Earnings call transcript Q1 2023

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Operator

Good day, everyone, and welcome to the First Quarter 2023 Minerals Technologies Earnings Call. Today's call is being recorded.

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

Lydia Kopylova

Carrie. you, Thank and conference everyone, our quarter first Good welcome earnings call. XXXX morning, to will Chairman Aldag. Today's Officer, led be call by and Financial Doug and Chief Officer, Erik Dietrich; Executive Chief

open Following Erik's Doug to prepared we'll and questions. it remarks, up

statements As during may the of this within laws. securities made the a statements of federal forward-looking call some meaning reminder, the constitute

Please release and earnings note in contained our the cautionary statements language this about slides. forward-looking on

from results these and risks statements. uncertainties may to certain differ disclose actual materially filings SEC Our forward-looking cause which our

Please GAAP also of posted some our our comments financial measures. is today non-GAAP website. note that can in refer A financial found which our to reconciliation be release, to earnings on measures

turn Doug. over to will Doug? I it Now

Doug Dietrich

Thanks, you Lydia. Good morning, and everyone, thank for joining.

outline first start quick segments, may two call. Let Consumer we're as press you our Specialties you for quarter Solutions. noted And this and me with from the reporting new and have release, a I'll summary. on today's quarter give Engineered

we change big a the present in is There how company.

to going refresher financial and them new for and market give quick I'm for will the for take quarter outlook So And second. details we'll the that open two you and it organized the a product then through how from standpoint. our on segments after questions. Erik we've these technology a up

to we of end go cash flows, operating challenging income improved of quick all delivered per delivered growth, year, the terms After margin summary on three. expected focused through on a in sales, and a what and Let's first we and quarter. we recovery We share. remain earnings last

Revenues X% on all across conditions. Despite quarter with sequentially four and first economic regions in these driven portfolio trajectory, personal strong currency MTI animal and of provide. products. and demand product was increased a market the we record amidst oil basis edible constant our growth X%, care our posted year-over-year achieved both a mixed pet continued by segments that litter, We household for can for X% and in which increased backdrop lines. purification in mixed all growth health to stability points sales Sales and conditions,

higher improved partially specialty line. Asia, from carbonate are PCC This The product of is market and from for benefited construction paper the in demand last year. conditions. newest seeing calcium our volumes continued weakness specialty satellites ground markets, offset We has PCC residential by in which and compared to we impacted additives from

in mainly across Demand we're Engineered varied seeing by regions. the economic driven our was Solutions conditions segment the

North offset technologies, and America temperature robust. refractory weak foundry and This high European conditions markets. remained steel For market China and remained strong in foundry sales relatively products for was conditions by continued in

quarter some the in March. improvement modest foundry we moved did we some market and We improvement through as expected China in the see

year. demand saw levels remediation and environmental line, product relatively However, last In regions infrastructure infrastructure below stable we conditions products. remained well the our in technologies drilling water all remained the for

drove $XX productivity XXX actions, the benefited impacted operating that We States. expanded We large United in gains operating capping the improved quarter. in and and income projects also two areas margins additional implemented points. increased to XX% basis sediment from last million Sequential conditions pricing were

is key growth year. focus this Margin a area

strong for Cash inflation always throughout as balance us. half our we actions to up priorities expand XXXX margins the and with in flow continue maintaining year. last pricing expect of are catch We to sheet second cost the experienced a

significant the a highlight of to change want to remains couple we of normal a to cash slides I historically First standpoint. completed our An flow the quarter and you and and sheet the additional businesses. new our review levels for liquidity quarter through net resegmentation take structure. that is from leverage take reorganization balance returned and solid The a

America pet and years, few past targeted We've and acquisitions the new a margin one industrial moved to markets, from in over into growth increased consumer, presence higher us historically followed served together markets which growing North markets. and faster in with with and you in less transformed adjacent, seen we've greater company an environmental higher agriculture growing Europe cyclical regions. litter involvement If invested and you've products how in

The been company's has always technology our part word of name.

maintain Going how you'll does part part capabilities. technologies we market established we hear forward, our are our central have about what company core more call positions. how of a foundational what and There and and our we leading of

transformation we we're revenue years from have pipeline dramatic five years in these draws we've product three And product to a than new technologies core been ago. MTI. place the the on pipeline innovation currently made in have almost few Today, products drive we new generating and this advancements Our over past at another new more development higher. times did

company keeping moving saw core organization that structured is that on Our based was culture improvement our and one continuous around our in we culture, with that technologies. to

This innovation dynamics to business. of more together fueling improve organization customer closer and making, technology on our will and earnings powerful decision way more a Similar clarity was higher and drive run collaboration new faster has purpose, market execution types potential.

