# Minerals Technologies Inc: Form 10-K for the period ended Dec 31, 2021 - Company: [Minerals Technologies Inc](/companies/mtx.md) (CIK 891014) - Form: 10-K - Filed: 2022-02-18 - Accepted by EDGAR: Feb 18, 2022, 15:33 ET - Period: 2021-12-31 - Accession: 0000891014-22-000009 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/891014/000089101422000009/form10k.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/891014/000089101422000009/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2021-12-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 12 months, 2021-01-01 to 2021-12-31 | $1.86bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Cost of revenue | 12 months, 2021-01-01 to 2021-12-31 | $1.41bn | us-gaap:CostOfGoodsAndServicesSold | | Gross profit | 12 months, 2021-01-01 to 2021-12-31 | $446.5m | us-gaap:GrossProfit | | Research and development | 12 months, 2021-01-01 to 2021-12-31 | $19.5m | us-gaap:ResearchAndDevelopmentExpense | | Selling, general and administrative | 12 months, 2021-01-01 to 2021-12-31 | $186.2m | us-gaap:SellingGeneralAndAdministrativeExpense | | Operating income | 12 months, 2021-01-01 to 2021-12-31 | $235.7m | us-gaap:OperatingIncomeLoss | | Interest expense | 12 months, 2021-01-01 to 2021-12-31 | $37.2m | us-gaap:InterestExpense | | Income tax | 12 months, 2021-01-01 to 2021-12-31 | $36.6m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 12 months, 2021-01-01 to 2021-12-31 | $164.4m | us-gaap:NetIncomeLoss | | Diluted EPS | 12 months, 2021-01-01 to 2021-12-31 | $4.86 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 12 months, 2021-01-01 to 2021-12-31 | $4.89 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 12 months, 2021-01-01 to 2021-12-31 | 33,800,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 12 months, 2021-01-01 to 2021-12-31 | $232.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 12 months, 2021-01-01 to 2021-12-31 | $86.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | | Dividends paid | 12 months, 2021-01-01 to 2021-12-31 | $6.8m | us-gaap:PaymentsOfDividendsCommonStock | | Share repurchases | 12 months, 2021-01-01 to 2021-12-31 | $74.7m | us-gaap:PaymentsForRepurchaseOfCommonStock | | Cash and equivalents | at 2021-12-31 | $299.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2021-12-31 | $1.03bn | us-gaap:AssetsCurrent | | Total assets | at 2021-12-31 | $3.37bn | us-gaap:Assets | | Current liabilities | at 2021-12-31 | $419.8m | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2021-12-31 | $1.79bn | us-gaap:Liabilities | | Long-term debt | at 2021-12-31 | $936.2m | us-gaap:LongTermDebtNoncurrent | | Current portion of debt | at 2021-12-31 | $800.0k | us-gaap:LongTermDebtCurrent | | Short-term borrowings | at 2021-12-31 | $80.0m | us-gaap:ShortTermBorrowings | | Shareholders' equity | at 2021-12-31 | $1.54bn | us-gaap:StockholdersEquity | ## Business As filed, 59,027 characters. Minerals Technologies Inc. (together with its subsidiaries, the "Company", “we”, “us” or “our”) is a resource- and technology-based company that develops, produces, and markets on a worldwide basis a broad range of specialty mineral, mineral-based and synthetic mineral products and supporting systems and services. In the first quarter of 2021, the Company reorganized the management structure for its Performance Materials and Energy Services operating segments into one operating segment, in order to support the Company's key growth initiatives, more closely align complementary technologies, processes and capabilities and better reflect the way performance is evaluated and resources are allocated. The Company now has three reportable segments: Performance Materials, Specialty Minerals and Refractories. - The Performance Materials segment is a leading global supplier of a wide range of bentonite-based and synthetic materials for consumer-oriented and industrial markets and for non-residential construction, environmental remediation, and infrastructure projects. This segment is the Company's largest and most diverse business segment with extensive technical, sales and commercial capabilities. - The Specialty Minerals segment produces and sells the synthetic mineral product precipitated calcium carbonate ("PCC") and processed mineral product quicklime ("lime"), and mines mineral ores then processes and sells natural mineral products, primarily limestone and talc. This segment is a leading supplier globally of PCC products. This segment's products are used principally in the paper and packaging, building materials, paint and coatings, glass, ceramic, polymer, food, automotive and pharmaceutical industries. - The Refractories segment produces monolithic and shaped refractory materials and specialty products. It also provides services and sells application and measurement equipment, calcium metal and metallurgical wire products. Refractories segment products are primarily used in high-temperature applications in the steel, non-ferrous metal and glass industries. The following table sets forth the percentage of our revenues generated from each segment for each of our last three fiscal years: | Percentage of Net Sales | 2021 | 2020 | 2019 | | --- | ---: | ---: | ---: | | Performance Materials | 53% | 52% | 51% | | Specialty Minerals | 31% | 32% | 32% | | Refractories | 16% | 16% | 17% | | Total | 100% | 100% | 100% | The Company maintains a research and development focus. The Company's research and development capability for developing and introducing technologically advanced new products has enabled the Company to anticipate and satisfy changing customer requirements, creating market opportunities through new product development and product application innovations. ### Performance Materials Segment The Performance Materials segment is a leading supplier of bentonite and bentonite-related products. Bentonite is a sedimentary deposit containing greater than 50% montmorillonite and is volcanic in origin. It is surface mined and then dried, crushed, sent through grinding mills where it is sized to customer requirements, and transferred to silos for automatic bagging or bulk shipment. The processed bentonite may be chemically modified. Bentonite’s unique chemical structure gives it a diverse range of capabilities, enabling it to act as a thickener, sealant, binder, lubricant or absorption agent. There are two primary types of natural bentonite utilized by the business, sodium and calcium. Sodium-bentonite is characterized by its ability to absorb large amounts of water and form viscous, thixotropic suspensions. Calcium-bentonite, in contrast, is characterized by its low water absorption and swelling capabilities and its inability to stay suspended in water. Each type of bentonite has its own unique applications. This segment also supplies leonardite, which is primarily used in metalcasting, drilling fluid additive, and agricultural applications. The principal products of this segment are marketed under various registered trade names, including VOLCLAY®, PANTHER CREEK®, PREMIUM GEL®, ADDITROL®, PREMIUM CHOICE®, ENERSOL®, RAFINOL®,,FLUORO-SORB®, VitaLife® and Hevi-Sand®. In addition, the segment provides products for non-residential construction, environmental and infrastructure projects worldwide. It serves customers engaged in a broad range of construction projects, including site remediation, concrete waterproofing for underground structures, liquid containment on projects ranging from landfills to flood control, and drilling applications including foundation, slurry wall, tunneling, water well, and horizontal drilling. *Household, Personal Care & Specialty Products – Products and Markets* The household, personal care & specialty products product line contains pet litter, fabric care, health and beauty, basic minerals and agricultural and industrial specialty products. The pet litter products include sodium bentonite-based scoopable (clumping), traditional and alternative cat litters sold to grocery and drug stores, mass merchandisers, wholesale clubs and pet specialty stores throughout North America, Europe and Asia. The Company’s scoopable products’ clump-forming capability traps urine, thereby reducing waste by allowing for easy removal of only the odor-producing elements from the litter box. The Company is a provider of private-label cat litter to retail partners, as well as a provider of bulk cat litter to national brands and other private label packaging companies. In North America, these products are sold from seven principal sites from which we package and distribute finished goods, as well as ship bulk material via rail cars. The Company’s internal transportation group provides logistics services and is a key component of our capability in supplying customers on a national basis. In Europe, these products are produced and sold by the Company's subsidiary, Sivomatic Holding, B.V. ("Sivomatic"). Sivomatic is a leading European supplier of premium pet litter products and is a vertically integrated manufacturer with production facilities in the Netherlands, Austria and Turkey. Sivomatic is a certified CO2 neutral producer of cat litter. On July 26, 2021, the Company completed the acquisition of Normerica Inc.("Normerica"), a leading North American supplier of premium pet care products for approximately $189 million. Normerica has production facilities in Canada, the U.S. and Thailand. As a leader in the pet product industry, Normerica provides premium products, both branded and private label to world-class retailers. Its product portfolio consists primarily of bentonite-based cat litter products which are supplied from a network of strategically located manufacturing facilities in Canada and the United States. Normerica has approximately 300 employees and generated revenue of $140 million in 2020. The Company supplies fabric care products and additives consisting of high-grade, agglomerated bentonite and other mineral additives that perform as softening agents in certain powdered-detergent formulations or act as carriers for colorants, surfactants and fragrances. These fabric care products are formulated to adapt to our customers’ changing technical requirements. The Company manufactures personal care products consisting of polymer delivery systems and purified grades of bentonite ingredients for sale to manufacturers of skin care products. The polymers are used to deliver high-value active ingredients and the bentonite-based materials act as thickening, suspension and dispersion agent emollients for topical skin care formulations. The personal care products range from ingredient sales to fully formulated finished goods. Specialty Products include bentonite and leonardite based proprietary solutions for agricultural and industrial applications, including drilling products and other industrial products. Agricultural uses include crop harvest enhancements, natural animal heath feed additives and vegetable cooking oil clarification. Drilling product are used in oil and gas well drilling as well as environmental and geotechnical drilling applications, horizontal directional drilling, mineral exploration and foundation construction. Bentonite imparts thickening and suspension properties that facilitate the transport of rock cuttings to the surface during the drilling process. It also contributes to a drilling fluid’s ability to lubricate the drill bit and coat the underground formations to prevent hole collapse and drill-bit seizing. Our primary trademark for this application is the trade name PREMIUM GEL®. The Company produces other industrial products utilizing bentonite and bentonite blends for the construction industry to be used as a plasticizing agent in cement, and plaster and bricks. The Company also supplies bentonite to help pelletize other materials for ease of use. An example of this application includes the pelletizing of iron ore. This product line also includes sales from our internal transportation and logistics group. The Company’s household, personal care & specialty products product line net sales were $460.5 million, $380.2 million and $376.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. *Metalcasting – Products and Markets* The metalcasting product line produces custom-blended mineral and non-mineral products to strengthen sand molds for casting auto parts, farm and construction equipment, oil and gas production equipment, power generation turbine castings and rail car components. These products help our customers in the foundry and casting industry to improve productivity by reducing scrap from metalcasting defects and poor surface quality. The ADDITROL® blends also improve the efficiency and recycling of sand blends in mold sand systems by lowering clay consumption and improve air quality by reducing volatile organic compound emissions. Our mine to mold operational capability has resulted in providing a consistent high-quality product, technical support and reliable on-time delivery service valued by our customers. In the ferrous casting market, the Company specializes in blending bentonite of various grades by themselves or with mineral binders containing sodium bentonite, calcium bentonite, seacoal and other ingredients. In the steel alloy casting market, the Company sells chromite products with a particle size distribution specific to customers’ needs. One of chromite’s qualities is its ability to conduct heat. The Company markets the product for use in making very large, high integrity, steel alloy castings where the chromite is better suited to withstand the high heat and pressure associated with the casting process. The Company is the exclusive distributor of certain specialty sand chromite products supplied by the Glencore-Merafe joint venture in select territories, including the Americas. The metalcasting product line was originally sold into the U.S. by the American Colloid Company (ACC) and over the past 90 years has grown in its use throughout the world including China, Thailand, Korea, Australia, India and regions of EMEA. Over the past several years, the Company has focused on further investment in China and India. The Company’s metalcasting product line net sales were $319.2 million, $258.1 million and $291.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. *Environmental Products – Products and Markets* The environmental product line includes bentonite and polymer lining technologies, as well as, other environmental remediation applications. The Company helps customers protect ground water and soil through the sale of geosynthetic clay liner products containing bentonite. These products are marketed under the RESISTEX® and BENTOMAT® trade names principally for lining and capping landfills, mine waste disposal sites and industrial waste storage sites, such as, bauxite residue and coal ash waste. The Company also provides associated geosynthetic materials for these applications, including geotextiles and drainage geocomposites. Environmental Products includes specialized technologies to mitigate vapor intrusion in new building construction. The Company’s innovative vapor barrier systems prevent potentially harmful vapors from entering occupied spaces, thus facilitating low-risk redevelopment. The Company also provides reactive capping technologies and solutions to effectively contain residual contamination, to reduce costs associated with ex-situ remedies, and aid in environmental protection. Products offered include Liquid Boot®, a liquid applied vapor barrier system; REACTIVE CORE-MAT™, an in-situ sediment capping material and QUIK-SOLID®, a super absorbent media. The Company specializes within the remediation market providing technologies to treat a variety of hazardous compounds in soil, groundwater, leachate and sediment. These products are marketed under the ORGANOCLAY® trade name. The Company also specializes in treating soil, groundwater, surface water and drinking water contaminated with Per-and polyfluoroalkyl substances (PFAS) and Perfluorooctane sulfonate (PFOS) under the FLUORO-SORB® trade name. Additionally, the Environmental Products segment provides offshore filtration and well testing services to improve the production, cost, compliance, and environmental impact of activities performed globally in the oil and gas industry. The composition of customers within this segment varies from year to year and is significantly dependent on the type of activities each customer is undertaking within the year, regulations, and overall dynamics of the oil and gas industry. This product line provides services for offshore filtration and well testing to the worldwide oil and gas industry through subsidiaries located in Australia, Brazil, Malaysia, Nigeria, Indonesia, Saudi Arabia and the United Kingdom. The Company’s environmental product line net sales were $136.3 million, $131.6 million and $181.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. *Building Materials – Products and Markets* The building materials product line includes various active and passive products for waterproofing of underground structures, commercial building envelopes and tunnels. The Company offers a wide variety of active and passive waterproofing and greenroof technologies for use in protecting the building envelope of non-residential construction, including buildings, subways, and parkway systems. Our products include VOLTEX®, a waterproofing composite comprised of two polypropylene geotextiles filled with sodium bentonite; ULTRASEAL®, an advanced membrane using a unique active polymer core; and COREFLEX®, featuring heat-welded seams for protection of critical infrastructure. In addition to these membrane materials, we also provide a variety of sealants and other accessories required to create a functional waterproofing system. The end-users of these products are generally building sub-contractors who are responsible for installing the products. The Company’s building materials product line net sales were $60.0 million, $55.9 million and $68.9 million for the years ended December 31, 2021, 2020 and 2019, respectively. ### Specialty Minerals Segment #### PCC Products and Markets The Company's PCC product line net sales were $426.8 million, $377.7 million and $434.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company's sales of PCC have been, and are expected to continue to be, made primarily to the printing and writing papers segment of the paper industry and also into the packaging industry. The Company also produces PCC for sale to companies in the polymer, food and pharmaceutical industries. #### PCC Products In the paper industry, the Company's PCC is used: - as a filler in the production of coated and uncoated wood-free printing and writing papers, such as office papers; - as a filler in the production of coated and uncoated groundwood (wood-containing) paper such as magazine and catalog papers; and - as a coating pigment for both wood-free and groundwood papers and packaging. The Company's Paper PCC product line net sales were $349.7 million, $308.4 million and $364.9 million for the years ended December 31, 2021, 2020 and 2019, respectively. Approximately 19% of the Company's sales consist of PCC sold to papermakers from "satellite" PCC plants. A satellite PCC plant is a PCC manufacturing facility located near a paper mill, thereby eliminating costs of transporting PCC from remote production sites to the paper mill. The Company believes the competitive advantages offered by improved economics and superior optical characteristics of paper produced with PCC manufactured by the Company's satellite PCC plants resulted in substantial growth in the number of the Company's satellite PCC plants since the first such plant was built in 1986. For information with respect to the locations of the Company's PCC plants as of December 31, 2021, see Item 2, "Properties," below. The Company currently manufactures several customized PCC product forms using proprietary processes. Each product form is designed to provide optimum balance of paper properties including brightness, opacity, bulk, strength and improved printability. The Company's research and development and technical service staff focuses on expanding sales from its existing and potential new satellite PCC plants, as well as, developing new technologies for new applications. These technologies include, among others, acid-tolerant ("AT®") PCC, which allows PCC to be introduced to the large wood-containing segment of the printing and writing paper market, OPACARB® PCC, a family of products for paper coating, our FulFill® family of products, a system of high-filler technologies that offers papermakers a variety of efficient, flexible solutions which decrease dependency on natural fibers, and NewYield® and ENVIROFIL®, innovative technologies that convert a paper and pulp mill waste stream into functional pigments for filling paper. The Company owns, staffs, operates and maintains all of its satellite PCC facilities, and owns or licenses the related technology. Generally, the Company and its paper mill customers enter into long-term evergreen agreements, initially ten years in length, pursuant to which the Company supplies substantially all of the customer's precipitated calcium carbonate filler requirements. The Company is generally permitted to sell to third-parties PCC produced at a satellite plant in excess of the host paper mill's requirement. The Company also sells a range of PCC products to paper manufacturers from production sites not associated with paper mills. These merchant facilities are located at Adams, Massachusetts and Lifford, United Kingdom. #### PCC Markets *Uncoated Wood-Free Printing and Writing Papers – North America*. Beginning in the mid-1980's, as a result of a concentrated research and development effort, the Company's satellite PCC plants facilitated the conversion of a substantial percentage of North American uncoated wood-free printing and writing paper producers to lower-cost alkaline papermaking technology. The Company estimates that during 2021, more than 90% of North American uncoated wood-free paper was produced employing alkaline technology. Presently, the Company owns and operates 12 commercial satellite PCC plants located at paper mills that produce uncoated wood-free printing and writing papers in North America. *Uncoated Wood-Free Printing and Writing Papers – Outside North America.* The Company estimates the amount of uncoated wood-free printing and writing papers produced outside of North America at facilities that can be served by satellite and merchant PCC plants is more than twice as large (measured in tons of paper produced) as the North American uncoated wood-free paper market currently served by the Company. The Company believes that the superior brightness, opacity and bulking characteristics offered by its PCC products allow it to compete with suppliers of ground limestone and other filler products outside of North America. Presently, the Company owns and operates 38 commercial satellite PCC plants located at paper mills that produce uncoated wood-free printing and writing papers outside of North America. In addition, there are 2 plants currently under construction that will begin production in 2022. *Coated Paper*. The Company continues to pursue satellite PCC opportunities in coated paper markets where our products provide unique performance and/or cost reduction benefits to papermakers and printers. Our Opacarb® product line is designed to create value to the papermaker and can be used alone or in combination with other coating pigments. PCC coating products are produced at 7 of the Company's PCC plants worldwide. *Paper Packaging*. The Company estimates that paper packaging markets are approximately double the size of the printing and writing paper markets. Growth in the paper packaging segment is driven by growth trends in e-commerce and demand for sustainable packaging solutions. The Company offers mineral solutions for filler and coating applications in both the containerboard and cartonboard packaging segments. #### Specialty PCC Products and Markets The Company also produces and sells a full range of dry PCC products on a merchant basis for non-paper applications. The Company's Specialty PCC product line net sales were $77.1 million, $69.3 million and $69.