Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. To ask a question, you may press star then one on your telephone keypad. Please note this event is being recorded. I would now like to turn the conference over to Lydia Kopylova, Head of Investor Relations at Minerals Technologies Inc. Please go ahead.

Thank you, Gary. Good morning, everyone, and welcome to our fourth quarter 2024 earnings conference call. Today's call will be led by Chairman and Chief Executive Officer, Doug Dietrich, and Chief Financial Officer, Erik Aldag. Following Doug's prepared remarks, we'll open it up to questions. As a reminder, some of the statements made during the call may constitute forward-looking statements within the meaning of the federal securities laws. Please note the cautionary language about forward-looking statements contained in our earnings release and on this slide. Our SEC filings disclose certain risks and uncertainties which may cause our actual results to differ materially from these forward-looking statements. Also, please note that some of our comments today refer to non-GAAP financial measures. A reconciliation to GAAP financial measures can be found in our earnings release and an appendix of the presentation, which are posted on our website. Now I'll turn it over to Doug.

Thanks, Lydia. Good morning, everyone, and thanks for joining today. Let's go over a quick outline for today's call. First, I'll do a quick review of our full-year financial highlights, then spend a few minutes reviewing the progress we've made this year on our long-term strategy. Erik will then take you through the detailed financials for the quarter and full year. And I'll come back at the end to give you an overview of what we're seeing in our end markets for 2025. Let me start off by saying that 2024 was an incredible year for Minerals Technologies Inc. This was the first full year after our resegmentation and one where we saw the true power of our new organization. It was also an impactful year in which we enhanced our financial stability, demonstrated the effectiveness of our business system, and continued to prove the value that we bring to our customers. I'm very proud of what our teams around the world achieved and want to thank them for their ongoing dedication to delivering outstanding results for our stakeholders. I'll start by saying that this ended up being a relatively flat sales year for MTI. Our consumer-oriented businesses continued on a steady track, and we're seeing the growth that we expected from our positions in these expanding markets. However, the commercial construction market weakened further throughout the year, and our steel and foundry markets that began the year strong softened toward the end. Nonetheless, our ability to navigate these issues and remain focused on the execution of our growth strategies turned the revenue we generated into a year of record profitability. This is the fourth consecutive quarter and the second consecutive year of record operating income. Our solid execution on growing our higher-margin products, disciplined pricing, capturing cost savings, and improving productivity led to an operating margin of 15% in 2024, a target we had planned to achieve by the end of 2025. It's also the second consecutive year of record EBITDA, reaching over $400 million this year. Full-year earnings per share were also a record, increasing 18%. We sustained our strong cash flow generation and strengthened our balance sheet. We increased returns to shareholders by completing our previous $75 million share buyback program, further increasing dividends by 10%, and authorizing a new $200 million share repurchase program. Our strong cash generation profile provides us with significant financial strength and options to drive value. Over the past four years, we've acquired three companies, paid down debt keeping leverage at or below our target levels, and returned over $240 million to shareholders. These achievements underline the effectiveness of our operating model and are the outcome of strategic actions we've taken over the last couple of years. Two years ago, we realigned our organization to enhance operational efficiencies, speed up decision-making, and better align accountability. This change continues to pay off with strong performance by our team. Results this year were delivered in no small part through our ongoing focus on managing costs and improving productivity, all of which would not be achieved if we were not anchored in a culture of operational excellence. We have a highly engaged team of colleagues who come to work motivated to provide input and generate ideas at all levels of the organization. Last year, we performed over 8,500 problem-solving Kaizen events and implemented more than 80% of the 60,000 suggestions we received from our employees around the globe. MTI's 4,000 employees submit an average of 160 suggestions and conduct 30 problem-solving events each and every day across the company. Those are remarkable numbers from a high-performing workforce and a powerful example of our people-centered operational excellence culture. All in all, this is a solid year for us, one where we made significant progress against our long-term goals. We also made significant progress in 2024 in each product line on the three elements of our growth strategy. As a reminder, our strategy has been to grow in consumer-oriented markets, expand our positions in our core markets, and extend them geographically, and continuously introduce new innovative higher-margin products to the market. Let me walk you through some of these highlights, and I think it'll give you a good perspective on how we continue to transform MTI and solidify its foundation for sustainable growth.

