Minerals Technologies Q4 2024 Earnings Report

Minerals Technologies EPS Results

• Actual EPS: $1.50
• Consensus EPS: $1.39
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: N/A

Minerals Technologies Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $522.93 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Minerals Technologies Announcement Details

• Quarter: Q4 2024
• Date: 2/6/2025
• Time: After Market Closes
• Conference Call Date: Friday, February 7, 2025
• Conference Call Time: 11:00AM ET

Minerals Technologies (NYSE:MTX) develops, produces, and markets various mineral, mineral-based, and related systems and services. The company operates through two segments, Consumer & Specialties, and Engineered Solutions segments. The Consumer & Specialties segment offers household and personal care products, such as pet litter, personal care, fabric care, edible oil and other fluid purification, animal health, and agricultural products; and specialty additives products, including precipitated calcium carbonate and ground calcium carbonate products that are used in the paper, paperboard, and fiber based packaging industries, as well as automotive, construction, and table and food applications. This segment produces limestone and dolomitic limestone used in construction, automotive, and consumer markets for packaging applications. The Engineered Solutions segment provides high-temperature technology products consisting of custom-blended mineral and non-mineral products for casting auto parts, farm and construction equipment, oil and gas production equipment, power generation turbine castings, and rail car components; and environmental and infrastructure products comprising geosynthetic clay lining systems, vapor intrusion mitigation products, sub surface waterproofing systems, green roofs, wastewater remediation, drinking water purification technologies, and drilling products. In addition, this segment provides chromite products; gunnable monolithic refractory products and application systems; monolithic refractory materials and pre-cast refractory shapes; refractory shapes and linings; carbon composite and pyrolitic graphite; and filtration and well testing services. It markets its products primarily through its direct sales force, as well as regional distributors. The company serves in the United States, Canada, Latin America, Europe, Africa, and Asia. Minerals Technologies Inc. was incorporated in 1968 and is headquartered in New York, New York.

Minerals Technologies Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning, and welcome to the Minerals Technologies Fourth Quarter twenty twenty four Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Lydia Kopilova, Head of Investor Relations at Minerals Technologies.

[Operator]

Please go ahead.

[Lydia Kopylova, VP - Investor Relations at Minerals Technologies]

Thank you, Gary. Good morning, everyone, and welcome to our fourth quarter twenty twenty four earnings conference call. Today's call will be led by Chairman and Chief Executive Officer, Doug Dichter and Chief Financial Officer, Eric Aldag. 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 law.

[Lydia Kopylova, VP - Investor Relations at Minerals Technologies]

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. Also, please 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 an appendix of this presentation, which are posted on our website. Now I'll turn it over to Doug.

[Lydia Kopylova, VP - Investor Relations at Minerals Technologies]

Doug?

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Thanks, Lydia. Good morning, everyone, and thanks for joining today. Let's go over a quick outline for today's call. First, I'll do a quick review of our full year financial highlights, then spend a few minutes reviewing the progress we've made this year on our long term strategy. Eric will then take you through the detailed financials for the quarter and full year, and I'll come back at the end to give you an overview of what we're seeing in our end markets for 2025.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Let me start off by saying that 2024 was an incredible year for MTI. This was the first full year after our re segmentation and one where we saw the true power of our new organization. It was also an impactful year in which we enhanced our financial stability, demonstrated the effectiveness of our business system and continue to prove the value that we bring to our customers. I'm very proud of what our teams around the world achieved and want to thank them for their ongoing dedication to delivering outstanding results for our stakeholders. I'll start by saying that this ended up being a relatively flat sales year for MTI.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Our consumer oriented businesses continued on a steady track and we're seeing the growth that we expected from our positions in these expanding markets. However, the commercial construction market weakened further throughout the year and our steel and foundry markets that began the year strong softened toward the end. Nonetheless, our ability to navigate these issues and remain focused on the execution of our growth strategies turned the revenue we generated into a year of record profitability. This is the fourth consecutive quarter and the second consecutive year of record operating income. Our solid execution on growing our higher margin products, disciplined pricing, capturing cost savings and improving productivity led to an operating margin of 15% in 2024, a target we had planned to achieve by the end of twenty twenty five.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

This is also the second consecutive year of record EBITDA reaching over $400,000,000 this year. Full year earnings per share were also a record increasing 18%. We sustained our strong cash flow generation and strengthened our balance sheet. We increased returns to shareholders by completing our previous $75,000,000 share buyback program, further increasing dividends by 10% and authorizing a new $200,000,000 share repurchase program. Our strong cash generation profile provides us with significant financial strength and options to drive value.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Over the past four years, we've acquired three companies, paid down debt keeping leverage at or below our target levels and returned over $240,000,000 to shareholders. These achievements underline the effectiveness of our operating model and are the outcome of strategic actions we've taken over the last couple of years. Two years ago, we realigned our organization to enhance operational efficiencies, speed up decision making and better align accountability. This change continues to pay off with strong performance by our team. Our results this year were delivered in no small part through our ongoing focus on managing costs and improving productivity, all of which would not be achieved if we were not anchored in a culture of operational excellence.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

We have a highly engaged team of colleagues who come to work motivated to provide input and generate ideas at all levels of the organization. Last year, we performed over 8,500 problem solving Kaizen events and implemented more than 80% of the 60,000 suggestions we received from our employees around the globe. MTI's four thousand employees submit an average of 160 suggestions and conduct 30 problem solving events each and every day across the company. Those are remarkable numbers from a high performing workforce and a powerful example of our people centered operational excellence culture. All in all, this is a solid year for us, one where we made significant progress against our long term goals.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