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company sells surface-treated and untreated grades of PCC to the polymer industry for use in automotive and construction applications, and to the adhesives and printing inks industries. The Company's PCC is also used by the food and pharmaceutical industries as a source of calcium in tablets and food applications, as a buffering agent in tablets, and as a mild abrasive in toothpaste. The Company produces PCC for specialty applications from production sites at Adams, Massachusetts and Lifford, England. *Processed Minerals – Products and Markets* The Company mines and processes natural mineral products, primarily limestone and talc. The Company also manufactures lime, a limestone-based product. The Company's net sales of processed mineral products were $152.1 million, $133.2 million and $140.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. Net sales of ground calcium carbonate ("GCC") products, which are principally lime and limestone, were $98.1 million, $89.3 million and $91.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. Net sales of talc products were $54.0 million, $43.9 million and $49.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company mines and processes GCC products at its reserves in the eastern and western parts of the United States. GCC is used and sold in the construction, automotive and consumer markets. Lime produced at the Company's Adams, Massachusetts, and Lifford, United Kingdom, facilities is used primarily as a raw material for the manufacture of PCC at these sites and is sold commercially to various chemical and other industries. The Company mines, beneficiates and processes talc at its Barretts site, located near Dillon, Montana. Talc is sold worldwide in finely ground form for ceramic applications and in North America for paint and coatings and polymer applications. Because of the exceptional chemical purity of the Barretts ore, a significant portion of worldwide automotive catalytic converter ceramic substrates contain the Company's Barretts talc. Our high-quality limestone, dolomitic limestone, and talc products are defined primarily by the chemistry and color characteristics of the ore bodies. Ore samples are analyzed by x-ray fluorescence (XRF) and other techniques to determine purity and more generally by Hunter brightness measurement to determine dry brightness and the Hunter yellowness (b) value. We serve multiple markets from each of our operations, each of which has different requirements relating to a combination of chemical and physical properties. ### Refractories Segment *Refractory – Products and Markets* The Company offers a broad range of monolithic and pre-cast refractory products and related systems and services. The Company's Refractory segment net sales were $303.4 million, $258.1 million and $298.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. Refractory product sales are often supported by Company-supplied proprietary application equipment, laser measurement systems and on-site technical service support. The Company's proprietary application equipment is used to apply refractory materials to the walls of steel-making furnaces and other high temperature vessels to maintain and extend their useful life. Net sales of refractory products, including those for non-ferrous applications, were $237.1 million, $212.3 million and $244.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company's proprietary application systems, such as its MINSCAN®, allow for remote-controlled application of the Company's refractory products in steel-making furnaces, as well as, in steel ladles. Since the steel-making industry is characterized by intense price competition, which results in a continuing emphasis on increased productivity, these application systems and the technologically advanced refractory materials developed in the Company's research laboratories have been well accepted by the Company's customers. These products allow steel makers to improve their performance through, among other things, the application of monolithic refractories to furnace linings while the furnace is at operating temperature, thereby eliminating the need for furnace cool-down periods and steel-production interruption. The result is a lower overall cost for steel produced by steel makers. The Company's technical service staff and application equipment assist customers to achieve desired productivity objectives. The Company's technicians are also able to conduct laser measurement of refractory wear, sometimes in conjunction with robotic application tools, to improve refractory performance at many customer locations. The Company believes that these services, together with its refractory product offerings, provide it with a strategic marketing advantage. Over the past several years, the Refractories segment has continued to develop, reformulate, and optimize its products and application technology to maintain its competitive advantage in the marketplace. Some of the products the Company has developed and optimized in the past include: - HOTCRETE®: High durability shotcrete products for applications at high temperatures in ferrous applications, such as, steel ladles, electric arc furnaces (EAF) and basic oxygen furnaces (BOF). - FASTFIRE®: High durability castable and shotcrete products in the non-ferrous and ferrous industries with the added benefit of rapid dry-out capabilities. - OPTIFORM®: A system of products and equipment for the rapid continuous casting of refractories for applications, such as, steel ladle safety linings. - ENDURATEQ®: A high durability refractory shape for glass contact applications, such as, plungers and orifice rings. - DECTEQ™: A system for the automatic control of electrical power feeding electrodes used in electric arc steel making furnaces. - LACAM® Torpedo: A laser scanning system that measures the refractory lining thickness inside a Hot Iron (Torpedo) Ladle. The torpedo ladles transport liquid iron from a blast furnace to the steel plant. - LACAM® LI Explorer: A laser scanning system that measures the refractory lining thickness from the interior of a Hot Steel Ladle. By entering the interior, the explorer provides the ability to see all areas of the ladle and identify the smallest flaws in the refractory lining. - LACAM®: A new, fourth generation Lacam® laser measurement device for use in the worldwide steel industry that is 17 times faster than the previous version. This new technology provides the fastest and most accurate laser scanning for hot surfaces available today. The principal market for the Company's refractory products is the steel industry. Management believes that certain trends in the steel industry will provide growth opportunities for the Company. These trends include growth and quality improvements regarding the development of improved manufacturing processes, such as, thin-slab casting, the trend in North America to shift production from integrated mills to electric arc furnaces (mini-mills) and the ever-increasing need for improved productivity and longer lasting refractories. The Company sells its refractory products in the following markets: *Steel Furnace.* The Company sells gunnable monolithic refractory products and application systems to users of basic oxygen furnaces and electric arc furnaces for application on furnace walls to prolong the life of furnace linings. *Other Iron and Steel.* The Company sells monolithic refractory materials and pre-cast refractory shapes for iron and steel ladles, vacuum degassers, continuous casting tundishes, blast furnaces and reheating furnaces. The Company offers a full line of materials to satisfy most continuous casting refractory applications. This full line consists of gunnable materials, refractory shapes and permanent linings. *Industrial Refractory Systems*. The Company sells refractory shapes and linings to the glass, cement, aluminum, petrochemicals, power generation and other non-steel industries. The Company also produces a specialized line of carbon composites and pyrolitic graphite sold under the PYROID® trademark, primarily to the aerospace and electronics industries. #### Metallurgical Products and Markets The Company produces a number of other technologically advanced products for the steel industry, including calcium metal, metallurgical wire products and a number of metal treatment specialty products. Net sales of metallurgical products were $66.3 million, $45.8 million and $53.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company manufactures calcium metal at its Canaan, Connecticut facility and purchases calcium to meet global production requirements. Calcium metal is used in the manufacture of the Company's PFERROCAL® solid-core calcium wire and is also sold for use in the manufacture of batteries and magnets. We also manufacture cored wires at our Canaan, Connecticut and Hengelo, Netherlands, manufacturing sites. The Company sells metallurgical wire products and associated wire-injection equipment, including SURECAL®, for use in the production of high-quality steel. These metallurgical wire products are injected into molten steel to improve castability and reduce imperfections. ### Marketing and Sales The Company relies principally on its worldwide direct sales force to market its products. The direct sales force is augmented by technical service teams that are familiar with the industries to which the Company markets its products, and by several regional distributors. The Company's sales force works closely with the Company's technical service staff to solve technical and other issues faced by the Company's customers. In the Performance Materials segment, the Company relies on industry-specialized technically oriented salespersons. In Metalcasting, these sales teams provide expertise to educate our customers on the bentonite blend properties and to aid them in producing castings efficiently. Certain other products are distributed through networks of distributors and representatives, who warehouse specific products at strategic locations. In addition, the sales and distribution of environmental products and building materials are primarily performed through the Company’s own personnel and facilities. Our staff includes sales professionals and technical support engineers who analyze the suitability of our products in relation to the customer’s specific application and the conditions that products will endure or the environment in which they will operate. In the Specialty Minerals segment, the Company's sales team and technical services staff assist paper producers in ongoing evaluations of the use of PCC for paper coating and filling applications as well as PCC, GCC and talc use in the automotive, construction and household goods markets. In the Refractories segment, the Company's technical service personnel advise on the use of refractory materials, and, in many cases pursuant to service agreements, apply the refractory materials to the customers' furnaces and other vessels. Continued use of skilled technical service teams is an important component of the Company's business strategy. The Company works closely with its customers to ensure that their requirements are satisfied, and it often trains and supports customer personnel in the use of the Company's products. The Company oversees domestic marketing and sales activities principally from Bethlehem, Pennsylvania and Hoffman Estates, Illinois, and from regional sales offices located elsewhere in the United States. The Company's international marketing and sales efforts are directed from regional centers located in India, the United Kingdom, Brazil, and China. The Company believes that its worldwide network of sales personnel and manufacturing sites facilitates continued international expansion. ### Raw Materials The Company depends in part on having an adequate supply of raw materials for its manufacturing operations, particularly lime and carbon dioxide for the PCC product line, and magnesia and alumina for its Refractory operations. We also depend on having an adequate supply of bentonite and leonardite for our Performance Materials segment and limestone and talc for our Processed Minerals product line. Supplies of bentonite, leonardite, limestone and talc are provided through the Company’s own mining operations and we depend on having adequate access to ore reserves of appropriate quality at such mining operations. The Company uses lime in the production of PCC and is a significant purchaser of lime worldwide. Generally, the lime utilized in our business is readily available from numerous sources and we purchase lime under long-term supply contracts from unaffiliated suppliers located in close geographic proximity to the Company's PCC plants. We also produce lime at our Adams, Massachusetts facility and our Lifford, UK facility, although most of the lime produced at our Adams facility and all of the lime produced at our Lifford facility is consumed in the production of Specialty PCC at the plant. We currently supply some quantities of lime to third parties that are in close proximity to our Adams plant and could supply small quantities of lime to certain of our PCC satellite facilities that are in close geographic proximity to the Adams plant. Carbon dioxide is readily available in exhaust gas from the host paper mills, or other operations at our merchant facilities. The principal raw materials used in the Company's monolithic refractory products are refractory-grade magnesia and various forms of alumina silicates. Approximately 46% of the Company’s magnesia requirements were purchased from sources in China over the past five years. The price and availability of bulk raw materials from China are subject to fluctuations that could affect the Company's sales to its customers. In addition, the volatility of transportation costs has also affected the delivered cost of raw materials imported from China to North America and Europe. The Company has developed alternate sources of magnesia over the past few years that have reduced our reliance on China-sourced magnesia. The amount sourced from China and other locations can vary from year to year depending upon price and availability from each source. The alumina we utilize in our business is readily available from numerous sources. The Company also purchases calcium metal, calcium silicide, graphite, calcium carbide and various alloys for use in the production of metallurgical wire products and uses lime and aluminum in the production of calcium metal. In addition to bentonite and leonardite provided through our mining operations, our Performance Materials segment’s principal raw materials are coal, soda ash, chromite, and woven and unwoven polyester material, all of which are readily available from numerous sources. #### Mineral Reserves and Mining Process The Company relies on access to bentonite reserves to support its Performance Materials segment. The Company has reserves of sodium and calcium bentonite at various locations in the U.S., including Wyoming, South Dakota, Montana and Alabama, as well as in Australia, China, and Turkey. Through the Company’s affiliations and joint ventures, the Company also has access to bentonite deposits in India, and Mexico. The Company owns or controls the properties on which the bentonite reserves are located through long-term leases, royalty agreements (including easement and right of way agreements) and patented and unpatented mining claims. No single or group of mining claims or leases is significant or material to the financial condition or operations of our Company or our segments. In general, our bentonite reserves are immediately adjacent to, or within sixty miles of, one of the related processing plants. All of the properties on which our reserves are located are either physically accessible for the purposes of mining and hauling or the cost of obtaining physical access would not be material. Access to processing facilities from the mining areas is generally by private road, public highways, or railroads. For most of our leased properties and mining claims, there are multiple means of access. The Processed Minerals product line of our Specialty Minerals segment is supported by the Company's limestone reserves located in the western and eastern parts of the United States, and talc reserves located in Montana. The Company generally owns and surface mines these reserves and processes its products at nearby processing plants. The Company has ongoing exploration and development activities for all of its mineral interests with the intent to increase its proven and probable reserves. See Item 2, “Properties,” for more information with respect to these facilities and mines. The Company relies on shipping bulk cargos of bentonite within and from the United States, Turkey and China to customers, as well as our own subsidiaries, and we are sensitive to our ability to recover these shipping costs. In the last few years, bulk cargo shipping rates have been very volatile, and, to a lesser extent, the availability of bulk cargo containers has been sporadic. ### Competition The Company is continually engaged in efforts to develop new products and technologies and refine existing products and technologies in order to remain competitive and to position itself as a market leader. For the Performance Materials segment, the Company competes on the basis of product quality, service, technical support, price, product availability and logistics. There are numerous major producers of competing products and various regional suppliers in the areas the Company serves. The Company is the world leader in bentonite, including number one positions in metalcasting and pet litter. With respect to the environmental products product line, the Company competes with geosynthetic clay liner manufacturers worldwide, several suppliers of alternative lining technologies, and providers of soil and environmental remediation solutions and products. In addition, the filtration and well-testing products within the Environmental Products product line compete with other oil and gas services companies. The building materials product line competes in a highly fragmented market comprised of a wide variety of alternative technologies. A number of integrated bentonite companies compete with our drilling products. With respect to its PCC products, the Company competes for sales to the paper industry with other minerals, such as GCC and kaolin, based in large part upon technological know-how, patents and processes that allow the Company to deliver PCC that it believes imparts gloss, brightness, opacity and other properties to paper on an economical basis. The Company is the leading manufacturer and supplier of PCC to the paper industry. The Company competes in sales of its limestone and talc based primarily upon quality, price, and geographic location. With respect to the Company's refractory products, competitive conditions vary by geographic region. Competition is based upon the performance characteristics of the product (including strength, consistency and ease of application), price, and the availability of technical support. ### Seasonality Some of our products in the Performance Materials segment within the environmental and building materials product lines are impacted by weather and soil conditions. Many of the products cannot be applied in wet or winter weather conditions and, as such, sales and profits tend to be greater during the period from April through October. Our Processed Minerals product line of our Specialty Minerals segment is subject to similar seasonal patterns. In addition, the oil and gas production facilities are subject to natural disasters, such as hurricanes, which could lead to lower sales in the June to November months. As a result, we consider the business of the Performance Materials segment to be seasonal. ### Research and Development Many of the Company's product lines are technologically advanced. The Company’s internal research team has dedicated years of experience into analyzing properties of minerals and synthetic materials while developing processes and applications to enhance their performance. Our expertise in inorganic chemistry, crystallography and structural analysis, fine particle technology and other aspects of materials science apply to and support all of our product lines. The Company's business strategy for growth in sales and profitability depends, to a large extent, on the continued success of its research and development activities. The Company’s Performance Materials segment also offers a strong portfolio of custom blended compounds, formulations and technology, which have been primarily developed internally by the Company’s research and development efforts. The ADDITROL® formulation, a custom blend, meets the need of both ferrous and non-ferrous applications. The Volclay® application is used in green sand molding applications ranging from the production of iron and steel castings to the production of non-ferrous castings. The Hevi-Sand® specialty chromite blend prevents metal penetration and can be used with most foundry binders in molds and cores. In addition, the Company’s RESISTEXTM and CONTINUUM® formulation enables withstanding aggressive leachates. The ORGANOCLAY® technology offers highly effective solutions in effective in removing oils, greases and other high molecular weight, low solubility organic compounds from aqueous streams. The Company's FLOURO-SORB® absorbent is a proprietary, NSF-certified product designed to globally support remediation efforts surrounding per- and polyflouroalkyl substances (PFAS). The Company will also continue to seek out promising compounds and innovative technologies, developed mainly by our internal research team, to incorporate into our product lines. In the Specialty Minerals segment, the significant achievements of the Company's research and development efforts include: the satellite PCC plant concept; PCC crystal morphologies for paper filling and coating; FulFill® high filler technology systems; NewYield® Waste Stream Process Technology; ENVIROFIL® Waste Stream Process Technology; Thixocarb® PCC, Vicality® USP PCC, EMforce®, and Optibloc® for the Processed Minerals and Specialty PCC product lines. The FulFill® brand High Filler Technology is a portfolio of high-filler technologies that offers papermakers a variety of efficient, flexible solutions that decreases dependency on natural fiber and reduces costs. The FulFill® E and V series allows papermakers to increase filler loading levels of precipitated calcium carbonate (PCC), which replaces higher cost pulp, and increases PCC usage. Depending on paper grades, this PCC volume increase may range from 15 to 30 percent. NewYield® Waste Stream Process Technology cost-effectively converts a problematic pulp mill waste stream into a functional pigment for filling paper, eliminating the cost of environmental disposal and remediation of certain waste streams to papermakers. The product and technology have been validated on a commercial scale in a pulping operation and papermaking system in China, with several current projects underway. ENVIROFIL® Waste Stream Process Technology cost-effectively converts a problematic de-inked sludge waste into a functional pigment for filling paper, eliminating the cost of environmental disposal and remediation. In the Refractories segment, the Company’s achievements include the development of FASTFIRE® and OPTIFORM® shotcrete refractory products; LACAM® laser-based refractory measurement systems; and the MINSCAN® and HOTCRETE® application systems. The Company will continue to reformulate its refractory materials to be more competitive. For the years ended December 31, 2021, 2020 and 2019, the Company spent approximately $19.5 million, $19.9 million and $20.3 million, respectively, on research and development. The Company's research and development spending for 2021, 2020 and 2019 was approximately 