Good day, ladies and gentlemen, and welcome to the Minerals Technologies Fourth Quarter 2013 Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. I will now turn the call over to your host, Rick Honey. Please go ahead.

Good morning. Welcome to our fourth quarter 2013 earnings conference call. Today, Chief Executive Officer, Bob Wetherbee, will provide some insights into our full year 2013 quarter performance; and we'll then turn the call over to our Chief Financial Officer, Doug Dietrich, who will give you a detailed report of our financial results for the quarter. Doug will be followed by D.J. Monagle, Senior Vice President and Managing Director of our Paper PCC business, who will provide some insights into our new product development pipeline. 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 Bob Wetherbee. Bob?

Thanks, Rick, and good morning. 2013 was Minerals Technologies' fourth record-breaking year in a row. We recorded operating income of $124 million and earnings per share of $2.42, both were all-time highs. EPS was up 12% over the prior year, and operating income increased 10% over 2012. We also accelerated our momentum and revenue growth during the year, with sales gains in the last 3 quarters, including 7% underlying sales growth in the fourth quarter. Year-over-year, underlying sales increased 3%. Both segments, Specialty Minerals and Refractories, established new operating income records for the year. Within Specialty minerals, our Performance Minerals operating group, consisting of Processed Minerals and our Specialty PCC product line, performed at record levels, and our Paper PCC unit delivered a very strong performance. During the year, we continued to successfully execute on our strategies of geographic expansion and new product innovation, ramping up new satellite PCC facilities, securing commitments for new satellites and advancing our FulFill high-filler technology. We also brought new products to market in Performance Minerals and Refractories. We're a strong operating company with the ability to globally deploy highly efficient business processes, practices and systems as a result of operational excellence, which is now integrated and embedded throughout the culture of the company. MTI employees work daily to develop new ways to reduce waste and improve productivity. During the year, we held our operating -- or our overhead expenses flat to 2012. This gave us tremendous leverage from every additional dollar of sales growth. We're set to further leverage that position as global economic conditions continue to improve, and we delivered the growth opportunities we're pursuing. Our cash position remains strong as we generated $138 million in cash flow from operations during the year. And we continue our balanced approach on the use of…

Thanks, Bob. Good morning, everyone. Let's go through our consolidated and business segment results for the fourth quarter and the full year. 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 fourth quarter of 2012 sequentially to the third quarter of 2013. As Bob mentioned, we achieved a record operating income for the fourth quarter of $31 million and earnings per share from continuing operations of $0.61, which is a 15% increase from the $0.53 recorded last year. Our reported earnings were $0.65 per share, which included an insurance settlement gain of $2.5 million here in the U.S. Our underlying sales grew approximately 7%, as foreign exchange had a 1% unfavorable effect. We saw underlying sales growth in both the Specialty Minerals and Refractories segments and across the majority of our product lines. Our strong performance this quarter was also driven by both operating segments. The Specialty Minerals segment recorded fourth quarter operating profits of $24 million, a 15% improvement over the prior year on underlying sales growth of 6%. Performance Minerals continued on its strong track, as operating income increased over 22% compared to last year. Paper PCC saw operating income growth of 11%. The Refractories segment also achieved significant growth, as operating income was up 26% from the fourth quarter of last year on underlying sales growth of 9%. Gross profit was approximately $59 million, 9% above the prior year. Gross margins expanded 70 basis points over last year, 23%, driven by price increases, sales of higher-margin products like FulFill, and an 8% improvement in manufacturing productivity. We continue to effectively manage our expenses as total fixed overhead cost dropped to 14.8% of sales, compared to 15.2% last year. And our return on…

Thanks, Doug. Good morning, everyone. You just heard Bob provide examples of our high-performing corporate goals [ph] for delivering operationally, designed to sustain the gains we made in 2013, and to keep building upon those improvements. Doug then described how our efforts translated to outstanding financial performance in 2013. My objective is to give you deeper insight in one of our core strategies, that of technology and innovation. In our last discussion, we introduced you to the Paper PCC technology pipeline to give you a sense of the dimension and the breadth of the ideas we're investing in to further grow our business. We thought it would be beneficial to give you an even better sense on where we are in some key development areas and provide greater detail regarding how these ideas will augment our growth in the coming years. As we've stated previously, technology is and will remain key to our success. Bob provided an update to FulFill E-325 earlier in the discussion today, providing a good example of how technological development allows us to grow in the established regions of the world while also supporting our strategy of geographic expansion. For instance, the main reason we were able to obtain 5 out the 7 satellite PCC plants in India was that we offered high-filler technology. It was a critical differentiator of our overall offering, and we're seeing a very similar reaction from the market in China. But FulFill is not the only product innovation in our portfolio. This color-coded slide shows the updated product development pipeline for Paper PCC. It is a snapshot of where we are today, but it provides insight into our longer-term thinking. As you may recall from prior calls, some of the areas of new technology that we are pursuing include products and…

[Operator Instructions] Our first question comes from Rosemarie Morbelli with Gabelli & Company.