We also made significant progress in 2024 in each product line on the three elements of our growth strategy. As a reminder, our strategy has been to grow in consumer oriented markets, expand our positions in our core markets and extend them geographically, and continuously introduce new innovative higher margin products to the market. Let me walk you through some of these highlights and I think it will give you a good perspective on how we continue to transform MTI and solidify its foundation for sustainable growth. As I just mentioned, one of our core strategic tenets is to expand in higher growth consumer oriented markets. This past year, we completed the integration of the three pet litter companies we acquired into one unified business called Civo.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

This new name is a way for us to be uniformly recognized by our customers around the world for the value we can bring to them in any region. We're the only company that can offer the combination of vertical integration, our global manufacturing footprint and deep technical capabilities to provide stable supply of innovative solutions. This business is well positioned to supply both private label and branded cat litter customers worldwide and generate above market rate sales growth. We're also building on the global trend of converting to natural additives in products ranging from personal care to animal health. Illustrating this, our animal feed additives business has grown at a 25% rate over the past couple of years and we see this pace continuing in 2025.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Another high margin business where we're well positioned to continue to grow is our natural oil filtration business or bleaching earth, which serves the edible oil and renewable fuel markets. This business has grown steadily over the last three years and we expect its growth to accelerate as regulation for increased use of sustainable aviation fuel additives is driving higher demand for our products in 2025. At the center of this slide are some examples on how we have deepened our positions in core markets and continued to expand them geographically this past year. We further solidified our position in the electric arc furnace market through the deployment of our automated Minscans. These units also position us for sales of our new high durability refractory products for these same furnaces.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Over the last two years, volumes of our foundry greensand bond systems have grown by 7% in Asia, a rate that they have been consistently growing out for the last eight years. We made further progress with penetrating into the growing packaging market. Since 2021, '60 percent of the satellite capacity we've installed has been for packaging applications. We also continue to successfully deploy NuYield, a technology that repurposes customers' papermaking waste and three of the five contracts we signed in 2024 were to deploy this innovative product. Lastly, we positioned ourselves as a leader in PFOS remediation through our Fluorazorb absorbent solutions.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

In 2024, we sold product into 51 projects, including drinking water utilities and groundwater remediation. We currently have over two fifty Fluorozorb projects running around the world and are working with the U. S. EPA on a broad based study of our products in several drinking water applications. On the right side of this slide are some examples of new product innovation, the third element of our growth strategy.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

The pace of innovation at MTI remained robust in 2024 with our percentage of revenue generated from new products remaining around 18%. Let me touch on a few new products released this year that will have a positive impact on our sales going forward. To help our cat litter customers maintain their brand, we must continue to offer them innovative technologies. This year, we have several new products rolling out to our customers with features such as litter with a pet health indicator, litter that has better clumping and better odor control and litter that is lighter in weight. We also have added to our portfolio of sustainable solutions this past year.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

A few examples are post consumer recycled packaging solutions, specialty additives for bioplastics and lower emission foundry blends. And we're excited about our new infrastructure solutions like drilling muds and grouts that provide efficient solutions to support increased drilling activity for hardening of the power grid. In summary, we accomplished quite a bit on all strategic fronts this past year. Each of these are examples of moves we have made to drive sales higher in 2025, but also to further solidify our foundation for long term growth.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Now let

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

me turn the call to Eric to take you through the details of our financial results for the fourth quarter and full year. Eric?

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Thanks, Doug, and good morning, everyone. I'll start by providing an overview of our fourth quarter and full year results, followed by some detail on the performance of our segments, And I'll wrap up with our outlook for the first quarter. Now let's review our fourth quarter results. We finished 2024 with another strong quarter. Our operating income and EPS results were record fourth quarter performances for the company, all while navigating some mixed market conditions.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Fourth quarter sales were $518,000,000 You can see from the bridge that sales in our Consumer and Specialties segment were slightly below prior year, driven by Specialty Additives. And in the Engineered Solutions segment, we saw further softening in the fourth quarter in our Steel and Foundry markets, which impacted sales in High Temperature Technologies. Despite some challenging market conditions, we delivered another strong operating performance. Gross margin improved by 170 basis points versus the prior year to 25.6% of sales as our teams delivered on price increases, cost savings and productivity. Operating income increased by 7% year over year to $74,000,000 You can see in the operating income bridge that our pricing actions of $4,000,000 and favorable cost performance of $3,000,000 more than offset the unfavorable volume impact resulting in an improvement to operating margin of 110 basis points.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Fourth quarter earnings per share was $1.5 excluding special items representing a 17% increase versus the prior year. Our reported earnings were $1.68 which included a

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

$12,000,000 gain on

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

the sale of a refractory facility in China. We sold this facility to the local government who was developing the area. This was a very small piece of our refractory business and we've absorbed the business across our other facilities in the region. Now let's review our full year results. Overall, 2024 was an outstanding year for MTI.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

