Q2 2025 Minerals Technologies Inc Earnings Call
Good morning and welcome to the minerals Technologies. Second quarter 2025 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 1 on your telephone keypad,
To address your question, please. Press star. Then 2
Please note this event is being recorded.
I would now like to turn the conference over to Lydia kopiva head of investor relations. Please go ahead.
Thank you, Gary. Good morning everyone and Welcome to our second quarter 2025 earnings conference call. Today's call will be led by chairman and chief executive officer. Doug and Chief Financial Officer, Eric caldic following Doug and Eric's prepared, remarks will open up and 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 know the cautionary language about forward-looking statements contained in our earnings release. And on this slide, our STC filings disclose certain risks and uncertainties, which may cause our actual results to differ materially from this forward-looking statements, please also know that some of our comments today refer to non-gaap financial measures reconciliation to gaap. Financial measures can be found in our earnings release. And in appendix of this presentation, which I posted on our website, I will turn it over to call to Doug. Thanks Lydia. Good morning everyone, and thanks for joining today.
Doug: Um, I'll start the call, uh, by giving you an overview of our second quarter followed by a review of our current market conditions across our product lines.
Doug: As well as an update on our near-term growth initiatives.
Doug: Eric will then take you through the detailed financials and provide an outlook for the third quarter?
Doug: I'm going to close our prepared remarks with a quick review of our 17th annual sustainability report, which we just released earlier this week, uh, before opening the call to questions,
Let me start with our Q2 numbers.
Doug: This is a strong quarter for us both on a standalone and historical basis with EPS coming in at 1:55 cents, up 36% from q1.
Doug: And at a level only behind the second quarter of last year when market conditions were relatively stronger.
Doug: Our ability to generate these results. Amid the recent global economic backdrop is an example of the strong operating culture of this company.
Doug: As we shared on our last call.
Doug: We started to see a significant uptick in sales at the end of the first quarter.
And our sales rate expanded through the second quarter and resulted in 529 million up 8% sequentially.
Doug: Operating income came in at 79 million up 25% sequentially.
And operating margin was 14.9% up. 200 basis points from the first quarter and reverting to our natural level of 15%.
Doug: It's important to put this performance into context given the challenges presented by changing tariffs and the ongoing uncertainties, they continue to put on our end markets.
Doug: Our results are a testament to mti's. Strong fundamentals, including our operational agility, prudent cost and expense control.
Doug: And our team's ability to take quick action and make necessary adjustments.
I'd like to highlight that we delivered strong cash conversion in this quarter in line with our historical average of around 7% of sales, a level that we expect to continue
Doug: We also returned 22 million to shareholder this quarter reflecting our ongoing commitment to steer Capital back to investors.
Doug: Our balance sheet remains an excellent condition giving us a strong foundation with the flexibility to pursue multiple Avenues to drive growth in sales earnings and cash flow.
Doug: Now let me talk a bit about what we're seeing with market conditions and give you some insight into projects that we have coming online to drive, both growth and margin expansion.
Doug: Let's start with the consumer and Specialty business segments, which comprises our household and personal care and Specialty additives product lines.
Doug: In household and personal care.
We're seeing mixed conditions across these consumer and markets.
Doug: The North American cat litter Market, has been slower this year compared to recent years and these conditions have created more competitive Dynamics.
We are navigating this with increased promotional activity with our customers and are seeing momentum building in our order books as a result.
Doug: Ross Global Pet litter markets.
Doug: To support this growing demand.
Doug: We've been retooling our facilities in North America and Europe with new process and packaging equipment.
These upgrades are designed not only to produce higher quality products, but also to improve efficiency and reduce production costs.
Doug: In addition we are opening a new pet litter packaging facility in Asia late. In the third quarter to support the demand growth. We are seeing their
Doug: In our other consumer oriented products. We are seeing significant increase in demand for Renewable Fuel purification, and Animal Health Solutions, and fabric care.
Doug: This is being driven by regulation changes for more sustainable aviation fuel.
The continued Trend toward natural livestock feed additives.
Doug: And the growing demand for more sustainable laundry detergents.
Doug: We have several capacity expansion projects underway for these product lines as well.
Doug: in the specialty, additives product line market conditions, remain mixed
The paper Market in North America, is relatively flat in Europe remains weak.
Doug: however,
we continue to penetrate the paper and packaging Market in Asia with strong, customer pool for our packaging Solutions and sustainable products like new yield.
