Minerals Technologies (NYSE:MTX) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.
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Summary
Minerals Technologies reported strong first-quarter sales of $547 million, an 11% increase year-over-year, driven by growth in both the consumer and specialty, and engineered solutions segments.
Strategic growth investments, including expansions in cat litter and natural oil purification facilities, are contributing to revenue growth, with a target of $100 million in incremental sales for 2026.
Despite geopolitical challenges, the company managed to avoid significant disruptions but faced increased energy and freight costs, addressing these with pricing actions and temporary surcharges.
Operating income increased by 7% to $68 million, with earnings per share rising 21% to $1.38, indicating strong financial performance despite cost pressures.
Management expressed confidence in achieving mid-single-digit sales growth for 2026, bolstered by strategic investments and improving market trends, but remained cautious of macroeconomic uncertainties.
Full Transcript
OPERATOR
Good morning and welcome to Minerals Technologies first quarter 2026 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Lydia Kopalova, Head of Investor Relations. Please go ahead.
Lydia Kopalova (Head of Investor Relations)
Thank you, Gary. Good morning everyone and welcome to our first quarter 2026 earnings conference call. Today’s call will be led by Chairman and Chief Executive Officer Doug Dietrich and Chief Financial Officer Eric Alduck. Following Doug and Eric’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 and in the appendix of this presentation, which I’ll post on our website. Now I’ll open it up to Doug.
Doug Dietrich (Chairman and Chief Executive Officer)
Thanks, Lydia. Good morning everyone and thank you for joining today. As usual, I’ll provide a quick review of our first quarter financials. Then I’ll give an update on our outlook for the remainder of 2026, including an overview of the impact that current events are having on our business and the progress we’ve been making on our growth projects. Eric will then take you through the detailed financials and provide our outlook. After that we’ll open up the call to questions. Before we get into the details, let me start with the headline. We delivered a strong first quarter with broad based double digit growth and we’re seeing early proof that our strategic growth investments are paying off. First quarter sales came in at $547 million up 11% from prior year. Sales growth was broad based and from both of our segments we saw an 11% year over year increase in our consumer and specialty segment driven by household and personal care which grew 16% and specialty additives which grew 6%. Our engineered solutions segment sales increased 12% over last year with high temperature technologies up 8% and environmental and infrastructure up 24%. A portion of this growth is tied to the specific investments we made last year in support of our strategic growth initiatives to expand into higher margin consumer markets and into higher growth geographies. If you recall, we projected that these initiatives would drive $100 million in annualized revenue beginning this year and this quarter we delivered the first portion of that growth from a market perspective. We saw small improvements in demand at the start of the year, which then trended stronger in March. The stronger trend has continued here. In the second quarter, operating income was $68 million excluding special items, up 7% from last year. Earnings per share were $1.38, up 21%, and both operating and free cash flows improved significantly compared to last year. Like most companies, we felt the impact this quarter from the rapidly changing environment caused by the recent geopolitical events, and I’ll talk about that more on the next slide. Let’s start on the left side of this slide with some points about the impact Current Events in the Middle East Overall, we’ve avoided any material impact on sales or operations to date. Where we have seen an impact is with higher energy and freight costs, which we are addressing through pricing actions and temporary surcharges. In terms of our operating and sales footprint, we only have a small presence in the region, primarily consisting of refractory sales to Middle East steel producers and a long standing joint venture in our energy services business. We did encounter some challenges with shipments that were in the Persian Gulf when the conflict started, but we managed to redirect those shipments to ensure delivery to our customers. Our team responded quickly to the changing environment, much as we did last year with tariffs, and I want to thank our employees for their agility and creativity in identifying solutions for our customers. Our biggest current challenges are higher energy prices at our facilities, increased fuel cost for our heavy equipment, and higher transportation and freight costs. Once these impacts became apparent, we implemented price actions, some of which could be implemented quickly and others which will take effect over the next 90 days due to contractual terms. We are of course closely monitoring the evolving conditions and are prepared to implement further actions as needed. We’ve had minimal supply disruptions as a result of the conflict, and I’d like to point out that from a broader supply chain and logistics standpoint, we benefit from the geographically diverse structure of our business and the localization of our operations. We typically produce our products within the same region or country where we sell them. I believe that this operating structure is one of MTI’s key differentiators as it limits the impact that global supply chain disruptions have on us. This structure will further demonstrate its value as the trend for locally produced minerals and mineral based products increases. Now let me turn to the right side of the slide to update you on our growth projects, the progress we’re making and the associated timing of the expected sales, as well as some market updates. There are a number of positive elements here, all contributing to what we see as strong sales momentum this year. I’ll start with our consumer and specialty segment. In our household and personal care product line, we’ve been upgrading and expanding several of our facilities. The cat litter facility expansions that we completed late last year in North America are fully online. We’ve been ramping up the new business we’ve secured for them from customers in the US and Canada. In fact, this is a record sales quarter for cat litter which grew 19% over last year. Our new cat litter facility in China also continues to ramp up and should be fully functional by the second half of the year. With new business orders already secured. Last year we announced a capacity expansion for our natural oil purification facility. We expect to have this fully online late in the second quarter, enabling us to meet the rapidly growing demand we are seeing for renewable fuels, specifically sustainable aviation fuel. Our high performing products are uniquely capable of meeting the challenging specification for these applications. This quarter. Sales of These products grew 14% over last year and we expect this pace to accelerate once the expansion is fully operational. Elsewhere in our specialties business, our animal health business is trending nicely with sales up 9% over last year, and we’re anticipating strong volume growth in Fabricare starting in the second half with the introduction of a new technology in our specialty additives product line. We previously announced the ramp up of several new satellites