The company delivered record performances for operating income, EBITDA and earnings per share, and we expanded operating margin by 200 basis points versus the prior year. Full year sales were $2,100,000,000 In the sales bridge, you can see that we saw continued growth in the Consumer and Specialty segments, offset by lower sales in Engineered Solutions. The Environmental and Infrastructure product line drove most of the year over year change in sales as weak market conditions for commercial construction and environmental lining applications persisted for most of the year. And in High Temperature Technologies, we experienced slowing demand for steel and foundry products in North America and Europe as we moved through the second half of the year. Operating income was $316,000,000 up 13% overall and up 16% on an underlying basis driven by favorable mix, pricing and cost savings.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Altogether, we delivered $44,000,000 of operating income improvement over 2023. Adjusted EBITDA was $4.00 $6,000,000 representing 19.2% of sales and up two ten basis points. And finally, our full year earnings per share was 6.15 representing an 18% increase over the prior year. I'd also like to highlight that over the last five years, our EPS has grown at an 8% compound rate. Now let's review the performance of our segments beginning with Consumer and Specialties.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Fourth quarter operating income for the segment was 4% higher than prior year on 1% lower sales. Household and Personal Care sales were 2% higher sequentially and relatively flat year over year. Cat litter sales increased 5% sequentially and were up 1% versus prior year. And sales of our other high margin specialties in this product line were down slightly due to the timing of customer orders. Specialty Additives fourth quarter sales were 2% lower than prior year, primarily driven by pass through pricing and softer base volumes in paper and packaging, which offset new volumes in Asia in the quarter.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

For the full year, segment sales grew 2% and operating income grew 25% on an underlying basis. Sales in Household and Personal Care grew 2%, primarily driven by sales of cat litter. We also saw growth in Animal Health, Personal Care, Edible Oil and Renewable Fuel Purification and Fabric Care. These relatively small, but fast growing and high margin businesses will continue to have a larger impact on the segment's growth and margins as they become a larger part of the portfolio. Specialty Additives sales grew 1% on 3% higher volume.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Note that some of the growth in this product line was offset by lower energy surcharges and formula price changes. Overall, the Consumer and Specialties segment delivered an impressive operating performance in 2024. As Doug outlined, we're making progress on growth initiatives and we're making investments across both product lines to support these initiatives. Throughout the year, the team adjusted selling prices as appropriate, captured cost savings and drove productivity improvements. The result was a two sixty basis point expansion in operating margin and a 25% increase in operating income.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Now let's turn to the Engineered Solutions segment. Fourth quarter operating income for the segment was 8% higher than the prior year on 2% lower sales. High Temperature Technologies sales were 3% lower than the prior year amid some challenging end markets. Steel utilization rates in The U. S.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Dropped to as low as 72% in the fourth quarter, down from as high as 80% in the third quarter. And the Europe steel market, which has been weak all year, declined further in the quarter. On a more positive note, our Asia foundry volume grew 10% in the quarter. Most of this growth was driven by the continued penetration of our products in the region. We also had some customers pull their orders forward into the quarter ahead of the relatively early Lunar New Year.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Environmental and Infrastructure sales grew 4% over the prior year, a welcome change from prior quarters. This was partly due to a large waterproofing project in the quarter, but we also had higher sales of drilling products linked to infrastructure projects. And remediation and wastewater was another bright spot, up 43% versus prior year on solid demand for industrial wastewater treatment and environmental remediation. For the full year, operating income grew 7% on 3% lower sales. Full year sales in High Temperature Technologies were 1% lower as solid market conditions at the start of the year gave way to more challenging conditions as we moved through the year.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

And our Asia foundry volume grew 8% for the year as we continue to penetrate the region with our differentiated products and technical services. Full year sales for environmental and infrastructure were 8% lower as this product line experienced significant declines for the first three quarters. However, we started to see signs of the market stabilizing in the fourth quarter. Overall, despite some challenging market conditions, Engineered Solutions delivered a solid performance. The segment's operating performance was driven by consistently strong execution, productivity improvements and diligent cost control.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Now let me turn to a summary of our balance sheet and cash flow highlights. We delivered a strong cash flow performance for the year. Cash from operations was $236,000,000 and free cash flow was $147,000,000 representing 7% of sales. We deployed $90,000,000 on CapEx, paid down $39,000,000 of debt and returned slightly more than 50% of our free cash flow to shareholders through dividends and share repurchases totaling $77,000,000 Our balance sheet continues to be very solid. We refinanced our debt in November, extending our average maturity to more than five years and increasing our strong liquidity position.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

We finished the year with net leverage at 1.6 times EBITDA and liquidity of more than $700,000,000 The steps we took in 2024 further strengthened our financial position and will help support our long term growth strategy going forward. Looking ahead, we expect 2025 will be another strong year from a cash flow perspective with free cash flow in the $150,000,000 to $160,000,000 range. Now I'll summarize our outlook for the first quarter. We currently expect first quarter sales of around $500,000,000 operating income of around $70,000,000 and EPS between $1.3 and $1.35 We've had a slow start to the year on both sides of the business with customers taking a more cautious approach to inventories and shifting around their orders. We believe this is partly driven by the uncertainty in some end markets around the potential introduction of tariffs and partly just general conservatism on inventory levels and production schedules.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

However, we don't see this reflecting a fundamental change in the health of our end markets. From a market perspective, we expect first quarter demand to to remain similar on both the consumer and the industrial side of the company. We expect sales in consumer and specialties will be similar sequentially. We expect sales in engineered solutions will be around 5% lower sequentially due to the slow start in January, the Lunar New Year holiday and the large waterproofing projects we delivered in the fourth quarter. I'll also note that the stronger U.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