Thanks, Doug, and good morning, everyone. I'll start by providing an overview of our fourth quarter and full-year results, followed by some detail on the performance of our segments. And I'll wrap up with our outlook for the first quarter. Now let's review our fourth quarter results. We finished 2024 with another strong quarter. Our operating income and EPS results were record fourth-quarter performances for the company, all while navigating some mixed market conditions. Fourth-quarter sales were $518 million. You can see from the bridge that sales in our Consumer and Specialties segment were slightly below the prior year driven by specialty additives. And in the Engineered Solutions segment, we saw further softening in the fourth quarter in our steel and foundry markets, which impacted sales in high-temperature technologies. Despite some challenging market conditions, we delivered another strong operating performance. Gross margin improved by 170 basis points versus the prior year to 25.6% of sales as our teams delivered on price increases, cost savings, and productivity. Operating income increased by 7% year over year to $74 million. You can see in the operating income bridge that our pricing actions of $4 million and favorable cost performance of $3 million offset the unfavorable volume impact resulting in an improvement to operating margin of 110 basis points. Fourth-quarter earnings per share was $1.50, excluding special items, representing a 17% increase versus the prior year. Our reported earnings were $1.68, which included a $12 million gain on the sale of a refractory facility in China. We sold this facility to the local government who is developing the area. This was a very small piece of our refractory business, and we've absorbed the business across our other facilities in the region.

Now let's review our full-year results. Overall, 2024 was an outstanding year for MTI. The company delivered record performances for operating income, EBITDA, and earnings per share. We expanded operating margin by 200 basis points versus the prior year. Full-year sales were $2.1 billion. In the sales bridge, you can see that we saw continued growth in the Consumer and Specialties segment, offset by lower sales in Engineered Solutions. The Environmental and Infrastructure product line drove most of the year-over-year change in sales, as weak market conditions for commercial construction and environmental lining applications persisted for most of the year. And in high-temperature technologies, we experienced slowing demand for steel and foundry products in North America and Europe as we moved through the second half of the year. Operating income was $316 million, up 13% overall, up 16% on an underlying basis driven by favorable mix pricing and cost savings. Altogether, we delivered $44 million of operating income improvement over 2023. Adjusted EBITDA was $406 million, representing 19.2% of sales, up 210 basis points. And finally, our full-year earnings per share was $6.15, representing an 18% increase over the prior year. I'd also like to highlight that over the last five years, our EPS has grown at an 8% compound rate.

Now let's review the performance of our segments beginning with Consumer and Specialties. Fourth-quarter operating income for the segment was 4% higher than the prior year on 1% lower sales. Household and personal care sales were 2% higher sequentially and relatively flat year over year. Cat litter sales increased 5% sequentially and were up 1% versus the prior year. And sales of our other high-margin specialties in this product line were down slightly due to the timing of customer orders. Specialty Additives fourth-quarter sales were 2% lower than the prior year, primarily driven by pass-through pricing and softer base volumes in paper and packaging, which offset new volumes in Asia in the quarter. For the full year, segment sales grew 2% and operating income grew 25% on an underlying basis. Sales in household and personal care grew 2%, primarily driven by sales of cat litter. We also saw growth in animal health, personal care, edible oil, and renewable fuel products. These relatively small but fast-growing and high-margin businesses will continue to have a larger impact on the segment's growth and margins as they become a larger part of the portfolio. Specialty Additives sales grew 1% on 3% higher volume. Note that some of the growth in this product line was offset by lower energy surcharges and formula price changes. Overall, the Consumer and Specialties segment delivered an impressive operating performance in 2024.

