Company Quick10K Filing
Quick10K
Minerals Technologies
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$60.12 35 $2,120
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-07-01 Quarter: 2018-07-01
10-Q 2018-04-01 Quarter: 2018-04-01
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-10-01 Quarter: 2017-10-01
10-Q 2017-07-02 Quarter: 2017-07-02
10-Q 2017-04-02 Quarter: 2017-04-02
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-10-02 Quarter: 2016-10-02
10-Q 2016-07-03 Quarter: 2016-07-03
10-Q 2016-04-03 Quarter: 2016-04-03
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-27 Quarter: 2015-09-27
10-Q 2015-06-28 Quarter: 2015-06-28
10-Q 2015-03-29 Quarter: 2015-03-29
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-28 Quarter: 2014-09-28
10-Q 2014-06-29 Quarter: 2014-06-29
10-Q 2014-03-30 Quarter: 2014-03-30
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-08-01
8-K 2019-07-17
8-K 2019-06-20
8-K 2019-05-15 Shareholder Vote
8-K 2019-05-14
8-K 2019-05-02
8-K 2019-03-13 Officers, Exhibits
8-K 2019-01-31
8-K 2019-01-23
8-K 2019-01-23
8-K 2018-11-01
8-K 2018-10-24
8-K 2018-08-02
8-K 2018-07-18
8-K 2018-05-31 Officers, Exhibits
8-K 2018-05-11 Shareholder Vote, Other Events, Exhibits
8-K 2018-05-03
8-K 2018-04-18 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-13 Amend Bylaw, Exhibits
8-K 2018-02-01
8-K 2018-01-24
SYY Sysco 37,800
MCY Mercury General 3,090
SSB South State 2,610
EEX Emerald Expositions Events 970
VIVO Meridian Bioscience 498
SPAR Spartan Motors 340
ARTNA Artesian Resources 336
AMSC American Superconductor 236
NTIC Northern Technologies International 119
ENBP ENB Financial 0
MTX 2019-06-30
Part 1. Financial Information
Item 1. Financial Statements
Note 1. Basis of Presentation and Summary of Significant Accounting Policies
Note 2. Leases
Note 3. Revenue From Contracts with Customers
Note 4. Business Combination
Note 5. Earnings per Share (Eps)
Note 6. Restructuring and Other Items, Net
Note 7. Income Taxes
Note 8. Inventories
Note 9. Goodwill and Other Intangible Assets
Note 10. Derivative Financial Instruments
Note 11. Long-Term Debt and Commitments
Note 12. Benefit Plans
Note 13. Comprehensive Income
Note 14. Accounting for Asset Retirement Obligations
Note 15. Contingencies
Note 16. Segment and Related Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Default Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-15 ex15.htm
EX-31.1 ex31_1.htm
EX-31.2 ex31_2.htm
EX-32 ex32.htm
EX-95 ex95.htm
EX-99 ex99.htm

Minerals Technologies Earnings 2019-06-30

MTX 10Q Quarterly Report

Balance SheetIncome StatementCash Flow


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-11430
--
MINERALS TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

Delaware
 
25-1190717
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

622 Third Avenue, New York, New York 10017-6707
(Address of principal executive offices, including zip code)

(212) 878-1800
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 
Title of each class
Trading Symbol
Name of exchange on which registered
Common Stock, $0.10 par value
MTX
New York Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes 
 
NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes 
 
NO

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or and emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 
Accelerated Filer
Non-accelerated Filer  (Do not check if a smaller reporting company)
Smaller Reporting Company
Emerging Growth Company
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES
 
NO

As of July 22, 2019, there were 35,062,611 shares of common stock, par value of $0.10 per share, of the registrant outstanding.




MINERALS TECHNOLOGIES INC.
INDEX TO FORM 10-Q

Page No.
PART I.   FINANCIAL INFORMATION
 
   
Item 1.
Financial Statements:
 
     
 
Condensed Consolidated Statements of Income for the three-month and six-month periods ended June 30, 2019 and July 1, 2018 (Unaudited)
3
     
 
Condensed Consolidated Statements of Comprehensive Income for the three-month and six-month periods ended June 30, 2019 and July 1, 2018 (Unaudited)
4
     
 
Condensed Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018
5
     
 
Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2019 and July 1, 2018 (Unaudited)
6
     
 
Condensed Consolidated Statements of Shareholders' Equity for the three-month and six-month periods ended June 30, 2019 and July 1, 2018 (Unaudited)
7
     