1.0%, 1.2% and 1.1% of net sales, respectively. The Company maintains its primary research facilities in Bethlehem and Easton, Pennsylvania; Houston, Texas; and Hoffman Estates, Illinois. It also has research and development facilities in China, England, Germany, Ireland, Japan and Turkey. Approximately 209 employees worldwide are engaged in research and development. In addition, the Company has access to some of the world's most advanced papermaking and paper coating pilot facilities. ### Patents and Trademarks The Company owns or has the right to use approximately 347 patents and approximately 1,893 trademarks related to its business. Our patents expire between 2022 and 2040. Our trademarks continue indefinitely. The Company believes that its rights under its existing patents, patent applications and trademarks are of value to its operations, but no one patent, application or trademark is material to the conduct of the Company's business as a whole. ### Insurance The Company maintains liability and property insurance and insurance for business interruption in the event of damage to its production facilities and certain other insurance covering risks associated with its business. The Company believes such insurance is adequate for the operation of its business. There is no assurance that in the future the Company will be able to maintain the coverage currently in place or that the premiums will not increase substantially. ### Human Capital Resources Our people are the most important part of MTI. They are the cornerstone of our operational excellence and safety-first culture, key to our ability to execute on our growth strategies, and vital to our success. Our core values — people, excellence, honesty, customer focus and accountability — guide our actions. #### Workforce Demographics As of December 31, 2021, the Company employed 3,961 persons globally, located in over 34 countries. Of these, 1,867 (47%) were located in North America, 901 (23%) were located in Europe, 1,017 (26%) were located in Asia and 176 (4%) were located in Latin America. #### Diversity and Inclusion As a global company, we are committed to an organizational culture that unconditionally accepts all colleagues. We believe in the power of an environment where everyone feels involved, respected, valued and connected, where everyone is free to be their authentic selves and share ideas. We believe that our culture of diversity and inclusion is a competitive advantage that fuels innovation and enhances our ability to attract and retain talent. We continually strive to improve the attraction, retention, and advancement of diverse employees reflective of the communities in which we live and work. Furthermore, we place a concerted effort on the continued growth of diverse employees through various global development and training programs, mentoring programs and individual development plans. We also view diversity as key to leadership development. When selecting participants for internal development programs, we ensure that groups are balanced across a number of factors, including gender, ethnicity, tenure, function, geography and experience. #### Compensation and Benefits We strive to hire, develop and retain the top talent in all areas of the company. MTI’s total rewards, values and philosophy is to provide competitive total rewards that include pay and benefits consistent with the varied practices in different regions of the world. We provide an array of programs to recognize individual and team achievements, and to enable us to appropriately reward performance consistent with employee contributions. MTI has a strong commitment to pay for performance at all levels. This commitment is embodied through merit increases, incentive compensation and our variable pay plans. We offer competitive compensation to attract and retain the best people. Our benefits are designed to help employees and their families stay healthy, meet their financial goals, protect their income and help them balance their work and personal lives. These benefits include health and wellness, paid time off, employee assistance, competitive pay, tuition reimbursement, career growth opportunities, and a culture of recognition. #### Focus on Safety The health and safety of our employees is our number one core value. We are committed to the health and safety of our employees, contractors, customers, and members of the communities in which we operate. Our "safety first" culture has been built through dedication, continuous improvement and active engagement. We continue to enhance our safety culture and our top priority is for all employees and contractors to return home in the same condition they arrived to work. While we believe zero-injuries across all our operations is attainable, we have set goals of 1.00 for Total Recordable Incident Rate (TRIR, which is the number of recordable injuries per 100 employees) and 0.10 for Lost Workday Injury Rate (LWIR, which is the number of lost workday injuries per 100 employees), and we continue to make strides to drive incidents below these levels. In 2021, our TRIR was 0.74 and our LWIR was 0.22. This safety-first mindset helps us attract and retain top talent from around the world and drives continuous improvement in our manufacturing operations. The COVID-19 pandemic continues to impact lives and businesses around the world. Protecting the health and safety of our employees is one of our core values. Since the onset of the pandemic, we put in place a robust series of protocols to protect our employees while ensuring the safe and efficient operations of our facilities, especially our frontline workers who continue to move and make our products during this critical time. We have remained focused on the health and safety of our employees by implementing new safety protocols in our facilities, enhanced screening at all entry points to our facilities, providing personal protective equipment and hygiene supplies, adhering to social distancing guidelines, recommended remote work, restricting travel and providing paid time off for our employees in quarantine as the result of a COVID infection and/or exposure. Employees are continuing to work from home when deemed necessary. #### Operational Excellence Culture Our Operational Excellence (OE) journey, rooted in the active engagement of our employees, began more than a decade ago when we developed a comprehensive and highly structured business system of lean principles closely integrated with safe and reliable work practices. We’ve significantly advanced OE across all aspects of our company, fostering a culture of continuous improvement where each employee recognizes the importance of applying these people-focused principles and tools to solve challenges, constantly refine our processes, identify and remove risk and waste, and deliver value to our customers. Every day, MTI employees show their engagement and apply their skills in ways that deliver measurable outcomes and create both business and social value. #### Talent Management Our people are essential to the successful delivery of the MTI strategy and to sustaining superior business performance. We believe our employees are at the core of everything we do. The work environment at MTI continually evolves to maximize the employee experience and drive high performance. We accelerate the development of our employees, strengthen our leadership capabilities, and enhance employee performance through engagement. Our culture of training and development motivates employees at all levels of the organization to work safely and efficiently. We employ several methods to engage, train and develop employees, yielding higher levels of performance year after year. Investment in skills and acceleration of employees’ professional and personal development are essential components of our people strategy. We leverage both formal and informal programs to identify, develop and retain talent across the organization. Through the MTI Internship Program, we identify new talent and prepare them for success within our organization upon graduation. We also provide mentoring opportunities for rising talent to accelerate their professional development and improve our bench strength. The Chairman and Chief Executive Officer and the MTI Leadership Council meet on a quarterly basis to review succession plans including key leadership positions across the company. The various internship programs, development programs and succession planning sessions demonstrate the Company’s ongoing commitment towards accelerating development of our future leaders. ### Environmental, Health and Safety Matters and Government Regulation The Company’s operations are subject to federal, state, local and foreign laws and regulations relating to the environment and health and safety. In particular, we are subject to certain requirements under the Clean Air Act. In addition, certain of the Company’s operations involve and have involved the use and release of substances that have been and are classified as toxic or hazardous within the meaning of these laws and regulations. Environmental operating permits are, or may be, required for certain of the Company’s operations and such permits are subject to modification, renewal and revocation. We are also subject to land reclamation requirements relating to our mining operations. In addition to environmental and health and safety laws and regulations, we are subject to a wide variety of other federal, state, local and foreign laws and regulations in the countries where we conduct business. The Company regularly monitors and reviews its operations, procedures and policies for compliance with these laws and regulations. Compliance with these laws and regulations often requires the dedication of time and effort of employees, as well as financial resources. The Company believes its operations are in substantial compliance with these laws and regulations and that there are no violations that would have a material effect on the Company. Despite these compliance efforts, some risk of environmental and other damage is inherent in the Company’s operations, as it is with other companies engaged in similar businesses, and there can be no assurance that material violations will not occur in the future. In fiscal 2021, compliance with the regulations applicable to us did not have a material effect on our capital expenditures, earnings, or competitive position, and the cost of compliance with these laws and regulations is not expected to have a material adverse effect on the Company in the future. Sustainability is core to who we are and the foundation of how we operate our company. At MTI, we are focused on providing the safest workplace for our employees, creating innovative technologies tailored to our customers’ evolving demands, reducing our environmental impact, preserving natural resources and making positive contributions to our local communities — all of which are ingrained in our values. For the past 13 years, MTI has published an annual Corporate Responsibility and Sustainability Report that describes our efforts in continuous improvement regarding our safety culture, environmental performance, social impact, new product development, and community engagement. Over the past several years, we've taken meaningful steps to advance our broad range of sustainability initiatives, including establishing 2025 environmental reduction targets in six focus areas: Scope 1 and Scope 2 CO2 emissions, airborne pollutants, water used, water discharged, and process waste landfilled. Laws and regulations are subject to change. See Item 1A, Risk Factors, for information regarding the possible effects that compliance with new laws and regulations, including those relating to climate change, may have on our businesses and operating results. Under the terms of certain agreements entered into in connection with the Company's initial public offering in 1992, Pfizer Inc. ("Pfizer") agreed to indemnify the Company against certain liabilities being retained by Pfizer and its subsidiaries including, but not limited to, pending lawsuits and claims, and any lawsuits or claims brought at any time in the future alleging damages or injury from the use, handling of or exposure to any product sold by Pfizer's specialty minerals business prior to the closing of the initial public offering. ### Available Information The Company maintains an internet website located at http://www.mineralstech.com. Its reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as well as its Proxy Statement and filings under Section 16 of the Securities Exchange Act of 1934 are available free of charge through the Investor Relations page of its website, as soon as reasonably practicable after they are filed with the Securities and Exchange Commission ("SEC"). Investors may access these reports through the Company's website by navigating to "Investor Relations" and then to "SEC Filings." ## Risk factors As filed, 36,667 characters. Our business faces significant risks. Set forth below are all risks that we believe are material at this time. Our business, financial condition and results of operations could be materially adversely affected by any of these risks. These risks should be read in conjunction with the other information in this Annual Report on Form 10-K. ### COVID-19 Pandemic Risk ***We have been and expect to continue to be adversely affected by the COVID-19 pandemic.*** The COVID-19 pandemic continues to affect nearly all regions around the world. Governments around the world have taken preventative measures to contain or mitigate the COVID-19 outbreak, including travel restrictions, border closings, restrictions on public gatherings, shelter-in-place restrictions and limitations on business. This has affected, and is continuing to affect, the global economy, the United States economy and the global financial markets. The outbreak and resulting preventative measures have disrupted our operations and affected our business, and we expect this to continue. The impacts include, but are not limited to, the following: - We have experienced, and may experience in the future, temporary facility closures in response to government mandates in certain jurisdictions in which we operate. We may also be required to close certain of our facilities for the safety of our employees in response to positive diagnoses for COVID-19. Even in facilities that are not closed, we could be affected by reductions in employee availability and effectiveness, changes in operating procedures, and increased costs. - Our customers have been, and may continue to be, affected by COVID-19 and the business slowdown caused by preventative measures, resulting in decreased demand for our products and services, delayed payments from customers and uncollectable accounts. - We have experienced, and may experience in the future, disruptions to our supply chain, logistics, and service providers. If we are unable to secure raw materials and supplies for our facilities, our operations could be materially adversely affected. - Significant disruption of global financial markets could have a negative impact on our ability to access capital in the future. We cannot predict the degree to which, or the time period that, global economic conditions and our business, sales, liquidity, financial condition and results of operations will continue to be affected by the COVID-19 pandemic and the resulting preventative measures. The extent to which we are affected will depend on future developments, including the duration of the outbreak and the significance of new variants of COVID-19, travel restrictions, business and workforce disruptions, and the effectiveness of vaccination and other actions taken to contain and treat the disease. The effects on our business, sales, liquidity, financial condition and results of operations could be material. ### Industry and Market Risks ***Worldwide general economic, business, and industry conditions may have an adverse effect on the Company’s results.*** The global economic instability caused by the COVID-19 pandemic has caused and may continue to cause, among other things, declining consumer and business confidence, volatile raw material prices, instability in credit markets, high unemployment, fluctuating interest and exchange rates, and other challenges in the countries in which we operate. The Company’s business and operating results could be adversely affected by these global economic conditions. The Company’s customers and potential customers may experience deterioration of their businesses, cash flow shortages, and difficulty obtaining financing. As discussed below, the industries we serve have in the past been adversely affected by the uncertain global economic climate due to the cyclical nature of their businesses. As a result, existing or potential customers may reduce or delay their growth and investments and their plans to purchase products and may not be able to fulfill their obligations in a timely fashion. Further, suppliers could experience similar conditions, which could affect their ability to fulfill their obligations to the Company. Adversity within capital markets may also impact the Company’s results of operations by negatively affecting the amount of expense the Company records for its pension and other postretirement benefit plans. Actuarial valuations used to calculate income or expense for the plans reflect assumptions about financial market and other economic conditions – the most significant of which are the discount rate and the expected long-term rate of return on plan assets. Such actuarial valuations may change based on changes in key economic indicators. Global economic markets remain uncertain, and there can be no assurance that market conditions will improve in the near future. Future weakness in the global economy could materially and adversely affect our business and operating results. ***Our customers’ businesses are cyclical or have changing regional demands. Our operations are subject to these trends and we may not be able to mitigate these risks.*** A significant portion of our Performance Materials segment’s sales are derived from the metalcasting market. The metalcasting market is dependent upon the demand for castings for automobile components, farm and construction equipment, oil and gas production equipment, power generation turbine castings, and rail car components. Many of these types of equipment are sensitive to fluctuations in demand during periods of recession or difficult economic conditions, including the current conditions resulting from the COVID-19 pandemic, which has affected and may continue to affect the demand for our Performance Materials segment’s products and services. In the paper industry, which is served by our Paper PCC product line, production levels for uncoated freesheet within North America and Europe, our two largest markets are projected to continue to decrease. The reduced demand for premium writing paper products has resulted in closures and conversions of mill in both North America and Europe. We expect paper consumption to remain similar to prior year levels in both regions. Our Refractories segment primarily serves the steel industry. Global steel production has seen volatility in the market due to COVID-19. We expect steel consumption to be similar or slightly better than 2021 levels. ***Our Environmental Products and Building Materials products sales are predominantly derived from the commercial construction and infrastructure markets. In addition, our Processed Minerals and Specialty PCC product lines are affected by the domestic building and construction markets, as well as the automotive market.*** Demand for our products is subject to trends in these markets. During periods of economic slowdown, our customers often reduce their capital expenditures and defer or cancel pending projects. Such developments occur even amongst customers that are not experiencing financial difficulties. In addition, these trends could cause our customers to face liquidity issues or bankruptcy, which could deteriorate the aging of our accounts receivable, increase our bad debt exposure and possibly trigger impairment of assets or realignment of our businesses. The Company has taken steps to reduce its exposure to variations in its customers' businesses, including by diversifying its portfolio of products and services; through geographic expansion, and by structuring most of its long-term satellite PCC contracts to provide a degree of protection against declines in the quantity of product purchased, since the price per ton of PCC generally rises as the number of tons purchased declines. In addition, many of the Company's product lines lower its customers' costs of production or increase their productivity, which should encourage them to use its products. However, there can be no assurance that these efforts will mitigate the risks of our dependence on these industries. Continued weakness in the industries we serve has had, and may in the future have, an adverse effect on sales of our products and our results of operations. A continued or renewed economic downturn in one or more of the industries or geographic regions that the Company serves, or in the worldwide economy, could cause actual results of operations to differ materially from historical and expected results. ***The Company operates in very competitive industries, which could adversely affect our profitability.*** The Company has many competitors. Some of our principal competitors have greater financial and other resources than we have. Accordingly, these competitors may be better able to withstand economic downturns and changes in conditions within the industries in which we operate and may have significantly greater operating and financial flexibility than we do. We also face competition for some of our products from alternative products, and some of the competition we face comes from competitors in lower-cost production countries like China and India. As a result of the competitive environment in the markets in which we operate, we currently face and will continue to face pressure on the sales prices of our products from competitors, which could reduce profit margins. ***The Company’s sales could be adversely affected by consolidation in customer industries, principally paper, foundry and steel.*** Several consolidations in the paper industry have taken place in recent years and such consolidation could continue in the future. These consolidations could result in partial or total closure of some paper mills where the Company operates PCC satellites. Such closures would reduce the Company's sales of PCC, except to the extent that they resulted in shifting paper production and associated purchases of PCC to another location served by the Company. Similarly, consolidations have occurred in the foundry and steel industries. Such consolidations in the major industries we serve concentrate purchasing power in the hands of a smaller number of manufacturers, enabling them to increase pressure on suppliers, such as the Company. This increased pressure could have an adverse effect on the Company's results of operations in the future. ***The Company’s sales of PCC could be adversely affected by our failure to renew or extend long term sales contracts for our satellite operations.*** The Company's sales of PCC to paper customers are typically pursuant to long-term evergreen agreements, initially ten years in length, with paper mills where the Company operates satellite PCC plants. Sales pursuant to these contracts represent a significant portion of our worldwide Paper PCC sales, which were $349.7 million in 2021, or approximately 19% of the Company’s net sales. The terms of many of these agreements have been extended or renewed in the past, often in connection with an expansion of the satellite plant. However, failure of a number of the Company's customers to renew or extend existing agreements on terms as favorable to the Company as those currently in effect, or at all, could have a substantial adverse effect on the Company's results of operations, and could also result in impairment of the assets associated with the PCC plant. ### Financial Risks ***Servicing the Company’s debt will require a significant amount of cash. This could reduce the Company’s flexibility to respond to changing business and economic conditions or fund capital expenditures or working capital needs. Our ability to generate cash depends on many factors beyond our control.