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 July 3, 2022

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 July 20, 2022, there were 32,594,693 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 July 3, 2022 and July 4, 2021 (Unaudited)
3
     
 
Condensed Consolidated Statements of Comprehensive Income for the three-month and six-month periods ended July 3, 2022 and July 4, 2021 (Unaudited)
4
     
 
Condensed Consolidated Balance Sheets as of July 3, 2022 (Unaudited) and December 31, 2021
5
     
 
Condensed Consolidated Statements of Cash Flows for the six-month periods ended July 3, 2022 and July 4, 2021 (Unaudited)
6
     
 
Condensed Consolidated Statements of Changes in Shareholders' Equity for the three-month periods ended July 3, 2022 and April 3, 2022 and July 4, 2021 and April 4, 2021 (Unaudited)
7
     
 
8
     
 
19
     
Item 2.
20
     
Item 3.
31
     
Item 4.
32
     
PART II.   OTHER INFORMATION
  
     
Item 1.
32
     
Item 1A.
32
     
Item 2.
32
     
Item 3.
32
     
Item 4.
32
     
Item 5.
33
     
Item 6.
33
     
 
34



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)
  
Jul. 3,
2022
    
Jul. 4,
2021
    
Jul. 3,
2022
    
Jul. 4,
2021
  
                         
Net sales
  
$
557.0
    
$
455.6
    
$
1,076.1
    
$
908.2
  
Cost of goods sold
    
429.7
      
340.2
      
827.1
      
681.0
  
Production margin
    
127.3
      
115.4
      
249.0
      
227.2
  
                                 
Marketing and administrative expenses
    
48.8
      
46.4
      
97.6
      
94.4
  
Research and development expenses
    
5.0
      
4.9
      
10.1
      
9.9
  
Acquisition related transaction and integration costs
    
2.6
      
0.4
      
4.2
      
0.4
  
Litigation costs
    
1.5
      
—
      
1.5
      
—
  
                                 
Income from operations
    
69.4
      
63.7
      
135.6
      
122.5
  
                                 
Interest expense, net
    
(10.4
)
    
(9.1
)
    
(20.2
)
    
(19.0
)
Non-cash pension settlement charge
    
(1.5
)
    
(2.2
)
    
(1.5
)
    
(2.2
)
Other non-operating income (deductions), net
    
(1.2
)
    
(0.1
)
    
(1.6
)
    
0.4
  
Total non-operating deductions, net
    
(13.1
)
    
(11.4
)
    
(23.3
)
    
(20.8
)
                                 
Income before tax and equity in earnings
    
56.3
      
52.3
      
112.3
      
101.7
  
Provision for taxes on income
    
11.4
      
9.8
      
22.6
      
18.7
  
Equity in earnings of affiliates, net of tax
    
0.6
      
0.5
      
0.7
      
1.0
  
                                 
Consolidated net income
    
45.5
      
43.0
      
90.4
      
84.0
  
Less:
                                
Net income attributable to non-controlling interests
    
0.6
      
1.1
      
1.4
      
2.2
  
Net income attributable to Minerals Technologies Inc.
  
$
44.9
    
$
41.9
    
$
89.0
    
$
81.8
  
                                 
Earnings per share:
                                
                                 
Basic:
                                
Income attributable to Minerals Technologies Inc.
  
$
1.37
    
$
1.24
    
$
2.70
    
$
2.42
  
                                 
Diluted:
                                
Income attributable to Minerals Technologies Inc.
  
