MTX - Earnings call transcript Q3 2019 | Minerals Technologies Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day everyone and welcome to the Third Quarter 2019 Minerals Technologies Earnings Call. [Operator Instructions]

At this time I would like to turn the call over to Cindi Buckwalter Head of Investor Relations for Minerals Technologies. Please go ahead Ms. Buckwalter.

Cindi Buckwalter

Brad. Thanks and third everyone conference XXXX to call. welcome morning quarter our earnings Good be Executive by and call led Today's will Chief Officer Garth. Chief Matt Officer Financial Dietrich; Doug

future up remarks Following that Matt's beginning and list on our to we the for of that questions. future XX remarks slide. these XX-K the our will affect to by remind Doug Safe you I prepared Statements conditions results open this disclaimer XXXX on limitations and also our out Page may of and point various Harbor like would to factors it related team and we risk performance members subject I'll are conditions. cautionary

the Now to call Doug? Doug. over I'll turn

Doug Dietrich

some call. third the you today that on our have challenges I'll quarter high-level markets commentary update Good as results we as then quarter providing go begin through will dynamics to Cindy. Thanks financials everyone detail to earnings we're and also that, since by our of morning the faced. growth And the I'd making take fourth following in give brief progress I'll the the welcome our focusing fronts. well in positive on and both Matt we areas several on last through areas end like quarter our key strategic a our review spoke. on outlook. third more changed

weaker key demand Heading into in through the third conditions navigate were quarter markets to and we end prepared geographies.

our volumes our taking driving aggressively challenges changing variable fixed focused with managing by restructuring lower strong align through by and and processing the them results to to measures but market on activities. to operations adapt also managed we've costs, mining demand. by and our remaining our and We've across and reflect they efficiencies adjusted to overall program Our these underscore persistent how execution disciplined decisive

discuss that And our solid our advanced long-term several execution initiatives we I'll operational remarks. these more in detail beyond as later highlights strategic support my Our extended in growth. activities

were $XXX and financial to Margins From a cost despite adjustments perspective, $XX generated we a remained total operational of actions product lower pressures. income. quarter sales weaker and million million our of second pricing reflection levels at overcome the quarter in and a mix, sales operating

activities of Our of to the XXXX. we're restructuring on first well savings the progressing full quarter achieve are million and track rate in $XX run

Importantly, of safety, sales of by our quarter, focused third through Continuing level our few second weaker global impacted operational employees refractories European markets, the have PCC. in excellence that customers notably American this, the service and were market, delivering quarter foundry the and Paper all conditions remained from on our expect. North high and quality the trend most a

in foundry the Metalcasting demand heavy and lower business Port mill to closure Asia year the plant which satellite the paper agricultural The ramp-up due through our serving largest sectors. equipment mitigated Indonesia off-highway increase in our decrease truck which customers new Hudson our affected some a but by XX%. came by of to impact from PCC global we softening helped in this sales of was earlier Paper automotive were this sales

expansions lines we Additionally been these experiencing technologies. in customer and we've affected sales interest delivered steel our product the our weaker market-driven was of volumes on much Refractories across increased this through year. European market innovative capitalized growth conditions sales for business other several by that Offsetting declines, encouraging capacity

than a which newest and pool was to for last private supported more UK. our operating newest high-value well and margins the momentum Pet by notable solid Care, with products as doubled capacity customer market boosters. attractive In expansion quarter label quarter, our Environmental the latest through income PCC year. by Products fundamentals most had in another fragrance for supported sales driven including having drive sales to as products. strategy U.S. we're demonstrates our our expansions demand had be products This the of over rheology-modifying margin strong continues by of Specialty our success sealant environmental

Services and driven operating sales on And remained up a projects positive Mexico. segment sizable in trajectory Energy by of our with significantly Gulf completed income

quarter attractive past one application. we've agreement we portfolio can several packaging many their market. support XXXXX in apply packaging different years of the a our the a opportunities technologies been value-added in highlight ton to in customer applications, European to pursue a premium with This packaging Over is expanding PCC of growth to a where technology our growth this was

was quarter $XX the operating repurchases. flow this and up of share in debt and cash Year-to-date repayments cash cash deployed We cash million and free operations generation both cash flow are strong XX% flow flow. with and free from $XX respectively. XX% Cash of million to

last addition one our to $XX to with continuing program and announced balanced commitment In share repurchase week a shareholders. returning capital new we million year our our approach

often. excellence operational of speak We

currently on for I and dynamics go give what system of Last and of this as in challenging enables looking business in And enable least we -- helpful growth. a our to of strong the This systems alignment foundation work company be outlook highly it markets that the continuous are Kanri use provided organizational staying at as to driving way. time through our on that system perspective standard on execute during us tools well Hoshin we're always is things such strategy. culture kaizens we conditions while to an and waste and continue is quarter ensure provides serve. Underpinning same with as it'd culture this suggestion and structured market ensure highly nimble clear our again seeing. thought deeply business we the you embedded do to focused agile, improvement our structured this Our the to the to operational update

changed. market On we third expected spoke areas whole has we're as market few during the we demand the although last with were conditions a when we quarter experienced you seeing where

and remained strong our our has markets of serves with much Pet Care coming Materials Products our from which with start Personal Household which Performance & growth I'll consumer-oriented bentonite-based business. Specialty business. is Care

seeing fourth the have the demand U.S. are projects and markets our primarily for serving In sectors third truck business strong cast weakened automotive the this changed lining our orders we where remediation that's of demand the customers Several the and in Metalcasting customers as quarter expect newest they in our during this from the production further in quarter. segment will in the addition parts of in a heavy shifts account quarter. pipeline continue are lower we for lower area reduced interest well for Environmental our upcoming is customer and One foundry our and technologies. as robust Products

overall the driven in blended bond side foundry our rebounded our China On green sand sales September of positive by products. penetration

Turning to Paper PCC.

operating the relatively XXXX. rates in stable. North America We remainder lasting both demand during quarter the dynamics conditions overall paper softer and experienced of While these market through and markets remain European see

expansions market with to in and newest X under we satellites for conditions in high-performing XXXXXX capacity new and construction additional Europe. products add Specialty However tons And of X remain year our PCC expect Asia next positive.