*** At December 31, 2021 the Company had $1,031.1 million aggregate principal amount of total indebtedness (consisting primarily of $548.0 million aggregate principal amount of loans under our term facility, $400.0 million aggregate principal amount of notes and $80.0 million outstanding under our revolving credit facility) and an additional $209.4 million of borrowing capacity under the revolving credit facility (after giving effect to $10.6 million of outstanding letters of credit). Our outstanding indebtedness will require a significant amount of cash to make interest payments. Further, the interest rate on a significant portion of our borrowings under our senior secured credit facility is based on LIBOR interest rates, which could result in higher interest expense in the event of an increase in interest rates. Our ability to pay interest on our debt and to satisfy our other debt obligations will depend in part upon our future financial and operating performance and upon our ability to renew or refinance borrowings. Prevailing economic conditions and financial, business, competitive, regulatory and other factors, many of which are beyond our control, will affect our ability to make these payments. We cannot guarantee that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to fund our liquidity needs. If we are unable to generate sufficient cash flow to meet our debt service obligations, we will have to pursue one or more alternatives, such as reducing or delaying capital or other expenditures, refinancing debt, selling assets, or raising equity capital. Further, the requirement to make significant interest payments may reduce the Company’s flexibility to respond to changing business and economic conditions or fund capital expenditure or working capital needs and may increase the Company’s vulnerability to adverse economic conditions. ***The interest rate of certain of our term loan borrowings is based on LIBOR interest rates, which is subject to change.*** The interest rates on a significant portion of our borrowings under our senior secured credit facility is based on LIBOR interest rates. These rates might be subject to change based on the United Kingdom's Financial Conduct Authority's intention to phase out LIBOR. In March 2021, the ICE Benchmark Administration Limited, the administrator of LIBOR, extended the transition dates of certain LIBOR tenors to June 30, 2023, after which LIBOR reference rates will cease to be provided. Despite this deferral, the LIBOR administrator has advised that no new contracts using U.S. Dollar LIBOR should be entered into after December 31, 2021. Regulators, industry groups and certain committees, such as the Alternative Reference Rates Committee (ARRC) have, among other things, published recommended fallback language for LIBOR-linked financial instruments, identified recommended alternatives for certain LIBOR rates, such as the Secured Overnight Financing Rate (SOFR) as the recommended alternative to U.S. Dollar LIBOR, and proposed implementations of the recommended alternatives in floating rate financial instruments. It is currently unknown the extent to which these recommendations and proposals will be broadly accepted, whether they will continue to evolve, and what the effect of their implementation may be on the markets for floating-rate financial instruments. At this time, it is not possible to predict the effect that these developments or any discontinuance, modification or other reforms may have on LIBOR, other benchmarks or floating-rate debt instruments, including our floating-rate debt. If LIBOR ceases to exist prior to the maturity of our term facility, we will be required to substitute an index such as the Prime Rate or renegotiate our senior secured credit facility, and substitute an index to replace LIBOR with the new standard that is established. If we borrow under the Prime Rate, we will see increased borrowing costs until the agreements are amended or renegotiated to incorporate the new SOFR borrowing rate or another substitute index. ***The agreements and instruments governing our debt contain various covenants that could significantly impact our ability to operate our business.*** The agreement governing our senior secured credit facility and the indenture that governs our 5.0% Senior Notes due 2028 contain a number of significant covenants that, among other things, limit our ability to: incur or guarantee additional indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, prepay, redeem or repurchase certain debt, issue certain preferred stock or similar equity securities, make loans and investments, sell or otherwise dispose of assets, incur liens, enter into transactions with affiliates, enter into agreements restricting our subsidiaries’ ability to pay dividends and consolidate, merge or sell all or substantially all of our assets. In addition, our revolving credit facility, if used, requires us to comply with specific financial ratios, including a maximum net leverage ratio, under which we are required to achieve specific financial results. Our ability to comply with these provisions may be affected by events beyond our control. A breach of any of these covenants would result in a default under the applicable agreements. In the event of any default under our senior secured credit facility, our lenders could elect to declare all amounts borrowed under the credit agreement, together with accrued interest thereon, to be due and payable. In such an event, we cannot assure you that we would have sufficient assets to pay debt then outstanding under the credit agreement, the indenture governing our notes, and any other agreements governing our debt. Any future refinancing of the senior secured credit facility is likely to contain similar restrictive covenants. We may also incur future debt obligations that might subject us to additional restrictive covenants that could affect our financial and operational flexibility. We cannot assure you that we will be granted waivers or amendments to these agreements if for any reason we are unable to comply with these agreements or that we will be able to refinance our debt on terms acceptable to us, or at all. ### Technology, Development and Growth Risks ***The Company’s results could be adversely affected if it is unable to effectively achieve and implement its growth initiatives.*** Sales and income growth of the Company depends upon a number of uncertain events, including the outcome of the Company's strategies of increasing its penetration into geographic markets such as Brazil, India and China as well as other Asian and Eastern European countries; increasing its penetration into product markets such as the market for papercoating pigments and the market for groundwood paper pigments; increasing sales to existing PCC customers by increasing the amount of PCC used per ton of paper produced; developing, introducing and selling new products for the paper industry. Difficulties, delays or failure of any of these strategies could affect the future growth rate of the Company. Our strategy also anticipates growth through future acquisitions. However, our ability to identify and consummate any future acquisitions on terms that are favorable to us may be limited by the number of attractive acquisition targets, internal demands on our resources and our ability to obtain financing. Our success in integrating newly acquired businesses will depend upon our ability to retain key personnel, avoid diversion of management’s attention from operational matters, and integrate general and administrative services. In addition, future acquisitions could result in the incurrence of additional debt, costs and contingent liabilities. Integration of acquired operations may take longer, or be more costly or disruptive to our business, than originally anticipated, and it is also possible that expected synergies from future acquisitions may not materialize. We also may incur costs and divert management attention with regard to potential acquisitions that are never consummated. ***Delays or failures in new product development could adversely affect the Company’s operations.*** The Company’s future business success will depend in part upon its ability to maintain and enhance its technological capabilities, to respond to changing customer needs, and to successfully anticipate or respond to technological changes on a cost-effective and timely basis. The Company is engaged in a continuous effort to develop new products and processes in all of its product lines. Difficulties, delays or failures in the development, testing, production, marketing or sale of such new products could cause actual results of operations to differ materially from our expected results. ***The Company’s ability to compete is dependent upon its ability to defend its intellectual property against inappropriate disclosure, theft and infringement.*** The Company's ability to compete is based in part upon proprietary knowledge, both patented and unpatented. The Company's ability to achieve anticipated results depends in part on its ability to defend its intellectual property against inappropriate disclosure and theft as well as against infringement. In addition, development by the Company's competitors of new products or technologies that are more effective or less expensive than those the Company offers could have a material adverse effect on the Company's financial condition or results of operations. ***The Company’s operations could be impacted by the increased risks of doing business abroad.*** The Company does business in many areas internationally. Approximately 48% of our sales in 2021 were derived from outside the United States and we have significant production facilities which are located outside of the United States. We have in recent years expanded our operations in emerging markets, and we plan to continue to do so in the future, particularly in China, India, Brazil, the Middle East, and Eastern Europe. Some of our operations are located in areas that have experienced political or economic instability, including Indonesia, Malaysia, Nigeria, Egypt, Russia, Saudi Arabia, Turkey, Brazil, Thailand, China and South Africa. As the Company expands its operations overseas, it faces increased risks of doing business abroad, including inflation, fluctuation in interest rates, changes in applicable laws and regulatory requirements, export and import restrictions, tariffs, nationalization, expropriation, limits on repatriation of funds, civil unrest, terrorism, war, unstable governments and legal systems, and other factors. We are also subject to increased risks of natural disasters, public health crises, including the occurrence of a contagious disease or illness, such as COVID-19, and other catastrophic events in such countries. Many of these risks are beyond our control and can lead to sudden, and potentially prolonged, changes in demand for our products, difficulty in enforcing agreements, and losses in the realizability of our assets. Adverse developments in any of the areas in which we do business could cause actual results to differ materially from historical and expected results. In addition, a significant portion of our raw material purchases and sales outside the United States are denominated in foreign currencies, and liabilities for non-U.S. operating expenses and income taxes are denominated in local currencies. Accordingly, reported sales, net earnings, cash flows and fair values have been and, in the future, will be affected by changes in foreign currency exchange rates. Our overall success as a global business depends, in part, upon our ability to succeed in differing legal, regulatory, economic, social and political conditions. We cannot assure you that we will implement policies and strategies that will be effective in each location where we do business. ***The Company’s operations are dependent on the availability of raw materials and access to ore reserves at its mining operations. Increases in costs of raw materials, energy, or shipping could adversely affect our financial results.*** The Company depends in part on having an adequate supply of raw materials for its manufacturing operations, particularly lime and carbon dioxide for the PCC product line, and magnesia and alumina for its Refractory operations. Purchase prices and availability of these critical raw materials are subject to volatility. At any given time, we may be unable to obtain an adequate supply of these critical raw materials on a timely basis, on price and other terms, or at all. While most such raw materials are readily available, the Company has purchased approximately 46% of its magnesia requirements from sources in China over the past five years. The price and availability of magnesia have fluctuated in the past and they may fluctuate in the future. Price increases for certain other of our raw materials, including petrochemical products, as well as increases in energy prices, have also affected our business. Our production processes consume a significant amount of energy, primarily electricity, diesel fuel, natural gas and coal. We use diesel fuel to operate our mining and processing equipment and our freight costs are heavily dependent upon fuel prices and surcharges. Energy costs also affect the cost of raw materials. On a combined basis, these factors represent a large exposure to petrochemical and energy products which may be subject to significant price fluctuations. The contracts pursuant to which we construct and operate our satellite PCC plants generally adjust pricing to reflect the pass-through of increases in costs resulting from inflation, including energy. However, there is a time lag before such price adjustments can be implemented. The Company and its customers will typically negotiate reasonable price adjustments in order to recover these escalating costs, but there can be no assurance that we will be able to recover increasing costs through such negotiations. The Company also depends on having adequate access to ore reserves of appropriate quality at its mining operations. There are numerous uncertainties inherent in estimating ore reserves including subjective judgments and determinations that are based on available geological, technical, contract and economic information. In addition, mining permits, leases and other rights are, or may be, required for certain of the Company’s mining operations. Such permits, leases and other rights are subject to modification, renewal and revocation. Our ability to maintain such mining permits, leases and other rights has been, and may continue to be, affected by changes in laws, regulations and governmental actions, particularly in emerging markets such as Turkey and China. We cannot assure you that we will be able to maintain such mining permits, leases and other rights to the extent we currently maintain them or at all. The Company relies on shipping bulk cargos of bentonite from the United States, Turkey and China to customers, as well as our own subsidiaries, and we are sensitive to our ability to recover these shipping costs. In the last few years, bulk cargo shipping rates have been very volatile, and, to a lesser extent, the availability of bulk cargo containers have been suspect. If we cannot secure our container requirements or offset additional shipping costs with price increases to customers, our profitability could be impacted. We are also subject to other shipping risks. In particular, rail service interruptions have affected our ability to ship, and the availability of rail service, and our ability to recover increased rail costs, may be beyond our control. During the COVID-19 pandemic, our ability to ship our products has been, and may in the future be, affected by government mandates in certain jurisdictions in which we operate. ### Operational Risks ***The Company is subject to stringent regulation in the areas of environmental, health and safety, and tax, and may incur unanticipated costs or liabilities arising out of claims for various legal, environmental and tax matters or product stewardship issues.*** The Company’s operations are subject to international, federal, state and local governmental environmental, health and safety, tax and other laws and regulations. We have expended, and may be required to expend in the future, substantial funds for compliance with such laws and regulations. In addition, future events, such as changes to or modifications of interpretations of existing laws and regulations, or enforcement polices, or further investigation or evaluation of the potential environmental impacts of operations or health hazards of certain products, may affect our mining rights or give rise to additional compliance and other costs that could have a material adverse effect on the Company. Government action taken in response to the COVID-19 pandemic, including government-imposed restrictions on the movement of people and goods, and other new legal rights and obligations, could also have an adverse effect on the Company. Further, certain of our customers are subject to various federal and international laws and regulations relating to environmental and health and safety matters, especially customers of our Energy Services business within the Environmental Products product line, who are subject to drilling permits, waste water disposal and other regulations. To the extent that these laws and regulations affecting our customers change, demand for our products and services could also change and thereby affect our financial results. State, national, and international governments and agencies have been evaluating climate-related legislation and regulation that would restrict emissions of greenhouse gases in areas in which we conduct business, and some such legislation and regulation have already been enacted or adopted. Enactment of climate-related legislation or adoption of regulation that restrict emissions of greenhouse gases in areas in which we conduct business could have an adverse effect on our operations or demand for our products. Our manufacturing processes, particularly the manufacturing process for PCC, use a significant amount of energy and, should energy prices increase as a result of such legislation or regulation, we may not be able to pass these increased costs on to purchasers of our products. We cannot predict if or when currently proposed or additional laws and regulations regarding climate change or other environmental or health and safety concerns will be enacted or adopted. The Company is also subject to income tax laws and regulations in the United States and various foreign jurisdictions. Significant judgment is required in evaluating and estimating our provision and accruals for these taxes. Our income tax liabilities are dependent upon the location of earnings among these different jurisdictions. Our income tax provision and income tax liabilities could be adversely affected by the jurisdictional mix of earnings, changes in valuation of deferred tax assets and liabilities and changes in tax treaties, laws and regulations. The Company is currently a party in various litigation matters and tax and environmental proceedings and faces risks arising from various unasserted litigation matters, including, but not limited to, product liability, patent infringement, antitrust claims, and claims for third party property damage or personal injury stemming from alleged environmental torts. Failure to appropriately manage safety, human health, product liability and environmental risks associated with the Company’s products and production processes could adversely impact the Company’s employees and other stakeholders, the Company’s reputation and its results of operations. Public perception of the risks associated with the Company’s products and production processes could impact product acceptance and influence the regulatory environment in which the Company operates. While the Company has procedures and controls to manage these risks, carries liability insurance, which it believes to be appropriate to its businesses, and has provided reserves for current matters, which it believes to be adequate, an unanticipated liability, arising out of a current matter or proceeding or from the other risks described above, could have a material adverse effect on the Company’s financial condition or results of operations. ***Production facilities are subject to operating risks and capacity limitations that may adversely affect the Company’s financial condition or results of operations.*** The Company is dependent on the continued operation of its production facilities. During the COVID-19 pandemic, our facilities have been, and may in the future be, temporarily closed in response to government mandates in certain jurisdictions in which we operate or for the safety of our employees in response to positive diagnoses for COVID-19. Production facilities are subject to hazards associated with the manufacturing, handling, storage, and transportation of chemical materials and products, including pipeline leaks and ruptures, explosions, fires, inclement weather and natural disasters, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, and environmental risks. We maintain property, business interruption and casualty insurance but such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We may incur losses beyond the limits, or outside the coverage, of our insurance policies. Further, from time to time, we may experience capacity limitations in our manufacturing operations. In addition, if we are unable to effectively forecast our customers’ demand, it could affect our ability to successfully manage operating capacity limitations. These hazards, limitations, disruptions in supply and capacity constraints could adversely affect financial results. ### Operating results for some of our segments are seasonal. Certain product lines within our Performance Materials segment are affected by seasonal weather patterns. A majority of revenues from our Energy Services business within the Environmental Products product line is derived from the Gulf of Mexico and surrounding states, which are susceptible to hurricanes that typically occur June 1st through November 30th. Actual or threatened hurricanes can result in volatile demand for services provided by our Energy Services business. Our other Environmental Products businesses and our Building Materials product line within our Performance Materials segment are affected by weather patterns which determine the feasibility of construction activities. Typically, less construction activity occurs in winter months and thus this segment’s revenues tend to be greatest in the second and third quarters when weather patterns in our geographic markets are more conducive to construction activities. Our Processed Minerals product line is subject to similar seasonal patterns. ***Our operations have been and will continue to be subject to cyber-attacks that could have a material adverse impact on our business, consolidated results of operations, and consolidated financial condition.