As Doug outlined, we're making progress on growth initiatives and we're making investments across both product lines to support these initiatives. Throughout the year, the team adjusted selling prices as appropriate, captured cost savings, and drove productivity improvements. The result was a 260 basis point expansion in operating margin and a 25% increase in operating income. Now let's turn to the Engineered Solutions segment. Fourth-quarter operating income for the segment was 8% higher than the prior year on 2% lower sales. High-temperature technology sales were 3% lower than the prior year amidst some challenging end markets. Steel utilization rates in the US dropped to as low as 72% in the fourth quarter, down from as high as 80% in the third quarter. In the Europe steel market, which has been weak all year, declined further in the quarter. On a more positive note, our Asia foundry volume grew 10% in the quarter. Most of this growth was driven by the continued penetration of our product in the region. We also had some customers pull their orders forward into the quarter ahead of the relatively early Lunar New Year. Environmental and infrastructure sales grew 4% over the prior year, a welcome change from prior quarters. This was partly due to a large waterproofing project in the quarter, but we also had higher sales of drilling products linked to infrastructure projects.

And remediation and wastewater was another bright spot, up 43% versus the prior year on solid demand for industrial wastewater treatment and environmental remediation. For the full year, operating income grew 7% on 3% lower sales. Full-year sales in high-temperature technologies were 1% lower as solid market conditions at the start of the year gave way to more challenging conditions as we moved through the year. Our Asia foundry volume grew 8% for the year as we continue to penetrate the region with our differentiated products and technical services. Full-year sales for environmental and infrastructure were 8% lower as this product line experienced significant declines for the first three quarters. However, we started to see signs of the market stabilizing in the fourth quarter. Overall, despite some challenging market conditions, Engineered Solutions delivered a solid performance. The segment's operating performance was driven by consistently strong execution, productivity improvements, and diligent cost control. Now let me turn to a summary of our balance sheet and cash flow highlights. We delivered a strong cash flow performance for the year. Cash from operations was $236 million and free cash flow was $147 million, representing 7% of sales. We deployed $90 million on CapEx, paid down $39 million of debt, and returned slightly more than 50% of our free cash flow to shareholders through dividends and share repurchases totaling $77 million. Our balance sheet continues to be very solid. We refinanced our debt in November, extending our average maturity to more than five years and increasing our strong liquidity position. We finished the year with net leverage at 1.6 times EBITDA and liquidity of more than $700 million. The steps we took in 2024 further strengthened our financial position and will help support our long-term growth strategy going forward. Looking ahead, we expect 2025 will be another strong year from a cash flow perspective, with free cash flow in the $150 million to $160 million range. Now I'll summarize our outlook for the first quarter. We currently expect first-quarter sales of around $500 million, operating income of around $70 million, and EPS between $1.30 and $1.35. We've had a slow start to the year on both sides of the business, with customers taking a more cautious approach to inventories and shifting around their orders. We believe this is partly driven by the uncertainty in some end markets around the potential introduction of tariffs and partly just general conservatism on inventory levels and production schedules. However, we don't see this reflecting a fundamental change in the health of our end market. From a market perspective, we expect first-quarter demand to remain similar on both the consumer and the industrial side of the company. We expect sales in Consumer and Specialties will be similar sequentially. We expect sales in Engineered Solutions will be around 5% lower due to the slow start in January, the Lunar New Year holiday, and the large waterproofing projects we delivered in the fourth quarter. I'll also note that the stronger US dollar is impacting our sales by approximately 2% to 3% in the first quarter versus last year. Overall for MTI, our order books and shipments have been improving every week, which gives us confidence in the health of our end markets and our outlook for the first quarter. And we expect further improvement across our end markets as we move into the second quarter. Before I hand the call back over to Doug, I'll give some perspective on the current tariff situation and potential implications for MTI as I'm sure is of interest to many of you. We shared a similar slide in 2018 when the previous round of tariffs was put in place. And as we've said previously, we primarily source and sell locally in the regions where we operate. This insulates us from the impact of tariffs. On the top left of this slide, you can see that a very small portion of our cost of sales is imported into the U.S. To put this in perspective, the 10% additional tariff on China increases our cost by approximately $2 million on an annualized basis. We also move a small percentage of our finished goods across borders in North America as shown on the bottom left of this slide. The potential impact of the proposed tariffs on Canada and Mexico would be approximately $10 million. The actual impact of all these tariffs though would be less, as we have multiple mitigating actions we would take, for example, shifting production between our facilities if necessary. While the tariff outlook is still uncertain, including potential end market effects, I'll summarize by saying that MTI's direct exposure is limited and we are well-positioned to navigate these dynamics. With that, let me turn the call back over to Doug for some additional perspective on the year ahead.