Doug: 3, new satellite facilities.
Doug: 2 of which are for packaging applications and 1 packaging and 1 capacity expansion are set to come online within the next 7 to 8 months.
And we continue to see a strong pipeline of additional opportunities across the paper and packaging Market further down the road.
Doug: In other areas.
The automotive Market has been relatively flat this year while residential construction markets uh vary for us by region.
With stronger Demand on the US, West Coast and continued softness on the East Coast.
Doug: Meanwhile, our food and pharmaceutical markets, remain robust.
Doug: Now, let me turn to our engineered solution segment which includes our high temperature Technologies and environmental and infrastructure product lines.
Doug: in high temperature Technologies, we continue to see strong demand in North America, for our automated men's scan systems and for our newest steel, refractory formulations
Doug: The North America steel Market remains relatively stable and at a production level that provides good volumes for us.
Doug: In Europe, the steel Market remains weak and we expect these conditions to continue for the remainder of the year.
A bright spot in Europe, is that we've secured. Our first mscan LSC sale there.
Doug: Opening a new market for our technology.
Doug: For pursuing the same strategy as we have in North America, helping our customers reduce costs and improve safety through high-tech automated refractory application and measuring systems.
Doug: We expect to generate additional Min, scan sales, moving forward as other customers, become comfortable with and adopt our new technology.
Doug: Us Foundry Market has generated solid demand for our green, sand bonds through the first half from stable Auto demand and despite the softer heavy truck and a equipment markets.
Doug: The China Foundry Market has remained resilient despite the introduction of increased tariffs.
Doug: our volumes of green sand Bonds in China remain, strong as Foundry, customers quickly adapt to the changing market conditions and seek the cost savings and productivity value that our products provide
Doug: on the environmental infrastructure side, the commercial construction and environmental lining markets have stabilized.
Doug: But we have not yet seen the initiation of several planned large projects where we are specified.
Doug: We expect commercial construction markets to remain relatively soft as long as interest rates, remain higher.
Doug: However, we are seeing strong pull for our infrastructure drilling products.
Doug: Water, remediation Solutions offshore, Energy Services and pfos Remediation through floorazzo.
Doug: As an overall Market summary. We see similar market conditions to the second quarter continuing into the back half of the year.
Doug: However, I would not characterize these conditions as robust by historical standards.
Doug: But as I just mentioned, we are executing on several initiatives to support the strong near-term. Demand, we are seeing in multiple product lines.
Doug: These initiatives include new capacity and plant expansions to support demand for sustainable aviation fuel, Animal Health, fabric care, and pet care.
Doug: These specific projects will support 100 million dollars, in Revenue growth for products that will drive the margin profile of the company higher.
Doug: This is just a subset of our growth initiatives.
Doug: No, let me let Eric take you through some additional details of our financial results as well as as the third quarter Outlook Eric.
Eric: Thanks Doug and good morning everyone. I'll start by providing an overview of our second quarter results.
Eric: Followed by a review of the performance of our segments.
Eric: And I'll wrap up with our outlook for the third quarter.
Eric: Following my remarks, I'll turn the call back over to Doug, to cover the highlights from our 2024 sustainability report.
Eric: Now, let's review our second quarter results.
Eric: Overall, we delivered a strong performance in the second quarter.
Eric: Across our end markets conditions played out mostly. As we expected with sales continuing to show improvement from the levels. We saw in the first quarter.
Eric: Sales of 529 million were up 8% sequentially driven by higher volumes in both segments.
Eric: Customer order patterns continue to normalize through the quarter, not quite to Prior year levels. But a significant improvement from what we experienced in the beginning of the year.
Eric: You can see from the bridge on the top, right that higher volume drove, 30 million of the 37 million sequential Improvement in sales.
With the balance of the increase coming from favorable pricing and foreign exchange.
Eric: Consumer and Specialty sales increased by $9 million sequentially and then engineered Solutions sales were up by 28 million.
Eric: Operating income increased by 16 million or 25% sequentially to 79 million.
Matching, the second highest operating income quarter for the company.
Eric: And that was despite the current macro challenges, Weighing on some of our end markets.
Eric: In the sequential operating income Bridge, you can see that higher volume drove a 9 million Improvement to income, which is a typical incremental margin for us on $30 million of volume.