 
8
     
 
23
     
Item 2.
24
     
Item 3.
35
     
Item 4.
36
     
PART II.   OTHER INFORMATION
 
     
Item 1.
37
     
Item 1A.
38
     
Item 2.
38
     
Item 3.
38
     
Item 4.
38
     
Item 5.
38
     
Item 6.
39
     
 
40





PART 1. FINANCIAL INFORMATION

ITEM 1.  Financial Statements

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
Three Months Ended
   
Six Months Ended
 
(millions of dollars, except per share data)
 
June 30,
2019
   
July 1,
2018
   
June 30,
2019
   
July 1,
2018
 
                         
Product sales
 
$
438.0
   
$
445.0
   
$
855.4
   
$
857.2
 
Service revenue
   
25.8
     
19.7
     
46.1
     
38.8
 
Total net sales
   
463.8
     
464.7
     
901.5
     
896.0
 
                                 
Cost of goods sold
   
334.0
     
335.3
     
648.0
     
640.3
 
Cost of service revenue
   
17.8
     
13.5
     
31.8
     
26.3
 
Total cost of sales
   
351.8
     
348.8
     
679.8
     
666.6
 
                                 
Production margin
   
112.0
     
115.9
     
221.7
     
229.4
 
                                 
Marketing and administrative expenses
   
48.4
     
45.3
     
91.3
     
89.7
 
Research and development expenses
   
4.9
     
6.4
     
9.7
     
12.5
 
Acquisition related transaction and integration costs
   
     
1.0
     
     
1.4
 
Restructuring and other items, net
   
13.2
     
0.4
     
13.2
     
0.4
 
                                 
Income from operations
   
45.5
     
62.8
     
107.5
     
125.4
 
                                 
Interest expense, net
   
(10.9
)
   
(11.5
)
   
(22.3
)
   
(22.2
)
Other non-operating income (deductions), net
   
(2.4
)
   
3.1
     
(3.8
)
   
0.4
 
Total non-operating deductions, net
   
(13.3
)
   
(8.4
)
   
(26.1
)
   
(21.8
)
                                 
Income from operations before tax and equity in earnings
   
32.2
     
54.4
     
81.4
     
103.6
 
Provision for taxes on income
   
5.1
     
10.3
     
14.4
     
19.6
 
Equity in earnings of affiliates, net of tax
   
0.5
     
1.1
     
0.6
     
2.3
 
                                 
Consolidated net income
   
27.6
     
45.2
     
67.6
     
86.3
 
Less:
                               
Net income attributable to non-controlling interests
   
1.0
     
1.1
     
1.9
     
2.3
 
Net income attributable to Minerals Technologies Inc.
 
$
26.6
   
$
44.1
   
$
65.7
   
$
84.0
 
                                 
Earnings per share:
                               
                                 
Basic:
                               
Income from operations attributable to Minerals Technologies Inc.
 
$
0.76
   
$
1.25
   
$
1.87
   
$
2.37
 
                                 
Diluted:
                               
Income from operations attributable to Minerals Technologies Inc.
 
$
0.75
   
$
1.24
   
$
1.86
   
$
2.36
 
                                 
Cash dividends declared per common share
 
$
0.05
   
$
0.05
   
$
0.10
   
$
0.10
 
                                 
Shares used in computation of earnings per share:
                               
Basic
   
35.2
     
35.3
     
35.2
     
35.4
 
Diluted
   
35.3
     
35.6
     
35.3
     
35.6
 

See accompanying Notes to Condensed Consolidated Financial Statements.
3




MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three Months Ended
   
Six Months Ended
 
(millions of dollars)
 
June 30,
2019
   
July 1,
2018
   
June 30,
2019
   
July 1,
2018
 
                         
Consolidated net income
 
$
27.6
   
$
45.2
   
$
67.6
   
$
86.3
 
Other comprehensive income (loss), net of tax:
                               
Foreign currency translation adjustments
   
(18.7
)
   
(54.5
)
   
(19.1
)
   
(39.1
)
Pension and postretirement plan adjustments
   
1.7
     
1.9
     
3.3
     
3.7
 
Unrealized gains (losses) on derivative instruments
   
(3.3
)
   
(1.3
)
   
(2.1
)
   
0.3
 
Total other comprehensive loss, net of tax
   
(20.3
)
   
(53.9
)
   
(17.9
)
   
(35.1
)
Total comprehensive income (loss) including non-controlling interests
   
7.3
     
(8.7
)
   
49.7
     
51.2
 
Comprehensive income (loss) attributable to non-controlling interests
   
(0.8
)
   
0.5
     
(2.2
)
   
(1.3
)
Comprehensive income (loss) attributable to Minerals Technologies Inc.
 
