Good afternoon. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2013 Minerals Technologies Inc. Earnings Conference Call. [Operator Instructions] I would like now to turn the call over to your host, Mr. Rick Honey. You may begin.

Good morning. Welcome to our first quarter 2013 earnings conference call. For today's call, we'll begin with Executive Chairman Joe Muscari, who will provide some perspective on our first quarter 2013 performance. Joe will then take a few moments to discuss the transition that will take place this year as he hands over the leadership of the company to our new President and CEO, Bob Wetherbee. Joe will introduce Bob, who will comment on his initial perspectives from his first 2 months of travels, visiting MTI locations around the globe. Bob will then turn the call over to Doug Dietrich, our Chief Financial Officer, who will review the details of our first quarter financial results. 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 remarks and conditions. Now I'll turn the call over to Joe Muscari. Joe?

Thanks, Rick. Good morning, everyone. Our financial performance for the first quarter continued to be strong, as we recorded $0.53 per share in earnings versus $0.51 in the first quarter a year ago. The $0.53 per share is also a record first quarter for Minerals Technologies. Underlying organic growth was strong in the quarter, as our Paper PCC business benefited from the continued ramp-up of our new facilities in India and Thailand. In the fourth quarter of 2012, we began operation of the satellite PCC plant at a paper mill owned by Quantum Paper in India, as well as another satellite serving Double A Paper in Thailand. And we just recently started operation of the satellite at JK Paper in India. Our Paper PCC business in Asia overall saw an 8% increase in volume this quarter. As a result, our Specialty Minerals segment, which consist of PCC and our Performance Minerals businesses, had a record-breaking first quarter with an operating income of $22.2 million. Our FulFill technology also continues to gain momentum, as we signed 3 commercial agreements during the quarter. Refractory segment, however, had a difficult quarter as a result of continued weakness in the North American and European steel markets. A major factor in the decline was the closure by RG Steel of 2 steel mills in North America, where we had significant positions. We also saw lower sales in our non-steel applications, as well as lower equipment sales, which continues to be a drag on this segment. Looking forward, we remain concerned about the economic conditions in Europe, as well as the softening worldwide steel industry. However, we do expect to stay on an improved earnings track, as our new satellites sustain their ramp-up traction, FulFill usage and new customer penetration continues and our operating performance remains…

Thanks, Joe. Hello, everyone. I look forward to meeting many of you face-to-face over the next few months to outline how I plan to keep MTI on a high-performance track and meet our growth targets. What I can tell you after just 2 months on the job is that Minerals Technologies is a high-performing, highly-focused, values-driven company. We have strong market leading positions in many of our businesses, especially in Paper PCC, where we are the largest supplier of precipitated calcium carbonate to the worldwide paper industry. Our Refractories business is a leader in monolithic refractory technology and application methods. The Performance Minerals business is a lean operation that's making strides in new technologies and gaining market share. I am committed to maintaining these leading positions. With our strong management team and the execution of our growth strategies of geographic expansion and new product innovation, we're well-positioned to grow the company. And with our strong cash position, we will continue to aggressively seek opportunities for acquisitions at the right price and in the right products and markets that will fuel that growth and reduce the cyclicality of our product portfolio. I embrace and will continue to aggressively lead the initiatives that have changed the MTI culture and improved our performance over the past 6 years. I come from a culture where safety is paramount. It's a core value for me. I believe it's a leader's responsibility to ensure that our employees leave work each day in the same healthy condition as they arrived. The difference that our operational excellence lean initiative has made in improving productivity and efficiency is evident in our higher performance. We will maintain the processes and practices that are in place. MTI was built on innovative technology. The company originated the satellite concept of building PCC…