Eric: In addition to favorable pricing and foreign exchange. We also benefited from 4 million of lower cost driven by improved productivity and the ramp up of our cost Savings Program.
Eric: As a result, operating margin increased by 200 basis points to 14.9% of sales.
Eric: It's worth noting that we incurred about a half a million dollars in incremental tariff costs in the second quarter which our team has done a nice job mitigating through supply chain and Commercial actions.
Eric: As Doug mentioned, we are working on several projects to expand capacity for high growth products and optimize our footprint for continued margin expansion.
Eric: And the second quarter, we executed on some efficiency opportunities in engineered solutions by consolidating 2 facilities in the US.
Eric: Which will result in direct cost savings as well as productivity and efficiency improvements.
Eric: In addition, we made adjustments to the layout of another facility in the US to accommodate future capacity expansion for floor. Absorb our POS remediation technology,
Eric: we recorded special charges in the quarter associated with these actions which were mostly offset by a gain on the final installment for the sale of refractory manufacturing Assets in China.
Eric: Second quarter, earnings per share, excluding these special items was $15.55 up to 36% sequentially.
Eric: Now, let's turn to our review of our segments, beginning with consumer and specialties
headquarter sales in the consumer and Specialty segment, where 278 million up 4% sequentially as customer order patterns stabilized throughout the quarter.
Eric: Sales in our household and personal care. Product line, were 127 million up slightly from prior year and up to 3%, sequentially.
Eric: As Doug mentioned, we've got a lot of exciting initiatives in household and personal care.
Eric: Some of these specialty applications like natural oil purification and Animal Health are growing at double-digit rates with incremental margins above the company average.
The growth of these products will continue to drive the margin profile of the company higher.
And we are supporting this growth with capital investment to ensure our facilities can keep up with demand.
Eric: In our specialty, added added, additives product line, sales of 150 million were 5% below, prior year, driven by softer, demand conditions.
Eric: Primarily in paper production in North America and Europe.
Eric: on a sequential basis sales in the product line were up 4%, primarily driven by seasonally higher sales into residential construction applications
Eric: The team remains focused on driving operational, efficiency, while also supporting our growth opportunities.
Eric: And this segment delivered, a much stronger operating performance in the second quarter.
Eric: 20 basis points to 13.4% of sales.
Eric: Margins were lower than last year, due to volume leverage and some higher raw material and energy costs that we are working to pass through.
Eric: We're also in the process of making significant upgrades to 1 of our cat litter facilities in the US.
Eric: And this is resulting in temporarily higher freight costs. As we've shifted production around our Network to accommodate the work at this facility.
Eric: Looking ahead to the third quarter, we expect sales in the household and personal care product line to increase the sequentially driven by an improving demand Outlook and the ramp up of our growth initiatives.
Eric: And in specialty additives we expect a similar quarter sequentially.
Eric: Now, let's turn to the engineered Solutions segment.
Eric: Second quarter sales in the engineered Solutions segment. Where 251 million up? 12% sequentially.
Eric: In our high temperature, Technologies, product line, sales were 178 million, 3% below prior year, but up 5% sequentially.
Global sales to Foundry customers were similar to Prior year.
Eric: Demand in North America is holding relatively stable apart from some ongoing softness. For castings. Going into the agricultural equipment and heavy truck markets.
and in Asia, we continue to deliver year-over-year volume growth, including in China, despite lingering tariff uncertainties,
Second quarter sales to steal customers were mixed.
Eric: We saw a modest sequential Improvement in sales to European steel customers after significant destocking in the first quarter.
Eric: However, that market remains softer than last year.
Meanwhile, the US steel Market has been solid.
And our team is doing an excellent job, executing on growth initiatives.
Second quarter sales to steal customers in North America were higher than last year and up sequentially as well.
Eric: In the environmental and infrastructure product line. Second quarter sales, were 73 million 1% higher than the prior year and 35% higher than the first quarter as we entered the seasonally stronger period for this product line.
Eric: Demand conditions across the product line, have stabilized, although overall project activity is still lower than historical levels.
The segment overall delivered, another strong operating performance.
Eric: operating income was 44, million and operating margin improved by 200 basis points sequentially to 17.4% of sales,
Eric: Matching last year's record performance.
Eric: Turning to the third quarter, we expect End Market conditions to remain stable for the segment and overall sales to be similar sequentially.
