Minerals Technologies Inc. (NYSE:MTX) Q4 2022 Earnings Call Transcript

Mike Harrison: All right. And then, in terms of the pricing in the PCC business, obviously, you’ve called out that most of that is contractual pass-through. Maybe help us understand what you’ve seen going on with lime and other raw material costs? Are they stabilizing? Are they starting to come lower? Maybe just help us understand kind of where we are in that lag in the contracts catching up to your input costs?

D.J. Monagle: Certainly, glad to share that with you. So, what we are seeing is, lime is mitigating, so it’s starting to plateau and our pricing is catching up on that. So, we’ll see some incremental increases as we go into next year, but they’re not nearly the rate that we saw in the prior periods. So, I would say that our contractual mechanisms seem to be holding through this process and it’s something that still provides a very collaborative relationship with our customers as we work through these things together. Further, I would say that the value equation of our PCC in these markets stand strong, as our customers are experiencing energy increases. For instance, part of the value contribution we bring is reduced energy consumption in their paper making process. So, it’s getting better. Contracts are working, and we seem to be holding up our value pretty well.

Doug Dietrich: I think, Mike, the only thing I’d add to that is just kind of energy, we do — we’re supplied a lot of electricity from our customers on our — as we reside on their facilities. So, major inputs this year have been lime cost, which is kind of a derivative of energy and the energy that goes into making it, and then also the direct electricity and energy from our customers. As that energy has plained over — as you’ve seen through the first half of the year, we have that lag, and as that plains over, you’ll see us catch up pretty quickly. I think that’s what you saw happen in SMI in the fourth quarter. That margin expansion is starting to happen. Again, we have to see energy continue to plain over. And if it starts to decline, you’ll see that margin improvement accelerate.

Mike Harrison: All right. Very helpful. Thanks very much.

Doug Dietrich: Yes.

Operator: We’ll now take our next question from Steve Ferazani with Sidoti.

Steve Ferazani: Hi, good morning, Doug, Erik. Just wanted to follow-up some of the other questions. In terms of the way you’re laying out 2023 and then your guidance for Q1, it sounds like China certainly — knowing what we know now, China gets a lot better as 2023 goes along. Inflationary pressures ease — I’m just (ph) your market conditions for guidance, inflationary pressures ease, you get more of the lagging price effect. All things considered, would you knowing what you know now say that Q1 would mark the significant low point for the year in terms of EPS?

Doug Dietrich: I guess that’s a little bit hard to predict. I would say that yes…

Steve Ferazani: Sure. Of course, it is.