$
6.5
   
$
(8.2
)
 
$
47.5
   
$
49.9
 

See accompanying Notes to Condensed Consolidated Financial Statements.

4




MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS


(millions of dollars)
 
June 30,
2019*
   
Dec. 31,
2018 **
 
ASSETS
           
             
Current assets:
           
Cash and cash equivalents
 
$
214.5
   
$
208.8
 
Short-term investments
   
5.2
     
3.8
 
Accounts receivable, net
   
411.9
     
387.3
 
Inventories
   
258.4
     
239.2
 
Prepaid expenses and other current assets
   
41.1
     
37.2
 
Total current assets
   
931.1
     
876.3
 
                 
Property, plant and equipment
   
2,246.8
     
2,256.0
 
Less accumulated depreciation and depletion
   
(1,177.7
)
   
(1,153.1
)
Property, plant and equipment, net
   
1,069.1
     
1,102.9
 
Goodwill
   
807.9
     
812.4
 
Intangible assets
   
207.9
     
214.1
 
Deferred income taxes
   
25.4
     
26.3
 
Other assets and deferred charges
   
108.0
     
55.1
 
Total assets
 
$
3,149.4
   
$
3,087.1
 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Current liabilities:
               
Short-term debt
 
$
104.2
   
$
105.2
 
Current maturities of long-term debt
   
2.1
     
3.3
 
Accounts payable
   
188.2
     
169.1
 
Other current liabilities
   
111.1
     
104.3
 
Total current liabilities
   
405.6
     
381.9
 
                 
Long-term debt, net of unamortized discount and deferred financing costs
   
874.2
     
907.8
 
Deferred income taxes
   
194.2
     
196.8
 
Accrued pension and post-retirement benefits
   
123.0
     
124.2
 
Other non-current liabilities
   
130.8
     
91.1
 
Total liabilities
   
1,727.8
     
1,701.8
 
                 
Shareholders' equity:
               
Common stock
   
4.9
     
4.9
 
Additional paid-in capital
   
435.3
     
431.9
 
Retained earnings
   
1,842.2
     
1,769.1
 
Accumulated other comprehensive loss
   
(262.8
)
   
(233.7
)
Less common stock held in treasury
   
(628.7
)
   
(618.7
)
                 
Total Minerals Technologies Inc. shareholders' equity
   
1,390.9
     
1,353.5
 
Non-controlling interests
   
30.7
     
31.8
 
Total shareholders' equity
   
1,421.6
     
1,385.3
 
Total liabilities and shareholders' equity
 
$
3,149.4
   
$
3,087.1
 

*
Unaudited
**
Condensed from audited financial statements

See accompanying Notes to Condensed Consolidated Financial Statements.

5




MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Six Months Ended
 
(millions of dollars)
 
June 30,
2019
   
July 1,
2018
 
             
Operating Activities:
           
             
Consolidated net income
 
$
67.6
   
$
86.3
 
                 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation, depletion and amortization
   
48.9
     
44.5
 
Amortization of right of use asset
   
6.6
     
 
Asset impairment charges
   
7.5
     
 
Other non-cash items
   
4.5
     
(2.0
)
Pension plan funding
   
(3.1
)
   
(12.3
)
Net changes in operating assets and liabilities
   
(33.7
)
   
(36.3
)
Net cash provided by operating activities
   
98.3
     
80.2
 
                 
Investing Activities:
               
                 
Purchases of property, plant and equipment, net
   
(35.5
)
   
(42.1
)
Acquisition of business, net of cash acquired
   
     
(124.1
)
Proceeds from sale of short-term investments
   
3.4
     
1.8
 
Purchases of short-term investments
   
(4.7
)
   
(2.5
)
Other investing activities
   
(0.8
)
   
 
Net cash used in investing activities
   
(37.6
)
   
(166.9
)
                 
Financing Activities:
               
                 
Debt issuance costs
   
     
(1.4
)
Repayment of long-term debt
   
(36.6
)
   
(6.6
)
Proceeds from issuance of short-term debt
   
     
113.0
 
Repayment of short-term debt
   
(1.1
)
   
(1.1
)
Purchase of common stock for treasury
   
(10.0
)
   
(13.3
)
Proceeds from issuance of stock under option plan
   
0.4
     
1.9
 
Excess tax benefits related to stock incentive programs
   
(1.9
)
   
