6 million, as compared with $87.1 million in the prior year as a result of weak market conditions in commercial construction, partially offset by growth in remediation applications.

Income from operations was $35.2 million and 13.5% of sales as compared with $41.7 million and 15.2% of sales in the prior year. Included in income from operations for the three months ended July 2, 2023 are restructuring costs of $3.2 million.

2422

~~Worldwide sales in the Specialty Minerals segment were $166.0 million,~~Six months ended July 2, 2023 as compared with ~~$146.9 million in the prior year, an increase of 13%. Foreign exchange had an unfavorable impact on sales of $7 million or 5 percentage points.~~

Worldwide net sales of PCC, which is primarily used in the manufacturing process of the paper industry, increased 14% to $123.2 million from $107.7 million in the prior year on continued strong demand for Specialty PCC in consumer, automotive, and residential construction applications, and higher pricing across all product lines. Paper PCC sales increased 9% to $97.7 million from $89.5 million in the prior year. Sales of Specialty PCC increased 40% to $25.5 million from $18.2 million in the prior year.

Net sales of Processed Minerals products increased 9% to $42.8 million driven primarily by strong demand for Ground Calcium Carbonate products. Ground Calcium Carbonate sales increased 14% to $28.6 million for the three month period ending October 2, 2022 as compared to $25.0 million in the prior year. Talc sales increased were flat at $14.2 million as compared with the prior year.

Specialty Minerals had a loss from operations of $14.2 million as compared with income of $17.3 million in the prior year. Included in the loss from operations for the current year are litigation costs of $31.1 million relating to costs incurred to defend against, opportunistically settle, and establish a reserve for claims associated with certain talc products from the Company’s Barretts Minerals Inc. subsidiary. Operating margins were impacted by the timing of contractual and negotiated price increases relative to continued inflationary cost increases.

Three Months Ended
Refractories Segment
Oct. 2,
2022

Oct. 3,
2021

%
Change

(millions of dollars)
Net Sales
Refractory Products $ 68.9 $ 58.3 18 %
Metallurgical Products 16.6 17.6 (6 )%
Total net sales $ 85.5 $ 75.9 13 %

Income from operations $ 12.4 $ 13.2 (6 )%
% of net sales 14.5 % 17.4 %

Net sales in the Refractories segment increased 13% to $85.5 million from $75.9 million in the prior year. Foreign exchange had an unfavorable impact on sales of $6 million or 7 percentage points. The increase in sales was driven by the ramp up of new business and higher pricing to cover inflationary cost increases. Sales of refractory products and systems to steel and other industrial applications increased 18% to $68.9 million and sales of metallurgical products decreased 6% to $16.6 million.

~~Income from operations was $12.4 million and 14.5% of sales as compared with $13.2 million and 17.4% of sales in the prior year.~~

~~Nine~~six months ended ~~October 2,~~July 3, 2022 ~~as compared with nine months ended October 3, 2021~~

Consolidated Income Statement Review

	Nine Months Ended									Six Months Ended
(millions of dollars)	Oct. 2, 2022			Oct. 3, 2021			% Change			Jul. 2, 2023			Jul. 3, 2022			% Change

Net sales	$	1,617.9		$	1,381.4			17	%	$	1,097.6		$	1,076.1			2	%
Cost of sales		1,250.6			1,040.9			20	%		848.9			827.1			3	%
Production margin		367.3			340.5			8	%		248.7			249.0			—
Production margin %		22.7	%		24.6	%					22.7	%		23.1	%

Marketing and administrative expenses		143.6			139.9			3	%		104.1			97.6			7	%
Research and development expenses		15.2			14.5			5	%		10.9			10.1			8	%
Acquisition related transaction and integration costs		4.7			1.9			147	%
Litigation costs		32.6			—			*
Restructuring and other items, net		—			1.1			*			6.6			—			*
Acquisition-related expenses											0.3			4.2			*
Litigation expenses											13.9			1.5			*

Income from operations		171.2			183.1			(6	)%		112.9			135.6			(17	)%
Operating margin %		10.6	%		13.3	%					10.3	%		12.6	%

Interest expense, net		(31.2	)		(28.2	)		11	%		(28.7	)		(20.2	)		42	%
Debt extinguishment expenses		(6.9	)		—			*
Non-cash pension settlement charge		(1.7	)		(3.0	)		(43	)%		—			(1.5	)		*
Other non-operating income (deductions), net		(2.0	)		0.3			*			(2.5	)		(1.6	)		*
Total non-operating deductions, net		(41.8	)		(30.9	)		35	%		(31.2	)		(23.3	)		34	%

