MINERALS TECHNOLOGIES INC. February 2019 MTI OVERVIEW INNOVATION LEADERSHIP EXCELLENCE
SAFE HARBOR STATEMENT This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which describe or are based on current expectations. Actual results may differ materially from these expectations. In addition, any statements that are not historical fact (including statements containing the words believes, plans, anticipates, expects, estimates, and similar expressions) should also be considered to be forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this document should be evaluated together with the many uncertainties that affect our businesses, particularly those mentioned in the risk factors and other cautionary statements in our 2018 Annual Report on Form 10-K and in our other reports filed with the Securities and Exchange Commission. Also, this presentation will include certain financial measures that were not prepared in accordance with generally accepted accounting principles. Reconciliations of those non- GAAP financial measures to the most directly comparable GAAP financial measures can be found in our Current Report on Form 8-K dated January 31, 2019, and in our other reports filed with the Securities and Exchange Commission, available on our website at www.mineralstech.com in the "Investor Information -- SEC Filings" section. 2
MTI AT A GLANCE COUNTRIES PRODUCTION LOCATIONS R&D CENTERS EMPLOYEES 35 158 12 3,720 2018 TOTAL NET SALES $1.8 BILLION 2018 NET SALES BY SEGMENT (percentage/millions of dollars) Performance Materials 17% $828.1 4% MINERALS TECHNOLOGIES INC. is a resource- and technology-based company that develops, produces and markets worldwide a broad range of specialty mineral, mineral-based and synthetic mineral products and related systems and services. MTX LISTED Since October 23, 1992 NYSE Specialty Minerals $589.3 Refractories $311.9 Energy Services $78.3 2018 NET SALES BY REGION (percentage/millions of dollars) United States $961.6 Europe/Africa $443.4 Asia $318.9 Canada/Latin America $83.7 33% 18% 25% 5% 46% 53% 3
MTI BUSINESS SEGMENTS Minerals Businesses Service Businesses Performance Materials (Bentonite) Specialty Minerals (Carbonates) Refractories Energy Services 2018 Net Sales $828M 46% of MTI $589M 33% of MTI $312M 17% of MTI $78M 4% of MTI 2018 Operating Income $117.3M 14.2% of Sales $96.1M 16.3% of Sales $45.4M 14.6% of Sales $6.3M 8.0% of Sales Product Lines Metalcasting Household & Personal Care Basic Minerals Environmental Products Building Materials Precipitated Calcium Carbonate (Paper and Specialty) Ground Calcium Carbonate Talc Refractory Products Metallurgical Wire Laser Measurement Equipment Steel Mill Service Off-Shore Water Filtration Off-Shore Well Testing Market Positions #1 Worldwide in Bentonite #1 in U.S. in Metalcasting Binders #1 in U.S. in Bulk Clumping Cat Litter and #1 in Europe in Premium Cat Litter #1 in Quality Assurance Waterproof Concrete Structures #1 Worldwide in Precipitated Calcium Carbonate #1 in North America in Specialty PCC #1 in N. American Monolithic Refractories #1 N. America and Europe in Solid Core Calcium Wire #1 Globally in Refractory Laser Measurement Systems #1 in Gulf of Mexico Flow-back Filtration, Produced Water Deepwater Projects, and High Pressure/High-Temp Well Testing Leading Global Off-Shore Produced Water and Well Testing Services Company 4
MTI VALUE PROPOSITION Leveraging Unique Reserve Position Carbonate Mines Adding Value Through Operational Excellence & Innovation World Class Operations Serving Customer Needs in High-Value Markets Carbonates Paper & Packaging Global, High Quality Mines Highly Competitive Ore Brightness 25+ Years of Reserves Bentonite Mines 35 158 Countries Locations 6% Productivity Environmental Responsibility PCC Consumed 1.3M Tons CO 2 China Eco-Partnership Customer Focused Research & Development Industrial Equipment & Agricultural Construction Environmental Protection / Remediation Consumer Automotive Both Minerals World Bentonite Leader Unmatched Natural Sodium Bentonite 25+ Years of Reserves Product & Process Innovation Mineral Enhancement 12 R&D Labs Energy Foundry Bentonite 5
MTI GROWTH STRATEGY ORGANIC GROWTH OF EXISTING BUSINESSES THROUGH Geographic Expansion + New Product Development + Acquisitions Value added technology driven minerals companies MTI Business System / Operational Excellence Continuously improving our processes and systems Continuously improving our leadership / employee capabilities 6
METALCASTING PENETRATION IN CHINA AND INDIA Casting Production by Country MTI Greensand Bond Sales Millions of Tons YoY Growth MTI Sales Growth Charts on Different Scales Pre-Blended Products Bulk Bentonite China 47.2 +5.4% China India India 11.4 +5.4% +12% Total +82% Total US 9.4 +2.8% Japan 5.2 +14% +116% Germany Russia 5.2 3.9 2017 2018 Annualized 2017 2018 Annualized Korea Mexico 2.6 2.6 Pre-Blended Market Penetration Relative Market Size (Width) and Pre-Blended Penetration (%) Brazil Italy 2.1 2.1 Bulk Bentonite Pre-Blended Products 90% 90% Penetration ~$900 Million Pre-Blended Market Source: Modern Casting, December 2017 Source: MTI US 10% China 5% India 25% Penetration ~$250 Million Pre-Blended Market 7 The numbers above reflect estimates provided on MTI s second quarter 2018 earnings call.