(3.2
)
Dividends paid to non-controlling interests
   
(3.9
)
   
(0.2
)
Capital contribution from non-controlling interests
   
0.6
     
 
Cash dividends paid
   
(3.5
)
   
(3.5
)
Net cash used in financing activities
   
(56.0
)
   
85.6
 
                 
Effect of exchange rate changes on cash and cash equivalents
   
1.0
     
(8.1
)
                 
Net increase (decrease) in cash and cash equivalents
   
5.7
     
(9.2
)
Cash and cash equivalents at beginning of period
   
208.8
     
212.2
 
Cash and cash equivalents at end of period
 
$
214.5
   
$
203.0
 
                 
Supplemental disclosure of cash flow information:
               
Interest paid
 
$
21.9
   
$
22.1
 
Income taxes paid
 
$
13.7
   
$
20.9
 
                 
Non-cash financing activities:
               
Treasury stock purchases settled after period end
 
$
   
$
0.3
 

See accompanying Notes to Condensed Consolidated Financial Statements.
6




MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)

 
Equity Attributable to Minerals Technologies Inc.
             
(millions of dollars)
 
Common
Stock
   
Additional
Paid-in
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Treasury
Stock
   
Non-controlling
Interests
   
Total
 
Balance as of December 31, 2018
 
$
4.9
   
$
431.9
   
$
1,769.1
   
$
(233.7
)
 
$
(618.7
)
 
$
31.8
   
$
1,385.3
 
                                                         
Net income
   
     
     
39.1
     
     
     
0.9
     
40.0
 
Other comprehensive income
   
     
     
     
1.9
     
     
0.5
     
2.4
 
Dividends declared
   
     
     
(1.7
)
   
     
     
     
(1.7
)
Dividends paid to non-controlling interests
   
     
     
     
     
     
(0.1
)
   
(0.1
)
Cumulative effect of accounting change
   
     
     
10.9
     
(10.9
)
   
     
     
 
Capital contribution from non-controlling interests
   
     
     
     
     
     
0.8
     
0.8
 
Issuance of shares pursuant to employee stock compensation plans
   
     
0.1
     
     
     
     
     
0.1
 
Stock-based compensation
   
     
0.6
     
     
     
     
     
0.6
 
Balance as of March 31, 2019
 
$
4.9
   
$
432.6
   
$
1,817.4
   
$
(242.7
)
 
$
(618.7
)
 
$
33.9
   
$
1,427.4
 
                                                         
Net income
   
     
     
26.6
     
     
     
1.0
     
27.6
 
Other comprehensive income
   
     
     
     
(20.1
)
   
     
(0.2
)
   
(20.3
)
Dividends declared
   
     
     
(1.8
)
   
     
     
     
(1.8
)
Dividends paid to non-controlling interests
   
     
     
     
     
     
(3.8
)
   
(3.8
)
Capital contribution from non-controlling interests
   
     
     
     
     
     
(0.2
)
   
(0.2
)
Issuance of shares pursuant to employee stock compensation plans
   
     
0.2
     
     
     
     
     
0.2
 
Stock-based compensation
   
     
2.5
     
     
     
     
     
2.5
 
Purchase of common stock for treasury
   
     
     
     
     
(10.0
)
   
     
(10.0
)
Balance as of June 30, 2019
 
$
4.9
   
$
435.3
   
$
1,842.2
   
$
(262.8
)
 
$
(628.7
)
 
$
30.7
   
$
1,421.6
 

 
Equity Attributable to Minerals Technologies Inc.
             
(millions of dollars)
 
Common
Stock
   
Additional
Paid-in
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Treasury
Stock
   
Non-controlling
Interests
   
Total
 
Balance as of December 31, 2017
 
$
4.9
   
$
422.7
   
$
1,607.2
   
$
(186.1
)
 
$
(597.0
)
 
$
27.4
   
$
1,279.1
 
                                                         
Net income
   
     
     
39.9
     
     
     
1.2
     
41.1
 
Other comprehensive income (loss)
   
     
     
     
18.2
     
     
0.5
     
18.7
 
Dividends declared
   
     
     
(1.8
)
   
     
     
     
(1.8
)
Dividends paid to non-controlling interests
   
     
     
     
     
     
(0.1
)
   
(0.1
)
Issuance of shares pursuant to employee stock compensation plans
   
     
0.5
     
     
     
     
     
0.5
 
Purchase of common stock for treasury
   
     
     
     
     