Income before tax and equity in earnings		129.4			152.2			(15	)%		81.7			112.3			(27	)%
Provision for taxes on income		25.8			27.6			(7	)%		18.0			22.6			(20	)%
Effective tax rate		19.9	%		18.1	%					22.0	%		20.1	%

Equity in earnings of affiliates, net of tax		1.4			1.8			(22	)%		2.0			0.7			186	%

Consolidated net income		105.0			126.4			(17	)%		65.7			90.4			(27	)%

Net income attributable to non-controlling interests		2.6			3.2			(19	)%		2.1			1.4			50	%
Net income attributable to Minerals Technologies Inc.	$	102.4		$	123.2			(17	)%	$	63.6		$	89.0			(29	)%

*	Not meaningful

Net Sales

Nine Months Ended
Oct. 2, 2022

Nine Months Ended
Oct. 3, 2021

(millions of dollars) Net Sales % of Total Sales % Growth Net Sales % of Total Sales

U.S. $ 852.6 52.7 % 20 % $ 712.9 51.6 %
International 765.3 47.3 % 14 % 668.5 48.4 %
Total sales $ 1,617.9 100.0 % 17 % $ 1,381.4 100.0 %

Performance Materials Segment $ 862.1 53.3 % 20 % $ 719.7 52.1 %
Specialty Minerals Segment 493.3 30.5 % 13 % 437.4 31.7 %
Refractories Segment 262.5 16.2 % 17 % 224.3 16.2 %
Total sales $ 1,617.9 100.0 % 17 % $ 1,381.4 100.0 %

	Six Months Ended Jul. 2, 2023								Six Months Ended Jul. 3, 2022
(millions of dollars)	Net Sales		% of Total Sales			% Growth			Net Sales		% of Total Sales

U.S.	$	582.7		53.1	%		2	%	$	572.8		53.2	%
International		514.9		46.9	%		2	%		503.3		46.8	%
Total sales	$	1,097.6		100.0	%		2	%	$	1,076.1		100.0	%

Consumer & Specialties Segment	$	587.6		53.5	%		4	%	$	566.7		52.7	%
Engineered Solutions Segment		510.0		46.5	%		—			509.4		47.3	%
Total sales	$	1,097.6		100.0	%		2	%	$	1,076.1		100.0	%

Total sales increased ~~17%~~2% from the previous year to ~~$1,617.9~~$1,097.6 million. Included in the net sales for the year are $89.0 million of net sales of Normerica and $9.1 million of net sales of Concept Pet. Foreign exchange had an unfavorable impact on sales of approximately $70 million or 5%.

Net sales in the United States increased to ~~$852.6~~$582.7 million from ~~$712.9~~$572.8 million in the prior year, an increase of ~~20%~~2%. International sales increased by ~~14%~~2% to ~~$765.3~~$514.9 million from ~~$668.5~~$503.3 million in the prior year.

Operating Costs and Expenses

Cost of sales increased ~~20%~~3% from the prior year and was 77.3% of sales, as compared with ~~75.4%~~76.9% in the prior year. The increase in cost of sales was primarily due to higher raw material, energy, and other manufacturing costs. Gross margin decreased to 22.7% of sales as compared with ~~24.6%~~23.1% of sales in the prior year. Margin was impacted by the timing of pricing actions relative to cost increases.

Marketing and administrative costs were ~~$143.6~~$104.1 million and ~~8.9%~~9.5% of sales compared to ~~$139.9~~$97.6 million and ~~10.1%~~9.1% of sales in the prior year.

Research and development expenses were ~~$15.2~~$10.9 million and represented ~~0.9%~~1.0% of sales for the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 as compared with ~~$14.5~~$10.1 million and ~~1.0%~~0.9% of sales in the prior year.

The Company recorded ~~$4.7~~a $6.6 million restructuring charge and $0.3 million of ~~acquisition related transaction and integration costs~~acquisition-related expenses during the ~~nine~~six months ended ~~October~~July 2, ~~2022.~~2023. In addition, the Company recorded ~~$32.6~~$13.9 million of litigation ~~costs~~expenses during the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 relating to costs incurred to defend against, opportunistically settle, and ~~establish a~~restore our reserve for claims associated with certain talc products from the Company’s Barretts Minerals Inc. subsidiary.