in our paper and packaging business, as well as capacity expansions at others, all of which remain on track for the second half of this year. One area where we’ve not seen much improvement is in the North America residential construction market, which remains relatively slow. Turning to our engineered solutions segment in the high Temperature technologies product line, the MinScan installations we previously announced all remain on track. We are seeing higher refractory product demand from stronger steel markets in North America as well as from the share gains we’ve captured as a result of our MinScan installations. Europe steel production, on the other hand, remains soft. Our metal casting business remains stable with no major inflections. We’re seeing some strength in municipal foundry applications and the North America heavy truck market is showing signs of potential recovery, but we continue to see slow demand from the agricultural equipment market. Foundry markets in Asia remain stable and demand for our engineered foundry blends continues to expand, with sales growing 9% in the first quarter over last year. In environmental and infrastructure, we’re seeing the potential beginnings of demand improvement mainly through environmental lining project activity, which has increased of late. We’re also on track for 10 or possibly more new water utility implementations for our FluoroSorb PFAS remediation product in the second half, and demand for our infrastructure drilling products remains robust in both North America and Europe. Let me summarize all this for you. First, I’m pleased with how our growth investments are performing and we’re on track to deliver $100 million of incremental sales. We’re off to a strong start to the year and we still have several new growth projects ramping up over the next two quarters. In addition, we’re seeing improving trends in many of our end markets. At the same time, we’re mindful of continued macro uncertainty, particularly around energy costs. But even with that backdrop, the momentum we’ve established from these well time investments and the positions we’ve established in durable and growing end markets puts us on track for a solid growth year. Our current projection is for mid single digit sales growth in 2026 and this could inflect higher if the market strength we are currently seeing continues. Now let me turn the call over to Eric who can take you through our financials and provide more details.
Eric Alduck (Chief Financial Officer)
Eric thanks Doug and good morning everyone. I’ll start by providing an overview of our first quarter results followed by a review of the performance of our segments and I’ll wrap up with our outlook for the second quarter. Following my remarks, I’ll turn the call over for questions. Now let’s review our first quarter results. We had a strong start to the year. first quarter sales were $547 million, up 5% sequentially and up 11% from prior year with solid growth across all product lines. In the sequential sales bridge on the upper left, you can see that sales in the consumer and specialties segment grew 22 million from the the prior quarter or 8% driven by strong growth in both household and personal care and specialty additives. Sales in the engineered solutions segment were up $5 million from the prior quarter driven by High Temperature technologies. Operating income was $68 million in the first quarter, up $1 million from the fourth quarter driven by higher volumes and improved productivity in the consumer and specialties segment. Turning to the year over year bridges, you can see that sales were well above prior year in all four of our product lines, excluding favorable foreign Exchange our sales grew 8%, driven by higher volumes in several of our businesses. We also benefited from a few extra days in the quarter relative to last year. We estimate that underlying growth excluding FX and the few extra days was 5 to 6%. In consumer and specialties sales in household and personal care were up $19 million or 16%, and specialty additives sales increased $9 million or 6% from prior years. In engineered solutions, sales in high temperature technologies grew $14 million or 8% versus prior year and environmental and infrastructure sales grew $13 million or 24%. Operating income improved 7% from prior year with increases from the segments totaling $8 million. Operating income and margin would have been stronger if not for the rapid shift in freight and energy costs we experienced during the quarter as well as higher corporate expense due to the change in stock price during the quarter and the resulting mark to market impact on stock based compensation. Recall that our guidance for the first quarter assumed 2 to 3 million from thears of higher energy and mining costs. We actually incurred about $5 million of higher costs in the quarter. While we do hedge a large portion of the energy we consume at our plants, the increases we experienced in the quarter were mostly in the form of higher freight expenses due to the increase in fuel costs. We expect to fully offset these higher input costs through pricing and other actions as we move through the year. However, we are anticipating a timing lag of up to 90 days, in some cases based on contractual pricing arrangements. All in all, it was a good start to the year with solid growth above our initial expectations. We are managing through some new cost challenges and we are working diligently and quickly to overcome them, just as we’ve done in previous inflationary periods. Despite these higher costs, our earnings per share, excluding special items, grew 21% from last year, setting us up for a strong year in 2026. Now let’s turn to a review of our segments beginning with consumer and specialties first quarter sales in the consumer and specialties segment were $297 million, up 11% from prior year. In household and personal care, sales of $142 million were up 16% year over year. Cat litter sales continued to build on the momentum we saw in the second half of last year. The new business we secured ramped up ahead of schedule in the first quarter, which helped drive cat litter sales up 19%. Sales of bleaching earth for edible oil and renewable fuel purification remained on a solid growth track, up 14% from prior year and commissioning is underway with our capacity expansion for this product line to serve our expanding order book. Our capacity investments are also progressing well for animal health and fabric care, which grew 9% and 13% respectively in the first quarter, and we expect sales from these investments to ramp up beginning in the second half. Sales in specialty additives grew 6% from prior year to $154 million. Our volume to paper and packaging customers in Asia was up 21% including the ramp up of our newest satellites there. This growth was partly offset by slower sales into residential construction. We did see an improvement in residential construction volumes from the fourth quarter as expected. However, this end market remains soft compared to prior years. Operating income for the segment increased by 8% from last year to $33 million. Operating margin improved by 40 basis points sequentially despite the rapid increases in freight and energy costs we saw in the first quarter, and we expect operating margin to continue to build throughout the year as we work with our customers to pass through these incremental costs and as we gain leverage from our growth initiatives. Looking ahead to the second quarter, we expect segment sales to be similar sequentially and up 4 to 5% from prior year. Sales in household and personal care are expected to remain strong up mid …
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