(5.7
)
   
     
(5.7
)
Balance as of April 1, 2018
 
$
4.9
   
$
423.2
   
$
1,645.3
   
$
(167.9
)
 
$
(602.7
)
 
$
29.0
   
$
1,331.8
 
                                                         
Net income
   
     
     
44.1
     
     
     
1.1
     
45.2
 
Other comprehensive income (loss)
   
     
     
     
(52.3
)
   
     
(1.6
)
   
(53.9
)
Dividends declared
   
     
     
(1.7
)
   
     
     
     
(1.7
)
Dividends paid to non-controlling interests
   
     
     
     
     
     
     
 
Issuance of shares pursuant to employee stock compensation plans
   
     
1.4
     
     
     
     
     
1.4
 
Stock based compensation
   
     
2.3
     
     
     
     
     
2.3
 
Purchase of common stock for treasury
   
     
     
     
     
(7.7
)
   
     
(7.7
)
Balance as of July 1, 2018
 
$
4.9
   
$
426.9
   
$
1,687.7
   
$
(220.2
)
 
$
(610.4
)
 
$
28.5
   
$
1,317.4
 

See Notes to Consolidated Financial Statements, which are an integral part of these statements.

7


MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1.  Basis of Presentation and Summary of Significant Accounting Policies


The accompanying unaudited condensed consolidated financial statements have been prepared by management of Minerals Technologies Inc. (the “Company”, “MTI”, “we”, or “us”) in accordance with the rules and regulations of the United States Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for a fair presentation of the financial information for the periods indicated, have been included. The results for the three-month and six-month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

Company Operations


The Company is a resource- and technology-based company that develops, produces and markets worldwide a broad range of specialty mineral, mineral-based and synthetic mineral products and supporting systems and services.


The Company has four reportable segments: Performance Materials, Specialty Minerals, Refractories and Energy Services.

The Performance Materials segment is a leading global supplier of bentonite and bentonite-related products, chromite and leonardite. This segment also provides products for non-residential construction, environmental and infrastructure projects worldwide, serving customers engaged in a broad range of construction projects.


The Specialty Minerals segment produces and sells the synthetic mineral product precipitated calcium carbonate (“PCC”) and processed mineral product quicklime (“lime”), and mines mineral ores then processes and sells natural mineral products, primarily limestone and talc.


The Refractories segment produces and markets monolithic and shaped refractory materials and specialty products, services and application and measurement equipment, and calcium metal and metallurgical wire products.


The Energy Services segment provides services to improve the production, costs, compliance, and environmental impact of activities performed in the oil and gas industry. This segment offers a range of patented and unpatented technologies, products and services to the upstream and downstream oil and gas sector throughout the world.


Use of Estimates


The Company employs accounting policies that are in accordance with U.S. generally accepted accounting principles and require management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Significant estimates include those related to revenue recognition, valuation of long-lived assets, goodwill and other intangible assets, income taxes, including valuation allowances, and pension plan assumptions. Actual results could differ from those estimates.


Recently Issued Accounting Standards


Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. All recently issued ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

8


MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



Recently Adopted Accounting Standards



On January 1, 2019, the Company adopted the provisions of ASU 2016-02, “Leases”, which requires lessees to recognize most leases on-balance sheet. The Company has adopted this new standard under the modified retrospective transition method, using the effective date as our date of initial application. As such, financial information and required disclosures will not be provided for dates prior to January 1, 2019.  The new standard provides a number of optional practical expedients in transition. We have elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides practical expedients for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. On adoption, we recognized additional operating liabilities of $61.4 million with corresponding right-of-use assets of $50.5 million based on the present value of the remaining lease payments under existing operating leases.  As of December 31, 2018, we had $10.9 million in deferred charges related to some of our real estate leases that were recorded against the right of use asset as part of the transition.  The adoption of this standard did not have a material impact on the Company's financial statements.


On January 1, 2019, the Company adopted the provisions of ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act.  As a result, the Company reclassified $10.9 million from "Accumulated other comprehensive loss" to "Retained earnings" on the Condensed Consolidated Balance Sheets as of June 30, 2019.

Note 2.  Leases


We determine if an arrangement is a lease at inception.  The Company has operating leases for premises, equipment, rail cars and automobiles.  Our leases have remaining lease terms of 1 year to 50 years, some of which may include options to extend the leases further. The Company considers these options in determining the lease term used to establish the right-of-use assets and lease liabilities.  As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based upon the information available at commencement date, or as of implementation of ASC 842, in determining the present value of lease payments.