The Company recorded ~~$1.9~~$4.2 million of ~~acquisition related transaction and integration costs~~acquisition-related expenses for the ~~nine~~six months ended ~~October~~July 3, ~~2021.~~2022. In addition, the Company recorded ~~$1.1~~$1.5 million of ~~restructuring and other items, net~~litigation expenses for the ~~nine~~six months ended

~~October~~ July 3, ~~2021.~~2022.

Income from Operations

The Company recorded income from operations of ~~$171.2~~$112.9 million, as compared to ~~$183.1~~$135.6 million in the prior year. Operating income was ~~10.6%~~10.3% and ~~13.3%~~12.6% of sales for the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 and ~~October~~July 3, ~~2021,~~2022, respectively. Operating income includes a $6.6 million restructuring charge during the ~~nine~~six months ended ~~October~~July 2, ~~2022 and October 3, 2021 includes $4.7 million and $1.9 million of acquisition related transaction and integration costs, respectively.~~2023. In addition, operating income during the ~~nine~~six months ended ~~October~~July 2, 2023 and July 3, 2022 includes ~~$32.6~~$0.3 million and $4.2 million of ~~litigation costs.~~acquisition-related expenses, respectively. Operating income also includes ~~$1.1~~$13.9 million and $1.5 million of ~~restructuring and other items, net~~litigation expenses during the ~~nine~~six months ended ~~October~~July 2, 2023 and July 3, ~~2021.~~2022, respectively.

Other Non-Operating Income (Deductions), net

The Company recorded non-operating deductions of ~~$41.8~~$31.2 million for the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, as compared with ~~$30.9~~$23.3 million in the prior year. Included in non-operating deductions for the ~~nine~~six months ended ~~October~~July 2, ~~2022~~2023 is ~~$31.2~~$28.7 million of net interest ~~expense, $6.9 million for debt extinguishment expenses related to the refinancing of our credit facilities and a $1.7 million non-cash pension settlement charge.~~expense. Included in non-operating deductions for the ~~nine~~six months ended ~~October~~July 3, ~~2021~~2022 was ~~$28.2~~$20.2 million of net interest expense and a ~~$3.0~~$1.5 million non-cash pension settlement charge.

Provision for Taxes on Income

Provision for taxes was ~~$25.8~~$18.0 million as compared to ~~$27.6~~$22.6 million in the prior year. The effective tax rate was ~~19.9%~~22.0% as compared to ~~18.1%~~20.1% in the prior year. The higher tax rate was primarily due to a change in the mix of ~~earnings and a reduced depletion benefit.~~earnings.

Consolidated Net Income Attributable to MTI Shareholders

Consolidated net income was ~~$102.4~~$63.6 million during the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, as compared with ~~$123.2~~$89.0 million in the prior year.

Segment Review

The following discussions highlight the operating results for each of our ~~three~~two segments.

Nine Months Ended
Performance Materials Segment
Oct. 2,
2022

Oct. 3,
2021

%
Change

(millions of dollars)
Net Sales
Household, Personal Care & Specialty Products $ 424.1 $ 333.9 27 %
Metalcasting 254.4 235.0 8 %
Environmental Products 138.0 105.8 30 %
Building Materials 45.6 45.0 1 %
Total net sales $ 862.1 $ 719.7 20 %

Income from operations $ 108.5 $ 96.5 12 %
% of net sales 12.6 % 13.4 %

	Six Months Ended
Consumer & Specialties Segment	Jul. 2, 2023			Jul. 3, 2022			% Change
	(millions of dollars)
Net Sales
Household & Personal Care	$	254.7		$	239.3			6	%
Specialty Additives		332.9			327.4			2	%
Total net sales	$	587.6		$	566.7			4	%

Income from operations	$	51.6		$	62.9			(18	)%
% of net sales		8.8	%		11.1	%

Net sales in the ~~Performance Materials~~Consumer & Specialties segment increased ~~20%~~4% to ~~$862.1~~$587.6 million from ~~$719.7~~$566.7 million in the prior year. ~~Foreign exchange had an unfavorable impact on sales of approximately $43 million or 6%.~~ Household & Personal Care ~~& Specialty Products~~sales increased ~~27%~~6% to ~~$424.1~~$254.7 as compared to ~~$333.9~~$239.3 million in the prior year as a result of continued strong demand for ~~consumer-oriented~~our pet littler products, higher pricing, and as a result of the ~~acquisitions of Normerica and~~ Concept ~~Pet. Included in the net sales for the year are $89.0 million of net sales of Normerica and $9.1 million of net sales of Concept Pet.~~Pet acquisition. Sales in ~~Metalcasting~~Specialty Additives increased 8% to $254.4 million as strong foundry demand in North America and the rest of world offset a slower than expected rebound in China following COVID-19 restrictions. Environmental Products sales increased 30% on strength in remediation, wastewater, and filtration activities. Building Materials increased 1% as2% primarily driven by higher ~~levels of project activity in North America offset slower activity levels in Europe.~~pricing.

