10-Q 1 form10q.htm 10-Q
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 March 31, 2024

or

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

Commission File Number 1-11430

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 every Interactive Data File required to be submitted 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 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
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 April 17, 2024, there were 32,248,162 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 periods ended March 31, 2024 and April 2, 2023 (Unaudited)
3
     
 
Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2024 and April 2, 2023 (Unaudited)
4
     
 
Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023
5
     
 
Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2024 and April 2, 2023 (Unaudited)
6
     
 
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three-month periods ended March 31, 2024 and April 2, 2023 (Unaudited)
7
     
 
8
     
 
18
     
Item 2.
19
     
Item 3.
26
     
Item 4.
26
     
PART II.   OTHER INFORMATION
 
     
Item 1.
26
     
Item 1A.
26
     
Item 2.
26
     
Item 3.
27
     
Item 4.
27
     
Item 5.
27
     
Item 6.
27
     
 
28




PART 1. FINANCIAL INFORMATION

ITEM 1.  Financial Statements

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

 
Three Months Ended
 
(in millions of dollars, except per share data)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Net sales
 
$
534.5
   
$
546.1
 
                 
Cost of goods sold
   
398.6
     
425.4
 
                 
Production margin
   
135.9
     
120.7
 
                 
Marketing and administrative expenses
   
53.0
     
52.3
 
Research and development expenses
   
5.6
     
5.3
 
Acquisition-related expenses
   
     
0.1
 
Litigation expenses
   
2.1
     
 
                 
Income from operations
   
75.2
     
63.0
 
                 
Interest expense, net
   
(14.9
)
   
(14.2
)
Other non-operating (deductions) income, net
   
(0.2
)
   
(1.1
)
Total non-operating deductions, net
   
(15.1
)
   
(15.3
)
                 
Income before tax and equity in earnings
   
60.1
     
47.7
 
                 
Provision for taxes on income
   
13.9
     
10.5
 
Equity in earnings of affiliates, net of tax
   
1.4
     
0.9
 
                 
Net income
   
47.6
     
38.1
 
Less:
               
Net income attributable to non-controlling interests
   
0.9
     
1.1
 
Net income attributable to Minerals Technologies Inc.
 
$
46.7
   
$
37.0
 
                 
Earnings per share:
               
                 
Basic:
               
Net income attributable to Minerals Technologies Inc.
 
$
1.45
   
$
1.14
 
                 
Diluted:
               
Net income attributable to Minerals Technologies Inc.
 
$
1.44
   
$
1.14
 
                 
Cash dividends declared per common share
 
$
0.10
   
$
0.05
 
                 
Shares used in computation of earnings per share:
               
Basic
   
32.3
     
32.5
 
Diluted
   
32.4
     
32.5
 

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
 
(in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Net income
 
$
47.6
   
$
38.1
 
Other comprehensive income (loss), net of tax:
               
Foreign currency translation adjustments
   
(24.3
)
   
10.0
 
Pension and postretirement plan adjustments
   
0.2
     
0.4
 
Unrealized (loss) gains on cash flow hedges
   
1.4
     
(2.3
)
Total other comprehensive income (loss), net of tax
   
(22.7
)
   
8.1
 
Total comprehensive income including non-controlling interests
   
24.9
     
46.2
 
Comprehensive income attributable to non-controlling interests
   
0.2
     
1.4
 
Comprehensive income attributable to Minerals Technologies Inc.
 
$
24.7
   
$
44.8
 

See accompanying Notes to Condensed Consolidated Financial Statements.


4



MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions of dollars)
 
Mar. 31,
2024*
   
Dec. 31,
2023 **
 
ASSETS
           
             
Current assets:
           
Cash and cash equivalents
 
$
315.7
   
$
317.2
 
Short-term investments
   
4.4
     
4.3
 
Accounts receivable, net
   
396.3
     
399.1
 
Inventories
   
326.0
     
325.4
 
Prepaid expenses and other current assets
   
58.9
     
53.0
 
Total current assets
   
1,101.3
     
1,099.0
 
                 
Property, plant and equipment
   
2,185.3
     
2,190.1
 
Less accumulated depreciation and depletion
   
(1,208.3
)
   
(1,203.3
)
                 
Property, plant and equipment, net
   
977.0
     
986.8
 
Goodwill
   
913.1
     
913.6
 
Intangible assets
   
227.6
     
231.0
 
Deferred income taxes
   
14.8
     
16.0
 
Other assets and deferred charges
   
105.3
     
100.2
 
Total assets
 
$
3,339.1
   
$
3,346.6
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
                 
Current liabilities:
               
Short-term debt
 
$
75.7
   
$
85.4
 
Current maturities of long-term debt
   
21.4
     
18.0
 
Accounts payable
   
194.7
     
188.7
 
Other current liabilities
   
150.0
     
165.2
 
Total current liabilities
   
441.8
     
457.3
 
                 
Long-term debt, net of unamortized discount and deferred financing costs
   
904.4
     
911.1
 
Deferred income taxes
   
142.7
     
139.3
 
Accrued pension and post-retirement benefits
   
50.4
     
51.7
 
Other non-current liabilities
   
103.9
     
100.5
 
Total liabilities
   
1,643.2
     
1,659.9
 
                 
Commitments and contingencies
   
     
 
                 
Shareholders’ equity:
               
Common stock
   
5.0
     
4.9
 
Additional paid-in capital
   
503.6
     
501.2
 
Retained earnings
   
2,404.1
     
2,360.6
 
Accumulated other comprehensive loss
   
(391.3
)
   
(369.4
)
Less common stock held in treasury
   
(860.3
)
   
(845.3
)
                 
Total Minerals Technologies Inc. shareholders’ equity
   
1,661.1
     
1,652.0
 
Non-controlling interests
   
34.8
     
34.7
 
Total shareholders’ equity
   
1,695.9
     
1,686.7
 
Total liabilities and shareholders’ equity
 
$
3,339.1
   
$
3,346.6
 

*
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)