$
1.36
    
$
1.23
    
$
2.69
    
$
2.41
  
                                 
Cash dividends declared per common share
  
$
0.05
    
$
0.05
    
$
0.10
    
$
0.10
  
                                 
Shares used in computation of earnings per share:
                                
Basic
    
32.8
      
33.7
      
33.0
      
33.8
  
Diluted
    
32.9
      
34.1
      
33.1
      
34.0
  

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)
  
Jul. 3,
2022
    
Jul. 4,
2021
    
Jul. 3,
2022
    
Jul. 4,
2021
  
                         
Consolidated net income
  
$
45.5
    
$
43.0
    
$
90.4
    
$
84.0
  
Other comprehensive income (loss), net of tax:
                                
Foreign currency translation adjustments
    
(51.3
)
    
2.0
      
(59.4
)
    
(26.9
)
Pension and postretirement plan adjustments
    
2.3
      
4.3
      
3.4
      
6.8
  
Unrealized gains (losses) on derivative instruments
    
6.2
      
(1.0
)
    
9.3
      
3.9
  
Total other comprehensive income (loss), net of tax
    
(42.8
)
    
5.3
      
(46.7
)
    
(16.2
)
Total comprehensive income including non-controlling interests
    
2.7
      
48.3
      
43.7
      
67.8
  
Comprehensive (income) loss attributable to non-controlling interests
    
1.2
      
(1.3
)
    
0.4
      
(1.9
)
Comprehensive income attributable to Minerals Technologies Inc.
  
$
3.9
    
$
47.0
    
$
44.1
    
$
65.9
  

See accompanying Notes to Condensed Consolidated Financial Statements.

4


MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS


(millions of dollars)
  
Jul. 3,
2022*
    
Dec. 31,
2021 **
  
ASSETS
            
             
Current assets:
            
Cash and cash equivalents
  
$
234.7
    
$
299.5
  
Short-term investments
    
2.0
      
4.9
  
Accounts receivable, net
    
429.9
      
367.8
  
Inventories
    
339.9
      
297.7
  
Prepaid expenses and other current assets
    
61.0
      
58.6
  
Total current assets
    
1,067.5
      
1,028.5
  
                 
Property, plant and equipment
    
2,289.4
      
2,296.4
  
Less accumulated depreciation and depletion
    
(1,236.2
)
    
(1,247.3
)
Property, plant and equipment, net
    
1,053.2
      
1,049.1
  
Goodwill
    
913.2
      
907.5
  
Intangible assets
    
247.9
      
251.6
  
Deferred income taxes
    
22.4
      
23.0
  
Other assets and deferred charges
    
98.9
      
114.5
  
Total assets
  
$
3,403.1
    
$
3,374.2
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
Current liabilities:
                
Short-term debt
  
$
110.0
    
$
80.0
  
Current maturities of long-term debt
    
0.8
      
0.8
  
Accounts payable
    
219.3
      
196.1
  
Other current liabilities
    
135.8
      
142.9
  
Total current liabilities
    
465.9
      
419.8
  
                 
Long-term debt, net of unamortized discount and deferred financing costs
    
939.3
      
936.2
  
Deferred income taxes
    
190.8
      
188.1
  
Accrued pension and post-retirement benefits
    
107.3
      
114.3
  
Other non-current liabilities
    
122.9
      
136.3
  
Total liabilities
    
1,826.2
      
1,794.7
  
                 
Shareholders' equity:
                
Common stock
    
4.9
      
4.9
  
Additional paid-in capital
    
478.1
      
474.2
  
Retained earnings
    
2,254.7
      
2,168.9
  
Accumulated other comprehensive loss
    
(378.5
)
    
(333.6
)
Less common stock held in treasury
    
(815.8
)
    
(775.1
)
                 
Total Minerals Technologies Inc. shareholders' equity
    
1,543.4
      
1,539.3
  
Non-controlling interests
    
33.5
      
40.2
  
Total shareholders' equity
    
1,576.9
      
1,579.5
  
Total liabilities and shareholders' equity
  
$
3,403.1
    
$
3,374.2
  

*
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)
  
Jul. 3,
2022
    
Jul. 4,
2021
  
             
Operating Activities:
            
             
Consolidated net income
  
$
90.4
    
$
84.0
  
                 
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation, depletion and amortization
    
47.9
      
47.3
  
Non-cash pension settlement charge
    
1.5
      
2.2
  
Reduction of right of use asset
    
6.2
      
6.2
  
Other non-cash items
    
10.5
      
7.1
  
Pension plan funding
    
(2.3
)
    