spark a the the energy organization to brought and team. new to added also It's

Let's take and two dive a product quick lines. segments into respective their these

in new growth Balanced four and well of types The are segments of item I'll out balanced. long-term growth, that first product point and is terms size, markets two drivers. end these lines

litter, Products First, like and Specialty household the the laundry household care let over-the-counter products through and personal care products your that consumer are additives. edible Consumer you products specialty product and personal detergent. of and find and oils, segment its two sold components take consumer would you in and skincare home or cat lines, me in

of function. or primarily one particle delivery act we a where odors, Functional design, the or application classify specific system. remove a absorb are create core Additives, of specifically developed impurities as perform our as technologies to a Products through called Such

together The into growth and innovation similarities better products similarities drive these one as such opportunities. timelines product can have and these service to By line, in served this trends. growth we product consumer innovation market organizing common macro line, leverage models,

line and coatings and Additives our COX developed based we of Engineering, product and such and the pharmaceuticals. function functional where optical brightness, such for called morphologies food become strength, design crystal as core mineral and components were paints products items that calcium of Crystal adhesives, and through contains packaging, These specific application a products as paper sequestration. Specialty technology sealants fortification gloss,

penetrating like line customers also this to by expertise strategy can further We geographies a common market our solution. applications served adapt growing growth share to these provide functionality enhanced in crystals modification. offer rheology of value using product higher The the

there's cost offering room been become or into streams growth. we've paper PCC recycling penetration for As Asian many customers market for waste still brighter savings, surfaces. options The largest our of production an continued region PCC the for glossier and example, of for years driving by volumes and has

At we week, technology. point, filler new this three long-term announced supply this PCC our in agreements for Asia

for newest NewYield called them our product of LO. recycling One

growing PCC specialty and opportunities our to penetrate United markets are products adhesive Similarly, globally see and sealant the we States. outside

go the contains through designed segment, manufacturing solutions Next, and Solutions customers processes. for which products our Engineered let's

Engineered are and high the the in Blends. steel product and leaders of a technology In called solutions, These materials technologies core industries. application temperature making foundry line, through process the developed products are providing for primarily we consumable

safety benefits We as that use to formulate and finish, emissions. dimensional our deliver stability customers products improved understanding deep lower such our process efficiency increased surface and of and production

the markets. large is Growth substitution of in line driven growing and products by lower primarily this performing in product

For greensand scantrol India example, in drive and and systems in we bond China deploy penetration new to application and continue Europe. of system our our and America measurement North

environmental many home environmental line for infrastructure, product is to containment. is waste fourth and of remediation which products and solutions and water The unique innovative our infrastructure,

Here we surface a or called a a technology physically we substrate Particle function. Surface Modification, to of core particle perform specific apply adapt where alter the

used barriers, from scavenge in construction large and waste create bulk are to impurities drilling water, enhanced particles modified waterproof fluids. projects, These

sediment infrastructure Our water capping, wastewater projects around communities landfill and product drinking support important the and world like industrial projects. containment in cleanup,

product is this solutions, by clean driven global the need line increased environmental commercial in for infrastructure and water. remediation demand and for the spending construction Growth

lines important stability tremendous reserves. and quantity The our locations these value by class combined mention that strategic quality, our long-term for each supply our it's expertise and world mineral mineral of customers. supported technologies leading and our to Lastly, provides own supplied with and product applications reserves is of

reason markets serve we and understanding and makes in see segments the of the product leader how truly can I how together the we're MTI MTI that, With many hope and the a reflect they and the better unique. of today. lines of what It's have fit better they you

and these and look segments through certainly technologies Day lines, Investor strategies doing product and take we in I'll at our so. May, forward our details to more on you

Erik. provide Now I more financial details. it Erik to Over to over to you, hand

Erik Aldag

the for our review and good an Thanks, results first second outlook provide quarter Doug, I'll I'll financial quarter. and also morning, everyone.

Following my call over remarks, Q&A. turn I'll to the

the results. the $XXX X% side sequential adjustments I'll Now bridges sequentially quarter increased higher our exchange. to Sales let's with by foreign turn this and million, financial on pricing volumes, driven incremental left favorable slide. start to of

XX% biggest related costs last the adjustments The inflationary from from to late driver improved of came year. income an quarter. significant million, to of Operating fourth increase $XX the $XX we pricing million improvement the absorbed

by on lower pressures primarily typical basis, some and sea of driven freight rates. also moderation We energy sequential a costs experienced cost more

a over side higher Sales year-over-year constant right were to on year X% prior the slide. Moving bridges basis. and the the increased the on of X% currency

and slightly higher by was our few lower pricing, year. markets, overall the compared which a growth with exchange helped prior offset end sales volumes across Our remains foreign driven Demand unfavorable primarily most of healthy to exceptions.

the expected in start after softer the are year. China demand in the foundry markets products a year last construction in as improve US quarter than slow started to Residential to late and

end our while products. we consumer some skincare personal oriented customer primarily strong, experienced the care, of associated in majority destocking addition, with remain our In have functional markets

Operating the by prior quarter, volumes. driven income primarily lower than year was lower the X%

and expect moderate. the Our in continued cost with the margin the additional to pricing year offset the of and inflation price to recover continues increases we actions year-over-year pace as period through increases

year First earnings our share, in by the versus XX% $X.XX. the XX% in that rate quarter EPS and Note excluding rates interest quarter items year last impacted quarter. tax versus was $X.XX per was prior higher effective special

expect our XX%. remain rate we approximately effective forward, Going tax to at

Now specialties. segments more beginning in and detail, let's the review with consumer

First strong quarter the X%, personal X% and on driven higher year million, and market higher conditions Sales and currency $XXX pricing. by sales basis. increased above were constant care consumer prior and for in household X% a specialties