 
Three Months Ended
 
(in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Operating Activities:
           
             
Net income
 
$
47.6
   
$
38.1
 
                 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation, depletion and amortization
   
23.5
     
23.7
 
Reduction of right of use asset
   
3.4
     
3.4
 
Other non-cash items, net
   
7.2
     
4.2
 
Net changes in operating assets and liabilities
   
(25.8
)
   
(35.7
)
Net cash provided by operating activities
   
55.9
     
33.7
 
                 
Investing Activities:
               
                 
Purchases of property, plant and equipment, net
   
(16.5
)
   
(24.4
)
Proceeds from sale of short-term investments
   
1.1
     
1.6
 
Purchases of short-term investments
   
(1.3
)
   
(2.0
)
Other investing activities
   
0.1
     
0.1
 
Net cash used in investing activities
   
(16.6
)
   
(24.7
)
                 
Financing Activities:
               
                 
Repayment of long-term debt
   
(3.6
)
   
(3.8
)
Proceeds from issuance of short-term debt
   
     
 
Repayment of short-term debt
   
(9.7
)
   
(1.2
)
Purchase of common stock for treasury
   
(15.0
)
   
 
Proceeds from issuance of stock under option plan
   
2.3
     
0.2
 
Excess tax benefits related to stock incentive programs
   
(2.8
)
   
(2.8
)
Cash dividends paid
   
(3.2
)
   
(1.6
)
Net cash used in financing activities
   
(32.0
)
   
(9.2
)
                 
Effect of exchange rate changes on cash and cash equivalents
   
(8.8
)
   
2.7
 
                 
Net increase (decrease) in cash and cash equivalents
   
(1.5
)
   
2.5
 
Cash and cash equivalents at beginning of period
   
317.2
     
247.2
 
Cash and cash equivalents at end of period
 
$
315.7
   
$
249.7
 
                 
Supplemental disclosure of cash flow information:
               
Interest paid
 
$
20.3
   
$
19.1
 
Income taxes paid
 
$
7.3
   
$
4.7
 
                 
Non-cash financing activities:
               
Treasury stock purchases settled after period end
 
$
0.4
   
$
 

See accompanying Notes to Condensed Consolidated Financial Statements.
6



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

 
Equity Attributable to Minerals Technologies Inc.
             
(in millions of dollars)
 
Common
Stock
   
Additional
Paid-in
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
Treasury
Stock
   
Non-controlling
Interests
   
Total
 
Balance as of December 31, 2023
 
$
4.9
   
$
501.2
   
$
2,360.6
   
$
(369.4
)
 
$
(845.3
)
 
$
34.7
   
$
1,686.7
 
                                                         
Net income
   
     
     
46.7
     
     
     
0.9
     
47.6
 
Other comprehensive income, net
   
     
     
     
(21.9
)
   
     
(0.8
)
   
(22.7
)
Dividends declared
   
     
     
(3.2
)
   
     
     
     
(3.2
)
Issuance of shares pursuant to employee stock compensation plans
   
0.1
     
2.3
     
     
     
     
     
2.4
 
Purchase of common stock for treasury
   
     
     
     
     
(15.0
)
   
     
(15.0
)
Stock-based compensation
   
     
2.9
     
     
     
     
     
2.9
 
Conversion of RSU's for tax withholding
   
     
(2.8
)
   
     
     
     
     
(2.8
)
Balance as of March 31, 2024
 
$
5.0
   
$
503.6
   
$
2,404.1
   
$
(391.3
)
 
$
(860.3
)
 
$
34.8
   
$
1,695.9
 

 
Equity Attributable to Minerals Technologies Inc.
             
(in millions of dollars)
 
Common
Stock
   
Additional
Paid-in
Capital
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Loss
   
Treasury
Stock
   
Non-controlling
Interests
   
Total
 
Balance as of December 31, 2022
 
$
4.9
   
$
487.6
   
$
2,284.6
   
$
(366.5
)
 
$
(831.1
)
 
$
33.7
   
$
1,613.2
 
                                                         
Net income
   
     
     
37.0
     
     
     
1.1
     
38.1
 
Other comprehensive income, net
   
     
     
     
7.7
     
     
0.4
     
8.1
 
Dividends declared
   
     
     
(1.6
)
   
     
     
     
(1.6
)
Issuance of shares pursuant to employee stock compensation plans
   
     
0.2
     
     
     
     
     
0.2
 
Stock-based compensation
   
     
2.7
     
     
     
     
     
2.7
 
Conversion of RSU's for tax withholding
   
     
(2.7
)
   
     
     
     
     
(2.7
)
Balance as of April 2, 2023
 
$
4.9
   
$
487.8
   
$
2,320.0
   
$
(358.8
)
 
$
(831.1
)
 
$
35.2
   
$
1,658.0
 

See accompanying Notes to Condensed Consolidated Financial 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, 2023. 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 periods ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Company Operations


The Company is a leading, technology-driven specialty minerals company that develops, produces, and markets a broad range of mineral and mineral-based products, related systems and services. The Company serves globally a wide range of consumer and industrial markets, including household, food and pharmaceutical, paper, packaging, automotive, construction, and environmental.


The Company has two reportable segments: Consumer & Specialties and Engineered Solutions.

The Consumer & Specialties segment serves consumer end markets directly and provides mineral-based solutions and technologies that are essential to our customers’ products. The two product lines in this segment are Household & Personal Care - our mineral-to-shelf product line that serves pet care, personal and household care, fluid purification and other consumer oriented markets, and Specialty Additives, delivering specialty mineral additives to a variety of consumer and industrial end markets including paper, packaging, construction, automotive, and food and pharmaceuticals.

The Engineered Solutions segment combines all engineered systems, mineral blends, and technologies that are designed to aid in customer processes and projects. The two product lines in this segment are High-Temperature Technologies – combining all of our mineral-based blends, technologies, and systems serving the foundry, steel, glass, aluminum and other high-temperature processing industries, and Environmental & Infrastructure, which includes environmental and remediation solutions such as geosynthetic clay lining systems, water remediation technologies as well as drilling, commercial building and infrastructure-related products.