S. Dollar is impacting our sales by approximately 2% to 3% in the first quarter versus last year. Overall for MTI, our order books and shipments have been improving every week, which gives us confidence in the health of our end markets and our outlook for the first quarter. And we expect further improvement across our end markets as we move into the second quarter. Doug will take you through more of what we're seeing for the rest of the year in just a moment.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Before I hand the call back over to Doug, I'll give some perspective on the current tariff situation and potential implications for MTI as I'm sure is of interest to many of you. We shared a similar slide in 2018 when the previous round of tariffs was put in place. And as we've said previously, we primarily source and sell locally in the regions where we operate, which does insulate us from the impact of tariffs. On the top left of this slide, you can see that a very small portion of our cost of sales is imported into The U. S.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

To put this in perspective, the 10% additional tariff on China would increase our cost by approximately $2,000,000 on an annualized basis. We also move a small percentage of our finished goods across borders in North America as shown on the bottom left of this slide. The potential impact of the proposed tariffs on Canada and Mexico would be approximately $10,000,000 The actual impact of all these tariffs though would be less as we have multiple mitigating actions we would take, for example, shifting production between our facilities if necessary. While the tariff outlook is still uncertain, including potential end market effects, I'll summarize by saying that MTI's direct exposure is limited and we are well positioned to navigate these dynamics. With that, let me turn the call back over to Doug for some additional perspective on the year ahead.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Doug?

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Thanks, Eric. Let me finish up today by giving you an outlook on how our markets are shaping up for 2025. Overall, we're set up for a stronger year and anticipate sales growth of between 35% for the full year. A general framework for how we see the year playing out is that the consumer side of the business will remain solid and continue its growth track. The industrial side of the business will have a relatively slow first quarter and strengthened throughout the year.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Let me break this down for you by segment and point out a few trends and some specific factors in each. In Consumer and Specialties, we have a positive outlook on growth for the year. In Household and Personal Care, our cat litter business has grown share and secured new sales with customers in North America, Europe and Asia. Sales will increase from our new packaging options and from the new technologies that I spoke about earlier. Our specialty consumer products like animal health, natural oil filtration and personal care products will all continue at their double digit growth rate this year.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

The specialty additives product line is also set up for a solid year. We have three new paper and packaging satellites coming online and expect stronger demand for our ground and precipitated calcium carbonate additives serving food and pharma and residential construction end markets. On the Engineered Solutions side, our outlook is a bit more conservative because of the uncertainty we are currently seeing in a few of these end markets. In High Temperature Technologies after a slow start, we expect the North America steel market to improve as we move into Q2 and through the second half of the year. We could also see some increased demand given the potential additional tariffs placed on steel imports, which may result in higher U.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

S. Production. Our Metalcasting business should remain stable in North America and continue to grow in Asia. We could see some potential upside in Metalcasting in The U. S.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

When the agriculture equipment market rebounds from a challenging 2024. Our Environmental Infrastructure product line has seen the biggest impact on its markets over the past few years due to higher interest rates. There are several potential catalysts which could drive growth in this product line, including increased infrastructure spending and lower interest rates, which support a rebound in commercial construction. We are seeing starting to see indications of stabilization in the large landfill lining and commercial construction markets, but it's a bit too early to tell if this is the beginning of a positive inflection. We also expect continued growth in Fluorozorb and are set to launch a large product project here in the Northeast, which should help generate further sales traction.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

As Eric mentioned, we're watching what happens with regulations, taxes, the timing of tariffs and the effect all of this could have on our markets. But MTI is well positioned for what comes our way. We have operations in each of our major markets with capacity to support demand if it moves from one geography to another. We have a very agile team and we'll quickly adapt to changing circumstances as they unfold. Speaking of our team, I'd like to thank everyone at MTI again for another great year.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

This is

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

a people centered company and the continued focus on operational excellence across our organization is what sets us apart. For those of you on the webcast and dialing in, thank you for joining the presentation today. Now let's open it up to questions.

[Operator]

We will now begin the question and answer session. The first question is from Daniel Moore with CJS Securities. Please go ahead.

[Daniel Moore, Partner - Director of Research at CJS Securities]

Thank you. Good morning, Doug. Good morning, Eric. Thanks for the color and taking the questions. Start with obviously operating execution has been really impressive.

[Daniel Moore, Partner - Director of Research at CJS Securities]

You're already basically at your 15% operating margin goal. What are your expectations for fiscal twenty twenty five? And where do you see margins heading over the next two to three years?

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Yes. Hi, Dan. Thanks for the question. So, yes, we've had a strong operating performance in 2024 and we reached that 15% operating margin target pretty much a year earlier from where we expected. I think for 2025, just from where we sit today, we're expecting to maintain that 15% margin or improve upon it.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

We do expect the margin to build through the quarters. So what we're guiding to in the first quarter equates to something around a 14% margin, which is similar to what we had in the fourth quarter and makes sense from a seasonality perspective. And so we would expect to see a margin build as we get into the stronger seasonal quarters in Q2 and Q3. There's a little bit of uncertainty in terms of the end market picture as Doug alluded to. So little bit cautious on guiding higher than that 15%, but right now confident in maintaining the 15% and could go higher from there depending on markets and volume leverage.

[Daniel Moore, Partner - Director of Research at CJS Securities]

Makes sense. Appreciate it. And then, Doug, appreciate the color on end markets. Just in terms of top line growth, Consumer and Specialty, goal is to get to kind of mid single digit growth. Obviously, you've got some headwinds in terms of inventory, customers manage the inventories here in the short term.

[Daniel Moore, Partner - Director of Research at CJS Securities]

What do you need to see to drive sustained kind of low and then mid single digit growth? And when do you think we can get there, net to Consumer and Specialty specific?