For example, oil care skincare due XX% prices. products. prior grew strong of And products. the bleaching sales than edible and acquisition were earth driven to continue purification we destocking year effective with pet certain personal Meanwhile, selling by lower to global the highly demand, of grew market Concept the as higher Pet our volumes our litter continued sales XX%, penetrate customer

line in product were than Specialty selling expectations. line US higher we throughout additive construction last automotive X% prices. remained and with experienced by lower were Overall our in pharmaceutical sales this from the food, demand driven paper applications but primarily mills conditions Europe. market for and and in quarter, US higher year, Demand residential strong the for

end we saw operating And XX% In US in the did, in the move our remained year. demand And to higher expect operations the has low the rates through some by we through driven in softness with range. America and however, paper we in we India. Europe China as rates as We the operating moved newest the Asia with operating low currently in see paper paper satellite in North improve quarter range. volumes rates mill XX% market, in

as level income same operating the was year. quarter $XX for First last the segment million,

to catch are increases price pricing price we absorbed last the And the from inflation further over going as Our forward, versus additional the beginning quarters. with to effect. margins benefit expand take expect we've up several accumulated actions cost

see personal product demand demands Looking personal to care litter to the second household specialty products improve. household and and care, additives strong to we demands the to In for and personal both remain expect and improved expect in care quarter, we pet for lines.

price take demand we costs across similar and across pet conditions automotive significant increases we the In selling additives, see markets. pharmaceutical to Additional expect litter we've business. food, end the continue will to inflationary specialty effect absorbed recover as that in

America. we year in markets sequentially on improve levels. typical apart should typical prior activity below construction outages maintenance Demand expect seasonality, customer from demand Residential be similar to but North remain based in sequentially, will paper

expect sequentially operating XX% for we increases. we continued see inflationary by costs of increasing see price segment through recovery and $XX million. contractual approximately selling Finally, absorbed previously negotiated income to Altogether, to the our

let's to Now Solutions. Engineered turn

million temperature in First higher X% Engineered quarter year sales increases volumes the XXX constant in on and higher were and last a segment driven North America. Solutions currency technologies Sales X%, by basis. than in higher grew price selling X% high

in in were products in and quarter. line demand conditions foundry for remained with recover late the this for America and began strong market Overall Demand to into line quarter. our product in China expectations refractory going the North

Sales sales by the year, driven and drilling $XX for Operating higher directional applications. was than slower environmental in infrastructure products X%, tunneling income prior segment and infrastructure to of the and and year remediation large grew start drilling million, lower primarily horizontal projects into driven China. by X% the

higher experienced of ongoing causing rail which to due to costs issues transportation. expensive the use also are US modes We us logistics in more service

Looking ahead products improvement to and we in demand. second refractory for and North demand quarter, in foundry continued strong China expect foundry continued we the expect America

XX% stronger total, environmental to and addition, be we we should In order construction this to $XX operating books for increase solid approximately period for a expect income million. heading have into In projects. what sequentially infrastructure commercial segment

sheet relative end the to balance operations highlights. quarter up slightly year. the XXX net capital and quarter, million increased last our first fourth and flow X.X inflationary on $XX was the from the to impact times EBITDA. year our review at let's quarter of working moderated cash Total has from versus improved leverage as the Cash liquidity million, Now prior

expenditures year. through As our our XX free year. improve the of is above free capital flow a continue which quarter lowest flow is in quarter million to $X move year. cash We to million And we $XX bringing the cash million, to expect first quarter, deployed we cash the flow typically last the as first reminder, toward

discrete higher projects, Our CapEx newest our spending few a quarter first included satellites incrementally including PPC in on Asia. in the

$XX selective in our high For full and which opportunities. year CapEx to includes continue short $XX sustaining million million crude we of return, to the the capital to in amount range, our expect payback normal investment operations maintain

we cash we will year. up $XXX capital The of on just flow the year. to end end continue spend that and the to in the balance we the free maintaining move could high as balanced strong million our Depending announced, are expect and point, update we new a deployment. the to this timing the continue full At you satellites we of on of sheet at approach remains for position range approximately through

priority net term through to Our move is target times to around near of continue EBITDA our leverage repayment. debt two toward

our we demand another to see Now expect for volumes second I'll our specialty ahead. quarter outlook consumer and we MTI, globally and expect summarize strong the segment, sequentially litter quarter. for pet Overall care expect in higher In for and strong purification. we continued personal edible oil

demand see second first as construction North will construction should quarter remain likely the North outages below paper enter to but Residential in the maintenance year, be expect usual to sequentially demand in quarter we And increase market America. we we similar the America. occurring an peak last customer season with

on China expect continued steel a recover should American Solutions, in markets foundry foundry we sequential Engineered continue to In strength North and and basis. volumes

infrastructure for activity. project In the be quarter and a addition, period stronger second should environmental

the on continued from improve price several further up expand will for the which moderates, pricing catch we we've year. expect margins the we cost pace cash our will And inflation experienced flow help lag last through the as adjustments expect move us of quarters. We versus and our to as

as Overall, China. our typical and conditions improvements that second to that quarter the in seasonal will sequential assumes end for the continued experience improvement as outlook quarter first well remain market similar

not share and MTI, our contrary million anything sequentially earnings to we heard to the $X.XX. have from we As XX% $XX today, income In equates to second increase total between customers. around which for of $X.XX quarter, to operating per in the expect

hosting the will York Lydia of New on May in to us save like to an like hope to go you'd We person, join Stock please everyone able the Day you'll be Investor to seat. at if you I'd that we Before XXth MTI reach Exchange. a be so morning remind to Q&A, us out

to webcast. details opportunities share website. We're several you company and More the earnings be last make meaningfully if on for power. posted higher evolved excited will portfolio growth the businesses growth will person, But have also our of events position to MTI's the and over be how years in can't it

deep unique to long-term also reorganization, and and more operational unique are that's culture providing our valuable and dive And be our market time drivers. Thanks elements the be evident that great of our excellence. growth it's ever our what We'll MTI recent story. and before, believe we a makes in of terms we'll share make current than why their positions sustainable MTI capabilities technologies, their businesses, leading highlighting into a to