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, contingent liabilities, 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. ASUs not listed below 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)



Segment Reporting (Topic 280):  Improvements to Reportable Segment Disclosures


In November 2023, the FASB issued ASU 2024-07, “Segment Reporting (Topic 280):  Improvements to Reportable Segment Disclosures”, which requires entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure, as well as the name and title of the chief operating decision maker.  The guidance also requires interim disclosures related to reportable segment profit or loss and assets that had previously only been disclosed annually.  The new standard is effective for interim and annual periods beginning on or after December 15, 2024.  The adoption of this standard is not expected to have a material impact on the Company’s financial statements.


Income Taxes (Topic 740):  Improvements to Income Tax Disclosures


In December 2023, the FASB issued ASU 2024-09, “Income Taxes (Topic 740):  Improvements to Income Tax Disclosures”, that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid.  The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities.  The new standard is effective for interim and annual periods beginning on or after December 15, 2024.   The adoption of this standard is not expected to have a material impact on the Company’s financial statements.


Note 2.  Revenue from Contracts with Customers


The following table disaggregates our revenue by major source (product line) for the three-month periods ended March 31, 2024 and April 2, 2023:

(in millions of dollars)
 
Three Months Ended
 
Net Sales
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Household & Personal Care
 
$
138.4
   
$
129.2
 
Specialty Additives
   
158.5
     
168.1
 
Consumer & Specialties Segment
   
296.9
     
297.3
 
                 
High-Temperature Technologies
   
177.3
     
178.6
 
Environmental & Infrastructure
   
60.3
     
70.2
 
Engineered Solutions Segment
   
237.6
     
248.8
 
                 
Total
 
$
534.5
   
$
546.1
 


Note 3 .  Earnings per Share (EPS)


Basic earnings per share are based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share are based upon the weighted average number of common shares outstanding during the period assuming the issuance of common shares for all potentially dilutive common shares outstanding.


The following table sets forth the computation of basic and diluted earnings per share:

 
Three Months Ended
 
(in millions, except per share data)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Net income attributable to Minerals Technologies Inc.
 
$
46.7
   
$
37.0
 
                 
Weighted average shares outstanding
   
32.3
     
32.5
 
Dilutive effect of stock options and deferred restricted stock units
   
0.1
     
 
Weighted average shares outstanding, adjusted
   
32.4
     
32.5
 
                 
Basic earnings per share attributable to Minerals Technologies Inc.
 
$
1.45
   
$
1.14
 
                 
Diluted earnings per share attributable to Minerals Technologies Inc.
 
$
1.44
   
$
1.14
 

9

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


Of the options outstanding of 1,671,687 and 1,608,613 for the three-month periods ended March 31, 2024 and April 2, 2023, respectively, options to purchase 900,163 shares and 1,002,344 shares of common stock for the three-month periods ending March 31, 2024 and April 2, 2023, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive, as the exercise prices of the options were greater than the average market price of the common shares.


Note 4.  Restructuring and Other Items, net


In the second quarter of 2023, the Company initiated a restructuring and cost savings program to further streamline its cost structure as a result of organizational efficiencies gained through the resegmentation in the first quarter of 2023. As a result, the Company recorded a charge of $6.6 million for restructuring and other charges related to severance and other costs. In the third quarter of 2023, an incremental charge of $0.3 million was recorded relating to this program.


At March 31, 2024, the Company had $3.7 million included within other current liabilities in the Condensed Consolidated Balance Sheet for cash expenditures needed to satisfy remaining obligations under workforce reduction initiatives. The Company expects to pay these amounts by end of 2024.


The following table is a reconciliation of our restructuring liability balance as of March 31, 2024:

(in millions of dollars)
     
Restructuring liability, December 31, 2023
 
$
3.8
 
Cash payments
   
(0.1
)
Restructuring liability, March 31, 2024
 
$
3.7
 

Note 5.  Income Taxes


Provision for taxes was $13.9 million and $10.5 million during the three-month periods ended March 31, 2024 and  April 2, 2023, respectively.  The effective tax rate was  23.1% for the three months ended March 31, 2024, as compared with 22.0% for the three months ended April 2, 2023.  The higher tax rate was primarily due to the mix of earnings.


As of March 31, 2024, the Company had approximately $2.9 million of total unrecognized income tax benefits. Included in this amount were a total of $2.1 million of unrecognized income tax benefits that, if recognized, would affect the Company’s effective tax rate.  While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company.


The Company’s accounting policy is to recognize interest and penalties accrued relating to unrecognized income tax benefits as part of its provision for income taxes. The Company had a net addition of approximately $0.1 million during the three-month period ended March 31, 2024  and had an accrued balance of $0.6 million of interest and penalties as of March 31, 2024.


The Company operates in multiple taxing jurisdictions, both within and outside the U.S.  In certain situations, a taxing authority may challenge positions that the Company has adopted in its income tax filings. The Company, with a few exceptions (none of which are material), is no longer subject to U.S. federal, state, local, and international income tax examinations by tax authorities for years prior to 2017.

In December 2021, as part of the Organization for Economic Co-operation and Development’s (“OECD”) released the Pillar Two Model Rules which aim to reform international corporate taxation rules, including the implementation of a global minimum tax rate. The Company began implementation of the Pillar Two Model Rules in the first quarter of 2024.  The Company continues to assess the rules in all jurisdictions and does not anticipate a material impact to its financial statements.