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Yes. So this year, I think we're set up for a stronger year growth in Consumer and Specialties. We're looking in the 4% to 8% range for that product for that segment. And it's really going to be driven by what we see is in some of the product lines that I talked about pet care or pet litter and the new products that we have coming online in the second quarter, the market share gains are entry in a pretty significant way into Asia that's going to be driving growth this year. I talked about some of our bleaching earth with renewable fuels.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

We are seeing some significant demand growth in that product line from aviation, sustainable aviation fuel. I don't know I'll let DJ give some more color, but some additive rates have changed in Europe and it's really pulling harder for that. And so we see that being a very positive. So we have a number of things that we feel are positive for that product line going forward. I guess the area that, as I mentioned, is a little bit uncertain right now is on the Engineered Solutions side.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

We saw a softer second half of the year and we think that that's persisting into the first quarter. There are indications we hear we get from customers right now that and in our order books that we see building in the back half of the first quarter for a stronger second and back half of the year. So it's almost like a mirror image of what happened last year. I think if those play out like that, we could be on that mid single digits or higher part of the guidance I gave you. I gave you 3% to 5%.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

If building and construction and interest rates persist and we don't see the drag in building and construction, but we see a planing over, We might be on the 3% to four percent range. So I guess I'm not giving you exactly the guide because it's a bit uncertain as we sit today. But to get us above that 5%, I think what's going to happen is you're going to start to see these consumer specialty businesses become a much bigger part of our portfolio. They're growing at double digit rates today. Animal Health, Bleaching Earth, our Personal Care business with the cat litter growth in that mid single digits, I think is that product line that's been kind of the structure of the company.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

As that product line gets bigger and bigger, bigger, it's going to have those higher growth rates and I think that's going to take us above that 5% and push us in the high mid single digits over the long term. Does that help?

[Daniel Moore, Partner - Director of Research at CJS Securities]

Really helpful.

[Daniel Moore, Partner - Director of Research at CJS Securities]

And then last for me is just leverage continues to tick lower, cash flow outlook for 2025 is pretty robust. So just talk about capital allocation and what the M and A pipeline looks like and what types of things you might like to flush out or tuck in? Obviously, it always takes two, but just wondering what you're seeing there. Thanks again.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

You took my answer out of my mouth. Yes, it does take two. Look, I think there's we have the balance sheet in great shape. I think it provides us a lot of optionality. We have a $200,000,000 share repurchase program out there that I think we'll continue to execute.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

I think we look at steering half of our free cash flow back to shareholders, and and I think we'll do that this year. I do think that, that preserves some capacity to do bolt in acquisitions. And to be honest, I think there's opportunities across all four product lines, ranging from moving us in to new geographies, solidifying positions in those geographies, bringing in reserves, adding new technologies and deepening us into areas of environmental and some of these consumer products. So I do think that there's opportunities in each of the four product lines. Again, we'll see

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

how

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

some of those play out and how the M and A market and the uncertainty plays out this year. But I think the balance sheet where we are, it can support both returns to shareholders and some acquisitions this year. So I think that's going to add and what I'm giving you is organic growth. I think those types of things will even add further to that growth rate going forward. So we have a really positive outlook, Dan, and capacity to use the balance sheet that way.

[Daniel Moore, Partner - Director of Research at CJS Securities]

All right. I'll jump back with any follow ups. Thank you.

[Operator]

The next question is from David Silver with CL King. Please go ahead.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

Yes. Hi. Good morning. Thanks for taking the questions. I had a couple of questions.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

I guess, firstly, I'm going to go back to a topic that was discussed in the third quarter conference call and that was kind of the sources of your efficiencies. So I'll echo Dan's comments about the impressive nature of the productivity and margin strength. But the last quarter, Eric, I believe, did a pretty good rundown of efficiencies that you gained within your pet litter business tightening the integration of the recent acquisitions. When I looked at the reported results and then again at the slide deck, I mean, there's the pretty big margin improvement on the other side on high temperature technologies and environmental and infrastructure. So modest revenue performance, but 150 basis point margin improvement year over year in the quarter and then also full year.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

If you were to kind of target one or two areas within the Engineered Solutions area where productivity or margin enhancing moves really came through in 'twenty four. Could you call out one or two of those? And then what's the outlook for further gains there in 2025?

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Thanks, Dave, for the question. Let me start and then I'll pass it over to Brett Arjurekas. The first thing I'd highlight is that we're always targeting productivity improvements across the company and we're finding ways to achieve them every year. I think this year for the entire company productivity improvement was 4%. So we're able to and we've averaged kind of 3%, four %, five % per year for many, many years.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And that's because we're finding ways as a company, as a team, our employees are finding ways to do things more efficiently. And that doesn't just include in our processing plants and in particular some of the productivity improvements this year in Engineered Solutions were in the mining side. But that's in our back office systems, right? So we're looking at ways to do things efficiently, closing the books. A lot of those Kaizen events are just looking at how to bring in sales without having to grow our overhead.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And I think if you've seen our percentage our overhead our SG and A as a percent of sales, it continues to go down. And that's the leverage you're seeing on our sales. So being able to hold fixed costs flat and bring in revenue and then being able to keep variable costs in control through productivities on a variable basis in our plans is exactly what we do day in and day out. And Brett, I guess in Energy Solutions, some things you want to point out particularly for margin growth?

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

Sure. Thanks, Doug. Hi, David. Look, I think Doug hit the highlights. But let me break it down into the two product lines.

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

If you look at the High Temperature Technologies, our refractory growth initiatives continue to benefit the segment. Very high value products. Our MINSCAN SCANTRO equipment continues to grow. We've got 17 units in place. We have about eight more on the books for this year.