Just looking at the Paper PCC. I was wondering if you could help me, in any case, understand the gap or the difference between the number of paper mills shut down, the new satellites, the increased volumes due to FulFill. So in 2013, if you net the shutdown with the new satellites, the increased volume due to FulFill, what would be your net volume gain in tons versus 2012? And then if you could go through the same exercise for 2014 to the best of your knowledge.

Okay, Rosemarie. Let me see if I can take that -- break it down over a couple of elements. So we lost about 25,000 tons in total over the past year due to some shutdowns as we mentioned here in North America. However, we gained about 85,000 tons due to the new satellites that have either come online or continued to ramp up through 2014. The FulFill component of that is an additional 50,000 tons of FulFill volumes. So you're seeing about 85,000 tons from some of the expansions, 50,000 from FulFill. That's offset by about 25,000 tons of volume declines, various things due to shutdowns. Does that help?

Yes, it does. And should I look at these number as increasing in 2014? Or have you already taken into consideration the ramp-up of the new satellites, the new contracts on FulFill, et cetera? Or maybe you want to go to -- out to 2015 to have a better feel?

Sure, Let me give you just a quick profile of the capacity that's going to be coming on in 2014. We have 4 satellites that are being built in 2014. Two in India will continue to ramp up, so there will be some incremental volumes from 2. We're building 4 in China. The first of which is Jianghe Paper, which was about 25,000 metric tons, will come online late Q2. A second with Nanning Jindaxing Paper, which will come online in late Q3; that's about 30,000 tons. We have 100,000-ton satellite with Sun Paper that will come online in the fourth quarter. And recently announced 100,000-ton filler satellite with UPM Changshu, which will probably come online -- it's being built this year. It will probably come online beginning of 2015. So you won't see all of the volume from that, but that gives you a profile, and it usually takes about a quarter to ramp each of these satellites up. That should give you an idea of about 250,000 tons of capacity this year.

Yes, that is very helpful. And I was wondering if you have heard of any more existing mills shutting down, and therefore, eliminating some of the existing capacity?

We have -- as I mentioned in my comments, the Courtland facility is currently in its process of shutting down. We expect those tons to be moving throughout the IP system. But as they do that, as those paper tons are shifting, and as they reduce some of their inventories, we're seeing some impact on our volumes, and that was in my comments in the first quarter, that may go slightly into the second quarter. One of those facilities is the recently announced -- there's a mill -- UPM mill in France, Docelles -- our Docelles plant. It's currently being held for sale with UPM, and our understanding is they have 2 potential buyers for that. So -- but there's a temporary issue with our Docelles plant, but we're confident there -- we're hopeful that, that will be sold and continue operating.

Okay, that is very helpful. Maybe if I can ask one last question before going back on the queue. When you look at your existing customers for FulFill, are you seeing them moving the product onto more of the technology, the process onto more machines and more mills? Or is it still too early for them to be moving from the initial utilization to additional one?

Yes, Rosemarie. It's D.J. A couple of answers to that. And it kind of builds up what I said last quarter. So we've got some 15 customers now, and in that group, 7 are using it pretty routinely, and we're seeing pretty robust expansion of that. So -- and then we've got -- as Bob's slide showed, we're still pursuing 35 active engagements. And then we would expect that number to grow this year. So we're not at all tapped out on FulFill. We still see that same market opportunity that we saw before. And we're hoping that the rate of growth for 2014 would be better than 2013. So just to frame up what we've been thinking for FulFill next year, if we were $2.5 million of contribution this past year, we're looking at something that's in the neighborhood of $4 million to $4.5 million for next year. Slight chance I can get higher than that, but that $4 million to $4.5 million number is something I feel pretty good about.

Our next question comes from Ivan Marcuse with KeyBanc Capital.

The first one I have is that you've done a great job on your operating costs, obviously, keeping them flat. But you have all these different expansions going on and initiatives to grow. So should you see -- as we go through '14, how much longer can you keep the operating cost sort of at this $90 million level? Or do you expect to start to see some pressure due to these expansions and due to these -- all these different initiatives that you have going on?