America conditions fourth we're and business. We're market In conditions relines several these which Moving and Refractories deepwater our broad furnace to are anticipate to the fourth stable deepwater capitalize year. of Europe And compared positioned opportunities will laid fourth the North have investing to impact our considerably last which organic growth. continue the have will market basin Services steel demand however we volumes. a in range quarter relatively the strong heading but market in weak into in into well is all Last quarter. temporarily quarter persisted in quarter each on Steel year for improved in services I offshore steady our for offshore services. out Energy for

those made we We've you a like area those take in outlined penetration several sales some Asia next more remain highlights and and bond for quarter on incremental Metalcasting significant projects will advancing Fundamentals is how times for our markets opportunities. formulations. attractive to China MTI. such contribute through of green the in blended of several you India growth sand growth business This foundry tangible year. as large color the I'd to progress that of give our

Our the in products. This technical we foundry and customers. ductile to growing iron and the for require blended tailored foundry a capitalize gray products China on value help the quality blended past quarter up foundries cast them as products year provide demand to market they of over value penetration our XX% volumes our provide last the were extended clear further signal more of

address our and offer environmental We base premium the world's PCC. needs and premier packaging to paper in increase Shifting levels portfolio recycling that for products filler applications. their with technologies provide technology customers help

highest sealants. we Specialty PCC for construction in and And offer performing automotive rheology additives the

progress each of This X against quarter made areas. we these

in levels plus Fulfill most new X%. increase of the First filler to paper to we called our cost-effective variation by deployed which technology is up fulfill

the Second important customer Envirofil for paper and a deployment PCC addresses sustainability of challenge we recycling our ramped which deinking.

a our expanding PCC has application complete of our market. our packaging we Fourth technology ramped growing Specialty Third packaging the in in the plan contract in for robust automotive customer newest XX% to signed in up construction premium at UK. expansion Europe for the a We the products into third These application supported facility and increase expansion demand U.S. rheology-modifying sales capacity have our quarter. fourth the for quarter. in sealants expansions to leading

exploring deploying capacity. China for and fundamentals the high of an India will large past our plants new satellites we're also broadest be by our technologies. represent permits to begin of in on to growth continues our areas recently Asia very those be expansion three demand secured region utilizing our satellite visited PCC of with their And in largest the on one new in region when new PCC and significant Paper our opportunities paper for year-to-date and customers operational will where environmental operational Asia and be an regarding technology production We and portfolio. largest interest underpenetrated latest month capitalizing latest PCC solutions. our encouraging in including constructing of up which I we the expansion had building construction further deploy of fully tons region volumes several XXXXX and add innovative these range will XX% XXXX. conversations are will in the are newest and India finalizing paper filler it two When our which technologies satellites are our portfolio plant to during our

business our Products shift complex delivering is to projects. products XX% results. Environmental Sales a quarter of we are from recap this As portfolio I higher-value addressing base such remediation in Resistex point. year-to-date. mentioned to strategy solutions are advanced up of liners our And Highlighting higher-margin clay geosynthetic our more the as

of remediation quarter. newest as commercially such in through markets U.S. selling the product markets also about And third higher-value pipeline high-growth our over We the past Care customers applications products at speak well which line In growth often sizable high-margin strong and across the as began have oil manufacturing trials and the of Bleaching in animal consumer-oriented as projects the FLUORO-SORB that Specialty PFAS We've interested of Earth serve variety contracted technology first investments Care XXXX. in to for we the our health date is sales & in quarter few portfolio and with a in a specialty broad years. for Personal both have But of Personal solutions. areas for global fourth remediation edible capabilities We we've conducted invested strategy of our business. clarification quarter Product several our markets. to other these consumer-oriented positive Pet Household and grow a sites Care addresses

I'll have Bleaching was we tangible new products. to markets made increased focus the that did are To will of range by on quarter environment these our end specialty progress from facility a application and Earth growth the sales Turkey of this wrap but several XX% market we defined over bentonite adjust the example strong up These multiple our and not take attractive current on costs wide growth on last by to in saying actions continue accelerating of an fronts strategic for operations past only execution we opportunities. remarks to year. my As also

and the with it over And financials the Thanks. our Matt? fourth for to outlook. hand quarter Matt I'll to review that

Matt Garth

I'll X and provide segments review fourth the performance quarter quarter. everyone. with our you hello the for of and our Doug Thanks results third our also outlook

at bridge by Third sales shows The the sales driver. top changed were than year. left quarter X% lower prior the major the