(4.2
)
Net changes in operating assets and liabilities
    
(121.0
)
    
(24.6
)
Net cash provided by operating activities
    
33.2
      
118.0
  
                 
Investing Activities:
                
                 
Purchases of property, plant and equipment, net
    
(40.2
)
    
(39.8
)
Acquisition of business, net of cash acquired
    
(22.3
)
    
—
  
Proceeds from sale of assets
    
0.3
      
0.3
  
Proceeds from sale of short-term investments
    
5.5
      
3.7
  
Purchases of short-term investments
    
(2.0
)
    
(5.1
)
Other investing activities
    
1.6
      
0.8
  
Net cash used in investing activities
    
(57.1
)
    
(40.1
)
                 
Financing Activities:
                
                 
Repayment of long-term debt
    
(0.5
)
    
(0.8
)
Proceeds from short-term debt
    
30.0
      
0.5
  
Purchase of common stock for treasury
    
(40.7
)
    
(36.9
)
Proceeds from issuance of stock under option plan
    
1.1
      
10.4
  
Excess tax benefits related to stock incentive programs
    
(3.3
)
    
(2.8
)
Dividends paid to non-controlling interests
    
(6.3
)
    
(0.6
)
Cash dividends paid
    
(3.3
)
    
(3.4
)
Net cash provided by (used in) financing activities
    
(23.0
)
    
(33.6
)
                 
Effect of exchange rate changes on cash and cash equivalents
    
(17.9
)
    
(8.4
)
                 
Net increase (decrease) in cash and cash equivalents
    
(64.8
)
    
35.9
  
Cash and cash equivalents at beginning of period
    
299.5
      
367.7
  
Cash and cash equivalents at end of period
  
$
234.7
    
$
403.6
  
                 
Supplemental disclosure of cash flow information:
                
Interest paid
  
$
29.7
    
$
28.1
  
Income taxes paid
  
$
24.4
    
$
23.6
  
                 
Non-cash financing activities:
                
Treasury stock purchases settled after period end
  
$
0.7
    
$
0.7
  

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.
              
(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, 2021
  
$
4.9
    
$
474.2
    
$
2,168.9
    
$
(333.6
)
  
$
(775.1
)
  
$
40.2
    
$
1,579.5
  
                                                         
Net income
    
—
      
—
      
44.1
      
—
      
—
      
0.8
      
44.9
  
Other comprehensive income (loss)
    
—
      
—
      
—
      
(4.0
)
    
—
      
0.1
      
(3.9
)
Dividends declared
    
—
      
—
      
(1.6
)
    
—
      
—
      
—
      
(1.6
)
Dividends paid to non-controlling interests
    
—
      
—
      
—
      
—
      
—
      
(0.1
)
    
(0.1
)
Issuance of shares pursuant to employee stock compensation plans
    
—
      
0.9
      
—
      
—
      
—
      
—
      
0.9
  
Purchase of common stock for treasury
    
—
      
—
      
—
      
—
      
(16.7
)
    
—
      
(16.7
)
Stock-based compensation
    
—
      
2.8
      
—
      
—
      
—
      
—
      
2.8
  
Conversion of RSU's for tax withholding
    
—
      
(2.8
)
    
—
      
—
      
—
      
—
      
(2.8
)
Balance as of April 3, 2022
  
$
4.9
    
$
475.1
    
$
2,211.4
    
$
(337.6
)
  
$
(791.8
)
  
$
41.0
    
$
1,603.0
  
                                                         
Net income
    
—
      
—
      
44.9
      
—
      
—
      
0.6
      
45.5
  
Other comprehensive loss
    
—
      
—
      
—
      
(40.9
)
    
—
      
(1.9
)
    
(42.8
)
Dividends declared
    
—
      
—
      
(1.6
)
    