So we us month hope join you'll to hear more. see next and

call that, with over the turn to questions. And let's

Operator

CJS line we'll Daniel And Instructions] our with Securities. the first of question ahead. take Please [Operator you. Moore Thank go from

Daniel Moore

morning, Good and color the taking the Doug. morning, you Good all for Thank Erik. questions.

Doug Dietrich

Dan. Hi,

Daniel Moore

start the really and preview good with solid on Investor progress obviously Day To quarter. congrats of the in the

coming you're margin -- uptick saw additional to margin pointing quarters. expansion and obviously You in

Just I think of of kind range a there's wide a expectations.

XX% run So to previously a were least HX. There's be annualized Is seasonality at what saw rate on is basis? still pre-pandemic. XX.X% margins by We you that. kind that thinking? had would an said of some typically And of you're QX kind that lower where goal

So about thinking over about margins the just want the next that for to be we think thinking how few you're cadence should expansion how Thanks. quarters. and about of kind

Erik Aldag

can This Erik. that Yeah. you. for I take one is Thanks, Dan.

cost catch last said just I up based on price quarter what So that alone. was our versus

end of on We have year line to XXX a XXX the margin of improvement run to sight basis the basis. by of points rate

said, inflation we're quarter. seasonality rate expect that we do a year through our to perspective. inflation sequential like is on our catch far what fourth so some expectations in this run will up as say year see means what I margin with that in full line from basis. to an has we So moderates to this you the continues plan, going But experienced been and have that's And with pricing as our year we've and the improvement inflation

been quite definitely pre-XXXX helps we saw levels, down but down bit Energy's to from back that last a and little peaks year. that not the

As the reasonable first quarter. in come more I mentioned, to freight our back our particular has in down freight, levels here sea

from to So of things, an plan. according has inflation everything side been happening

a quarter also have April. put adjustments. perspective, from on our place the And majority for pricing in in of plan first And in those the we're and pricing already been

quarter some quarter pricing We the third will in some and adjustments second pricing and happening contractual continuing later additional in taking have adjustments effect. the

the place. already been But pricing has of put the in majority

improvement on sequential the a still through so see margin that happening And basis we year.

the of margin terms improvement. In year-over-year overall

Now, income operating remember, did margin so That improvement XXXX this is XX% we on a backend year-over-year year. to going weighted for margins full year. be the basis

Daniel Moore

Erik. very good Shifting paper to that I helpful, really appreciate you is That gears, signed. the new that. see agreements

yield about talk what opportunities more and and generally new pipeline the additional looks specifically gaining like? Let's traction how of that's

Doug Dietrich

Sure. Yeah.

Let me satellite really take that opportunities these one first. new about contracts, and We're Dan. excited

I'm going you yield, Specifically what, that to comes let crystal in it from but talk D.J. engineering. a this to directly new know, about comments bit, my

product. in our additive functional repurpose So to It's crystal crystal reshape filler it become different a to growing on this able gloss do. a to of paper box be the another it type of a become a is core ability or to of kind for modify case, to to, or crystal to to we as what and the technology same or a grow

reapply to a understand that be This and stream is and crystal to it. able our waste ability take

new these that contracts for of one so And product. is

depth little So through more there. want bit the to and a D.J. you timing take us

D.J. Monagle

Certainly.

Dan, be me year. some development We a with business of ago that kind on an expansion let half of had satellite. this the be GCC into to second going that'll towards packaging announced coming already announced the and you're state We seeing. progress time of unpack So, new the and

and and announced, And new what year also and are were both those a end India. high standard that's is We've PCC application. and in the gloss in opportunities a they're provides And about a was up. with China writing packaging ramp grades Erik and tons XX,XXX that applications PCC this new continuing referring to in already to satellites, printing and those

the and up. in year been they've of quarter So year they're ramping second half of completed last first this started the and

this with tons. total standard XXX three last had had, -- we we They announcement Now PCC agreements. that some thousand about three

those of called company with pretty Dragons. One is a Nine a key investment

and application particular writing a grades. PCC packaging is So Nine standard printing and is this company. Dragons But

to that crystal there. able we're So with expand that to grades them some going product work be and into packaging

materials. some We new that with come also XX,XXX online announced Zhefeng tons

Again PCC tailored go grades. this will that is specialty a specially into

printing and And grades. grades you element these some last writing So food a platform a to on then which announced were NewYield include applications. developed LO new things variant wrap with the some referring like that is we will But had those we specialty ago. time and

Papers. And XX,XXX in with deployed And India with to that's application. going to be Andhra that's some in be that's that going tons

the of is tons of So way come that there's to the was this the towards part year. some the good was right looking this second at growth in trajectory immediate of a that still XX,XXX of PCC and more half