Eric: Now, let me turn to a summary of our balance sheet and cash flow highlights.
Eric: We delivered a solid cash flow performance in the second quarter.
Eric: With free cash flow of 34 million.
Looking ahead. We expect cash flow to continue to build through the second half.
As we've mentioned, we're making several key Investments across the company. That support the progress we've made on our strategic growth initiatives.
Eric: In the second quarter capex was 29 million as activity on several projects picked up.
And for the full year, we're projecting capital of approximately 100 million dollars.
Eric: This figure includes the ramp up of several growth Investments that Doug referred to in his remarks that will add $100 million of annual revenue at above average, margins.
Eric: These Investments total about $50 million of capex, that will be executing on over the next 12 months.
Eric: We're expecting to generate significant free cash flow in the second half.
At this point we expect full year, free cash flow in the 6% of sales range, which factors in the silver start to the year, the higher level of investment and a very strong. Second half of cash flow generation.
We also returned 22 million to shareholders through dividends and Cherry purchases in the second quarter.
and we've returned 73 million to shareholders over the last 4 quarters, maintaining our balance approach to Capital deployment,
Eric: Turning to the balance sheet total liquidity at the end of the second quarter so that nearly 700 million which is 150 million higher than the last year.
In our net, leverage ratio is 1.7 times IBA below, our Target of 2 times IBA.
Eric: The company's strong balance sheet and reliable cash flow generation. Provide the financial strength to navigate periods of uncertainty while. Also, enabling significant flexibility to pursue growth and return cash to shareholders,
Eric: A third quarter.
Eric: We're expecting a largely similar quarter sequentially for sales and income with a balance of potential upsides.
And some ongoing macro uncertainty.
Eric: Overall, we're expecting sales of between 525 million, and 535 million.
In consumer and Specialties, we're expecting higher sales from the continued. From continued, growth across the household and personal care product line, including natural oil, purification, personal care, and Animal Health Products to name a few examples.
Eric: And an engineered solution. We see a similar level of sales sequentially. As our Stable Market Outlook is balanced by seasonal. Customer maintenance outages in high temperature Technologies.
Our operating income guidance of approximately 75 million reflects the midpoint of our sales range and represents a balanced view with potential upsides, as well as the potential for macro uncertainty around, trade and tariffs to continue to impact our customers and end markets.
Eric: And while our direct exposure to tariffs is relatively low, we are facing a higher tariff cost in the third quarter of 1.5 million.
Eric: We're confident, we'll be able to mitigate this tariff impact through our ongoing supply chain and Commercial efforts.
Eric: In summary, we feel confident that the second half will be stronger than the first half and we are excited about the progress. We are making on several key initiatives that will contribute to long-term growth and continued margin expansion.
With that, I'll turn the call back over to Doug, for some remarks on our annual sustainability report. Doug, thanks, Eric. I want to close the call with a quick overview of our sustainability report.
Doug: Which we just released earlier this week?
Doug: Uh, this is a 17th year that we've published this report and it reflects the tremendous amount of ongoing activity across our company to enhance, what we do, and how we do it, in order to drive value for our customers employees, communities, and investors.
Doug: Sustainability is not new to me. It's always been explicitly included in our values and how we run the company.
Doug: We're committed to being responsible stewards of the environment. Good neighbors, and the places in which we work and dependable, supportable supportive and inclusive colleagues who are laser focused on keeping each other safe.
Doug: This isn't just talk. We put this commitment into action as you can see, from the highlights in our report.
Doug: Let me give you a few of them.
Through 2024, we've achieved 11 out of 12 of the environmental goals we set for ourselves back in 2018.
Doug: And we achieved them 1 year, ahead of our 2025 Target.
The progress we've made since 2018 is quite remarkable.
We've reduced our overall scope, 1 emissions by 32%.
Doug: Scope 2 emissions by 36%.
Doug: And reduced emission intensity for both scope 1 and 2 on a per unit basis by over 50%.
Doug: We've reduced our Airborne pollutant emissions by 70%.
Doug: Cut our process, water usage in half.
Doug: And reduced processed waste, disposal by 44%.
Doug: Every year we extract over 1.1 million metric, tons of waste, CO2 from our customers and our own exhaust stacks and sequester those emissions into use into consumer products.
Doug: We operated a world-class safety level and consistently look for ways to make our work environment safer.