Income from operations was ~~$108.5~~$51.6 million and ~~12.6%~~8.8% of sales as compared to ~~$96.5~~$62.9 million and 13.4% of sales in the prior year due higher volume from increased demand. Included in income from operations for the nine months ended October 2, 2022 were $3.3 million of acquisition related transaction and integration costs.

Nine Months Ended
Specialty Minerals Segment
Oct. 2,
2022

Oct. 3,
2021

%
Change

(millions of dollars)
Net Sales
Paper PCC $ 286.4 $ 264.9 8 %
Specialty PCC 77.7 57.1 36 %
PCC Products $ 364.1 $ 322.0 13 %

Ground Calcium Carbonate $ 84.0 $ 74.5 13 %
Talc 45.2 40.9 11 %
Processed Minerals Products $ 129.2 $ 115.4 12 %

Total net sales $ 493.3 $ 437.4 13 %

Income from operations $ 24.4 $ 58.4 (58 )%
% of net sales 4.9 % 13.4 %

Worldwide sales in the Specialty Minerals segment were $493.3 million, as compared with $437.4 million in the prior year, an increase of 13%. Foreign exchange had an unfavorable impact on sales of approximately $14 million or 3%.

Worldwide net sales of PCC products, which are primarily used in the manufacturing process of the paper industry, increased 13% to $364.1 million from $322.0 million in the prior year on continued strong demand and higher pricing for paper, packaging, and specialty PCC applications. Paper PCC sales increased 8% to $286.4 million from $264.9 million in the prior year. Sales of Specialty PCC products increased 36% to $77.7 million from $57.1 million in the prior year.

Net sales of Processed Minerals products increased 12% to $129.2 million from $115.4 million in the prior year due to strength in residential construction and automotive markets. Ground Calcium Carbonate sales increased 13% to $84.0 million from $74.5 million in the prior year. Talc sales increased 11% to $45.2 million from $40.9 million.

~~Income from operations was $24.4 million and 4.9% of net sales as compared to $58.4 million and 13.4%~~11.1% of sales in the prior year. Included in income from operations for the ~~current year~~six months ended July 2, 2023 and July 3, 2022 are litigation ~~costs~~expenses of ~~$31.1~~$13.9 million ~~incurred to defend against, opportunistically settle,~~ and ~~establish a reserve~~$1.5 million, respectively. In addition, there are $0.6 million of restructuring charges for ~~claims associated with certain talc products~~the six months ended July 2, 2023. For the six months ended July 3, 2022, there were $0.5 million of acquisition-related expenses included in income from ~~the Company’s Barretts Minerals Inc. subsidiary.~~operations.

~~Operating margins were impacted by the timing of contractual and negotiated price increases relative to continued inflationary cost increases.~~

	Nine Months Ended									Six Months Ended
Refractories Segment	Oct. 2, 2022			Oct. 3, 2021			% Change
Engineered Solutions Segment										Jul. 2, 2023			Jul. 3, 2022			% Change
	(millions of dollars)									(millions of dollars)
Net Sales
Refractory Products	$	203.9		$	175.1			16	%
Metallurgical Products		58.6			49.2			19	%
High-Temperature Technologies										$	361.2		$	356.6			1	%
Environmental & Infrastructure											148.8			152.8			(3	)%
Total net sales	$	262.5		$	224.3			17	%	$	510.0		$	509.4			0	%

Income from operations	$	45.1		$	36.9			22	%	$	70.5		$	79.0			(11	)%
% of net sales		17.2	%		16.5	%					13.8	%		15.5	%

~~Net~~Worldwide sales in the ~~Refractories~~Engineered Solutions segment increased ~~17%~~slightly to ~~$262.5~~$510.0 million from ~~$224.3~~$509.4 million in the prior year. ~~Foreign exchange had an unfavorable impact on~~High-Temperature sales ~~of approximately $13 million or 6%. The growth in sales was driven by the ramp up of new business and higher pricing~~increased 1% to ~~cover inflationary cost increases. Sales of refractory products and systems to steel and other industrial applications increased 16% to $203.9~~$361.2 million from ~~$175.1 million and sales of metallurgical products increased 19% to $58.6 million from $49.2~~$356.6 million in the prior ~~year.~~year, primarily driven by strength in North America, which offset weaker market conditions in China. Environmental & Infrastructure sales decreased 3% to $148.8 million from $152.8 million in the prior year driven by weak market conditions in commercial construction.