That that GCC will XXXX. early of XXX,XXX tons year and half then will of into this also be PCC online second and come

little a the to link was going just do you, to tell want engineering. the crystal I'll LO with referring NewYield I and Doug to bit further it Now what on

customer. What been stream And application, is waste concept. the of applications. the are PCCs in NewYield repurposing from LO we're these for unique the satellite particular around building these this All we're excited tailored for about this we have the

high product paper disposing and this quality of So it customer good now into take that paper. put landfilling to and printing and and we're be provide a able writing and a would grade the portion waste it

is it's high also performance, reducing allowing that cost. So for their but their

that waste, do longer it. in further it we particular pull that developing these for where mostly regions this. of they'll have some This machine has landfill their paper no and is is general, some application designed in So

our that past. market we've share that the enjoyed hope to and I to penetrate bolsters continue think really we market the in this that the ability helps. So at

Daniel Moore

There's I $XXX that know, applications. still been different ton these kind different, Absolutely think And perspective, of $XXX in a end Is $XXX And used markets are revenue thought to a per you know and lot inflation. from But per to the a does. all ton. right process? that it ton. I be of like

Doug Dietrich

thought I a give can't consistent process. deployed I process everything and with consistent right I reasonable our this previous been that say we had GCC of that the and returns. some specifics, a our said but is those had That's bit just remind pricing in that's away different. would opportunity that's with would discussions, that that earlier though, one's you, we little any announced

tons size That's generated consistent to the tolling going That we income tons to be model. that's some the is a a small is. But be the that that there pricing arrangement. XX,XXX XXX,XXX our are different put sort That's to material. a of on business you it's capital with reasonable think And satellite. would of for of what say returns the model

Daniel Moore

right. hearing Look queue. and more sense. will obviously, to jump later forward in these in May. Make All back about others, I

Doug Dietrich

Thanks, Dan.

Operator

[Operator question our Please And King. from take go of Instructions] next we'll ahead. the David with C.L. line Silver

David Silver

hear maybe thanks for you. I'd new that walkthrough wanted than comments setup. It just things you about the of remediation to Okay. segment second ask maybe to I doing more Dan's the about helps opportunities. also Thank time. one

press So on out been water remediation the I in of I think believe release the called commercialization was of to-date source it growth. the incremental the remediation things. as and referenced But it was a side ground has

commercialization of Thank you. on overall remediation update an or portfolio. your in testing pace just beta the maybe So

Doug Dietrich

Sure, David.

One water in provide you A space, remediation. take different that remediation just me tons. of remediation. applications couple the Let types environmental through is what we quickly of

these groundwater, are areas where and our are drinking comes things water FLUORO-SORB these So in. product

impurities take to or out able water. we're of So

oil that deep-water We this gas also water able flow offshore right and in apply terms on of backs. to offshore our in platform. remediate We're that

create part systems the pump to we cases, is where some or we technology and in able even media the have as be to, this a of So company these treat.

it actually you had for a of we if That a pump military remember US put plume That's an government project and last PFAS which some a in. treat the and then pumped base was the the out year area treated water contamination. So underground, water did application. back we where

in I another where services one we sediment provide referring was The is to, capping. remediation area

couple of a capping mentioned I projects. quarter, This sediment

York and George. past We've and moving One of the in forward cap another work was on United capping Gowanus the project States It on in quarter was which that but continuing really that New Canal. sediment here over Lake years, to this several City. project was here been

are place and So sit cap we're products provide in on able things know, contain, or chemicals that riverbeds. to that you to able

The other drinking industrial. is water area I mentioned

We have also industrial wastewater. an

we'll So media industrial some system the to go able around and water the be sites to up site. providing clean cases to on in

I water I water PFAS that chemicals the installations limitations on PFAS where putting and remove the and have of begin proposed to EPA some to And you've drinking some our drinking news mentioned we around systems. that is from noted know drinking probably some of the water.

finding be to able itself, by down We've to down and the to system dictating. know, levels remediate been to product working extremely is media. be the the provide able for, we're our be And EPA as that you several to years utilities the to with effective,

and us, or all impurities a take but new it's of that comes a Hopefully capability for that's substance toxins able water. helps. particle a or technology So area to that to provide that's out from

David Silver

results. if helpful. might Yeah, might and relationship it it like euro your every affect something that a of where question were effects currency reported coming we're I detriment thinking that's your looks had dollar going other balance very some here currency and a I'm no, forward. period least relationships, a on how that's But about of almost lengthy for maybe I the the up year. think to flip at maybe currency And the thinking quarter

at, two reported currency on that's one should in looking don't overall currency detriment effect you of to you're magnitude? And element flip some to volatile on that most project or which results? So your But is maybe currency the Thank want quarter eye effect relationships the and period, have in maybe you. a what a terms ask of or far from maybe two being kind to rates kind of to out. positive a over likely I been the one the a too maybe of key are that we of keep an factor

Erik Aldag

Dave. Yeah. is This Erik. Thanks,

bit there So quarter of first saw in that you a our a reversal was results.

So It impact the was on basis, we're currency a in seeing unfavorable impacting about X% first our year-over-year a on still a revenues. year-over-year basis. quarter

at euro than first you sequential to less it fourth has actually been a previous little And the favorable in That's the moving bit. was quarter the if as quarter bridges, it look the from strengthened quarters.