Thanks, Bob. Good morning, everyone. Now I'll take you through our consolidated and business segment results for the first 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 first quarter of 2012 and sequentially to the fourth quarter of 2012. As Joe mentioned, we achieved record first quarter earnings of $0.53 per share versus the $0.51 reported last year. Our solid performance this quarter was led by the Specialty Minerals segment, which also achieved record first quarter profits, as performance was strong enough to more than offset the lower profitability we experienced in the Refractory segment. We also benefited from a strong -- from a positive swing in below the line items, primarily due to foreign exchange and favorable tax items, which added $0.02 to our EPS. Our consolidated sales this quarter decreased 2% or about $6 million from the prior year. Foreign exchange had an unfavorable impact of approximately 1%, and 2 fewer days in the quarter this year accounted for another 2%. Excluding these factors, our underlying sales increased 1%. Underlying sales in the Specialty Minerals segment grew 3%, but declined 3% in Refractories. Operating income of $27.1 million represented 10.8% of sales compared with 10.5% last year, as margin expansion, as a result of strong contribution from our growing Asia PCC business, continued FulFill commercializations and pricing improvements. In addition, overall productivity improved more than 6% versus the first quarter of last year, and we continued keeping our expense levels tightly in control. Return on capital for the quarter increased to 8.9% on an annualized basis. We generated $25 million in cash from operations, of which $9 million was used for capital expenditures and $9.5 million was used to repurchase shares.…

[Operator Instructions] Your first question comes from the line of Daniel Rizzo from Sidoti & Company. Daniel D. Rizzo - Sidoti & Company, LLC: The improvements you made in the operating margin in PCC -- I'm sorry, in the Specialty Minerals segment, is that from -- does FulFill have a lot to do with that, or is it just increased productivity? I mean, is FulFill actively contributing to improve margins in that segment?

Yes, it is, Dan. I put up on the chart that both the Asia PCC satellites and FulFill are contributing to that margin growth. I think it was -- total was about 0.6% in total.

And your next question comes from the line of Rosemarie Morbelli from Gabelli & Company. Rosemarie J. Morbelli - Gabelli & Company, Inc.: So, Joe, it looks as though you are now going to focus in M&A. Does that -- could that translate into a transaction before year end?

Well, I have been focusing on M&A, just for the record, but what it'll allow me to do is to spend even more time in the M&A area, working with folks like John Hastings, the Head of our M&A group, and it does not necessarily -- one does not necessarily follow the other. And as much as I'd like to give you more insight, I think the way to look at it is -- or think about it, it does allow us to increase the intensity of our efforts, as well as increase some of the breadth, but I would say more on the intensity side. And as I've related in the past, at any given point in time, we have a number of things going and the period of time -- going in a sense of in discussions with other companies, and this period is no exception. Rosemarie J. Morbelli - Gabelli & Company, Inc.: Okay. And I was wondering if you could give us some details on the price increases that you had in several of the areas and particularly, in the new contracts. It sounded as though you had price increases on the new contract.

Yes, Rosemarie, this is Doug. We -- there are 2 components to the price increases. One of them was PCC. Those were largely the contractual price increases as we absorbed lime cost increases in the fourth quarter. We passed them through in the first quarter. We've benefited from some stability in our -- in some of the raw materials and energy. So lime cost increases weren't as severe this year over last, so we benefited from some good pricing there. The other component is in Performance Minerals, and I highlighted, we had some pricing improvement in our talc product line. Rosemarie J. Morbelli - Gabelli & Company, Inc.: And in talc, I suppose, that because it is linked to construction, the price increase is due to the stronger demand and a better competitive environment, or are you offering that industry some different products?

Well, we are. We're -- I mean, it's obviously, due to the quality of our products and the value we bring to the customers, we've managed to increase some pricing. But also, some of the Optibloc products that Joe had mentioned, those are pretty high price point type products, high-value as well, and so we've seen an increase in some of those. Rosemarie J. Morbelli - Gabelli & Company, Inc.: What about the TiO2 extenders. You didn't mention any of that. Could you talk about the demand and the pricing? Or because TiO2 is more stable at the moment, there is somewhat of a slowdown in the growth in there?

Rosemarie, yes, we have seen -- we are still active with a number of companies where we're running trials. And we are actually selling to 1 particular company, 2 -- actually 2 now, Doug tells me. So the activity continues, but with the price reductions in TiO2, the degree of pull that we experienced a year ago has slowed down, without a doubt. But we're still active in it. We have a good product. And we expect to see continued sales growth there albeit at a, let's say, a slower rate than we were thinking last year. Rosemarie J. Morbelli - Gabelli & Company, Inc.: Okay. And then if I could -- in Germany, did you have some kind of a hit to operating income from the operation you aren't going to -- discontinuing?

