Good morning. My name is Doug Dietrich. I'm the Chairman and Chief Executive Officer of Minerals Technologies. I'm here with Erik Aldag, who's our Chief Financial Officer, and Lydia Kopylova, Head of Investor Relations. So let's get started. Just cautionary statements, some of the numbers I'll give you today and include some non-GAAP measures and some forward-looking statements. So let's get into it. Who is Minerals Technologies? Minerals Technologies is a global specialty minerals company. A global company, we're $2,200,000,000 in sales, 4,000 employees. We operate in 32 countries with a heavy technology focus, with 12 R&D centers around the world. As I mentioned, we're a technology-driven provider of specialty solutions and applications, but you'll see through the presentation that we're actually a constituent part and quite an essential part of your everyday life.
You'll come across products from the time you get up to the time you go to sleep that include some of our minerals and solutions. What else, what else is unique about Minerals Technologies? Well, we have a global footprint of reserves, mineral reserves around the world, aligned with our growth aligned with our customers and our growth opportunities. We're also very vertically integrated, and I'll show you that in a moment, and how we apply these technologies to deep reserves of specialty minerals around the world. How do we report ourselves? We report ourselves, kind of a balanced portfolio. We have two segments, one called Specialties, Consumer & Specialties, and the other, Engineered Solutions. Both around $1 ,000,000,000, $1,200,000,000 on the consumer side. We have four product lines.
The first on the consumer and specialty side is Household & Personal Care . These are products that products sold in this product line are mine to market. They serve, they're coming straight out of our mine, and they're going straight to the shelf, something you would buy every day, such as cat litter. We're the leading provider of packaged cat litter globally. Other items like health and beauty creams, edible oils that you'll consume, we're using our minerals to help filter out the contaminants that are in those oils. We're also in your fabric care. So we have a number of technologies and mineral technologies that come into dry laundry detergent and other type of tablet detergents. Below that is our Specialty Additives business.
These are, these are additives, specialty-designed additives for food, pharmaceutical, paper, consumer packaging, and residential construction markets. On the other side is the more industrial side of the business. We have this consumer side and the industrial side. The industrial side, the first product line is High Temperature Technologies . It's one of our largest product lines. These are value-added solutions. These aren't things that necessarily go onto your shelf or things that you'll consume. These are things that help our customers make the products that you use, such as steel, in terms of refractories for furnaces, green sand bonds, which help make, a gray and ductile iron casting. So these would be your brake rotors or any type of automotive component, or heavy truck, or agricultural equipment, or municipal castings. Below that is Environmental & Infrastructure .
These are items in white water, wastewater treatment . These are lining systems for landfills. These are sediment capping systems. These are waterproofing systems for commercial construction projects. They're drilling products and other and other infrastructure type of products. So these are not items that you'd buy, but these are items that are helping our customers make things like your drinking water that you'll consume, and we'll get into that in more more detail. So you can see the balance to the company. There's $1 ,000,000,000 of kind of Consumer & Specialties and $1 ,000,000,000 in the company with more industrial focus. So what do we do? We have four core technologies in the company. We take this technology and know-how. The core technologies are crystal engineering.
These are where we actually can synthetically grow a crystal of calcium carbonate. We have functional additives, where we take our minerals, and we make them functional components of things that you consume, such as deodorizers, rheology modification, et cetera. We have engineered blends. This is where we take our minerals and other constituent products and blend them together to add attributes or efficiencies to the products for our customers. And we also have particle surface modification. This is where we take a constituent mineral, and we modify the surface of it to do something specific. But these technologies sit on global reserves. We're the largest bentonite producer in the world. We have the largest reserves of sodium bentonite, a very specific type of bentonite, and calcium carbonate reserves, world-class calcium carbonate reserves around the United States.
We also have other specialty minerals that we use and apply in some of our blended solutions, but these technologies sit on top of these deep mineral reserves, and that's unique about the company in terms of its vertical integration. So what do these technologies and these minerals provide? Some of the functional attributes. Some of our crystal engineering adds light weighting to our products, our customers' products, strengthening attributes. CO2 sequestration. In growing crystals, we sequester almost 1,200,000 tons of CO2 every year. And calcium fortification. Some of our functional additives are in odor elimination, such as our cat litter. They're actually active odor elimination because of the type of mineral and what we do to it, it absorbs odors. Adsorption or absorption.