10

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

Note 6.  Inventories


The following is a summary of inventories by major category:

(in millions of dollars)
 
Mar. 31,
2024
   
Dec. 31,
2023
 
Raw materials
 
$
142.3
   
$
144.3
 
Work-in-process
   
11.1
     
11.7
 
Finished goods
   
117.7
     
113.5
 
Packaging and supplies
   
54.9
     
55.9
 
Total inventories
 
$
326.0
   
$
325.4
 

Note 7.  Goodwill and Other Intangible Assets


Goodwill and other intangible assets with indefinite lives are not amortized, but instead are assessed for impairment, at least annually. The carrying amount of goodwill was $913.1 million and $913.6 million as of March 31, 2024 and December 31, 2023, respectively.  The net change in goodwill from December 31, 2023 to March 31, 2024 is attributable to the effects of foreign exchange.


Acquired intangible assets subject to amortization as of March 31, 2024 and December 31, 2023 were as follows:

       
Mar. 31, 2024
   
Dec. 31, 2023
 
(in millions of dollars)
 
Weighted Average
Useful Life
(Years)
   
Gross
Carrying
Amount
   
Accumulated
Amortization
   
Gross
Carrying
Amount
   
Accumulated
Amortization
 
Tradenames
   
34
   
$
221.3
   
$
60.3
   
$
221.5
   
$
59.1
 
Technology
   
13
     
18.8
     
14.6
     
18.8
     
14.2
 
Patents and trademarks
   
19
     
6.4
     
6.4
     
6.4
     
6.4
 
Customer relationships
   
21
     
78.4
     
16.0
     
79.0
     
15.0
 
     
29
   
$
324.9
   
$
97.3
   
$
325.7
   
$
94.7
 


The weighted average amortization period for acquired intangible assets subject to amortization is approximately 29 years.  Estimated amortization expense is $8.8 million for the remainder of 2024, $47.8 million for 2025–2028 and $171.0 million thereafter.


Note 8.  Derivative Financial Instruments


As a multinational corporation with operations throughout the world, the Company is exposed to certain market risks.  The Company uses a variety of practices to manage these market risks, including, when considered appropriate, derivative financial instruments. The Company’s objective is to offset gains and losses resulting from interest rates and foreign currency exposures with gains and losses on the derivative contracts used to hedge them. The Company uses derivative financial instruments only for risk management and not for trading or speculative purposes.


By using derivative financial instruments to hedge exposures to changes in interest rates and foreign currencies, the Company exposes itself to credit risk and market risk. Credit risk is the risk that the counterparty will fail to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty, and therefore, it does not face any credit risk. The Company minimizes the credit risk in derivative instruments by entering into transactions with major financial institutions.


Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, currency exchange rates, or commodity prices.  The market risk associated with interest rate and forward exchange contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
11

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


Cash Flow Hedges


For derivative instruments that are designated and qualify as cash flow hedges, the Company records the effective portion of the gain or loss in accumulated other comprehensive income (loss) as a separate component of shareholders’ equity.  The Company subsequently reclassifies the effective portion of gain or loss into earnings in the period during which the hedged transaction is recognized in earnings.


The Company utilizes interest rate swaps to limit exposure to market fluctuations on floating-rate debt.  In the second quarter of 2023, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million.  The fair value of this swap is an asset of $1.9 million at March 31, 2024 and is recorded in other assets and deferred charges on the Condensed Consolidated Balance Sheet.  This interest rate swap is designated as a cash flow hedge.  As a result, the gains and losses associated with this interest rate swap are recorded in accumulated other comprehensive income (loss).


Assets and liabilities measured at fair value are based on one or more of three valuation techniques. The three valuation techniques are as follows:

Market approach - prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
Cost approach - amount that would be required to replace the service capacity of an asset or replacement cost.
Income approach - techniques to convert future amounts to a single present amount based on market expectations, including present value techniques, option-pricing and other models.


The Company primarily applies the income approach for interest rate derivatives for recurring fair value measurements and attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.


The fair value of our interest rate and cross currency rate swap contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets and are categorized as Level 2.

Note 9.  Long-Term Debt and Commitments


The following is a summary of long-term debt:

(in millions of dollars)
 
Mar. 31,
2024
   
Dec. 31,
2023
 
Secured Credit Agreement:
           
Term Loan due 2027, net of unamortized deferred financing costs of $2.3 million and $2.4 million
 
$
527.1
   
$
530.4
 
                 
Senior Notes:
               
5.00% due 2028, net of unamortized deferred financing costs of  $3.7 million and $3.9 million
   
396.3
     
396.1
 
Other debt
   
2.4
     
2.6
 
Total
   
925.8
     
929.1
 
Less: Current maturities
   
21.4
     
18.0
 
Total long-term debt
 
$
904.4
   
$
911.1
 


On August 11, 2022, the Company entered into a Refinancing Facility Agreement (the “Amendment”) to amend the Company’s previous credit agreement (the “Previous Credit Agreement”; the previous credit agreement, as amended by the Amendment, being the “Amended Credit Agreement”). The Amendment provides for, among other things, a new senior secured revolving credit facility with aggregate commitments of $300 million (the “Revolving Facility”), a portion of which may be used for the issuance of letters of credit and swingline loans, and a new senior secured term loan facility with aggregate commitments of $550 million (the “Term Loan Facility” and, together with the Revolving Facility, the “Senior Secured Credit Facilities”). The Revolving Facility and the Term Loan Facility replaced the facilities under the Previous Credit Agreement, which provided for, among other things, a $788 million senior secured floating rate term loan facility and a $300 million senior secured revolving credit facility. The maturity date for loans under the Senior Secured Credit Facilities is August 11, 2027.
12