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

So that's a huge impact to the high temperature technologies. The Metal Castings business continues to be solid. Our growth opportunities as we've discussed in the past are primarily in Asia. Asia signed up 14 new customers in 2024. So we anticipate that continuing to grow.

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

It's been pretty solid. Trying to get those blends into Asia is our goal and we'll continue to push that. Of course, the cost control as Doug pointed out and the productivity improvements continue to be looked at. But when you look at the other side of the business, of course, it's been a it's in a tough market. The environmental infrastructure has struggled for the last two years because of market conditions.

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

But the good news is we're starting to see some activity. In the fourth quarter, we start to get more construction projects question where we got specified into some of the other some projects for when that market comes back and investment continues. We talked about the large project in California, a waterproofing project. That's going to continue in 'twenty five, later probably in the second half of the year. So there's more to come.

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

Of course, the drinking water, we continue to work on the drinking water and remediation projects and also the drilling products. So we've got a lot in the pipeline. We need a little help from the market, but we feel pretty good about where we're at now and where we're headed.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And David, let me just add one thing. I know you probably got another question, but I think some of the most impressive, I've engineered solutions, offense Brett, was good progress this year, but the consumer and specialty side and especially in that pet care business had some significant margin improvement. And I think that translated into that twenty five percent operating income growth. And I think that's exact example of what I'm talking about, being able to integrate these facilities. We've lowered our fixed cost base and worked on productivities in these new acquisitions.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And DJ, you saw a lot of that happening through the system that we've built over the past three years with these new businesses.

[D.J. Monagle, Group President, Specialty Minerals & Refractories at Minerals Technologies]

Yes, Doug. So David, just on that pet side of the house in particular, this we announced this integration in this global brand Civo and to the customer facing side, it's a consistent approach to how we go about serving our customers' needs. Gives them access to the global footprint, gives them access to our high quality reserves and gives them a consistent access to all the innovation. And in the process of doing all that, especially on the manufacturing footprint,

[D.J. Monagle, Group President, Specialty Minerals & Refractories at Minerals Technologies]

we've been moving around

[D.J. Monagle, Group President, Specialty Minerals & Refractories at Minerals Technologies]

an awful lot of just optimizing that whole customer experience, taking costs out where we can and then also providing what I call incremental innovations where we're able to improve the margin through the offering of new products. So really a big part of that was that margin improvement. And then as we're looking forward, the exciting part to me on the revenue growth side is that we've got quite a few new projects and new products that are coming out over the next couple of months that should allow us for even further expansion and further optimization of that manufacturing footprint.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

Okay, great. Wow, thank you for all the color there. I'd like to ask a second question here on Fluoro Sorb. So Doug, in your prepared remarks, you called out a large new project for the Northeast, I believe. Could you just kind of point us in the right direction?

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

Is that a beta test? Is that a full commercialization? And then is that for drinking water or ground water remediation? Maybe just some color on that large new Lurosorb project you called out? Thank you.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Yes. Do you want to give some color

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

on that?

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

Yes. David, I can give you a little bit of color on that. So we do have a large scale drinking water program that's in the works and that's in the Northeast. It's full scale drinking water, Fluorozorb and we anticipate that to start up in the coming months. So that's pretty exciting.

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

We have a lot of activity on Fluorozorb right now. As we talked about, we've met with the EPA. We have a kickoff meeting scheduled with them this month. We had 51 projects, David, of various sizes. Our portfolio included full scale implementation, some larger scale piloting, some cleanups, in situ cleanups for soil remediation.

[Brett Argirakis, Group President of Engineered Solutions at Minerals Technologies]

But the Fluorazorb continues to get more and more attention. There's eight programs that we're working with the EPA on now. And we have four full scale drinking water systems utilizing our Fluorazorb and four more that we anticipate in the first half. So internationally, we continue to pursue it. And of course, we continue to target the other opportunities outside of drinking water for landfill and wastewater and soil and groundwater remediation.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And David, the reason I highlighted this one is it's a little bit newer for us. For the past year or two, we've been working on drinking water in kind of vessels. So there's two different ways of removing impurities and drinking utilities. One of them is vessel driven. Water passes through the vessel, through our media, takes out the Fluorozorb.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

There's gravity fed systems, which are much larger, where the water will pass through it in big out big large, I mean, very large outdoor vessels. This will be one of those. Again, we're still working through some of the details, but it will be a new application, a very high volume application of Fluorozorb, which I think gives more traction in a different utility type of utility. So, just wanted to call that one out because it's a bit different from the past ones we've been piloting.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

All right. Thank you for the color. I'll get back in the queue.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Thanks, David.

[Operator]

The next question is from Pete Osterlund with Truist Securities. Please go ahead.

[Pete Osterland, Equity Research Analyst at Truist Securities]

Hey, good morning. Thanks for taking the questions.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Hi,

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Pete.

[Pete Osterland, Equity Research Analyst at Truist Securities]

So your first quarter guidance implies some margin pressure year over year. I was just wondering if you could break out what the major drivers are there. Is it mostly driven by operating leverage or revenue mix? Are you seeing any pressure from pricing versus raw materials?