Though, we will never be satisfied. Until we reach and maintain zero injuries as a company.
Doug: We support our customers in achieving their sustainability goals, with 66% of our new products, which we Define as products developed Over The Last 5 Years. Having a profile
Doug: These products range from natural solutions to emissions and waste reduction products that support pollution, prevention, filtration, and Energy savings.
Doug: You'll also see several examples of how we engage within our communities, by supporting education installing systems to bring clean Waters to areas in to areas in need and working alongside our neighbors in a variety of local initiatives.
Doug: This is only a sample of what you'll see in this year's report and I encourage you to take a deep dive into it.
Doug: I'm extremely proud of what we've achieved thus far, but there's so much more to do for us and for our industry.
Doug: We intend intend to outline. This next chapter, when we publish our new long-term goals in next year's report,
Doug: With that, let me turn the call over to questions.
We will now begin the question and answer session.
Doug: to ask a question, you may press star then 1 on your telephone keypad,
Doug: If you are using a speaker-phone, please pick up your handset before pressing the keys.
Doug: Please press star. Then 2
Doug: At this time, we will pause momentarily to assemble our roster.
Our first question today comes from Mike Harrison with Seaport research Partners. Please go ahead.
Speaker Change: Hi. Good morning. Congrats on a nice quarter. Hi, Mike.
Speaker Change: Um, was hoping that we could uh, talk a little bit and start out here with the the household and personal care. Segment, uh, there there was some improvement sequentially, uh, but we're still not back to the kinds of growth rates we'd like to see there. I know you mentioned that kind of the underlying Pet Care Market. Uh, is still not fantastic. But can you give us maybe some additional color on what you're seeing in in that HPC product line in terms of volume Trends? Um, and and when you might expect to get back to Stronger growth rates.
Speaker Change: Shure mic. Let me start off and then I'll hand it over to DJ to give you a little bit more detail. Um, look, I think the product line several of the products as we mentioned in this are doing quite well. We've got some of the smaller products like our Aviation, uh, natural oil, purification Animal, Health, Personal Care. These are growing at kind of double digits and high double digit, kind of rates. So they're doing very well. They're a smaller piece of the profile. As I mentioned, we're investing in them and I think as they grow, they're going to be continued to to drive the the growth profile of this this product line much higher.
Speaker Change: Um, they are also the higher margin products in the company. Some of them are newest Technologies. And, uh, they, as I mentioned, will drive the margin profile of the company higher as they grow.
Speaker Change: You know, Pet Care is the largest, uh, product in that product line, and yeah, this year, it's been a bit of a slower year for the market in total. And I think you'll see that across any of the producers or with that commentary. And I think that's driven some higher competitive activity, uh, some discounting that's been going on that. We've been working our way through. So with that what? What? I'll answer the the other product TJ? Why don't you take us through the pet care and give us a little ideas of the Dynamics going on there? Yeah, sure glad to thanks for the question. Mike. Um, so that's kind of peel back the onion a little bit on what we're seeing in the Pet Care Market. Um, little surprised to see the sequential drop that we saw in the quarter. It's not uncommon for the second quarter to be a little bit lighter than the first, but we saw a 2% drop in that market and it particularly hit the private label sector. Um Doug was mentioned some, some discounts and just to give you a flavor of the discounts that we're seeing done by the major brands. It's been a normal year, you're seeing, you know, 15 to 20%
TJ: Of those, uh, Major Brands, uh, sell on Deal. Um, this year, they're still up in the 20 to 30%, we're starting to see some mitigation on that. Um, so, so we're expecting, uh, the, the shift to private label, to, to start, uh, improving a little bit. But the Market's still been down. And, and against that down, we've kind of held our own, not bragging about it, but just, that gives you some perspective on that.
TJ: On the pet side. Our, you know, we
We enable our private label Partners to execute their strategy. And uh, and what we're doing lately with them is uh, quite a bit of brand refresh and promotions so that brand refresh can can be as simple as, uh, new placements and increased. The volumes that, uh, that our partners want to put and display differently in the shelves, uh, but they also could be as complicated, uh, as product refreshes which, which could just be a label change. But could also be a reinvigoration of the, uh, of the, uh, whole product line, that would include some things like new products, which would be. In our case, it's what what we're promoting is, uh, some lightweight litter products. And some some other things that have to do with the kind of a under the clean hygiene theme. So, those Pro Promotions are ongoing now, uh, we expect to see
TJ: See some better growth in that Pet Care Market. Uh going forward. Uh and then
yes, on top of that, uh, as Doug was mentioning
TJ: Netherlands facility. These, these changes will allow us to improve the productivity better enabling us to to meet some promotions, but it also expands our capability to meet some. Some requests we've got for customers in different channels on, uh, on new grades, uh, and new new products. So we're pretty enthused about that.
that's the Pet Care story and I guess I just want to
TJ: I guess pile on to the other side of the uh the equation, uh, in that household, uh, personal care line.