Look, we work very hard at holding our overhead expenses flat. Now -- so let me give you an idea. We're not -- it's not that we're not adding expenses. What we're doing is we're looking to find ways to make our operations much more efficient here in North America and Europe through our shared service model to reduce our cost so that we can add where we need to in China so -- in China and Asia. So -- and this is really a part of our continuous improvement culture. We look every day throughout the company to improve processes, to reduce cost in our operations, to reduce cost in our business processes, and so that when we add sales and we add R&D and we're adding business development to pursue that growth of new technologies in China and Asia and around the world, we're making even more efficient the base processes in the business, and that's how we have managed to keep our expenses flat. So it's not that we're not adding anything. We're just looking to continue to make more efficient the underlying processes for the company.

Great. And then in terms of the expenses, this is more of a quick modeling question, your corporate and unallocated sort of -- clearly, it looks like it trends $1.5 million to $2 million, but it popped a little bit this quarter. Is there something special in there? And how should we think about it going through 2014?

That was related to kind of mark-to-market expenses on our stock option and stock grants program.

Got you. And then if you -- moving back into the business a little bit more, if you look at your -- all these expansions to higher-margin products you have coming on to Asia, to India, and I think you said in your comments that you sort of look for -- you've been growing earnings at about 11%. Your buyback has actually doubled on what it's been. Why wouldn't your EPS growth start to accelerate above where it's been in the past couple of years with all the different products coming on and the more accelerated buyback?

Well, it will. We just started on that buyback program, the larger buyback program, as I mentioned this quarter. So that will, as we continue through that buyback, and that should reduce -- it's pretty much giving our free cash flow back by reducing share count by about 5%. So that will happen. However, with these new and higher-margin products, you will see margin expansion. We do see, offset with that, higher raw material costs and energy costs. So that's going to be an offset to that. But we expect, as I mentioned in my comments, that we achieved our 2015 target already in 2013 of 12%. And we think we can grow those margins even further, perhaps to 15% over the next 5 years, and that will help accelerate that EPS growth.

Got you. With that 15% over the next 5 -- so 300 basis points -- 300 additional basis points 5 years from now. That's the new goal?

I'm sorry. Can you repeat that again?

You plan on raising your operating margins 300 basis points over the next 5 years? Did I hear you correctly?

Well, I think that's possible. I think we have products, I think, with our operating expense control and with the new products, some of which D.J. just mentioned with our expansion in Asia and the potential to expand in Asia and leverage that overhead base, I see that as possible. Am I going to throw out a target for you right now that we're going to achieve that by a certain date? No. But I definitely see that we can do that in the short to -- in the medium term.

Great. And then my last question and I'll move on is -- or get back in the queue. Can you talk -- I like the detail you put on the new product development. And if you look at your stage, what's the timing on these different stages? Does each stage represent a bit of, like a year? And what sort of -- if you look at the -- all the products that you have in Stage 2, what's sort of the success rate? Or how do you measure that historically that you see, will 5 move on or 50% of those products move on? And how do you sort of measure the timing? If that makes sense. I don't know if I was clear enough.

I think it makes sense, so let me give you an answer, and we'll see if we addressed your question. So let's think about the graph for a second and talk to the timing. If you had looked at that slide, you'd see a bunch that go into Stage 1. And Stage 1 and 2 have a lot of churn. We may get 10 ideas in a month, and we'll go through those. But when you're in the Stage 3, 4 and 5, that's where really the rubber meets the road. That's where we're spending and validating things. So we look at like energy and the environment that I've spoken of earlier. We had 3 in Stage 5 and one of those in Stage 4. So 2 of these that are in Stage 5 are really significant about meeting that $100 million opportunity I was speaking to. And so we are in the process now of seeking some partners to scale up and test this. And so when we get that partner's commitment, which I do not have now, and if we're able to come up with an agreement, it has been our tradition to announce those sort of things to keep all of you updated. Then you're looking at something that's 6 to 9 months before we can actually measure the impact of those things. So when will that -- and if we just look at the energy and environment, when will that $100 million opportunity start showing up? I get agreement. I build something for 6 to 9 months, and then it probably takes me 3 months to figure out what the value of that is, and then we start proliferating on that. So we would expect to make good progress on that. I mentioned the other one in waste management. You can see those are in Stage 3. We probably get some small trials early. If they get validated, now I'm into another 9-month sort of a build on those things. But if you take it -- those 2 sort of objectives and a couple of the others that are in Stage 5, we're thinking that we can expect to have $100 million to $140 million over the next 3 to 5 years, if that kind of dimensions [ph] with that for you.