USD euro and in us. just euro matters linked that we're operating terms that So in broad for euro region. It's currencies

further. much for project flip to being But us first quarter. on favorable it going did not so And in yeah, to basis, the sequential a

Doug Dietrich

the thing just is I'll it's we euro only Yeah, have some David, there, add that dollar. not

kind some region have are of We that mindful. crosses inter

We some lira euro that the impacts mostly dollar. have which and but translation currency of euro is

we're not to are. where currencies predict going So

you've weaker the the maybe or the to set I least seems be latest tendency going would and of economy for today. where some. would think dollar seen But see the stabilizing interest curves We'll where improving But is at it Europe a be maybe rate go. from forward,

flip I be probably not would that out weighted the US, later a of mix our say to go a other to way. that revenues will happen, start for as heavily to positive for could but positive given and us. of us going be year I'm to into when next And think more that kind this But far the

David Silver

the just or margins I to in cost inflation your your fully Okay, levels. my great. the of non-raw general, maybe plans here about it are desired about general companies mean, number cost picture. affects thought and strategies be your to elements a talking But restore how question in material would Last a

same visible how more overall you more seeing raw not a say moving raw that like wondering for last and materials that thing. increases are picture here. if ahead, have other the words that anticipate And raw as stabilized let's secondly, in In it cost get importantly, cost logistics. year material prices as This of negotiation do companies the even insurance be. was if So to talked offsetting utilities, kind year of and would I'm materials it's it's kind just reimbursed just elements I all that? to are the other labor, might you're harder say

environment maybe Thank inflationary sources still a where in of you. elements the inflation cost overall the the managing are So shifting.

Doug Dietrich

I for We're least across the board. say that's seeing moderated. I to energy some say six raw cost labor transportation. exact It's impact thing there's quarters. also least another area capital We're material that think inflation. time have I'd that seeing logistics seeing We're expenditures. mentioned now, and we're year. But inflation well, some Erik last same past inflation. of seeing in would will continue at the Yeah, the is at we and the

that buy satellites we So these we're CapEx seeing and things build. the we

that this longer potentially capital to return weigh And so and depreciation impact the an increase will margins. of that additional being has on therefore having term increasing make a on

that. in And customers fixed so across manage to our that we're the variable and and with and impacts at how structure looking our total through cost that board working pricing

Again, say, conversations have with we constructive always we very our customers.

their product. to some something tailor work think we're a We're gave the you a We necessarily. are actually them we selling just I of to with not -- examples product today that selling solution.

the and packaging In the something With contracts, negotiated, it being some case XX-year that's through right? paper that's of and a of pricing ten we a up varies ends tailor that or contract, contract. then our

in protect we're provide understand also to find customers to to solution. So our able we value ways But ourselves. the that we

we I so they fair able well. margin as there is to make. And a should be and therefore that think that And recognize

always -- negotiated and able we're to the as but that discussions giving constructive pricing. are have never back company contractual revert through protected very They're easy. challenging, and pricing then those we've the will to conversations pricing Now, margins

But easier in these provide. products going continue in solution, If to get we the deserve very the inflate, when to conversation. solution we're an value price we sure you're costs we our drive to valuable to a make providing a continue that's

how looking manage capital that's and it. So are But it transportation expenditures. materials raw in and it energy our seeing we labor at we and and we're and in

that we're It's across get back deliver with we're have companies able as we where And through. they board deal had it I it. past shown well, we've to we'll But very pass over associated and should and more, be. with or I time think to the year pricing there's some the to with think pretty dealing our how although margins

David Silver

all appreciate for it. additional the I Thanks detail.

Doug Dietrich

Thanks, David.

Operator

Please ahead. the of next take with question Sidoti. we'll Ferazani from line Steve And go our

Steve Ferazani

with of over QX flow, year the I CapEx. you improvement range. flow cash even On was There a had much higher Obviously know ago. targeted cash free

now those the know cash whether think what to of in sense trends we're targets on your to of sort months Just and five trying that conversion year still hold?

Doug Dietrich

I'll take that.

Erik Aldag

I Yeah, Steve. take can that,

yeah, quarter we lowest mean, each have as typically I that So, I cash mentioned, is the QX flow -- year. of are

normal in It we levels within the was quarter more was of the so And our back first expect. that expectations. we towards saw what

in year. but It's for cash cash majority about year of quarter, It of this half. which outlook the somewhat expecting to anything inflation. the doesn't in our typical versus XXX our that flow. improve going also What cash year is full change in is second We're free to be last flow still is going the is moderation flow, million second the the helping

our they Costs pace don't come cash have the and impact of and that much. the to flow haven't to working But through. fall inflation as necessarily that on slows, down starts capital moderates

what that's going And as year. move see so you're the we through to

Steve Ferazani

to reasonable still to under you even leverage? leverage, or two year-end net So get can think times

Erik Aldag

Yeah.

towards So that and get target the using to going paydown, our that we're debt. free think closer flow to going cash around much debt flow going year. That's target. EBITDA, two through times end be happen to down We're the EBITDA. up pay cash from to It's to cash of more to building reasonable is our

Doug Dietrich

Yeah, Steve, with $XXX million.

Steve Ferazani

no So change.