*** Our operations are becoming increasingly dependent on digital technologies and services. We use these technologies for internal purposes, including data storage, processing, and transmissions, as well as in our manufacturing operations and in our interactions with customers and suppliers. Increased use of remote working arrangements has only increased our reliance on these technologies. Digital technologies are subject to the risk of cyber-attacks. If our systems for protecting against cybersecurity risks prove not to be sufficient, we could be adversely affected by, among other things: loss of or damage to intellectual property, proprietary or confidential information, or customer, supplier, or employee data; interruption of our business operations; and increased costs required to prevent, respond to, or mitigate cybersecurity attacks. In October 2020, we detected a ransomware attack impacting certain of our information technology systems. The risks associated with the October 2020 incident or future incidents could harm our reputation and our relationships with customers, suppliers, employees, and other third parties, and may result in claims against us. In addition, although the October 2020 incident has not had a material impact on us, there can be no assurance that this incident or future incidents will not have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition. ## Properties As filed, 37,498 characters. The Company’s corporate headquarters, sales offices, research laboratories, plants, mines and other facilities are owned by the Company except as otherwise noted. Set forth below is certain information relating to the Company’s principal plants and office and research facilities. | Location | Facility | Product Line | Segment | | --- | --- | --- | --- | | **United States** | | | | | Alabama, Sandy Ridge | Plant; Mine | Metalcasting and specialty products | Performance Materials | | Arizona, Phoenix | Plant | Pet care products | Performance Materials | | Arizona, Pima County | Plant; Mine (1) | Limestone | Specialty Minerals | | Arkansas, Ashdown | Plant | PCC | Specialty Minerals | | California, Lucerne Valley | Plant; Mine | Limestone | Specialty Minerals | | Connecticut, Canaan | Plant; Mine | Limestone, Metallurgical Wire/Calcium | Specialty Minerals; Refractories | | Georgia, Cartersville | Plant | Environmental products and other building materials products | Performance Materials | 21 | Location | Facility | Product Line | Segment | | --- | --- | --- | --- | | Illinois, Belvidere | Plant | Metalcasting products | Performance Materials | | Illinois, Hoffman Estates | Research Laboratories; Administrative office (2) | All Company Products | Performance Materials | | Indiana, Portage | Plant | Refractories/Shapes | Refractories | | Indiana, Troy | Plant | Metalcasting products | Performance Materials | | Iowa, Shell Rock | Plant | Metalcasting products | Performance Materials | | Louisiana, Baton Rouge | Plant | Monolithic Refractories | Refractories | | Louisiana, Lafayette | Plant | Personal Care Products | Performance Materials | | Louisiana, New Iberia | Operations base (2) | Environmental products | Performance Materials | | Massachusetts, Adams | Plant; Mine | Limestone, Lime, PCC | Specialty Minerals | | Michigan, Albion | Plant | Metalcasting products | Performance Materials | | Mississippi, Aberdeen | Plant | Performance additive products | Performance Materials | | Missouri, Ste. Genevieve | Plant | Limestone, Lime, PCC | Specialty Minerals | | Montana, Dillon | Plant; Mine | | Specialty Minerals | | Nebraska, Scottsbluff | Transportation terminal | | Performance Materials | | New York, New York | Headquarters (2) | All Company Products | Headquarters | | North Dakota, Gascoyne | Plant; Mine | Metalcasting and specialty products | Performance Materials | | Ohio, Archbold | Plant | Metalcasting products | Performance Materials | | Ohio, Bryan | Plant | Monolithic Refractories | Refractories | | Ohio, Dover | Plant | Monolithic Refractories/Shapes | Refractories | | Pennsylvania, Bethlehem | Administrative Office; Research Laboratories; Sales Offices | All Company Products | All Segments | | Pennsylvania, Easton | Administrative Office; Research Laboratories; Plant; Sales Offices | All Company Products | All Segments | | Pennsylvania, Slippery Rock | Plant; Sales Offices | Monolithic Refractories/Shapes | Refractories | | Pennsylvania, York | Plant | Metalcasting and pet care products | Performance Materials | | Tennessee, Chattanooga | Plant | Metalcasting products | Performance Materials | | Tennessee, Dyersburg | Plant | Pet care products | Performance Materials | | Texas, Houston | Research Laboratories (2) | Environmental products | Performance Materials | | Texas, Houston | Administrative Office (2) | Environmental products | Performance Materials | | Texas, Bay City | Plant | Talc | Specialty Minerals | | Wisconsin, Neenah | Plant | Metalcasting products | Performance Materials | | Wisconsin, Superior | Plant | PCC | Specialty Minerals | | Wyoming, Colony | Plant; Mine | Metalcasting, pet litter, personal care, specialty and basic minerals products | Performance Materials | | Wyoming, Lovell | Plant; Mine | Specialty and pet care products; Environmental and building materials products | Performance Materials | 22 | Location | Facility | Product Line | Segment | | --- | --- | --- | --- | | **International** | | | | | Australia, Perth | Operations base (2) | Environmental products | Performance Materials | | Australia, Brisbane | Sales Office/Administrative Office | Metalcasting, specialty and pet care products | Performance Materials | | Australia, Carlingford | Sales Office (2) | Monolithic Refractories | Refractories | | Australia, Gurulmundi | Plant; Mine | Metalcasting, specialty and pet care products | Performance Materials | | Austria, Rottersdorf | Plant | Pet care products | Performance Materials | | Belgium, Brussels | Administrative Office | Monolithic Refractories | Refractories | | Brazil, Macae | Operations base (2) | Environmental products | Performance Materials | | Brazil, Sao Jose dos Campos | Sales Office (2)/Administrative Office | PCC | Specialty Minerals | | Canada, Brantford, Ontario | Plant | Pet care products | Performance Materials | | Canada, Lethbridge, Alberta | Plant | Pet care products | Performance Materials | | Canada, Mississaugua, Ontario | Administrative Office | Pet care products | Performance Materials | | Canada, Pt. Claire | Administrative Office | PCC/Monolithic Refractories | Specialty Minerals; Refractories | | China, Beijing | Sales Office/Administrative Office | Metalcasting, specialty, fabric care and pet care products | Performance Materials | | China, Chao Yang, Liaoning | Plant; Mine | Metalcasting and fabric care products | Performance Materials | | China, Shanghai | Administrative Office/Sales Office | PCC/Monolithic Refractories | Specialty Minerals; Refractories | | China, Suzhou | Plant | Environmental and building materials products | Performance Materials | | China, Suzhou | Plant/Sales Office/Research Laboratories | PCC/Monolithic Refractories | Specialty Minerals; Refractories | | China, Tianjin | Plant; Mine; Research Laboratories | Metalcasting and fabric care products | Performance Materials | | India, Bhuj | Plant | Environmental and building materials products | Performance Materials | | India, Chennai | Plant | Metalcasting products | Performance Materials | | India, Mumbai | Sales Office (2)/Administrative Office | PCC/Monolithic Refractories/ Metallurgical Wire | Specialty Minerals; Refractories | | Indonesia, Jakarta | Operations base (2) | Environmental products | Performance Materials | | Ireland, Cork | Plant; Administrative Office (2)/ Research Laboratories | Monolithic Refractories | Refractories | | Italy, Brescia | Sales Office | Monolithic Refractories/Shapes | Refractories | | Italy, Nave | Plant | Monolithic Refractories/Shapes | Refractories | | Japan, Gamagori | Plant/Research laboratories | Monolithic Refractories/Shapes, Calcium | Refractories | | Japan, Tokyo | Sales/Administrative Office | Monolithic Refractories | Refractories | | Korea, Pyeongtaek | Plant | Environmental, building materials and other products | Performance Materials | | Germany, Duisburg | Plant/Sales Office/Research Laboratories | Laser Scanning Instrumentation/ Probes/Monolithic Refractories | Refractories | 23 | Location | Facility | Product Line | Segment | | --- | --- | --- | --- | | Netherlands, Moerdjik | Plant/Administrative Office | Pet Care Products | Performance Materials | | Nigeria, Port Harcourt | Operations base (2) | Environmental products | Performance Materials | | South Africa, Johannesburg | Sales Office/Administrative Office (2) | Monolithic Refractories | Refractories | | South Korea, Yangbuk-Myeun, Kyeung-buk | Plant; Mine | Metalcasting products | Performance Materials | | Spain, Santander | Administrative Office | Monolithic Refractories | Refractories | | Thailand, Laemchabang | Plant | Metalcasting and fabric care products | Performance Materials | | Thailand, Wangnoi | Plant | Pet Care Products | Performance Materials | | Turkey, Enez | Plant; Mine | Metalcasting, specialty and basic minerals products | Performance Materials | | Turkey, Gebze | Plant/Research Laboratories | Monolithic Refractories/Shapes/ Application Equipment | Refractories | | Turkey, Istanbul | Sales Office/Administrative Office | Monolithic Refractories | Refractories | | Turkey, Kutahya | Plant | Monolithic Refractories/Shapes | Refractories | | Turkey, Unye | Plant; Mine | Pet Care Products | Performance Materials | | Turkey, Usak | Plant; Mine | Specialty material products | Performance Materials | | United Kingdom, Aberdeen | Operations base (2) | Environmental products | Performance Materials | | United Kingdom, Birkenhead | Research Laboratories (2) | Environmental products | Performance Materials | | United Kingdom, Lifford | Plant | PCC, Lime | Specialty Minerals | | United Kingdom, Rotherham | Plant/Sales Office | Monolithic Refractories/Shapes | Refractories | (1) This plant and quarry is leased to another company. (2) Leased by the Company. The facilities in Cork, Ireland, are operated pursuant to a 99-year lease, the term of which commenced in 1963. The Company's headquarters in New York, New York, are held under a lease which expires in 2031. Set forth below is the location of, and the main customer served by, each of the Company's satellite PCC plants in operation or, under construction, within the Specialty Minerals segment, as of December 31, 2021. Generally, the land on which each satellite PCC plant is located is leased at a nominal amount by the Company from the host paper mill pursuant to a lease, the term of which generally runs concurrently with the term of the PCC production and sale agreement between the Company and the host paper mill. | Location | Principal Customer | | --- | --- | | **United States** | | | Alabama, Selma | International Paper Company | | Arkansas, Ashdown | Domtar Inc. | | Kentucky, Wickliffe | Phoenix Paper Wickliffe LLC | | Michigan, Quinnesec | Verso Paper Holdings LLC | | Minnesota, Cloquet | Sappi Ltd. | | Minnesota, International Falls | PCA Corporation | | New York, Ticonderoga | Sylvamo Corporation | | Ohio, Chillicothe | Pixelle Specialty Solutions | | South Carolina, Eastover | Sylvamo Corporation | | Washington, Longview | North Pacific Paper Corporation | 24 | Location | Principal Customer | | --- | --- | | **International** | | | Brazil, Guaiba | CMPC - Celulose Rio Grandense | | Brazil, Jacarei | Munksjo Brasil Ind e Com de Papeis Especiais Ltda. | | Brazil, Luiz Antonio | International Paper do Brasil Ltda. | | Brazil, Mucuri | Suzano Papel e Celulose S. A. | | Brazil, Suzano | Suzano Papel e Celulose S. A. | | Canada, St. Jerome, Quebec | Les Entreprises Rolland Inc | | Canada, Windsor, Quebec | Domtar Inc. | | China, Changshu | UPM Changshu | | China, Dagang (1) | Gold East Paper (Jiangsu) Company Ltd. | | China, Zhenjiang (1) | Gold East Paper (Jiangsu) Company Ltd. | | China, Suzhou (1) | Gold HuaSheng Paper Company Ltd. | | China, Henan | Henan Jianghe Paper Co., Ltd. | | China, Shandong | Shandong Sun Paper Industry Joint Stock Company Ltd | | China, Shouguang (1) | Shandong Meilun Paper Corporation | | China, Yanzhou | Yanzhou Tianzhang Paper Industry Co., LTD | | China, Zhumadian(2) | Zhumadianshi Baiyun Paper | | Finland, Äänekoski | Metsa Board Corporation | | Finland, Tervakoski | Delfort | | France, Alizay | Double A Paper Company Ltd. | | France, Quimperle | PDM Industries | | France, Saillat Sur Vienne | International Paper Company | | Germany, Schongau | UPM Corporation | | India, Ballarshah (1) | Ballarpur Industries Ltd. | | India, Dandeli | West Coast Paper Mill Ltd. | | India, Erode (2) | SPB | | India, Gaganapur (1) | Ballarpur Industries Ltd. | | India, Kala Amb | Ruchira Papers Limited | | India, Lalkuan | Century Papers Ltd. | | India, Saila Khurd | Kuantum Papers Ltd. | | India, Rayagada (1) | JK Paper | | India, Mukstar | Satia Industries Ltd. | | Indonesia, Perawang (1) | PT Indah Kiat Pulp and Paper Corporation | | Indonesia, Perawang 2 (1) | PT Indah Kiat Pulp and Paper Corporation | | Japan, Shiraoi (1) | Nippon Paper Group Inc. | | Malaysia, Sipitang | Ballarpur Industries Ltd. | | Poland, Kwidzyn | International Paper – Kwidzyn, S.A | | Portugal, Figueira da Foz (1) | Navigator Paper Figueira, S.A. | | Slovakia, Ruzomberok | Mondi Business Paper SCP | | South Africa, Merebank (1) | Mondi Paper Company Ltd. | | Thailand, Namphong | Phoenix Pulp & Paper Public Co. Ltd. | | Thailand, Tha Toom (1) | Double A Paper Company Ltd. | | Thailand, Tha Toom 2 (1) | Double A Paper Company Ltd. | (1) These plants are owned through joint ventures. (2) This plant is under construction. ### Mining Properties In 2018, the SEC adopted new rules updating the disclosure requirements for companies with mining operations. The new mining disclosure rules rescind Industry Guide 7 and codify the SEC’s mining property disclosure requirements in new subpart 1300 of Regulation S-K. The rules became applicable to disclosures by the Company on January 1, 2021. The Company relies on access to bentonite reserves to support its Performance Materials segment. The Company has reserves of sodium and calcium bentonite at various locations in the U.S., including Wyoming, South Dakota, Montana and Alabama, as well as in Australia, China, and Turkey. Through the Company’s affiliations and joint ventures, the Company also has access to bentonite deposits in India, and Mexico. The Company owns or controls the properties on which the bentonite reserves are located through long-term leases, royalty agreements (including easement and right of way agreements) and patented and unpatented mining claims. No single or group of mining claims or leases is significant or material to the financial condition or operations of our Company or our segments. The majority of our current bentonite mining in the U.S. occurs on reserves where our rights to such reserves accrue to us through over 80 mining leases and royalty agreements and 2,000 mining claims. A majority of these are with private parties and located in Montana, South Dakota and Wyoming. The bentonite deposits underlying these claims and leases generally lie in parcels of land varying between 20 and 40 acres. In general, our bentonite reserves are immediately adjacent to, or within sixty miles of, one of the related processing plants. All of the properties on which our reserves are located are either physically accessible for the purposes of mining and hauling or the cost of obtaining physical access would not be material. Access to processing facilities from the mining areas is generally by private road, public highways, or railroads. For most of our leased properties and mining claims, there are multiple means of access. Bentonite is surface mined, generally with large earthmoving bulldozers and scrapers, and then loaded into trucks and off-highway-haul wagons for movement to processing plants. The mining and hauling of our bentonite is done by us and by independent contractors. At the processing plants, bentonite is dried, crushed and sent through grinding mills, where it is sized to customer requirements, then chemically modified, where needed, and transferred to silos for automatic bagging or bulk shipment. Most of the production is shipped as processed rather than stored for inventory. For our Performance Materials segment, we also mine leonardite, a form of oxidized lignite, in North Dakota, and transport it to nearby processing facilities. The Processed Minerals product line of our Specialty Minerals segment is supported by the Company's limestone reserves located in the western and eastern parts of the United States, and talc reserves located in Montana. The Company generally owns and surface mines these reserves and processes its products at nearby processing plants. Below is a map of our significant mines globally. Based upon the quantitative and qualitative factors applicable, we do not consider any of our mines to be individually material to the Company's business or financial condition. The following provides an overview of the Company's most significant mining properties and operations. ### Colony, Wyoming Mines The Company's Colony, WY mining operations are located in the northern Black Hills in the tri-State area of South Dakota, Wyoming, and Montana, with processing facilities located in Colony, WY and Belle Fourche, SD. The local processing facilities are supported by bentonite clay supplied from 51 million tons of proven and probable reserves, comprised of leases (79%), unpatented claims (14%), and owned properties (7%). The area operates under 12 mining permits covering approximately 100,000 acres, with active mining and future mineral reserves located within 35 miles of the Colony processing facilities. The Black Hills are a northward-trending anticlinal uplift approximately 200 miles long and flank the Powder River Basin to the west and southwest, and the Williston Basin to the northeast. The bentonite clay in the Black Hills area is predominantly of the sodium type and was formed by the in-situ alteration of rhyolite volcanic ash. Bentonite mining consists of shallow surface mining for bentonite beds located in the Mitten Black Shale, Gammon Ferruginous, Belle Fourche Shale, Green Horn Formations, Mowry, and Newcastle shales and sandstones. A back-cast method of mining is used whereby small pits are progressively opened and then quickly backfilled in succession as mining progresses along outcrops. The majority of pits are reclaimed in the same year that they were first disturbed. Annual exploration and permitting activities target the replacement of the number of tons mined to support the long-term sustainability of local operations. The Colony area mines are supported by 2 main processing plants located in Colony, WY. These plants produce both powder and granular products. A wet-processing facility is located near Belle Fourche, SD. All three facilities have direct access to rail. ### Lovell, Wyoming Mines The Company's Lovell, WY mining operations are located in the Bighorn Basin near Lovell, WY with processing facilities located 3 miles west of the town of Lovell. The Lovell processing facility is supported by bentonite clay supplied from 35 million tons of proven and probable reserves, comprised of leases (12%), unpatented claims (40%), and owned properties (48%). The area operates under 2 mining permits covering ~30,000 acres, with active mining and future mineral reserves located within 30 miles of the Lovell processing facilities. The Bighorn Basin is a large sedimentary basin in northwestern Wyoming. It is Laramide in age and style and trends northwest-southeast. The bentonite clay in the Bighorn Basin is predominantly of the sodium type. Mining occurs from 19 different bentonite beds occurring in 3 geologic formations – the Thermopolis shale, the Mowry shale, and the Frontier shale which were deposited during the Upper Cretaceous Period between 70 to 100 million years ago. A back-cast method of mining is used whereby small pits are progressively opened and then quickly backfilled in succession as mining progresses along outcrops. Most pits are reclaimed in the same year that they were first disturbed. Annual exploration and permitting activities target the replacement of the number of tons mined to support the long-term sustainability of local operations. The Lovell area mines are supported by 2 processing facilities located 3 miles East of Lovell, WY. One facility produces powder and granular bentonite products; the other facility produces geosynthetic clay liners and other environmental products. Both facilities have direct access to rail. ### Ünye, Turkey Mines The Company's Unye-area mines, Nadirli and Konan, are located southwest of the town of Unye, Turkey on the southern coast of the Black Sea. These mines are operated by the Company via contract mining and hauling. Both mines use conventional open-pit truck and shovel mining methods. The properties are comprised of both government-issued mining claims and privately-owned lands. The orebodies were produced by hydrothermal alteration and generally occur as massive deposits greater than 10 meters in thickness. The bentonite ore is notable for its high brightness. Current mine life is 18 years based on 6 million tons of proven and probable reserves, with additional potential of 18 million tons of identified reserves. Ore from the mines is transported by truck to a processing facility in the town of Unye where it is stockpiled, dried, and converted to granular products. ### Dongming, China Mines The Company's Dongming mines and processing facilities are located in Jianping county, Liaoning province, China. The regional bentonite occurs within the Jurassic Jingangshan and Tuhulu formations which were deposited during the Upper Jurassic Period between 135 to 144 million years ago. The thickness of the bentonite layers varies from 0.5 to 40m. The bentonite clay in the region is predominantly of the calcium type and is converted to sodium bentonite to produce the majority of products. The Dongming mines consist of 16 small mining areas under 4 mining permits covering approximately 1,200 acres controlled by the Company. Rights to the bentonite are leased from the Chinese government and separate agreements are made with land owners for surface access and mining. Much of the bentonite supplied to the Dongming processing facility is from 3rd-party mines, with Company-controlled mines used to supplement supply and as strategic backup reserves. In most cases, supply from 3rd-party mines is directly supervised by local Company staff which assists with grading and quality control. All mines are operated by contractors with conventional open-pit truck and shovel mining methods. Clay from the mines is hauled by trucks to the Company's processing facility. The primary processing facility is located approximately 50 miles west of Chaoyang, Liaoning Province near the Dongming mines. ### Adams, Massachusetts Mine The Company's Adams mine and the associated processing facility is located in the town of Adams, in the Northwest corner of Massachusetts. The property consists of approximately 800 total acres, including the land that the production facilities sit on. Production of lime began on the site back in the 1850s and continues today with GCC, Lime and PCC production. The open-pit mine consists mainly of a mineral deposit of limestone (marble). The deposit is part of the Shelburne geological formation, which runs up and down the eastern coast of the United States. The mined material is finely pulverized at the processing facility using a variety of crushing and milling equipment and sold as ground products, calcined into lime and is also synthesized into a participated crystals or PCC. The resulting calcium and calcium carbonate products are primarily used as food and pharmaceutical ingredients, sealant additives, high-end construction ingredients, as well as asphalt roofing shingles. The deposit is wholly owned by the Company. With over 150 years of mining on site by the Company and its predecessors, the resources have become reasonably well understood. A mine plan has been developed based on the prior mining activities and a core drilling program completed in 2019. The reserves and resources outlined further in this document, are the product of this recent life of mine study. The mine proper is unregulated by the State of Massachusetts; however, the production facility has a number of federal and state permits. The Adams location maintains a permitted solid