Got you. So something in -- so these blocks that you have in Stage 5, that represent $150 million, you would expect that to flow through over the next 3 years -- 3 to 5 years. But then again, how successful that you're able to gain traction?

3 to 5. And then -- so the danger of giving you this insight is this. It's we are running our first trials. And so assuming success, I think that, that's what you can expect. And then if it's not a perfect success, maybe the numbers change around a little bit. But yes, so we're running our first full-scale commercial trials after we get those commitment. But yes, that 3 to 5 range will be appropriate.

Our next question comes from Daniel Moore with CJS Securities.

Maybe I'll focus on Refractories a little bit. Obviously, a nice pickup in Q4. And can you talk about how the environment may be improving for equipment sales, what your expectations are for growth or for Metallurgical Wire, as well as Refractories in general in '14?

Sure. While we don't see -- we see some stability, I guess. I can -- let me start with the refractory products. So some stability in the U.S. and Europe steel markets. Europe improved a bit over 2012. I think that shows in some of our share gains and some of the gains we've had in Europe in terms of growth of refractory products. Looking forward, again, in the U.S., pretty stable. So we're not projecting a tremendous amount of just baseline growth. However, we've been working on the SULB in Bahrain model. So we see an opportunity for growth in the Middle East, and that extends into India where that cost-per-ton model, the full-service refractory model could apply to a steel mill or a portion of a steel mill. In equipment sales, typically, Q4 is the best area -- is the best time for equipment sales. We sell most of them at the end of the year. This year actually picked up a bit. And the reason it did is we had some equipment that we thought was probably going to be commissioned in the first quarter actually got commissioned in the fourth quarter. So did a really good job bringing those into the fourth quarter and getting those sales booked last year. So going forward, though, the first quarter, as I mentioned, equipment sales, typically not the strongest quarter. We're usually taking orders for them. We're building them through the first, and you'll start to see those sales pick up in the third and fourth quarter again. [indiscernible] do you want to elaborate on any of that?

Thank you, Doug. Yes, so if you look overall, we saw the market growing in Europe and in North America. 4% are still -- our underlying sales growth was 9%. So it was positive from a Refractory perspective. And like Doug mentioned, equipment sales is really strongest in the fourth quarter. We were able to get some units from the first quarter into the fourth quarter. I'd just like to highlight the wire side. So we will continue our strategy of geographical growth and new products. And so we were strong in Turkey, in Russia and in India in the fourth quarter, and that will continue into 2014 as a strategy. Also, we have new products on the wire side, introduced our new delivery systems, which are also starting to deliver on the wire side.

Very helpful. And remind us, Bahrain, how much revenue did you generate in 2013? And what should we expect for 2014?

Our full-service contract that we have with -- in Bahrain with SULB generated $14 million in revenue in 2013, and it was up from $4 million in 2012. So it was a delta of $10 million between the 2 years.

And remind me, is that -- should we be thinking of that in terms of a good portion of the initial contracts has now been generated? Or do you think that you hope to expand that and continue to grow off of that base?

Yes. Again, so we saw a little bit higher sales this year as that mill has been ramping up. So the consumption of Refractories is a little higher than normal. That contract is a $25 million to $30 million 3-year contract, and we're about halfway through it. I think you're going to see sales normalize back to the $10 million, $9 million per year as we go through the funnel [ph] end, as their consumption are getting more efficient and as their consumption of Refractories has declined.

Very helpful. And then I believe, Doug, you mentioned you still thought that even given the challenges in Q1, 10% EPS growth was a reasonable target for '14. Did I hear that correct? And what might be -- if there are areas of risk or concern around that, what might they be?

Sure. I think -- well look, the first quarter, as I mentioned, we have some uncertainty there. I won't go back through the items. A lot of them are related to energy cost and weather. But as we look out, I mentioned, we see another strong year for MTI. I mentioned we've delivered 10% earnings per share growth over the past 4 years, and we think we can do that again this year. We see -- increased FulFill, as D.J. mentioned, will drive some of that growth. Our new satellites and ramp-ups that we're putting in China will drive some of that growth. We've got an expansion in Specialty PCC in Adams that we're filling out that will drive that growth. We've got the kiln conversion last year that we converted to natural gas that we're going to have some additional savings from this year. So there's a number of factors driving that growth, the geographic expansion, deployment of new products and the cost savings initiatives. So we're confident that we can continue to deliver that type of EPS growth.