Income from operations was ~~$45.1~~$70.5 million and ~~17.2%~~13.8% of net sales as compared ~~with $36.9~~to $79.0 million and ~~16.5%~~15.5% of sales in the prior year. ~~Operating margins were strong, primarily driven by pricing actions and operational efficiencies.~~Included in income from operations for the six months ended July 2, 2023 are $3.2 million of restructuring expenses.

Liquidity and Capital Resources

Cash provided from operations during the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, was approximately ~~$63.6~~$79.2 million. ~~Cash from operations in the first nine months of 2022 was significantly lower than prior year driven by a deliberate, strategic inventory build and the impact of higher pricing on accounts receivable.~~ Cash flows provided from operations during the first ~~nine~~three months of ~~2022~~2023 were principally used to fund ~~acquisitions and~~ capital expenditures, ~~repurchase shares~~repay debt, and to pay the Company’s dividend to common shareholders. The aggregate maturities of long-term debt are as follows: remainder of ~~2022 - $3.8 million;~~ 2023 - ~~$14.6~~$7.4 million; 2024 - $18.0 million; 2025 - $31.8 million; 2026 - ~~$41.8~~$42.0 million; 2027 - $443.7 million; thereafter - ~~$843.6~~$400.0 million.

On August 11, 2022, the Company entered into a Refinancing Facility Agreement (the “Amendment”) to amend the Company’s previous credit agreement (the “Previous Credit Agreement”; the previous credit agreement, as amended by the Amendment, being the “Amended Credit Agreement”). The Amendment provides for, among other things, a new senior secured revolving credit facility with aggregate commitments of $300 million (the “Revolving Facility”), a portion of which may be used for the issuance of letters of credit and swingline loans, and a new senior secured term loan facility with aggregate commitments of $550 million (the “Term Loan Facility” and, together with the Revolving Facility, the “Senior Secured Credit Facilities”). The Revolving Facility and the Term Loan Facility replace the facilities under the Previous Credit Agreement, which provided for, among other things, a $788 million senior secured floating rate term loan facility and a $300 million senior secured revolving credit facility. The maturity date for loans under the Senior Secured Credit Facilities is August 11, 2027.

2925

As of ~~October~~July 2, ~~2022,~~2023, there were ~~$$115.0~~$105.0 million in loans and ~~$10.3~~$10.6 million in letters of credit outstanding under the Revolving Facility.

~~At any time and from time to time prior to July 1, 2023, the Company may redeem some or all of the Notes for cash at a redemption price equal to~~ ~~100%~~ of their principal amount, plus the “make-whole” premium described in the Indenture and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Beginning on July 1, 2023, theThe Company may redeem some or all of the Notes at any time and from time to time at the applicable redemption prices listed in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. ~~In addition, at any time and from time to time prior to July 1, 2023, the Company may redeem up to~~ ~~40%~~ ~~of the aggregate principal amount of the Notes with funds from~~ ~~one~~ ~~or more equity offerings at a redemption price equal to~~ ~~105%~~ ~~of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.~~

As part of the Sivomatic acquisition, the Company assumed $10.7 million in long-term debt, recorded at fair value, consisting of two term loans, one of which matured in the third quarter of 2020 and the other of which matured in the first quarter of 2022. During the first quarter of 2022, the Company repaid the remaining $0.2 million on this loan.

As of ~~October~~July 2, ~~2022,~~2023, the Company had ~~$24.6~~$25.4 million in uncommitted short-term bank credit lines, of which ~~$$3.5~~$2.1 million were in use. The credit lines are primarily outside the U.S. and are generally one year in term at competitive market rates at large, well-established institutions. The Company typically uses its available credit lines to fund working capital requirements or local capital spending needs. We anticipate that capital expenditures for ~~2022~~2023 ~~should~~will be ~~between $80 million and $85~~approximately $90 million, principally related to ~~the construction of PCC plants~~opportunities to improve our operations and ~~other opportunities that~~ meet our strategic growth objectives.