waste landfill, required for the byproducts produced in the lime and PCC production operation. Solid waste landfills have been managed on the site for over 25 years. The latest landfill is currently being permitted and will reclaim a significant portion of the mined out quarry. The production facility is also regulated under the Title V air permit, an NPDES storm water discharge permit, solid waste pollution & reduction permit, and a number of other state and local requirements. ### Canaan, Connecticut Mine The Canaan mine and the associated processing facility is located in the town of North Canaan, Connecticut and consists of approximately 208 total net acres. The mine is situated between Canaan Mountain to the South and Lower Road to the North. The mine is located approximately 1.0 miles south of the main processing facility. The open-pit mine consists mainly of a mineral deposit of dolomitic limestone. The mined dolomite is finely pulverized at the processing facility using a variety of crushing and milling equipment. This resulting Ground Calcium Carbonate (GCC) is primarily used as high-end, high volume construction supply markets in joint compound, floor coverings, asphalt roofing shingles and glass. ### Dillon, Montana Mines The Company's talc operations consist of two operating mines, the Regal mine and the Treasure mine, and an inactive mining property, the Smith-Dillon mine, all located in the Ruby Range mountains east of Dillon, Montana. Refining and processing plant operations are in Barretts, Beaverhead County, Montana, 8 miles south of Dillon, Montana. In November 2020, the Company began a major stripping campaign at the Regal mine for development of the Imperial deposit. Stripping was completed by a contractor during 2021 and mining has resumed with in-house Company mining crews. Drilling programs during 2015-2018 at the Treasure mine defined new mine resources in the Treasure Island deposit. Mine exploration activities are ongoing with work at both operating mines and the inactive Smith-Dillon mine. Ore is mined by conventional open pit mining methods with ore selectively mined and stockpiled on ore pads at the mine sites. A contract trucking company transports ore from the mines to the processing plant year-around. Both mining locations are fully supported by local power utilities with dedicated power lines to the sites. The Company's lands, including the Regal and Treasure mines, Barretts plant site, and related properties held for exploration and development, consist of approximately 2,556 net acres, which encompasses 129 unpatented lode mining claims, appropriating approximately 2,008 net acres of Public Land, 27 patented lode claims, consisting of approximately 187 acres, 219 acres of mineral rights in split reservation, and approximately 93 acres of additional real property. At these mines, talc mineralization is hosted in highly deformed Archean aged dolomitic marbles of the Cherry Creek group of metasedimentary rocks. Deposits are segregated into several different grades based on mineral impurities of dolomite, calcite, chlorite, graphite, and various iron oxide minerals. ### Lucerne Valley, California Mines The Company's Lucerne Valley operation consists of three high-purity, Calcium Carbonate surface mining leases, a processing and packaging facility, and supporting infrastructure within 7,347 acres in the town of Lucerne Valley in San Bernardino County, California. Calcium carbonate mining onsite stretches back to the early 1950’s. The Marble Canyon and Arctic Canyon Leases are both still active, with Marble Canyon at a minimal rate of production. Furnace Canyon is in an advanced stage of reclamation. All mineral rights are owned by the Company. ### Operating Statistics The following table sets forth the tons usage for the fiscal years 2021, 2020 and 2019 by major mineral category. | Limestone | 2021 Tons (000s) | 2020 Tons (000s) | 2019 Tons (000s) | | --- | ---: | ---: | ---: | | Adams, MA | 355 | 453 | 475 | | Canaan, CT | 522 | 510 | 612 | | Lucerne Valley, CA | 1,250 | 1,082 | 1,043 | | Pima County, AZ | 166 | 177 | 170 | | **Total Limestone** | 2,293 | 2,222 | 2,300 | | **Talc** | | | | | Dillon, MT | 117 | 122 | 167 | | **Sodium Bentonite** | | | | | Australia | 118 | 83 | 97 | | Belle/Colony, WY/SD | 1,177 | 1,345 | 1,458 | | Lovell, WY | 629 | 507 | 647 | | **Total Sodium Bentonite** | 1,924 | 1,935 | 2,202 | | **Calcium Bentonite** | | | | | Chao Yang, Liaoning, China | 507 | 332 | 27 | | Nevada | 1 | 1 | 1 | | Sandy Ridge, AL | 77 | 40 | 76 | | Turkey, Enez | 196 | 196 | 210 | | Turkey, Usak | 51 | 33 | 10 | | Turkey, Unye | 320 | 314 | 215 | | **Total Calcium Bentonite** | 1,152 | 916 | 539 | | **Leonardite** | | | | | Gascoyne, ND | 51 | 34 | 44 | | **GRAND TOTALS** | 5,537 | 5,229 | 5,252 | 30 ### Proven and Probable Reserves The following table sets forth the Company’s proven and probable reserves, as well as, the conversion factor for the conversion of in-situ materials to saleable products by major minerals category at December 31, 2021. | Limestone | Proven Reserves (1)(2) Tons (000s) | Probable Reserves (1)(2) Tons (000s) | Conversion Factor (%) | Proven and Probable Reserves (1)(2) Tons (000s) Owned | Unpatented (3) | Leased | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Adams, MA | 7,132 | 1,076 | 56% | 8,208 | — | — | | Canaan, CT | 14,480 | 4,268 | 89% | 18,748 | — | — | | Lucerne Valley, CA | 31,066 | 9,143 | 95% | 40,209 | — | — | | Pima County, AZ | 7,357 | — | 90% | — | 7,357 | — | | **Total Limestone** | 60,035 | 14,487 | | 67,165 | 7,357 | — | | | | | | 90% | 10% | 0% | | **Talc** | | | | | | | | Dillon, MT | 973 | 541 | 80% | 1,045 | — | 469 | | | | | | 69% | 0% | 31% | | **Sodium Bentonite** | | | | | | | | Australia | — | 945 | 80% | — | — | 945 | | Belle/Colony, WY/SD | 32,708 | 23,399 | 77% | 3,044 | 12,496 | 40,567 | | Lovell, WY | 31,893 | 2,534 | 87% | 16,257 | 13,996 | 4,174 | | Other SD, WY, MT | 43,117 | 29,714 | 77% | 54,815 | 15,048 | 2,968 | | **Total Sodium Bentonite** | 107,718 | 56,592 | | 74,116 | 41,540 | 48,654 | | | | | | 45% | 25% | 30% | | **Calcium Bentonite** | | | | | | | | Chao Yang, Liaoning, China | — | 784 | 78% | — | — | 784 | | Nevada | — | 1,057 | 75% | 1,013 | 44 | — | | Sandy Ridge, AL | 4,492 | 1,841 | 75% | 1,839 | — | 4,494 | | Turkey, Enez | 210 | 1,942 | 78% | — | — | 2,152 | | Turkey, Usak | 98 | 731 | 43% | — | — | 829 | | Turkey, Unye | 833 | 5,207 | 80% | — | — | 6,040 | | **Total Calcium Bentonite** | 5,633 | 11,562 | | 2,852 | 44 | 14,299 | | | | | | 17% | — | 83% | | **Leonardite** | | | | | | | | Gascoyne, ND | 120 | 2,237 | 67% | — | 2,237 | 120 | | | | | | 0% | 95% | 5% | | **Chromite** | | | | | | | | South Africa | 2,113 | 1,381 | 75% | — | — | 3,494 | | | | | | 0% | 0% | 100% | | **GRAND TOTALS** | 176,592 | 86,800 | | 145,178 | 51,178 | 67,036 | | | | | | 55% | 19% | 26% | (1) Certain definitions: The term "mineral reserve" represents an estimate of tonnage and grade or quality of indicated and measured mineral resources that can be the basis of an economically viable project. The term "proven mineral reserve" represents the economically mineable part of a measured mineral resource and can only result from conversion of a measured mineral resource. The term "probable mineral reserve" represents the economically mineable part of an indicated and, in some cases a measured mineral resource. (2) Mineral reserves estimates were calculated and prepared by the Company's in-house technical staff. (3) Quantity of reserves that would be owned if patent was granted. ### Measured, Indicated and Inferred Resources The following table sets forth the Company’s measured, indicated and inferred resources by major minerals category at December 31, 2021. | Limestone | Measured Resources (1)(2) Tons (000s) | Indicated Resources (1)(2) Tons (000s) | Measured and Indicated (1)(2) Resources Tons (000s) | Inferred (1)(2) Resources Tons (000s) | Total Resources (1)(2) Tons (000s) Owned | Unpatented (3) | Leased | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Adams, MA | 12,792 | 1,930 | 14,722 | 584 | 15,306 | — | — | | Canaan, CT | 31,823 | 25,737 | 57,560 | 3,674 | 61,234 | — | — | | Lucerne Valley, CA | 32,077 | 23,651 | 55,728 | 7,319 | 63,047 | — | — | | Pima County, AZ | — | — | — | — | — | — | — | | **Total Limestone** | 76,692 | 51,318 | 128,010 | 11,577 | 139,587 | — | — | | | | | | | 100% | 0% | 0% | | **Talc** | | | | | | | | | Dillon, MT | 1,218 | 676 | 1,894 | 1,023 | 2,329 | — | 588 | | | | | | | 80% | 0% | 20% | | **Sodium Bentonite** | | | | | | | | | Australia | — | 1,231 | 1,231 | — | — | — | 1,231 | | Belle/Colony, WY/SD | 6,359 | 6,994 | 13,353 | 94 | — | 8,309 | 5,138 | | Lovell, WY | 400 | 57 | 457 | 3,146 | 926 | 2,677 | — | | Other SD, WY, MT | 4,612 | — | 4,612 | 11,030 | — | 15,642 | — | | **Total Sodium Bentonite** | 11,371 | 8,282 | 19,653 | 14,270 | 926 | 26,628 | 6,369 | | | | | | | 3% | 78% | 19% | | **Calcium Bentonite** | | | | | | | | | Chao Yang, Liaoning, China | — | 300 | 300 | 937 | — | — | 1,237 | | Nevada | — | — | — | — | — | — | — | | Sandy Ridge, AL | 1,571 | — | 1,571 | — | — | — | 1,571 | | Turkey, Enez | 39 | — | 39 | 1,192 | — | — | 1,231 | | Turkey, Usak | — | 400 | 400 | 1,800 | — | — | 2,200 | | Turkey, Unye | — | 1,320 | 1,320 | 17,000 | — | — | 18,320 | | **Total Calcium Bentonite** | 1,610 | 2,020 | 3,630 | 20,929 | — | — | 24,559 | | | | | | | 0% | 0% | 100% | | **Leonardite** | | | | | | | | | Gascoyne, ND | 1,435 | — | 1,435 | 790 | — | — | 2,225 | | | | | | | 0% | 0% | 100% | | **Chromite** | | | | | | | | | South Africa | 800 | 584 | 1,384 | 11,320 | — | — | 12,704 | | | | | | | 0% | 0% | 100% | | **Other** | | | | | | | | | Nevada | — | 2,997 | 2,997 | 3,031 | — | 6,028 | — | | | | | | | 0% | 100% | 0% | | **GRAND TOTALS** | 93,126 | 65,877 | 159,003 | 62,940 | 142,842 | 32,656 | 46,445 | | | | | | | 64% | 16% | 21% | (1) Certain definitions: The term " mineral resource" indicates a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. The term "measured resource" indicates a mineral resource for which quantity and grade or quality are estimated based on conclusive geological evidence and sampling. The term "indicated resource" indicates a mineral resource for which quantity and grade or quality are estimated based on adequate geological evidence and sampling. The term "inferred resource" indicates a mineral resource for which quantity and grade or quality are estimated based on limited geological evidence and sampling. (2) Mineral resources estimates were calculated and prepared by the Company's in-house technical staff. (3) Quantity of resources that would be owned if patent was granted. The estimates of total reserves and resources noted in the tables above require the Company to make certain key assumptions. These assumptions relate to consistency of deposits in relation to drilling samples obtained with respect to both quantity and quality of reserves contained therein; the ratio of overburden to mineral deposits; any environmental or social impact of mining the minerals; and profitability of extracting those minerals, including haul distance to processing plants, applicability of minerals to various end markets and selling prices within those markets, and our past experiences in the deposits, several of which we have been operating in for many decades. The Company maintains a Mining Lead Team that develops standards and systems to ensure Company-wide use of best practices for mining and exploration practices. The Mining Lead Team ensures that the Company maintains robust controls over its exploration and resource and reserve estimation efforts. In particular, because the Company has a long history of operations at its mining operations, the Company is able to continuously validate its resource and reserve estimates by reference to actual production from each mine. During the process from exploration to final production, ore is tested a minimum of 3 times beginning with exploration drilling, again after overburden removal and finally on finished products after plant processing. In some cases when blending ore grades, an additional step of testing occurs on stockpiles after hauling from the mine but before plant processing. The quantities, qualities, and costs of grades obtained from mining and processing are reconciled to quantities, qualities, and costs from reserve estimates and mine models. To enable additional verification of reserves if needed, all exploration samples are retained until areas are mined out and reclaimed. The Company believes that its facilities, which are of varying ages and are of different construction types, have been satisfactorily maintained, are in good condition, are suitable for the Company's operations and generally provide sufficient capacity to meet the Company's production requirements. Based on past loss experience, the Company believes it is adequately insured with respect to these assets and for liabilities likely to arise from its operations. Assuming the continuation of 2021 annualized usage rates, the Company has reserves of commercially usable sodium bentonite for the next 48 years, commercially usable calcium bentonite for the next 15 years and commercially usable leonardite for more than 46 years. At current usage levels, the Company has reserves in excess of 29 years at its limestone production facilities and in excess of 9 years at its talc production facility. The Company has ongoing exploration and development activities for all of its mineral interests with the intent to increase its proven and probable reserves. ## Legal proceedings As filed, 702 characters. The Company and its subsidiaries are involved in the legal and environmental proceedings described in Note 17 to the consolidated financial statements included elsewhere in this report, which disclosure is incorporated herein by reference. From time to time, the Company and its subsidiaries are also the subject of various routine legal actions and claims arising in the ordinary course of their businesses. The Company does not anticipate that the individual or aggregate liability arising out of litigation pending or claims known to be threatened against the Company and its subsidiaries will have a material adverse effect on the Company’s results of operations, cash flows or financial condition. ## Management's discussion and analysis As filed, 56,097 characters. ### Cautionary Statement for “Safe Harbor” Purposes under the Private Securities Litigation Reform Act of 1995 The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. This report contains statements that the Company believes may be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, particularly statements relating to the Company’s objectives, plans or goals, future actions, future performance or results of current and anticipated products, sales efforts, expenditures, and financial results. From time to time, the Company also provides forward-looking statements in other publicly-released materials, both written and oral. Forward-looking statements provide current expectations and forecasts of future events such as new products, revenues and financial performance, and are not limited to describing historical or current facts. They can be identified by the use of words such as “outlook,” “forecast,” “believes,” “expects,” “plans,” “intends,” “anticipates,” and other words and phrases of similar meaning. Forward-looking statements are necessarily based on assumptions, estimates and limited information available at the time they are made. A broad variety of risks and uncertainties, both known and unknown, as well as the inaccuracy of assumptions and estimates, can affect the realization of the expectations or forecasts in these statements. Many of these risks and uncertainties are difficult to predict or are beyond the Company’s control. Consequently, no forward-looking statements can be guaranteed. Actual future results may vary materially. Significant factors affecting the expectations and forecasts are set forth under “Item 1A — Risk Factors” in this Annual Report on Form 10-K. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances that arise after the date hereof. Investors should refer to the Company's subsequent filings under the Securities Exchange Act of 1934 for further disclosures. ### Executive Summary Worldwide sales increased 17% in 2021 to $1.858 billion as compared with $1.595 billion in 2020. Foreign exchange had a favorable impact on sales of $27 million or 2%. Consolidated income from operations was $235.7 million as compared with $187.9 million in the prior year. Included in income from operations for 2021 was $4.0 million related to acquisition-related expenses and $1.1 million for restructuring and other items, net. Included in income from operations in 2020 was $10.4 million related to litigation expenses associated with the bankruptcy of Novinda Corp, $7.6 million for assets write-downs and severance-related costs, $3.1 million of acquisition-related expenses and $4.0 million in costs related to system restoration and risk mitigation following a ransomware attack on certain of the Company's information technology systems. Net income was $164.4 million in 2021, as compared to $112.4 million in the prior year. The Company reported diluted earnings of $4.86 per share in 2021 as compared with $3.29 per share in the prior year. In 2021, the Company continued to execute on its key growth initiatives of geographic expansion, new product innovation and acquisitions. In the fourth quarter of 2021, the Company signed two new Paper and Packaging satellite contracts in Asia, advancing geographic expansion of our core product lines. The Company also continued to advance on its strategic growth initiatives through the commercialization of new value-added products. On July 26, 2021, the Company completed the acquisition of Normerica Inc., a leading North American supplier of premium quality cat litter. As a leader in the pet product industry, they provide premium products, both branded and private label to world-class retailers and their product portfolio consists primarily of bentonite-based cat litter products. In addition, in November, we acquired the Specialty PCC assets of a company in the Midwest U.S., helping us expand our manufacturing reach and providing us a strategic logistics footprint at a key point along the Mississippi River. Although the COVID-19 pandemic continues to impact our business operations, we experienced limited disruptions during 2021. We are taking safety measures to protect our employees and monitoring our operations and public health measures implemented by governmental authorities in response to the pandemic. COVID-19 also continues to impact the global supply chain, causing disruptions to service providers, logistics and the flow and availability of supplies and products. Despite these challenges, we were able to maintain a stable supply of raw materials to meet our production requirements. Our balance sheet continues to be strong. Cash, cash equivalents and short-term investments were $304.4 million as of December 31, 2021. Cash flow from operations for 2021 was $232.4 million. The Company currently has more than $500 million of available liquidity, including cash on hand, as well as availability under its revolving credit facility. We believe these factors will allow us to meet our anticipated funding requirements. Our intention is to maintain a balanced approach to capital deployment, by using cash flow for investments in growth, continued debt reduction and selective share repurchases. ### Outlook The COVID-19 pandemic has not had a material effect on our reported results for 2021 and we do not expect it will negatively impact our business and results of operations for 2022. However, the extent to which our operations will be impacted by the pandemic will depend largely on future developments, including the severity of future outbreaks and actions by government authorities to contain it or treat its impact. These are highly uncertain and cannot be accurately predicted. Refer to Part I. Item 1A. Risk Factors for further discussion of these risks. We will continue to actively monitor and respond to the COVID-19 pandemic. The Company will continue to focus on innovation and new product development and other opportunities for sales growth in 2022 from its existing businesses, as follows: - Increase our presence and gain penetration of our bentonite-based foundry customers for the Metalcasting industry in emerging markets, such as China and India. - Increase our presence and market share in global pet care products - Deploy new products in pet care such as lightweight litter. - Increase our presence and market share in Asia and in the global powdered detergent market. - Continue the development of our proprietary Enersol® products for agricultural applications worldwide. - Pursue opportunities for our products in environmental and building and construction markets in the Middle East, Asia Pacific and South America regions. - Increase our presence and market share for geosynthetic clay liners within the Environmental Products product line. - Develop multiple high-filler technologies under the FulFill® platform of products, to increase the fill rate in freesheet paper and continue to progress with commercial discussions and full-scale paper machine trials. - Develop products and processes for waste management and recycling opportunities to reduce the environmental impact of the paper mill, reduce energy consumption and improve the sustainability of the papermaking process, including our NewYield® and ENVIROFIL® products. - Further penetration into the packaging segment of the paper industry. - Increase our sales of PCC for paper by further penetration of the markets for paper filling at both freesheet and groundwood mills, particularly in emerging markets. - Expand the Company's PCC coating product line using the satellite model. - Promote the Company's expertise in crystal engineering, especially in helping papermakers customize PCC morphologies for specific paper applications. - Expand PCC produced for paper filling applications by working with industry partners to develop new methods to increase the ratio of PCC for fiber substitutions. - Develop unique calcium carbonate and talc products used in the manufacture of novel biopolymers, a new market opportunity. - Deploy new talc and GCC products in paint, coating and packaging applications. - Deploy value-added formulations of refractory materials that not only reduce costs but improve performance. - Deploy our laser measurement technologies into new applications. - Expand our refractory maintenance model to other steel makers globally. - Deploy operational excellence principles into all aspects of the organization, including system infrastructure and lean principles. - Continue to explore selective acquisitions to fit our core competencies in minerals and fine particle technology. However, there can be no assurance that we will achieve success in implementing any one or more of these opportunities. ### Results of Operations ### Consolidated Income Statement Review | (millions of dollars) | Year Ended December 31, 2021 | 2020 | 2019 | 2021 vs. 2020 | 2020 vs. 2019 | | --- | ---: | ---: | ---: | ---: | ---: | | Net sales | $1,858.3 | $1,594.8 | $1,791.0 | 16.5% | (11.0)% | | Cost of sales | 1,411.8 | 1,189.4 | 1,350.4 | 18.7% | (11.9)% | | Production margin | 446.5 | 405.4 | 440.6 | 10.1% | (8.0)% | | Production margin % | 24.0% | 25.4% | 24.6% | | | | Marketing and administrative expenses | 186.2 | 176.5 | 187.5 | 5.5% | (5.9)% | | Research and development expenses | 19.5 | 19.9 | 20.3 | (2.0)% | (2.0)% | | Acquisition-related expenses | 4.0 | 3.1 | — | 29.0% | \* | | Litigation expenses | — | 10.4 | 10.9 | \* | (4.6)% | | Restructuring and other items, net | 1.1 | 7.6 | 13.2 | (85.5)% | (42.4)% | | Income from operations | 235.7 | 187.9 | 208.7 | 25.4% | (10.0)% | | Operating margin % | 12.7% | 11.8% | 11.7% | | | | Interest expense, net | (37.2) | (38.2) | (43.2) | (2.6)% | (11.6)% | | Non-cash