Okay, very good. And lastly, maybe getting [indiscernible], but tell me a little bit more about the VICRON product. What technologies, if any, does it compete with or displace, cost benefit? And how should we think about the size of that potential opportunity over time?

Sure, I'm going to let Doug talk about the VICRON product.

Yes. Dan, the VICRON product sales, it's a full product line for us. So VICRON will tend to go into paints and coatings. It will displace higher-value mineral content on certain products. And in some cases, the compounders will see improvement in production rates. So when you say VICRON, we have a number of specific areas that we've identified improvements like the new product that we launched with FRP that has been specifically designed for areas like bulk molding and thermoset polyesters as an example.

And in terms of -- anything you'd gauge around market opportunity over time?

Well, we're always chasing the market opportunities. That really is our area, where we're looking at displacing higher value and larger -- the higher expensive and more expensive minerals. And it's -- but it's a big area for us, and it's an area that we've identified as a big growth area for Performance Minerals.

Our next question comes from Jeff Zekauskas with JPMorgan. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: It's Silke Kueck for Jeff. A couple of questions. Maybe I'll just start with earnings growth as well. So 10% EPS growth for the year means that you're trying to get somewhere like $2.65. And if your first quarter starts slow, that means that you probably expect your EPS for the rest of the year to be somewhere in the high $0.60 a quarter or $0.70 a quarter range, right, is that the way to think about it?

I think that's what we're going to have deliver in the last 3 quarters to hit that target, yes. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: And typically, like seasonally, your second and third quarter are normally strongest. Will it be different this year because some of the ramp-ups of the satellite plants will happen later in the year or...

No, I don't think -- it's typically the second and third quarter are our strongest. The fourth quarter -- the past couple of years, the fourth quarter has changed just largely due to the Refractories business unit, which I think in the past 2 years has had much lower kind of high-margin equipment sales. But now we see another year with a typical second and third quarter strength. And yes, we were going to have to continue to increase our earnings per share the remainder of the year to hit that target. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: There were a lot of questions about the growth of the refractory sales and then PCC sales, and there was a lot of strength that came out of Europe. And so the way I understood answers is that probably there was a fair amount of market share gain. And so it seems like MTX sales in Europe grew much faster than the underlying market. Is that right?

Well, in total, yes. So Europe was a much better year for us than 2012. 2012 was a very low point. A lot of that growth was driven by the Refractories. I mentioned, 15% growth in refractory products. That was both some base volume growth. SULB contributed to that. But also some share gain. On Paper PCC, we did see some volume growth. And particularly in some of our coated products, in our Aanekoski, Finland mill that really drove and those are some higher price point products. Also, if you remember, the Alizay mill kind of restarted in late Q2, and that's helped the year-over-year comparisons as well. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: That's helpful. But then I have a question about the Specialty PCC expansion. How much of the 10,000-ton expansion is complete by now? And the Specialty PCC, does it get picked up as part of your overall PCC production? I guess it's part of like the 3.3 million tons of production? And what do you sell the stuff for, as in your dollar per ton, like an average?

It's separate from the PCC for Paper. It's actually a separate process. We make PCC in North America up at our Adams mill, which is also one of our larger mines for GCC. So ground calcium carbonate. We also make our own line here. And that line is used in the Specialty PCC product line. And Specialty PCC, we call that anything that's nonpaper. So it goes into automotive sealants, very high-end automotive sealants, goes into construction sealants. It goes into food and pharma as calcium fortification. And we also have a facility in England, outside of Birmingham, makes the same product. We announced last year a 10,000-ton expansion in Adams. That's increasing the capacity about 35%. We're finishing up just this first quarter. We'll have that full 10,000 tons online. It's probably another -- we had about 6,000 or 7,000 tons come online at the end of the first quarter of last year, and this is the remainder of that expansion. So you will see some increased sales from Specialty as a result. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: And are the price points very different to what you sell your paper-grade PCC, or if paper-grade PCC sells anywhere in the range of, I don't know, $100 to $150 a ton. Is the specialty grade very different?