Doug Dietrich

Steve. ahead, Go Sorry.

Steve Ferazani

No, no, Douglas. go no. ahead, Please

Doug Dietrich

times leverage million $XXX I be with around would million to flow going the was of net. cash free say $XX two of

to two or absolutely times So within get able repayment, below. to we and cash see debt build

that cash Overseas. we cash States we in and will generate maintain, both the Some of United

that We for We use will that capital expenditures. hold overseas. cash

have We'll can choice cash So know, or cetera. bring bolt-on home. you et use taxes to it to trade-off we don't as a make offshore. with the move for we that, with there's acquisitions it But back

we've So yeah. all within region, hit able we got that time, be flow to those cash trade-offs but to target the the make

Steve Ferazani

could now opportunities flow bolt-on do that look cash How be improving?

Doug Dietrich

I guess They tell I'd are time. say there. this year we that I'm you hard going keep our that's opportunities. to eye they're to on out

strong have this to purchase say bias sheet work able is going becomes to something it year to to our on. We I be a am actionable. balance continuing when

three opportunities good the real some we've years. some strong purchased and profit growth from got over ones to We've the past generate

So got product to that say lines. there and worked some cost on We've the integrate continue move easier of and can we we won't I continuing things, we've after leverage we Normerica grow but to go as Concept these some Pet. of there's lot capacity fixed a

generating making really that's sure profitability. think over of made our we're the want years, debt. focus. couple So year I the maximum at the past this paying that off We looking acquisitions we've profitability the But down

to to to come if on able up and the cash were However, we've the in sheet on the it. got small, be regions balance something execute

So we're I focus our is ourselves spot I debt a really good in sheet, with think be think but the balance and paydown. really year going some this on Steve, to

Steve Ferazani

Thanks color on that. guys. Great. the I it, appreciate for

Operator

from take Harrison line we'll Please ahead. Partners. Research the with And our next question Mike go Seaport of

Mike Harrison

morning. Good Hi.

Doug Dietrich

Hi, Mike. How are you?

Mike Harrison

Doing well, you. thank

more of guess? any benefits there these growth that dollar in or structure. bit that margin there's been way indicated just reorganization, you're definitely changes And terms either is terms implemented operating? to streamlining on are this in what hoping you some color associated some this the terms now is maybe could these Now you've little I completed segments that how of real seeing have a with give or that new you've that terms was quantify I

Doug Dietrich

to Day You Investor of know, some questions. those come to going to just you're the get have Mike, to

are see same that Just I say, a were and joking. they in a going the stop to segments company to better product lines becoming. but of lot organize starting we're quantify what to These -- these and it's Look, around. year, to you way them are they of we see. terms we're yeah, that Look, last for want -- look, they

what And similarities to I'm technologies, you and project these growth to drivers. trying

And shelf in having consumer that one would innovation separate products all conversations so what but cycles. seeing weren't they in you'd around those are natural, group, the be before think we is segments on the sitting the

some common are that there we customers in There supply.

to temperature those unify ourselves to being the a we high that's present type consumer product to the In of R&D And products different talk and and engineered some together big getting as had blends kind some solutions couple able groups about a able provider being global so a -- solutions conversations companies happening. to kind of different. bit is consumer and them things these of with of of meetings the just

foundries sharing that's on. There's of I direct these opportunities in use materials. sales some think of, going refractory there's lot a terms

in And at to terms the I'm so their synergies. to able go able groups, with far with going move that that being conversations R&D look and industry being there's small the too not around the of have some similar strategies to they sales world. and as groups

seeing we're So happen. that

out play will this time. think I over

go. power I segments we will these think the be of evident as

I think innovation. certainly conversations having in more the it'll yield faster It's company.

I and think innovation new more will that faster, growth. yield faster products even

higher in products. there's around think thinking synergies I margin also the some

higher you the over targeted they're are of growth, years three lot past so, that growing fastest. the know, been we've products, And at products a developing higher and the margin type

going these that's with And to improvement to And to accelerate margin forward. our able so teams. going new will be also they help continue

these sometimes get a Why this to does reorganization you wonder, it you're look, So, conversations company. well, take going? know, you

of once be put know, place, start know, to in you you you see once put surprised And you'd together incentives drive and And, we're you a dynamic. starting that. to type things you different

So organization there. that's and energy spark some the what a kind of I meant by put it's in to

And that five Investor going May. talk our in Day see playing about years I to at to that how think few see the out a and little over we're bit going we we're next

hopefully able least if it. we'll make be at make it. not you'll to able to to be catch up hopefully on But able So it you're

Mike Harrison

D.J. Well, satellite? with It existing your Perfect. follow least. in you of the construction on the me to can it's retrofit that at Wanted the that something appreciate an explanation New preview offering. into I to Yield satellite. the integrated up something that sounded Is that's

retrofitted? with So have a new start that do that or can something is to project you be

D.J. Monagle

can be engineering I product And earlier. think way specific certain that referred particular specifically to is to retrofitted capability to very applications. which best we as is Mike, So, think New the apply crystal this that Yield to Doug of how

couple We of advanced and contemplating specifically. that negotiations that have trials a are

each be onto based this tailored So the new be can satellite on an retrofitted and case customer. existing in as and satellite environmental built condition it can particular specific of a it

to So but it it's does going apply to a everybody, application. good not have

I get some are packaging this as to well. we're technology manufacturers in from interested would some pull you also starting that pursuing tell that