Thanks, Erik. Let me finish up today by giving you an outlook on how our markets are shaping up for 2025. Overall, we're set up for a stronger year and anticipate sales growth of between 3% and 5% for the full year. A general framework for how we see the year playing out is that the consumer side of the business will remain solid and continue its growth track. The industrial side of the business will have a relatively slow first quarter and strengthen throughout the year. Let me break this down for you by segment and point out a few trends and some specific factors in each. In Consumer and Specialties, we have a positive outlook on growth for the year. In household and personal care, our cat litter business has grown share and secured new sales with customers in North America, Europe, and Asia. Sales will increase from our new packaging options and from the new technologies I spoke about earlier. Our specialty consumer products like animal health, natural oil filtration, and personal care products will all continue at their double-digit growth rate this year. The Specialty Additives product line is also set up for a solid year. We have three new paper and packaging satellites coming online and expect stronger demand for our ground and precipitated calcium carbonate additives serving food and pharma and residential construction end markets. On the Engineered Solutions side, our outlook is a bit more conservative because of the uncertainty we are currently seeing in a few of these end markets. In high-temperature technologies, after a slow start, we expect the North America steel market to improve as we move into Q2 through the second half of the year. We could also see some increased demand given the potential additional tariffs placed on steel imports, which may result in higher US production. Our metal casting business should remain stable in North America and continue to grow in Asia. We could see some potential upside in metal casting in the US when the agriculture equipment market rebounds from a challenging 2024. Our environmental infrastructure product line has seen the biggest impact on its markets over the past few years due to higher interest rates. There are several potential catalysts which could drive growth in this product line, including increased infrastructure spending and lower interest rates which support a rebounding commercial construction. We are starting to see indications of stabilization in the large landfill lining and commercial construction markets, but it's a bit too early to tell if this is the beginning of a positive inflection. We also expect continued growth in FluorZorb and are set to launch a large project here in the northeast, which should help generate further sales traction. As Erik mentioned, we're watching what happens with regulations, taxes, the timing of tariffs, and the effect all of this could have on our markets. But MTI is well-positioned for what comes our way. We have operations in each of our major markets, with capacity to support demand if it moves from one geography to another. We have a very agile team and we'll quickly adapt to changing circumstances as they unfold. Speaking of our team, I'd like to thank everyone at MTI again for another great year. This is a people-centered company, and the continued focus on operational excellence across our organization is what sets us apart. Those of you on the webcast and dialing in, thank you for joining the presentation today. Now let's open it up to questions.

Keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. We will pause momentarily to assemble our roster. The first question is from Daniel Moore with CJS Securities. Please go ahead.

Thank you. Good morning, Doug. Good morning, Erik. Thanks for the color and taking the questions. Start with obviously, operating execution has been really impressive. You're already basically at your 15% operating margin goal. What are your expectations for fiscal 2025 and, you know, where do you see margins headed over the next two to three years?

Yeah. Hi, Dan. Thanks for the question. So, yeah, we've had a strong operating performance in 2024. And we reached that 15% operating margin target pretty much a year earlier from where we expected. I think for 2025, just from where we sit today, we're expecting to maintain that 15% margin or improve upon it. We do expect the margin to build through the quarters. So what we're guiding to in the first quarter equates to something around a 14% margin, which is similar to what we had in the fourth quarter and makes sense from a seasonality perspective. And so we would expect to see a margin build as we get into stronger seasonal quarters in Q2 and Q3, a little bit of uncertainty in terms of the end market picture as Doug alluded to. So a little bit cautious on guiding higher than that 15%, but right now, confidence in maintaining the 15% and could go higher from there depending on markets and volume leverage.

Makes sense. Appreciate it. And then, you know, Doug, appreciate the color on end markets. Just in terms of top-line growth, Consumer and Specialties, and obviously, that's some headwinds in terms of inventory. Customers manage inventories here in the short term? You know, what do you need to see to drive sustained kind of low and then mid-single-digit growth? And when do you think we can get there? That's consumer and specialty specific.

Yeah. So this year, I think we're set up for a stronger year of growth in Consumer and Specialties. The 4% to 8% range for that segment. And it's really gonna be driven by what we see is some of the product lines that I talked about, pet care or pet litter. And the new products that we have coming online in the second quarter, the market share gains, our entry in a pretty significant way into Asia that's gonna be driving growth this year. We talked I talked about some of our bleaching earth with, you know, renewable fuels. We are seeing some significant demand growth in that product line from aviation, sustainable aviation fuel. You know, I'll let DJ give some more color, but some additive rates have changed in Europe and it's really pulling harder for that. And so we see that being very positive. So we have a number of things that we feel are positive for that product line going forward. I guess the area that, as I mentioned, is a little bit uncertain right now is on the engineering solution side. We saw, you know, a softer second half of the year. We think that that's persisting into the first quarter. There are indications we hear we get from customers right now and in our order books that we see building in the back half of the first quarter for a stronger second and back half of the year. So it's almost like a mirror image of what happened last year. I think if those play out like that, we could be on that mid-single digits or higher part of the guidance I gave you. I gave the three to five. If building and construction and interest rates persist and we don't see the drag in building in construction but we see a planing over, we might be on the four three to four percent range. So I guess I'm not giving you exactly, you know, the guide because it's a bit uncertain as we said today. But to get us above that five percent, I think what's gonna happen is you're gonna start to see these consumer specialty businesses become a much bigger part of our portfolio. They're growing at double-digit rates today. Animal health, bleaching earth, our personal care business with the cat litter growth in that mid-single digits. I think as that product line, that's been kind of the structure of the company. As that product line gets bigger and bigger, it's going to have those higher growth rates, and I think that's gonna take us above that five percent and push us in the high mid-single digits over the long term. Does that help?

Really helpful. And then last for me is just your leverage continues to tick lower. Cash flow outlook for 2025 is pretty robust. So just talk about capital allocation and, you know, what the M&A pipeline looks like and, you know, what types of things you might like to flush out or tuck in. Obviously, it always takes two, but just wondering what you're seeing there. Thanks again.

You took my answer out of my mouth. Yes. It does take two. Look, I think there's we have the balance sheet in great shape. I think it provides us a lot of optionality. We have a $200 million share repurchase program out there that I think will continue to execute. I think, you know, we look at steering half of our free cash flow back to shareholders and I think we'll do that this year. I do think that that preserves some capacity to do, you know, bolt-in acquisitions. And to be honest, I think there's opportunities across all four product lines. Ranging from, you know, moving us into new geographies, solidifying positions in those geographies, bringing in reserves, adding new technologies, and deepening us into, you know, areas of environmental and some of these consumer products. So I do think that there's opportunities in each of the four product lines. Again, we'll see how, you know, how some of those play out and how the M&A market and the uncertainty plays out the year. But I think the balance sheet where we are, it can support both returns to shareholders and some acquisitions this year. So I think that's gonna add and what I'm giving you is organic growth. I think those types of things will even add further to that growth rate going forward. So we have a really positive outlook, Dan, and capacity to use the balance sheet that way.