During the second quarter of 2018, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million. ~~The fair value~~This instrument matured in May 2023. Additionally, in the second quarter of ~~this instrument at October 2, 2022 is an asset of $1.2 million. Additionally,~~2018, the Company entered into a cross currency rate swap with a total notional value of $150 million to exchange monthly fixed-rate interest payments in U.S. dollars for monthly fixed-rate interest rate payments in Euros. This cross currency swap matured in May 2023. At maturity, the Company realized, in comprehensive income, an after-tax gain of $7.6 million. In the second quarter of 2023, the Company entered into a new floating to fixed interest rate swap for a notional amount of $150 million. The fair value of this instrument at ~~October~~July 2, ~~2022~~2023 is an asset of ~~$25.3~~$1.8 million. ~~These swaps mature in May 2023. As a result of these swaps, the Company’s effective fixed interest rate on the notional floating rate indebtedness will be 2.5%.~~

On October 20, 2021, the Company’s Board of Directors authorized the Company’s management to repurchase, at its discretion, up to $75 million of the Company’s shares over a one-year period. As of October 2, 2022, 1,027,768 shares have been repurchased under this program for $67.8 million, or an average price of approximately $65.99 per share. This program is now complete.

The Company is required to make future payments under various contracts, including debt agreements and lease agreements. The Company also has commitments to fund its pension plans and provide payments for other postretirement benefit plans. During the ~~nine~~six months ended ~~October~~July 2, ~~2022,~~2023, there were no material changes in the Company’s contractual obligations.

The Company and certain of the Company’s subsidiaries are among numerous defendants in over ~~four~~five hundred cases seeking damages for alleged exposure to asbestos-containing materials related to talc products sold by the Company’s subsidiary Barretts Minerals Inc. ~~Based~~During the third quarter of 2022, based on its evaluation of available information, the Company accrued $31 million for litigation costs ~~during the three months ended October 2, 2022. The litigation costs were incurred~~ to defend against, opportunistically settle, and establish a reserve for such cases. In the second quarter of 2023, the Company reviewed its estimates of the probability and amount of losses in connection with its current talc-related cases and recorded a charge of $13.9 million for litigation costs and to restore its reserve. The Company’s position is that these cases are meritless and all talc products sold by Barretts Minerals Inc. are safe. However, we cannot predict the ultimate outcome of pending litigation. The Company could in the future be required to pay significant amounts as a result of settlements or judgments in these matters, potentially in excess of liabilities accrued to date. Further, the Company has announced that it will exit the talc business following a strategic review of its operations and amidst the backdrop of the escalating talc-related litigation environment. However, whether Barretts Minerals Inc. is able to dispose of its talc business, on favorable terms or otherwise, and the potential associated financial effects of such disposition efforts, successful or otherwise, are currently unknown. See Note 13 to the condensed consolidated financial statements included in this report for more information.

At the current time, we are operating without any material impacts from the COVID-19 pandemic, and the pandemic is not having a materially negative impact to our consolidated results. However, as we cannot predict the duration or scope of the COVID-19 pandemic and its impact on our customers and suppliers, we cannot reasonably estimate any negative financial impact to our results in future periods. We continue to generate operating cash flows to meet our short-term liquidity needs and continue to maintain access to capital markets. See “Item 1A — Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, and in Exhibit 99 to this Quarterly Report on Form 10-Q, for additional risks to the Company related to the COVID-19 pandemic.

Cautionary Statement for “Safe Harbor” Purposes under the Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. This report contains statements that the Company believes may be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, particularly statements relating to the Company’s objectives, plans or goals, future actions, future performance or results of current and anticipated products, sales efforts, expenditures, and financial results. From time to time, the Company also provides forward-looking statements in other publicly-released materials, both written and oral. Forward-looking statements provide current expectations and forecasts of future events such as new products, revenues and financial performance, and are not limited to describing historical or current facts. They can be identified by the use of words such as “believes,” “expects,” “plans,” “intends,” “anticipates,” and other words and phrases of similar meaning.