PAPER PCC PENETRATION IN CHINA AND INDIA Uncoated Woodfree Paper Demand MTI Paper PCC Sales Millions of Tons, 2017 YoY Growth* MTI Paper PCC Sales Growth Charts on Different Scales China 15.6 +1.2% China India Europe 9.8 (1.4%) +7% +13% Rest of Asia 8.9 +0.7% N. America 7.6 (2.9%) India L. America 4.0 3.4 +3.7% +1.4% 2017 2018 Annualized 2017 2018 Annualized PCC Uncoated Woodfree Market Penetration Relative Market Size (Width) and PCC Penetration (%) Other Filler Pigments PCC 5% 95% 50% 60% 95% Penetration ~2 Million Additional Tons of PCC Demand 50% 40% *2018 Forecast Source: RISI 03-2018 Source: MTI N. America China India 8 The numbers above reflect estimates provided on MTI s second quarter 2018 earnings call.
GLOBAL TRADE DYNAMICS MTI Trade Flows To / From USA Raw Material Imports / Exports Finished Goods Exports Imports China to US 1.8% ROW to US 2.3% Exports US to China 0.7% US to ROW 0.8% FY18 Total Annualized CoGS US to China 0.1% US to ROW 2.3% FY18 Total Annualized Sales MTI Primarily Sources and Sells Locally 2018 Annualized Sales by Region Primary Import: Magnesium Oxide (MgO) for Refractory Products (Currently no tariff proposed). Americas 9% 9% Primary Export: Bentonite (Currently 8% tariff imposed on bentonite). EMEA China Rest of Asia 24% 58% Total Tariff Impact: <$1M 9 The numbers above reflect estimates provided on MTI s third quarter 2018 earnings call.
ORGANIC GROWTH HIGHLIGHTS Revenue by Region Growth Drivers % of Total Year Ended December 31, 2018 US 53% International 47% Growth (Excluding FX) Growth (Including FX) +2% +2% +13% +15% Total MTI +7% +8% New PCC Satellites and Expansions Globally Specialty PCC Expansions in US / UK Continued Metalcasting and PCC Penetration in Asia Fabric Care New Additive Rolling Out Globally 47% 53% Continued Growth in Lightweight Cat Litter Bleaching Earth Facility in Turkey Ramping Up New Waste Water and Environmental Remediation Technologies Commercialized ~80 New Products over the Past 5 Years with Potential to Deliver ~$300M Revenue 10
ACQUISITION IN MAY 2018: SIVOMATIC MTI Acquisition Criteria & Sivomatic Criteria Minerals-based Companies with Technological Differentiation Provide Additional Growth Venues (Geographies, Attractive Markets) Extend Existing Business Positions (Global Reach, Technology) Sivomatic Transaction Summary Purchase Price: $122.5M Accretive to Earnings in 2018 FY18 Revenue: $61.8M Strong Track Record of Revenue Growth 11
2018 YEAR IN REVIEW Growth Operating Performance Capital Deployment Sales, $M $1,808 +8% Executing Our Strategy EPS $4.84 +5% Strong Performance in Challenging Environment Continued Strong Cash Generation Balanced Capital Deployment Geographic Expansion Penetration of PCC and Metalcasting Double Digit Growth in India, Turkey, Indonesia, and Thailand New Product Development Commercialized 35 New Products; >$100M Revenue Potential Acquisition and Integration of Sivomatic Significant Margin Pressures $41M in Higher Costs Pricing Actions $35M Price Increases Realized Leveraged Strong Operating Culture Employee Engagement 6% Productivity SGA Percent of Sales 90 BPS Lower $76M Capital Expenditures Investing in High Return Opportunities $123M Sivomatic Acquisition $80M Debt Repayment $29M Returned to Shareholders The above chart reflects the Company s EPS, excluding special items, such as acquisition-related costs, restructuring, gains/(losses) on asset sales and impairment costs and related tax effects, for all periods presented. This is a non-gaap measure that the Company believes provides meaningful supplemental information regarding its performance. 12
ANNUAL EPS TRENDS +5% $4.00 $4.31 $4.47 $4.59 $4.84 2014 2015 2016 2017 2018 The above chart reflects the Company s EPS, excluding special items, such as acquisition-related costs, restructuring, gains/(losses) on asset sales and impairment costs and related tax effects, for all periods presented. This is a non-gaap measure that the Company believes provides meaningful supplemental information regarding its performance. 13