—
      
—
      
—
      
(1.6
)
Dividends paid to non-controlling interests
    
—
      
—
      
—
      
—
      
—
      
(6.2
)
    
(6.2
)
Issuance of shares pursuant to employee stock compensation plans
    
—
      
0.2
      
—
      
—
      
—
      
—
      
0.2
  
Purchase of common stock for treasury
    
—
      
—
      
—
      
—
      
(24.0
)
    
—
      
(24.0
)
Stock-based compensation
    
—
      
2.8
      
—
      
—
      
—
      
—
      
2.8
  
Balance as of July 3, 2022
  
$
4.9
    
$
478.1
    
$
2,254.7
    
$
(378.5
)
  
$
(815.8
)
  
$
33.5
    
$
1,576.9
  



 
Equity Attributable to Minerals Technologies Inc.
              
(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, 2020
  
$
4.9
    
$
453.3
    
$
2,011.3
    
$
(308.3
)
  
$
(700.4
)
  
$
37.9
    
$
1,498.7
  
                                                         
Net income
    
—
      
—
      
39.9
      
—
      
—
      
1.1
      
41.0
  
Other comprehensive loss
    
—
      
—
      
—
      
(21.0
)
    
—
      
(0.5
)
    
(21.5
)
Dividends declared
    
—
      
—
      
(1.7
)
    
—
      
—
      
—
      
(1.7
)
Dividends paid to non-controlling interests
    
—
      
—
      
—
      
—
      
—
      
(0.1
)
    
(0.1
)
Issuance of shares pursuant to employee stock compensation plans
    
—
      
5.8
      
—
      
—
      
—
      
—
      
5.8
  
Purchase of common stock for treasury
    
—
      
—
      
—
      
—
      
(20.0
)
    
—
      
(20.0
)
Stock-based compensation
    
—
      
2.8
      
—
      
—
      
—
      
—
      
2.8
  
Conversion of RSU's for tax withholding
    
—
      
(2.6
)
    
—
      
—
      
—
      
—
      
(2.6
)
Balance as of April 4, 2021
  
$
4.9
    
$
459.3
    
$
2,049.5
    
$
(329.3
)
  
$
(720.4
)
  
$
38.4
    
$
1,502.4
  
                                                         
Net income
    
—
      
—
      
41.9
      
—
      
—
      
1.1
      
43.0
  
Other comprehensive income
    
—
      
—
      
—
      
5.0
      
—
      
0.3
      
5.3
  
Dividends declared
    
—
      
—
      
(1.7
)
    
—
      
—
      
—
      
(1.7
)
Dividends paid to non-controlling interests
    
—
      
—
      
—
      
—
      
—
      
(0.6
)
    
(0.6
)
Issuance of shares pursuant to employee stock compensation plans
    
—
      
4.6
      
—
      
—
      
—
      
—
      
4.6
  
Purchase of common stock for treasury
    
—
      
—
      
—
      
—
      
(16.9
)
    
—
      
(16.9
)
Stock-based compensation
    
—
      
2.8
      
—
      
—
      
—
      
—
      
2.8
  
Balance as of July 4, 2021
  
$
4.9
    
$
466.7
    
$
2,089.7
    
$
(324.3
)
  
$
(737.3
)
  
$
39.2
    
$
1,538.9
  

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, 2021. 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 July 3, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Company Operations


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


The Company has three reportable segments: Performance Materials, Specialty Minerals and Refractories.

–
The Performance Materials segment is a leading global supplier of bentonite and bentonite-related products 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 and remediation projects as well as offers a range of patented and unpatented technologies, products and services to the upstream and downstream oil and gas sector throughout the world.

–
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.