pension settlement charge | (1.8) | (6.4) | — | (71.9)% | \* | | Other non-operating income (deductions), net | 5.6 | (5.3) | (8.2) | \* | (35.4)% | | Total non-operating deductions, net | (33.4) | (49.9) | (51.4) | (33.1)% | (2.9)% | | Income from operations before tax and equity in earnings | 202.3 | 138.0 | 157.3 | 46.6% | (12.3)% | | Provision for taxes on income | 36.6 | 24.4 | 22.8 | 50.0% | 7.0% | | Effective tax rate | 18.1% | 17.7% | 14.5% | | | | Equity in earnings of affiliates, net of tax | 2.8 | 2.2 | 1.9 | 27.3% | 15.8% | | Consolidated net income | 168.5 | 115.8 | 136.4 | 45.5% | (15.1)% | | Less: Net income attributable to non-controlling interests | 4.1 | 3.4 | 3.7 | 20.6% | (8.1)% | | Net income attributable to Minerals Technologies Inc. (MTI) | $164.4 | $112.4 | $132.7 | 46.3% | (15.3)% | \* Not meaningful ### Net Sales | (millions of dollars) | Year Ended December 31, 2021 | 2020 | 2019 | 2021 vs. 2020 | 2020 vs. 2019 | | --- | ---: | ---: | ---: | ---: | ---: | | U.S. | $959.6 | $822.5 | $962.4 | 16.7% | (14.5)% | | International | 898.7 | 772.3 | 828.6 | 16.4% | (6.8)% | | Total sales | $1,858.3 | $1,594.8 | $1,791.0 | 16.5% | (11.0)% | | Performance Materials Segment | $976.0 | $825.8 | $918.5 | 18.2% | (10.1)% | | Specialty Minerals Segment | 578.9 | 510.9 | 574.4 | 13.3% | (11.1)% | | Refractories Segment | 303.4 | 258.1 | 298.1 | 17.6% | (13.4)% | | Total sales | $1,858.3 | $1,594.8 | $1,791.0 | 16.5% | (11.0)% | Worldwide net sales in 2021 increased 16.5% from the previous year to $1,858.3 million. Included in net sales for 2021 are $48.6 million of net sales of Normerica. Foreign exchange had a favorable impact on sales of approximately $27 million or 2 percentage points. Net sales in the United States increased 16.7% to $959.6 million in 2021 and represented 52.0% of consolidated net sales. International sales increased 16.4% to $898.7 million in 2021 and represented 48.0% of consolidated net sales. Worldwide net sales in 2020 decreased 11.0% from the previous year to $1,594.8 million. Foreign exchange had an unfavorable impact on sales of approximately $16 million or 1 percentage point. Net sales in the United States decreased 14.5% to $822.5 million in 2020 and represented 52.0% of consolidated net sales. International sales decreased 6.8% to $772.3 million in 2020 and represented 48.0% of consolidated net sales. ### Operating Costs and Expenses Consolidated cost of sales was $1,411.8 million, $1,189.4 million and $1,350.4 million in 2021, 2020 and 2019, respectively. Production margin as a percentage of net sales was 24.0% in 2021, 25.4% in 2020 and 24.6% in 2019. Production margin decreased primarily in 2021 due to timing of pricing actions relative to higher inflationary costs, including energy and other manufacturing costs as well as supply chain and logistics challenges. Marketing and administrative costs were $186.2 million, $176.5 million and $187.5 million in 2021, 2020 and 2019, respectively. Marketing and administrative costs as a percentage of net sales were 10.0% in 2021, 11.1% in 2020 and 10.5% in 2019. Included in marketing and administrative costs in 2020 was a $4.0 million charge relating to system restoration and risk mitigation following a ransomware attack on certain of the Company's information technology systems. Research and development expenses were $19.5 million, $19.9 million and $20.3 million in 2021, 2020 and 2019, respectively. Research and development expenses as a percentage of net sales were 1.0% in 2021, 1.2% in 2020 and 1.1% in 2019. In 2021, the Company recorded a $4.0 million charge for acquisition-related expenses. In addition, the Company recorded a $1.1 million charge for asset write-downs and other restructuring costs. In 2020, the Company recorded a $10.4 million charge related to litigation expenses associated with the bankruptcy of Novinda Corp. In addition, the Company recorded a $7.6 million charge for asset write-downs and other restructuring costs and $3.1 million for acquisition-related expenses. In 2019, the Company recorded a $13.2 million charge for asset write-downs and severance-related costs. In addition, the Company recorded a $10.9 million charge related to litigation expenses associated with the bankruptcy of Novinda Corp. ### Income from Operations During 2021, the Company recorded income from operations of $235.7 million, as compared with $187.9 million in the prior year. Income from operations represented 12.7% of sales compared with 11.8% of sales in the prior year. Income from operations in 2021 included a $4.0 million charge for acquisition-related expenses and $1.1 million for asset write-downs and other restructuring costs. During 2020, the Company recorded income from operations of $187.9 million, as compared with $208.7 million in the prior year. Income from operations represented 11.8% of sales compared with 11.7% of sales in the prior year. Income from operations in 2020 included a $10.4 million charge related to litigation expenses associated with the bankruptcy of Novinda Corp, $7.6 million for asset write-downs and severance-related costs, $4.0 million related to system restoration and risk mitigation following a ransomware attack on certain of the Company's information technology systems and $3.1 million of acquisition-related expenses. ### Non-Operating Income (Deductions) The Company recorded non-operating deductions, net of $33.4 million in 2021 as compared with $49.9 million in the previous year. Included in non-operating deductions was net interest expense of $37.2 million in 2021 as compared to $38.2 million in the prior year, primarily due to lower interest rates. Additionally, the Company recorded at $1.8 million non-cash pension settlement charge relating to some of the Company's retirement plans in the United States. Included in non-operating deductions was net interest expense of $38.2 million in 2020 as compared to $43.2 million in the prior year, as a result of lower debt balances due to principal repayments and lower interest rates. Additionally, the Company recorded at $6.4 million non-cash pension settlement charge relating to one of the Company's retirement plans in the United States. ### Provision for Taxes on Income Provision for taxes was $36.6 million, $24.4 million and $22.8 million in 2021, 2020 and 2019, respectively. The effective tax rates were 18.1%, 17.7% and 14.5% during 2021, 2020 and 2019, respectively. The higher effective tax rate in 2021 as compared to 2020 was primarily due to mix of earnings. The higher effective tax rate in 2020 as compared to 2019 was primarily due to tax credits in the prior year resulting from the expiration of a tax statute of limitations. The other factors having the most significant impact on our effective tax rates in recent periods are the rate differentials related to foreign earnings indefinitely invested, percentage depletion, and the tax benefits on restructuring and impairment charges at a higher rate. Percentage depletion allowances (tax deductions for depletion that may exceed our tax basis in our mineral reserves) are available to us under the income tax laws of the United States for operations conducted in the United States. The tax benefits from percentage depletion were $10.9 million in 2021, $8.5 million in 2020 and $7.8 million in 2019. The U.S. Tax Reform legislation established a new Global Intangible Low-Tax Income provision (“GILTI”) that currently taxes certain income from foreign operations. The Company has elected, as its accounting policy, to treat the taxes due from GILTI as a current period expense when incurred. The net charge to the Company for GILTI was $1.2 million and $0.6 million for 2021 and 2020, respectively. There was no charge for GILTI in 2019. We operate in various countries around the world that have tax laws, tax incentives and tax rates that are significantly different than those of the United States. These differences combine to move our overall effective tax rate higher or lower than the United States statutory rate depending on the mix of income relative to income earned in the United States. The effects of foreign earnings and the related foreign rate differentials resulted in increases of $5.2 million, $4.6 million and $6.0 million in 2021, 2020 and 2019, respectively. ### Consolidated Net Income Attributable to MTI Shareholders Consolidated net income was $168.5 million in 2021 and included a $5.3 million charge, net of tax. This charge consisted of asset write-downs, severance-related costs, acquisition-related costs and a non-cash pension settlement charge. Consolidated net income was $115.8 million in 2020 and included a $24.1 million charge, net of tax. This charge consisted of litigation expenses associated with the bankruptcy of Novinda Corp., asset write-downs, severance-related costs, IT incident remediation cost, acquisition-related costs and a non-cash pension settlement charge. ### Segment Review The following discussions highlight the operating results for each of our three segments. ### Performance Materials Segment | (millions of dollars) Net Sales | Year Ended December 31, 2021 | 2020 | 2019 | 2021 vs. 2020 | 2020 vs. 2019 | | --- | ---: | ---: | ---: | ---: | ---: | | Household, Personal Care & Specialty Products | $460.5 | $380.2 | $376.6 | $80.3 | $3.6 | | Metalcasting | 319.2 | 258.1 | 291.2 | 61.1 | (33.1) | | Environmental Products | 136.3 | 131.6 | 181.8 | 4.7 | (50.2) | | Building Materials | 60.0 | 55.9 | 68.9 | 4.1 | (13.0) | | Total net sales | $976.0 | $825.8 | $918.5 | $150.2 | $(92.7) | | **Income from operations** | $125.0 | $108.8 | $104.9 | $16.2 | $3.9 | | % of net sales | 12.8% | 13.2% | 11.4% | | | #### 2021 v 2020 On a regular basis, the Company reviews its segments and the approach used by the chief operating decision maker to assess performance and allocate resources. Accordingly, in the first quarter of 2021, the Company reorganized the management structure for its Energy Services and Performance Materials operating segments to support MTI's key growth initiatives, more closely align complementary technologies, processes and capabilities, and better reflect the way performance is evaluated and resources are allocated. As a result, Energy Services was combined into the Environmental Products product line within the Performance Materials operating segment. Net sales in the Performance Materials segment increased 18.2% to $976.0 million as compared with $825.8 in the prior year. Household, Personal Care & Specialty Products sales increased 21.1% to $460.5 million from $380.2 million the prior year. Included within 2021 net sales for Household, Personal Care & Specialty Products are $48.6 million of net sales for Normerica. The acquisition of Normerica contributed 13 percent growth versus prior year. In addition, organic sales contributed an additional 8 percent driven by strong demand for consumer-oriented products. Metalcasting’s sales increased 23.7% from $258.1 million in the prior year to $319.2 million in 2021, primarily due to increased foundry demand across a diverse set of foundry customer end markets and continued penetration in Asia. Environmental Products and Building Materials sales grew 3.6% and 7.3% , respectively on higher levels of project activity that yielded an increase in sales from the prior year of $4.7 million and $4.1 million, respectively. Income from operations increased $16.2 million, or 14.9% to $125.0 million in 2021 and represented 12.8% of net sales as compared to $108.8 million and 13.2% of sales in 2020. Margin was impacted by the timing of pricing actions relative to inflationary cost increases and supply chain and logistics issues. #### 2020 v 2019 Net sales in the Performance Materials segment in 2020 were $825.8 million and decreased $92.7 million, or 10 percent from 2019. Metalcasting’s sales decreased $33.1 million or 11 percent, primarily due to COVID-19 related weaker foundry demand in North America. Household, Personal Care & Specialty Products sales increased $3.6 million or 1 percent from the prior year, primarily driven by strong demand for consumer-oriented products. Environmental Products and Building Materials sales experienced COVID-19 related project delays that yielded a decrease in sales from the prior year of $50.2 million and $13.0 million, respectively. Income from operations increased $3.9 million to $108.8 million in 2020 and represented 13.2% of net sales as compared to $104.9 million and 11.4% of sales in 2019. Pricing actions, cost control and expense reductions more than offset the impact of lower sales versus the prior year. ### Specialty Minerals Segment | (millions of dollars) Net Sales | Year Ended December 31, 2021 | 2020 | 2019 | 2021 vs. 2020 | 2020 vs. 2019 | | --- | ---: | ---: | ---: | ---: | ---: | | Paper PCC | $349.7 | $308.4 | $364.9 | $41.3 | $(56.5) | | Specialty PCC | 77.1 | 69.3 | 69.1 | 7.8 | 0.2 | | PCC Products | $426.8 | $377.7 | $434.0 | $49.1 | $(56.3) | | Ground Calcium Carbonate | $98.1 | $89.3 | $91.3 | $8.8 | $(2.0) | | Talc | 54.0 | 43.9 | 49.1 | 10.1 | (5.2) | | Processed Minerals Products | $152.1 | $133.2 | $140.4 | $18.9 | $(7.2) | | Total net sales | $578.9 | $510.9 | $574.4 | $68.0 | $(63.5) | | **Income from operations** | $72.9 | $67.8 | $83.1 | $5.1 | $(15.3) | | % of net sales | 12.6% | 13.3% | 14.5% | | | #### 2021 v 2020 Net sales in the Specialty Minerals segment increased 13.3% to $578.9 million in 2021 from $510.9 million in 2020. Worldwide sales of PCC products increased 13.0% to $426.8 million in 2021 from $377.7 million in the prior year due to increased paper machine operating rates, as well as the ramp-up of three new satellite plants in China, India and the U.S. Specialty PCC sales grew 11.3% as compared with prior year driven by strength in construction and automotive markets. Sales of Processed Minerals products increased 14.2% to $152.1 million in 2021 from $133.2 million in the prior year as demand from automotive, construction and consumer end markets remained strong. Income from operations increased $5.1 million, or 7.5% to $72.9 million in 2021 and represented 12.6% of net sales compared to $67.8 million and 13.3% of sales in the prior year. Included in income from operations were $1.1 million of restructuring and impairment costs. Operating margin was impacted by the timing of contractual and negotiated price increases relative to inflationary cost increases including energy and other manufacturing costs. In addition, logistics and labor challenges impacted both sales and operating performance. #### 2020 v 2019 Net sales in the Specialty Minerals segment decreased 11 percent to $510.9 million in 2020 from $574.4 million in 2019. Worldwide sales of PCC products decreased to $377.7 million in 2020 from $434.0 million in the prior year largely due to lower paper demand and temporary COVID-19 related customer shutdowns. Specialty PCC sales remained flat as compared with prior year as automotive and residential construction markets rebounded during 2020 and consumer-oriented markets continue to be strong. Sales of Processed Minerals products decreased 5 percent to $133.2 million in 2020 primarily driven by the slowdown in residential construction and automotive markets in the second and third quarters. Income from operations decreased $15.3 million to $67.8 million in 2020 and represented 13.3% of net sales compared to $83.1 million and 14.5% of sales in the prior year. Included in income from operations were $7.6 million of restructuring and impairment costs. ### Refractories Segment | (millions of dollars) Net Sales | Year Ended December 31, 2021 | 2020 | 2019 | 2021 vs. 2020 | 2020 vs. 2019 | | --- | ---: | ---: | ---: | ---: | ---: | | Refractory Products | $237.1 | $212.3 | $244.8 | $24.8 | $(32.5) | | Metallurgical Products | 66.3 | 45.8 | 53.3 | 20.5 | (7.5) | | Total net sales | $303.4 | $258.1 | $298.1 | $45.3 | $(40.0) | | **Income from operations** | $49.3 | $35.5 | $39.8 | $13.8 | $(4.3) | | % of net sales | 16.2% | 13.8% | 13.4% | | | #### 2021 v 2020 Net sales in the Refractories segment increased 17.6% to $303.4 million in 2021 from $258.1 million in the prior year driven by a gradual improvement of steel mill utilization rates. Sales of refractory products and systems to steel and other industrial applications increased 11.6% to $237.1 million from $212.3 million in the prior year and sales of metallurgical products increased 44.8% to $66.3 million from $45.8 million in the prior year. Income from operations increased $13.8 million, or 38.9% to $49.3 million and represented 16.2% of net sales in 2021 compared to $35.5 million or 13.8% of sales in 2020 due to higher sales volumes from improved steel market conditions, strong operating performance and new business development. #### 2020 v 2019 Net sales in the Refractories segment decreased 13 percent to $258.1 million in 2020, as a result of steel mill utilization rates decline in the second quarter in North America and Europe, which was followed by a gradual improvement in the second half of the year. Income from operations decreased $4.3 million to $35.5 million and represented 13.8% of net sales in 2020 compared to $39.8 million or 13.4% of sales in 2019 due to lower refractory volumes globally. ### Inflation While inflation historically has not had a material impact on the Company, our financial performance was affected in 2021, and could continue to be adversely affected by increases in energy and commodity prices. Our production processes consume a significant amount of energy, primarily electricity, diesel fuel, natural gas and coal. We use diesel fuel to operate our mining and processing equipment and our freight costs are heavily dependent upon fuel prices and surcharges. Energy costs also affect the cost of raw materials. On a combined basis, these factors represent a large exposure to petrochemical and energy products which may be subject to significant price fluctuations. The contracts pursuant to which we construct and operate our satellite PCC plants generally adjust pricing to reflect the pass-through of increases in costs resulting from inflation, including lime and energy prices. However, there is a time lag before such price adjustments can be implemented. The Company and its customers will typically negotiate reasonable price adjustments in order to recover a portion of these escalating costs, but there can be no assurance that we will be able to recover increasing costs through such negotiations. ### Cyclical Nature of Customers' Businesses The portions of our sales within Specialty Minerals, Performance Materials and Refractories segments are to customers in the paper manufacturing, metalcasting, steel manufacturing, oil and gas and construction industries, which have historically been cyclical. The pricing structure of some of our long-term PCC contracts makes our PCC business less sensitive to declines in the quantity of product purchased. Oil and natural gas prices decreased significantly between 2014 through 2017 and again in 2020, which has caused exploration companies to reduce their capital expenditures and production and exploration activities. This has had the effect of decreasing the demand and increasing competition for the services we provide. We cannot predict the economic outlook in the countries in which we do business, nor in the key industries we serve. ### Liquidity and Capital Resources Cash provided from continuing operations in 2021 was $232.4 million, compared with $240.6 million in prior year. Cash flows provided from operations in 2021 were principally used to fund acquisitions and capital expenditures, repay debt, repurchase shares and to pay the Company's dividend to common shareholders. The Company’s intention is to use excess cash flow for investments in growth, continued debt reduction and selective share repurchases. On May 9, 2014, in connection with the acquisition of AMCOL International Corporation (“AMCOL”), the Company entered into a credit agreement providing for the $1.560 billion senior secured term loan facility (the “Term Facility”) and a $200 million senior secured revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Facilities”). On June 23, 2015, the Company entered into an amendment (the “First Amendment”) to the credit agreement to reprice the $1.378 billion then outstanding on the Term Facility. As amended, the Term Facility had a $1.078 billion floating rate tranche and a $300 million fixed rate tranche. On February 14, 2017, the Company entered into an amendment (the “Second Amendment”) to the credit agreement to reprice the $788 million floating rate tranche then outstanding, which extended the maturity and lowered the interest costs by 75 basis points. On April 18, 2018, the Company entered into an amendment (the “Third Amendment”) to the credit agreement to refinance its then existing senior secured revolving credit facility. In connection with the Third Amendment, the existing senior secured revolving credit facility was replaced with a new revolving credit facility with $300 million of aggregate commitments (the “Revolving Credit Facility” and, together with the Term Facility, the “Senior Secured Credit Facilities”). Following the amendments, the loans outstanding under the floating rate tranche of the Term Facility are scheduled to mature on February 14, 2024, the loans outstanding (if any) and commitments under the Revolving Facility will mature and terminate, as the case may be, on April 18, 2023. Loans under the fixed rate tranche of the Term Facility were repaid in full in June 2020. Loans under the floating rate tranche of the Term Facility bear interest at a rate equal to an adjusted LIBOR rate (subject to a floor of 0.75%) plus an applicable margin equal to 2.25% per annum. Loans under the Revolving Facility bear interest at a rate equal to an adjusted LIBOR rate plus an applicable margin equal to 1.625% per annum. Such rates are subject to decrease by up to 25 basis points in the event that, and for so long as, the Company’s net leverage ratio (as defined in the credit agreement) is less than certain thresholds. The variable rate tranche has a 1% required amortization per year. The Company will pay certain fees under the credit agreement, including customary annual administration fees. The obligations of the Company under the Senior Secured Credit Facilities are unconditionally guaranteed jointly and severally by, subject to certain exceptions, all material domestic subsidiaries of the Company (the “Guarantors”) and secured, subject to certain exceptions, by a security interest in substantially all of the assets of the Company and the Guarantors. The phase out of LIBOR may affect our obligations under the Facilities. See the applicable discussion under Item 1A. Risk Factors. On June 30, 2020, the Company issued $400 million aggregate principal amount of 5.0% Senior Notes due 2028 (the “Notes”). The Notes were issued pursuant to an indenture, dated as of June 30, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. The Company used the net proceeds of its offering of the Notes to repay all of its outstanding loans under the fixed rate tranche of the Term Facility, repay all of its outstanding borrowings under its Revolving Credit Facility, and the remainder for general corporate purposes. The Notes bear an interest rate of 5.0% per annum payable semi-annually on January 1 and July 1 of each year, beginning on January 1, 2021. The Notes are unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly owned domestic restricted subsidiaries that is a borrower under or that guarantees the Company’s obligations under its Senior Secured Credit Facilities or that guarantees the Company’s or any of the Company’s wholly owned domestic subsidiaries’ long-term indebtedness in an aggregate amount in excess of $50 million. At any time and from time to time prior to July 1, 2023, the Company may redeem some or all of the Notes for cash at a redemption price equal to 100% of their principal amount, plus the “make-whole” premium described in the Indenture and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Beginning on July 1, 2023, the Company may redeem some or all of the Notes at any time and from time to time at the applicable redemption prices listed in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time and from time to time prior to July 1, 2023, the Company may redeem up to 40% of the aggregate principal amount of the Notes with funds from one or more equity offerings at a redemption price equal to 105.