Forward-looking statements are necessarily based on assumptions, estimates and limited information available at the time they are made. A broad variety of risks and uncertainties, both known and unknown, as well as the inaccuracy of assumptions and estimates, can affect the realization of the expectations or forecasts in these statements. Many of these risks and uncertainties are difficult to predict or are beyond the Company’s control. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially. Significant factors that could affect the expectations and forecasts include ~~the duration and scope of the COVID-19 pandemic, and government and other third-party responses to it;~~ worldwide general economic, business, and industry ~~conditions, including the effects of the COVID-19 pandemic on the global economy;~~conditions; the cyclicality of our customers’ businesses and their changing regional demands; ~~the dependence of certain of our product lines on the commercial construction and infrastructure markets, the domestic building and construction markets, and the automotive market;~~ our ability to compete in very competitive industries; consolidation in customer industries, principally paper, foundry and steel; our ability to renew or extend long term sales contracts for our ~~PCC~~ satellite operations; our ability to generate cash to service our debt; our ability to comply with the covenants in the agreements governing our debt; our ability to effectively achieve and implement our growth ~~initiatives;~~initiatives or consummate the transactions described in the statements; our ability to successfully develop new products; our ability to defend our intellectual property; the increased risks of doing business abroad; the availability of raw materials and access to ore reserves at our mining ~~operations;~~operations, or increases in costs of raw materials, energy, or shipping; compliance with or changes to regulation in the areas of environmental, health and safety, and tax; claims for legal, environmental and tax matters or product stewardship issues; the continuing effects of the COVID-19 pandemic and the resulting preventative measures; operating risks and capacity limitations affecting our production facilities; seasonality of some of our ~~segments;~~businesses; cybersecurity and other threats relating to our information technology systems; and other ~~risks~~risk factors set forth under “Item 1A — Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, and in Exhibit 99 to this Quarterly Report on Form 10-Q.

The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances that arise after the date hereof. Investors should refer to the Company’s subsequent filings under the Securities Exchange Act of 1934 for further disclosures.

Recently Issued Accounting Standards

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, valuation of long-lived assets, goodwill and other intangible assets, income taxes, including valuation allowances and pension plan assumptions. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that cannot readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates.

There have been no material changes to the critical accounting estimates that our accounting policies require us to make in the preparation of our consolidated financial statements, as described in the ~~2021~~2022 Annual Report on Form 10-K.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse changes in market prices and foreign currency and interest rates. We are exposed to market risk because of changes in foreign currency exchange rates as measured against the U.S. dollar. We do not anticipate that near-term changes in exchange rates will have a material impact on our future earnings or cash flows. However, there can be no assurance that a sudden and significant decline in the value of foreign currencies would not have a material adverse effect on our financial condition and results of operations. A portion of our long-term bank debt bears interest at variable rates; therefore, our results of operations would be affected by interest rate changes to the extent of such outstanding bank debt. An immediate 10 percent change in interest rates would have a material effect on our results of operations over the next fiscal year. A one-percent change in interest rates, inclusive of the impact of our interest rate derivatives, would result in ~~$1.3~~$24 million in incremental interest charges on an annual basis.

We do not enter into derivatives or other financial instruments for trading or speculative purposes. When appropriate, we enter into derivative financial instruments, such as forward exchange contracts, hedges and interest rate swaps, to mitigate the impact of foreign exchange rate movements and interest rate movements on our operating results. The counterparties are major financial institutions. Such forward exchange contracts, hedges and interest rate swaps would not subject us to additional risk from exchange rate or interest rate movements because gains and losses on these contracts would offset losses and gains on the assets, liabilities, and transactions being hedged.

During the second quarter of 2018, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million. ~~The fair value of this instrument at October 2, 2022 is an asset of $1.2 million.~~ Additionally, the Company entered into a cross currency rate swap with a total notional value of $150 million to exchange monthly fixed-rate interest payments in U.S. dollars for monthly fixed-rate interest rate payments in Euros. These swaps both matured in May 2023. In the second quarter of 2023, the Company entered into a new floating to fixed interest rate swap for a notional amount of $150 million. The fair value of this instrument at ~~October~~July 2, ~~2022~~2023 is an asset of ~~$25.3~~$1.8 million. ~~These swaps mature in May 2023. As a result of these swaps, the Company’s effective fixed interest rate on the notional floating rate indebtedness will be 2.5%.~~

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ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, and under the supervision and with participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During 2021, we closed on the acquisition of Normerica and we excluded Normerica from the scope of management’s report on internal control over financial reporting for the year ended December 31, 2021. We are in the process of integrating Normerica to our overall internal control over financial reporting and will include them in scope for the year ending December 31, 2022. This process may result in additions or changes to our internal control over financial reporting.