TJ: uh, big investment coming online early in 2026, uh, to to meet, uh, to continue to meet
TJ: The demands of this fast growing bleaching Earth product that that is helping, uh, purify the, uh, plant-based fuels and plant-based oils that include sustainable Aviation sustainable. Aviation is the primary poll that we're seeing from from there. We also have got some uh some really good projects going on especially uh in the fabric care line. Uh where we're introducing some new products to help with the macro trends of better washing uh in a cold water environment with those folks. So so overall we feel really good about
TJ: The that part of the product line within the segment, still think Pet Care is on track to be a hundred million dollar plus business. Uh feeling really good about the Specialties uh growth trajectory especially uh as embodied by uh bleaching, our Animal Health fabric care and and the personal care products
Hope that helps.
Speaker Change: Oh, very helpful, thanks for all that additional color. I wanted to switch over to engineered solutions, that the operating income you guys can kind of give in a Range there. Uh in terms of guidance for the second quarter and it looks like you came in pretty nicely ahead of those expectations. Um, so can you talk about some of the the key drivers of that better uh operating income performance in Q2 and I guess just looking at your overall guidance, it seems like you know, even though you expect uh, a similar quarter in Q3, uh, the op income guide is a little bit lower. Uh, so so is that is that an engineered solution? Uh, step back, uh that we should be expecting an in operating income?
Okay. Uh yeah, Mike. This is Eric. Uh, thanks for the question. So
Yeah, I think from an engineered Solutions perspective, uh, they performed very well in the second quarter productivities, were very strong. The supply chain teams in particular, have done a really nice job managing input costs for us. Um, you know, we mentioned that tariffs aren't a huge uh, direct impact for us.
Speaker Change: Um, but the supply chain team and engineered Solutions in particular has done a really nice job mitigating, uh, that impact for us. So margins, uh, probably a little bit better than we guided to for the second quarter in that segment. Um, I think in terms of what we're looking at for the third quarter guidance, as I mentioned, we have upside to that number. I think what you're hearing from us is, you know, there is still a lot of uncertainty out there in terms of what's going on with macro, uh, and markets and potential impacts on on our customers. But I would say, you know, if things continue to play out and and continue to be relatively stable, um we can do a similar level of margin performance in the third quarter. Uh we are facing some slightly higher tariff costs in the third quarter. But we are we are confident that we're going to be able to mitigate that. Um, that's what I would give you in terms of the color for the third quarter. And my other thing I would add is
This this uh product line. This segment is performing really well, I think they're doing uh, as Eric mentioned, all the things they've got. This is where the tariffs sit mostly in the company. And I, and they are, you know, having to navigate that. And they have a heavier load in the third quarter, which we're confident we'll do. So there's some there's some uncertainty there but, you know, this is, um, these margins are not, you know, they've been moving this direction for a while now and it's it is, it is part of the strategy. It's these, it's our higher Tech, uh, you know, green sand, Bond Solutions, it's growing. The business in underserved regions. Uh these mscan units which then come with, you know, kind of contracts for Refractories. But then also there are new refractory formulations that we're using that have, you know, good performance, which helped us with a higher margin capture. So there's a number of different things that are going on. And yeah, the steel Market in Europe is
Speaker Change: All right, that sounds good. Last question for me. Uh, the balance sheets in pretty good shape. It, it was 2021 when you guys last did a more sizable acquisition was hoping you could talk about your capacity and your appetite for a larger or more transformative deal. Given that there are some potential targets out there, including uh some some targets that you may have looked at in the past.
Speaker Change: Well, you know. Um uh m&a has always been a piece of the growth strategy for the company. You know, we've executed, um
Speaker Change: You know, fairly regularly on on uh on Acquisitions over the past 5 years. I think we've done 4 of them.