No, Rosemarie, that's -- so that's been part of our continuing operations since 2007. We did -- you probably remember, we did take an impairment on that facility back then as we restructured away from the merchant model in Europe. That facility is a merchant PCC coating facility. And as we had shifted more to the satellite model in coating, as you can see Sun Paper, our new facility China is a satellite coating PCC, that business has continued to run at lower volumes. So we're looking at -- right now is a good time to close that facility given where we are with it, and that's going to be done this quarter. And so really, it's going to be moved to discontinued ops, and we'll have some closure costs associated with it. That answer your question? Rosemarie J. Morbelli - Gabelli & Company, Inc.: Yes, it does. And one last question, on the PCC new contracts, any change in terms of what you are able to get?

In terms of price? Rosemarie J. Morbelli - Gabelli & Company, Inc.: When your satellites -- the contracts for the satellite, the multi-years, expire, you are renewing those contracts at similar prices, or do you have to take them down, or because of the value you are offering in FulFill potential, you can actually renew those contracts at a higher price?

Rosemarie, this is D.J. So what we're experiencing right now that we've got about a normal number of renewals that are going on, and that's between 6 and 10 every year. We've been -- we're continuing along at that rate, and we're getting, I would say, favorable renewals based on a couple of elements, one of them being FulFill. And then as we're going forward, these new PCC contracts -- Doug had mentioned the 2 that we're building right now and we're pursuing many, especially in China and in Asia. As we're pursuing these new contracts, we're finding that FulFill is a key strategic lever for us to get those contracts, and so we remain optimistic that they'll be at similar pricing levels to what we've been experiencing in the past.

And your next question comes from the line of Daniel Moore with CJS Securities.

First, a quick clarification on the -- your comments for Q2 in Specialty Minerals, you expect operating income up 10%, is that the year-over-year or sequentially?

That's sequentially.

Sequential. Perfect. And in the not-too-recent past, you've talked about growing FulFill, the impact you would have there, doubling its impact on operating profits from $1.4 million to closer to $3 million in 2013. Given the 3 new contracts in Q1, is that still a reasonable goal, is there upside? And given the various stages of business development, what type of growth do you expect to see in '14?

We had indicated on the last call that we expected 2013 to have op income from FulFill in the range of $2.5 million to $3 million. In the first quarter, we were tracking at around $450,000 of op income, so we're at a rate in the first quarter of a $1.8 million. And in terms of what we're looking at last quarter, we're right on track. I'd say the potential is higher, but it's a little early to call that. As we get through the second quarter, we're going to be in, obviously, a better position to do it. But we are definitely seeing a firming up and stability around FulFill. I don't know if you recall, at the last call, I discussed the fact that we will be accepted. We'll run our trials, and we'll start to run and then a grade of paper changes, and we have to make modifications, sometimes come off a machine, so it's not a linear process in a sense of once you're on, you just keep going, that we have to typically get through the different types of papermaker is going to be using on that machine or other machines on a site. What we're seeing now is we've been on machines for a period of time. We are beginning to see more stability. And so, that should also lead to more sustainable earnings over time as well.

Great. And one quick follow-up, perhaps an update on the product development pipeline. I think you launched 34 new products in '12. You may have given this previously, I apologize, but what's the split between Specialty Minerals and Refractories, and how much incremental revenue do you expect from those products in '13 and '14?

We typically have not split that out in terms of what we have where, and it's something actually off the top of my head, I couldn't even give you a percentage approximation, but that's something on a future call we can probably do to give you a sense. By and large, I'd say the -- if you look at the revenue split and the percent of new products driven by the different businesses, it would be PCC plus in terms of potential future revenue. The higher growth new development will be -- is primarily or a large majority of it is driven by the PCC business. I'd say Performance Minerals would be #2, and Refractories, third.

Your next question comes from the line of Steve Schwartz with First Analysis.