Alright. I'll jump back with any follow-ups. Thank you.

Yeah. Hi. Good morning. Thanks for taking the questions. I had a couple of questions. I guess, firstly, I'm gonna go back to a topic that was discussed in the third quarter conference call, and that was kind of the sources of your efficiencies. So I, you know, I'll echo Dan's comments about, you know, the impressive nature of the productivity and, you know, margin strength. But last quarter, you know, Erik, I believe, did a pretty good rundown of efficiencies that you gained within your pet litter business, tightening the integration of the recent acquisitions. When I looked at the reported results and then again at the slide deck, I mean, there's the pretty big margin improvement on the other side on, you know, high-temperature technologies and environmental and infrastructure. So, you know, modest revenue performance, but a hundred and fifty basis point margin improvement year over year in the quarter and then also full year. If you were to kind of target one or two areas within, you know, the engineered solutions area, where productivity or, you know, margin-enhancing moves really came through in 2024, you know, could you call out one or two of those? And then, you know, what's the outlook for further gains there in 2025?

Thanks, David, for the question. Let me start and then I'll pass over to Brett Argirakis. The first thing I'd highlight is that, you know, we're always targeting productivity improvements across the company and we're finding ways to achieve them every year. I think this year for the entire company, productivity improvement was 4%. So we're able to, and, you know, we've averaged kind of three, four, five percent per year for many, many years. And that's because we're finding ways as a company, as a team, our employees are finding ways to do things more efficiently. And that doesn't just include in our processing plants. And in particular, some of the productivity improvements this year and Engineered Solutions were in the mining side. But that's in our back-office systems. Right? So we're looking at, you know, we're looking at ways to do things more efficiently, closing the books. A lot of those Kaizen events are just looking at how to bring in sales without having to grow our overheads. I think if you've seen our percentage, our overhead is our SG&A as a percentage of sales, it continues to go down. And that's the leverage you're seeing on our sales. So being able to hold fixed costs flat and then being able to keep variable costs in control through productivities on a variable basis in our plants is exactly what we do day in and day out. And Brett, I guess, in Engineered Solutions, some things you want to point out particularly for margin growth?

Sure. Thanks, Doug. Hi, David. Look, I think Doug hit the highlights, but let me break it down into the two product lines. If you look at the high-temperature technologies, our refractory growth initiatives continue to benefit the segment. Very high-value products. Our MINSCAN trail equipment continues to grow. We've got seventeen units in place. We have about eight more on the books for this year. So that's a huge impact on the high-temperature technologies. The metal castings business continues to be solid. Our growth opportunities, as we've discussed in the past, are primarily in Asia. Asia signed up fourteen new customers in 2024. So we anticipate that continuing to grow. It's been pretty solid. Trying to get those blends into Asia is our goal, and we'll continue to push that. Of course, the cost control, as Doug pointed out, and the productivity improvements continue to be looked at. But when you look at the other side of the business, of course, it's been in a tough market. The environmental infrastructure has struggled for the last two years because of market conditions, but the good news is we're starting to see some activity. In the fourth quarter, we started to get more construction projects, where we got specified into some projects for when that market comes back and investment continues. We talked about the large project in California, a waterproofing project. That's gonna continue in 2025, probably in the second half of the year. So there's more to come. Of course, the drinking water continues to work on the drinking water and remediation projects and also the drilling products. So we've got a lot in the pipeline. Need a little help from the market, but we feel pretty good about where we're at now and where we're headed.

And David, let me just add one thing. I know probably another question, but I think some of the, you know, the most impressive of Engineered Solutions, Brett, was good progress this year. But the Consumer and Specialty side, and especially in that pet care business, had some significant margin improvement. And I think that translated into that 25% operating income growth. And I think that's an exact example of what I'm talking about, being able to integrate these facilities, we lowered our fixed cost base and worked on productivities in these new acquisitions. And, DJ, you saw a lot of that happening through the system that we've built over the past three years.

Yeah. Doug, so David, just on that pet side of the house in particular, we announced this integration in this global brand Ceva, and to the customer-facing side, it's a consistent approach to how we go about serving our customers' needs. It gives them access to the global footprint, gives them access to our high-quality reserves, and gives them consistent access to all the innovation. And in the process of doing all that, especially on the manufacturing footprint, we've been moving around an awful lot of volumes, optimizing efficiency, and really just optimizing that whole customer experience, taking costs out where we can, and then also providing incremental innovations where we're able to improve the margin through the offering of new products. So really, a big part of that was that margin improvement. And then as we're looking forward, the exciting part to me on the revenue growth side is that we've got quite a few new projects and new products that are coming out over the next couple of months that should allow us for even further expansion and further optimization of that manufacturing.

Okay. Great. Wow. Thank you for all the color there. I'd like to ask a second question here on FluorZorb. So, Doug, in your prepared remarks, you called out a large new project for the Northeast, I believe. Could you just kind of point us in the right direction? Is that a beta test? Is that a full commercialization? And then, you know, is that for drinking water or groundwater remediation? Maybe just some color on that large new FluorZorb project you called out. Thank you.

Brett, you want to give some color?

Yeah. David, I can give you a little bit of color on that. So we do have a large-scale drinking water program that's in the works. And that's in the northeast. It's full-scale drinking water, FluorZorb, and we anticipate that to start up in the coming months. So that's pretty exciting. We have a lot of activity on FluorZorb right now. As we talked about, we've met with the EPA. We've had a kickoff meeting scheduled with them this month. We had fifty-one projects, David, of various sizes that our portfolio included full-scale implementation, some larger-scale piloting, some cleanups institute cleanups for soil remediation. But the FluorZorb continues to get more and more attention. There's eight programs that we're working with the EPA on now, and we have four full-scale drinking water systems utilizing our FluorZorb and four more that we anticipate in the first half.

And, David, the reason I highlighted this one is it's a little bit newer for us. For the past year or two, we've been working on drinking water in kind of vessels. So there's two different ways of removing impurities in drinking utilities. One of them is vessel-driven, water passes through the vessel, through our media, takes out the FluorZorb. There's gravity-fed systems, which are much larger, where the water will pass through it in big, large, I mean, very large outdoor vessels. This will be one of those. Again, we're still working through some of the details, but it would be a new application, a very high-volume application of FluorZorb, which I think gives more traction in a different type of utility. So I just wanted to call that one out because it's a bit different from the past ones we've been piloting.

Alright. Thank you for the color. I'll get back in the queue.

Hey, good morning. Thanks for taking the questions.

Hi, Pete.

So your first-quarter guidance implies some margin pressure year over year. I was just wondering if you could break out what the major drivers are there? Is it mostly driven by operating leverage or revenue mix? Are you seeing any pressure from pricing versus raw materials? Just any additional color you can give there would be helpful.

Yeah. Hi, Peter. This is Erik. Thanks for the question. So, yeah, from a margin perspective, we're looking at pretty similar margin in the guidance going from Q4 to Q1. You're right to point out that last Q1 in 2024, we had a pretty strong margin. I would point to mix on that. I mean, some of the markets that are softer for us this year versus last year are some pretty high-margin markets for us. I'm thinking of the high-temperature technologies markets in particular. There's a little bit of a mix impact going on there. I will say energy rates are a little higher than they were last year. And we're working to pass those through. We could have somewhat of a timing impact in terms of when we're passing through those higher energy costs to our customers. But generally, the margins are staying consistent with what we had in Q4, and we expect those to build through the year. I mentioned earlier, Q4 and Q1 are typically the softest from a margin perspective just due to seasonality. And then they strengthen as we go through the year.