Uh, the balance sheet is in good shape. Uh, liquidity positions in good shape. Um, I think you know, we have a nice portfolio of things that we're looking at. Mike, I think they are, um, you know, there's some larger things that we would consider. And I think there's also some bolt-ons that, uh, you know, give us faster penetration in regions or they bolt onto some of these higher margin products, uh, in the consumer space. So, um, I think there's a number of things that, um, um, um, that we would that we would consider. Um, I think, uh, you know, we look at these things, you know, obviously very carefully, uh, we model them, uh, with the appropriate level of risk and concern. And, you know, we make sure that we know exactly what we're going to do with it. If we were to get it. And so, uh, we take
Speaker Change: A very measured approach to it, um, but I think the balance sheets in good shape if, uh, if something were to become actionable. That's what I can give you.
Speaker Change: All right. Thanks very much. Yep.
Dan Moore: The next question is from Dan Moore with CJs Securities. Please go ahead.
Hey, this is Will on for Dan. Uh can you add some more color to the schedule for new PCC satellites, including new yield coming online and uh, the second half and into 2026.
Sure, um, well outline that for you DJ. Do you want to
Dan Moore: Get some details. We have what I mentioned will was uh uh we have uh, 3 new satellites, and 1 expansion coming online in the next 7 to 8 months. Uh, 2 of those 2 of those satellites are for packaging in Asia. 1 of them is a, is a kind of what we call our base PCC for paper, and then another expansion and DJ can give you more details on what they are and where they are. Uh yeah. Well, so just as as a baseline for you, we're we're going to be
Speaker Change: We started a plant earlier this year, so it's, uh, in the neighborhood of 60,000, tons will still seeing that to ramp up a little bit. That's that's, uh, not quite at full capacity yet. In the third quarter, we'll be seeing, uh, 2 more uh, satellites. Come on, 1 of them is the expansion to which Doug was referring, that's in India, um, and that that'll come online pretty quickly. Uh, the other 1 is, uh, a new yield facility, uh,
In in, uh, China. Um, so that, uh, that'll be coming on. And we'll start seeing the impact of that towards the second half of this year as we go into, uh, next year we've got, uh, another packaging facility that will actually have a combination of products. Uh, 1 is new yield, but the other 1 is, uh, is our satellite GCC. It's, it's a new to MTI technology that we've been getting a lot of, uh, Market pull for. So, that'll be coming on, uh, towards the end of the first quarter, uh, as well as a a, uh, another site that we've got in China, that'll be coming on in, uh, and that would be a printing and writing site that is becoming on, in China, uh, towards the end of that first quarter. So, and that 1 is uh, is about
Speaker Change: Uh, 60,000 tons sort of ballpark.
Speaker Change: Thank you, that's super helpful. And then uh, looking at Refractories.
Speaker Change: You have some more color to the outlook for steel production, for the remainder of the year. And then, secondly, where we, in terms of penetration of mini mini scan systems in the US and Europe.
Speaker Change: Uh, sure, Brett or Drake. I just want to take that 1.
It it keeps a pretty consistent steel production. So so overall us is is doing really well uh that it's benefiting our refractory business from the European side, of course, is Doug mentioned. Uh the the European uh Market is, Is Still Remains really, really low. Um, their efforts converting um to Green steel technology, uh has slowed. Uh, that means going from integrated steel or or basic oxygen, furnace to, to electric furnace. That's slowed, just because of the market. Um, and, and the turkey and Middle East Market, which which we, as part of we work as part of our European, uh, group is is has also slowed. So from a market standpoint, uh pretty uh, really good Market uh for us in in North America and and much suppressed Market in in Europe. So, uh, overall, it's it's pretty, it's it's stable for our business.
Speaker Change: um, as far as the mint scans go, um,
Speaker Change: You know, as as Doug also mentioned these mint scans provide us with a really custom application for our customers. Um, it it improves safety. Um and and it it it improves the efficiencies of their operation and and allows their furnaces to run longer uh by extending the refractory life. Uh in 2025, for this year, we signed 8 agreements. Uh, we we installed
Um, in the first half, uh, the remaining will be in the second half.
Speaker Change: Possibly into the first quarter. But, but, uh, our Target is to get the rest of them, uh, tied in, um, this year, um, over the past few years, we've had 17 M scans, uh, uh, or scan trolls, which which include the laser, uh, and the camera, uh, installed, uh, to date. Uh, 2 of those were, uh, in turkey and, and the, the remaining were in North America. And, and we're happy to say that we signed our first agreement in in Austria. Uh, that'll go in, uh, sometime in the first quarter of next year. So we're excited about that. Moving that technology, uh, to Europe.