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)



Note 2.  Revenue from Contracts with Customers


The following table disaggregates our revenue by major source (product line) for the three and six-month periods ended July 3, 2022 and July 4, 2021:

(millions of dollars)
  
Three Months Ended
    
Six Months Ended
  
Net Sales
  
Jul. 3,
2022
    
Jul. 4,
2021
    
Jul. 3,
2022
    
Jul. 4,
2021
  
                         
Household, Personal Care & Specialty Products
  
$
140.1
    
$
102.6
    
$
282.6
    
$
212.0
  
Metalcasting
    
88.8
      
80.5
      
169.0
      
162.2
  
Environmental Products
    
54.4
      
39.9
      
90.3
      
65.9
  
Building Materials
    
16.3
      
15.4
      
29.8
      
29.2
  
Performance Materials
    
299.6
      
238.4
      
571.7
      
469.3
  
                                 
Paper PCC
    
91.9
      
85.8
      
188.7
      
175.4
  
Specialty PCC
    
28.0
      
18.5
      
52.2
      
38.9
  
Ground Calcium Carbonate
    
28.9
      
25.5
      
55.4
      
49.5
  
Talc
    
15.5
      
12.9
      
31.1
      
26.7
  
Specialty Minerals
    
164.3
      
142.7
      
327.4
      
290.5
  
                                 
Refractory Products
    
70.2
      
58.0
      
135.0
      
116.8
  
Metallurgical Products
    
22.9
      
16.5
      
42.0
      
31.6
  
Refractories
    
93.1
      
74.5
      
177.0
      
148.4
  
                                 
Total
  
$
557.0
    
$
455.6
    
$
1,076.1
    
$
908.2
  

Note  3.  Acquisitions


Normerica Inc.


On July 26, 2021, the Company completed the acquisition of Normerica Inc., a leading North American supplier of premium pet care products. Normerica has production facilities in Canada, the U.S. and Thailand. As a leader in the pet product industry, Normerica provides premium products, both branded and private label to world-class retailers. Its product portfolio consists primarily of bentonite-based cat litter products which are supplied from a network of strategically located manufacturing facilities in Canada and the United States. The results of Normerica are included within our Household, Personal Care & Specialty Products product line in our Performance Materials segment. The fair value of the total consideration transferred, net of cash acquired, was $187.5 million.


The acquisition has been accounted for using the acquisition method of accounting, which requires, among other things, that we recognize the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. As of July 3, 2022, the purchase price allocation remains preliminary as the Company completes its assessment of property, certain reserves, legal and tax matters, obligations, intangible assets and deferred taxes, as well as completes its review of Normerica’s existing accounting policies.
9
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table summarizes the Company's preliminary purchase price allocation for the Normerica acquisition as previously reported on the Company's Form 10-K for the year ended December 31, 2021.  There have been no changes to the purchase price allocation during the period ended July 3, 2022.

 (millions of dollars)
  
Preliminary Allocation
Previously Reported
on Form 10-K as of
July 3, 2022
  
       
Accounts receivable
  
$
8.4
  
Inventories
    
5.1
  
Other current assets
    
1.4
  
Property, plant and equipment
    
21.2
  
Goodwill
    
104.5
  
Intangible assets
    
68.1
  
Total assets acquired
    
208.7
  
Accounts payable
    
12.8
  
Accrued expenses
    
8.4
  
Total liabilities assumed
    
21.2
  
Net assets acquired
  
$
187.5
  


The Company used the income, market, or cost approach (or a combination thereof) for the valuation and used valuation inputs and analyses that were based on market participant assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability. For certain items, the carrying value was determined to be a reasonable approximation of fair value based on the information available.


Goodwill was calculated as the excess of the consideration transferred over the assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill is primarily attributable to fair value of expected synergies from combining the MTI and Normerica businesses and will be allocated to the Performance Materials segment.  The allocation was completed during the third quarter of 2022.


Intangible assets acquired mainly include tradenames and customer relationships. Tradenames have an estimated useful life of approximately 15 years and customer relationships have an estimated useful life of approximately 20 years.


The Company incurred $2.6 million and $4.2 million of acquisition related transaction and integration costs during the three and six-month periods ended July 3, 2022 and $0.4 million in the three and six-months period ended July 4, 2021, which are reflected within the acquisition-related expense line of the Condensed Consolidated Statements of Income.