[Pete Osterland, Equity Research Analyst at Truist Securities]

Just any additional color you can give there would be helpful.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Yes. Hi, Peter. This is Eric. Thanks for the question. So yes, from a margin perspective, we're looking at a pretty similar margin in the guidance going from Q4 to Q1.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

You're right to point out that last Q1 in 2024, we had a pretty strong margin. I would point to mix on that. I mean, some of the markets that are softer for us this year versus last year are some pretty high margin markets for us. So I'm thinking the high temperature technologies markets in particular. So there's a little bit of a mix impact going on there.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

I will say energy rates are a little higher than they were last year, and we're working to pass those through. We could have somewhat of a timing impact in terms of when we're passing through those energy higher energy costs to our customers. But generally, we the margins are staying consistent with what we had in Q4 and we expect those to build through the year. As I mentioned earlier, Q4 and Q1 are typically the softest from a margin perspective just due to seasonality and then they strengthen as we go through the year.

[Pete Osterland, Equity Research Analyst at Truist Securities]

Very helpful. Thank you, Eric. And just as a follow-up, are there any additional details you could give on the sale of refractory assets during the quarter? Just what was the reason for exiting that business? And are there any other asset sales across the portfolio that you are contemplating along similar lines?

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Yes. There's nothing really to highlight. This is we've always had a very small refractory footprint in China. Our main markets have been North America, Europe, Southeast Asia, India, primarily Turkey. So we've always had a very small footprint there.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

The Chinese government was looking to develop this land. We were one of the first twenty some years ago in this industrial park. As that park has grown, the local government there want to develop our piece of property, which is pretty valuable to them, which was not an issue for us. We were able to move that and absorb that production elsewhere. We have facility in Japan that was able to absorb some of that production.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

So and we also our equipment sales come from into China from Germany. So it's not a wasn't a big deal from a manufacturing standpoint. We thought it was a good thing to do and so exited that facility and sold it to government. So nothing more than that.

[Operator]

The next question is a follow-up from David Silver with C. L. King. David, your line is open on our end.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

Okay. Sorry, I hit the mute button. Sorry about that. So there was one topic I wanted to ask you about not really mentioned in your prepared remarks or I believe in the press release, but it does relate to the talc litigation. So you have you did dedicate, I think, dollars 30,000,000 to sustaining the ongoing negotiations towards settlement.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

And this doesn't relate directly to you, but I guess the folks involved with the larger talc litigation with J and J and Emerus, I guess there was some movement there. There was a shareholder vote that was successful. Could you just give us maybe your latest thoughts on progress towards a settlement and whether the movement, I guess, with the litigation with J and J and Emirates bodes one way or the other for either the timing or the magnitude of an eventual settlement?

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Sure. So not a lot to report on that front, but there we have been progressing in mediation. I would say that we've been progressing at pace. These things tend to be relatively slow, but we're moving. We've had mediation sessions in December and through January.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And so I'd say it's constructive and it continues. I can't give you an indication right now that that's leading toward a solution sooner rather than later, but I'd say it's constructive and that's still positive that we're moving in the mediation direction. Relative to others, we're separate from that. We're focusing on our own solution to this to find a fair and final solution for the company and for all involved. And so we're focused on that.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

If there's one thing and maybe it does do is it creates less distraction outside of other mediations and enables us to maybe move more quickly, but that's my supposition. I would say that they don't have any influence on ours and we're dealing with ours on our own. So nothing much to add to that other than it's still constructive and it is progressing, David.

[David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates]

Okay, great. And then last one from me. I did want to touch base with DJ just to get a sense of expected new PCC startups in 2025? And then maybe just some comments on the new project funnel that you see? Thank you.

[D.J. Monagle, Group President, Specialty Minerals & Refractories at Minerals Technologies]

Thanks for the question, David. As Doug mentioned, we signed three contracts we've got coming online in 2025. All of those are in Asia. I'd expect another couple of signings, one in Europe, 1 in Asia and heavy emphasis on packaging, heavy emphasis on new yield. When I look at the overall pipeline, it's reasonable for you to think we've got a couple of dozen projects that are under review, under discussion.

[D.J. Monagle, Group President, Specialty Minerals & Refractories at Minerals Technologies]

Quite a few of them are related to packaging and there's some overlap at this comment, but quite a few of those are also a new yield as a platform for other items. So I would say we'll definitely see these the effect of these new startups coming on second half of the year. There's still a little bit of a ramp up that's going on in the satellites that we started this year. That's three, four. And then you'll see there was one conversion that we did to new yield in The Americas.

[D.J. Monagle, Group President, Specialty Minerals & Refractories at Minerals Technologies]

So that's not so much a change on revenue and volume, but it's part of the profit enhancement and margin enhancement that we've got going on in that segment. So overall, good progress, good trajectory. And the continued themes are packaging and these newer platforms that are mostly directed at being a more sustainable pigment to the paper industry.

[Operator]

The next question is from Mike Harrison with Seaport Research Partners. Please go ahead.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Hi, good morning.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Hi, Mike.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

I was hoping that I could just get some clarification on the sales outlook. The 3% to 5% that you're looking for, is that an organic number or does that include the expected FX headwind?