I thought I dodged that question. No, they're much higher price points, Silke. They're 4x [ph], and it really depends on the type of product and the grade. There's a big difference between what we sell in terms of fine uncoated products that might be price points of the $200, $300. But when you're looking at the ultrafine products, the nano size that we've been making traditionally as a company that have coatings on them, that's one of our technological advantages that really go into a plastisol as a rheology modifier. Those can be very higher price points. They can be in the $500 and $600 per ton. When you're talking food and pharma, when you talk -- when you're going into calcium fortification of milk substitutes and other things are even -- they could be higher than that. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: Okay. And lastly, if some of the rates in China and India could ever reach the 20% mark and you're really -- get to these -- get to realize like another 3 million tons of talc production. Is that really possible? Or is that something that's like a 10-year process or like an 8-year process? Or do you have like a target? Or do you think it's actually feasible to get to this level at some point?

Silke, this is D.J. It's not just feasible. That's where they're going. And so what I mean by that is China and India are a little slower than the Americas and Europe. And that's where they migrated to. And so the penetration rate is a little bit slower right now. But there is no doubt that, that's where we're growing. Here's the drivers behind it. First one is now they're putting in these world-class machines, as Bob said earlier. The second part of that is that they're competing in the global market, so they have to improve their quality. And then we've got this value equation of replacing high-cost fiber. And in Asia, currently, the fiber is even higher cost. A lot of that is shipped in from Brazil and other countries. [indiscernible] is very strong there. We have to do something to modify our processes to make it competitive versus other pigments, but we really do have a compelling story. So they put up the slide just for you here, just to orient you here. What we're saying is that, today, India ought to be 700,000 tons, 400,000 tons of growth that is there today. And what we're saying in China is just if I get them up to where Europe and North America is, that ought to be a 3 million ton market. And so we're saying that just the growth there today is that 2.6 million tons. And they've been growing at a historical rate between 5% and 7%. So we're saying, near term, that 2.6 million tons, just if they stay on other track, is 1 million tons. And then -- and I would be remiss if I don't remind you about FulFill. And where we're taking people now is that we can get them from 20% to 22% to 24% fill levels. So it's a huge opportunity for us. Now if I -- let's go to the rate of penetration on this. And what I was trying to let you know before was these developmental pipeline augments this pursuit of geographic expansion. So where we're trying to go with some of our trials that will be lining up in the next couple of months, and I hope to deploy these new satellites early, is that should increase our rate of penetration in this market and it should give us an opportunity to have an even higher market share than what we typically enjoy. So we should be north of that 50% market share just by being who we are and keeping the new products. So yes, it's real, and I'm very excited about it. Silke Kueck-Valdes - JP Morgan Chase & Co, Research Division: I appreciate the insight. Maybe I just have one last follow-up. When you launch these new satellite plants in China and India, how long does it typically take until these mills switch over to FulFill? Is it like a 1-year process or do they start out with FulFill?

Based on my -- so probably a year ago, I would say that we should be able to get things squared away in 3 months. That has not been our case. So right now, I would say that from the time we started up right now, it's taking us 3 to 6 months to get them stabilized, and then we start getting FulFill. We're looking at ways in trying to introduce FulFill earlier in the process. FulFill provides them many papermaking benefits. So saying a year into it is probably a more realistic planning figure to that. But my -- I'm trying to drive the organization to keep it closer to that 3 to 6 months after things start up. But your calculation of a year is probably more pragmatic.

Our next question comes from Steve Schwartz from First Analysis.

It's a good deck today, but of course, that just generates more questions. So I think most of my questions are for D.J. But just you show the pipeline for FulFill and now for the new products in Paper PCC. How would you describe your pipeline for satellites? Because you're certainly coming off a period where that's been very strong.

It has been strong relatively. And I guess what I'm trying to tell and say to Silke and we tried to give you insight on at the last call is that it's getting stronger. It's -- so especially as it relates to China, where we showed an opportunity [indiscernible] that is a dozen, and I got another dozen behind that, that I'm just trying to get qualified. And now part of that momentum that we've got is related to these new products that we're bringing out, including FulFill. And we will probably be introducing a new brand on this environmental pursuit that we're talking about. It probably will take on another name. But I'm telling you in earnest, I'm pursuing a dozen. Most of those are in China, got a couple of more in India, several in Thailand, a couple down in the Other Americas. We've got just great opportunities that bring home satellites, but part of delivering those satellites is about getting the new technology on board because it's addressing a need and it creates that urgency to make the shift.

Okay. And then -- and D.J., when you talk about moving into the higher technology FulFill products, when you first introduced the program to us, you had a table that had different variants, different theories. Is that what you're referring to is moving down that table?

Well, it's not -- so let me try and take -- make sure we don't get an apples and oranges. So the FulFill line of products is very much around these higher filler technologies. And we showed you at the time a FulFill A, FulFill E, FulFill V and FulFill F. FulFill F is our highest-performing system. That's the filler for fiber where we believe we can get people closer to a 50% filled sheet. That one is a little bit off of our track. We've had demonstrated capabilities where we increased by 50% where they are. So we take somebody from, say, 25% and get them to 34%, 35%. And we think we can extend that further if we're given a chance to work on it on a full scale commercially. FulFill A has been helping augment FulFill E, and FulFill E is the workforce of what we've been delivering that op income growth that you've seen so far. I'll tell you that one of our hiccups had been around FulFill V. I had thought that I'd be having more contribution from FulFill V as part of the portfolio. Right now, we've got several trials that we had a technical hiccup with it. We think we're on track with that. They'll get trialed in the first and second quarter of this year. And FulFill V should start contributing some op income. If it doesn't, we're quite comfortable that FulFill E can fill that void. So those higher filler products, that's what I've been referring to.

Right. And Steve, think I'm going to add just to make sure we answered your question. These are different technologies than the FulFill. The FulFill is one of them. What D.J. described today is different from FulFill. There are other technologies that as we commercialize even help further the penetration of the PCC because they're addressing other problems at the paper site. And so it's -- there's a filler need, but then there's also other issues. And these are addressing those other environmental issues, recycling issues, et cetera. So they're different from FulFill.

Okay. And then lastly, can you give us a little more color about the 6% growth rate assumptions? So for near-term market growth, India and China, I think you said you're assuming 6%. Is that just -- to be a little bit Western arrogant, is that just a westernization of Asia in terms of using paper in a more formal business market?

Well, so Steve, it's 2 elements. The way we come up with the number is simply the application of the historical rate. So if you look at that 10-year historical rate, that's what the growth has been. What is going on there is -- what we see is a couple of things. And they're a little bit different for India and China, at least in the rate at which the change is happening. For China, it is about increased business but -- and better consumption. And then there's also the other part that's creating a market opportunity as China is shutting down old equipment, putting in new equipment, making our PCC a more viable option as we get economies of scale with these larger machines. In India, it's more of a -- I believe that they understand that evolving the paper industry has a lot to do with helping their infrastructure improve, providing very solid jobs and also fueling the white collar growth that they're hoping to continue to support in India. So both of those elements are growing. And then there is some slight export increase as well, India less so than China. So I hope that, that's addressing what the question is, but the 5 to 7, really, is the application of the historical rate and a projection that if that continues, this is where we ought to be.

Our final question comes from Rosemarie Morbelli with Gabelli & Company.

I was wondering, with this doubling of the capacity or doubling of what you are producing now in order to supply China and India, what would be the cost of doing all of that? Are you paying fully for those satellites there? Or is the model a little similar to that in the U.S. and in Europe whereby you kind of share it, if my memory serves me right? Could you give us a feel for how much you need to invest in order to pursue that market?

Sure, Rosemarie. Those are -- I think you're referring to this kind of capital spend, right? So...

Right.

So to support 3 million tons in the region, and again, we do some of these in joint ventures, and some of them are wholly-owned. Historically, it's been -- that would probably give you the answer of about $250 million. So certainly, something well in our capability to finance. But as you know, we've been driving down the capital cost of building satellites tremendously over the past several years, almost 20% of our capital, through efficient designs, strategic sourcing of those parts, standardization of the plants from a commonality, being able to use capital from other plants that have closed. So we're really driving down the capital footprint. So it's not going to be -- the capital is not going to be an issue to pursue that growth.

Okay. And going back to the new products, your potential $100 million and $140 million over the next 3 to 5 years. First of all, is that the market? Or is that the amount that Minerals Technologies is expecting to generate? Or would you have only a certain percentage of that $100 million to $150 million?

So Rosemarie, what I said -- what I tried to convey was that I see that total market right now in -- at least those 2 new areas that I introduced. I didn't go into a lot on all the areas. But the 2 new areas that I introduced, I saw market size of $150 million to $200 million, and I think that we ought to be between $100 million and $140 million of capturing that. So I described both the opportunity and what I think that we can get in the medium term.

Okay, no, that is helpful. And then will the margin on those new products be similar to what it is today or be at or above your 15% goal, operating margin?