Foreign of price $X.X X million million We the exchange $X.X or drove quarter. point. impacted sales percentage in increases by

the European net driver versus partially offset biggest lower market-based $X unfavorable specialty of that mentioned were $X.X earlier. increases of decrease price and sales was these million Paper volume for Metalcasting million. to in PCC However Refractories the American a in weakness last pricing sands mix due of continued market year by and Doug and in improvement resulted primarily overall The North

steel market and the in increasing the Europe sales million were the product and sales $XX.X line. weak year were filtration conditions segment. activity was the And U.S. operating income processed $X.X the some Performance of in Gulf due $X.X by The sales internationally. million was softening and minerals announced construction Services to of sales on markets. test Specialty grew sales $X.X million the paper Materials primarily on driver volume lower million bridge that Minerals shows $X.X to levels in and primary operating lower last and mix. the Mexico unfavorable and shutdowns into million previously bridge well than income of lower Moving the Metalcasting lower continued on change machine automotive in Energy Refractory

offset Metalcasting Minerals. Pet Environmental in partially reductions growth Sales in Services and Specialty Energy and Care Products,

the Environmental quarter. million pricing Care margin unfavorable mix to offset Products, that Pet quarter actions. in the mines at our Western Energy the primarily with a in $X.X material relative costs ore U.S. However in which the costs and mostly at note we lower due is generating growth increased Services Raw higher

experienced related we to the of addition same the in margin was of XX.X% other changes. prior to Operating $X.X the mark-to-market compares sales million year. as and In XX.X% cost margin primarily quarter second increases

Pricing per margins were largest basis XXX able inflationary and point an to despite a to combining maintain weaker impact for recover increases XX to points mix And cost had we market conditions. included Earnings contributed per basis dilution. year-over-year Sequentially volume quarter special basis the on the our bankruptcy share actions change. due to Special were margin in items litigation $X.XX the associated and ongoing the legal tax $X.XX Novinda. and with reported was excluding share. XXXX onetime earnings items of a of benefit expenses

rate agricultural Performance than our Materials. And year the tax primarily driven review sales market automotive for XX%. by and demand Performance was X% to are Materials in U.S. be weaker segments now softness the with detail expecting ETR of equipment due in effective full lower were let's Metalcasting in in more the prior parts the Asia. truck And Our year XX.X%. to and heavy around we starting

geosynthetic of sands. X% our higher-value business line continued on for Most decline sands. Environmental XXXX specialty based of Metalcasting sand provided correlate Specialty volumes to historical the Personal and we product sales product Metalcasting basic There Metalcasting to market-based minerals higher structure. our are volume two our was XXXX including parts of X% and products. X%. management. by In including of in to our Thailand sales earnings Care sales Household specialty this line penetration and Specialty we in Product better in in Care Care green due are Products bonds increased and new our green liners and lower where Resistex Specialty clay & Note the by China Personal line & litter our driven Household growth within in bonds by and our was sand that as with as grew release X% Personal line Fabric Care product where specialty sales pet decreased offset Products. Products this grew products pricing sales quarter liners lower

slightly continued Building quarter material operational operating driven was up from due the mix million actions. was in from by year million. lower was margin $X.X volumes primarily despite and adjustments and sales weaker North operating largely activity. of sales that Note mix. period our product pricing X% lower American and volume prior decreased The the the the second by to unfavorable $XX.X driven Segment reduction construction income

to of we to the XX% third we typical of and income. quarter XX% operating similar the will that condition decline quarter, fourth very a market seasonal on looking the experience And see to

regarding in quarter facing of extent fourth we In our holidays. customers' during foundry volumes addition, some are uncertainty Metalcasting downtime the the

new PCC a capacity driven balance currency segment Products offset move volume PCC Europe. America was the sales and by Paper X% basis. Asia the were paper on processed the in lower and The including million. to to lower increased expansions. year-over-year Paper Europe our X% of of primarily operating shutdowns of prior sales by by Specialty the volumes sales from lower Asia ramp-up mill let's Now in Segment demand-driven satellite growth constant $XX.X North Minerals. driven in was grew a North in was PCC on this $X minerals. in million Specialty due volume X% and and due lower income for mining costs lower operating Sales The than was the America in X% in higher reduction change additions. to year. XX%

well our fourth paper our in the by the Domtar's be PCC. This from quarter. to machine will PCC recently Asia PCC lower XX,XXX expect Ashdown. continued growth at volume continued volumes Paper as expansion will beginning PCC to quarter, annually in shutdown as growth in tons impact U.S. due Looking we announced fourth

For Processed the Minerals typical from we to on operating volumes. XX% sequentially of apart conditions expect and impacts similar Ashdown of income XX% seasonality

to due Europe sales volumes sales Now soft relines to primarily U.S. to in blast segment. laser Refractory furnace X% let's market segment continued several Refractory conditions oxygen due decreased during equipment quarter. the and lower go steel fewer

we in Europe expect Overall continued Looking with market our fourth that furnace we quarter, relines to third to similar volumes. be refractory quarter. similar softness to blast the will impact America the expect temporarily the in oxygen to North operating for lower sales the due income segment, conditions

is strategy by Brazil. we Services in for demand Mexico projects filtration well accelerating traction gaining large as quarter of with opportunities up XX%. another the We water the Guyana driven XX% in number water of produced as our Energy higher and produced services Services, secured increased are Orca-lead Gulf and our up a sales quarter as internationally. and well income operating Energy strong growth Sales to Turning testing was had and in activity

into operating to to third the strong continue performance quarter. expect fourth We quarter the income this with similar

liquidity cash the $XX operations $XXX a let's of cash quarter in Now the million. generated take flow bringing look from total our year-to-date at We in to and million quarter. the