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



Loans under the Senior Secured Credit Facilities will bear interest at a rate equal to, at the election of the Company, Term SOFR plus a credit spread adjustment equal to 0.100% plus an applicable margin equal to 1.500% per annum or a base rate plus an applicable margin equal to 0.500% per annum, subject in each case to (a) an increase of 25 basis points in the event that, and for so long as, the net leverage ratio (as defined in the Amended Credit Agreement) is greater than or equal to 3.00 to 1.00 as of the last day of the preceding fiscal quarter, (b) a decrease of 12.5 basis points in the event that, and for so long as, the net leverage ratio is less than 2.00 to 1.00 and greater than or equal to 1.00 to 1.00 as of the last day of the preceding fiscal quarter and (c) an decrease of 25 basis points in the event that, and for so long as, the net leverage ratio is less than 1.00 to 1.00 as of the last day of the preceding fiscal quarter.  The Company will pay certain fees under the Amended Credit Agreement, including (a) a commitment fee of 0.250% per annum on the undrawn portion of the Revolving Facility (subject to a step-up to 0.300% and step-downs to 0.175% and 0.150% at the same levels described above), (b) a fronting fee of 0.125% per annum on the average daily undrawn amount of, plus unreimbursed amounts in respect of disbursements under, letters of credit issued under the Revolving Facility and (c) customary annual administration fees. The obligations of the Company under the Senior Secured Credit Facilities are unconditionally guaranteed jointly and severally by, subject to certain exceptions, all material domestic subsidiaries of the Company (the “Guarantors”) and secured, subject to certain exceptions, by a security interest in substantially all of the tangible and intangible assets of the Company and the Guarantors. In the third quarter of 2023, the Company's subsidiaries Barretts Minerals Inc. and Barretts Ventures Texas LLC were removed as borrowers under, and Guarantors of, the Senior Secured Credit Facilities.


As of March 31, 2024, there were $75.0 million in loans and $9.1 million in letters of credit outstanding under the Revolving Facility.


On June 30, 2020, the Company issued $400 million aggregate principal amount of 5.0% Senior Notes due 2028 (the “Notes”).  The Notes were issued pursuant to an indenture, dated as of June 30, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”). The Notes bear an interest rate of 5.0% per annum payable semi-annually on January 1 and July 1 of each year, beginning on January 1, 2021.  The Notes are unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly owned domestic restricted subsidiaries that is a borrower under or that guarantees the Company’s obligations under its Senior Secured Credit Facilities or that guarantees the Company’s or any of the Company’s wholly owned domestic subsidiaries’ long-term indebtedness in an aggregate amount in excess of $50 million. In the third quarter of 2023, the Company’s subsidiaries Barretts Minerals Inc. and Barretts Ventures Texas LLC were removed as guarantors of the Notes.


The Company may redeem some or all of the Notes at any time and from time to time at the applicable redemption prices listed in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.


If the Company experiences a change of control (as defined in the indenture), the Company is required to offer to repurchase the Notes at 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.


The Amended Credit Agreement and the Indenture both contain certain customary affirmative and negative covenants that limit or restrict the ability of the Company and its restricted subsidiaries to enter into certain transactions or take certain actions, as well as customary events of default. In addition, the Amended Credit Agreement contains financial covenants that require the Company to maintain, as of the last day of any fiscal quarter, (x) a maximum net leverage ratio (as defined in the Amended Credit Agreement) of 4.00 to 1.00 for the four fiscal quarter period preceding such day (subject to an increase to 5.00 to 1.00 for four quarters in connection with certain significant acquisitions) and (y) a minimum interest coverage ratio (as defined in the Amended Credit Agreement) of 3.00 to 1.00. The Company is in compliance with all the covenants contained in the Amended Credit Agreement throughout the period covered by this report.


The Company has a committed loan facility in Japan. As of March 31, 2024, $1.2 million was outstanding under this loan facility.  Principal will be repaid in accordance with the payment schedule ending in 2026. The Company repaid $0.1 million on this facility in the first quarter of 2024.


As part of the acquisition of Concept Pet Heimtierprodukte GmbH ("Concept Pet") in 2022, the Company assumed $1.9 million in long-term debt, recorded at fair value, consisting of two terms loans, one that matures in 2025 and one that matures in 2027.  Both loans have annual payments and carry a variable interest rate. The Company did not make repayments on these loans during the first quarter of 2024.


As of March 31, 2024, the Company had $25.3 million in uncommitted short-term bank credit lines, of which $0.7 million were in use.

13

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

Note 10.  Benefit Plans


The Company and its subsidiaries have pension plans covering the majority of eligible employees on a contributory or non-contributory basis.  The Company also provides postretirement health care and life insurance benefits for the majority of its U.S. retired employees.  Disclosures for the U.S. plans have been combined with those outside of the U.S. as the international plans do not have significantly different assumptions, and together represent less than 21% of our total benefit obligation.

Components of Net Periodic Benefit Cost

 
Pension Benefits
 
   
Three Months Ended
 
(in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Service cost
 
$
1.2
   
$
1.2
 
Interest cost
   
4.0
     
3.9
 
Expected return on plan assets
   
(5.0
)
   
(4.5
)
Amortization:
               
Recognized net actuarial loss
   
0.4
     
0.6
 
Net periodic benefit cost
 
$
0.6
   
$
1.2
 

 
Post-Retirement Benefits
 
   
Three Months Ended
 
(in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Service cost
 
$
   
$
 
Interest cost
   
     
 
Amortization:
               
Recognized net actuarial (gain)
   
(0.1
)
   
(0.1
)
Net periodic benefit cost
 
$
(0.1
)
 
$
(0.1
)


Amortization amounts of prior service costs and recognized net actuarial losses are recorded, net of tax, as increases to accumulated other comprehensive income.


The Company expects to contribute approximately $13.2 million to its pension plans and $0.1 million to its other postretirement benefit plans in 2024.  As of March 31, 2024, approximately $1.0 million has been contributed to the pension plans and no contributions have been made to the other postretirement benefit plans.


