Ladies and gentlemen, thank you for standing by and welcome to the Minerals Technologies Second Quarter 2013 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Rick Honey, Vice President of Investor Relations. You may begin.

Good morning. Welcome to our second quarter 2013 earnings conference call. Today, Chief Executive Officer, Bob Wetherbee will provide some insights into our second quarter performance, as well as his perspectives on his first few months as CEO. Bob will then turn the call over to Chief Financial Officer, Doug Dietrich, who will give you a detailed report of our financial results for the quarter. Executive Chairman, Joe Muscari, will provide some closing comments on the direction of the company and then we will open it up to questions for our management team. Before we begin, I need to remind you that on Page 8 of our 2012 10-K, we list the various factors and conditions that may affect future results. Statements related to future performance by members of our management, are subject to these cautionary marks and conditions. Now I'll turn the call over to Bob Wetherbee. Bob?

Thanks, Rick, and good morning, everyone. Minerals Technologies posted record financial results for both the second quarter and first half of 2013. We saw increases in sales and operating income and recorded $0.63 per share from continuing operations for the quarter versus $0.57 a year ago. Underlying sales increased 4% over the second quarter of 2012 and operating income was up 7% over a year ago to $32.4 million. The primary drivers for this growth were the increased volume in the Paper PCC business with the continuing ramp up of 3 new satellite plants in Asia, increased penetration of our FulFill technology at paper mills, where we have existing commercial agreements, and the restart of production at our Alizay, France satellite facility, a plant that had been idle since the fourth quarter of 2011. We also saw an 8% increase in sales in our U.S. specialty PCC product line enabled by an expansion at our Adams, Massachusetts facility. In all, this resulted in a record operating income for the Specialty Minerals segment of $25.2 million. This is 15% of sales, the highest level of profitability in a decade. In the Refractory segment, underlying sales increased 5%, primarily due to incremental sales from our operations in Bahrain. We're also faced with lower equipment sales and the loss of sales from 2 steel mill closures in the United States in the second quarter of 2012, both of which contributed to a 2% decline in operating income for the segment. Looking forward, we see economic conditions that drive our steel and paper end markets, remaining similar to what we experienced in the quarter. Our core strategies were developed in some of the most difficult economic conditions of our generation and they have proven to be very successful. As conditions improve, we are well-positioned…

Thanks, Bob. Good morning, everyone. Let's go through our consolidated and business segment results for the quarter. I'll highlight the key market and operational elements of our financial results in each major product line and comment on comparisons to both the second quarter of 2012 and sequentially, to the first quarter of 2013. As Bob mentioned, we achieved record quarterly earnings from continuing operations of $0.63 per share, which is an 11% increase from the $0.57 recorded last year. Our strong performance this quarter was led by the Specialty Minerals segment, which also achieved record quarterly profits. Paper PCC profits increased over 15% compared to last year and the Performance Minerals business continues to operate on a very strong track. Our record earnings were achieved despite slightly lower profitability in the Refractories segment. We also benefited from a lower effective tax rate due primarily to a one-time reversal of tax reserves associated with the completion of the U.S. tax audits. This added approximately $0.02 to our earnings per share. As we indicated on the last call, we closed our merchant PCC facility in Walsum, Germany in the second quarter and reclassified the operation as discontinued. We recorded a loss from discontinued operations in the second quarter of $0.14 per share related to operating losses that were higher this quarter due to winding down of the facility and through a charge related to the facility closure cost. Normal quarterly operating losses of the Walsum facility have been between $0.01 to $0.02 per share. All prior periods have been restated to reflect this reclassification. Our consolidated sales this quarter increased 2% or about $5 million from the prior year. Our underlying sales grew approximately 4% as foreign exchange had an unfavorable effect on sales. In each segment, underlying sales grew by 3%…

Thanks, Doug. Good morning, everyone. I just want to take a few minutes to share a few additional thoughts with you as Bob and I continue on the leadership transition path that we started on a few months ago. By the way, the transition is going well and as planned, Bob has taken over the day-to-day operations of the company as I focused more on the M&A front and major new customers, particularly in Asia. I expect to serve in an active management role as Executive Chairman, at least through the end of this year and possibly into the early part of 2014. As you heard from Bob and Doug, Minerals Technologies continues to perform at a high level, setting new records for profitability. The company's direction and trust is to continue on that track and as Bob indicated, to deliver on opportunities that will increase shareholder value. As we look forward, the challenges of a never-changing global economy, as well as competing in the highly cyclical markets of steel, paper, construction and automotive, remain. What has changed, however, is the company's ability to improve its leading market positions because we offer our customers products and services that provide significant cost savings, as well as advantages that allow them to differentiate in their marketplaces. And because we're a strong operating company built on a lean foundation, we will continue to grow our product line through geographic expansion and technological differentiation. These have been and will continue to be the company's pathways to creating value. As we move through the transition, it is clear that the groundwork we've laid in the last 6 years, while I might add, increasing our earnings almost 70%, will remain the foundation for future growth, both organically and through acquisitions. I'm confident in Bob Wetherbee's ability to lead this company and to maintain a high-performance track going forward. Now let's open it up for questions.

[Operator Instructions] And your first question will come from the line of Daniel Moore, CJS Securities.

The Refractories, as you mentioned, showed surprising strength. Can you give us a sense of the contribution from the Bahrain operation?

Yes, Dan, this is Doug. So we saw a little bit stronger sales than we'd expected in the second quarter. So most of that growth, we had about $5 million worth of sales just in the quarter in Bahrain so that was higher than normal. Operating income from that, probably around $750,000. So I think the higher sales are what really drove through the volume increases in Europe.

Perfect. And obviously, in your prepared remarks, you see similar type results for operations as you look into Q3. What might give you pause? Any concerns around the core business in Refractories or is this level -- very comfortable this level is sustainable as we look out at Q3 and the back half of the year?

Yes. I think in Q3, it's really probably a difference in mix. I don't think we're going to see the continued strong sales in Bahrain and I think that -- to your question, what gives me pause is probably the equipment sales. We've continued, as you've known for almost the past year with the soft steel industry, where capital spending on their behalf has been lower, and that's affected our equipment sales. So those equipment sales coming through in the third quarter but if it gives me pause, that's one area that has been soft through the past year.

And lastly, that goes to my question, just a little bit more detail on equipment sales in Q2, specifically. Did you see much of a pickup and obviously, the environment remains a little uncertain there.

Yes, it does. We didn't see much of a pickup in Q2 as I referenced in my remarks. It just continues to be soft on a year-over-year basis in terms of number of units. We do usually see a pickup in the fourth quarter. Typically for this business, we're working on selling units throughout the year and building them throughout the year and most customers take deliveries in the fourth quarter. So it's not that the second quarter is typically strong anyway but they have been typical to the soft market. They've been weak this quarter.

Your next question is from Rosemarie Morbelli with Gabelli & Co. Rosemarie J. Morbelli - Gabelli & Company, Inc.: Doug, you just said that on the steel area, equipment is -- I mean, customers take -- well, we see their equipment in the fourth quarter. Could you talk about your backlog? I know this is an area of concern and when you look at that backlog, are there any cases of customers placing an order and then either delaying delivery or actually canceling it all together?

So, Rose, I'm going to start then I'm going to pass it over to Han to give you a little bit more color. The structure, as I mentioned, of kind of our equipment sales on a typical year, we'll have some equipment sales, laser units, some dektecs [ph] other types of equipment that are sold throughout the year. But typically, historically, our sales are increased in the fourth quarter as most of the units where the orders are placed through the year are finally sold, commissioned, qualified in the fourth quarter. I'll take you back to the second quarter or the fourth quarter of last year, where we did not see those sales. If we go back to that call we highlighted that with the downturn in the second half of the steel market last year, a lot of customers didn't take the equipment, they didn't place the purchase orders, they didn't come back, they didn't place the orders as they were constricting their capital spending. While we're seeing that continue this year, though we're hopeful in outlook, I'm going to let Han talk about the outlook of the fourth quarter of this year in terms of the number of units that could potentially come through. Han?

Yes, thank you, Doug. Yes, so if you look to the -- in general, to our sales, of course, in the equipment, it's heavily loaded normally to the fourth quarter. It has primarily to do also with the outages that the customer has taken in the Christmas period and they are looking for a way, of course, to install the equipment. So we have to be ready to be able to install in the fourth quarter, and that's why it's heavily loaded into the fourth quarter. We haven't seen really customers postponing so far but we see still a lot of capital restrictions and the capital approvals as the customers are very slow at the moment. So that continues to be the current situation.

Rosemarie, I'd add one thing to that, though. You look at restriction in capital spend over the past 18 months and we do see that that's going to come back eventually. We also have some new products out there, as we mentioned, with the laser torpedo. We've continued to market and sell that. Some other new products that the business is working on. So we do see some growth in equipment sales in the future. We just, as I mentioned, in the third quarter, we're not seeing it happen in the near term. Rosemarie J. Morbelli - Gabelli & Company, Inc.: And then on the Specialty Minerals, that 15% operating margin, which is a great level. But is it sustainable, is it because usually the second quarter is seasonally stronger so it is not going to be at that level over the next couple of quarters but then more importantly, what about next year? Is anything in -- that you see happening that would prevent you from having that 15% margin?

This is Bob Wetherbee and thanks for joining the call. We feel well-positioned for future growth. We're executing our strategies. We're seeing success and when you get underneath of that, the Paper PCC business continues to grow with new satellites expansions, FulFill is gaining traction in the marketplace. We see the increase validation around trials coming through and you see our expansions in ultrafine Specialty PCC coming to the marketplace. On top of that, we have the development pipeline that's very robust at the moment. So we do see that we built a foundation for growth and expect continued results. Doug, any flavor you'd like to add to that?

Yes. Rosemarie, I do think they're sustainable. I think, as Bob mentioned, the underpinnings of those margins with higher-margin products, productivity improvements, our new satellites and growth and leveraging our shared service model to support that growth without having to add to cost. So I do think all of the underpinnings of our margin expansion that we've been talking about are coming through. So yes, I do see that that's sustainable and not necessarily just a reflection of the seasonality in the second quarter. Rosemarie J. Morbelli - Gabelli & Company, Inc.: Okay. And then lastly, if I may. I was wondering if Joe could give us a feel for what he sees out there in terms of M&A, whether we are getting closer to a third leg and if there are any thoughts of repurchasing more shares with the lack of acquisitions.

Sure, Rosemarie. One, we're -- we continue to be -- you've heard me say this before but it's simply a fact, we are very active. Our M&A team, at any one point in time and that's true today, is involved in 3 to 5 different projects. So the activity level of areas that we're either looking at or in discussion at is still at a very high level today. We are going to continue to take a very balanced approach to the use of that cash, as you heard me say before, which basically means that if we see that certain acquisitions may not be developing as fast or we bet we can bring them to fruition within a reasonable time frames, then we have the opportunity to accelerate buyback, which is something that we have done from time to time and we're going to continue to look at share repurchasing as another aspect of delivering shareholder value and making good use of the cash. Rosemarie J. Morbelli - Gabelli & Company, Inc.: And, Joe, your definition of a reasonable timeframe, is that 1 year, 2 years?

You know what? As soon as I used the word reasonable, I had a feeling you were going to ask me what reasonable is. Well, it's -- you have to sort of be in the moment and assess how much longer a deal may take to complete and the probability of it taking to complete. But I think the thing to keep an eye on is that we have not really been materially adding to the cash position, which is reflective of some acceleration while at the same time, it's still a large amount of cash, which means that we still have a perspective that we can put that to good use within the coming year or so.

Your next question is from Steve Schwartz with First Analysis.

On the SULB ramp in Bahrain, so this is going to anniversary in the third quarter and, Doug, I think when you were answering one of Dan's questions, you commented that you thought maybe the third quarter year-over-year growth might slow. So I'm just wondering as this goes into the 2nd and 3rd year of the agreement, do you expect that essentially the revenue from that will be flat year-over-year from here on out?

Well, let me go back to Dan's comment -- my answer to Dan's question. That mill continues to ramp up and so, as they go through their ramp-up, they could be consuming more -- they do consume more refractory products in these early days. So it's taking them some time to get that plant started late in the third quarter and they're still going. So I think the sales -- the higher sales in the second quarter is reflective of that kind of higher consumption. As that mill gets up to full capacity and full running rate, we think we're going to get back down to the normal and we had about, I think, we said $10 million to $12 million per year and so we're going to get back to that kind of run rate. And so it's nothing significant in terms of slow, I think it's just more of getting back to the normal run rates when that mill gets ramped up. So on a year-over-year basis, I think you're going to still see in the third quarter probably some sales growth because we had -- we're ramping it up in -- just in the beginning of the third quarter. So there'll still be some incremental growth there but that will normalize as we get to the fourth quarter.

And then regarding Alizay, I thought I saw some comments from Double A that -- where they suggested that, that mill would ramp through this year. So I'm just wondering, it obviously was a notable contributor to the second quarter, did you -- because it's starting up, did you see a huge surge in volume in the second quarter or will the third and fourth get better for you?

So we saw some volume increase. I think it will continue to ramp up. We got to normal running rate, D.J., probably late in July. So we had about $0.5 million of revenue contribution from it just in the quarter as it ramped up through -- I'm sorry, through June. That facility will just run. I think it got to run rate at the end of June. So we'll see a full quarter of that rate coming forward.

Okay. All right, that sounds good. And then just my last question on the net wire sales, how is it those are bucking macro trends in steel and you're seeing growth there?

That's a great question, Steve. I appreciate you bringing it up. It's actually a good example of our new product innovation and the robust portfolio of products coming to the marketplace. We're actually joined this morning by Han Schut, who runs the Refractory business and, Han, can you add a little color as to what's going on in the Metallurgical Wire business?

Yes, sure. Thank you. And, Steve, so if you look at wire and our strategies there, it -- first of all, it's new product development. So we are developing new injection systems and also new products, which gives us the entry to new market segments. So that's a way for us to grow. And then secondly, geographically, we're also focusing on new markets. So specifically, if you look to India has been for us a very important growth markets that we have been able to penetrate and we're also starting to make traction in both Turkey and Russia.

You have a follow-up question from the line of Daniel Moore.

Any potential lingering impact on the P&L from Walsum in Q3 or is that entirely behind?

No, that's entirely behind and that's all been called prior financial result sales and income have been restated to discontinued ops.

And lastly, I haven't talked too much on GCC, you have nice pickup in Q2 after several quarters' declines. Is that sustainable and what's the outlook for the remainder of the year?

Yes, I think -- well, first off, the Performance Minerals business is seasonal and a lot of our GCC products goes into the construction industry. You'll see that the second quarter is typically the highest point as it ramps up through late in the first quarter into the second quarter, and then as the construction industry starts to tail off. So I think from a year-over-year basis, yes, we're going to continue to contribute with the growth in construction and that's regional. I mean, it's -- we operate on the East Coast to the West Coast but as you see into the third quarter, that will probably tail off in terms of growth just due to the seasonal nature of the business.

We also have a follow-up question from the line of Rosemarie Morbelli. Rosemarie J. Morbelli - Gabelli & Company, Inc.: I was wondering if you could give us some -- I mean, an idea of the progress you are making in TiO2 extenders now that TiO2 seems to be stabilized in terms of price. Do you see less of an interest from your customers?

Well, thanks, Rosemarie, this is Bob. TiO2 extenders are still a product of our -- in our portfolio and we still see it as an avenue for growth. There's certainly been a lot of news in the press about where TiO2 is going and we have Doug Mayger here with us who is responsible for the Performance Minerals business and he can shed some light on that.

Yes, we continue to do trials with customers. We have commercial customers although small, but we do see that as -- and a little bit into the future as TiO2 prices, perhaps, increase into the future as construction becomes more robust, paint industries will be challenged with, perhaps, higher TiO2 prices. And at that point, we do see that we would be in a good position to leverage our extenders and at -- the ALBAFIL T10 and the ALBACR T10. And we do continue to make even today inroads with other customers. Rosemarie J. Morbelli - Gabelli & Company, Inc.: Okay. So you haven't -- how big business is it today? I mean, it is still very tiny, right?

It is tiny, yes, it is. Rosemarie J. Morbelli - Gabelli & Company, Inc.: And same question on the talc, which also goes into construction if my memory serves me right, as well as into plastics?

Well, actually, you're right, Rosemarie, we're very excited about where the talc business is going in terms of plastics. You heard us announce, or you saw us announce last week an opportunity called VICRON FRP and that product is going into the polymer plastic reinforcement industry. And so, we see some new products there. I think when you look at talc, the other concern we have for that is that we do supply the Class A truck market and where exactly that market has been, it's certainly down from the historical peaks. So we see the talc products going into a variety of different markets but upside growth for us with polymers, concerns about Class A trucks. And then the other opportunity for us, clearly, in the talc business is geographic expansion. We certainly talked about that as a key part of our strategy and we have a lot of energy going into where do we play or how do we play in China and then the balance of Asia, specifically to follow our global customers around the world as they continue to grow. So, Doug, do you have anything you'd like to add to that perspective?

The -- so pretty good opportunities around construction for us, market share, opportunities. And as Bob said, we continue to make good progress in all product lines and in talc and the opportunities to leverage that technology over into Asia and take advantage of good opportunities in Asia would be our desire. Rosemarie J. Morbelli - Gabelli & Company, Inc.: I think that you are looking for, possibly, a source of good talc somewhere in the world. Are there any possibilities in Asia?