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

That's an organic number. I'm not making a projection on foreign exchange right now. That's as we see foreign exchange today. If that would I guess, if there's further strengthening of the U. S.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Dollar, that could put some pressure on that. But I think that if you think about that as an organic based volume growth number, that's what we're seeing in our businesses. And it's really it's driven on the high side by the Consumer and Specialty segment. As I mentioned, we're seeing probably about 4% to 8% growth there. On the Engineered Solutions side, I'm going to give you 1% to 3%.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Probably that's just one is just on the conservative side given some of the markets building construction depending on how steel and metal casting goes. But I do think that it could trend up higher than that in Engineered Solutions if what we're seeing, if you start to see an inflection in consumer and specialties and if the steel and foundry markets stay strong and if not strengthened, it could go higher. So we have a pretty positive outlook, Mike, on this. And I think the average of those two numbers that I'm giving you is that 3% to 5%. But I see factors that could drive it higher than that.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And I see headwinds like I hate to use that term, but foreign exchange that could push it down. So trying to give you as much as I can in kind of an uncertain quarter right now, but that's what it looks like today.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Understood. Yes, I think what we're trying to get to is some sense of what EPS could look like for the full year. Obviously, you're starting with a slower quarter in Q1. But it sounds like what you're saying is maybe kind of low single digit top line growth net of FX headwind and maybe not much margin improvement, so maybe kind of a low single digit type of earnings growth. Is that kind of what the best projection would be for

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

now?

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Yes, there's a lot of ins and outs to the EPS side of that, Mike. But I will tell you this, it really depends on where that revenue comes from, right? There are some very high margin regions and product lines. I'd tell you in some North America markets, if we see that bleaching earth traction in some of our newer higher growth, higher margin products, you might see that sales growth, but it could come at a much higher margin.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

So I think what Eric gave earlier is we're trying to stay a little bit conservative on that margin growth and holding it at 15% given our given the kind of the outlook that we have and some of the foreign exchange. But no doubt, if we get onto the 5% type range with some of the product lines that I've mentioned in refractories and some of these higher growth projects, that margin could trend north of 15%. And it could for a few of the quarters like our second and third, as are usually our highest volume markets. That would change that EPS outlook a little bit. So 5% growth rate with an extra half turn on margin, depending on what happens below the line with foreign exchange and how we translate things, I think it's probably back into that.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Our compound annual growth of earnings has been 8% and I think you could see that 8% again, keeping on that track.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right. Very helpful. And then, Eric, you had mentioned in response to an earlier question that maybe energy costs are a little bit elevated. It may take you some time to pass those through. But certainly, the winter has been a little more ferocious than in the past couple of years.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Any comments or quantification, I guess, you could provide on what you've seen in Q4 in terms of not just energy cost inflation, but maybe mining cost impacted by the colder weather. What did you see in Q4? And what would be your expectation for Q1 relative to last year?

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Yes. Thanks, Mike. So I wouldn't call it out as a major impact in terms of energy in the fourth quarter. We saw I think if you look at the bridge, we actually saw favorable costs overall year over year. A lot of that's driven by the productivity, particularly in the Western mines in The U.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

S. We had a really strong quarter from a mining perspective and our clay inventories are in great shape. From an energy perspective, it's a little higher than last year. The cold weather in The U. S.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Has resulted in a little bit of volatility in natural gas prices, but we're not talking anything really significant to the company and nothing that we can't pass through or mitigate.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right. And then on the Engineered Solutions business, the margin improving quarter on quarter from the third quarter, that's a little bit unusual. Usually, seasonally, that comes down in terms of margin performance. So can you talk a little bit about the drivers there? Is that the environmental and infrastructure business turning positive and showing some good operating leverage?

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Or is there something going on within High Temperature Technologies that help the margin performance sequentially?

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Yes, definitely helped by the environmental and infrastructure improvements. Those are that business in general has high incremental margins, high contribution margins. So when we get a couple of large projects and some higher activity in that business, that helps the margins significantly. I would just point to the productivities again. We had a really solid quarter in that business from a productivity perspective.

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

The fourth quarter, I would just the only thing other piece of color I would add there is the fourth quarter is typically stronger from an equipment sales perspective in the high temperature business and that was again the case this year. So that helps to offset some of the seasonality that you would typically expect in the margins Q3 to Q4.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right. Last one for me is just on the Specialty Additives business. You mentioned that there's some pricing headwinds there due to the contractual pass through of lower raw material costs. Can you give us a sense quantify the price decline in 2024 and in the fourth quarter in Specialty Additives?

[Erik Aldag, Senior VP of Finance & Treasury and CFO at Minerals Technologies]

Yes. So I called out the volume increase in Specialty Additives for the full year was around 3% overall and revenue was up about around 1%. So that gap between the volume and the revenue increase reflects the pass through pricing.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right. Very helpful. Thanks very much.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And Mike, you're not to reiterate you're familiar. We price those on a margin basis, on a cash margin basis. So if some of the raw materials drop, the price will drop, but the margin and the cash generated off of that ton remains flat. That's where those contracts work. So you do see those fluctuations from time to time in high inflationary periods on the way up.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

And then as it deflates on the way down, you'll see that impact the top line. But margins, cash flow always remain the same. That's how the contracts are structured.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Sounds good. Thank you.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Yes.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Doug Dietrich for any closing remarks.

[Douglas Dietrich, Chairman & CEO at Minerals Technologies]

Just want to say thank you very much for joining the call today. I appreciate you listening. I appreciate the questions from everyone, and we'll talk to you again in three months. Thank you.

[Operator]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Lydia Kopylova, VP - Investor Relations
• Douglas Dietrich, Chairman & CEO
• Erik Aldag, Senior VP of Finance & Treasury and CFO
• Brett Argirakis, Group President of Engineered Solutions
• D.J. Monagle, Group President, Specialty Minerals & Refractories

Analysts

• Daniel Moore, Partner - Director of Research at CJS Securities
• David Silver, Managing Director & Senior Research Analyst at C.L. King & Associates
• Pete Osterland, Equity Research Analyst at Truist Securities
• Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners