Minerals Technologies Q4 2025 Minerals Technologies Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Minerals Technologies Inc Earnings Call
Speaker #1: Good
Operator: Good morning, and welcome to the Minerals Technologies Q4 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 one on your telephone keypad. To withdraw your question, please press Star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Lydia Kopylova, Head of Investor Relations. Please go ahead.
Operator: Good morning, and welcome to the Minerals Technologies Q4 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 one on your telephone keypad. To withdraw your question, please press Star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Lydia Kopylova, Head of Investor Relations. Please go ahead.
Speaker #1: Good morning, and welcome to the Minerals Technologies fourth 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.
Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad.
Speaker #1: To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Lydia Kopylova, Head of Investor Relations.
Speaker #1: Please go ahead.
Speaker #2: Thank you, Gary. Good morning, everyone, and welcome to our fourth quarter 2025 earnings conference call. Today's call will be led by Chairman and Chief Executive Officer Doug Dietrich, and Chief Financial Officer Erik Aldag. Following Doug and Erik's prepared remarks, we will open it up to questions.
Lydia Kopylova: Thank you, Gary. Good morning, everyone, and welcome to our Q4 2025 earnings conference call. Today's call will be led by Chairman and Chief Executive Officer, Doug Dietrich, and Chief Financial Officer, Erik Aldag. Following Doug and Erik's prepared remarks, we'll open it up to questions. As a reminder, some of the statements made during this call may constitute forward-looking statements within the meaning of the federal securities laws. Please note the cautionary language about forward-looking statements contained in our earnings release and on the slides. Our SEC filings disclose certain risks and uncertainties, which may cause our actual results to differ materially from these forward-looking statements. Please also know that some of our comments today refer to non-GAAP financial measures. A reconciliation to GAAP financial measures can be found in our earnings release in an appendix of this presentation, which are posted on our website.
Lydia Kopylova: Thank you, Gary. Good morning, everyone, and welcome to our Q4 2025 earnings conference call. Today's call will be led by Chairman and Chief Executive Officer, Doug Dietrich, and Chief Financial Officer, Erik Aldag. Following Doug and Erik's prepared remarks, we'll open it up to questions. As a reminder, some of the statements made during this call may constitute forward-looking statements within the meaning of the federal securities laws. Please note the cautionary language about forward-looking statements contained in our earnings release and on the slides. Our SEC filings disclose certain risks and uncertainties, which may cause our actual results to differ materially from these forward-looking statements. Please also know that some of our comments today refer to non-GAAP financial measures. A reconciliation to GAAP financial measures can be found in our earnings release in an appendix of this presentation, which are posted on our website.
Speaker #2: As a reminder, some of the statements made during this call may constitute forward-looking statements within the meaning of the Federal Securities Laws. Please note the cautionary language about forward-looking statements contained in our earnings release is on this slide.
Speaker #2: Our SEC filings disclose certain risks and uncertainties, which may cause our actual results to differ materially from these forward-looking statements. Please also note that some of our comments today refer to non-GAAP financial measures.
Speaker #2: A reconciliation to GAAP financial measures can be found in our earnings release and in an appendix of this presentation, which I posted on our website.
Speaker #2: Now I'll turn it over to
Lydia Kopylova: Now I'll turn it over to Doug. Doug?
Now I'll turn it over to Doug. Doug?
Speaker #2: Doug. Thanks, Lydia. Doug?
Douglas T. Dietrich: Thanks, Lydia. Good morning, everyone, and thanks for joining today. I'll start today's call by giving you a high-level overview of our performance for 2025, and then Erik will walk you through our Q4 and full year financial summary, and, as well as give you a Q1 outlook. I'll then take a couple of moments toward the end to give you an overview of how we see 2026 shaping up in terms of our end markets and the sales growth we expect to see over the year in each product line. After that, we'll open it up to questions. 2025 was a more challenging year for us, especially compared to the record year we had in 2024.
Douglas Dietrich: Thanks, Lydia. Good morning, everyone, and thanks for joining today. I'll start today's call by giving you a high-level overview of our performance for 2025, and then Erik will walk you through our Q4 and full year financial summary, and, as well as give you a Q1 outlook. I'll then take a couple of moments toward the end to give you an overview of how we see 2026 shaping up in terms of our end markets and the sales growth we expect to see over the year in each product line. After that, we'll open it up to questions. 2025 was a more challenging year for us, especially compared to the record year we had in 2024.
Speaker #3: Good morning, everyone, and thanks for joining today. I'll start today's call by giving you a high-level overview of our performance for 2025. Then Erik will walk you through our fourth quarter and full-year financial summary, as well as give you a first quarter outlook.
Speaker #3: I'll then take a couple of moments toward the end to give you an overview of how we see 2026 shaping up in terms of our end markets, and the sales growth we expect to see over the year in each product line.
Speaker #3: After that, we'll open it up to questions. 2025 was a more challenging year for us, especially compared to the record year we had in 2024.
Speaker #3: Like other companies, we experienced the impact of a dynamic, and at times volatile, operating environment, including geopolitical uncertainty, changing tariffs, and softer market demand.
Douglas T. Dietrich: Like other companies, we experienced the impact of a dynamic and at times volatile operating environment, including geopolitical uncertainty, changing tariffs, and softer market demand. The ability to make the ongoing adjustments to these changing conditions, while at the same time remaining focused on delivering the key drivers of our long-term strategy, is a testament to the strength of our team. I'd first like to highlight that in 2025, the employees at MTI achieved a world-class safety performance and one that was the best ever in MTI's history. The health and safety of our people, partners, and communities are our top priorities. And though we continue to reduce the number of injuries that occur at MTI, we still haven't reached our goal of eliminating them altogether. But the progress we made as a team this year is a positive step toward that achievement.
Like other companies, we experienced the impact of a dynamic and at times volatile operating environment, including geopolitical uncertainty, changing tariffs, and softer market demand. The ability to make the ongoing adjustments to these changing conditions, while at the same time remaining focused on delivering the key drivers of our long-term strategy, is a testament to the strength of our team. I'd first like to highlight that in 2025, the employees at MTI achieved a world-class safety performance and one that was the best ever in MTI's history. The health and safety of our people, partners, and communities are our top priorities. And though we continue to reduce the number of injuries that occur at MTI, we still haven't reached our goal of eliminating them altogether. But the progress we made as a team this year is a positive step toward that achievement.
Speaker #3: The ability to make ongoing adjustments to these changing conditions, while at the same time remaining focused on delivering the key drivers of our long-term strategy, is a testament to the strength of our team.
Speaker #3: At first, I'd like to highlight that in 2025, the employees at MTI achieved a world-class safety performance, and one that was the best ever in MTI's history.
Speaker #3: The health and safety of our people, partners, and communities are our top priorities. And though we continue to reduce the number of injuries that occur at MTI, we still haven't reached our goal of eliminating them altogether.
Speaker #3: But the progress we've made as a team this year is a positive step toward that achievement. Moving to our financial results, full-year sales came in at $2.1 billion, a similar level to last year.
Douglas T. Dietrich: Moving to our financial results, full year sales came in at $2.1 billion, a similar level to last year. Full year operating income was $287 million, and earnings per share was $5.52. Many of our key end markets either remained flat or weakened throughout the year. Our teams moved quickly to adjust to these conditions in our facilities by maintaining control of costs and managing inventories, while at the same time navigating changing tariffs and remaining focused on quality, customers, and safety. We also took proactive steps to improve our cost structure, including a company-wide cost savings program that we announced in the first half, which we will see the full year impact from this year.
Moving to our financial results, full year sales came in at $2.1 billion, a similar level to last year. Full year operating income was $287 million, and earnings per share was $5.52. Many of our key end markets either remained flat or weakened throughout the year. Our teams moved quickly to adjust to these conditions in our facilities by maintaining control of costs and managing inventories, while at the same time navigating changing tariffs and remaining focused on quality, customers, and safety. We also took proactive steps to improve our cost structure, including a company-wide cost savings program that we announced in the first half, which we will see the full year impact from this year.
Speaker #3: Full-year operating income was $287 million, and earnings per share was $5.52. Many of our key end markets either remained flat or weakened throughout the year.
Speaker #3: Our teams moved quickly to adjust to these conditions, and our facilities. By maintaining control of costs and managing inventories, while at the same time navigating changing tariffs and remaining focused on quality, customers, and safety.
Speaker #3: We also took proactive steps to improve our cost structure, including a company-wide cost savings program that we announced in the first half, which we will see the full-year impact from this year.
Speaker #3: Despite the market and operating distractions, we meaningfully advanced the three pillars of our organic growth strategy in both of our segments, including expanding into higher-growth consumer-oriented markets, positioning ourselves in faster-growing geographies, and introducing innovative, higher-margin products.
Douglas T. Dietrich: Despite the market and operating distractions, we meaningfully advanced the three pillars of our organic growth strategy in both of our segments, including expanding into higher growth, consumer-oriented markets, positioning ourselves in faster-growing geographies, and introducing innovative, higher-margin products. We outlined for you a few examples of the investments we've recently made to support this strategy, including upgrades to our pet litter facilities in the US, Canada, and China, expanding our natural oil purification operations in Turkey, building several paper and packaging satellite plants in Asia, and expanding our production of FLUOROSORB. Each of these investments has led to significant new sales growth in 2026, and I'll give you details on this later in the presentation. This was also a strong year on the technology and new product development front.
Despite the market and operating distractions, we meaningfully advanced the three pillars of our organic growth strategy in both of our segments, including expanding into higher growth, consumer-oriented markets, positioning ourselves in faster-growing geographies, and introducing innovative, higher-margin products. We outlined for you a few examples of the investments we've recently made to support this strategy, including upgrades to our pet litter facilities in the US, Canada, and China, expanding our natural oil purification operations in Turkey, building several paper and packaging satellite plants in Asia, and expanding our production of FLUOROSORB. Each of these investments has led to significant new sales growth in 2026, and I'll give you details on this later in the presentation. This was also a strong year on the technology and new product development front.
Speaker #3: We outlined for you a few examples of the investments we've recently made to support this strategy, including upgrades to our pet litter facilities in the US, Canada, and China, expanding our natural oil purification operations in Turkey, building several paper and packaging satellite plants in Asia, and expanding our production of floors.
Speaker #3: Each of these investments has led to significant new sales growth in 2026, and I'll give you details on this later in the presentation. This is also a strong year on the technology and new product development front.
Speaker #3: Sales of our newest products accounted for 19% of our total sales, which is the highest level we've achieved and points to both the strength of our innovation engine and our ability to continue to bring new value to our customers through the application of our core technologies.
Douglas T. Dietrich: Sales of our newest products accounted for 19% of our total sales, which is the highest level we've achieved, and points to both the strength of our innovation engine, and ability to continue to bring new value to our customers through the application of our core technologies. Further, we remain strong stewards of our capital, returning $73 million to our investors through dividends and share repurchases, while also maintaining a strong balance sheet that is well-positioned to support both our organic and inorganic growth initiatives. With that, let me have Erik take you through our financials in more detail.
Sales of our newest products accounted for 19% of our total sales, which is the highest level we've achieved, and points to both the strength of our innovation engine, and ability to continue to bring new value to our customers through the application of our core technologies. Further, we remain strong stewards of our capital, returning $73 million to our investors through dividends and share repurchases, while also maintaining a strong balance sheet that is well-positioned to support both our organic and inorganic growth initiatives. With that, let me have Erik take you through our financials in more detail.
Speaker #3: Further, we remain strong stewards of our capital, returning $73 million to our investors through dividends and share repurchases, while also maintaining a strong balance sheet that is well-positioned to support both our organic and inorganic growth initiatives.
Speaker #3: With that, let me have Erik take you through our financials in more detail.
Speaker #4: Thanks, Doug, and good morning, everyone. I'll start by providing a summary of our fourth quarter and full-year 2025 results, followed by a review of our segments, and I'll wrap up with our outlook for the first quarter.
Erik Aldag: Thanks, Doug, and good morning, everyone. I'll start by providing a summary of our Q4 and full year 2025 results, followed by a review of our segments, and I'll wrap up with our outlook for the Q1. Following my remarks, I'll turn the call back over to Doug for additional perspective on 2026. Now let's turn to review our results. The Q4 played out largely as we expected. Sales, operating income, and EPS were all roughly in the middle of the ranges we provided on our Q3 earnings call. Sales were $520 million, up slightly from prior year, as 2% growth in engineered solutions offset a 2% decline in consumer and specialties. Operating income was $67 million, and operating margin was 12.8% of sales.
Erik Aldag: Thanks, Doug, and good morning, everyone. I'll start by providing a summary of our Q4 and full year 2025 results, followed by a review of our segments, and I'll wrap up with our outlook for the Q1. Following my remarks, I'll turn the call back over to Doug for additional perspective on 2026. Now let's turn to review our results. The Q4 played out largely as we expected. Sales, operating income, and EPS were all roughly in the middle of the ranges we provided on our Q3 earnings call. Sales were $520 million, up slightly from prior year, as 2% growth in engineered solutions offset a 2% decline in consumer and specialties. Operating income was $67 million, and operating margin was 12.8% of sales.
Speaker #4: Following my remarks, I'll turn the call back over to Doug for additional perspective on 2026. Now, let's turn to review our results. The fourth quarter played out largely as we expected.
Speaker #4: Sales, operating income, and EPS were all roughly in the middle of the ranges we provided on our third quarter earnings call. Sales were $520 million, up slightly from the prior year, as 2% growth in Engineered Solutions offset a 2% decline in Consumer and Specialties.
Speaker #4: Operating income was $67 million, and operating margin was 12.8% of sales. Operating margin for the quarter was impacted by lower residential construction and foundry volumes in the U.S., as well as lower productivity and fixed cost absorption at our plants serving those markets.
Erik Aldag: Operating margin for the quarter was impacted by lower residential construction and foundry volumes in the US, as well as lower productivity and fixed cost absorption at our plants serving those markets. Turning to the full year, sales were $2.1 billion, and operating income was $287 million. You can see in the sales bridge on the upper right that sales were 2% lower than prior year, driven by $74 million of unfavorable volume and mix impacts, which was partly offset with $21 million of selling price increases and an $8 million benefit from foreign exchange. You can see in the bridge on the bottom right, that unfavorable volume and mix impacted operating income by approximately $27 million from the prior year. Our selling price increases completely offset inflationary impacts, including the impact from tariffs.
Operating margin for the quarter was impacted by lower residential construction and foundry volumes in the US, as well as lower productivity and fixed cost absorption at our plants serving those markets. Turning to the full year, sales were $2.1 billion, and operating income was $287 million. You can see in the sales bridge on the upper right that sales were 2% lower than prior year, driven by $74 million of unfavorable volume and mix impacts, which was partly offset with $21 million of selling price increases and an $8 million benefit from foreign exchange. You can see in the bridge on the bottom right, that unfavorable volume and mix impacted operating income by approximately $27 million from the prior year. Our selling price increases completely offset inflationary impacts, including the impact from tariffs.
Speaker #4: Turning to the full year, sales were $2.1 billion, and operating income was $287 million. You can see in the sales bridge on the upper right that sales were 2% lower than the prior year, driven by $74 million of unfavorable volume and mix impacts, which was partly offset with $21 million of selling price increases and an $8 million benefit from foreign exchange.
Speaker #4: You can see in the bridge on the bottom right that unfavorable volume and mix impacted operating income by approximately $27 million from the prior year.
Speaker #4: Our selling price increases completely offset inflationary impacts, including the impact from tariffs. However, we also experienced unfavorable productivity and fixed cost absorption, primarily due to volume challenges in the first and fourth quarters.
Erik Aldag: However, we also experienced unfavorable productivity and fixed cost absorption, primarily due to volume challenges in Q1 and Q4. As we've mentioned, we had some temporarily higher logistics costs associated with our cat litter plant upgrades. Operating margin was 13.9% of sales versus 14.9% in the prior year. Lower volume was the biggest driver of the change and was worth about 80 basis points. We see this margin reverting back toward 15% as volume improves, and we won't have these one-time cost impacts I just mentioned. Earnings per share, excluding special items, was $1.27 in the fourth quarter and $5.52 for the full year. Now let's turn to a review of our segments, beginning with consumer and specialties.
However, we also experienced unfavorable productivity and fixed cost absorption, primarily due to volume challenges in Q1 and Q4. As we've mentioned, we had some temporarily higher logistics costs associated with our cat litter plant upgrades. Operating margin was 13.9% of sales versus 14.9% in the prior year. Lower volume was the biggest driver of the change and was worth about 80 basis points. We see this margin reverting back toward 15% as volume improves, and we won't have these one-time cost impacts I just mentioned. Earnings per share, excluding special items, was $1.27 in the Q4 and $5.52 for the full year. Now let's turn to a review of our segments, beginning with consumer and specialties.
Speaker #4: And as we've mentioned, we had some temporarily higher logistics costs associated with our cat litter plant upgrades. Operating margin was 13.9% of sales, versus 14.9% in the prior year.
Speaker #4: Lower volume was the biggest driver of the change, and was worth about 80 basis points. We see this margin reverting back toward 15% as volume improves, and we won't have these one-time cost impacts I just mentioned.
Speaker #4: Earnings per share, excluding special items, was $1.27 in the fourth quarter and $5.52 for the full year. Now let's turn to a review of our segments, beginning with Consumer and Specialties.
Speaker #4: Fourth quarter sales in the Consumer and Specialties segment were $274 million. Sales in our Household and Personal Care product line increased 2% sequentially to $133 million, and were 1% below the prior year.
Erik Aldag: Q4 sales in the consumer and specialties segment were $274 million. Sales in our household and personal care product line increased 2% sequentially to $133 million and were 1% below prior year. Momentum continued to build for our cat litter business, with sales up 8% sequentially and up slightly from prior year. We also saw continued growth in edible oil and renewable fuel purification, as well as animal feed additives. However, this growth was offset by lower fabric care sales as customers reduced their inventories in the fourth quarter. In our specialty additives product line, sales of $142 million were 2% below prior year, as higher sales to paper and packaging customers were offset by a pronounced slowdown in residential construction, which resulted in several customers taking unusually long downtime in December.
Q4 sales in the consumer and specialties segment were $274 million. Sales in our household and personal care product line increased 2% sequentially to $133 million and were 1% below prior year. Momentum continued to build for our cat litter business, with sales up 8% sequentially and up slightly from prior year. We also saw continued growth in edible oil and renewable fuel purification, as well as animal feed additives. However, this growth was offset by lower fabric care sales as customers reduced their inventories in the Q4. In our specialty additives product line, sales of $142 million were 2% below prior year, as higher sales to paper and packaging customers were offset by a pronounced slowdown in residential construction, which resulted in several customers taking unusually long downtime in December.
Speaker #4: Momentum continued to build for our cat litter business, with sales up 8% sequentially and up slightly from the prior year. We also saw continued growth in edible oil and renewable fuel purification, as well as animal feed additives.
Speaker #4: However, this growth was offset by lower fabric care sales, as customers reduced their inventories in the fourth quarter. In our specialty additives product line, sales of $142 million were 2% below the prior year, as higher sales to paper and packaging customers were offset by a pronounced slowdown in residential construction.
Speaker #4: Which resulted in several customers taking unusually long downtime in December. These customers resumed ordering in January, but we are not expecting this market to improve significantly from the fourth quarter to the first quarter.
Erik Aldag: These customers resumed ordering in January, but we are not expecting this market to improve significantly from Q4 to Q1. Operating income for the quarter was $29 million, $9 million lower than prior year, driven by unfavorable volume and the associated impact on fixed cost absorption at our plants, particularly those serving residential construction. Turning to the full year, consumer and specialty sales were $1.1 billion. Household and personal care sales of $513 million were down 3% from prior year overall, but improved by 5% in the second half of the year compared with the first half. The improvement in the second half was driven by a positive trend in cat litter sales, which were 7% higher in the second half, as we worked with our retail partners to drive higher volumes....
These customers resumed ordering in January, but we are not expecting this market to improve significantly from Q4 to Q1. Operating income for the quarter was $29 million, $9 million lower than prior year, driven by unfavorable volume and the associated impact on fixed cost absorption at our plants, particularly those serving residential construction. Turning to the full year, consumer and specialty sales were $1.1 billion. Household and personal care sales of $513 million were down 3% from prior year overall, but improved by 5% in the second half of the year compared with the first half. The improvement in the second half was driven by a positive trend in cat litter sales, which were 7% higher in the second half, as we worked with our retail partners to drive higher volumes....
Speaker #4: Operating income for the quarter was $29 million, $9 million lower than the prior year, driven by unfavorable volume and the associated impact on fixed cost absorption at our plants, particularly those serving residential construction.
Speaker #4: Turning to the full year, Consumer and Specialties sales were $1.1 billion. Household and Personal Care sales of $513 million were down 3% from the prior year overall, but improved by 5% in the second half of the year compared with the first half.
Speaker #4: The improvement in the second half was driven by a positive trend in cat litter sales, which were 7% higher in the second half, as we worked with our retail partners to drive higher volumes.
Speaker #4: We also continued to make solid progress on some of our key growth initiatives, with full-year sales into edible oil and renewable fuel purification up 17%, and sales of animal feed additives up 12%.
Erik Aldag: We also continued to make solid progress on some of our key growth initiatives, with full-year sales into edible oil and renewable fuel purification up 17%, and sales of animal feed additives up 12%. Sales in specialty additives were $585 million, 4% below prior year. As I mentioned, one of the bigger macro challenges we faced in 2025 was a slowdown in residential construction, which impacted sales for this product line in both Q3 and Q4. Overall volumes to paper and packaging customers were also lower than the prior year, as our new satellites in Asia were offset by declines in North America and Europe, including two paper machine shutdowns that occurred over the past year in the US.
We also continued to make solid progress on some of our key growth initiatives, with full-year sales into edible oil and renewable fuel purification up 17%, and sales of animal feed additives up 12%. Sales in specialty additives were $585 million, 4% below prior year. As I mentioned, one of the bigger macro challenges we faced in 2025 was a slowdown in residential construction, which impacted sales for this product line in both Q3 and Q4. Overall volumes to paper and packaging customers were also lower than the prior year, as our new satellites in Asia were offset by declines in North America and Europe, including two paper machine shutdowns that occurred over the past year in the US.
Speaker #4: Sales in specialty additives were $585 million, 4% below prior year. As I mentioned, one of the bigger macro challenges we faced in 2025 was a slowdown in residential construction.
Speaker #4: This impacted sales for this product line in both the third and fourth quarters. Overall volumes to paper and packaging customers were also lower than the prior year, as our new satellites in Asia were offset by declines in North America and Europe, including two paper machine shutdowns that occurred over the past year in the U.S.
Speaker #4: Despite these market challenges, our sales to paper and packaging customers picked up by 3% compared with the first half of the year, increasing in the second half, as some of our newest satellites continue to ramp up and volumes in Europe and Latin America also ticked higher.
Erik Aldag: Despite these market challenges, our sales to paper and packaging customers picked up in the second half of this year, increasing by 3% compared with the first half of the year, as some of our newest satellites continued to ramp up, and volumes in Europe and Latin America also ticked higher. As I mentioned, overall sales to paper and packaging customers returned to year-over-year growth in Q4. And with the capacity that has come out of the market in North America, operating rates at our customers are very healthy, in the 90% range, which is positive for our volumes. Full-year operating income for the segment was $134 million, compared to $166 million last year, driven by unfavorable volume and mix, and the associated unfavorable cost productivity, as well as temporary cost increases related to our facility upgrades.
Despite these market challenges, our sales to paper and packaging customers picked up in the second half of this year, increasing by 3% compared with the first half of the year, as some of our newest satellites continued to ramp up, and volumes in Europe and Latin America also ticked higher. As I mentioned, overall sales to paper and packaging customers returned to year-over-year growth in Q4. And with the capacity that has come out of the market in North America, operating rates at our customers are very healthy, in the 90% range, which is positive for our volumes. Full-year operating income for the segment was $134 million, compared to $166 million last year, driven by unfavorable volume and mix, and the associated unfavorable cost productivity, as well as temporary cost increases related to our facility upgrades.
Speaker #4: As I mentioned, overall sales to paper and packaging customers returned to year-over-year growth in the fourth quarter. And with the capacity that has come out of the market in North America, operating rates at our customers are very healthy.
Speaker #4: In the 90% range, which is positive for our volumes. Full-year operating income for the segment was $134 million, compared to $166 million last year.
Speaker #4: Driven by unfavorable volume and mix and the associated unfavorable cost productivity, as well as temporary cost increases related to our facility upgrades. Now, let's turn to a review of our Engineered Solutions segment.
Erik Aldag: Now let's turn to a review of our Engineered Solutions segment. Q4 sales in the Engineered Solutions segment grew 2% from prior year to $245 million. Sales in high-temperature technologies of $178 million were up 1% from the prior year, as higher sales to steel customers offset lower foundry sales in North America. As we expected, foundry customers in North America took extended seasonal outages toward the end of the Q4. In the environmental and infrastructure product line, sales of $67 million were 7% higher than prior year. Sales growth was driven by infrastructure drilling, offshore services, and environmental lining systems. This growth was partially offset by lower sales of waterproofing materials for the commercial construction market. Q4 operating income was $40 million, representing another strong performance by the segment, despite mixed market conditions.
Now let's turn to a review of our Engineered Solutions segment. Q4 sales in the Engineered Solutions segment grew 2% from prior year to $245 million. Sales in high-temperature technologies of $178 million were up 1% from the prior year, as higher sales to steel customers offset lower foundry sales in North America. As we expected, foundry customers in North America took extended seasonal outages toward the end of the Q4. In the environmental and infrastructure product line, sales of $67 million were 7% higher than prior year. Sales growth was driven by infrastructure drilling, offshore services, and environmental lining systems. This growth was partially offset by lower sales of waterproofing materials for the commercial construction market. Q4 operating income was $40 million, representing another strong performance by the segment, despite mixed market conditions.
Speaker #4: Fourth quarter sales in the Engineered Solutions segment grew 2% from the prior year to $245 million. Sales in High-Temperature Technologies were $178 million, up 1% from the prior year, as higher sales to foundry customers in North America offset lower sales elsewhere.
Speaker #4: As we expected, foundry customers in North America took extended seasonal outages toward the end of the fourth quarter. In the Environmental and Infrastructure product line, sales of $67 million were 7% higher than prior year.
Speaker #4: Sales growth was driven by infrastructure drilling, offshore services, and environmental lining systems. This growth was partially offset by lower sales of waterproofing materials for the commercial construction market.
Speaker #4: Operating income was $40 million, representing another strong performance by the fourth quarter operating income segment, despite mixed market conditions. Turning to the full year, segment sales were $975 million.
Erik Aldag: Turning to the full year, segment sales were $975 million. Sales in high-temperature technologies were $705 million, representing a 1% decrease from prior year. We continued to see growth in our Asia foundry business, which helped to offset slower demand from foundries serving the agricultural equipment and heavy truck markets in North America. Sales to steel customers were relatively flat overall, as growth in North America was offset by softness in Europe. Full-year sales in the environmental and infrastructure product line were $270 million, up 2% from prior year, primarily driven by higher demand for infrastructure drilling products, environmental lining systems, and offshore water treatment. The segment navigated mixed market conditions and tariff impacts to deliver record operating income of $163 million and record operating margin of 16.7% of sales.
Turning to the full year, segment sales were $975 million. Sales in high-temperature technologies were $705 million, representing a 1% decrease from prior year. We continued to see growth in our Asia foundry business, which helped to offset slower demand from foundries serving the agricultural equipment and heavy truck markets in North America. Sales to steel customers were relatively flat overall, as growth in North America was offset by softness in Europe. Full-year sales in the environmental and infrastructure product line were $270 million, up 2% from prior year, primarily driven by higher demand for infrastructure drilling products, environmental lining systems, and offshore water treatment. The segment navigated mixed market conditions and tariff impacts to deliver record operating income of $163 million and record operating margin of 16.7% of sales.
Speaker #4: Sales in high-temperature technologies were $705 million, representing a 1% decrease from the prior year. We continue to see growth in our Asia foundry business, which helped to offset slower demand from foundries serving the agricultural equipment and heavy truck markets in North America.
Speaker #4: were relatively flat overall, as sales to steel customers' growth in North America was offset by softness in Europe. Full-year sales in the environmental and infrastructure product line were $270 million, up 2% from the prior year, primarily driven by higher demand for infrastructure drilling products, environmental lining systems, and offshore water treatment.
Speaker #4: The segment navigated mixed market conditions and tariff impacts to deliver record operating income of $163 million, and a record operating margin of 16.7% of sales.
Speaker #4: Now let me turn to a summary of our balance sheet and cash flow highlights. Fourth quarter cash from operations was $64 million, bringing the full-year total to $194 million.
Erik Aldag: Now let me turn to a summary of our balance sheet and cash flow highlights. Fourth quarter cash from operations was $64 million, bringing the full-year total to $194 million. We deployed $107 million of capital expenditure, which was a bit higher than the prior year, driven by the higher number of growth investments we've made. Overall, free cash flow was $87 million for the year. After a slow start to the year, our free cash flow averaged 7% of sales from Q2 to Q4. For 2026, we're expecting full-year free cash flow in this more typical range of 6 to 7% of sales. We returned a total of $73 million to shareholders last year, in keeping with our balanced approach to capital deployment.
Now let me turn to a summary of our balance sheet and cash flow highlights. Q4 cash from operations was $64 million, bringing the full-year total to $194 million. We deployed $107 million of capital expenditure, which was a bit higher than the prior year, driven by the higher number of growth investments we've made. Overall, free cash flow was $87 million for the year. After a slow start to the year, our free cash flow averaged 7% of sales from Q2 to Q4. For 2026, we're expecting full-year free cash flow in this more typical range of 6 to 7% of sales. We returned a total of $73 million to shareholders last year, in keeping with our balanced approach to capital deployment.
Speaker #4: We deployed $107 million of capital expenditure, which was a bit higher than the prior year, driven by the higher number of growth investments we've made.
Speaker #4: Overall, free cash flow was $87 million for the year. After a slow start to the year, our free cash flow averaged 7% of sales from Q2 to Q4.
Speaker #4: And for 2026, we're expecting full-year free cash flow in this more typical range of 6% to 7% of sales. We returned a total of $73 million to shareholders last year, in keeping with our balanced approach to capital deployment.
Speaker #4: Our balance sheet remains solid, finishing the year with more than $700 million in liquidity and a net leverage ratio of 1.7 times EBITDA. Now, I'll summarize our outlook for the first quarter.
Erik Aldag: Our balance sheet remains solid, finishing the year with more than $700 million in liquidity and a net leverage ratio of 1.7 times EBITDA. Now I'll summarize our outlook for Q1. Overall, we expect Q1 sales and operating income to be similar to Q4, which would represent approximately 5% growth over the prior year. In the Consumer and Specialty segment, we expect sales to be up mid-single digits versus prior year. In Household and Personal Care, we're building on the momentum we've generated in cat litter and other consumer-oriented products, and we expect this product line to be up mid to high single digits year-over-year in Q1. We've also seen an uptick in fabric care orders after a slow Q4.
Our balance sheet remains solid, finishing the year with more than $700 million in liquidity and a net leverage ratio of 1.7 times EBITDA. Now I'll summarize our outlook for Q1. Overall, we expect Q1 sales and operating income to be similar to Q4, which would represent approximately 5% growth over the prior year. In the Consumer and Specialty segment, we expect sales to be up mid-single digits versus prior year. In Household and Personal Care, we're building on the momentum we've generated in cat litter and other consumer-oriented products, and we expect this product line to be up mid to high single digits year-over-year in Q1. We've also seen an uptick in fabric care orders after a slow Q4.
Speaker #4: Overall, we expect first quarter sales and operating income to be similar to the fourth quarter, which would represent approximately 5% growth over the prior year.
Speaker #4: In the Consumer and Specialties segment, we expect sales to be up mid-single digits versus the prior year. In Household and Personal Care, we're building on the momentum we've generated in cat litter and other consumer-oriented products, and we expect this product line to be up mid- to high-single digits year over year in the first quarter.
Speaker #4: We've also seen an uptick in fabric care orders after a slow fourth quarter. In specialty additives, we're expecting growth in paper and packaging to offset continued softness in residential construction.
Erik Aldag: In Specialty Additives, we're expecting growth in paper and packaging to offset continued softness in residential construction. In Engineered Solutions, we're also expecting mid-single-digit growth in Q1. In high-temperature technologies, we see continued growth in Asia Foundry and continued strong sales to steel customers in North America, which we expect to offset the softness we are seeing in North America Foundry. Our North America Foundry customers continue to be impacted by sluggish agricultural equipment and heavy truck volumes, and a few permanent foundry closures have been announced for Q1. We expect most of the volume from these foundries to be absorbed by other foundries in the US. However, it will take some time for that volume to transition. In environmental and infrastructure, we're expecting continued growth in infrastructure drilling products, as well as offshore water treatment.
In Specialty Additives, we're expecting growth in paper and packaging to offset continued softness in residential construction. In Engineered Solutions, we're also expecting mid-single-digit growth in Q1. In high-temperature technologies, we see continued growth in Asia Foundry and continued strong sales to steel customers in North America, which we expect to offset the softness we are seeing in North America Foundry. Our North America Foundry customers continue to be impacted by sluggish agricultural equipment and heavy truck volumes, and a few permanent foundry closures have been announced for Q1. We expect most of the volume from these foundries to be absorbed by other foundries in the US. However, it will take some time for that volume to transition. In environmental and infrastructure, we're expecting continued growth in infrastructure drilling products, as well as offshore water treatment.
Speaker #4: In engineered solutions, we're also expecting mid-single-digit growth in the first quarter. In high-temperature technologies, we see continued growth in Asia foundry and continued strong sales to steel customers in North America, which we expect to offset the softness we are seeing in North America foundry.
Speaker #4: Our North America foundry customers continue to be impacted by sluggish agricultural equipment and heavy truck volumes, and a few permanent foundry closures have been announced for the first quarter.
Speaker #4: We expect most of the volume from these foundries to be absorbed by other foundries in the US; however, it will take some time for that volume to transition.
Speaker #4: In Environmental and Infrastructure, we're expecting continued growth in infrastructure drilling products, as well as offshore water treatment. For the total company, we're seeing energy and mining costs in the first quarter versus the fourth quarter, which will have a temporary impact on our facing $2 to $3 million higher margins.
Erik Aldag: For the total company, we're facing $2 to 3 million higher energy and mining costs in Q1 versus Q4, which will have a temporary impact on our margins. We expect to offset these higher costs through pricing and improved productivity as we move through the quarter, and the margin impact should be limited to Q1. We expect overall sales and margins to improve as we move through the year, particularly as some exciting new growth opportunities begin to ramp up in Q2. With that, let me turn the call back over to Doug for some additional detail on these opportunities and some perspective on the year ahead. Doug?
For the total company, we're facing $2 to 3 million higher energy and mining costs in Q1 versus Q4, which will have a temporary impact on our margins. We expect to offset these higher costs through pricing and improved productivity as we move through the quarter, and the margin impact should be limited to Q1. We expect overall sales and margins to improve as we move through the year, particularly as some exciting new growth opportunities begin to ramp up in Q2. With that, let me turn the call back over to Doug for some additional detail on these opportunities and some perspective on the year ahead. Doug?
Speaker #4: We expect to offset these higher costs through pricing and improved productivity as we move through the quarter, and the margin impact should be limited to the quarter.
Speaker #4: First, overall sales and margins are expected to improve as we move through the year, particularly as some exciting new growth opportunities begin to ramp up in the second quarter.
Speaker #4: With that, let me turn the call back over to Doug for some additional detail on these opportunities and some perspectives on the year ahead.
Speaker #4: Doug?
Speaker #2: Thanks,
Douglas T. Dietrich: Thanks, Erik. Every first quarter, I like to give you a general perspective on our end market conditions for the year. As Erik just mentioned, we're not currently seeing any significant changes in our end markets and expect them to largely remain stable at current levels through the first half. Several factors could change this outlook, such as lower interest rates, increased consumer confidence in home buying and remodeling, and improvements in on-and-off highway vehicle builds. These factors could take hold this year, but the timing of the resulting inflections is hard to determine at this point. Independent of exactly how our markets play out, the growth investments we made last year were well-timed, and we have captured significant sales growth for 2026 as a result. Let me take you through each product line and give you some examples.
Douglas Dietrich: Thanks, Erik. Every Q1, I like to give you a general perspective on our end market conditions for the year. As Erik just mentioned, we're not currently seeing any significant changes in our end markets and expect them to largely remain stable at current levels through the first half. Several factors could change this outlook, such as lower interest rates, increased consumer confidence in home buying and remodeling, and improvements in on-and-off highway vehicle builds. These factors could take hold this year, but the timing of the resulting inflections is hard to determine at this point. Independent of exactly how our markets play out, the growth investments we made last year were well-timed, and we have captured significant sales growth for 2026 as a result. Let me take you through each product line and give you some examples.
Speaker #1: Eric, every I'd like to generally give you a perspective on our end market conditions for the year. And as Eric just mentioned, we're not currently seeing any significant changes mentioned.
Speaker #1: We're not currently seeing changes in any significant end markets and expect them to largely remain stable at current levels through the first half.
Speaker #1: Several factors change this could outlook , interest lower rates , increased consumer confidence in home such as buying and remodeling , and improvements in on and off highway vehicle builds .
Speaker #1: These factors could take hold this year, but the timing of the resulting inflections is hard to determine at this point. But independent of exactly how our markets play the growth investments we put out, year were timed, and we have significant sales growth for 2026.
Speaker #1: Well, as a result, let me take you through each product line and give you some examples. And household and personal care were set up for what we expect to be a strong year.
Douglas T. Dietrich: In household and personal care, we're set up for what we expect to be a strong year. The result of the investments we made into the US, our US, Canadian, and Chinese cat litter facilities, is that we've secured significant new business this year with major retailers, which will begin to ramp up at the beginning of Q2. We're also completing the expansion of our bleaching earth facility in Turkey to support the rapid growth of our edible oil and renewable fuel purification business. Regulatory changes driving an increased use of sustainable aviation fuels worldwide are creating significant demand for our best-in-class bleaching earth products. We've also recently qualified our products at a large refinery in Asia, which opens this large market to us.
In household and personal care, we're set up for what we expect to be a strong year. The result of the investments we made into the US, our US, Canadian, and Chinese cat litter facilities, is that we've secured significant new business this year with major retailers, which will begin to ramp up at the beginning of Q2. We're also completing the expansion of our bleaching earth facility in Turkey to support the rapid growth of our edible oil and renewable fuel purification business. Regulatory changes driving an increased use of sustainable aviation fuels worldwide are creating significant demand for our best-in-class bleaching earth products. We've also recently qualified our products at a large refinery in Asia, which opens this large market to us.
Speaker #1: The result of the investments we made into the US . Our US , Canadian and Chinese cat litter facilities . we've secured Is that significant new business this year with retailers , which will begin to ramp up at the beginning of the second quarter .
Speaker #1: We're also completing the expansion of our bleaching earth facility in Turkey to support the rapid growth of our edible oil and renewable fuel business.
Speaker #1: Regulatory changes driving increased use of sustainable aviation fuels worldwide are creating significant demand for our best in bleaching class earth products . We've also recently qualified our products at a refinery large in Asia , which opens this large market to us .
Douglas T. Dietrich: Over the past five years, this business has grown at an average of 15% per year, and this year, we expect that growth rate to accelerate further. Lastly, we're expanding capacity for our animal health and fabric care products with new partnerships and products in development, and we expect to share more on these initiatives over the next two quarters. In specialty additives, we have three new paper and packaging satellite plants coming online this year in Asia, which will drive solid volume growth. We've recently shared details in a press release about our multi-year expansion in the region, which continues to provide a solid pipeline of opportunities for us, and that will yield additional contracts and volume growth going forward.
Over the past five years, this business has grown at an average of 15% per year, and this year, we expect that growth rate to accelerate further. Lastly, we're expanding capacity for our animal health and fabric care products with new partnerships and products in development, and we expect to share more on these initiatives over the next two quarters. In specialty additives, we have three new paper and packaging satellite plants coming online this year in Asia, which will drive solid volume growth. We've recently shared details in a press release about our multi-year expansion in the region, which continues to provide a solid pipeline of opportunities for us, and that will yield additional contracts and volume growth going forward.
Speaker #1: Over the past five years, this business has grown at an average of 15% per year, and this year we expect that growth rate to further accelerate.
Speaker #1: Lastly , we're expanding capacity for our animal health and fabric care products new with partnerships development . And we expect to share more on these initiatives over the next and two quarters in specialty Additives , have three new paper and packaging , satellite we plants coming online this year in drive solid will volume Asia , which growth .
Speaker #1: We've shared details in a press release about our multiyear, recently expansion in the region, which continues to pipeline of opportunities for us, and that will yield contracts and additional volume growth forward going.
Douglas T. Dietrich: The main uncertainty this year in this product line is the residential construction market and the question of when it will begin to strengthen from its current condition. When it does, this will have a positive impact on our GCC and specialty PCC volumes. Moving to the engineered solutions segment, our high-temperature technologies product line is positioned for a solid year. Steel production in the US remains stable, and we've seen some recent improvement in Europe. We're commissioning six additional MINSCAN units this year and continue to see strong pull for our latest high-performance refractory formulations. Foundry output in the US, however, remains relatively slow due to flat auto builds and weaker heavy truck, and agricultural equipment demand. Asia presents a large addressable market for us, and we continue to see opportunities to expand our business there.
The main uncertainty this year in this product line is the residential construction market and the question of when it will begin to strengthen from its current condition. When it does, this will have a positive impact on our GCC and specialty PCC volumes. Moving to the engineered solutions segment, our high-temperature technologies product line is positioned for a solid year. Steel production in the US remains stable, and we've seen some recent improvement in Europe. We're commissioning six additional MINSCAN units this year and continue to see strong pull for our latest high-performance refractory formulations. Foundry output in the US, however, remains relatively slow due to flat auto builds and weaker heavy truck, and agricultural equipment demand. Asia presents a large addressable market for us, and we continue to see opportunities to expand our business there.
Speaker #1: The main uncertainty in this year is the product line residential construction market, and the question of when it will begin to strengthen from its current condition.
Speaker #1: When it does, this will have a positive impact on our GCC and specialty PCC volumes. Moving to the Engineered Solutions segment, our High Temperature Technologies product line is positioned for a solid year.
Speaker #1: Steel production in the US remains stable, and we've seen some recent improvement in Europe. We're commissioning six additional Minskad units this year and continue to see strong pull for our latest high-performance refractory formulations.
Speaker #1: Foundry output in the U.S., however, remains relatively slow due to flat auto builds and weaker heavy truck and agricultural equipment demand.
Speaker #1: presents a Asia addressable market for us , and we large continue to see opportunities to expand our business . There . The China Foundry market proved to be resilient year , and last we expect to see strong continued volume there .
Douglas T. Dietrich: The China foundry market proved to be resilient last year, and we expect to see continued strong volume growth there again this year. In the environmental and infrastructure product line, our commercial construction and large environmental lining markets are beginning to trend in a positive direction. FLUOROSORB continues its qualification track, with hundreds of trials taking place at water utilities across the US and in Europe. We have 10 new FLUOROSORB water utility installations scheduled for this year, which will more than double our current footprint. We're also seeing continued strong demand for our infrastructure drilling products and expect this strength to continue throughout the year. In summary, the specific actions we took last year in support of our long-term strategy have put us in a position to deliver a strong 2026. With relatively stable markets, we see growth returning to the mid-single-digit range.
The China foundry market proved to be resilient last year, and we expect to see continued strong volume growth there again this year. In the environmental and infrastructure product line, our commercial construction and large environmental lining markets are beginning to trend in a positive direction. FLUOROSORB continues its qualification track, with hundreds of trials taking place at water utilities across the US and in Europe. We have 10 new FLUOROSORB water utility installations scheduled for this year, which will more than double our current footprint. We're also seeing continued strong demand for our infrastructure drilling products and expect this strength to continue throughout the year. In summary, the specific actions we took last year in support of our long-term strategy have put us in a position to deliver a strong 2026. With relatively stable markets, we see growth returning to the mid-single-digit range.
Speaker #1: Again this year, in the environmental infrastructure product line, our commercial construction and large environmental lining markets are beginning to trend in a positive direction.
Speaker #1: Laura's orb continues its qualification track with trials hundreds of taking place at water utilities across the in US and Europe . We have ten new floors of water , water utility installations scheduled for this which will more than double our current footprint year , .
Speaker #1: We're also seeing continued strong demand for our infrastructure drilling products and expect this strength to continue throughout the year. In specific summary, the actions we took last year in support of our long-term strategy have put us in a position to deliver a strong 2026 with relatively stable markets.
Speaker #1: see We growth the mid-single returning to digit range . Should the US construction and foundry end markets improve this year , 2026 will turn out to be an even stronger year for MTI .
Douglas T. Dietrich: Should the US construction and foundry end markets improve this year, 2026 will turn out to be an even stronger year for MTI. Before we wrap up, I also wanna let you know that we're planning another investor event this year, where we will highlight many of our newest technologies and update you on our progress against our five-year targets. We also have some exciting new projects in our innovation pipeline that we hope to share with you. These projects are targeted at opportunities created by the regulatory and tariff-related policy changes around the world, that are driving the increased importance of, and demand for, local mineral supply. We feel we are uniquely positioned with some of our technologies to turn these opportunities into significant renew revenue streams for MTI. More to come on this, so stay tuned for details.
Should the US construction and foundry end markets improve this year, 2026 will turn out to be an even stronger year for MTI. Before we wrap up, I also wanna let you know that we're planning another investor event this year, where we will highlight many of our newest technologies and update you on our progress against our five-year targets. We also have some exciting new projects in our innovation pipeline that we hope to share with you. These projects are targeted at opportunities created by the regulatory and tariff-related policy changes around the world, that are driving the increased importance of, and demand for, local mineral supply. We feel we are uniquely positioned with some of our technologies to turn these opportunities into significant renew revenue streams for MTI. More to come on this, so stay tuned for details.
Speaker #1: Before we wrap up, I also want to let you know that we're planning another investor event this year, where we will highlight many of our newest technologies and update you on our progress against our five-year targets.
Speaker #1: We also have some exciting new projects in our innovation pipeline that we hope to share with you. These projects are targeted at opportunities created by the regulatory and tariff-related policy changes around the world that are driving the increased importance of, and demand for, local supply mineral.
Speaker #1: We feel we are uniquely, some of our positioned with technologies to turn these opportunities into significant new revenue streams for MTI. More to come on this, so stay tuned for details.
Douglas T. Dietrich: Again, thank you for joining today, and thank you to everyone at MTI for your ongoing focus on safety. With that, let's open the call to questions.
Again, thank you for joining today, and thank you to everyone at MTI for your ongoing focus on safety. With that, let's open the call to questions.
Speaker #1: Again, thank you for joining today, and thank you to everyone at MTI for your ongoing focus on safety. With that, let's open the call to questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question today is from Mike Harrison with Seaport Research Partners. Please go ahead.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question today is from Mike Harrison with Seaport Research Partners. Please go ahead.
Speaker #2: We will now begin the question and answer session. To ask a question, you may star, then one on your telephone keypad.
Speaker #2: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two.
Speaker #2: At this time, we will pause momentarily to assemble our roster. Our first question today is from Mike Harrison with Seaport Research Partners.
Speaker #2: Please go ahead .
Mike Harrison: Hi, good morning.
Mike Harrison: Hi, good morning.
Douglas T. Dietrich: Hi, Mike.
Douglas Dietrich: Hi, Mike.
Erik Aldag: Hi, Mike.
Erik Aldag: Hi, Mike.
Speaker #3: Hi . Good .
Mike Harrison: Wanted to start out with consumer and specialties segment. The operating margin performance there was the worst you've had in a few years, and I know you went through some of the fixed cost absorption issues there, as well as maybe some of the inefficiencies associated with some of the work you're doing in pet care. But I was just curious, was the performance there worse than you expected, or was it in line? And I guess, maybe as we start to think about what margin could look like in that segment for 2026, can you maybe give us some guidelines or puts and takes, in terms of how we should think about that margin performance next year, or this year, I guess?
Speaker #1: Hi, Mike. Hi, Mike.
Mike Harrison: Wanted to start out with consumer and specialties segment. The operating margin performance there was the worst you've had in a few years, and I know you went through some of the fixed cost absorption issues there, as well as maybe some of the inefficiencies associated with some of the work you're doing in pet care. But I was just curious, was the performance there worse than you expected, or was it in line? And I guess, maybe as we start to think about what margin could look like in that segment for 2026, can you maybe give us some guidelines or puts and takes, in terms of how we should think about that margin performance next year, or this year, I guess?
Speaker #3: Wanted to start out with Consumer and Specialty segment. The operating margin performance there was the worst you've had in a few years.
Speaker #3: And I know you went through some of the fixed cost absorption issues there, as well as maybe some of the inefficiencies associated with some of the work you're doing in Pet Care.
Speaker #3: I was But curious , was the there performance worse than you expected , or was it in line ? And I guess maybe as we start to think about what margin could like in that look segment for 2026 , can you maybe give us some some guidelines or puts and takes in terms of how we should think about that margin performance next year ?
Erik Aldag: Yeah. Hi, Mike, this is Erik. Thanks for the question. So as far as, and I'm assuming you're talking about the fourth quarter margin, so I'll start there. As far as that, I would say it was in line with what we were expecting, apart from the softness, the softer than expected residential construction demand that we saw later in the quarter. And that had kind of a twofold impact on the margins in that segment. First, the residential construction products that we sell are relatively high contribution margin products, so there's an unfavorable mix impact that happens when that volume falls off.
Erik Aldag: Yeah. Hi, Mike, this is Erik. Thanks for the question. So as far as, and I'm assuming you're talking about the Q4 margin, so I'll start there. As far as that, I would say it was in line with what we were expecting, apart from the softness, the softer than expected residential construction demand that we saw later in the quarter. And that had kind of a twofold impact on the margins in that segment. First, the residential construction products that we sell are relatively high contribution margin products, so there's an unfavorable mix impact that happens when that volume falls off.
Speaker #3: This year , I guess
Speaker #4: This is Erik. Mike, thanks for this.
Speaker #4: question . , yeah . So as Hi , far as and I'm assuming you're talking about the fourth quarter margin . So I'll start there .
Speaker #4: As far as that , I would say it was in line with what we were expecting . Apart from the softness , the softer expected residential than construction demand that we saw later in the quarter and had kind of that impact on the a two fold margins in that segment .
Speaker #4: First, the residential products that we sell into construction are relatively high contribution margin products. So there's an unfavorable impact that mix happens when that volume falls off.
Erik Aldag: And then secondly, as I mentioned, the fixed cost absorption impact of a sharp drop-off in volumes at these facilities; it's just hard to pull out the fixed and semi-variable costs from those facilities, when you see a volume shift like that. So those were the main impacts in the fourth quarter. You mentioned the temporary impacts associated with the plant upgrades that we did. Most of that, I would say, was in the second and third quarter, although we did... You know, we were starting to ramp up this facility that we just upgraded in the fourth quarter, so we didn't really see the full benefit of that upgrade yet in the fourth quarter. I would say going forward, the biggest thing that's gonna drive margins up in that segment is volume.
And then secondly, as I mentioned, the fixed cost absorption impact of a sharp drop-off in volumes at these facilities; it's just hard to pull out the fixed and semi-variable costs from those facilities, when you see a volume shift like that. So those were the main impacts in the Q4. You mentioned the temporary impacts associated with the plant upgrades that we did. Most of that, I would say, was in the second and third quarter, although we did... You know, we were starting to ramp up this facility that we just upgraded in the Q4, so we didn't really see the full benefit of that upgrade yet in the Q4. I would say going forward, the biggest thing that's gonna drive margins up in that segment is volume.
Speaker #4: And then secondly , as I the fixed cost absorption mentioned , impact sharp of a drop off volumes at these in facilities . just hard to It's pull out fixed and semi the costs from those facilities .
Speaker #4: When volume shifts, like you see that. So those were mainly the impacts in the fourth quarter. You mentioned the temporary impacts associated with the plant we did.
Speaker #4: Most of that I would say was in the quarter , second and the third we did , although we were starting to ramp up facility that this we just upgraded in the fourth didn't quarter .
Speaker #4: see the full benefit really of that So we . Of that upgrade . Yet in the fourth quarter . I would say going forward , the biggest thing that's going to drive margins up in that segment is volume .
Erik Aldag: I showed you the MTI operating bridge, and, and volume and mix is the biggest driver of the change in margin that we saw from 2024 to 2025, and a lot of that was in the consumer and specialties segment. I can say we're feeling confident about the volume growth that we've got ahead for consumer and specialties, and that's gonna drive the majority of the margin improvement, in addition to not having those kind of one-time costs that we had last year.
I showed you the MTI operating bridge, and, and volume and mix is the biggest driver of the change in margin that we saw from 2024 to 2025, and a lot of that was in the consumer and specialties segment. I can say we're feeling confident about the volume growth that we've got ahead for consumer and specialties, and that's gonna drive the majority of the margin improvement, in addition to not having those kind of one-time costs that we had last year.
Speaker #4: I showed you the MTI operating bridge, and volume and mix is the biggest driver of the change we saw in margin from '24 to '25.
Speaker #4: And a lot of that was in the consumer and specialty segment . I can say we've got we're feeling confident about the volume growth that we've got ahead for consumer and specialties , and that's going to drive majority the of the margin improvement .
Speaker #4: In addition to not having those kind of one-time WE costs that we had last year.
Mike Harrison: All right. Very helpful. And then, I wanted to just dig in a little bit on the press release you put out recently, talking about your paper PCC business, some of the new satellites that have come on and are still to come on during 2026. Was hoping you could just give a little more color on how you're seeing the market. Presumably, you know, North America still is maybe a little bit soft, but you would expect to see some growth in Asia. Maybe also talk about the pipeline of opportunities for future satellites as you see it right now.
Mike Harrison: All right. Very helpful. And then, I wanted to just dig in a little bit on the press release you put out recently, talking about your paper PCC business, some of the new satellites that have come on and are still to come on during 2026. Was hoping you could just give a little more color on how you're seeing the market. Presumably, you know, North America still is maybe a little bit soft, but you would expect to see some growth in Asia. Maybe also talk about the pipeline of opportunities for future satellites as you see it right now.
Speaker #3: All right . Very helpful . then I wanted to just dig And in little bit on the press release . You put out recently , talking about your paper , PCC business .
Speaker #3: Some of the new satellites that have come on, and are still to come on during 2026. I was hoping you could just give a little more color on how you're seeing the market.
Speaker #3: You know, North, presumably, America still is maybe a little bit soft, but you would expect to see some growth in Asia.
Speaker #3: Maybe also about the pipeline for future opportunities—satellites, as you see it right now.
Douglas T. Dietrich: Yeah, thanks, Mike. This is Doug. I'll start and then maybe I'll pass it to DJ to give you a little bit more color. We see that Asia presents and continues to present, you know, a good growth opportunity for us. It's a large market, paper production, relatively stable there. But what we're seeing is more, we've always talked about what we call penetration, you know. So PCC is the pigment being used in that market. We're probably about only 50% penetrated, where in Europe and North America, it's pretty much 100% penetrated with use of PCC in paper and packaging, or paper in particular.
Douglas Dietrich: Yeah, thanks, Mike. This is Doug. I'll start and then maybe I'll pass it to DJ to give you a little bit more color. We see that Asia presents and continues to present, you know, a good growth opportunity for us. It's a large market, paper production, relatively stable there. But what we're seeing is more, we've always talked about what we call penetration, you know. So PCC is the pigment being used in that market. We're probably about only 50% penetrated, where in Europe and North America, it's pretty much 100% penetrated with use of PCC in paper and packaging, or paper in particular.
Speaker #1: Thanks , Mike . Yeah . This is Doug . I'll start and then maybe I'll pass it to D.J. to give you a little bit more color .
Speaker #1: We see that Asia presents and continues present , to you know , a good growth opportunity for us . It's a large market paper production , relatively stable .
Speaker #1: There . what we're But we've always talked about what we seeing is more call penetration , you know , so PCC is the pigment being used in that market that that's we're probably about only 50% penetrated .
Speaker #1: Where in Europe and North America, it's pretty penetrated with use—much, almost 100%—of PCC and paper and packaging, or paper in particular. And so, we see a large opportunity to continue to base.
Douglas T. Dietrich: And so we see a large opportunity to continue to drive our base PCC business in Asia, and that's gonna, that's gonna occur through consolidation of smaller paper mills into larger mills and newer machines, and when you're doing that, you're gonna continue. That's been going on now for, you know, a decade, so we see that continuing. But more so, it presents a great pipeline for us in other opportunities, and those opportunities, like our new technologies, like NewYield, where we're, you know, repurposing some waste streams and movement into packaging, okay? So large, and the packaging market is growing. It's growing in Asia, and so as we adapt our technologies and our products from, you know, kind of base printing and writing paper into packaging and into these new technologies, it presents an even bigger opportunity for us.
And so we see a large opportunity to continue to drive our base PCC business in Asia, and that's gonna, that's gonna occur through consolidation of smaller paper mills into larger mills and newer machines, and when you're doing that, you're gonna continue. That's been going on now for, you know, a decade, so we see that continuing. But more so, it presents a great pipeline for us in other opportunities, and those opportunities, like our new technologies, like NewYield, where we're, you know, repurposing some waste streams and movement into packaging, okay? So large, and the packaging market is growing. It's growing in Asia, and so as we adapt our technologies and our products from, you know, kind of base printing and writing paper into packaging and into these new technologies, it presents an even bigger opportunity for us.
Speaker #1: PCC drive our business in Asia . And that's going to that's going to through paper mills into larger mills and newer machines . going to doing that , you're That's been consolidation of continue .
Speaker #1: And when you're smaller now going on know , for for a decade . So that we see that you continuing . But more so it presents a great pipeline for us in other opportunities .
Speaker #1: And those opportunities like our new technologies , like new yield , where we're , you repurposing some waste streams and moving movement into packaging .
Speaker #1: Okay . So large and the packaging market is growing . It's growing in Asia . And so as we adapt our technologies and our products from , you know , kind of base printing and writing paper into packaging and into these new technologies , it presents an even bigger opportunity for us .
Douglas T. Dietrich: So maybe I'll let D.J. talk about that, and then back to North America and what it looks like this year.
So maybe I'll let D.J. talk about that, and then back to North America and what it looks like this year.
Speaker #1: So maybe I'll let D.J. talk about that, and then to North back, looks like, and what it—America year. This, glad to.
Erik Aldag: Glad to. Thanks, Mike. So let's just expand on what to what Doug was referring. So the announcements that we had, we talked about the four that came online in 2025, and then Doug, in this presentation, was highlighting three more that are coming on in 2026. All Asia growth, couple of those, one of those in particular was an expansion in growth, so that's mostly China and India, and we see that continuing. And the pull that we're getting, so I'm gonna shift a little bit to the pipeline. The pull that we're getting is, we've got-
D.J. Monagle: Glad to. Thanks, Mike. So let's just expand on what to what Doug was referring. So the announcements that we had, we talked about the four that came online in 2025, and then Doug, in this presentation, was highlighting three more that are coming on in 2026. All Asia growth, couple of those, one of those in particular was an expansion in growth, so that's mostly China and India, and we see that continuing. And the pull that we're getting, so I'm gonna shift a little bit to the pipeline. The pull that we're getting is, we've got-
Speaker #1: Thanks , Mike . So let's just expand on what to what Doug was referring . So the the announcements that we had , we talked about the four that came online in 2025 .
Speaker #1: And then Doug , in presentation this was highlighting three more that are coming on . And 26 . Asia growth a couple of are those one of those in particular was an expansion in growth .
Speaker #1: So that's mostly in India. And we see China, that's continuing. And the pull that we're getting... So I'm going to shift a little bit to the pipeline.
Speaker #1: The pull that we're getting is we've got a little less than two dozen opportunities in the pipeline that I would call are very real. Real.
D.J.: ... a little less than 24 opportunities in the pipeline that I would call are very real, real. They are mostly in Asia, although there's a couple of other spots in what I'll consider the further developed regions. Big pull for NewYield that has a lot of traction, and NewYield has evolved since we first chatted about it. It started off as a very singular product with a conversion of a waste stream, and now there's a – it's really more of a platform. There's quite a lot of adaptations we can do for the specific application, which is opening up further packaging applications for us.
... a little less than 24 opportunities in the pipeline that I would call are very real, real. They are mostly in Asia, although there's a couple of other spots in what I'll consider the further developed regions. Big pull for NewYield that has a lot of traction, and NewYield has evolved since we first chatted about it. It started off as a very singular product with a conversion of a waste stream, and now there's a – it's really more of a platform. There's quite a lot of adaptations we can do for the specific application, which is opening up further packaging applications for us.
Speaker #1: They are in mostly Asia. Others are a couple of other in what spots I'll consider the further developed regions. Big pull for new yield that has taken, has a lot of traction, and new yield has evolved since we first chatted about it.
Speaker #1: It it started off as a very singular product with a with a conversion of a waste there's a it's really more of a platform .
Speaker #1: There's quite a lot of stream , and now adaptions we can do specific application , for the which is opening up further packaging applications for us .
D.J.: So before, we were targeting printing and writing grades, and now we're finding opportunities to go in recycled packaging in Asia, in particular, and then augmenting that, we're also offering satellite ground calcium carbonate that has gotten a lot of pull from some packaging customers as well. So we see the pipeline remaining strong. I would say if I were hedging where the next two or three, in addition to what Doug had highlighted, they are probably a broader Southeast Asia opportunities, and that continues strong. On the base market, Erik highlighted really good operating rates, so we don't see much degradation. This is a rough year as some big volume came out. North America operating at 90% seems pretty sustainable for the future.
So before, we were targeting printing and writing grades, and now we're finding opportunities to go in recycled packaging in Asia, in particular, and then augmenting that, we're also offering satellite ground calcium carbonate that has gotten a lot of pull from some packaging customers as well. So we see the pipeline remaining strong. I would say if I were hedging where the next two or three, in addition to what Doug had highlighted, they are probably a broader Southeast Asia opportunities, and that continues strong. On the base market, Erik highlighted really good operating rates, so we don't see much degradation. This is a rough year as some big volume came out. North America operating at 90% seems pretty sustainable for the future.
Speaker #1: So we were before targeting printing and writing grades, and now we're finding good recycled opportunities to packaging in Asia, and then augmenting that.
Speaker #1: We're also offering satellite ground calcium carbonate that has gotten a lot of pull from some packaging customers as well. So we see the pipeline remaining strong.
Speaker #1: would I say , if I were were hedging where the next 2 or 3 , in addition to what Doug had were highlighted , they probably broader Southeast Asia opportunities .
Speaker #1: And that continues strong on the base market . Eric highlighted really good operating rates . So we don't see much degradation . This is a a rough year as some big volume came out .
Speaker #1: North America operating at 90% seems pretty sustainable for the future. Europe is slightly less than that, and the European market is dealing with penetration from Asia.
D.J.: Europe is slightly less than that, and the European market is dealing with penetration from Asia. But the customers that we're dealing with are pretty well situated within that market. So they're leaders in that area, in that region, and so I think that they'll be fine for the foreseeable future as well. So overall, bullish on continued expansion of the paper group, with particular emphasis in growth in Asia, and that's primarily due to market penetration.
Europe is slightly less than that, and the European market is dealing with penetration from Asia. But the customers that we're dealing with are pretty well situated within that market. So they're leaders in that area, in that region, and so I think that they'll be fine for the foreseeable future as well. So overall, bullish on continued expansion of the paper group, with particular emphasis in growth in Asia, and that's primarily due to market penetration.
Speaker #1: But the customers that we're dealing with are pretty well situated within that market . So they're they're leaders in that in that area , in that region .
Speaker #1: And so I think that they'll be fine for the foreseeable future as well . So overall bullish on continued expansion of the of the paper group , with particular emphasis on growth in Asia .
Speaker #1: And that's primarily due to market penetration.
Mike Harrison: All right. Thanks for the additional color there, DJ. Last question I had is just kind of on capital deployment going forward. The balance sheet is still very strong. You guys have a good track record of free cash flow generation, and it sounds like maybe some further recovery in free cash flow in 2026. Can you just talk about how you're thinking about spending cash during 2026, as you look at your M&A pipeline, as well as, I forget what you have left on the share repurchase authorization, but what should investors be expecting this year?
Mike Harrison: All right. Thanks for the additional color there, DJ. Last question I had is just kind of on capital deployment going forward. The balance sheet is still very strong. You guys have a good track record of free cash flow generation, and it sounds like maybe some further recovery in free cash flow in 2026. Can you just talk about how you're thinking about spending cash during 2026, as you look at your M&A pipeline, as well as, I forget what you have left on the share repurchase authorization, but what should investors be expecting this year?
Speaker #3: All right . the Thanks for color there DJ last question I had is is just kind of on on deployment going forward . The balance sheet is still very strong .
Speaker #3: You guys have a good track record of free cash flow generation. And it sounds like maybe some further recovery in free cash flow in '26.
Speaker #3: You just talked about how you're thinking about spending cash during 2026. As you look at your M&A pipeline, as well as— I forget what's left on the share repurchase authorization.
Speaker #3: But what should investors be expecting this year?
Douglas T. Dietrich: Yeah, Mike, I think we have a, you know, we continue to call it kind of our balanced deployment of capital, where we, you know, at these debt levels, we like to steer 50% of our free cash flow back to shareholders and keep some on the balance sheet for further opportunities, and that's after we support our organic growth. I think we have about $140 million left on our share repurchase program, so we intend to continue that at pace this year. And there's no timeline on that, so we can, you know, we'll look for opportunities to make sure we maximize the use of that cash.
Douglas Dietrich: Yeah, Mike, I think we have a, you know, we continue to call it kind of our balanced deployment of capital, where we, you know, at these debt levels, we like to steer 50% of our free cash flow back to shareholders and keep some on the balance sheet for further opportunities, and that's after we support our organic growth. I think we have about $140 million left on our share repurchase program, so we intend to continue that at pace this year. And there's no timeline on that, so we can, you know, we'll look for opportunities to make sure we maximize the use of that cash.
Speaker #5: Yeah , Mike , I have think we a you continue to know , we call it our balance deployment of capital where we , you know , these debt levels , we like to steer 50% of our free cash flow back to shareholders and keep some on the balance sheet for for other opportunities .
Speaker #5: And that's after we support our organic growth. I think we have about $140 million left on our share repurchase program, so we intend to continue that at pace.
Speaker #5: This this year . And and there's no timeline on that . So we can , you know , we'll look for opportunities to make sure we maximize the use of that cash .
Douglas T. Dietrich: But we do keep about 50% of that cash on the balance sheet for inorganic opportunities, and we, we think that there's a nice pipeline of things that we, you know, would be targeting and that we think that, that could help accelerate our growth strategy. They could be things that, you know, kind of are bolt-ons in different geographies to help move more into consumer products, and there could be some larger things out there that we feel that we should own that could give the company some scale. So, I think we've got the balance sheet in good spot. I think we continue to watch the market and make sure, you know, we're prepared for if something comes our way.
But we do keep about 50% of that cash on the balance sheet for inorganic opportunities, and we, we think that there's a nice pipeline of things that we, you know, would be targeting and that we think that, that could help accelerate our growth strategy. They could be things that, you know, kind of are bolt-ons in different geographies to help move more into consumer products, and there could be some larger things out there that we feel that we should own that could give the company some scale. So, I think we've got the balance sheet in good spot. I think we continue to watch the market and make sure, you know, we're prepared for if something comes our way.
Speaker #5: But we do keep about 50% of that cash on the balance sheet for inorganic opportunities . And we we think that there's a nice pipeline of things that we , you know , would be targeting and that we think that that could help accelerate our growth strategy .
Speaker #5: They could be things that , you are know , kind of bolt ons in different geographies to help move more consumer into products .
Speaker #5: There could be some larger things out there that we feel we should own that could give the company some scale. So I think, balance, we've got the sheet in spot.
Speaker #5: I think we continue to watch the market and make sure we're prepared, you know, for if something comes our way.
Douglas T. Dietrich: I think we have the team in place that's able to do it, and, you know, we're just patient with it. So, we'll see what happens. Hard to time some of these things, but, you know, we're gonna continue to be active and look out there to see if there's some things that we should pick up. But short of that, we're gonna continue with our balanced approach, and that's gonna continue with that share repurchase and dividend structure, you know, again, keeping with that kind of 50% of our free cash flow.
I think we have the team in place that's able to do it, and, you know, we're just patient with it. So, we'll see what happens. Hard to time some of these things, but, you know, we're gonna continue to be active and look out there to see if there's some things that we should pick up. But short of that, we're gonna continue with our balanced approach, and that's gonna continue with that share repurchase and dividend structure, you know, again, keeping with that kind of 50% of our free cash flow.
Speaker #5: I think we have the team in place that's able to do it. And, you know, we're just patient with it.
Speaker #5: So, we'll see what happens at times. It's hard, some of these things, but you know we're going to continue to be active and look out there to see if there are some things that we should pick up.
Speaker #5: Short of that, we're going, but to continue with our balanced approach. And that's going to continue with that share repurchase and dividend structure.
Speaker #5: You know, again, keeping with that kind of 50% of our free cash flow.
Mike Harrison: All right.
Mike Harrison: All right.
Douglas T. Dietrich: Does that help?
Douglas Dietrich: Does that help?
Mike Harrison: Thanks very much.
Mike Harrison: Thanks very much.
Douglas T. Dietrich: Yep.
Douglas Dietrich: Yep.
Mike Harrison: Very helpful.
Mike Harrison: Very helpful.
Speaker #3: All right. Thank you very much.
Speaker #3: helpful Yep . .
D.J.: The next question is from Daniel Moore with CJS Securities. Please go ahead.
Operator: The next question is from Daniel Moore with CJS Securities. Please go ahead.
Speaker #2: The next question is from Daniel Moore with CJS Securities. Please go ahead.
Daniel Moore: Thanks. Morning, Doug. Morning, Erik. Appreciate the-
Daniel Moore: Thanks. Morning, Doug. Morning, Erik. Appreciate the-
Douglas T. Dietrich: Hey, Dan.
Douglas Dietrich: Hey, Dan.
Daniel Moore: - Color and taking the questions.
Daniel Moore: - Color and taking the questions.
Speaker #6: Thanks. Good morning. Good morning, Eric.
Speaker #5: Appreciate the .
Brett: Hey, Dan.
Erik Aldag: Hey, Dan.
Speaker #6: Color and taking the
Speaker #6: questions . Hey
Daniel Moore: So just maybe clarification or drill down on a couple of specific products or end markets. Fabric care, you called out, you know, customers managing inventories late in the year, not a shock, but is that largely behind you, and talk about your visibility into Q1.
Daniel Moore: So just maybe clarification or drill down on a couple of specific products or end markets. Fabric care, you called out, you know, customers managing inventories late in the year, not a shock, but is that largely behind you, and talk about your visibility into Q1.
Speaker #4: Dan .
Speaker #6: maybe Just clarification or drill down on a couple of specific products or end markets fabric care . You called out customers managing inventories late in the year , not a shock , but is largely that behind you ?
Speaker #6: And talk about your visibility into Q1.
Douglas T. Dietrich: Yeah, we think so. I mean, we've had... it's been a kind of a lumpy year from fabric care. Some of our larger customers, this happened in Q1, they moved some orders from the first to the second. A little bit hard to forecast some of this, and then that happened late in Q4 as well, where they've kind of moved some things around from Q4, and we think Q1. So as Erik mentioned, you know, those orders have picked up. We think that that volume is still there, but it does shift around from quarter to quarter from times. But more to the point, you know, we think we have some good volumes ahead of us. I mentioned that we have some new technologies, some new things, that we're working on.
Douglas Dietrich: Yeah, we think so. I mean, we've had... it's been a kind of a lumpy year from fabric care. Some of our larger customers, this happened in Q1, they moved some orders from the first to the second. A little bit hard to forecast some of this, and then that happened late in Q4 as well, where they've kind of moved some things around from Q4, and we think Q1. So as Erik mentioned, you know, those orders have picked up. We think that that volume is still there, but it does shift around from quarter to quarter from times. But more to the point, you know, we think we have some good volumes ahead of us. I mentioned that we have some new technologies, some new things, that we're working on.
Speaker #5: Yeah , we think so . I mean , we've had it's been a kind of a lumpy year from fabric . Some of our larger This happened in the first quarter .
Speaker #5: customers . They moved some some orders from the first to the second . A little bit hard to forecast some of this . And then that happened late in the fourth quarter as well , where they've some things kind of moved around from the fourth .
Speaker #5: And we think the first . So as Eric mentioned , you know , those orders have picked up . We think that that volume is still there , but it does shift around from quarter to quarter from times .
Speaker #5: to the But more point , you know , we think we have good volumes some ahead of us . I mentioned that we have some new technologies , some new things that we're working on .
Douglas T. Dietrich: We hope to, you know, shed some light on that, the rest of this year, that we think could be some new products that get developed and out there in the marketplace that can drive, you know, our fabric care business bigger. So I don't think there's really anything behind it other than some moving orders, at least in our current fabric care business, but we've got some things in our pipeline that we're hoping to get out this year that could grow that a little bit faster.
We hope to, you know, shed some light on that, the rest of this year, that we think could be some new products that get developed and out there in the marketplace that can drive, you know, our fabric care business bigger. So I don't think there's really anything behind it other than some moving orders, at least in our current fabric care business, but we've got some things in our pipeline that we're hoping to get out this year that could grow that a little bit faster.
Speaker #5: We hope to, you know, shed some light on that through the rest of this year, that we think could be some new products that get developed and out there in the marketplace that can drive our fabric care business bigger.
Speaker #5: So I don't think there's really, behind it, some moving orders, other than at least in our current fabric business. But we've got some things in our pipeline that we're hoping to get out this year that could grow that a little bit faster.
Daniel Moore: Got it. And then shifting to pet care, you know, you gave the outlook. Just maybe take a step back. Obviously, you know, early 2025 was challenging in terms of market dynamics, you know, discounting by branded players. How would you describe market conditions, both US and Europe, as we enter 2026 and the kind of underpinning net growth expectation?
Daniel Moore: Got it. And then shifting to pet care, you know, you gave the outlook. Just maybe take a step back. Obviously, you know, early 2025 was challenging in terms of market dynamics, you know, discounting by branded players. How would you describe market conditions, both US and Europe, as we enter 2026 and the kind of underpinning net growth expectation?
Speaker #6: Got it . then And shifting to pet care , you know , you gave the outlook just take a maybe step back . Obviously , you know early 25 was challenging in terms of market dynamics .
Speaker #6: Of you discounting by branded players, how would you describe market conditions in both the US and Europe as we enter '26, and kind of underpinning that growth, what are we expecting?
Douglas T. Dietrich: ... Yeah, this year was, you know, a bit of a. Let's just start with the overall market. The markets were relatively flat this year for Pet litter. I think they grew maybe 1 to 2%, in total. And yeah, we did see that discounting activity this year, that we had to make some adjustments with our customers to deal with. We did that. We made those through Q2, and that's why I think Erik highlighted, you know, we worked with them on promotions, making sure the value that private label brings on the shelf was seen and, you know, in kind of comparison to that discounted price from the branded customers. We made those adjustments, and we saw those volumes return.
Douglas Dietrich: ... Yeah, this year was, you know, a bit of a. Let's just start with the overall market. The markets were relatively flat this year for Pet litter. I think they grew maybe 1 to 2%, in total. And yeah, we did see that discounting activity this year, that we had to make some adjustments with our customers to deal with. We did that. We made those through Q2, and that's why I think Erik highlighted, you know, we worked with them on promotions, making sure the value that private label brings on the shelf was seen and, you know, in kind of comparison to that discounted price from the branded customers. We made those adjustments, and we saw those volumes return.
Speaker #5: year was Yeah , this a bit of a let's just start with the overall market . The markets were relatively flat this year for pet litter .
Speaker #5: I think they grew maybe only 1 to 2% total. And yeah, we did see that discounting activity this year that we had to make some adjustments with to deal with some customers.
Speaker #5: We did that . We made those through the second quarter , and that's why I think Eric highlighted , you know , we worked with them on on promotions , on making sure the value of that private label the shelf was seen and brings on know , in , you comparison to that discounted price from the branded customers , we made those adjustments and we saw return .
Douglas T. Dietrich: I think our, as Erik mentioned, our second half kind of sales in pet care were, pet litter, were 7% higher than the first half. So we think those took hold. I do think that discounting is gonna continue, but I think we've made those this year, and that's really North America type phenomenon. But I think we've made those adjustments, and I think we're gonna continue to see base volume growth. I think on top of that, you know, we've secured some significant business. We, you know, we took some cost, as you noted this year, to upgrade those facilities and start one up in China. Those are largely running right now and running as expected, and we did that to increase the capacity and the capability of those plants.
I think our, as Erik mentioned, our second half kind of sales in pet care were, pet litter, were 7% higher than the first half. So we think those took hold. I do think that discounting is gonna continue, but I think we've made those this year, and that's really North America type phenomenon. But I think we've made those adjustments, and I think we're gonna continue to see base volume growth. I think on top of that, you know, we've secured some significant business. We, you know, we took some cost, as you noted this year, to upgrade those facilities and start one up in China. Those are largely running right now and running as expected, and we did that to increase the capacity and the capability of those plants.
Speaker #5: Mentioned volumes, as Erik said, in the second half—sales, and those were pet litter—were, I think, higher than the first half, 7% higher.
Speaker #5: So we think we took those hold. I do think that that discounting is continuing, but I think going to those, this we've made year, and that's really a North America type phenomenon.
Speaker #5: But I— we've made those key adjustments, and I think we're going to continue to see that base volume growth. I think on top of that, you know, we've secured some significant business.
Speaker #5: We you know , we took we took some took some some time . cost , as We you noted this year , to upgrade those facilities and start one up in China .
Speaker #5: Those are largely running right now and running as expected . And we did that to increase the capacity and the those plants . capability of So not know , the only , you throughput variable cost structure improvements , but also the type of products they can make and the type of packaging configurations that they can deliver .
Douglas T. Dietrich: So not only, you know, the throughput, variable cost structure improvements, but also the type of products they can make and the type of packaging configurations that they can deliver, and that has enabled us to secure some significant business. I think on our last call, we told you those were around $25 to 30 million of business, and that's part of what Erik's, you know, was talking about in terms of, or what I was talking about in terms of return to high single digit growth in that business. So that should start up in Q2. It looks good. We've gained some new business with retailers, and that should flow through this year, bringing that business back up to that high single digit kind of growth rate. So we think it's a very strong year ahead for Pet Litter.
So not only, you know, the throughput, variable cost structure improvements, but also the type of products they can make and the type of packaging configurations that they can deliver, and that has enabled us to secure some significant business. I think on our last call, we told you those were around $25 to 30 million of business, and that's part of what Erik's, you know, was talking about in terms of, or what I was talking about in terms of return to high single digit growth in that business. So that should start up in Q2. It looks good. We've gained some new business with retailers, and that should flow through this year, bringing that business back up to that high single digit kind of growth rate. So we think it's a very strong year ahead for Pet Litter.
Speaker #5: And that is enabled us to some significant think on business , I our last call , we told you those around 25 to $30 million of business , and that's part of what Eric's , you know , was in I was talking about , in terms of talking about what return to high terms of single digit business .
Speaker #5: Growth in that, so that should start up in the second quarter. It looks good. We've gained some new business with retailers, and that should flow through this year.
Speaker #5: Bringing that business back, that high single-digit kind of growth, up into rate. So we think it's a very strong year ahead for pet litter.
Douglas T. Dietrich: We made the adjustments last year. That volume has returned to us, and now we've got some new business to start driving the growth rates back up.
We made the adjustments last year. That volume has returned to us, and now we've got some new business to start driving the growth rates back up.
Speaker #5: We made the adjustments last year. That volume has returned to us, and now we have new business to start driving the growth rates back up. Great.
Daniel Moore: Great. Very helpful. One or two more, I'll turn it over. Q1, you know, 5% revenue growth, quite healthy. And I know you called out the higher mining and energy costs, so that's a, you know, a chunk of it, but just wondering why we wouldn't expect to see maybe a little more operating leverage on that type of top line growth.
Daniel Moore: Great. Very helpful. One or two more, I'll turn it over. Q1, you know, 5% revenue growth, quite healthy. And I know you called out the higher mining and energy costs, so that's a, you know, a chunk of it, but just wondering why we wouldn't expect to see maybe a little more operating leverage on that type of top line growth.
Speaker #6: Very helpful . 1 or 2 more , I'll turn it over . Q1 5% revenue growth . Quite healthy . And I know you called out the higher mining and energy costs .
Speaker #6: So that's a , you know , a chunk of it , but I'm just wondering why we wouldn't expect to see maybe a little more operating leverage on that type of , of , of top line growth .
Erik Aldag: Yeah, Dan, this is Erik. Just a couple of other things going on there. You mentioned the higher energy and mining costs. That's about $2 to 3 million on a sequential basis. You know, the mix impact that I mentioned in response to Mike's question, the softer residential construction that we're seeing in the first quarter versus last year, in particular, is having an impact on our margins. This is relatively high contribution margin product, and the market's just softer right now. Q4 and Q1 are usually soft for that market, but we're seeing it a little softer than last year, so far at least. I'd say the only other thing affecting margins in Q1 is lower equipment sales. We've got these equipment sales in high temperature technologies.
Erik Aldag: Yeah, Dan, this is Erik. Just a couple of other things going on there. You mentioned the higher energy and mining costs. That's about $2 to 3 million on a sequential basis. You know, the mix impact that I mentioned in response to Mike's question, the softer residential construction that we're seeing in the Q1 versus last year, in particular, is having an impact on our margins. This is relatively high contribution margin product, and the market's just softer right now. Q4 and Q1 are usually soft for that market, but we're seeing it a little softer than last year, so far at least. I'd say the only other thing affecting margins in Q1 is lower equipment sales. We've got these equipment sales in high temperature technologies.
Speaker #4: Yeah . Dan , this is Just so a couple of other things going on there . You mentioned the higher energy and mining costs .
Speaker #4: That's about 2 to $3 million on a sequential basis . You know , the mix I impact that mentioned in response to Mike's question , the softer residential construction that we're seeing in the first quarter versus last year in particular , is having an impact on our margins .
Speaker #4: This is a relatively high contribution margin product, and the market's just softer right now. Q4 and Q1 are usually soft for that market, but we're seeing it a little softer than last year so far, at least.
Speaker #4: I'd say the only other thing affecting margins in Q1 is lower equipment sales. We've got these equipment sales in High Temperature Technologies.
Erik Aldag: We had some in the Q4, and we had some in the Q1 last year, and we don't have any in the Q1 this year. So that's, that's affecting the margin as well.
We had some in the Q4, and we had some in the Q1 last year, and we don't have any in the Q1 this year. So that's, that's affecting the margin as well.
Speaker #4: We had some in the fourth quarter, and we had some in the first quarter last year, and we don't have any in the first quarter this year.
Speaker #4: So, that's affecting the margin as well.
Daniel Moore: That really helps. Last one for me. You know, mid-single digit growth this year, if I listened appropriately or heard correctly, which is a very healthy outlook. Obviously, 15% operating margin's been a goal for some time. You've made, you know, great progress toward it. What would it take to get there from here in terms of, you know, organic top line growth? Is that achievable in 2026? And what type of timeframe should we be thinking about, if not? And appreciate the color.
Daniel Moore: That really helps. Last one for me. You know, mid-single digit growth this year, if I listened appropriately or heard correctly, which is a very healthy outlook. Obviously, 15% operating margin's been a goal for some time. You've made, you know, great progress toward it. What would it take to get there from here in terms of, you know, organic top line growth? Is that achievable in 2026? And what type of timeframe should we be thinking about, if not? And appreciate the color.
Speaker #6: That really helps . Last one for me . You know , mid-single digit growth this I year . If listened appropriately or heard correctly , which is a healthy very outlook .
Speaker #6: Obviously 15% operating margins has been a goal for some time . You make great progress toward it . What would it take to get there from here in terms of , you know , organic top line that achievable in growth ?
Speaker #6: 26? Is that a type of— and what time frame should we be thinking about? If not, and appreciate the color?
Erik Aldag: Yeah. So I think, you know, on the growth side, we do feel more confident about the growth this year. We've talked a lot about these growth investments that we've made that support about $100 million of new revenue. Right now, we're estimating about $50 million of that will come through in 2026. That's everything we've mentioned, the cat litter, the new cat litter business, new SKUs on the shelf, new distribution centers that we haven't served before. It's the bleaching earth expansion, it's the new satellites, it's new MINSCANs. That's about $50 million that we think is gonna come through this year. And on top of that, we've got $20 million of pricing. So $70 million right there of things that we can tally up, and we feel very confident about.
Erik Aldag: Yeah. So I think, you know, on the growth side, we do feel more confident about the growth this year. We've talked a lot about these growth investments that we've made that support about $100 million of new revenue. Right now, we're estimating about $50 million of that will come through in 2026. That's everything we've mentioned, the cat litter, the new cat litter business, new SKUs on the shelf, new distribution centers that we haven't served before. It's the bleaching earth expansion, it's the new satellites, it's new MINSCANs. That's about $50 million that we think is gonna come through this year. And on top of that, we've got $20 million of pricing. So $70 million right there of things that we can tally up, and we feel very confident about.
Speaker #4: Yeah . So I think , you know , on the growth side , we do feel more confident the about growth this year .
Speaker #4: We've talked a lot about these growth investments that we've made that support about $100 million of new revenue. Right now, we're estimating about $50 million of that will come through in—that's everything mentioned.
Speaker #4: Cat The Litter, the new cat litter business, new in 2026. SKUs on the shelf, new distribution centers that we haven't served before.
Speaker #4: It's the bleaching earth expansion. It's the new satellites. It's new Minteq scans. That's about $50 million that we think is going to come through this year.
Speaker #4: On top of that, we've got $20 million of pricing. So, $70 million right there of things that we can tally up.
Erik Aldag: That's before we even start talking about things like the Asia foundry growth that we expect to continue. The refractory business, they've got new products. We expect those to continue to grow. Animal health, FLUOROSORB, the whole environmental and infrastructure product line has been on a pretty good trend recently. So look, markets could get weaker from here, but right now we're not expecting markets to change very significantly. So that's why, you know, from where we sit today, we feel confident that we're gonna have a strong year. If we get some help from the markets, particularly like construction, ag equipment, heavy truck, that's why we think we could have a really strong year this year.
That's before we even start talking about things like the Asia foundry growth that we expect to continue. The refractory business, they've got new products. We expect those to continue to grow. Animal health, FLUOROSORB, the whole environmental and infrastructure product line has been on a pretty good trend recently. So look, markets could get weaker from here, but right now we're not expecting markets to change very significantly. So that's why, you know, from where we sit today, we feel confident that we're gonna have a strong year. If we get some help from the markets, particularly like construction, ag equipment, heavy truck, that's why we think we could have a really strong year this year.
Speaker #4: And we feel very confident about that. That's before we even start talking about things like the foundry growth that we expect in Asia to continue, and the refractory business.
Speaker #4: They've got new products. We expect those to continue to grow Animal Health floras, or the whole Environmental and Infrastructure product line, which has been on a pretty good trend recently.
Speaker #4: So look , markets could get weaker from here . But right not now we're expecting markets very to change significantly . So that's why from where we sit today , we feel confident that we're going to have a strong year if we get some help from the markets , particularly like construction , ag equipment , heavy truck .
Speaker #4: That's why we think we could have a really strong year this year.
Douglas T. Dietrich: And Dan, I'll just add that, you know, look, the base—I think the company is built to, you know, around a 15% margin. I know that, and Erik's giving you some of the temporary cost issues and some of the mix and volume declines that took about a percentage away. So, you know, last year, we were around that 14.9, around that 15% target. This year, 80 basis points came out just from the volumes. But I think, you know, with the, with that growth, with at least the $70+ or $100 million growth that we see coming through, that single digits is gonna take care of that, that, that absorption, that volume. And again, some of these are higher margin products, and so I think that reverts this company.
Douglas Dietrich: And Dan, I'll just add that, you know, look, the base—I think the company is built to, you know, around a 15% margin. I know that, and Erik's giving you some of the temporary cost issues and some of the mix and volume declines that took about a percentage away. So, you know, last year, we were around that 14.9, around that 15% target. This year, 80 basis points came out just from the volumes. But I think, you know, with the, with that growth, with at least the $70+ or $100 million growth that we see coming through, that single digits is gonna take care of that, that, that absorption, that volume. And again, some of these are higher margin products, and so I think that reverts this company.
Speaker #5: And I'll just add that , you know , look , the base I think the company is built to , you know , around a 15% margin .
Speaker #5: I know that Erik’s giving you some of the temporary cost issues and some of the mix and volume declines that took about a percentage away.
Speaker #5: So , you know , last year we were around that 14 , nine , around that 15% target this year , 80 basis points came out just from the volumes .
Speaker #5: But I think , you know , with growth with that with at least the 70 plus or coming through that single digits , $100 million growth that we see to take care it's going of that , that , that absorption that volume .
Speaker #5: And again , some of these are higher margin products . And so I think that reverts this company might not happen in the first quarter , but on a run rate basis I think we start getting back to that 15% this year .
Douglas T. Dietrich: It might not happen in the first quarter, but on a run rate basis, I think we start getting back to that 15% this year as that revenue flows through and that volume flows through. You know, that said, you know, you've got half of the company right now at 16.7% margins, albeit a record, they had a good quarter, but that still doesn't even have the foundry in there. So I think there's room to grow on that side, and I think getting the consumer with this new higher margin products starting to grow faster, like bleaching earth, Animal Health, Fabric Care, and the pet litter business, I think that reverts back up to 14%. Then I think you start seeing us getting over 15% margins, okay?
It might not happen in the Q1, but on a run rate basis, I think we start getting back to that 15% this year as that revenue flows through and that volume flows through. You know, that said, you know, you've got half of the company right now at 16.7% margins, albeit a record, they had a good quarter, but that still doesn't even have the foundry in there. So I think there's room to grow on that side, and I think getting the consumer with this new higher margin products starting to grow faster, like bleaching earth, Animal Health, Fabric Care, and the pet litter business, I think that reverts back up to 14%. Then I think you start seeing us getting over 15% margins, okay?
Speaker #5: Is that is that revenue flows through that volume , throws , flows through , you know , that said , you know , you've got half of the company right now at 16.7% margins , albeit a record they had had a good quarter .
Speaker #5: But that still doesn't foundry in there . So I think there's room to grow even have the on that side . And I think getting the consumer with with this new , higher margin product starting to grow faster , like bleaching Earth animal health , fabric the pet care and litter business .
Speaker #5: I think that reverts back up to 14 . Then I thought , think you start seeing us getting over 15% margins . Okay , so you know , hard to time whether that market's going to help us this year .
Douglas T. Dietrich: So, you know, hard to time whether that market's gonna help us this year, but I do think that this company, with what we have in the tank, with the investments we've made, is gonna start pushing that, pushing that margin higher. Probably later this year, maybe into next, but I think it's above 15 right now is structural- is a structural, kind of level for us.
So, you know, hard to time whether that market's gonna help us this year, but I do think that this company, with what we have in the tank, with the investments we've made, is gonna start pushing that, pushing that margin higher. Probably later this year, maybe into next, but I think it's above 15 right now is structural- is a structural, kind of level for us.
Speaker #5: But I do think that this company , with what we have in the tank , what the investments we've made to start , is going pushing that , pushing that margin higher , probably later this year maybe into next .
Speaker #5: I think it's above 15 right now. Structural is a structural kind of level for us.
Daniel Moore: Certainly progress toward it this year is what, what I'm hearing. Thank you. That's really helpful.
Daniel Moore: Certainly progress toward it this year is what, what I'm hearing. Thank you. That's really helpful.
Speaker #6: And certainly, progress toward it this year is what I'm hearing. Thank you. That's right, I really appreciate it.
Douglas T. Dietrich: That's right.
Douglas Dietrich: That's right.
Daniel Moore: I appreciate it.
Daniel Moore: I appreciate it.
Operator: The next question is from Pete Osterland with Truist Securities. Please go ahead.
Operator: The next question is from Pete Osterland with Truist Securities. Please go ahead.
Speaker #2: The next question is from Pete Osterlund with Truist Securities. Please go ahead.
Pete Osterland: Hey, good morning. Thanks for taking the question.
Pete Osterland: Hey, good morning. Thanks for taking the question.
Douglas T. Dietrich: Hi, Pete.
Douglas Dietrich: Hi, Pete.
Speaker #7: Hey , good morning . Thanks the for taking questions .
Pete Osterland: So first, just wanted to ask you, in specialty additives, with sales being up year-over-year in the paper and packaging business during Q4, I was just wondering if you could break out that sales growth by region, and was also wondering, is there a meaningful geographic mix impact on margins for, you know, sales into North America and Europe versus sales into Asia in that business?
Pete Osterland: So first, just wanted to ask you, in specialty additives, with sales being up year-over-year in the paper and packaging business during Q4, I was just wondering if you could break out that sales growth by region, and was also wondering, is there a meaningful geographic mix impact on margins for, you know, sales into North America and Europe versus sales into Asia in that business?
Speaker #5: Hi , Pete .
Speaker #7: So first , I just wanted to ask in a specialty additives with sales being up year over year in the paper and packaging business during the fourth quarter , I was just wondering if you could break out that sales growth by region and was also wondering , is there a meaningful geographic mix impact on margins for North America sales into and Europe versus sales into Asia ?
Erik Aldag: Yeah. Thanks, Pete. So definitely, you know, the growth is coming from Asia, and that's offsetting the softer volumes in North America. We mentioned a couple of shutdowns we have to overcome. But the growth in Asia did start to overcome that in the Q4, and so that's the dynamic that you see. As far as margins go, on an operating income basis, yes. So we're bringing on new capital with these investments in Asia, and they've got a higher depreciation load than the assets in North America and Europe. And so on an operating income basis, there's a lower operating margin in Asia for the new satellites coming on than for some of the volume declines that we've seen in North America. On a cash flow return basis, we look at these investments on an IRR basis.
Erik Aldag: Yeah. Thanks, Pete. So definitely, you know, the growth is coming from Asia, and that's offsetting the softer volumes in North America. We mentioned a couple of shutdowns we have to overcome. But the growth in Asia did start to overcome that in the Q4, and so that's the dynamic that you see. As far as margins go, on an operating income basis, yes. So we're bringing on new capital with these investments in Asia, and they've got a higher depreciation load than the assets in North America and Europe. And so on an operating income basis, there's a lower operating margin in Asia for the new satellites coming on than for some of the volume declines that we've seen in North America. On a cash flow return basis, we look at these investments on an IRR basis.
Speaker #7: In that business ?
Speaker #4: Yeah . Thanks , Pete . So definitely , you know , the growth is coming from And that's offsetting the softer volumes America .
Speaker #4: In North, we mentioned a couple of shutdowns we have to overcome. But the growth in Asia did start to overcome that in the fourth quarter.
Speaker #4: And so that's the dynamic that you see as far as margins go on an income basis; an operating, bringing on new—yes, with these—so we're making investments in Asia.
Speaker #4: And they've got a higher depreciation than the load assets in North America and Europe, and so on. On an operating income basis, there's a lower operating margin in Asia, new for the satellites coming on, than for some of the volume declines that we've seen in North America.
Speaker #4: On a cash flow basis . We look at investments on these an IRR basis . You know , we're getting the same level of returns that we expect around the world .
Erik Aldag: You know, we're getting the same level of returns that we expect around the world in Asia. And so as those assets depreciate, the operating margins will go up, but that's basically how the math works.
You know, we're getting the same level of returns that we expect around the world in Asia. And so as those assets depreciate, the operating margins will go up, but that's basically how the math works.
Speaker #4: In Asia. And so, as those assets depreciate, the operating margins will go up. But that's basically how the math works.
Pete Osterland: Got it. And then, just a clarification, I apologize if I missed it, but you talked about plans to implement pricing and productivity as offset, as offsets for some of the margin pressure you're seeing. Just given the breadth of end markets and businesses you have, where within your portfolio do you have relatively strong pricing power to implement increases?
Pete Osterland: Got it. And then, just a clarification, I apologize if I missed it, but you talked about plans to implement pricing and productivity as offset, as offsets for some of the margin pressure you're seeing. Just given the breadth of end markets and businesses you have, where within your portfolio do you have relatively strong pricing power to implement increases?
Speaker #7: Got it . And then just a clarification I apologize if I missed it . But you talked about plans to implement pricing and productivity as often as offsets for some of the margin pressure .
Speaker #7: You're seeing, just given the breadth of end markets and businesses you have, where within your portfolio do you have relatively strong pricing power to implement increases?
Douglas T. Dietrich: Yeah, I think we have strong pricing power pretty much across the portfolio. You know, that it's, you know, in softer markets, that becomes a little bit more of a challenge. But I think as you saw back in, you know, kind of 2023, 2024 time frames, you know, the company moved almost $250 million of price through across the board. So, you know, our ability to price is there. We work closely with our customers. We make sure that we, you know, generate the value, from that, you know, our products deserve from our customers, and we're also conscious of the competitive environment that they're in sometimes. I think this year, you know, there's some standard base price increases that go across, the specialty additives business. I think in our high-temperature technologies, there's a lot of pricing power.
Douglas Dietrich: Yeah, I think we have strong pricing power pretty much across the portfolio. You know, that it's, you know, in softer markets, that becomes a little bit more of a challenge. But I think as you saw back in, you know, kind of 2023, 2024 time frames, you know, the company moved almost $250 million of price through across the board. So, you know, our ability to price is there. We work closely with our customers. We make sure that we, you know, generate the value, from that, you know, our products deserve from our customers, and we're also conscious of the competitive environment that they're in sometimes. I think this year, you know, there's some standard base price increases that go across, the specialty additives business. I think in our high-temperature technologies, there's a lot of pricing power.
Speaker #5: think we Yeah , I have strong pricing power pretty much across portfolio . You know , that it's you know , in markets that becomes a little bit software more of a challenge .
Speaker #5: But I think back in , as you saw you know , kind of 2324 time know , the company you frames , almost $250 million of price through across the board .
Speaker #5: So , you know , our ability to price is there . We work closely with our customers . We make sure that we , you know , generate the value from our products , deserve from our customers .
Speaker #5: And we're conscious also competitive environment that they're of the in . Sometimes . I think this year , you know , there's some standard based price increases that go across the specialty additives business .
Speaker #5: I think in our high temperature technologies, there's a lot of pricing power. We've managed to move largely last year through on tariffs.
Douglas T. Dietrich: We've managed to move largely last year through on tariffs, had to push that through. And so I think there's... It's gonna be kind of across the board. I think Erik mentioned about $20 million. I think it's coming, I don't know if there's one product line more than the other, but I think it's pretty well spread across the business in terms of being able to keep up. We also note that, you know, making sure that our pricing has to more than take care of our input costs to make sure we maintain our margins. So we're conscious of that as well, Pete. So no specific area, but we do have a capability to push to move price as needed across the board.
We've managed to move largely last year through on tariffs, had to push that through. And so I think there's... It's gonna be kind of across the board. I think Erik mentioned about $20 million. I think it's coming, I don't know if there's one product line more than the other, but I think it's pretty well spread across the business in terms of being able to keep up. We also note that, you know, making sure that our pricing has to more than take care of our input costs to make sure we maintain our margins. So we're conscious of that as well, Pete. So no specific area, but we do have a capability to push to move price as needed across the board.
Speaker #5: Had to had to push that through . And so I think there's it's going to be kind of across the board . I think Eric mentioned about $20 million .
Speaker #5: I think it's coming. Now, if I don't, there's one product line more than the other, but I think it's pretty well spread across the business in terms of being able to keep up.
Speaker #5: We also note that, you know, making sure that our pricing has to more than take care of our input—make sure we cover our costs to maintain our margins.
Speaker #5: So we're conscious of that as well. So, no specific area. But we do have capability to do what’s needed across the move.
Pete Osterland: Very helpful. And then, lastly, I just wanted to ask, you know, you called out that you're expecting to have, at least 10 installations of FLUOROSORB, later this year. I was just wondering, what's, you know, the approximate revenue potential associated with those installations, and how long does that take to ramp?
Pete Osterland: Very helpful. And then, lastly, I just wanted to ask, you know, you called out that you're expecting to have, at least 10 installations of FLUOROSORB, later this year. I was just wondering, what's, you know, the approximate revenue potential associated with those installations, and how long does that take to ramp?
Speaker #7: Very helpful . And then lastly , I just wanted to ask , you know , you called out that you're expecting to at have least ten installations of floors , orb .
Speaker #7: Later this year . I was just wondering , what's , you approximate revenue potential know , the associated with those and how long does that take to ramp ?
Douglas T. Dietrich: Yeah, maybe I'll start, and I'll let Brett talk a bit more about FLUOROSORB in general. These are, these are probably smaller installations still. These are smaller utilities that are coming in place. You know, they, they are, I guess, we'll call tank renewals, so we're putting in the media into tank systems that will get renewed, maybe a couple of times, three times per year. So those change outs aren't, you know, super high revenue, but, you know, as we get them put in place, that kind of feeds more opportunities, because they get more use, and they get more storytelling around their capabilities. And so it's more of an indication of more the acceleration of use of FLUOROSORB.
Douglas Dietrich: Yeah, maybe I'll start, and I'll let Brett talk a bit more about FLUOROSORB in general. These are, these are probably smaller installations still. These are smaller utilities that are coming in place. You know, they, they are, I guess, we'll call tank renewals, so we're putting in the media into tank systems that will get renewed, maybe a couple of times, three times per year. So those change outs aren't, you know, super high revenue, but, you know, as we get them put in place, that kind of feeds more opportunities, because they get more use, and they get more storytelling around their capabilities. And so it's more of an indication of more the acceleration of use of FLUOROSORB.
Speaker #5: Yeah , maybe I'll start and I'll let let Brett talk a bit more about floors . In general . These are these are probably smaller installations still .
Speaker #5: These are smaller, are coming in utilities that place. You know, they are, I—we'll call it, I guess, renewable tank renewals.
Speaker #5: So we're putting in the media into tank systems that will get renewed , maybe a couple of times , three times per So those change outs aren't , you know , super high revenue .
Speaker #5: But you know, as we get them put in place, that kind of feeds more opportunities because they get more use, and they get more storytelling around their capabilities.
Speaker #5: And so it's more of an indication of of more the acceleration of use of floors . Orb I think the revenue this year will probably grow , you know , a couple of million dollars from , from those from those installations .
Douglas T. Dietrich: I think the revenue this year will probably grow, you know, a couple of million dollars from those installations. But I think more importantly is that the number of installations and trials that's going on right now, we're talking a couple of hundred, I believe, trials across the United States and into Europe. That's really bodes well for, as this accelerates toward some of the regulation changes, you know, more quickly, more installations and take up of FLUOROSORB over the coming years. So, Brett, anyone want to give any more color than that, what's going on specifically in the US?
I think the revenue this year will probably grow, you know, a couple of million dollars from those installations. But I think more importantly is that the number of installations and trials that's going on right now, we're talking a couple of hundred, I believe, trials across the United States and into Europe. That's really bodes well for, as this accelerates toward some of the regulation changes, you know, more quickly, more installations and take up of FLUOROSORB over the coming years. So, Brett, anyone want to give any more color than that, what's going on specifically in the US?
Speaker #5: I think But more importantly is that the number of installations and trials that's going on right now , we're talking a couple of hundred , I believe , trials across the United States and into Europe .
Speaker #5: That really bodes well for us as this accelerates toward some of the regulation. You know, more quickly, more installations, and take up the floors over the coming years.
Speaker #5: So, Brett, anyone want to give any more color than that? What's going on specifically in the U.S.?
Brett: Sure, sure. Thanks, Pete. Yeah, when we look at FLUOROSORB right now, as Doug pointed out, the progress continues to go pretty well for us. It's really despite the regulatory delays that we've seen. Full year growth of sales was around 20% year-over-year last year. We have 8 full-scale drinking water projects underway, and as Doug mentioned, we have a pipeline of 10 more wins that FLUOROSORB has been selected for the adsorptive media this year.
Brett Argirakis: Sure, sure. Thanks, Pete. Yeah, when we look at FLUOROSORB right now, as Doug pointed out, the progress continues to go pretty well for us. It's really despite the regulatory delays that we've seen. Full year growth of sales was around 20% year-over-year last year. We have 8 full-scale drinking water projects underway, and as Doug mentioned, we have a pipeline of 10 more wins that FLUOROSORB has been selected for the adsorptive media this year.
Speaker #8: Sure , sure . Thanks , Pete . Yeah . When you look floors right now at out , the we pointed progress continues pretty to go well for us .
Speaker #8: It's really despite the regulatory delays that we've seen , full year growth sales was of around 20% year over last . We have eight full scale drinking water projects underway .
Speaker #8: And as Doug mentioned, we have a pipeline of ten more wins that that floor has been selected for the absorptive media this year.
Douglas T. Dietrich: ... So interest is not only in the US. Doug just mentioned, Europe is really picking up interest. What we're seeing now is in Germany, Sweden, and the UK are actively piloting the FLUOROSORB, and we're working with the German EPA to gain approval of the FLUOROSORB for drinking water applications. France just recently added a full-scale drinking water pilot, and Belgium and Sweden, they continue to pilot in situ PFAS remediation projects with our FLUOROSORB. So we remain really confident in our product, and its performance. And really, we fully expect it to continue to commercialize the FLUOROSORB programs to remove the PFAS. So we're still really excited about it, and we anticipate a continual growth in this product line.
... So interest is not only in the US. Doug just mentioned, Europe is really picking up interest. What we're seeing now is in Germany, Sweden, and the UK are actively piloting the FLUOROSORB, and we're working with the German EPA to gain approval of the FLUOROSORB for drinking water applications. France just recently added a full-scale drinking water pilot, and Belgium and Sweden, they continue to pilot in situ PFAS remediation projects with our FLUOROSORB. So we remain really confident in our product, and its performance. And really, we fully expect it to continue to commercialize the FLUOROSORB programs to remove the PFAS. So we're still really excited about it, and we anticipate a continual growth in this product line.
Speaker #8: so interest So , is not only in the US , Doug just mentioned Europe is really picking up interest . What we're seeing now is in Germany , Sweden and the UK are actively the piloting floors and we're working with the German EPA to gain approval of the floors for drinking water .
Speaker #8: Applications France . Just of recently full scale drinking water pilot in added a Belgium and Sweden . They continue to pilot in-situ PFAS remediation projects with our floors , so we remain really confident in our product and performance its and really , we fully to continue expect it to commercialize the floors or programs to remove the PFAS .
Speaker #8: So we're still really excited about it. And we anticipate continual growth in this product line.
Brett: Great color. Thank you.
Pete Osterland: Great color. Thank you.
Speaker #7: Great, thank you, Calla.
Operator: The next question is from David Silver with Freedom Capital. Please go ahead.
Operator: The next question is from David Silver with Freedom Capital. Please go ahead.
Speaker #2: The next question is from David Silver with Freedom Capital. Please go ahead.
David Silver: Yeah. Hi, good morning. Thank you.
David Silver: Yeah. Hi, good morning. Thank you.
Speaker #9: Yeah. Hi. Good morning. Thank you.
Douglas T. Dietrich: Hi, David.
Douglas Dietrich: Hi, David.
David Silver: Hey, I'm gonna follow up on a couple of areas first. But I did wanna touch- go back and just touch on your comments about pet litter. So I think for 2025 as a whole, maybe revenues were up, I don't know, low single digits, I'm guessing, you know, slanted towards the back half of the year, as you pointed out. But, you know, in there, I guess there's a volume component and a price component, and as I recall, you know, earlier in 2025, you did make some adjustments to support, on price, to support your customers there. So I was just wondering, firstly, could you just break down the pet litter growth in terms of, you know, delta on volume versus price?
Speaker #5: Hi , David .
David Silver: Hey, I'm gonna follow up on a couple of areas first. But I did wanna touch- go back and just touch on your comments about pet litter. So I think for 2025 as a whole, maybe revenues were up, I don't know, low single digits, I'm guessing, you know, slanted towards the back half of the year, as you pointed out. But, you know, in there, I guess there's a volume component and a price component, and as I recall, you know, earlier in 2025, you did make some adjustments to support, on price, to support your customers there. So I was just wondering, firstly, could you just break down the pet litter growth in terms of, you know, delta on volume versus price?
Speaker #9: Hey . I'm going to follow up on a couple areas of . First , but I did want to back touch go and just touch on your comments about pet litter .
Speaker #9: I think for So 2025 as a whole , maybe were revenues I don't know , low single digits . I'm guessing . You know the towards back half of the year as you pointed out .
Speaker #9: But you know , in there , I guess there's a volume component and a price component and as I recall , you know , earlier in 2025 , you did make some adjustments to support on price , to support your customers .
Speaker #9: Their . So I was just wondering , firstly , could you just break down the pet litter growth terms of in delta on volume versus ?
David Silver: And then secondly, if you could make a comment about the pricing outlook for 2026. In other words, is that customer support kind of still in place, or are there prospects for, you know, recouping some of those, some of those reductions?
And then secondly, if you could make a comment about the pricing outlook for 2026. In other words, is that customer support kind of still in place, or are there prospects for, you know, recouping some of those, some of those reductions?
Speaker #9: And then secondly , if you could make a comment about the pricing outlook for 26 , in other words , is that customer support kind of still in place or are there prospects for recouping some of those of those , some reductions ?
Douglas T. Dietrich: Sure.
Douglas Dietrich: Sure.
Erik Aldag: Yeah. Thanks, Dave.
Erik Aldag: Yeah. Thanks, Dave.
Douglas T. Dietrich: Go ahead, Erik, you take it.
Douglas Dietrich: Go ahead, Erik, you take it.
Erik Aldag: Yeah, the pricing was actually relatively minimal, the pricing impact. We did, in some instances, give on some pricing, but that would be in exchange for volume. And so from a margin perspective, it's actually accretive to margins because getting more volume flowing through those plants can be very beneficial for us. So I would say some targeted pricing adjustments in some areas, but certainly not across the board. That's... I guess, the other part of the question was on volume.
Erik Aldag: Yeah, the pricing was actually relatively minimal, the pricing impact. We did, in some instances, give on some pricing, but that would be in exchange for volume. And so from a margin perspective, it's actually accretive to margins because getting more volume flowing through those plants can be very beneficial for us. So I would say some targeted pricing adjustments in some areas, but certainly not across the board. That's... I guess, the other part of the question was on volume.
Speaker #4: Yeah, thanks, Dave.
Speaker #5: Go ahead Eric .
Speaker #4: Actually, yeah, it's relatively minimal. The pricing impact we did, in some instances, give on some pricing, but that was in exchange for volumes.
Speaker #4: And so, from a margin perspective, it's actually accretive to margins because getting more volume flowing through those plants can be very beneficial for us.
Speaker #4: So I would say some some targeted pricing adjustments in some areas , but certainly not across the board . That's I guess , the other part of the question was on volumes .
Douglas T. Dietrich: Mostly volume.
Douglas Dietrich: Mostly volume.
Erik Aldag: Yeah.
Erik Aldag: Yeah.
Douglas T. Dietrich: The challenge, the revenue this year was mostly volume, and it was due to, you know, kind of competitive, the collapse of the, you know, the delta between brands as they discounted in private label. And so we've made those adjustments. Some, like Erik said, some of that was price, but the majority of that we regained through promotions, packaging, and working with our customers. Again, they are the retailers, and making their product that we supply them more valuable on the shelf. And so mostly volume, David, a little bit of price. As we go forward, though, you know, that, what I referred to about $25 to 30 million is pretty much all volume.
Douglas Dietrich: The challenge, the revenue this year was mostly volume, and it was due to, you know, kind of competitive, the collapse of the, you know, the delta between brands as they discounted in private label. And so we've made those adjustments. Some, like Erik said, some of that was price, but the majority of that we regained through promotions, packaging, and working with our customers. Again, they are the retailers, and making their product that we supply them more valuable on the shelf. And so mostly volume, David, a little bit of price. As we go forward, though, you know, that, what I referred to about $25 to 30 million is pretty much all volume.
Speaker #5: Mostly volume . Yeah . The challenge , revenue the this year was mostly volume and it was due to kind of competitive . Yeah , the collapse of the , you know , the delta between as they brand discount it in label .
Speaker #5: And private so we've made those adjustments . Some like Eric said , some of that was priced . majority of But that we regained through promotions and packaging and our working with customers again , they are the retailers and making their product supply that we them more on so valuable the shelf .
Speaker #5: And private so we've made those adjustments . Some like Eric said , some of that was priced . majority of But that we regained through promotions and packaging and our working with customers again , they are the retailers and making their product supply that we them more on so valuable the on mostly And volume .
Speaker #5: David , a little bit of price as we forward go though , you know that what I referred to about 25 , $30 million is pretty much all volume that's coming through , you know , at average prices .
Douglas T. Dietrich: That's coming through, you know, at average prices, I think, with these major retailers, but it's coming through all volume and different regions, and as Erik mentioned, hitting some new distribution centers that we hadn't had before. So, we've secured that business and, yes, the customer has to buy it still, but we're pretty confident that that volume's coming through, and that should solve some of the absorption challenges, the productivity challenges, and start to fill up these plants that we just built. So, we're excited about that.
That's coming through, you know, at average prices, I think, with these major retailers, but it's coming through all volume and different regions, and as Erik mentioned, hitting some new distribution centers that we hadn't had before. So, we've secured that business and, yes, the customer has to buy it still, but we're pretty confident that that volume's coming through, and that should solve some of the absorption challenges, the productivity challenges, and start to fill up these plants that we just built. So, we're excited about that.
Speaker #5: I think with these major retailers . But it's coming through all volume and , and different regions and as , as , as Eric mentioned , some new distribution centers that we had hadn't before .
Speaker #5: So hitting we've secured that . We've secured that business . And yes , the customer has to buy it still , but but but we're pretty confident that that volume is coming through should and that solve some of the absorption challenges , the productivity challenges , and start to fill up these plants that we just built .
Speaker #5: So we're excited about that.
David Silver: Okay, great. Second, the second said topic would be on the refractory side. I did take note that you had the 6 new MINSCANs to be commissioned. Just to focus on that, should I assume that that's 6 to be commissioned, you know, in 2026? And then secondly, there was a certain size on average of the previous batch of, I think, 5 MINSCANs commissioned, you know, maybe $100 million of total revenue for 5. Are these- is this batch of 6, is that similarly sized, or how should we think about that?
David Silver: Okay, great. Second, the second said topic would be on the refractory side. I did take note that you had the 6 new MINSCANs to be commissioned. Just to focus on that, should I assume that that's 6 to be commissioned, you know, in 2026? And then secondly, there was a certain size on average of the previous batch of, I think, 5 MINSCANs commissioned, you know, maybe $100 million of total revenue for 5. Are these- is this batch of 6, is that similarly sized, or how should we think about that?
Speaker #9: Okay , great . Second , second topic would be on the refractory side . I did take note that your you had the six new min be scans to commissioned just to focus on that .
Speaker #9: Should I assume that that that's six to be commissioned , in 2026 . And then secondly , there was a certain size on of the the previous batch of , I think five min scans commissioned maybe $100 million of total revenue for five .
Speaker #9: Are these—is this batch of six—is that similarly sized, or how should we think about that?
Douglas T. Dietrich: Well, let me take you through. I think the $100 million was kind of the, you know, the addressable universe of what we think we... I don't know, Brett, there's 130 different electric arc furnaces in North America and Europe that we're targeting. You know, so there's a large addressable market for this. It's gonna take some time, obviously, for customers to want to adopt this, this technology. It's largely been here in the United States and driven by safety concerns, being able to, you know, put the device in the plant, on the furnace, being able to remove anybody from near that furnace for safety concerns, but then, being able to scan, measure, and very efficiently deploy our refractory material through the machine.
Douglas Dietrich: Well, let me take you through. I think the $100 million was kind of the, you know, the addressable universe of what we think we... I don't know, Brett, there's 130 different electric arc furnaces in North America and Europe that we're targeting. You know, so there's a large addressable market for this. It's gonna take some time, obviously, for customers to want to adopt this, this technology. It's largely been here in the United States and driven by safety concerns, being able to, you know, put the device in the plant, on the furnace, being able to remove anybody from near that furnace for safety concerns, but then, being able to scan, measure, and very efficiently deploy our refractory material through the machine.
Speaker #5: Well , let me take you through . I think the $100 million was kind of the , you know , the addressable universe of what we think we there's there's , I don't know , there's 130 different electric arc furnaces in North America and Europe that we're targeting .
Speaker #5: You know , there's a large addressable market for this . It's going to take some time . customers Obviously , for to want to adopt this this technology .
Speaker #5: It's largely been here in the United States and by safety concerns , being able to driven , you know , put the device in the plant on the furnace , being able to remove anybody from near that furnace for safety concerns .
Speaker #5: But then being able to scan , measure and very efficiently deploy refractory our through material the machine . So we see a large market for it .
Douglas T. Dietrich: So, we see a large market for it. We have, you know, each of these come with about a 5-year contract. I think we've secured... over the 5-year period for these, it'd be a hund-- you know, about $100 million. But, so you're talking about $27 million, $20 million a year, from what's been installed. So, you know, it's a good business model. Long-term contracts, there's a large addressable market. It's using our higher performing refractory products, and I'm probably taking stuff that Brett should be talking about, so I'm gonna pass it to him.
So, we see a large market for it. We have, you know, each of these come with about a 5-year contract. I think we've secured... over the 5-year period for these, it'd be a hund-- you know, about $100 million. But, so you're talking about $27 million, $20 million a year, from what's been installed. So, you know, it's a good business model. Long-term contracts, there's a large addressable market. It's using our higher performing refractory products, and I'm probably taking stuff that Brett should be talking about, so I'm gonna pass it to him.
Speaker #5: We have , you these come with about a five year contract . I think we've secured over the five year period for these .
Speaker #5: Would be , about $100 million . But so you're talking about 20 , 17 million , $20 million a year from what's been installed .
Speaker #5: So , you know , it's a good business model . The long term contracts , large addressable there's a market . It's using our higher performing refractory products .
Speaker #5: I'm probably taking stuff that Brett should be talking about, so I'm going to pass it to him.
Brett: Thanks, Doug. Hi, David. Yeah, I think Doug covered a lot of it. But as Doug mentioned, look, the program really was designed for safety and improved operations. I mean, it's really customized application technology that has really grasped the industry, and it's for the electric furnace steel makers. Over the past few years, we've signed 18 agreements, and the value is probably, as Doug said, actually, it's $150 million over the life of the agreements. And the positive thing about this program is we're keeping the refractory business that's a daily program for five years, and at a minimum.
Brett Argirakis: Thanks, Doug. Hi, David. Yeah, I think Doug covered a lot of it. But as Doug mentioned, look, the program really was designed for safety and improved operations. I mean, it's really customized application technology that has really grasped the industry, and it's for the electric furnace steel makers. Over the past few years, we've signed 18 agreements, and the value is probably, as Doug said, actually, it's $150 million over the life of the agreements. And the positive thing about this program is we're keeping the refractory business that's a daily program for five years, and at a minimum.
Speaker #8: Doug .
Speaker #8: Hi , David . Yeah I think . Thanks , covered lot of a Doug Doug it . But as Doug as mentioned , the the program really was designed for for safety and improved operations .
Speaker #8: I mean , it's really customized application technology that that has really grasped the industry . And it's it's for the electric furnace steelmakers over the past few years , we've we've signed 18 agreements and the value is probably , as Doug said , 150 .
Speaker #8: Actually , it's 150 million over the life of the agreements and the positive thing about this program is , is we're we're we're keeping the refractory business .
Speaker #8: That's a daily program for five years . And at a minimum . So we we we do see a lot of runway in this technology .
Brett: So we do see a lot of runway in this technology. When you look at just Europe and the United States, which are our two largest markets, we see at least, as Doug mentioned, probably 130 targeted projects, and we have a pipeline in hand that continues. So we feel really good about it. You asked a question about installation. Yes, there are 6 additional units to be commissioned this year. Those units are gonna go throughout the year. We have probably half of them going in Q1 or first half of the year, and then sometimes they move out a little bit.
So we do see a lot of runway in this technology. When you look at just Europe and the United States, which are our two largest markets, we see at least, as Doug mentioned, probably 130 targeted projects, and we have a pipeline in hand that continues. So we feel really good about it. You asked a question about installation. Yes, there are 6 additional units to be commissioned this year. Those units are gonna go throughout the year. We have probably half of them going in Q1 or first half of the year, and then sometimes they move out a little bit.
Speaker #8: When you look at just Europe and the United States , which are two largest markets , we we see at as Doug least mentioned , probably 130 targeted projects .
Speaker #8: And we have a pipeline in hand that continues, so we feel really good about it. You asked the question about installation.
Speaker #8: Yes . There are six six additional units to be year commissioned this . Those units are going to go throughout the year . We have we have probably half of them going in in the first , first quarter .
Speaker #8: Or first half of the And year . then then sometimes they they move out a little bit . But but yes , six will be commissioned .
Brett: But yes, 6 will be commissioned, and one of those is in Europe, so 5 of those in the US, one in Europe. So again, our pipeline remains really strong. We feel really good about it, and we're bringing in products that adapt to it. I had mentioned before about banks and bottoms. These materials that aren't a gunning product, they actually go to the bottom where it's beneath the molten steel. These products were launched last year, early first half. By the second half, our momentum really, the trajectory just skyrocketed. So we doubled our growth business in the refractory group, and we expect to do that again this year.
But yes, 6 will be commissioned, and one of those is in Europe, so 5 of those in the US, one in Europe. So again, our pipeline remains really strong. We feel really good about it, and we're bringing in products that adapt to it. I had mentioned before about banks and bottoms. These materials that aren't a gunning product, they actually go to the bottom where it's beneath the molten steel. These products were launched last year, early first half. By the second half, our momentum really, the trajectory just skyrocketed. So we doubled our growth business in the refractory group, and we expect to do that again this year.
Speaker #8: And one of those is in Europe. So, five of those in the U.S., and one in Europe. So again, our remains pipeline is really strong.
Speaker #8: We feel really good about it . And we're bringing in products that that adapt to it . I had mentioned before about banks and bottoms , these materials that that don't aren't a gunning product .
Speaker #8: They actually go to the , the bottom where it's beneath the molten steel were . These products launched last year early first half by the second half , our momentum really the trajectory just just skyrocketed .
Speaker #8: So so we we doubled our business in the growth refractory group . And we expect to do that again this year . And it's because of these new products , not only in the the in the , in furnaces but also in the steel ladles , which carry the molten steel to the continuous caster .
Brett: And it's because of these new products, not only in the furnaces, but also in the steel ladles, which carry the molten steel to the continuous caster. So we're really excited about this business, and it's doing very well. Hope that answers your question.
And it's because of these new products, not only in the furnaces, but also in the steel ladles, which carry the molten steel to the continuous caster. So we're really excited about this business, and it's doing very well. Hope that answers your question.
Speaker #8: So we're really excited about this business, and it's doing very well. Hope that answers your question.
David Silver: Yeah. No, I appreciate all the color. Thank you. And while I have you, Brett, I did want to maybe ask a follow-up question on FLUOROSORB. Let's see. You know, earlier in 2025, I guess the EPA went and extended the timelines for drinking water authorities to make, you know, to pick a remediation plan and then another 2 years in effect to actually install it. And I, I'm just wondering how, you know, you are thinking about maybe the adoption curve in the wake of those, those extended timelines. So in other words, should we just push it. You know, I assume there would be a certain rate of adoption that would start to spike, you know, as the deadlines approached. Is that still the right way to think about it?
David Silver: Yeah. No, I appreciate all the color. Thank you. And while I have you, Brett, I did want to maybe ask a follow-up question on FLUOROSORB. Let's see. You know, earlier in 2025, I guess the EPA went and extended the timelines for drinking water authorities to make, you know, to pick a remediation plan and then another 2 years in effect to actually install it. And I, I'm just wondering how, you know, you are thinking about maybe the adoption curve in the wake of those, those extended timelines. So in other words, should we just push it. You know, I assume there would be a certain rate of adoption that would start to spike, you know, as the deadlines approached. Is that still the right way to think about it?
Speaker #9: Yeah . No , I appreciate all the color . Thank you . And while I have you , Brett , I did want to maybe ask a follow up question on fluorescence .
Speaker #9: Let's see . You know , earlier in 2025 , I guess the EPA went and extended the timelines for drinking water authorities to make to pick a remediation plan .
Speaker #9: And then another in effect to actually two years install it . And I'm just wondering how , you know , you you are thinking about the adoption curve in the wake of those , those extended timelines .
Speaker #9: in So other words , should we just push it , you know , I would be assume there a certain rate of adoption that that would start to spike as the deadlines approached .
Speaker #9: Is that still the right way to think about it? You know, push out the growth, maybe a couple of years?
David Silver: You know, push out the growth, maybe a couple of years. Or is this the case where you think, you know, there might be more early adopters since a number of potential customers have already been trialing it, you know, thinking that there was a shorter timeline? So in other words, you know, should we just push out the growth curve for FLUOROSORB two years, or is there reason to think that, you know, adoption might occur a little more quickly, you know, despite the lengthier timelines that the EPA established?
You know, push out the growth, maybe a couple of years. Or is this the case where you think, you know, there might be more early adopters since a number of potential customers have already been trialing it, you know, thinking that there was a shorter timeline? So in other words, you know, should we just push out the growth curve for FLUOROSORB two years, or is there reason to think that, you know, adoption might occur a little more quickly, you know, despite the lengthier timelines that the EPA established?
Speaker #9: Is this the case where you think there might be more early adopters, since the number of potential customers have already been trialing it?
Speaker #9: You know , thinking that there was a shorter timeline . So , in other words , should we just push out the growth curve for for two years ?
Speaker #9: Or is there a reason to that think , you know might , adoption occur a little more quickly know , despite ? You the the lengthier timelines that the EPA established ?
Brett: Yeah. Great question, David. Look, the current US EPA drinking water limits are set for 2029, and there has been some discussions about a reset to 2031. The timing could determine an inflection point for the takeoff of this product line. But to be honest with you, we've seen a lot of drinking water utilities, although they've delayed major projects, the amount of trial activity, opportunities, and inquiries has significantly increased. I think what's happening is we're starting to see extra trial activity because of the extra time. It could be benefiting us, although we'd like to see the sales take off immediately, it is allowing us to prove this product really well.
Brett Argirakis: Yeah. Great question, David. Look, the current US EPA drinking water limits are set for 2029, and there has been some discussions about a reset to 2031. The timing could determine an inflection point for the takeoff of this product line. But to be honest with you, we've seen a lot of drinking water utilities, although they've delayed major projects, the amount of trial activity, opportunities, and inquiries has significantly increased. I think what's happening is we're starting to see extra trial activity because of the extra time. It could be benefiting us, although we'd like to see the sales take off immediately, it is allowing us to prove this product really well.
Speaker #8: Yeah . Great question , David . Look , the the current US EPA drinking water limits are set for 2029 . And there has been some discussions about a reset to 2031 .
Speaker #8: The timing could determine an inflection point for for the takeoff of this . This product line . But to be honest with you , we've seen a lot of drinking water utilities , although they've delayed major projects .
Speaker #8: The amount of trial activity and opportunities and inquiries has significantly increased. So I think what's happening is we're starting to see extra trial activity because of the extra time.
Speaker #8: So it it could be benefiting us . Although we'd like to see the take off immediately . It is allowing us to prove this product really well .
Brett: So that's why I think we're starting to see more and more activity. But keep in mind, I mentioned earlier about the European activity, and that's starting to take off, and there are different regulations there. So we're working with the German EPA. We're working with all these other countries just to continue to drive this product. So we're not slowing down regardless of the regulations. Maybe a trajectory point will be determined by, you know, when it is drawn in stone, but we're gonna continue to blow forward and drive the sales.
So that's why I think we're starting to see more and more activity. But keep in mind, I mentioned earlier about the European activity, and that's starting to take off, and there are different regulations there. So we're working with the German EPA. We're working with all these other countries just to continue to drive this product. So we're not slowing down regardless of the regulations. Maybe a trajectory point will be determined by, you know, when it is drawn in stone, but we're gonna continue to blow forward and drive the sales.
Speaker #8: So that's why I think we're starting to see more and more activity. But keep in mind I mentioned earlier about the European activity, and that's starting to take off.
Speaker #8: And there are different regulations there. So we're working with the German EPA. We're working with all these other countries just to continue to drive this product.
Speaker #8: So we're not slowing down regardless of the regulations , maybe a trajectory point will will be determined by , when you know , it drawn is is in stone .
Speaker #8: But we're going to continue to push forward and drive the sales.
Douglas T. Dietrich: ... And I think as Brett mentioned, David, that the extra, you know, there could be an extra year delay, but that extra time is being used to really solidify FLUOROSORB in these facilities. And so, it's been a good thing from a trial activity. We think that that's gonna make it a really solid solution here in the United States as that influx, and in the meantime, we're also working, like I'm just repeating Brett, other countries. So we do think that the revenue trajectory with the breadth of the regions that we're addressing, you know, might actually be the same of what we thought two years ago, so, even with the delay.
Douglas Dietrich: ... And I think as Brett mentioned, David, that the extra, you know, there could be an extra year delay, but that extra time is being used to really solidify FLUOROSORB in these facilities. And so, it's been a good thing from a trial activity. We think that that's gonna make it a really solid solution here in the United States as that influx, and in the meantime, we're also working, like I'm just repeating Brett, other countries. So we do think that the revenue trajectory with the breadth of the regions that we're addressing, you know, might actually be the same of what we thought two years ago, so, even with the delay.
Speaker #5: I think And Brett as mentioned , David , that the extra , you know , there could be an extra year delay , but that extra time is used being to really solidify floors in these facilities .
Speaker #5: And so it's been a good thing from a trial activity. We think that that's really going to make it solid states, as that influx.
Speaker #5: And in the meantime , we're also working . I'm just repeating , Brett , other countries . So we do think that the revenue trajectory with the breadth regions of the that we're we're addressing , you know , might actually be the same of what we thought two years ago .
Speaker #5: So even with the delay,
David Silver: Okay, great. And then last one from me would be on free cash flow. So when I look at, you know, the Q4 result there and full year 2025, I mean, I think free cash flow came in a little bit below, you know, what I was anticipating, you know, maybe early in 2025 and middle of 2025. I'm just, you know, we don't get a look at your cash flow statement just yet, but I'm just wondering if you could maybe highlight where you think, compared to where you were, you know, a year ago, where you think the differences in your free cash flow generation were, you know, how maybe working capital or CapEx above earlier projections?
David Silver: Okay, great. And then last one from me would be on free cash flow. So when I look at, you know, the Q4 result there and full year 2025, I mean, I think free cash flow came in a little bit below, you know, what I was anticipating, you know, maybe early in 2025 and middle of 2025. I'm just, you know, we don't get a look at your cash flow statement just yet, but I'm just wondering if you could maybe highlight where you think, compared to where you were, you know, a year ago, where you think the differences in your free cash flow generation were, you know, how maybe working capital or CapEx above earlier projections?
Speaker #9: great . Okay , And then last one from me would be on free cash So flow . when I when I look at the fourth quarter result , there and full year 2025 , I mean , I think free cash flow a little bit below what I was anticipating .
Speaker #9: Maybe early in '25 and middle of '25. I'm just, you know, we don't get a cash flow look at your statement just yet.
Speaker #9: But I'm just wondering if you could maybe highlight where you think compared to where you were a year ago , where you think the differences in your free cash flow generation were maybe capital or CapEx above earlier projections and , you know , should should we think that there might be a little bit of drag extending into 2026 on that , on that metric or , you know , will things rebound closer to your long term targets ?
David Silver: You know, should we think that there might be a little bit of drag extending into 2026 on that metric? Or, you know, will things rebound closer to your long-term targets? Thanks.
You know, should we think that there might be a little bit of drag extending into 2026 on that metric? Or, you know, will things rebound closer to your long-term targets? Thanks.
Erik Aldag: Yeah. Thanks, Dave. So, you know, I think the biggest driver this year was just the income. If you look relative to expectations we had earlier in the year, the income was lower, and that had an impact on our cash flow. Working capital was, I would say, a little bit elevated at the end of the year. A lot of that was FX driven, and so with the weakness in the US dollar that we saw, especially right at the end of the year, you saw an elevated impact on our working capital balances.
Erik Aldag: Yeah. Thanks, Dave. So, you know, I think the biggest driver this year was just the income. If you look relative to expectations we had earlier in the year, the income was lower, and that had an impact on our cash flow. Working capital was, I would say, a little bit elevated at the end of the year. A lot of that was FX driven, and so with the weakness in the US dollar that we saw, especially right at the end of the year, you saw an elevated impact on our working capital balances.
Speaker #9: Thanks .
Speaker #4: Yeah . Thanks , Dave . So , you know , I think the biggest driver this year was just the income if relative expectations we had earlier to in the year , the income was was lower .
Speaker #4: And that had an impact on our cash flow. Working capital was, I would say, a little bit elevated at the end of the year.
Speaker #4: that A lot of was FX And driven . so with the weakness in the US dollar that we saw , especially right at the end of the year , you saw an elevated impact on our working capital balances , but we'll realize the benefit of that as we collect that cash that was on our balance sheet at the end of the in the receivables .
Erik Aldag: But we'll realize the benefit of that as we collect that cash that was on our balance sheet at the end of the year in the receivables, and as we sell that inventory that was on our balance sheet at the end of the year. So, you know, going forward, as I mentioned in the presentation, expecting free cash flow in that 6 to 7% of sales range for the full year. I guess the only other thing I'd mention for the full year, last year, is we got off to a pretty slow start. We're expecting this Q1 to be better than last Q1 from a free cash flow perspective. But as I mentioned, Q2, Q3, and Q4 last year were all at that 7% of sales range.
But we'll realize the benefit of that as we collect that cash that was on our balance sheet at the end of the year in the receivables, and as we sell that inventory that was on our balance sheet at the end of the year. So, you know, going forward, as I mentioned in the presentation, expecting free cash flow in that 6 to 7% of sales range for the full year. I guess the only other thing I'd mention for the full year, last year, is we got off to a pretty slow start. We're expecting this Q1 to be better than last Q1 from a free cash flow perspective. But as I mentioned, Q2, Q3, and Q4 last year were all at that 7% of sales range.
Speaker #4: year And as we sell that inventory , that was on our balance at the sheet end of the year . So , you know , going forward , as I mentioned in the in the presentation , expecting free cash flow in that 6 to 7% of sales range for the full year .
Speaker #4: The only, I guess, other thing I'd mention for the full year last year is we got off to a pretty slow start. We're expecting this Q1 to be better than last Q1 from a free cash flow perspective.
Speaker #4: But as I mentioned , Q2 , Q3 and Q4 last year were all at that 7% of sales range . So company nothing has changed in terms of the company's ability to generate free cash flow .
Erik Aldag: Nothing has changed in terms of the company's ability to generate free cash flow.
Nothing has changed in terms of the company's ability to generate free cash flow.
David Silver: Okay, great. Thank you very much.
David Silver: Okay, great. Thank you very much.
Speaker #9: Okay, great. Thank you very much.
Douglas T. Dietrich: Thank you.
Douglas Dietrich: Thank you.
Operator: The next question is a follow-up from Daniel Moore with CJS Securities. Please go ahead.
Operator: The next question is a follow-up from Daniel Moore with CJS Securities. Please go ahead.
Speaker #5: David Thanks , .
Speaker #2: The next question is a follow-up from Daniel Moore with CJS Securities. Please go ahead.
Daniel Moore: All right. Appreciate all the color, and almost got away without asking, you know, without the question coming up. But any update on talc litigation? And, we feel, still feel like the reserves, you know, we've taken thus far are sufficient at this stage. Really appreciate it.
Daniel Moore: All right. Appreciate all the color, and almost got away without asking, you know, without the question coming up. But any update on talc litigation? And, we feel, still feel like the reserves, you know, we've taken thus far are sufficient at this stage. Really appreciate it.
Speaker #6: All right . All the color and almost got away without asking . You know , without question . Coming up . But any update on talc litigation and we still feel like the reserves , you know , we've taken thus are far sufficient at this stage .
Douglas T. Dietrich: Yeah, still sufficient, Dan, and, you know, look, I think we're making constructive progress. As you know, we're working toward establishing a 524(g) trust. And we're gonna continue to work really hard at that. We're trying to work as expeditiously as possible, but... and we're committed to the process. But I will say that, you know, we wanna make sure that what we create is a fair outcome for everybody, and also that it provides finality for the company. And so we're gonna continue working until we feel that those two objectives have been met. And, like I said, we're committed to the process, and we're working at it as fast as possible. But we're making constructive progress. That's what I can give you.
Speaker #6: Greatly appreciate it .
Douglas Dietrich: Yeah, still sufficient, Dan, and, you know, look, I think we're making constructive progress. As you know, we're working toward establishing a 524(g) trust. And we're gonna continue to work really hard at that. We're trying to work as expeditiously as possible, but... and we're committed to the process. But I will say that, you know, we wanna make sure that what we create is a fair outcome for everybody, and also that it provides finality for the company. And so we're gonna continue working until we feel that those two objectives have been met. And, like I said, we're committed to the process, and we're working at it as fast as possible. But we're making constructive progress. That's what I can give you.
Speaker #5: Yeah . Still sufficient in and you know , look , I think we're making constructive progress you know , . As we're working toward a , you know , establishing a 524 G trust .
Speaker #5: And we're going to continue to work really hard at that. We're trying to work as expeditiously as possible, and we're committed to the process.
Speaker #5: But I will say that, you know, we want to make sure that what we create is a fair outcome for everybody.
Speaker #5: And and also that it provides finality for the company . And so we're going to continue working until we feel that those two objectives have been like I said , we're committed to the process and we're met .
Speaker #5: And working at it as fast as possible. But we're making constructive progress. That's what I can give you.
Daniel Moore: All right. Thanks again. Appreciate it.
Daniel Moore: All right. Thanks again. Appreciate it.
Speaker #6: All right. Thanks again. Appreciate it.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Doug Dietrich for any closing remarks.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Doug Dietrich for any closing remarks.
Speaker #2: This concludes our question-and-answer session. I would like to turn the conference back over to Doug Dietrich for any closing remarks.
Douglas T. Dietrich: I just wanna say thank you for everyone joining today. I'd also want to, you know, again, reiterate to those at NCI, really appreciate your work in this past year, more to do, and thank you very much on the safety front. Again, more work to do, but thank you very much for the efforts, and we'll talk to you in another three months. Thanks. Bye.
Douglas Dietrich: I just wanna say thank you for everyone joining today. I'd also want to, you know, again, reiterate to those at NCI, really appreciate your work in this past year, more to do, and thank you very much on the safety front. Again, more work to do, but thank you very much for the efforts, and we'll talk to you in another three months. Thanks. Bye.
Speaker #5: I just want to say for thank you joining everyone today . I also want to , you know , again , reiterate to at MTI , really appreciate your work those in this past year , more to do .
Speaker #5: And thank you very much. On the front, again, more of the safety work to do, but thank you very much for the efforts.
Speaker #5: And we'll talk to you in another three months. Thanks. Bye.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.