There are opportunities in Asia and all talc is not created equal. But I will tell you that even here in the U.S., there are opportunities and we continue to have a very good mine in Montana that we continue to do our exploration on to find additional reserves there. Rosemarie J. Morbelli - Gabelli & Company, Inc.: Okay. And then lastly, the pricing on the contract renewals regarding PCC. Is the price staying the same, is it coming down, what do you see?

Rosemarie, it's D.J. On balance, we've been -- as we've been renewing, we've been keeping them about the same. We've been able to do that as we're going forward as we've gotten some good leverage from our new products and we've been having a concentrated effort at refreshing the product line within our existing customers. So on balance, I'd say it's about the same, our best success probably to give you an indicator, is in Brazil where most of our contracts now are locked up through 2020 without any significant price erosion. So that's just an indicator for you.

Our next question is from Steve Schwartz.

Is there any more potential savings from the fuel oil to natural gas conversions on your kilns?

Yes. We have -- we mentioned on the past calls that we have 4 kilns in Adams, we currently use 2 of them. That second one was just converted late in the second quarter to natural gas. We converted one last year and you've seen the savings from that one flow-through as part of our margin growth. Converted the second one to the extent that we can continue to expand Specialty PCC like we've done and continue to grow that market. We're self-sufficient in lime and then we could convert a third kiln with the use of that lime. And so we could see some continued savings, but right now, you're going to see a little bit more savings coming in the third quarter from the second one we converted just recently.

Yes. I think on that first kiln, you'd said on prior calls that you saved as much as $2.5 million a year, is it that still an appropriate number?

It is. Again, it fluctuates at the price of natural gas. And so the amount of savings is based on it and gas is up a little bit but that's a good number, Steven. The second kiln is a little bit smaller than that one, it's not the different sizes. So the savings will be less, probably about half on that kiln.

And then, Doug, in your prepared remarks, and I apologize for missing some of this, I heard you say $0.60 and I think you were referring to the near-term quarters. Did you say that was in fact, a floor or just kind of a target or -- can you clarify that for me?

Well, Steve, I don't think I gave you the floor, or I gave you an approximate $0.60. I think I was trying to highlight that we see the second -- we see the third quarter continuing to be strong and if you look at it versus last year with sales up 4%, we think earnings per share of approximately 10%. Again, we're not going to have the tax benefit, the $0.02 tax benefit that we got this quarter so you have to discount that. So I see a strong quarter in the third quarter, and I said approximately $0.60.

Approximately, okay. Well, good thing both of us, we got that clarified.

You have a follow-up question from the line of Rosemarie Morbelli. Rosemarie J. Morbelli - Gabelli & Company, Inc.: Just a little more clarification on the clarification. When we are looking at that 10% increase, are we looking at adjusted numbers in 2012 to reflect Germany? And if that is the case, what is the number we are looking at in 2012? Because while you were in last year, you reported $0.55 in the second, it was actually -- the comparison was against the $0.57, which is an adjusted number.

Correct. If you look at the charts that I showed today, Rosemarie, all -- everything has been restated. So if you look at our restated charted chart today, last quarter was $0.54 -- last third quarter, last year was $0.54 restated. I've taken that out, so I'm looking at a 10% or around $0.60 from last third quarter, and that is without Walsum, that's taking out Walsum and everything from both last year and this year.

This is Joe. If I could maybe add a little bit to that from my perspective in my new role but also of the board, but if you reflect a little bit on the comments that were made during this call, it really speak to -- the company is at a different place today from where it's been and it's different in a sense and it's not something that was a leapfrog. It was something that's been deliberately built in a consistent way over time and our ability to now, I think, grow in a more consistent manner to continue to deliver good, high performance. The integration, the further engagements of our employees in terms of their suggestions and what we convert in terms of ideas that are converted to things that we act on. So the company is at a new place. And the board has an expectation that the company is going to continue to deliver at a higher level. And so you heard Bob talk about we've broken through or we -- the $0.60 level. And there is an expectation of ourselves and of the board that is going to continue to be a high-performance level. So I think that's the way, maybe, to maybe think about this quarter in terms of the things that came together that are sustainable going forward.

There are no further questions at this time.

That will conclude our call today. Thank you for your interest in Minerals Technologies.