Sodium bentonite swells when things hit it, so we're able to capture things and attach things to our minerals to remove them from substances. Rheology modification and particle surface modification, we're able to... Rheology modification is allow things to flow under stress, so we're into a number of different sealant and high-tech sealant operations in automotive and in construction. Some of our engineered blends help our customers save energy, help them recycle waste streams, and help them with their productivity improvements. What that's led us to is number one positions in a number of the markets we serve. We're obviously the number... I mentioned we're the number one in worldwide bentonite.... We're also the largest global private label cat litter provider in the world. We're selling bulk cat litter to the branded customers.
We're packaging around the world in Europe, North America, and also now in Asia. It's actually, the pet litter business has become the largest single product line in the company. We're number one in worldwide precipitated calcium carbonate, in green sand bond blends, in refractory laser measurement systems, and also in water-active waterproofing and construction markets. So these technologies sitting on these global mineral reserves add these very functional attributes to our customers' products and lead us, given those positions, to number one positions around the world. So what's driving our growth? We have our innovation, which I talk about in the middle, aligned with some specific kind of growth trends around the world.
First, we're aligned with our reserves to be able to tap into this growth, but there's some secular trends that are happening as in, you know, global pet ownership is growing around the world. Natural ingredients for personal care and animal feed, so moving away from synthetic or chemical and more into natural, natural additives. Clean energy and alternate fuels. Decarbonization, obviously. Recycling and sustainability in the packaging industry. Emission reduction, increased in efficiency technologies, water purification, as we'll talk about in a moment, and environmental conservation. All of these items are areas where we are playing in today and where we're steering our technologies to help provide solutions for.
In the middle, you'll see our four technologies, but I'll tell you that the stat at the bottom, 64% of everything in our product pipeline right now has a sustainability benefit for our customers or ourselves. So where does that end us? In each of these, these trends with these technologies, that's leading us into these positions in our product lines. Obviously, pet care and animal health, we're adding natural feed additives around the world, one of our fastest-growing product lines. Natural personal care solutions, we're the largest retinol, which is an active ingredient for anti-aging creams. We're the largest retinol, additive provider in the United States, and we now have natural, ingredients to be able to, offer a natural additive instead of a synthetic additive for the delayed release of retinol in that product.
Our bleaching earth is now moving into biofuel, not just in edible oil and oils that are consumed on the shelf, but also in refining and helping to purify biofuels. As a matter of fact, one of our facilities in the Western United States has converted completely to this fuel in our heavy equipment. In Specialty Additives , we're looking at recycling solutions for paper and packaging. Our three, half of our latest new contracts that we've signed around the world are for taking a waste stream from a paper or packaging mill and repurposing it and putting it back into the box or the sheet of paper. We're expanding into packaging just with our new mineral solutions, which is growing, and adding these new additives and recycling additives on the surface of the box as well.
We're into emission reduction and High Temperature Technologies , automation and data analytics. In Environmental & Infrastructure , we're working with our wastewater and drinking water to purify and remove a contaminant called PFOS. We have a new product that is highly effective and very cost-effective, as a matter of fact, and we're working on 50 different projects around the United States and around the world, 2 in utilities for drinking water, to remove this forever chemical from that water stream. A number of trends, technologies, core technologies that we have, and they are constituent parts of each of these product lines, and they're going to add to the growth going forward. What is that growth profile? What does that add up to?
Well, we see that with the combination of this balanced portfolio of Consumer & Specialties , offering consistent, stable growth going forward with, the trends that I just mentioned, but also our engineered solutions with our deep positions and leading positions, with opportunities to move them around the world. We see the company growing between 4%-7% compound over the next 5 years, probably around an average of 5%. And where that's coming from is, the two sides of the company, the Household & Personal Care . Given that our growth in pet care has been around 7%-8% for the past few years, and we see that trend continuing, and with the growth in some of these natural additives and animal feed, we see that product line growing between 7% and 10% over the next 5 years.