We the to cash the and prior year. quarter. million of have in X over year free deployed $XX debt. $XXX debt shares And We our capital flow million of $XX of $XX last have million repurchased free repaid of expenditures in from resulting this the repay million up over million we XX% flow quarters used of $XXX cash

equivalents on of with and end million total and facility. third revolving credit our liquidity cash available the at Our is $XXX million of $XXX quarter strong the

our continue and net leverage toward capital approach move will of debt balanced deployment We times repaying our to target EBITDA. continue X to ratio

we now Materials, surrounding product is Environmental the let predict second, And our exceptions fourth PCC we U.S. continued growth in Ashdown. are There Pet holiday have Building will So to summarize point. the hard are Processed also what me fourth the quarter lines similar global for to SPCC. to quarter seeing quarter. in and First, ramp-ups are we tracking to the typical closures uncertainty the in PCC and experienced customer We've third Minerals. of the which foundry lower Care majority this with of and In Products extent note: Paper at volume two due have seasonality

$XXX flow typical strong perspective cash We to expect cash and for the generation EPS our business. target free be to of per expect of primarily full reflecting the million around we $X.XX EPS seasonality year. an From share quarter our around of deliver another anticipate flow quarter of fourth

Now to Q&A. let's turn it over

Operator

with Daniel comes from question [Operator CJS our Instructions]. Securities. And Moore first

Daniel Moore

various Metalcasting. good of start mix the what's morning, Good between type mix world? terms questions. geographies. But moving breakdown question. And with of overall you when Asia, for crystal that the the do given current U.S. the growth to taking expect back -- parts, the I Thanks in Rest a moving it's between of morning, parts business? Wanted Matt. the revenue a Doug, lot in know get But to that in Obviously ball-ish to and

Doug Dietrich

little Yes about Jon and I'll it it Dan. bit off talk why kick don't a then Hastings let I

-- in years past now almost right North and five the over almost is seen America with business XX-XX growth Metalcasting Our China we've the Asia.

in down green this total. impacted volumes been in are I XX% think probably year. sand in bond America year North our it's this Our as Asia up They're volumes I about the But have mentioned quarter. XX%

I in because America been clay albeit return in I of is XXX% bonds. question income bigger do your consistently blended than the slower products rates North you So we've past. the growth? what when green growing A saw at to and is think But we volume in impact China. China blend sand guess of and in

and little China in now America mix Asia. to profitability North will hard to bit different when return it's the call growth. right But So a

see now in least as bit see heavy as we in and though from quarter a the We conditions automotive to things look as the we're can similar truck far right the at third fourth market cautious end in bit fourth some as That's of mentioned see that as around variation least quarter. we little year. the a giving Matt we the might at can outages extended why of you the see far we're

Going in going an it's terms into really you feel. call. you to truck is gave add our that? some But I we'll to anything heavy I going you to think Jon give automotive want next on what update hard of call that to to next year on do be

JonHastings

Doug bit Dan I And appreciate the I like. can if you elaborate a question. little

year China the China demand New Dan quite First Year. in America slowed of earlier robust. know all around as had North the was you

seen off oversupply encountered couple high unfortunately caused specialty some the new pretty and We've and because prices an those We our Southeast market But And many of in changes the went is we've primary off those some in industrial caused as competitors automotive what of from then sectors China. the specialty predominantly Most a a the markets. several of pricing Asia was seen Doug in softened since sands. course declining in previous had but in the Japan, picking bit that's highlighted. affecting of up of demand is U.S., And seen worldwide. what And other have we've that of markets sectors came years. well. China, India. we've some the as some of Automotive of highlighted of kind markets come sands. that's

our So customers. to with we work continue against that backdrop

in As Doug we're mentioned and providing. the that our products high-end to Thailand customers China continue demand

continue strategy conversion work. continues customers. our to our all worldwide all foundries to in with we stay touch So to And of the our products blended of

uncertainty. And so of there's lot a

the we're saying it's are flat. are down a or market Some next customers month relatively saying or others in for two three

And hard the it's Hope using color. say that quarter how read. right I as comes out what to see demand play major first. word is like uncertain. so And as and now We'll far we're holidays the highly some gives the into that fourth and it's in helps. Hope that you

Daniel Moore

to on that string just going a more. little I'm pull bit

of North In back sands. comes specialty for when you And to back your volume? price more whether us it give terms Can tend experience quickly? demand does America in relatively a snap sense versus pricing was

Jon Hastings

Yes. fairly vast do of and sell based off right We on pricing. is Pricing does yes sands seen was can do volatile. It it's the into specialty have go Right very go North quickly come quickly. it the also China. softness -- you're now pretty We up majority predominantly low. China specialty pretty But North America America. volume it demand. it's sands. and in some can also And we've down

industry will modulate it market we the tightens fast? It’s expect to the hard predict. comes back, How up that As some. and

Doug Dietrich

about primarily mentioned want goes green The of which It in bond in of things. think volumes and mentioned steel stainless penetration blended America sand green XX% talk I that in about sands which piece China. to offset North Jon quarter China. biggest Dan, and say comments casting was But that piece confuse our was by often Metalcasting off the growth X.X%. pieces in into were has specialty the going I terms don't we to product two Matt his sand that I that just bond

So it's is of in That growth hanging offsetting. China kind in there.

