New York -- Minerals Technologies Inc. (NYSE: MTX) (“MTI” or “the Company”) today announced that it is adjusting its second quarter 2019 outlook due to several factors. First, shipments out of the Company’s facilities in the Western United States have been temporarily impacted by flooding-related rail infrastructure issues since early June that have required the logistics provider to cease all railroad traffic. MTI has communicated with its affected customers and is working diligently to minimize supply chain disruptions, which are expected to last at least 30 days. In addition, the Company is also experiencing slowing demand in the U.S. Metalcasting market, as well as generally weaker demand in China and Europe.
As a result of the supply chain disruptions and softening market demand affecting several product lines, the Company now anticipates second quarter 2019 sales and operating income to be lower than previously communicated. MTI currently expects second quarter reported earnings per share to be between $0.70 and $0.80, or between $1.00 and $1.10, excluding special items.
- Operations Temporarily Impacted by Rail Traffic Limitations in the Western United States
- Weaker Market Demand Affecting Several Product Lines
- Restructuring Program Implemented; Expected to Deliver Annualized Savings of $12 Million Beginning in the Third Quarter
Douglas T. Dietrich, Chief Executive Officer, stated, “Rail traffic limitations caused by severe flooding have temporarily affected our U.S. Bentonite shipments. Furthermore, the strong demand we saw in March and April changed rapidly in May and further in June, primarily in U.S. automotive, heavy truck and agricultural equipment, leading to lower volumes in our U.S. Metalcasting business. We are also experiencing weaker demand across our China and European markets. These factors have contributed to our reduced outlook for the second quarter.”
The Company has also initiated a cost savings program, primarily through workforce reductions, to address the demand environment and improve profitability. The pre-tax annualized savings from the program will be approximately $12 million, beginning in the third quarter of 2019 and achieving full run-rate in the first half of 2020. A pre-tax charge of approximately $12 million will be recorded in the second quarter of 2019. The Company will provide additional details in the coming quarters as part of its regular earnings reporting cycle.
Mr. Dietrich added, “Given the current demand environment, we believe these restructuring actions are prudent and necessary. We are better positioning our business to adjust to our customers’ needs and reducing costs to effectively manage through a more uncertain global market outlook. Through these changing conditions we continue to focus on our growth strategy of geographic expansion, new product development and acquisitions.”