Below that, the Specialty Additives with our recycling solutions and with into the food and pharmaceutical products, and the geographic expansion we see in those opportunities, we see 3%-5% growth in Specialty Additives . In the High Temperature Technologies , 4%-6% growth. This is largely driven by geographic expansion, moving the technologies that we use here in the United States globally. We're penetrating markets in India, in Asia with our green sand bond blends for the foundry industry. We see that continuing for many, many years, offering 4%-6% growth for this product line. In the Environmental & Infrastructure product line, 4%-6% growth, largely driven by our water solutions in sediment capping, in wastewater remediation, pump and treat.
A lot of these Environmental & Infrastructure with our drilling products that are helping hardening of the grid, etcetera. We see that those trends contributing almost 3%-6% growth for this business. So that balanced portfolio, what we have as a company is quite unique. We have the reserves, we have the technologies, we have the positions around the world, and we have them attached to growth trends that are gonna provide some long-term, stable, through the cycle growth for the company. That balance and stable growth with many of the products that we're developing have much higher margins than we currently have as average. Those new products with higher margins will accrete to the company. Plus, if you know Minerals Technologies and the way we operate, we operate in a very efficient, lean fashion.
We see leveraging those sales over our fixed cost base as a company, adding additional contribution and margin expansion going forward. So that balance and stable through the cycle growth of 5%, with that margin expansion that will continue, we see that generating some strong cash flow for the company. We've always been a very strong cash flow-generating company, averaging 7% of free cash flow to sales, and we see that continuing and continuing to grow. What that gives is this company a lot of options and opportunities, opportunities to steer that cash back to shareholders, but also to opportunities to look to expand the company inorganically at the same time. We maintain a solid balance sheet, and as I mentioned, returning capital to shareholders.
So we've set some targets for ourselves, and these are the targets that after one year, we're right on track to meet, and I see us continuing that trend in 2024. But organic sales of 5%, margin improvement to 15% by the end of next year. An interim target would be 14% this year. That would yield operating income growth of 10% compound through 2027, and with 7% free cash flow conversion to sales, we see that maintaining very strong cash flow, a healthy balance sheet with the flexibility that I just mentioned. Speaking of cash flow, this is the trend of cash flows over the past few years. This year, we expect somewhere between $140 ,000,000 and $160 ,000,000 of free cash flow.
Our general policy is when we're around 2x net leverage, which is our target, we look to make sure we steer that back to shareholders. We do that through about a 50/50. So 50% of our free cash flow goes back to shareholders when we're at our target leverage. This year, this past year, we increased our dividend, doubled our dividend to $0.10, and also initiated a $75 ,000,000 share repurchase. That's about $84 ,000,000, or I'm sorry, $90 ,000,000 going back to shareholders, about 50% of that free cash flow. The other 50% sits on the balance sheet. We like to accumulate that for opportunities and acquisitions.
This is that balanced cash flow deployment, capital deployment I mentioned, being able to steer capital back to shareholders while also retaining the capability of doing bolt-on acquisitions as we see them come available. Now, this can be moved back and forth. If we see something that's more, we think more valuable to shareholders to buy, a larger acquisition, we can move it this direction, and if we don't see that, we can move that cash flow over and steer more back to shareholders in any given year. So a very flexible model, but also, we try to keep that balance at least a guide to about 50% of free cash flow back to shareholders. You can see our debt and leverage right now, about 1-1.9 times net leverage.
Our maturities, balance sheet's in very good shape, with maturities out in 2027 and 2028, as I mentioned, the dividend increase and, our share repurchase program. So we think that what I just gave you is a very powerful combination. It's something that we've built over the past several years. We've acquired ourselves into some consumer-oriented products. We've invested in technologies along the trends, the growth trends that I just mentioned. We're setting ourselves up nicely with some very high margin and high growth products that are acceptable around the world. We still have retained some of the legacy parts of the business that have deep and strong number one positions globally, also very high cash flow businesses.
So to be able to line up the growth, the margin, and the cash flow is something I think that's unique about the company. But also, because it's vertically integrated and we have deep and widespread reserves around the world, it's something that continue for a very long time. That's the presentation today. Hopefully, that was informative. I'm happy to answer any questions that you may have. Silke.