China take quarter stable had in you growing sands if biggest to So outside grow and that and China. the was this largely due decline. piece. The piece the the impact pricing that on sales specialty continue to impact in Relatively -- was

Daniel Moore

when new the capacity of got announcement. levels in The with continue down high volume satellites North PCC you've utilization like overall Domtar year. And coming to we're bucket in feel win nice the Very then kind coming at of America switching volumes helpful. to hole in keep next we

So feel level crystal XXXX a I guess you all does it's of ball that what say new but America up. overall capacity? like for I growth the coming given know sort to implications post we're does in in at have for North do we Domtar hard new volume of it tell and your terms big

Doug Dietrich

Yes. been I can -- the -- in been know it's time is. for well to used over that business sometimes is paper we've we in We It's this to successful it. hard India. the have China Port years -- to under-penetration we're be you successful. That areas we're the we as try where not Asia challenge to come in so many it will usually primarily contracts and out. with We in but the a in mill very earlier not of year out. years X%, be which on past the We we average to But that that mill predict tend to that America of did Europe predict see Hudson said opportunity which XX see close. might expect decline the that filler paper around mill X% come securing one North over new of in kind in always in and

XXX,XXX of we tons XXX,XXX this adding this in about year tons but lost Indonesia So net-net year. this the we're about all

starting quarter. on Next see the of basis of an Domtar see tons we're see going year about annual we'll this we annualization of don't XX,XXX kind to happening what's really

on the in satellites in to secured we just coming in ramping new XX,XXX one China We tons. year first up satellites got offset which have two quarter two that India new the Later I mentioned we've in the permits.

Should that next on of Paper ready the year. for another coming we're fourth of year. was So net-net Century another XXX,XXX tons. is be XX,XXX tons beginning The in quarter beginning in one construction. India next that And the

dependent next on I the you about we're year in given numbers come ups But and Domtar. that's growth PCC all -- volume with X% if other right bunch So bringing we next time sorry if is a now and ball closures, see with Dan things those we the all growth on gave currently what on X% see any about heard we to downs is they looks highly should. which year crystal to of have and X% those up just we volume X% a what like right of now that of annualization

Daniel Moore

good. Very

manage in annualized hit $XX generate to you Lastly for that to -- save, cost rate me QX you sort much in we obviously QX? run acutely. of The let's full before say do continue that million annualized very how costs of expect to

Matt Garth

Dan we adjustments are was of part there's an savings program be took components cost run restructuring remember if million going to that told headcount that. overall in really XXXX. annualized that to XXXX. about to There's getting We've place that's remember of this would the so fixed taking $XX a from now year. said first And you was two of are ramp-up And reduction complete. in of the quarter largely that that beginning already we the Yes. that achieve those perspective that And you rate the Those now are that that now part we earlier higher complete. rate.

plus that So we that million at right rate on now the quarter translates $X.X $X was a the third quarter to the look in year-over-year had about if about million basis. you annualized in here third

the fourth going quarter a ramp-up So see to going into through nice first. you're the

Operator

Thank you.

JPMorgan. Jeff comes next from question Our with Zekauskas

Silke Kueck

to investigate wanted PCC like one like the more for It's Silke Jeff. question Kueck time. I

be how beginning can start-ups two year in you in much in the terms of of the the size? quantify like of India will So

Doug Dietrich

Sure.

the probably should the It's a first online in announced in with quarter. for in early new Actually India we we Silke. first expansion about small got satellite. have I XX,XXX-ton end We've don't XX,XXX the India this current about with coming So a at customer satellite of think online an the papermaker come tons. one that quarter

probably The large it'd that's a secured In year again a one just probably India. another the China XX,XXX So tons those for first XXX,XXX satellites that's us two in start to the permits beginning is that's the should have India in and in take And build up. XX,XXX another tons. tons. about XXX,XXX between of QX India one two in we one QX China. and quarter the in it one year in we about tons Later the

tons around tons That's QX. tons. the coming year, QX XXX,XXX XX,XXX about next online in So XXX,XXX

right the We contract quarter. signed looking it's -- the The it's new Right a like fourth looking our of now in will the customers contract. third on. packaging application. And last those of paper sorry maker now that around Right end really now just is part that's the come will online mentioned I quarter. X,XXX Europe in be that of one probably early tons the XX with like

end of of So a type year that's probably quarter fourth ramp-up.

So next it's about XXX,XXX tons year.

Silke Kueck

Okay.

a the so around volume the come have the because then really year of you And is maybe is of up looks plan way will come if a the it it? Is the then have And all half volume really growth on quarter like that the way would year. have a about offset next think -- starts to sort everything that big lot right that way like Domtar like -- fourth headwinds like if closure India? in it of then you time in to like when second be you the maybe

DougDietrich

and so it's seen again capacity has should coming the That said Europe India volumes. some online a volume that's lower. about in in solid standpoint continued flat volumes. From growth. and demand growth. be be to saw XX% North America when Yes. But we far we've those China been

growth some our So volume there is in base system.