LIQUIDITY AND DEBT HIGHLIGHTS Cash Generation and Use Debt and Leverage Liquidity 2018 Cash From Ops* $204M CapEx $76M Free Cash Flow (FCF) $128M *Includes $15M Discretionary Pension Contributions 2.2X Total Debt, $M Net Leverage Ratio 2.4X 2.2X Cash, Cash Equivalents, and ST Investments 12/31/18 $213M Available Revolver $200M Total Liquidity $413M $80M Debt Repayment 970 1,058 1,016 $22M Share Repurchases $7M Dividends Paid 4Q17 3Q18 4Q18 14
DRIVING PROFITABLE GROWTH Growth Engaged Employees Operating Performance Increasing the Speed of Innovation 21% Improvement Kaizen Events Thousands 1.9 1.9 3.0 4.0 6.2 7.2 Strong Cost Control 34 Months 27 Months 2013 2014 2015 2016 2017 2018 2016 2018 Time to Commercialization Delivering Value Through Innovative Solutions Executing on Geographic Growth Initiatives Employee Suggestions Thousands 15.4 17.8 39.7 45.1 53.1 59.2 2013 2014 2015 2016 2017 2018 Productivity Year Over Year Improvement 5% 6% 9% 7% 6% 6% 2013 2014 2015 2016 2017 2018 Productivity and Efficiency Improvements Pricing Actions Operational Excellence ( OE ) Foundation 15
2019 PERSPECTIVE MTI Fundamentals 2019 Business Outlook Engaged & Energized Team Advancing Growth Strategy Strong Operating Culture Performance Materials Strong Pet Care Demand Globally; Leveraging Sivomatic Acquisition Continued Metalcasting Penetration Despite Slowing Industry Growth in China Trend Toward Higher-Value Environmental Products Moderate Building Materials Growth Specialty Minerals Constructing Two Paper PCC Satellites; Robust Pipeline SPCC Expansions Acting to Offset Lime and Energy Inflation & North America Shutdowns Refractories Global Steel Utilization Rates Remaining Strong Softness in Turkey Steel Market Energy Services Moderate Increase in Activity Opportunities in Well Testing and Produced Water Operating Environment Continue to Manage Inflationary Costs Pricing Actions in Place and Will Continue Aligned Organization Operational Excellence Strong Balance Sheet 16
FINANCIAL ADDENDUM 17
FOURTH QUARTER 2018 HIGHLIGHTS Earnings per Share +6% to $1.17 Revenue +4% to $448 Million Operating Income of $64M Pricing Actions and Strong Operating Performance Fully Offset Inflationary Costs 6% Productivity Improvement Progress with our Growth Initiatives The above figures reflect the Company s operating income and EPS, excluding special items, such as acquisition-related costs, restructuring, gains/(losses) on asset sales and impairment costs and related tax effects, for all periods presented. These are non- GAAP measures that the Company believes provide meaningful supplemental information regarding its performance. 18
QUARTERLY EPS TREND +6% $1.07 $1.18 $1.06 $1.00 $1.02 $1.20 $1.17 $1.08 $1.07 $1.23 $1.19 $1.10 $1.13 $1.28 $1.27 $1.17 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2015 2016 2017 2018 The above chart reflects the Company s EPS, excluding special items, such as acquisition-related costs, restructuring, gains/(losses) on asset sales and impairment costs and related tax effects, for all periods presented. This is a non-gaap measure that the Company believes provides meaningful supplemental information regarding its performance. 19
FOURTH QUARTER FINANCIAL HIGHLIGHTS KEY FINANCIALS 4Q17 4Q18 Change SALES BRIDGE $ Millions Sales ($M) 432.1 447.5 +4% +4% +5% Gross Margin (%) 26.5 25.2 (130) bps 432.1 (6.7) 425.4 22.1 447.5 SGA (%) 11.9 10.9 (100) bps Operating Income ($M) 62.9 64.1 +2% 4Q17 OPERATING INCOME BRIDGE $ Millions FX Adjusted Baseline +2% Sales Growth 4Q18 Operating Margin (%) 14.6 14.3 (30) bps 62.9 13.5 64.1 (12.3) Earnings per Share ($) 1.10 1.17 +6% 4Q17 Raw Materials, Freight, & Energy Business Performance 4Q18 The above figures reflect the Company s EPS, operating income, and operating margin, excluding special items, such as acquisition-related costs, restructuring, gains/(losses) on asset sales and impairment costs and related tax effects, for all periods presented. These are non-gaap measures that the Company believes provide meaningful supplemental information regarding its performance. 20