Note 11.  Comprehensive Income


The following table summarizes the amounts reclassified out of accumulated other comprehensive loss attributable to the Company:

 
Three Months Ended
 
(in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Amortization of pension items:
           
Pre-tax amount
 
$
0.3
   
$
0.5
 
Tax
   
(0.1
)
   
(0.1
)
Net of tax
 
$
0.2
   
$
0.4
 


The pre-tax amounts in the table above are included within the components of net periodic pension benefit cost (see Note 10 to the Condensed Consolidated Financial Statements) and the tax amounts are included within the provision for taxes on income line within the Condensed Consolidated Statements of Income.
14

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



The major components of accumulated other comprehensive loss, net of related tax, attributable to MTI are as follows:

(in millions of dollars)
 
Foreign Currency
Translation Adjustment
   
Unrecognized
Pension Costs
   
Net Gain (Loss)
on Derivative Instruments
   
Total
 
Balance as of December 31, 2023
 
$
(350.9
)
 
$
(28.8
)
 
$
10.3
   
$
(369.4
)
                                 
Other comprehensive income (loss) before reclassifications
   
(23.5
)
   
     
1.4
     
(22.1
)
Amounts reclassified from AOCI
   
     
0.2
     
     
0.2
 
Net current period other comprehensive income (loss)
   
(23.5
)
   
0.2
     
1.4
     
(21.9
)
Balance as of March 31, 2024
 
$
(374.4
)
 
$
(28.6
)
 
$
11.7
   
$
(391.3
)


Note 12.  Contingencies


The Company is party to a number of lawsuits arising in the normal course of our business. The Company and certain of the Company’s subsidiaries are among numerous defendants in a number of cases seeking damages for alleged exposure to asbestos-contaminated talc products sold by the Company’s subsidiary Barretts Minerals Inc. (“BMI”). On October 2, 2023 (the “Petition Date”), notwithstanding the Company’s confidence in the safety of BMI’s talc products, the Company’s subsidiaries, BMI and Barretts Ventures Texas LLC (together with BMI, “Barretts”), filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Chapter 11 Cases”) to address and comprehensively resolve BMI’s liabilities associated with talc. Minerals Technologies Inc. and the Company’s other subsidiaries were not included in the Chapter 11 filing.  During the pendency of the Chapter 11 Cases, the Company anticipates that BMI will benefit from the operation of the automatic stay, which stays ongoing litigation in connection with talc-related claims against BMI. In addition, subject to certain exceptions, the filing or continued prosecution of all talc-related claims against BMI’s non-debtor affiliates is temporarily stayed through May 13, 2024 (subject to further extensions), the date on which a hearing is scheduled on the status of the Chapter 11 Cases.


As of March 31, 2024, we had 594 open cases related to certain talc products previously sold by BMI, which is an increase from previous years.  As a result of the Chapter 11 Cases, these cases are stayed.  The following table details case activity related to talc products previously sold by BMI:

 
Three Months Ended
 
(number of claims)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
             
Claims pending, beginning of period
   
574
     
439
 
Claims filed
   
30
     
62
 
Claims dismissed, settled or otherwise resolved
   
10
     
41
 
                 
Claims pending, end of period
   
594
     
460
 


These claims typically allege various theories of liability, including negligence, gross negligence and strict liability and seek compensatory and, in some cases, punitive damages, but most of these claims do not provide adequate information to assess their merits, the likelihood that the Company will be found liable, or the magnitude of such liability, if any. We are unable to state an amount or range of amounts claimed in any of these lawsuits because state court pleading practices do not require the plaintiff to identify the amount of the claimed damage. The Company’s position, as stated publicly, is that the talc products sold by BMI are safe and do not cause cancer.


The Company records accruals for loss contingencies associated with legal matters, including talc-related litigation, when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors, including whether damages sought in the proceedings are unsubstantiated or indeterminate, the stage of the litigation, the factual and legal matters in dispute, the ability to achieve comprehensive settlements, the availability of co-defendants with substantial resources and assets participating in the litigation, and our evaluation of the unique attributes of each claim.
15

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



While costs relating to the talc-related cases have increased concurrently with the volume, the majority of these costs have historically been borne by Pfizer Inc. in connection with certain agreements entered into in connection with the Company’s initial public offering in 1992, and as long as the litigation is subject to the stay under the Chapter 11 Cases, the Company will not be required to make any payments in respect thereof. The Company is entitled to indemnification, pursuant to agreement, for liabilities arising from sales prior to the initial public offering. The Company continues to receive information from Pfizer Inc. with respect to potential costs associated with the defense and/or settlement of talc-related cases that Pfizer alleges are not subject to indemnification. Although the Company believes that the talc products are safe and that claims to the contrary are without merit, BMI opportunistically settled certain talc-related cases in 2022 and 2023. None of such settlements have been material to the Company.


In the first quarter of 2024, BMI entered into an agreement to sell its talc assets under section 363 of the Bankruptcy Code. The sale is expected to close in the second quarter of 2024.  Proceeds of the sale will be used to fund the Chapter 11 Cases.  BMI’s ultimate goal in the Chapter 11 Cases is to confirm a plan of reorganization under Section 524(g) of the U.S. Bankruptcy Code and utilize this provision to establish a trust that will address all current and future talc-related claims.  Following the Chapter 11 filing, the activities of Barretts are now subject to review and oversight by the bankruptcy court. As a result, Barretts was deconsolidated as of the Petition Date, and its assets and liabilities were derecognized from the Company’s consolidated financial statements on a prospective basis.


The broader litigation and regulatory environments for talc-related claims continue to evolve. Moreover, although the Chapter 11 Cases are progressing, it is not possible at this time to predict the form of any ultimate resolution or when an ultimate resolution might occur. Given the foregoing factors, it is reasonably possible that the Company will incur a loss for liabilities associated with future talc claims in excess of the amount currently recognized. This risk is based on the potential for new talc-related claims that could eventually be asserted together with their associated disposition cost and related legal costs, despite the automatic stay with respect to claims against BMI, taking into account the portion of such hypothetical claims that may be subject to indemnification by Pfizer Inc., as well as the inability to estimate the amount that may be necessary to fully and finally resolve all of BMI’s future talc-related claims in connection with a confirmed Chapter 11 plan of reorganization. Accordingly, the Company is currently unable to provide an estimate or range of the magnitude of any potential loss related to future talc claims.