So it's retrofit, little and application standalone particular broadly writing this a and than able and applied papers. to printing more be

Mike Harrison

a then question business on And the Great. care. and right. All consumer pet

label. into down if label private because have products that consumers guys to And You margins name selling starting starting where to the guess brands. in look you're reiterate of big maybe I inflation. you're glitter private your just trade position compared see Curious expand to worked to

Doug Dietrich

private a some but Yeah, the market, I litter been well, as products. growing faster has branded trend, not think over label just than you general. in time, of pet growing, in been the know, It's

sell we of Let in the know, overview. you pet not me an States. give we're you, give label. just United packaged largest business private private not our label, label Not just kind the I'll litter litter only you is do here manufacturer private

bought -- premium those little in we're all market brands cat We're and the premium Europe. Europe, it's much the provider We're a or largest pretty litter brands. is in different. store bit In the

you know, We goes for, the litter branded also in two into manufacturers, we sell bulk here so branded United bulk States. sell cat litter, the bentonite customers that clumping

pet business naturally grow that And Asia is growing. to growing. It's in ownership we're starting where

over in the think has pet ownership grown China XX% past years. at I couple of

got while, China. initiatives some for we've been there So continuing in grow and but a we've to

branded Also, been we has particularly in the North and in a America, and in Asia China. Demand channels pretty bulk into Europe, multi-channels. which we store, are sell We're the becoming channel is we're online, selling and prominent to we're in have robust. online so

and solid comments in growth. it's would regularly. products, Asia. growing between across say I X% in pet my I pet I seen products, that Europe demand at mentioned all pretty been a in we've X% pretty regions, mean, growing across North We've litter America, stable care and

I total than that. little lower a bit growing think in the is category

customer being private company's especially North America. margins. to a So the branded I speak bit can't trajectory, ours. I label in to that growth to Margins, higher speaks speak can only

Ours are and growing. they're good

have somewhat the but done and the we're pricing, more think to plants by of mines growing We've built is that fixed not not it's cost system. I support from to mentioned of piece of it I the and the leverage a our we system. we're get system that going around driven leveraging margin world that

We With even is think this got drive of X% business to fixed X% higher. capacity. in growth in we've cost leverage care plenty that that pet litter, to pet going margins

trajectory of the So more growth But positive. business work looks the the to this do. and improvement pretty margin in

Mike Harrison

is on do my packaged I just than question clarify you that bulk on you to private margins, better label products guys it guess realize margins on bentonite.

selling it that in use to You're their customers blends.

Doug Dietrich

would that, to bulk have answer having a We it integrated the on cat that I'm we're as using would on being But clumping America I margins, solid depends market. North and across. that on not we vertically all going say really Mike. sure in margins resource, I probably the good the chance XX%, make XX% you're say the I have channels. those we there's and litter. in -- good margins mentioned,

our You're shape one form. using bentonite probably in or

being that vertically we are position get integrated and we kind that sure for So of make value that's we the resource.

Mike Harrison

the question a for on Last Understood. me year a that comment get maybe of hoping is full outlook. we just little bit could

I But Any be guess to have You the detail for guidance have EPS appreciated. as that mean improvement there to guys full Do be talked full going on. I'll about maybe you other able year show I year the on you your you're year? would the year-over-year expectation here. of driving confidence growth start for sequential margin goes do

Doug Dietrich

Yeah.

a guidance on margin. gave bit little the Erik of So

will continued start in where at Let throughout the to specific year. see that times going me margin comes growth be from put there pricing the we we that That's year. throughout through come will sequential the pricing and margin pricing improvement have contractual that some happen do that place

last we not see the tapering points tune seeing run over XXX XXX year. of about improvement a basis some and transportation to on have being of tapering basis inflation, the although net margin rate We been us that are costs points, for of basis

So margins XX%. think, you were know, last year's

we XX%. at be on EPS different, of little by think run a rate higher basis, The if the not a the bit XX.X% bit little year, though. like We a can end is

growth interest The the different. EPS The a So only is there through. will change that come EBIT bit rates. little is

higher You know, a we're seeing interest.

We're floating than fixed line that's is prior below a us on little in think. debt of costing XX% charge is XX% floating interest our that And kind more been expensive I about it the more bit obviously has structure. expensive, That years.

alone year last over XXXX was it think $X.XX of I EPS.

I But have this and interest grow. project we're on tax probably around going EPS happened drag interest have $X.XX due rates, EPS probably changes our some to So can year can't that another another just world. the to

grow and I a year to translates but how interest rates. little EPS predict based So EBITDA net-net that this harder into will think on EBIT -- is

Mike Harrison

much. very Thanks Excellent.

Doug Dietrich

Thanks, Mike.

Operator

this I'd remarks. to any for time, At to Mr. Dietrich the like turn closing call back

Doug Dietrich

today. Thank growth you our in virtually and hope to joining you, see trajectories care. or we these you deeper first our person operator. I our for I and appreciate love into very Take much Investor you there. that. Anyway, I segments take joining to to do everyone for quarter thanks for us either appreciate join Day. encourage today call. for I'd

Operator

This your concludes today's and you Thank may you call. for participation now disconnect.

Minerals (MTX) 28 Apr 232023 Q1 Earnings call transcript