I would have -- I would say that they'll be slightly above those so -- because we're trying to get the entire portfolio up to that sort of performance. And then -- but a key part on all of this is that these are going to the trial stage now, and the key part of the trial validation is what is the value of this because these are -- they're not displacing a pigment. We're creating a market space and creating a market opportunity. And so that will be -- we'll know more as we come out of these trials, but as we're going forward, I would say they'd be slightly higher than that average margin, and we'll let you know more.

Okay. And then lastly, if I may. If I remember, probably from, I think, the last call, Joe said that he would give a reasonable time frame before you come [indiscernible] the third leg type of acquisition. Are we getting closer to that time frame? Should we be expecting something by the end of 2014? And if not, what are you going to do with all that cash? Would you be buying back some 15% of your shares? Could you give us a feel for what is happening there?

Sure, Rosemarie. This is Doug. We have a very robust pipeline. Jon Hastings commented on last time -- last call, of potential acquisition opportunities. We continue to work them, and some of them continue to get closer, and some of them are -- get further behind, and some of them come back around. So I really can't give you any insights on how fast that will happen. I can tell you, though, that we continue to use the balanced approach to our cash. So we've issued -- authorized from the Board $150 million share repurchase. And as we see the opportunities wane, we can accelerate the share repurchase. And as we see that they come closer towards, perhaps, fruition, we can throw that back [ph]. So what do you use with the cash? I think it's balanced with what we see as the opportunity on the M&A side like in -- and that's what I can offer.

We have time for one more question, and that question comes from Alan Mitrani with Sylvan Lake Asset Management.

As you move more towards emerging markets in the next couple of years, can we expect your tax rate to drop appreciably from where -- from the current, where is it now, current roughly around 28%, 29%?

Yes, about 29%. So yes, given as long as it's not Japan, we should see a net decrease in the tax rate. But we continuously work on lowering the tax rate. We're looking at opportunities as we move to other regions and setting up holding companies in those regions to make sure that we have the most tax-efficient structure in China or in the Asia region, making sure that we have ways of utilizing the cash that's generated and reinvesting it into China and the region. So when you move outside of the U.S., yes, that's -- in general, the tax rate will drop. But until the United States decides to work with businesses and lower the tax rate here, anytime we repatriate that cash, it's going to be subject, obviously, to the differential.

Okay, and I appreciate that. And just to understand, you hit that 12% operating margin goal that you had had, which is great, it seems like you got a lot of opportunity and potentially good opportunities in new products and pricing in the next couple of years if these products work out. I wanted to understand your thought on 15% operating margins in 5 years. In running through some back-of-the-envelope math, it seems like you probably need something close to 1250 or 13 -- $1.25 billion or $1.3 billion in sales to get to that number. And that would imply an EPS number of in the 4s assuming you're using some of that early free cash to buy back stock and also doesn't assume you do anything with this $12 of cash, which would mean that you're EPS growth accelerates from the 10% level it's been in the last 5 years to a little slightly higher driven by buybacks and maybe even tax rate helping you.

I remember you, Alan. I remember you.

Well, if you guys hit your targets early, I've got to give you a chance to get some new ones.

Yes. I think -- look, you've seen as we've gone through building our satellites and FulFill, higher-margin products coming out, we've had 2 -- 1%, 2%, 3% growth in the company's top line over the past few years. Yet we've gone from 10% to 12% margins. So the additional sales, certainly, and especially the higher-margin sales, will absolutely contribute to growing margins at the 15%. But we still have very efficient shared service model in the company. We leverage that. We continue to add services to it. And so even our existing margins, I think, the base margins and our base business can expand as we continue to drive continuous improvement in the company and more efficiencies. And that will, yes, I haven't done the math in my head as fast as you just did to get to the $4 per share. But yes, a 15% margin and $1.25 billion, you're up in that range.

Yes, I was a little higher. But that's also assuming again, like Rosemarie, that you don't do anything with this $12 a share in cash. I've got to tell you, we're waiting for the day that you do something with it because all your customers run with leverage. Your competitors are running with leverage and given where rates are, we just hope you don't miss a window to buy something that you could make -- that you could put your lean model on or at least to return the cash to shareholders ahead of you doing what we know you can do in terms of internal growth the next few years. So looking forward to it.

Absolutely. Well, thank you for those comments. I appreciate that.

Thank you. I will now turn the call back over to Rick Honey for closing remarks.

Thank you all for a good call and your interest in Minerals Technologies. Have a great afternoon.

Thank you, ladies and gentlemen. That does conclude today's conference. You may all disconnect, and have a wonderful day.