Note 13.  Segment and Related Information


The Company has two reportable segments: Consumer & Specialties and Engineered Solutions. See Note 1 to the Condensed Consolidated Financial Statements. Segment information for the three-month periods ended March 31, 2024 and April 2, 2023  is as follows:

 
Three Months Ended
 
(in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Net Sales
           
Consumer & Specialties
 
$
296.9
   
$
297.3
 
Engineered Solutions
   
237.6
     
248.8
 
Total
 
$
534.5
   
$
546.1
 
                 
Income from Operations
               
Consumer & Specialties
 
$
42.0
   
$
32.2
 
Engineered Solutions
   
38.5
     
35.3
 
Total
 
$
80.5
   
$
67.5
 

16

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


A reconciliation of the totals reported for the operating segments to the applicable line items in the condensed consolidated financial statements is as follows:

 
Three Months Ended
 
(in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Income from operations for reportable segments
 
$
80.5
   
$
67.5
 
Acquisition-related expenses
   
     
(0.1
)
Litigation expenses
   
(2.1
)
   
 
Unallocated and other corporate expenses
   
(3.2
)
   
(4.4
)
Consolidated income from operations
   
75.2
     
63.0
 
Non-operating deductions, net
   
(15.1
)
   
(15.3
)
Income before tax and equity in earnings
 
$
60.1
   
$
47.7
 


The Company's sales by product category are as follows:

 
Three Months Ended
 
(in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
 
Household & Personal Care
 
$
138.4
   
$
129.2
 
Specialty Additives
   
158.5
     
168.1
 
High-Temperature Technologies
   
177.3
     
178.6
 
Environmental & Infrastructure
   
60.3
     
70.2
 
Total
 
$
534.5
   
$
546.1
 


17


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors
Minerals Technologies Inc.:

Results of Review of Interim Financial Information

We have reviewed the condensed consolidated balance sheet of Minerals Technologies Inc. and subsidiaries (the Company) as of March 31, 2024, the related condensed consolidated statements of income, comprehensive income, changes in shareholders' equity, and cash flows for the three-month periods ended March 31, 2024 and April 2, 2023, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2023, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 16, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2023 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


/s/ KPMG LLP

New York, New York
April 26, 2024

18


ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Our consolidated sales for the first quarter of 2024 were $534.5 million, a decrease of 2% as compared with $546.1 million in the prior year.  Income from operations was $75.2 million, as compared with $63.0 million in the prior year.  Included in income from operations for the first quarter of 2024 was $2.1 million of litigation expenses incurred in connection with the bankruptcy of the Company's subsidiaries, Barretts Minerals Inc. ("BMI") and Barretts Ventures Texas LLC (together with BMI, "Barretts").  Net income was $46.7 million, as compared to $37.0 million in the first quarter of 2023.  Diluted earnings in the first quarter ended March 31, 2024 were $1.44 per share, as compared with $1.14 per share in the first quarter of 2023.

Our balance sheet continues to be strong. Cash, cash equivalents and short-term investments were $320.1 million as of March 31, 2024 and the Company had more than $500 million of available liquidity, including cash on hand as well as availability under its revolving credit facility.  We believe that these factors will allow us to meet our anticipated funding requirements.

Outlook

The Company will also continue to focus on innovation and new product development and other opportunities for sales growth from our existing businesses in 2024, as follows:

Consumer & Specialties Segment

Increase our presence and market share in global pet litter products, particularly in emerging markets.
Deploy new products in pet care such as lightweight litter.
Increase our sales of calcium carbonate products by further penetration into filling and coating applications in the paper and packaging markets.
Promote the Company's expertise in crystal engineering by developing crystal morphologies that help our customers achieve functional benefits.
Deploy new calcium carbonate products in paint, coating and packaging applications.
Continue developing products and processes for waste management and recycling opportunities to reduce the environmental impact for our customers by reducing energy consumption and improve the sustainability of their products.
Continue to develop innovative applications for our bleaching earth products for edible oil and biofuel industries.
Develop new mineral-based solutions for personal care applications.
Increase our presence and market share in globally for retinol delivery technology for personal care applications.
Expand our bentonite product solutions for animal health applications.
Increase our presence and market share in fabric care, particularly in emerging markets.

Engineered Solutions Segment

Increase our presence and gain penetration of our bentonite-based foundry customers for the metalcasting industry in emerging markets, such as China and India.
Deploy value-added formulations of refractory materials that not only reduce costs but improve performance.
Deploy our laser measurement technologies into new applications.
Expand our refractory maintenance model to other steel makers globally.
Continue the development and market penetration of our FLUORO-SORB® products which  address PFAS contamination in soil, groundwater, drinking water sources, landfill leachate and wastewater treatment facilities.
Pursue opportunities for the expanded use of our products in environmental, building and construction, infrastructure and oil and gas drilling and water treatment globally.
Increase our presence and market share for geosynthetic clay liners globally.

All Segments

Further operational excellence principles into all aspects of the organization, including system infrastructure and lean principles.
Continue to explore selective acquisitions to fit our competencies in minerals and our core technologies.

However, there can be no assurance that we will achieve success in implementing any one or more of these opportunities.

19



Results of Operations

Three months ended March 31, 2024 as compared with three months ended April 2, 2023

Consolidated Income Statement Review

 
Three Months Ended
       
 (in millions of dollars)
 
Mar. 31,
2024
   
Apr. 2,
2023
   
%
Change
 
Net sales
 
$
534.5
   
$
546.1
     
(2
)%
Cost of sales
   
398.6
     
425.4
     
(6
)%
Production margin
   
135.9
     
120.7
     
13
%
Production margin %
   
25.4
%
   
22.1
%
       
                         
Marketing and administrative expenses
   
53.0
     
52.3
     
1
%
Research and development expenses
   
5.6
     
5.3
     
6
%
Acquisition-related expenses
   
     
0.1
     
*
 
Litigation expenses
   
2.1
     
     
*
 
                         
Income from operations
   
75.2
     
63.0
     
19
%
Operating margin %
   
14.1
%
   
11.5
%
       
                         
Interest expense, net
   
(14.9
)
   
(14.2
)
   
5
%
Other non-operating income (deductions), net
   
(0.2
)
   
(1.1
)
   
(82
)%
Total non-operating deductions, net
   
(15.1
)
   
(15.3
)
   
(1
)%
                         
Income before tax and equity in earnings
   
60.1
     
47.7
     
26
%
Provision for taxes on income
   
13.9
     
10.5
     
32
%
Effective tax rate
   
23.1
%
   
22.0
%
       
                         
Equity in earnings of affiliates, net of tax
   
1.4
     
0.9
     
56
%
                         
Net income
   
47.6
     
38.1
     
25
%
                         
Net income attributable to non-controlling interests
   
0.9
     
1.1
     
(18
)%
Net income attributable to Minerals Technologies Inc.
 