I guess, first question, Joe, you mentioned in your prepared remarks the pipeline in China. Were you referring to refractories, or was that just for the Paper PCC?

It is primarily Paper PCC and in terms of new satellites and FulFill. As you recall, we've talked in terms of we have in this pipeline of new potential projects some 12 to 15 applications for satellites that we're active in, and that's as we look out over the next 1.5 years to 2 years. So that's one of the key areas that I'll be spending more time with D.J. and with the Asia team with some of the major Asian papermakers there, and that's both for new satellites, as well as the FulFill product. Having said that, we also are looking at a talc positions in China, as well as Specialty PCC in China. So I'll be working with Doug Mayger and his team around those as well.

Okay. So quite a bit going on. And then from a raw material inflation standpoint, what does the outlook look like there? So you obviously, got some very good pricing in the first quarter, what about refractories in MgO?

Sure. Steve, we've seen actually some stability in the magnesium oxide area, so we don't see, at least going forward, a lot of cost pressure there. Where we are seeing some raw material increases, and maybe you have as well, is seeing the natural gas, electricity, so really, the energy arena, and that's primarily in the Performance Minerals business. I highlighted we had some impact on that in the first quarter over last year. So largely stable raw materials except for energy.

Okay. And that actually rolls into my next question about the conversion in natural gas at the Adams kiln, I think the last one you did saved you about $1 million a year, is that correct?

Yes, it was a little higher than that. It was probably about $2.5 million a year.

$2.5 million, okay. And then just lastly some nuts and bolts on the discontinued ops for Walsum, as we back that out of our models for continuing ops, is there any meaningful revenue or op income that we need to factor into our numbers?

So the revenue is largely out. That mill is operating at very low capacities right now. And largely, the volume decline you've seen in Europe this quarter over the last is primarily due to Walsum. There'll probably be some benefit from -- in the operating income, and we're currently going through kind of those costs and the timing of those costs as they get pulled out. So there will be some benefit in operating income.

And it will start in the second quarter that you reported as discontinued ops?

Correct.

Your next question comes from the line of Jeff Zekauskas with JPMorgan. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: This is Silke Kueck for Jeff. Post the closure of the Walsum plant in Germany, how much coatings for a PCC exposure is there, and then in which region? If you can just put it in perspective, what's filler grade PCC and what's coatings grade PCC.

That mill is a merchant mill. It services just Europe, and it's all coating PCC. Probably revenue on an annual basis is about $4 million, $5 million -- $6 million, I think it is. Let me get that for you. $6 million on an annualized basis.

I think in terms of coating per se in the different regions, to your question -- further to your question, Silke, the -- most of our other sites are satellite sites, and if you recall, we withdrew from the -- we withdrew the merchant model, primarily from Europe and other places, and basically adopted a strategy that says, if we do coating such as we're going to be doing at our new facility in China, it will be using the satellite model. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: Okay. How many coatings plants do you have today excluding Walsum?

Silke, it's D.J. Let me quick give you that number. It would be about 10 when we're done with -- when Walsum is out of that number, in that ballpark. And Silke, just to highlight that, that Walsum -- we said in 2007, Walsum just didn't fit our strategic profile, being that merchant facility. So when we put in Sun Paper, which is a 100,000 ton facility, that will be an add to the coating side. So we still see a place for coating in our portfolio, but it's got to fit with the satellite model where we know we bring other value to that customer. So we're -- that's the -- Walsum just wasn't a strategic fit.

Silke, I just have the number for you. This is Doug. Walsum revenue last year was about $8 million and dropped to basically nothing in the first. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: Okay. On the Refractory side, are there -- is there more restructuring coming given that the industry is going through another round of contraction, or is it rightsized to where it should be?

We don't anticipate anything significant at least as we look out through this year, Silke. I mean, it's possible, but it would be nothing of the magnitude of the restructuring we did post-2008 and 2009, when we had the significant drop in revenue. Europe is being affected the most right now, and I think we're at a pretty good position with regard to where our facilities are now. So as I said, right now, we don't anticipate any further restructuring there. We could see some adjustments and some smaller changes, adjustments in Asia, potentially in Europe as well, but they wouldn't -- I don't see them as being large. Doug, do you or [indiscernible]?