I don't have a microphone, so it's hard to speak loudly.
Here comes one.
Oh, there's one. Thank you. Silke Kueck from J.P. Morgan. Can you speak about the size of the water technologies, what exactly it is, and also about, like, the CO2 sequestration technologies, like what it is that you do, and is it you sequester 1,200,000 tons? I assume that you're doing that not yourself, but for your customers.
We do. So, I'll take the water one first. What we've developed, and we've always been in water treatment businesses. It's been part of our environmental technologies, and so we're looking at contaminants and wastewater. We take a mineral particle, and we've changed the surface of it, either by changing the chemistry or changing the charge on the outside. And so we're able to tailor the outside of that product to be able to scavenge a very specific chemical or contaminant in water, and so we've always been able to do that. We do that in offshore oil and gas. We've done that in onshore wastewater streams. We do that a couple different ways.
We'll build slurry walls, and we'll put that component into the ground so that as groundwater flows through it, it'll capture it as it moves. But we also have pump and treat systems, where if you have a static base of water, we're able to pump the water out, treat it through a system, and then reinject the water, and we do that in offshore as well. What we've now done is so we've been doing that for many years, but we've expanded that as more wastewater issues have been seen around the United States, but we've adapted that particle now to be able to to scavenge specific chemical known as PFOS. And so we've been working for the past, I don't know, trialing for the past three years or so with PFOS in different areas.
It's now been certified by all of the certification agencies, but it is becoming a very effective. It can treat on its own to remove PFAS down to 4 parts per trillion, which is largely non-detect, on its own. It's also very effective, meaning the residence time. It lasts longer in the containment vessel, which means you're not changing the media out as much. It also allows for smaller vessels, either, you know, longer change-out times or smaller vessels. So it becomes a very cost-effective method of removing PFAS. We're working with many water utilities in the United States. We're resident in two of them, so we're currently active treating drinking water. As I mentioned, we have 50 different opportunities.
We're working in projects around the United States, treating static or acute areas of PFAS contamination, so it's becoming very effective. The size of that, right now we're being probably pretty conservative. We think it's probably a $30 ,000,000 opportunity over the next five years. That's only because it's very difficult to see the real catalyst, which would be regulation moving forward. We're actually seeing probably more regulation happening outside the United States than opportunities there. But should regulation, should this become more widespread, real issues that are out there being addressed, we see this being, you know, $1,000,000,000 type market. We can- we probably even see about a 10% share of that market. That would probably be about, you know, a $100 ,000,000 type opportunity in the relatively near term for the company.
Does that answer the first question on water? That's kind of where we're going with the wastewater and how we see it growing. With CO2, look, CO2 is... Our technology is able to, when we grow crystals of calcium carbonate, we do start with calcium oxide, so there is an emission that's being driven to make the calcium oxide. And what we're doing is we're helping that paper mill capture that CO2 back and reconstitute the mineral. We do that in a way to be able to grow a crystal specifically, and we've been doing this, Silke, as you know, for a long, long time. But that technology, that capability of being able to...
There's a number of companies that are looking to just scavenge CO2 with calcium oxide, so making the calcium oxide, pumping the CO2 resultant into the ground, and then capturing CO2. I think our technologies and our applications expertise is going to make that a much more valuable solution, and as we look to expand on this, and that is being able to actually grow the crystal, not just get whatever you get, and then be able to apply that crystal, know how to apply it, is the know-how that I think is the missing link in CO2 sequestration. So we have the technologies. We currently do look for stranded sources of CO2 to be able to make a functional product, and so we think that's something that we can expand.
But the resident knowledge of taking CO2 and growing a crystal or capturing it in a crystal has been something that the company was founded on, and we're looking at making that much more expansive in terms of stranded CO2 around the world. Other questions? Sure.
I always have plenty. I have one financial question. So the growth target is 4%-7% CAGR over the next 5 years, and does that include the 20% growth that you've already seen in 2023? You know, part of it was pricing. I was just sort of like wondering whether you can speak about how you see 2024 in the out years, you know, just sort of the trajectory.