Speaker Change: Um, so there is there's still a very sufficient Runway to add more of these units. Um, there's plenty of electric furnaces out there, uh, both in, in North America and Europe. So we're not going to give up. We're going to continue to pursue them uh both North America Europe and and and Japan as well.
Speaker Change: so, I hope that helps
Speaker Change: Thank you.
The next question is from Pete. Ostrand with sunrust, please, go ahead.
Pete Ostrand: Hey, good morning. Uh thanks for taking the questions.
Pete Ostrand: Um, first just wanted to ask 1 on the, uh, pet care business just, uh, given the increased competitive activity, you've referenced, um, are you having to lower prices there in order to increase, momentum in your order book? And is that a potential source of margin pressure and CNS in the second half? Until you know, you see a more meaningful pickup for demand
Speaker Change: Yeah, I think there's, you know, promotional activity is, you know, generally uh, a pricing issue. It's either, you know, similar prices, higher, higher sizes, or more weight, um, 2 for ones, those types of things. What we're doing is working with, as DJ mentioned, we're working with our customer, uh, you know, they own the brand and so it's their decision as to how they want to put it on the shelf and price. It, but we're helping them with, you know, those packaging Solutions, the labeling. Um, and yes, we could help them with some pricing, uh, pricing actions a little bit in this quarter to help with that promotional activity. Uh, what that does is that, you know, make sure that we maintain and help them maintain that value proposition. And that value gap between the brand of product and the private label and, uh, ensure that there is that value seen on the shelf and that uh, that tends to pull more, uh, poor pull more of of their product, IE our product, uh, off the shelf. So yes, we're working on all of those and there has been some pricing, um, that's been through that. But as DJ mentioned, we expect that some of this promotional activity in the marketplace in general, to go back.
Dynamics. Peter.
Uh, yes that's very helpful. Thanks. And then um I wanted to ask 1 on uh talc as well. I guess. Is there anything you can share on the time frame for a final resolution or any meaningful upcoming dates to be aware of and just kind of as a follow-on question to that, is there a time frame within which it needs to be resolved in order for the reserve that you've established to be sufficient?
Speaker Change: Uh, well, first, I can't give you, you know, a solid answer on the timing. These are it's quite Dynamic. And it's determined by a number of different items in terms of the courts and court dates. Um, regarding the the reserve it's sufficient, it is a sufficient reserve and it's, uh, we, we find it, sufficient. There's no time stamp on that. We find that, that is the, um, uh, the liability of that we see for, for resolving this. Look, I think, um, you know what, I can give you in terms of over the past 90 days, that's happened. A couple of significant items. Um, you know, the hearing in the middle of May about May 14th, uh, where the bankruptcy court, um, you know, kind of referred to had a hearing and refer to key factual question, in the case to a federal district court and that was, you know, to determine whether BMI uh Old Co tell contained asbestos.
Speaker Change: Um, you know, that's a relative positive development for us because, you know, we've always maintained that BMI Old Co has, uh, has always maintained that its talc was safe and free of asbestos. And so there is a forum by which um, you know, that can be, um, determined. Um, at the same time we're still, uh, BMI is waiting for that. Um, you know, kind of next steps in in that, that hearing,
Uh, and while we wait, you know, we're waiting on that Clarity, you know, we're we're still working and hope that a consensual plan can be developed. Um, where you know, we're working through. Uh, we've always been open to a plan and um, and we feel that the reserve is sufficient to that end. Uh, but you know, there's 2 steps here, 1 through the district court. And, you know, showing that our telk has been uh, bmi's. Telk has been free of asbestos and then also, uh, working uh, on developing a consensual plan. So, uh, that's going to take some time. Uh, we're open to both Avenues, uh, but um, I can't give you a time frame when that will be concluded.
Speaker Change: Uh, it's very helpful. Thanks a lot Doug.
Speaker Change: Yep.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Doug Dietrich for any closing remarks.
Well everyone, I really appreciate you joining the call today. Again uh, thank you for the questions. Hopefully it was informative and uh we look forward to talking to you uh after the third quarter in October, all right, take care till then.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect