Minerals Technologies Inc.

Second-quarter sales were $548 million, up 4% year over year, with operating income of $75 million and EPS of $1.60, up 3% from last year. On a year-to-date basis, sales were up 7%, EPS excluding special items was up 11%, EBITDA was up 5%, and cash from operations was $95 million, up $37 million from last year. Year-to-date free cash flow was $45 million, CapEx was $27 million in Q2, and net leverage improved to 1.6x EBITDA. For Q3, management guided to sales of approximately $550 million, operating income of around $75 million, EPS of $1.55 to $1.60, and sales growth of about 4% year over year; full-year CapEx is expected to be $90 million to $100 million, free cash flow is expected to be 6% to 7% of sales, and full-year sales growth is expected in the mid-single-digit range.

Doug Dietrich framed the quarter as evidence that the company’s growth strategy is working, emphasizing that sales gains were driven by higher volumes from new growth projects and stronger end markets. He highlighted Engineered Solutions’ record margin, the ramping of multiple strategic projects, and said the company has a clear line of sight to mid-single-digit full-year growth. His tone was constructive, but he also acknowledged persistent inflation and said pricing actions are still working through the system.

Erik Aldag focused on the financial bridge: pricing added $8 million in Q2, volume added $4 million, while overall cost increases totaled $16 million, mainly freight, energy, and mining-linked costs. He said Consumer & Specialties is still about 90 days away from fully catching up on price versus cost, and that the fourth quarter should recover margin as pricing catches up and seasonality normalizes. On cash and capital allocation, he cited $95 million of year-to-date cash from operations, $45 million of free cash flow year-to-date, Q2 CapEx of $27 million, expected full-year CapEx of $90 million to $100 million, and net leverage of 1.6x EBITDA.

Analysts pressed on why Consumer & Specialties underperformed expectations despite strong cat litter and household product trends, and management said the miss was mainly timing: cat litter eased after a very strong Q1, the bleaching earth expansion came online later than expected, and a personal care campaign shifted into the second half. Questions also focused on whether margins can snap back next year and whether Engineered Solutions’ record margins are sustainable; management said price/cost should eventually normalize, but Q3 will still be pressured, while Engineered Solutions is establishing a new baseline despite some normal seasonal softness in Q3. There was also a detailed discussion of the BMI talc case and the $290 million charge, with management saying the reserve was set to support a proposed plan for finality, but declining to speculate on litigation outcomes.