Yeah, it does. The basis of that would have been 2022 basis through 2027, so 5 years. So it does include the growth we saw in 2023. Look, the first thing I'll caution is it's not going to be 5, 5, 5, 5, right? It's... The nature of the business is, I think, historically, the company has been much more industrial focused. It would cycle +2, -2 with economic cycles. I think what's different about the company today and what we've taken the time to build is this more stable, I guess, consumer-oriented business product lines, which the largest, and some of them are the largest in the company, that just have this stable growth trajectory. They don't cycle.
They have some seasonality, but they move at a 4%-8% as our pet litter, you know, consistent growth, and that adds some balance to the company. And so I say 4%-7%, but the, you know, the company might see a 3, and it might see a 9. And as you know, right now, the commercial construction market is very slow. Some of the Environmental & Infrastructure is also slower in this season. So you might see some slower quarters or slower years, and then when those move to a different cycle, you'll see on the top end of that cycle. But we see on average that growing, and yes, it includes last year's through 2027 at about that average rate. Does that make sense?
That's a lot different from what the company was before.
Mm-hmm. And, and lastly, I was wondering whether you can talk about where you have most pricing opportunities, and do you have any segments we can hold on to your pricing, where just incrementally now, you know, are able to, like, price a little better?
Yeah. I think we have opportunities for pricing across the board. There are segments and product lines in the company that are formulaic. Our paper and packaging business, you know, pricing gets passed through, you know, almost immediately. So, these are long-term contracts, 10-year contracts that are set up to allow price to pass through or give back, and the design of that contract is to yield a stable return on the capital invested or a stable EBITDA, so to speak, a cash return.
But across the business, I think given our number one positions that we have in the cat litter business, in the health and beauty, but also in the uniqueness of our mineral reserves and the solutions we provide, I think it's been shown that we have quite a bit of pricing power, and we use that, you know, to help our customers. It's not that we just price because we can. We get our fair share of the value we provide. I think we passed through, over the past couple of years, $250 ,000,000 of pricing, and largely, we see that being able to be held. There's a reason for that, pricing power, as I mentioned, our positions and the value we provide, and I think we can hold that.
I think there's also opportunities, Silke, to move that price further because I don't think we're getting the value necessarily that we provide in some cases, and I think we'll continue to make sure we do.
... Can I squeeze in like one more question?
Yeah, keep going.
So part of your cash you hold for inorganic growth, maybe to acquire. And what would you add on if you, you know, do you have like a wish list of, like, you know, technologies or areas where you would want to expand?
I guess, there... First off, there are opportunities in each of the product lines for bolt-on acquisitions, whether it be a company that offers us deeper into a market, a geographic position, or a technology. So there are smaller bolt-ons, I think, in each of the four product lines. I also think that there are larger pieces that we should probably own as a company. Items that span our four product lines that probably deepen our reserves around the world or give us a similar position to what we have in North America elsewhere. So there are some larger items that I think we'd be attracted to, and I think we would good for us to own, and I think there are bolt-ons. I'll put it this way, in a matrix, I try to give people...
We could move into a different specialty mineral, but it would probably be very something that's tangential or into one of our markets. We know the market well. It's a mineral that is synergistic with something that we're providing, and we will integrate into that mineral. Or we'll go into the similar mineral, but it could be a different market. We're interested in a different market for the same bentonite or carbonates or something we're in, and so we would expand that. And there's opportunities in both. I would say that it's probably less likely that we'd go into a new mineral and a new market at the same time. It would probably be something mineral, similar market, or similar market, or similar mineral, new market that would be there.
There are plenty of opportunities to bolt on in each of those product lines and larger things that I think we'd be attracted to. So you can't time these things, but I think we've purchased four different companies over the past five years, and so I think a track record of buying and integrating and buying and integrating, we've shown that we're very capable of doing that.
Thanks very much.
Thank you, Silke. Other questions?
Thanks for the presentation. So historically, your kind of income statement looks pretty stable, slightly cyclical, and your forward guidance is obviously quite different. You're talking about secular growth. So is there, like, a transformation that's occurred? What's changed?