I don't see -- I agree with Joe. That's what we're looking at. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: Okay. And lastly, you've done a wonderful job and now signing on, like, 13 commercial customers for FulFill and then these various satellite plants coming on in Thailand, and in India, and in China and -- but also the underlying business is going through a period of contraction. And so, as you look out a few years, is it still possible to reach the growth targets that you set out a while ago, I think, you hope to achieve maybe sales in the range of $1.4 billion, $1.5 billion by 2015. Given the industry conditions, it just seems -- that's a harder target to achieve.

Yes, as I indicated in the -- when we discussed this previously, 1 or 2 calls ago, that as we look at those -- we're at the revenue targets, right? The -- what we were anticipating to come from economic recovery, we're going to be short. And we had -- just from pure economic recovery, we had $100 million in that number. Also, as you look at Refractories has actually had a setback from where we were tracking before. So we've lost ground on the Refractories business as we set that target. So revenue associated in there with economic recovery is -- will fall short. As we look to Asia growth, Asia growth in terms of the geographic expansion strategy and what we had anticipated or what we were targeting, is actually right on track. That is tracking very, very well. The FulFill is a little shallower than what we were targeting, but the potential for FulFill is actually -- has -- still has the potential. If you recall, we were targeting about $125 million in revenue, but it really is revenue and equivalent op income, so you're looking at an op income target of -- in the $10 million to $12 million range; $12 million to $15 million, actually, if you look at the 10% op income margin. So that's tracking well. Question marks right now are around our -- some of our, let's say, larger technology projects that we had built as part of those targets, such as filler fiber. We still have filler fiber. The probability of that actually getting into that timeframe is lower, but post-2015, that's still there. We're still active with the FulFill app. In terms of the other targets' margin, we're tracking to that 12% margin. I'd say we're right on. We're a little under this year, but relative to that target, we're there. ROC, we're also tracking very well from an ROC standpoint, particularly as you think about the cash that is in the denominator of the way we calculate it. We use, as you recall, the Bloomberg method, so cash is in our denominator. So we're tracking above that target right now when you look at the underlying return of the current business.

And there are no further questions at this time. Sir?

Are there any further questions?

[Operator Instructions] You do have a follow-up question from the line of Jeff Zekauskas with JPMorgan. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: Did you purchase any shares in the quarter?

We did, Silke. We purchased $9.5 million worth of them. I'm sorry, that's 228,000 shares.

Year-to-date, we're about $11.5 million.

This year, that is, yes.

Yes, this year. Yes. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: Okay. And how much is left under your program?

About $35 million is left in the program. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: Okay. So that means we are probably done by the summer?

No comment. The authorizations -- Silke, just to give you the details. So we have $35 million remaining, and the authorization runs through beginning of October -- current authorization.

[Operator Instructions] Your next question comes from the line of Steve Schwartz from First Analysis.

This one just on refractory equipment. Isn't the first quarter typically a seasonally weak, so to speak, quarter for equipment, and is it only normally like $1 million or $2 million in revenue?

It is, Steve. It's seasonally weak, but I think what highlights this year is that it's weaker than last first quarter is what I was trying to mention. Usually, the fourth quarter is the strongest. And if you remember last quarter, we didn't see the sales in equipment. Usually, those orders will come in throughout the year and we'll build them throughout the year and commission the majority of them in the fourth quarter; that didn't happen. And we're still seeing that same level of low equipment orders through the first quarter of this year.

Would you describe 1Q '12 as a tough comp for equipment then, or was it more of a standard quarter that you were up against?

I think last quarter, that's probably a decent comp. There's nothing significant in the first quarter.

I mean, for that impact to operating income that you showed on the one slide, it almost makes it look like equipment sales were in the hundreds of thousands instead of $1 million or $2 million?

Correct.

[Operator Instructions] There no further questions at this time.

I'd like to thank everyone for your interest in Minerals Technologies, and that concludes today's call.

Thank you.

Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.