$
46.7
   
$
37.0
     
26
%

*  Not meaningful

20



Net Sales

 
Three Months Ended
Mar. 31, 2024
         
Three Months Ended
Apr. 2, 2023
 
 (in millions of dollars)
 
Net Sales
   
% of Total Sales
   
% Change
   
Net Sales
   
% of Total Sales
 
U.S.
 
$
275.1
     
51.5
%
   
(4
)%
 
$
288.0
     
52.7
%
International
   
259.4
     
48.5
%
   
1
%
   
258.1
     
47.3
%
Total sales
 
$
534.5
     
100.0
%
   
(2
)%
 
$
546.1
     
100.0
%
                                         
Consumer & Specialties Segment
 
$
296.9
     
55.5
%
   
0
%
 
$
297.3
     
54.4
%
Engineered Solutions Segment
   
237.6
     
44.5
%
   
(5
)%
   
248.8
     
45.6
%
Total sales
 
$
534.5
     
100.0
%
   
(2
)%
 
$
546.1
     
100.0
%

Worldwide net sales decreased 2% to $534.5 million in the first quarter from $546.1 million in the prior year. Included in sales from the prior year were $13.1 million of sales related to BMI, which was deconsolidated in the fourth quarter of 2023.

Net sales in the United States were $275.1 million in the first quarter of 2024, as compared to $288.0 million in the prior year, a decrease of 4%.  International sales increased 1% to $259.4 million from $258.1 million in the prior year.

Operating Costs and Expenses

Cost of sales was $398.6 million and represented 74.6% of sales for the three month period ended March 31, 2024, as compared with $425.4 million and 77.9% of sales in the prior year. Production margin increased from 22.1% of sales in the prior year to 25.4% of sales in the first quarter of 2024.  This increase was primarily due to price and cost management as well as productivity improvements.

Marketing and administrative costs were $53.0 million and 9.9% of sales for the three months ended March 31, 2024, as  compared to $52.3 million and 9.6% of sales in the prior year.

Research and development expenses were $5.6 million and represented 1.0% of sales for the three months ended March 31, 2024, as compared with $5.3 million and 1.0% of sales in the prior year.

The Company recorded litigation expenses of $2.1 million in connection with BMI's bankruptcy during the three months ended March 31, 2024.

Income from Operations

The Company recorded income from operations of $75.2 million as compared to $63.0 million in the prior year.  Operating income during the three months ended March 31, 2024 includes litigation expenses of $2.1 million in connection with BMI's bankruptcy.

Other Non-Operating Income (Deductions), net

In the first quarter of 2024, non-operating deductions were $15.1 million, as compared with $15.3 million in the prior year. The Company had higher interest expense in the current year resulting from higher interest rates.  Included in other non-operating deductions in the first quarter of 2024 was net interest expense of $14.9 million, as compared to $14.2 million in the first quarter of the prior year.

Provision for Taxes on Income

Provision for taxes on income was $13.9 million and $10.5 million for the three months ended March 31, 2024 and April 2, 2023, respectively.  The effective tax rate was 23.1% and 22.0% for the three months ended March 31, 2024 and April 2, 2023, respectively.  The higher tax rate was primarily due to the mix of earnings.

Net Income Attributable to MTI Shareholders

Net income attributable to MTI shareholders was $46.7 million for the three months ended March 31, 2024, as compared with $37.0 million in the prior year.
21



Segment Review

The following discussions highlight the operating results for each of our two segments.

 
Three Months Ended
       
Consumer & Specialties Segment
 
Mar. 31,
2024
   
Apr. 2,
2023
   
%
Change
 
   
(in millions of dollars)
       
Net Sales
                 
Household & Personal Care
 
$
138.4
   
$
129.2
     
7
%
Special Additives
   
158.5
     
168.1
     
(6
)%
Total net sales
 
$
296.9
   
$
297.3
     
0
%
                         
Income from operations
 
$
42.0
   
$
32.2
     
30
%
% of net sales
   
14.1
%
   
10.8
%
       

Net sales in the Consumer & Specialties segment was $296.9 million for the three months ended March 31, 2024, as compared with $297.3 million in the prior year.   Household & Personal Care sales increased 7% to $138.4 million, as compared with $129.2 million in the prior year on continued strong demand for our pet litter products as well as growth in other high-margin consumer-oriented products. Sales in Specialty Additives decreased $9.6 million, or 6% as compared with prior year. Included in sales from the prior year were $13.1 million of sales related to BMI, which was deconsolidated in the fourth quarter of 2023.

Income from operations was $42.0 million and represented 14.1% of sales, as compared to $32.2 million in the prior year and 10.8% of sales, a 30% improvement. This increase was the result of volume growth, productivity improvement, pricing and cost control.

 
Three Months Ended
       
Engineered Solutions Segment
 
Mar. 31,
2024
   
Apr. 2,
2023
   
%
Change
 
   
(in millions of dollars)
       
Net Sales
                 
High-Temperature Technologies
 
$
177.3
   
$
178.6
     
(1
)%
Environmental & Infrastructure
   
60.3
     
70.2
     
(14
)%
Total net sales
 
$
237.6
   
$
248.8
     
(5
)%
                         
Income from operations
 
$
38.5
   
$
35.3