There were no ~~other~~ changes in the Company’s internal controls over financial reporting during the quarter ended ~~October~~July 2, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

~~The~~From time to time, the Company and its subsidiaries are ~~involved~~the subject of various legal actions and claims arising in the ordinary course of their businesses. Additional information regarding legal ~~and environmental~~ proceedings ~~described~~is disclosed in Note 13 to the condensed consolidated financial statements included elsewhere in this report, which disclosure is incorporated herein by reference. From time to time, the Company and its subsidiaries are also the subject of various routine legal actions and claims arising in the ordinary course of their businesses. The Company does not anticipate that the individual or aggregate liability arising out of litigation pending or claims known to be threatened against the Company and its subsidiaries will have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

ITEM 1A. Risk Factors

For a description of Risk Factors, see Exhibit 99 attached to this report. There have been no material changes to our risk factors from those disclosed in our ~~2021~~2022 Annual Report on Form 10-K.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Period
Total Number of
Shares Purchased

Average Price
Paid Per Share

Total Number of
Shares Purchased as
Part of the Publicly
Announced Program

Dollar Value of
Shares that May
Yet be Purchased
Under the Program

July 4 - July 31 99,965 $ 62.26 882,562 $ 16,271,526
August 1 - August 28 104,451 $ 64.21 987,013 $ 9,564,212
August 29 - October 2 40,755 $ 58.50 1,027,768 $ 7,180,053
Total 245,171 $ 62.47

ITEM 3. Default Upon Senior Securities

Not applicable.

ITEM 4. Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

ITEM 5. Other Information

~~None~~During the three months ended July 2, 2023, none of our directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

ITEM 6. Exhibits

Exhibit No.		Exhibit Title
~~10.1~~		Refinancing Facility Agreement dated as of August 11, 2022, among Minerals Technologies Inc., certain subsidiaries party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 11, 2022).
15		Letter Regarding Unaudited Interim Financial Information.
31.1		Rule 13a-14(a)/15d-14(a) Certification executed by the Company’s principal executive officer.
31.2		Rule 13a-14(a)/15d-14(a) Certification executed by the Company’s principal financial officer.
32		Section 1350 Certifications.
95		Information concerning Mine Safety Violations
99		Risk Factors
101.INS		XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as inline XBRL and contain in Exhibit 101).

3430

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Minerals Technologies Inc.

	By:	/s/ ~~Matthew E. Garth~~Erik C. Aldag
		~~Matthew E. Garth~~Erik C. Aldag
		Senior Vice President, Finance and Treasury,
		Chief Financial Officer

~~October~~July 28, ~~2022~~2023

3531

(millions of dollars)	Final Allocation

Accounts receivable	$	8.4
Inventories		5.1
Other current assets		1.4
Property, plant and equipment		21.2
Goodwill		104.5
Intangible assets		68.1
Total assets acquired		208.7
Accounts payable		12.8
Accrued expenses		8.4
Total liabilities assumed		21.2
Net assets acquired	$	187.5

	Three Months Ended Oct. 2, 2022								Three Months Ended Oct. 3, 2021
(millions of dollars)	Net Sales		% of Total Sales			% Change			Net Sales		% of Total Sales

U.S.	$	279.9		51.7	%		14	%	$	245.5		51.9	%
International		262.0		48.3	%		15	%		227.7		48.1	%
Total sales	$	541.9		100.0	%		15	%	$	473.2		100.0	%

Performance Materials Segment	$	290.4		53.6	%		16	%	$	250.4		53.0	%
Specialty Minerals Segment		166.0		30.6	%		13	%		146.9		31.0	%
Refractories Segment		85.5		15.8	%		13	%		75.9		16.0	%
Total sales	$	541.9		100.0	%		15	%	$	473.2		100.0	%

	Nine Months Ended Oct. 2, 2022								Nine Months Ended Oct. 3, 2021
(millions of dollars)	Net Sales		% of Total Sales			% Growth			Net Sales		% of Total Sales

U.S.	$	852.6		52.7	%		20	%	$	712.9		51.6	%
International		765.3		47.3	%		14	%		668.5		48.4	%
Total sales	$	1,617.9		100.0	%		17	%	$	1,381.4		100.0	%

Performance Materials Segment	$	862.1		53.3	%		20	%	$	719.7		52.1	%
Specialty Minerals Segment		493.3		30.5	%		13	%		437.4		31.7	%
Refractories Segment		262.5		16.2	%		17	%		224.3		16.2	%
Total sales	$	1,617.9		100.0	%		17	%	$	1,381.4		100.0	%

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of the Publicly Announced Program		Dollar Value of Shares that May Yet be Purchased Under the Program
July 4 - July 31		99,965	$	62.26		882,562	$	16,271,526
August 1 - August 28		104,451	$	64.21		987,013	$	9,564,212
August 29 - October 2		40,755	$	58.50		1,027,768	$	7,180,053
Total		245,171	$	62.47