Right looking to of that India -- coming our it's add contract -- to flies in D.J. was time seven to the So we've past be -- hard a which just fast seventh in you'll saying satellite renewal India our how the believe India but nice some will at past in first is satellites seven got position was think in built years. I India. in to now really I this XX have it. we've up

Silke Kueck

line does be that sales have X% to you would of price therefore lower offset growth? lost is all you And and the that region the U.S. tons anticipate? mean helpful. offset versus incremental Asia the in you like sales That's X% than India offshore the component -- lower Okay. pricing were is in course cost and like so same lower Or the if if the tons will

Doug Dietrich

of because on of way Yes. The same. percentage of each the lower EBITDA EBITDA at of because raw the look the cost like in materials we is -- kind Asia and is The there those margins points our are lower. amount capital the it EBITDA of to tons lower of price conversion are

America. So case. is in to the Asia or Europe in a That it ton in tons does a more take North offset ton

it's technology of our have revenues the and we paper about also about those like into of different environmental that packaging but paper. new have a and -- increasing just can be we've to I deploying and want have there of technologies with in want while we we things also on not don't launched just in opportunities highlight plus. Yes opportunities though also which opportunities. We're high-filler tons feel we Envirofil Fulfill paper like filling have NewYield. However higher-margin we're some you which forget And filler to we are also satellites opportunities. best and I our terms margins and -- our in number XX

and -- we executing should also in in technologies growth we're tons that as that in segment it's out paper in not help these also that So the the that only new and profitability segment. on just

Silke Kueck

is helpful. your SG&A costs. That's second question But R&D my on and

see do SG&A sales that? were we sort X% year-over-year. is through? where cost your coming savings So R&D and lower costs year-over-year up like Or like are your costs of and Why the

Matt Garth

actually line in Restructuring going be operations. as you largely our time SG&A service Silke the we down focused of line. place if all as components on at throughout across R&D have the redundancies the was as our quarter mark-to-market it this the us as take say in you you is driver normal around told that basis. savings you impacts shared should things the to I basis force Well capability We place. One were COGS When year significant in remember sales deferred right? compensation on see organization equity the was cost have well sequentially some you fairly that the at well here -- that's XX previous year-over-year compensation keeping in on and you're equity on -- a in year-over-year few seeing place. to range. main in The from XX, you're SG&A look that that a the break the of and a well versus some are So P&L what compensation some seen you've going as line

Doug Dietrich

a add can little down. sequentially bit One are that? to I expenses Silke just

the -- mark-to-market Matt starting see that see restructuring So just mentioned. save to the you're that you'll

I quarter to So And the savings primarily those flat. you're were trials. -- PCC. some starting had some spending on come R&D in we see those in of through. trials COGS And generally savings more We've The think this yes line. are those is Paper

you will our that time But some to kind with as on given through see R&D spikes spike our go mentioned PCC. kind from of different So trials will Paper That as in any is in general time in I Environmental Products in of flat. R&D -- we it quarter. business

at trial -- looking some what activity in R&D. a I So you're is think

it's but not thing. a mark-to-market some And structural

you start that line. to I see come think of you're -- out those costs SG&A seeing

Silke Kueck

me just lastly was the -- And Okay. third you D&A mind? in you give wondering the I wouldn't if quarter can number that whether

Matt Garth

million. in the $XX.X quarter Yes. D&A was third

Doug Dietrich

good run rate... Probably a

Silke Kueck

Oh...

Doug Dietrich

told first million was the $XX Right going about throughout talking run and project been been to I big three $XX looks no have this that about is that way in the the mean Remember be we to rate. Chenming now in start good layered million it the did deferral probably $XX you $XX between the million in spent to you year. range. in through think if you million bifurcate which X to about that if going Yes just Silke a delay that million to on. it's I to similar say be has we probably it quarters was fourth The really now the difference mid-XXs quarter. across quarters that $XX CapEx is

to and projects Chenming. really capital bit a continuing both lay and of So of good timing change here around growth in sustaining for terms out just

Operator

G. you. take We'll our question Research. Rosemarie Thank Morbelli next with from

Rosemarie Morbelli

environment in apologize at some the you already it on a numbers seeing least your at the call not any little the company? in a may late if got you look I going discussed I you end of I whole don't there but the as it. it of showing markets through when may signs be company while some pieces pickup the are But -- mind that if anecdotally so is be whether you mean

Doug Dietrich

Yes.

Rosemarie. those comments I -- my in think there are to some highlight tried I

Rosemarie Morbelli

Yes, I which and I it analogize. missed

Doug Dietrich

okay. That's,

been lines Europe our off-highway markets has Sorry. There's North of number a the Asia that industrial activity no kind that have truck lower. in product markets. automotive look serve -- America doubt -- do again heavy of We of and lot

automotive X% -- much so Those America. really in And about India seen on across as boards. we've in We've a have us extent the deeper seen on seen China decline some impact build a us. rates in lesser we've to of even impacted X.X% XX% and in North decline declines

plastics. that our of products into talc go Some

base-sealing products market. foundry in growing our of Some certainly the although new ones our are and

our many continued around side a good like markets of our would Pet very projects see on to customers starting kind pace. in good off-the-shelf be base Care. very some other ledger really fragrance a our at consumer-oriented X% tendential of of newer the We're -- products on to products seeing our take like the steady of quarter-over-quarter boosters That has rates those. However see good near we consumer-oriented grow with

landfills nice other remediation fundamentals moving solutions Pet for R&D -- activity So to been we've trial And and through got And that some to we've business that. I landfills. market. really higher-value and projects products with Products been in successful well. tried Care really solutions that municipal good than as different business -- base real products Environmental the highlight We've

the we we've quarter the trajectory by And of and XX% through almost those year. fourth next see this and into increased those higher-margin kind those continuing of products

in Packaging years well Environmental on paper may not but newest our Environmental bullish a paper new we consumption broadening America We've net on positive growth these signing our lot always the Products we're Europe with do business next North think coming that. have in year. of Fulfill products XXXXXX there. tons Yes talk successful and trying business working and we portfolio focusing paper we're the been technologies. our it for our We've with -- on about Products on that you So we're satellites markets but pretty contracts to on And I as show associated business new with Care well. challenges been faced our that and our we've we're really as though Pet

kind hard through So the that for automotive. well to and I go positive. been we feel in a as out growth But with primarily in seeing. business in little Products Pet has a see we're business. we'll steel. to It's relatively make of of construction work us the whether for challenge guess Services that to even our will currently lower Care -- going planing industrial Europe it's Energy Environmental some been the others we as us us There's good areas for has continue

focus the on But we're we're going So capture sure costs to in on keeping continue in part. growth that industrial going maintain available focus to we to those our for also control markets. growing making