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. If the Company experiences a change of control (as defined in the indenture), the Company is required to offer to repurchase the Notes at 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The credit agreement and the Notes contain certain customary affirmative and negative covenants that limit or restrict the ability of the Company and its restricted subsidiaries to enter into certain transactions or take certain actions. In addition, the credit agreement contains a financial covenant that requires the Company, if on the last day of any fiscal quarter loans or letters of credit were outstanding under the Revolving Facility (excluding up to $25 million of letters of credit), to maintain a maximum net leverage ratio (as defined in the credit agreement) of 3.50 to 1.00 for the four fiscal quarter periods preceding such day. As of December 31, 2021, there were $80 million in loans and $10.6 million in letters of credit outstanding under the Revolving Facility. The Company is in compliance with all the covenants associated with the Revolving Facility as of the end of the period covered by this report. The Company has a committed loan facility in Japan. As of December 31, 2021, there was an outstanding balance of $3.0 million on this facility. Principal will be repaid in accordance with the payment schedules ending in 2021. The Company repaid $0.8 million on these loans in 2021. As part of the Company's acquisition of Sivomatic in 2018, the Company assumed $10.7 million in long-term debt, recorded at fair value, consisting of two term loans, one of which matured in the third quarter of 2020 and the other of which matures in 2022. The outstanding loan carries an interest rate of Euribor plus 2.0% and has quarterly repayments. During 2021, the Company repaid $0.4 million on this loan. As of December 31, 2021, the Company had $25.9 million in uncommitted short-term bank credit lines, none of which were in use. The credit lines are primarily outside the U.S. and are generally one year in term at competitive market rates at large, well-established institutions. The Company typically uses its available credit lines to fund working capital requirements or local capital spending needs. We anticipate that capital expenditures for 2022 should be between $85 million and $95 million, principally related to opportunities to improve our operations and meet our strategic growth objectives. We expect to meet our other long-term financing requirements from internally generated funds, committed and uncommitted bank credit lines and, where appropriate, project financing of certain satellite plants. During the second quarter of 2018, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million. The fair value of this instrument at December 31, 2021 is a liability of $4.0 million. Additionally, the Company entered into a cross currency rate swap with a total notional value of $150 million to exchange monthly fixed-rate interest rate payments in U.S. dollars for monthly fixed-rate interest rate payments in Euros. The fair value of this instrument at December 31, 2021 is an asset of $8.2 million. These swaps mature in May 2023. As a result of these swaps, the Company's effective fixed interest rate on the notional floating rate indebtedness will be 2.5%. In addition to long-term debt, the Company has committed cash outflow related to pension and post-retirement benefit obligations, non-cancelable operating leases, primarily for office space and equipment, and other long-term contractual obligations. Other long-term liabilities include tax liabilities, including contingent obligations associated with gross unrecognized tax benefits for uncertain tax positions and a tax liability for the one-time transition tax on accumulated foreign subsidiary earnings under U.S. Tax Reform, asset retirement obligations relating to the retirement of certain tangible long-lived assets and land restoration obligations at the Company’s PCC satellite facilities and mining operations. See Notes 2, 8, 15, 16 and 20 to the Consolidated Financial Statements. On October 21, 2020, the Company's Board of Directors authorized the Company's management to repurchase, at its discretion, up to $75 million of the Company's shares over a one-year period. As of October 3, 2021, 1,016,088 shares have been repurchased under this program for $74.1 million, or an average price of approximately $72.90 per share. This program has been completed. On October 20, 2021, the Company's Board of Directors authorized the Company's management to repurchase, at its discretion, up to $75 million of the Company's shares over a one-year period. As of December 31, 2021, 164,882 shares have been repurchased under this program for $11.8 million, or an average price of approximately $70.15 per share. On January 26, 2022, the Company's Board of Directors declared a regular quarterly dividend on its common stock of $0.05 per share. No dividend will be payable unless declared by the Board and unless funds are legally available for payment thereof. ### Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, valuation of long-lived assets, goodwill and other intangible assets, income taxes, including valuation allowances and pension plan assumptions. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that cannot readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates. We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements. #### Revenue Recognition Revenue is recognized at the point in time when the customer obtains control of the promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services. The Company's revenues are primarily derived from the sale of products. Our primary performance obligation is satisfied upon shipment or delivery to our customer based on written sales terms, which is also when control is transferred. Revenue where our performance obligations are satisfied in phases is recognized over time using certain input measures based on the measurement of the value transferred to the customer, including milestones achieved. Revenues from sales of equipment are recorded upon completion of installation and transfer of control to the customer. Revenues from services are recorded when the services are performed. In most of our PCC contracts, the price per ton is based upon the total number of tons sold to the customer during the year. Under those contracts, the price billed to the customer for shipments during the year is based on periodic estimates of the total annual volume that will be sold to the customer. Revenues are adjusted at the end of each year to reflect the actual volume sold. There were no significant revenue adjustments in the fourth quarter of 2021 and 2020, respectively. We have consignment arrangements with certain customers in our Refractories segment. Revenues for these transactions are recorded when the consigned products are consumed by the customer. #### Valuation of Long-lived Assets, Goodwill and Other Intangible Assets We assess the possible impairment of long-lived assets and identifiable amortizable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is evaluated for impairment at least annually. Factors we consider important that could trigger an impairment review include the following: - Significant under-performance relative to historical or projected future operating results; - Significant changes in the manner of use of the acquired assets or the strategy for the overall business; - Significant negative industry or economic trends; - Market capitalization below invested capital. Annually, the Company performs a qualitative assessment for each of its reporting units to determine if the two-step process for impairment testing is required. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company then evaluates the recoverability of goodwill using a two-step impairment test approach at the reporting unit level. Step one involves a) developing the fair value of total invested capital of each reporting unit in which goodwill is assigned; and b) comparing the fair value of total invested capital for each reporting unit to its carrying amount, to determine if there is goodwill impairment. Should the carrying amount for a reporting unit exceed its fair value, then the step one test is failed, and the magnitude of any goodwill impairment is determined under step two. The amount of impairment loss is determined in step two by comparing the implied fair value of reporting unit goodwill with the carrying amount of goodwill. The Company has four reporting units; Performance Materials, PCC, Processed Minerals and Refractories. We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available and management regularly reviews the operating results of those components. In the fourth quarter of 2021, the Company performed a qualitative assessment of each of its reporting units and determined it was not more likely than not that the fair value of any of its reporting units was less than their carrying values. Property, plant and equipment are depreciated over their useful lives. Useful lives are based on management’s estimates of the period that the assets can generate revenue, which does not necessarily coincide with the remaining term of a customer’s contractual obligation to purchase products made using those assets. Our sales of PCC are predominately pursuant to long-term evergreen contracts, initially ten years in length, with paper mills at which we operate satellite PCC plants. The terms of many of these agreements have been extended, often in connection with an expansion of the satellite PCC plant. Failure of a PCC customer to renew an agreement or continue to purchase PCC from our facility could result in an impairment of assets or accelerated depreciation at such facility. We evaluate the recoverability of our property, plant and equipment whenever events or change in circumstances indicate that the carrying value of the assets may not be recoverable. For testing the recoverability, we primarily use discounted cash flow models or cost approach to estimate the fair value of these assets. Critical assumptions used in conducting these tests included expectations of our business performance and financial results, useful lives of assets, discount rates and comparable market data. When we acquire a company, we determine fair value on the acquisition date of assets acquired and liabilities assumed. We use the income, market or cost approach (or a combination thereof) for the valuation and use valuation inputs and analyses that are based on market participant assumptions. Changes in assumptions can have a significant impact on the fair value of tangible assets. Goodwill is calculated as the excess of the consideration transferred over the assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. #### Income Taxes As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating current tax expense together with assessing temporary differences resulting from differing treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or change this allowance in a period, we must include an expense within the tax provision in the Consolidated Statements of Income. Deferred tax liabilities represent the amount of income taxes payable in future periods. Such liabilities arise because of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating losses. We evaluate the recoverability of these future tax deductions by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences and forecasted operating earnings. These sources of income inherently rely heavily on estimates. We use our historical experience and business forecasts to provide insight. The amount recorded for the net deferred tax liability was $165.1 million and $138.4 million at December 31, 2021 and 2020, respectively. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of operations. See Note 8 to the Consolidated Financial Statements for additional detail on our uncertain tax positions. #### Pension Benefits We sponsor pension and other retirement plans in various forms covering the majority of employees who meet eligibility requirements. Several statistical and actuarial models which attempt to estimate future events are used in calculating the expense and liability related to the plans. These models include assumptions about the discount rate, expected return on plan assets and rate of future compensation increases as determined by us, within certain guidelines. Our assumptions reflect our historical experience and management's best judgment regarding future expectations. In addition, our actuarial consultants also use subjective factors such as withdrawal and mortality rates to estimate these assumptions. The actuarial assumptions used by us may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants, among other things. The investment strategy for pension plan assets is to maintain a broadly diversified portfolio designed to both preserve and grow plan assets to meet future plan obligations. The Company's average rate of return on assets from inception through December 31, 2021 was approximately 10%. The Company’s assets are strategically allocated among equity, debt and other investments to achieve a diversification level that dampens fluctuations in investment returns. The Company’s long-term investment strategy is an investment portfolio mix of approximately 55%-65% in equity securities, 30%-35% in fixed income securities and 0%-15% in other securities. As of December 31, 2021, the Company had approximately 54% of its pension assets in equity securities, 31% in fixed income securities and 15% in other securities. The Company recognized pension expense of $9.1 million in 2021 as compared to $18.4 million in 2020. Accounting guidance on retirement benefits requires companies to discount future benefit obligations back to today’s dollars using a discount rate that is based on high-quality fixed-income investments. A decrease in the discount rate increases the pension benefit obligation, while an increase in the discount rate decreases the pension benefit obligation. This increase or decrease in the pension benefit obligation is recognized in Accumulated other comprehensive income (loss) and subsequently amortized into earnings as an actuarial gain or loss. The guidance also requires companies to use an expected long-term rate of return on plan assets for computing current year pension expense. Differences between the actual and expected returns are also recognized in Accumulated other comprehensive income (loss) and subsequently amortized into earnings as actuarial gains and losses. At the end of 2021, total actuarial losses recognized in Accumulated other comprehensive income (loss) for pension plans were ($73.3) million as compared to ($119.1) million in 2020. The majority of the actuarial losses were due to decreases in the discount rate and lower actual rates of return on assets than expected during the financial crisis of 2008. A net gain of $60.6 million ($45.2 million after-tax) primarily due to actuarial gains, driven by a change in discount rates is included in other comprehensive income in 2021. In 2020, a net loss of $24.5 million ($18.7 million after-tax) was recorded in other comprehensive income, primarily due to a change in discount rates. In 2019, a net loss of $21.2 million ($16.1 million after-tax) was recorded in other comprehensive income, primarily due to a change in discount rates and updated mortality tables. Actuarial losses for pensions will be impacted in future periods by actual asset returns, discount rate changes, actual demographic experience and other factors that impact these expenses. These losses, reported in Accumulated other comprehensive income (loss), will generally be amortized as a component of net periodic benefit cost on a straight-line basis over the average remaining service period of active employees expected to receive benefits under the benefit plans. At the end of 2021, the average remaining service period of active employees or life expectancy for fully eligible employees was 9 years. For a detailed discussion on the application of these and other accounting policies, see "Summary of Significant Accounting Policies" in Note 1 to the Consolidated Financial Statements. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report. ### Recently Issued Accounting Standards Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations. #### Adoption of Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes", to simplify the accounting for income taxes and improve consistent application by clarifying or amending existing guidance. The Company adopted this guidance on January 1, 2021. Adoption of this standard did not have a material impact on the Company's consolidated financial statements. #### Adoption of Investments - Equity Securities, Investments - Equity Method and Joint Ventures, and Derivatives and Hedging In January 2020, the FASB issued ASU 2020-01, "Investments - Equity Securities, Investments - Equity Method and Joint Ventures, and Derivatives and Hedging", which addresses the accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. The Company adopted this guidance on January 1, 2021. Adoption of this standard did not have a material impact on the Company's consolidated financial statements. ## Market risk As filed, 4,940 characters. We are exposed to market risk from fluctuations in foreign currency exchange rates, interest rates and credit risk. We use a variety of practices to manage these market risks, including derivative financial instruments when appropriate. Our treasury and risk management policies prohibit us from using derivative instruments for trading or speculative purposes. We also do not use leveraged derivative instruments or derivatives with complex features. ### Exchange Rate Sensitivity As we operate in over 30 countries with many international subsidiaries, we are exposed to currency fluctuations related to manufacturing and selling our products and services. This foreign currency risk is diversified and involves assets, liabilities and cash flows denominated in currencies other than the U.S. Dollar (USD). We manage our foreign currency exchange risk in part through operational means, including managing same currency revenues versus same currency costs, as well as, same currency assets versus same currency liabilities. We also have subsidiaries with the same currency exposures which may offset each other, providing a natural hedge against one another’s currency risk. When appropriate, we enter into derivative financial instruments, such as forward exchange contracts and cross currency interest rate swaps, to mitigate the impact of foreign exchange rate movements on our operating results. The counterparties are major financial institutions. Such forward exchange contracts would not subject us to additional risk from exchange rate because gains and losses on these contracts would offset losses and gains on the assets, liabilities, and transactions being hedged. In the second quarter of 2018, the Company entered into a cross currency swap with a total notional value of $150 million. The swap matures in May 2023. The fair value of this swap at December 31, 2021, was an asset of $8.2 million. Assets and liabilities of our international subsidiaries are translated to their parent company’s reporting currency at current exchange rates during consolidation; gains and losses stemming from these translations are included as a component of Other Comprehensive Income and reported within Accumulated Comprehensive Income within our Consolidated Balance Sheets. Income and expenses of our international subsidiaries are translated at average exchange rates for the period and, when included within retained earnings in the balance sheet at current exchange rates, the differences to those average exchange rates are included within Other Comprehensive Income and reported within Accumulated Comprehensive Income. When our subsidiaries transact business in currencies other than their functional currency, those transactions are revalued in their functional currency and differences resulting from such revaluations are included within other non-operating income (deduction), net within our Consolidated Statement of Income. We do not anticipate that near-term changes in exchange rates will have a material impact on our future earnings or cash flows. However, there can be no assurance that a sudden and significant change in the value of foreign currencies would not have a material adverse effect on our financial condition and results of operations. ### Interest Rate Sensitivity A portion of our long-term bank debt bears interest at variable rates (see Note 15 to the Consolidated Financial Statements) and our results of operations would be affected by interest rate changes to such bank debt outstanding. The Company utilizes interest rate swaps to limit exposure to market fluctuations on floating-rate debt. In the second quarter of 2018, the Company entered into an additional floating to fixed interest rate swap for with a total notional value of $150 million. The fair value of this swap at December 31, 2021, was a liability of $4.0 million. An immediate 10% increase in the interest rates would not have a material effect on our results of operations over the next fiscal year. A one percentage point change in interest rates would cost $1.4 million in incremental interest charges on an annual basis. ### Credit Risk We are exposed to credit risk on certain assets, primarily accounts receivable. We provide credit to customers in the ordinary course of business and perform ongoing credit evaluations. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising our customer base. We currently believe our allowance for doubtful accounts is sufficient to cover customer credit risks. Our accounts receivable financial instruments are carried at amounts that approximate fair value. ### Sovereign Debt Risk We do not have any material credit risk with sovereign governments as we do not sell our products to them. We do, however, sell to customers in these countries, but we believe our risk associated with these customers is not material. ## Controls and procedures As filed, 1,790 characters. ### Disclosure Controls and Procedures As of the end of the period covered by this report, and under the supervision and with participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2021. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we have included a report of management's assessment of the design and operating effectiveness of our internal controls as part of this report. Management's report is included in our consolidated financial statements on page F-42 of this report under the caption entitled "Management's Report on Internal Control Over Financial Reporting." ### Changes in Internal Control Over Financial Reporting During 2021, we closed on the acquisition of Normerica and we excluded Normerica from the scope of management’s report on internal control over financial reporting for the year ended December 31, 2021. We are in the process of integrating Normerica to our overall internal control over financial reporting and will include them in scope for the year ending December 31, 2022. This process may result in additions or changes to our internal control over financial reporting. There were no other changes in the Company's internal control over financial reporting during the fourth fiscal quarter of 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Filed Feb 18, 2022. Source: SEC EDGAR, the filing index for accession 0000891014-22-000009. Last ingested by Listed: Oct 30, 2026, 15:40 ET. No prices; not investment advice.