Well, a couple of things. First off, it didn't happen just overnight. Over the past four or five years, as I mentioned, we've looked at a couple of. The company was a legacy, more industrial focused, and recognizing that we had positions in the company that were rather small, that had these growth features, like pet litter. Pet litter was a $75 ,000,000 business. It was only North America, very small niche focus in North America. Took a look at the pet litter business globally and said, very, the private label market is very fragmented, and we're the ones that are supplying all the clay. So we were supplying clay to all the fragmented packaging. We were supplying the clay to all the branded customers.
When you have that resource, and you have the technology, and you have the position, I looked at the cat litter market and said, "This is a stable, growing market. It's GDP plus, it's growing in Asia, pet ownership trends are going up, and we're well positioned to provide that." So we bought a company in Europe called Sivomatic, which was vertically integrated, and it brought us the largest position in cat litter in Europe. Bought another company called Normerica here, which gave us positions in geographic centers around the United States. And we bought another company in Eastern Europe called Concept Pet, and now we're looking at organic growth strategies in Asia and China. We've always produced there, but now that's growing very quickly. That happened over the past three to four years.
And now you have a position where large consumers, Walmart, Sam's Club, you know, Kroger, large outlets are looking at, even branded customers, consumer-branded customers, are looking at a global conversation that says, "Look, I'm everywhere, and I need somebody to help me to supply and/or make," and now there's a person or one person to help them. And so we're having conversations around the world, and we're being able to supply and be the supplier of choice. That's driving that growth, that just the organic nature of pet ownership is driving that growth, plus having those conversations where we can become either the manufacturer of the private label or even the branded label globally. That happened over four years. We've also decided that we, you know, our innovation wasn't tied with global trends.
We were doing things in our current markets, but there were other trends out there that were growing, that we needed to develop solutions for our minerals. So, I don't know, five or six years ago, we were probably generating only 5% of our sales from new technologies. It took four years to get something from ideation out to commercialization. We said, "We're gonna need to speed that up." And so, we decided to set some targets for ourselves, cut that time in half and double the sales from new products. As we said, at the end of 2023, we're moving things from idea to commercialization in 17 months, and about 18% of our sales are now generated from products developed over the past five years. So that's about $300 ,000,000 in sales. So it's really starting to move, right?
I mean, we're now a substantial portion of our revenue stream is coming from new technologies and new technologies that are accepted globally. So the innovation engine, and we've invested in that, and investing in facilities then to produce that, and then we've invested organically to build out pieces of our business, that have more stable growth. And so now that Household & Personal Care business is a, you know, $600 ,000,000, seven, you know... Pet, pet litter business is our largest product line. But it grows at, you know, our pet litter product line's grown an 8% kinda compound for the past 4 years. And, and we see, you know, that may not always stay that way all the time, but as we move into Asia, we see that growth continuing. So that's added a level of stable growth to the company.
It's, as a percentage, it's made smaller some of the more cyclical nature of the company. So the company is going to cycle, but it's gonna cycle on a growth trend that averages that, you know, 4%-5% per year. When you have that, and you apply it to an operating model that we have, where on a fixed cost base, we operate on a global shared service base, we have single instance ERP systems everywhere, we leverage those investments in that efficient back office, and so we're able to bring in that revenue without adding the overhead, right? So we have plenty of capacity in our facilities. We're always looking at efficiency and productivity improvements in those to expand efficiencies or expand capacity.
So we're able to bring in that contribution without having to add the additional fixed, and that's going to help margins continue. So when you have that stable revenue growth and higher margin products over a very efficient operating model, then margins expand, the growth continues, and that cash flow continues to go. And I think that gives, like I said, that's the formula I think is unique. And when we have the mineral reserves, it's not like we're having to go out and buy them or negotiate that side of the equation. It gives us a very stable cost base, long-term, stable cost base in each region for those customers. That's an attraction to them as well. They know that we're there, and we have the reserves, and we can be a stable supply for many, many years. And so I think that's a unique formula.
I think that differentiates MTI, for sure.
That's super. Thank you.
I have a few more minutes. Any other questions? Erik, Lydia, anything I missed?
I think you covered it.
Silke, one more?
Yeah.
No, I won't put you on the spot. Okay, thank you very much. Appreciate the time today.