Minerals Technologies Inc 2026 Q2 Earnings Call

Good morning, everyone, welcome to our second quarter 2026 earnings conference call. Today's call will be led by Chairman and Chief Executive Officer, Doug Dietrich, and Chief Financial Officer, Erik Aldag. Following Doug and Erik's prepared remarks, we'll open it up to questions. As a reminder, some of the statements made during this call may constitute forward-looking statements within the meaning of the federal securities laws. Please note the cautionary language about forward-looking statements contained in our earnings release and on the slides. Our SEC filings disclose certain risks and uncertainties, which may cause our actual results to differ materially from these forward-looking statements. Please also note that some of our comments today refer to non-GAAP financial measures. A reconciliation to GAAP financial measures can be found in our earnings release in an appendix of this presentation, which are posted on our website.

I'll turn it over to Doug.

Doug? Thanks, Lydia. Good morning, everyone, thanks for joining today.

I'm gonna kick us off with a review of our second quarter financials. Erik will take you through the numbers in more detail and provide our outlook. At the end of our presentation, I'll briefly share some of the highlights from our sustainability report, which we just published, and provide a preview of our upcoming Investor Day on September 22nd. After that, we'll open the call to questions. First, a quick overview of the quarter results. Sales were $548 million, up 4% over last year, with operating income of $75 million. Earnings per share were $1.60, up 3% from last year. We continue to be a strong cash generator, with cash flow improving over last year, our balance sheet is in great shape, with our net leverage reducing to 1.6 times EBITDA.

Our top-line momentum has continued, with sales growing 7% for the first half of the year. I'll highlight that this has been quality revenue growth, driven by higher volumes from our new growth projects and from stronger end market conditions. Another highlight is that our Engineered Solutions segment delivered a particularly impressive performance this quarter, generating a record margin of 17.8% and a record quarterly income of $49 million. Both segments continue to be positioned for solid growth this year, with our strategic projects in each segment remaining on track. As a result, we have a clear line of sight to hitting our mid-single-digit growth guidance for the company for the full year.

In our Consumer & Specialties segment, our cat litter sales have grown 9% through the first half of the year, driven by the introduction of new products, and this business remains on track for a mid to high single digit growth year. We're also excited about our RAFINOL bleaching earth expansion, which is now ramping up, and we can begin working through a very strong order book from sustainable aviation fuel customers. Our new Fabricare product production is also ramping up. We expect sales to strengthen early in the fourth quarter. Paper and packaging sales were also strong, up 7% so far this year, and our three new satellite facility launches are all progressing.

In our Engineered Solutions segment, High-Temperature Technologies is having a strong sales year, driven by our refractories business, where sales are up 14%, driven by MinScan installations and the corresponding contractual refractory volumes, as well as from higher foundry sales in Asia, which are up 11%. We also saw strong sales in Environmental & Infrastructure, where sales are up 19% this year, driven by higher volumes of environmental lining products, building materials, and drilling products, as well as from strong demand for our offshore energy services business. Our main challenge this year has been dealing with the higher level and persistent inflation. As we mentioned would happen, this quarter, we absorbed quite a bit of higher energy, transportation, and raw material costs, the majority of which hit our Consumer & Specialties segment.

We've adjusted pricing across all product lines, due to contractual price increase timing to many customers in the Consumer & Specialties segment, the majority of the positive pricing impact is only now beginning to take effect. Margins in the quarter for the Consumer & Specialties segment were impacted as a result. Erik will outline all of the price cost dynamics for you in detail, we continue to make contractual price adjustments and expect to recover segment margins as we move through the second half of the year. A few other items I'd like to touch on before handing the call over to Erik. First, I wanted to mention that we've made organizational changes that I believe will result in even closer collaboration and greater efficiency across our four product lines.

We've elevated four experienced leaders to oversee each product line, leveraging their deep knowledge of our markets, operations, and technologies. This change will more closely align the people, products, facilities, and core technologies that serve similar markets and strengthen execution across the organization. We expect these changes to drive efficiencies, further accelerate innovation, and speed to market for new products, and accelerate best practice sharing and adoption across our business. Second, as we previously announced this past quarter, we also filed a plan of reorganization in the Chapter 11 cases of our subsidiaries, BMI OldCo, formerly known as Barretts Minerals. Its affiliated debtors to comply with the court deadline. Concurrently, with the filing of the plan, we recorded a charge of $290 million to increase our reserve for funding the proposed potential trust and for estimated costs related to this matter.

More recently, the judge has abated the bankruptcy court cases in order to await the outcome of a district court proceeding on the underlying talc causation issue. We continue to maintain that all talc sold by BMI OldCo has always been safe and remain committed to a fair and final resolution for the company and all stakeholders. Lastly, I'm pleased to announce that we published our 18th annual sustainability report earlier this week. It's packed with information about the company and our journey over the past several years. I'm going to take a moment at the end of our presentation to run you through some of the highlights. Now let me hand the call over to Erik, who will take you through our second quarter financials in more detail.

Erik? Thanks, Doug. Good morning, everyone.

I'll start by providing a summary of our financial results, followed by a review of our segments. I'll wrap up with our outlook for the third quarter. Following my remarks, I'll turn the call back over to Doug. Let's review our results. Second quarter sales were $548 million, up 4% versus last year, driven by strength in High-Temperature Technologies and Environmental & Infrastructure. After a strong first quarter, second quarter sales in Consumer & Specialties were down slightly from last year, primarily due to some volume that shifted into the second half in Household & Personal Care. Second quarter operating income was $75 million. You can see from the bridge on the lower left that volume contributed $4 million and pricing contributed $8 million to income.

Overall cost increases totaled $16 million in the quarter as we experienced higher freight, energy, and energy-linked costs, such as mining. The cost environment remains dynamic. Further price adjustments will be necessary until costs stabilize and we fully offset these increases. Moving to the top right side of the slide, sales have grown 7% in the first half over last year, with 5% growth in Consumer & Specialties and 10% growth in Engineered Solutions. We'll show year-to-date figures in a few places today to highlight the growth so far this year and to highlight the magnitude of the cost impacts that we expect to fully recover once these higher costs plane over. The first half operating bridge on the bottom right shows that volume delivered $13 million of additional income. Higher pricing contributed $14 million.