Very helpful. Thank you, Erik. And just as a follow-up, are there any additional details you could give on the sale of refractory assets during the quarter? Just what was the reason for exiting that business? And are there any other asset sales across the portfolio that you are contemplating along similar lines?

Yeah. There's nothing really to highlight. This is, you know, we've always had a very small refractory footprint in China. Our main markets have been North America, Europe, Southeast Asia, India, primarily, Turkey. So we've always had a very small footprint there. The Chinese government was looking to develop this land. We were one of the first twenty-some years ago in this industrial park. That park has grown. The local government there wanted to develop our piece of property, which is pretty valuable to them, which was not an issue for us. We were able to move that and absorb that production elsewhere. We have a facility in Japan that was able to absorb some of that production. So and we also our equipment sales come from into China from Germany. So it's not a big deal from a manufacturing standpoint. We thought it was a good thing to do, and so exited that facility and sold it to the government. So nothing more than that.

Very helpful. Thank you.

Okay. Sorry. I hit the mute button. Sorry about that. So there was one topic I wanted to ask you about, not really mentioned in your prepared remarks or I believe in the press release. But it does relate to the talc litigation. So you have you did dedicate, I think, $30 million to sustaining the ongoing negotiations towards settlement. And this doesn't relate directly to you, but I guess the folks involved with the larger talc litigation with J&J and Imaris. I guess there was some movement there. There was a shareholder vote that was successful. Could you just give us maybe your latest thoughts on progress towards the settlement and whether the movement, I guess, with the litigation with J&J and Imaris, you know, bodes one way or the other for either the timing or the magnitude of an eventual settlement? Thank you.

Sure. So not a lot to report on that front, but we have been progressing in mediation. I would say that we've been progressing at pace. You know, these things tend to be relatively slow, but we're moving. We've had mediation sessions in December and through January. And so I'd say it's constructive, and it continues. I can't give you an indication right now that that's leading toward a solution, but it's still positive that we're moving in the mediation direction. Relative to others, you know, we're separate from that. We're focusing on our own solution to this to find a fair and final solution for the company and for all involved. And so we're focused on that. If there's one thing and maybe it does do is it, you know, it creates less distraction outside of other, you know, mediations and enables us to maybe move more quickly. But, you know, that's my supposition. I would say that they don't have any influence on ours, and we're dealing with ours on our own. So nothing much to add to that other than it's still constructive and it is progressing, David.

Okay. Great. And then last one from me. I did want to touch base with DJ just to get a sense of expected new PCC startups in 2025 and then maybe just some comments on the new project funnel that you see. Thank you.

Thanks for the question, David. As Doug mentioned, we signed three contracts we've got coming online in 2025. All of those are in Asia. I'd expect another couple of signings, one in Europe, one in Asia. And heavy emphasis on packaging. Heavy emphasis on NewYield. When I look at the overall pipeline, it's reasonable for you to think we've got a couple of dozen projects that are under review, under discussion. Quite a few of them are related to packaging, and there's some overlap with this comment, but quite a few of those are also NewYield as a platform for other items. So I would say we'll definitely see the effect of these new startups coming on in the second half of the year. There's still a little bit of a ramp-up that's going on in the satellites that we started this year, that's three or four, and then you'll see there was one conversion that we did to NewYield in the Americas. So that's not so much a change in revenue and volume, but it's part of the profit enhancement and margin enhancement that we got going on in that segment. So overall, good progress, good trajectory, and the continued themes are packaging in these newer platforms that are mostly directed at being a more sustainable pigment to the paper industry.

Great. I appreciate that. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Doug Dietrich for any closing remarks.

Just want to say thank you very much for joining the call today. Appreciate you listening. Appreciate the questions from everyone, and we'll talk to you again in three months. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.