Leases with an initial term of 12 months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Certain lease agreements contain both lease and non-lease components. We account for lease components together with non-lease components.


Operating lease cost was $4.0 million and $8.1 million for the three and six-month periods ended June 30, 2019, respectively.  The components of lease costs are as follows:


(millions of dollars)
 
Three Months Ended
   
Six Months Ended
 
   
June 30, 2019
   
June 30, 2019
 
             
Operating lease cost
 
$
3.9
   
$
7.9
 
Short-term lease cost
   
0.1
     
0.2
 
Total
 
$
4.0
   
$
8.1
 


Supplemental cash flow information and non-cash activity related to our operating leases are as follows:

(millions of dollars)
 
June 30, 2019
 
       
Operating cash flows information:
     
Cash paid for amounts included in the measurement of lease liabilities
 
$
8.3
 
Non-cash activity:
       
Right-of-use assets obtained in the exchange for operating lease liabilities
 
$
3.3
 

9


MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



Weighted average remaining lease term, and weighted average discount rates related to the Company’s operating leases were as follows:


     
Weighted-average remaining operating lease term (in years)
   
7.80
 
Weighted-average operating leases discount rate
   
5.0
%

          The following table summarizes the Company's outstanding lease assets and liabilities and their classification on the Condensed Consolidated Balance Sheet:

(millions of dollars)
Balance Sheet Classification
 
June 30, 2019
 
         
Right-of-use asset
Other assets and deferred charges
 
$
47.1
 
Lease liability - current
Other current liabilities
   
12.0
 
Lease liability - non-current
Other non-current liabilities
   
46.1
 


Future minimum lease payments under the Company's operating leases as of June 30, 2019 were as follows:

(millions of dollars)
 
June 30, 2019
 
       
For the remainder of 2019
 
$
7.7
 
2020
   
13.0
 
2021
   
9.6
 
2022
   
7.7
 
2023
   
6.2
 
Thereafter
   
26.3
 
Total future minimum lease payments
   
70.5
 
Less imputed interest
   
(12.6
)
Total
 
$
57.9
 


As of December 31, 2018, minimum lease payments under non-cancellable operating leases were expected to be as follows:

(millions of dollars)
 
Dec. 31, 2018
 
       
2019
 
$
17.3
 
2020
   
13.0
 
2021
   
9.5
 
2022
   
8.2
 
2023
   
7.0
 
Thereafter
   
24.8
 
Total
 
$
79.8
 


A summary of rent expense for the fiscal years ended December 31, 2018 and December 31, 2017 was as follows:

(millions of dollars)
 
Dec. 31, 2018
   
Dec. 31, 2017
 
             
Rent expense
 
$
19.5
   
$
19.3
 


The Company has certain arrangements under which we are the lessor.  Lease income associated with these leases is not material.




10


MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 3.  Revenue from Contracts with Customers


The following table disaggregates our revenue by major source (product line) for the three and six-month periods ended June 30, 2019 and July 1, 2018 :

(millions of dollars)
 
Three Months Ended
   
Six Months Ended
 
Net Sales
 
June 30,
2019
   
July 1,
2018
   
June 30,
2019
   
July 1,
2018
 
                         
Metalcasting
 
$
75.8
   
$
88.8
   
$
149.0
   
$
168.0
 
Household, Personal Care and Specialty Products
   
69.0
     
58.6
     
143.9
     
107.3
 
Environmental Products
   
29.0
     
25.2
     
44.9
     
37.9
 
Building Materials
   
19.1
     
18.0
     
34.4
     
36.9
 
Basic Minerals
   
22.5
     
23.9
     
42.4
     
51.7
 
Performance Materials
   
215.4
     
214.5
     
414.6
     
401.8
 
                                 
Paper PCC
   
90.2
     
94.5
     
181.7
     
191.5
 
Specialty PCC
   
17.3
     
17.3
     
35.4
     
34.3
 
Ground Calcium Carbonate
   
24.8
     
25.2
     
47.1
     
47.7
 
Talc
   
12.8
     
13.9
     
25.3
     
27.0
 
Specialty Minerals
   
145.1
     
150.9
     
289.5
     
300.5
 
                                 
Refractory Products
   
61.0
     
66.7
     
123.0
     
129.0
 
Metallurgical Products
   
16.5
     
12.9
     
28.3
     
25.9
 
Refractories
   
77.5
     
79.6
     
151.3
     
154.9
 
                                 
Energy Services
   
25.8