Concept Pet Heimtierprodukte GmbH


On April 29, 2022, the Company completed the acquisition of Concept Pet Heimtierprodukte GmbH ("Concept Pet"), a European supplier of pet litter products. The purchase of Concept Pet supports the expansion of our European pet care business, as well as provides additional mineral reserves.  The purchase price was $28.0 million and acquisition was financed through cash on hand.  The fair value of the total consideration transferred, net of cash acquired, was $22.3 million. The results of Concept Pet are included in our Performance Materials segment. The acquisition has been accounted for using the acquisition method of accounting, which requires, among other things, that we recognize the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The Company has recorded goodwill of $9.2 million and intangible assets of $4.3 million relating to this acquisition.


10
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 4.  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
    
Six Months Ended
  
(in millions, except per share data)
  
Jul. 3,
2022
    
Jul. 4,
2021
    
Jul. 3,
2022
    
Jul. 4,
2021
  
                         
Net income attributable to Minerals Technologies Inc.
  
$
44.9
    
$
41.9
    
$
89.0
    
$
81.8
  
                                 
Weighted average shares outstanding
    
32.8
      
33.7
      
33.0
      
33.8
  
Dilutive effect of stock options and stock units
    
0.1
      
0.4
      
0.1
      
0.2
  
Weighted average shares outstanding, adjusted
    
32.9
      
34.1
      
33.1
      
34.0
  
                                 
Basic earnings per share attributable to Minerals Technologies Inc.
  
$
1.37
    
$
1.24
    
$
2.70
    
$
2.42
  
                                 
Diluted earnings per share attributable to Minerals Technologies Inc.
  
$
1.36
    
$
1.23
    
$
2.69
    
$
2.41
  


Of the options outstanding of 1,524,368 and 1,415,684 for the three-month and six-month periods ended July 3, 2022 and July 4, 2021, respectively, options to purchase 728,322 shares and 253,895 shares of common stock for the three-month and six-month periods ending July 3, 2022 and July 4, 2021, 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 5.  Restructuring and Other Items, net


At July 3, 2022, the Company had $1.9 million included within accrued 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 the end of 2022.


The following table is a reconciliation of our restructuring liability balance as of July 3, 2022:

(millions of dollars)
      
Restructuring liability, December 31, 2021
  
$
2.2
  
Additional provision
    
—
  
Cash payments
    
(0.3
)
Restructuring liability, July 3, 2022
  
$
1.9
  


Note 6.  Income Taxes


Provision for taxes was $11.4 million and $22.6 million during the three-month and six-month periods ended July 3, 2022.  Provision for taxes was $9.8 million and $18.7 million for the three-month and six-month periods ended July 4, 2021.  The effective tax rate was 20.2% for the three months ended July 3, 2022 as compared with 18.7% for the three months ended July 4, 2021.  The effective tax rate was 20.1% for the six months ended July 3, 2022, as compared with 18.4% for the six months ended July 4, 2021.  The higher tax rate was primarily due to a deferred tax benefit resulting from a foreign country rate change in the prior year.


As of July 3, 2022, the Company had approximately $5.0 million of total unrecognized income tax benefits. Included in this amount were a total of $3.5 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 increase of approximately $0.1 million during the three-month period ended July 3, 2022  and an accrued balance of $1.1 million of interest and penalties as of July 3, 2022.

11
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


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 income tax examinations by tax authorities for years prior to 2015.

Note 7.  Inventories


The following is a summary of inventories by major category:

(millions of dollars)
  
Jul. 3,
2022
    
Dec. 31,
2021
  
             
Raw materials
  
$
167.6
    
$
136.6
  
Work-in-process
    
14.3
      
10.7
  
Finished goods
    
105.9
      
99.4
  
Packaging and supplies
    
52.1
      
51.0
  
Total inventories
  
$
339.9
    
$
297.7
  

Note 8.  Goodwill and Other Intangible Assets