2018 FULL YEAR FINANCIAL HIGHLIGHTS KEY FINANCIALS 2017 2018 Change SALES BRIDGE $ Millions Sales ($M) 1,676 1,808 +8% +8% +7% 118.6 1,807.6 Gross Margin (%) 27.9 25.6 (230) bps 1,675.7 13.3 1,689.0 SGA (%) 12.1 11.2 (90) bps Operating Income ($M) 265 261 (2%) 2017 FX Adjusted Baseline OPERATING INCOME BRIDGE $ Millions -2% Sales Growth 2018 Operating Margin (%) 15.8 14.4 (140) bps 264.9 260.6 37.1 Earnings per Share ($) 4.59 4.84 +5% (41.4) 2017 Raw Materials, Business Freight, & Energy Performance 2018 The above figures reflect the Company s EPS, operating income, and operating margin, excluding special items, such as acquisition-related costs, restructuring, gains/(losses) on asset sales and impairment costs and related tax effects, for all periods presented. These are non-gaap measures that the Company believes provide meaningful supplemental information regarding its performance. 21
2018 ACTIONS TO OFFSET INFLATIONARY COSTS +17.1 Significant Inflationary Costs Raw Materials Freight Energy 16.2 +9.0 25.2 27.1 Business Performance Price Increases Expense Control Productivity Improvement Continued Sales Growth 10.0 H118 H218 YoY Raw Materials, Freight, Energy, $M YoY Business Performance, $M 22
PERFORMANCE MATERIALS Fourth Quarter Results Sales, $M Operating Income, $M +6% +4% 195.8 219.5 206.8 28.1 31.8 29.2 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 Fourth Quarter Highlights Metalcasting +6% Household, Personal Care & Specialty (HPC) +50% Pricing and Productivity Offset Higher Raw Materials and Logistics Costs; Operating Margin at 14.1% First Quarter Outlook Additional Pricing Actions In Place to Offset Logistics & Energy Inflation HPC Markets Remain Strong Seasonally Slow Period for Building Materials and Environmental Products Slowdown in Automotive in China; Blended Products Growth to Continue 23
SPECIALTY MINERALS Fourth Quarter Results Sales, $M Operating Income, $M -1% -6% 143.9 146.3 142.5 23.3 25.0 21.9 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 Fourth Quarter Highlights PCC Growth in Asia +2% Partially Offsetting Previously Announced NA Closures Processed Minerals Sales Flat Higher Energy and Lime Costs Segment Operating Margin at 15.4% First Quarter Outlook PCC Volume Impact of Port Hudson Closure Continued Growth in Asia Higher Lime Costs Processed Minerals Typical Seasonality Continued Pricing Actions Higher Energy, Transportation Costs 24
REFRACTORIES Fourth Quarter Results Sales, $M Operating Income, $M +9% +6% 71.3 79.1 77.9 10.2 11.5 10.8 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 Fourth Quarter Highlights Strong Global Steel Utilization Rates at ~75% Driving Refractory Demand Refractory Product Sales +14% Pricing Actions and New Product Formulations Mitigating Raw Material Cost Increases First Quarter Outlook North America Remains Strong European Steel Production Stable Signs of Slowing Steel Production in Turkey Operating Margin of 13.9% 25
ENERGY SERVICES Fourth Quarter Results Sales, $M Operating Income, $M -4% +5% 21.1 19.2 20.3 2.2 2.3 1.4 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 Fourth Quarter Highlights Sales Lower on Timing of Capital Sales Favorable Mix and Lower Expenses Versus Prior Year First Quarter Outlook Pipeline of Activity is Strong Expect Similar Level of Operating Performance Operating Margin of 11.3% 26
MINERALS TECHNOLOGIES INC. February 2019 MTI OVERVIEW INNOVATION LEADERSHIP EXCELLENCE