Rosemarie Morbelli

it mentioned all? at the have seeing of Are least a you in pickup stop at decline. or companies seeing China some Some slight

Doug Dietrich

third a will so picked pretty our up say that Metalcasting our business signs low pickup. second of pickup. throughout the we've not seeing the I the some end albeit in bonds a seen point September of large sand from green We're beginning of

increase too I'm that's build of some to yet. see not the that's that in in to did far going pickup rates in some we foundry business. China. a largely automotive go as think due our in say I But to in automotive trend

Rosemarie Morbelli

by Care. the slowdown the of particular for business? Or in Okay. And issue? softness reasons mostly then there Is the that that are affected the other Personal talc

Doug Dietrich

over that in products. Materials release bentonite creams of small and Performance probably additives counter-type some business. structural. Personal is based a bentonite. for one rheology But delayed timing Bentonite in kind Care projects the our to And business. kind additives of in are but based sun the have businesses. decline -- they the it's no, based It's -- It's business of our a for These nothing a action Care No, due I some of Personal they're think that's modifying bentonite a are small was

Matt Garth

to want just don't And our have talc because products a we Care from sure sales. mentioned talc right? -- make you Personal in Just

those said So Like the Care you're at I looking Personal side. us bentonite for not on things. two really is

Rosemarie Morbelli

Okay.

-- has asbestos can So found operations? some mean would the talc in your some affect containers talc been that not I fact

Doug Dietrich

No.

Johnson So we're not we historically. Johnson and business sell-in look to -- powder piece -- a yes has been & body do we our not small do of very

us. doesn't affect that no, So,

Rosemarie Morbelli

XXXX. of all amount X% these volume those because Okay. looking the recover is properly I volumes? coming PCC that And have order at And I XXXX of of will it okay, up take pricing to What volume on all know more pricing you -- versus cost. you that? is up. did hear maintaining that your the dollar on in Are lower

Doug Dietrich

points bit cost to those tons. can input less -- The absolute Asia And little than in costs buy a newer because to the line in expensively Europe lower. that's can so we the customers are is We price for Yes. point speak. our lower

that the or in from relative return that as Latin a a same so or profile capital is of But price points Rosemarie profile as North a project as return into satellite bit are profile the America. in Europe return invest the little And China standpoint one we a America lower. from cash

that So yes from aspect we are.

Rosemarie Morbelli

U.S., to permanent tell? is or production mill? the recent is shutdown moved Okay. the in it temporary, the is going be into shutdown And a can then another at mill you the looking in only Or it

Doug Dietrich

Yes.

Let me hook so... D.J. in

D.J. Monagle

grades it's Rosemarie paper fluff uncoated from changing would makes -- Domtar the freesheet a that machine that to be pulp. announced Yes they

view would free made it'll and a being So America. permanent machine be down sheet in permanently the North reduction we uncoated that of

Rosemarie Morbelli

you the And for? move into can you new up one recently satellites signed have equipment of satellite those

D.J. Monagle

satellite. no small -- the removing that There particular from particular an down. be shutting open. satellite. machine. particular Service volumes shutdown we'll of some that this satellite not and machines location. customer create continue It the to that so customer or opportunity we But periphery we that Rosemarie So keep that operate is does are one satellite affecting that pick this still other up will to supply to at on It'll continue

Doug Dietrich

we thing that that America. a would seen through year Paper I the closure Hudson year. is that know imports. dynamic moved was this announced you consumed the saw when paper thought mix North One that we Port have by be that production that would we this --

Now Europe Domtar. this same mostly satellites, from that. which you tell have paper we expect the thing to we'll is And from happen where probably to I'll

Operator

take our We'll question David CL King. Silver from you. with next Thank

David Silver

I'd I three Yes, like points have hi, thank on. touch to you.

that's the if going specialty a discussed am But color used clarification. tiny on the of a fiber? for? Is plant? new Just is is Is in PC project? benefits it points net to provide assuming be Specialty PCC several to more a maybe new other replacing at could unit it qualities you've I in Europe satellite PCC it one more correct end bit pigment -- that here that filler improve And PCC combination? Specialty characteristics words the not product? In you the or that just First the on some large replacing the a little then color that

D.J. Monagle

be would to my that. pleasure do It

satellite. agreement and an we So going this that existing new is of this end first an actually to up have extension PCC being off

consistent in white pizza on that a and -- in have that and the the My unique. as existing with mostly application is on brown grade The that box Therefore best and Europe. the as customer inside kids arrangement the a is have linerboard white That's industry going top terms conditions an outside. that a it's liner. a called on industry will The is it's the that grade pricing into new to the very So what we brown it with. imagine somewhat our way premium something is general and recognize box. we recognize

that application is -- application bring PCC we well into to it's is the coverage. that value do that's by better providing positioned in. So What unique

sprinkling So get brightness less opacity a top that of on fiber of still that the that PPC that expensive use think the to white them to delivers brown product. premium fiber of allows fiber

it. to application the that's So

that targeting we out that where other end would coating then PCCs applying I grades. packaging we've We've got into And on would our got high call locations making I also include trying that's place grade. with it's some grades. advanced not also what world we're very only NewYield in -- mentioning going just various stages this Doug technology not similar trials packaging going are into the trials in was general the have in our that -- we're about say packaging And then on some around premium grades. that pursuit

machine So as particular of growth then announcement we've it's a extension the the this in pipeline. is By to some the so in think got going And in net Europe, industry. is critical it way more new customer. an that there, opportunities of

Doug Dietrich

I can going on a question. -- Europe. in Were ask David, you there's And quick you two things

and You about talked a said PCC Specialty then contract. you

goes that rheology specific market. very different -- Does facility our call expansion goes That is into UK it just not there's goes facility. through. PCC PCC to applications. Specialty the be So sealants in I going for Specialty it clear One packaging things help? in the of want market sized That is of -- construction the I into we in it It a contract a Europe. when number that UK is an fortification submicron calcium sealants a talked nano-sized It's into PCC. paper. just two very, application sealant application. The went usually automotive we an that's is D.J. sealant it's about that's on everything automotive say expansion

David Silver

lot as static the But those have comments, up. to I mixed review going of I to my I was I'm line, ton may on have just targeting your that mostly believe not a characterized two have XX,XXX expansion satellite. a was so I

Doug Dietrich

That's an expansion.

David Silver

Yes. Okay.

curious I buyback. is I don't I long-term goal And know the quarter just net next not be second big to hitting a quarter made precise between maybe $XX I to very know has toward the you that on your tracking. but X.X don't me generation cash would And some or agencies good cash metric as for question yours noted Matt. think this difference million on nearly Board versus probably because reduction toward maybe it hitting share as yours and the the And of buybacks $XX directed rating debt model debt-to-EBITDA my lot of number X.X. that I the that's share is million So -- a free I been this get quarter. the directed thought not was was maybe somebody difference that the And round was but a to

X.X metric that flexibility. maybe Maybe So on did already you've you if financial issue? could incremental discuss the just could just whether you now comment hit got just you and

Matt Garth

returns Sure. let's been over and what when the to about the shareholders we first is opportunities the Obviously good debt we acquisitions. free years of we've from capital. how fund pay to talk approach balanced a of very a communicating at And is David balance we that past have company. at look flow deploy priority beyond look then it and we couple cash that down to growth And within

into million million paid third $XX years seen I We way balanced so you it you've of a X those just perspective like of what in past the across debt. couple the vehicles. quarter repurchased happened in down the deploy If shares. over fairly $XX And said put us we of in

perspective cash obviously continue leverage that driving thinking that X share ways million very you And to that times been area we net in that's valuations still and repurchases. $XX a for we're that and we share that's net to we have From about perspective attractive into X.X leverage of opportunistically what would are a share I the the our the deploy from price. in go-forward our what as about repurchases tell we we $XX As see are will opportunistic means when target. at times. find seeing can you are million

capital share X deploy balanced leverage acquisition to getting on way to repayment repurchases a in net We will to our times continue down way target. debt that opportunities finding

David Silver

incorrect a and speed hit directly one I to you're capacity? a areas -- answer supply. has recently from diversify surge if to sources in downgrade Arconic I mean to going is say -- be and assuming prior you I And opportunity -- correct credit door with major spare it's the company going etc. there's that your Okay. my looking that some case you that maybe the know customers in their Do preface new knocking not the a that been to I'll with I'm changes And your to with you something be I management perspective Alcoa be of Then in ratings or this Interesting. remarks would postings I ask you point at but of in ratings maybe downgrade saying have able signals of response where would may by Alright. do your competitors overlap your last the or and of competitors' don't have -- business let's competitor. your know capability to bump probably or come major

Doug Dietrich

Okay.

What to regardless me the will that say We we are part issues I'm I you and going compete is competitors overlap. to Let -- I'm answer of give first that do our well address see going your not to going etc. right I'm -- that question we customers you're not of same -- I'm way. David

compete product. creates the of based customer for we we to I for I know talking -- they're based think a do value in markets We different feel that us. what hitting are what bump I number we those But in same of that away you're in about deliver can speed we necessarily if on somebody the different end regions. don't overlap a takes with on think have -- or opportunities any And of competitors. that terms when customers we some is a

the it's the way. ones and And ones don't, market the same out we in customers with overlap the at we opportunities we so and look the

pretty for we We're going them. comment our world that I'm So are the going laser-focused on might other and that our around see we're competitors if helps. necessarily those products. on issues what opportunities have, after to not

David Silver

Okay.

with industry the last So changed so? in up. mean you has just month competitive in dynamic -- not or opinion just overlap and the significantly that in global particular competitor to might the where your I areas wrap in other

Doug Dietrich

think I I and markets I in operate look think of our we number guess -- a similar to competitors.

elsewhere our where do them. America, so might we're occurring North The that the competing the be have think one. where for I'll from not in America. they I is for we going to different North than similar to in compete world positioning we like We're We're to in dynamics one larger customers what give dynamics are customers and continue you. those That's normally positions do.

Operator

like conference Ms. I'd time, any this to for closing the turn to remarks. at And back Buckwalter

Cindi Buckwalter

with today. look Brad. a Thanks, joining to you day. us again everyone, Have Thanks, for speaking very We great soon. forward

Minerals (MTX) 1 Nov 192019 Q3 Earnings call transcript