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These positive sales areas were offset by lower sales in North America paper and packaging, which were down 18% due to paper customer destocking actions. Slower residential construction markets, and lower demand for specialty food additives impacted sales in specialty PCC, which was down 10%. On the Engineered Solutions side, sales were slightly down compared to last year. We benefited from strong metal casting and refractory sales in North America, as well as higher metal casting volumes in China. We also saw significant growth in our remediation and wastewater business, with sales up 86% driven by the continuation of two large sediment capping projects. These areas of strength were offset by continued slow conditions in commercial construction and the European steel market.

Sequential operating income grew by 12% and operating margin improved by 120 basis points driven by favorable price cost dynamics. The pricing actions that we have put in place are beginning to meaningfully offset the raw material inflation we experienced for the past six quarters. Additionally, cash from operations doubled compared to last year. The higher working capital level we experienced due to inflation is beginning to release and convert to cashflow. As mentioned in previous presentations and at our recent Investor Day, we completed the business re-segmentation to focus MTI’s energy and capital on our core markets, product lines, and technologies. An outcome of this realignment is an opportunity to streamline our organizational structure and reduce overhead costs.

We expected to save $10 million from this program, which will be implemented over the next three to four months, and Erik will discuss the details in his financial section. We also made an announcement that our subsidiary, Barretts Minerals Inc., is exiting the Talc business. As was outlined in the release, we took a very careful look at all the circumstances concerning the Barretts subsidiary and made the decision to exit the Talc market. A relatively small size of the business within MTI needed to be balanced against the outside costs and distraction from the escalating litigation environment that primarily involves other large companies, but has nonetheless impacted Barretts. I want to reiterate that our Talc is safe and we're proud of Barretts’ track record of meeting its customer needs with the highest quality products and service.

However, we're taking the step to divest its Talc business and are now working to determine the transaction structure that best provides value to all stakeholders. Part of this process includes taking the prudent steps required to ensure that any liabilities associated with Talc are dealt with both effectively and efficiently. As you can imagine, a number of activities are ongoing while we move this process forward. Our intent is to move quickly so that all our energy can be focused on achieving our core long-term strategic objectives. We'll certainly provide further updates as the process moves forward. So, overall, for the quarter, I'm pleased with our performance and the progress we're making with margin expansion and cashflow improvement.

I'm also pleased with how our consumer-oriented businesses continue to perform well through mixed economic conditions, providing the balance that we expected to our portfolio. Now that you're more familiar with our new segments and product lines, I'd like to share how we see the markets playing out for them over the balance of the year. Overall, we have a positive view of our positions, market conditions, and momentum going into the second half. Let's start with the Consumer & Specialties segment. In household and personal care, we expect demand to remain strong across the majority of our consumer-oriented product portfolio. Our pet care business is experiencing significant growth across all regions, and for the remainder of the year, we see this demand continuing.

In other consumer businesses like animal health and bleaching earth for edible oil and renewable fuel purification, our customers are expanding production capacity and have new facilities coming online. This is creating new supply opportunities for us, and as a result, we're projecting to remain on our current strong growth trajectory. Our personal care business has been experiencing lower volumes for most of the first half of the year due to customer destocking actions. Indications are that this will continue through the third quarter, but they'll begin to see an increase in order volume in the fourth. For the specialty additives product line, we expect the North America paper market to improve from a rather lackluster first half as our paper customer destocking activity concludes, and for the European paper market to remain stable for the balance of the year.

We started up one new paper PCC satellite in India earlier this year, and we'll start up three additional satellites, one in India and two in China over the next three to four months, which will support continued volume growth in Asia. Additionally, we just announced a new agreement with one of our customers in Brazil for our new, NewYield LO product. This technology leverages our crystal engineering platform to recycle a paper mill waste stream and offer our customers a more sustainable filler particle for manufacturing paper. We expect this facility to be operational by this time next year. Elsewhere in specialty additives, markets are mixed. In North America, we see a strong pull for pharmaceutical and automotive sealant additives for the remainder of the year, though demand for our specialty food additives is expected to remain soft through the third quarter, but pick up in the fourth.

Let's talk about the market trends in Engineered Solutions. In High Temperature Technologies, we expect the North America and European steel markets to remain at similar levels for the second half. Refractory sales will improve in the second half versus last year as we begin to benefit from the new Scantrol laser and application systems we've been deploying. Speaking of which, this quarter we signed another contract for this technology worth $10 million over five years. This is our 11th contract like this, demonstrating that this technology is truly unique and valuable to the electric steel furnace market. The North America foundry market was strong for the first half, driven by relatively robust auto, heavy truck, and agricultural equipment demand.

We expect these conditions to remain through the second half and translated to continued strong metal casting volumes for the remainder of the year. In China, our metal casting volumes have steadily improved each month this year, albeit at a slower pace than what we expected at the beginning of the year. In the second quarter, volumes grew 10% over last year, despite this slower rebound. This is largely due to the growth and penetration of our latest blended technologies. Current sales from our foundry customers in China are that volumes will continue to increase through the remainder of this year. In Environmental & Infrastructure, our outlook is mixed. We see stable demand for wastewater and water remediation, as well as for our drilling products throughout the balance of the year.

Project activity for both our environmental lining and commercial construction waterproofing systems is expected to remain soft. Before we move on, I'd like to make a couple of comments on the China market. There's been a lot of commentary recently on China and how their potential transition to a lower growth economic phase will impact companies who do business there. I've already made a few comments on our second half outlook in China for specific product lines, but I thought I'd give you a longer-term perspective on our business position. China represents about 8% of our overall global sales. We primarily participate in three markets in China, the foundry, paper and packaging, and pet litter. Changes in economic growth rates there will have an impact on our metal casting and PCC sales, but growth in these two product lines is driven more by the introduction and penetration of our new technologies and the substitution of existing products in the market.

For pet litter, the market is in the early stages of development, and given its current size compared to the more mature pet litter markets in the US and Europe, we see a long growth path ahead of us. China is still a relatively small region for us, but given our current market positions, we see being able to continue to grow sales at our historic rates despite potentially slower economic growth conditions there moving forward. To sum up our market outlook, I have a positive outlook for the second half of the year, and I'm pleased with the momentum we have going into it. We are making a great deal of progress leveraging our core technologies and expertise to enhance our positions in key areas. We see continued margin and cashflow growth in the second half, and feel we're well positioned to deliver on the targets we recently laid out for you.

Now, I'll hand it over to Erik to provide more financial details. Erik.

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Erik Aldag: Thanks, Doug, and good morning, everyone. I'll review our second quarter results, and I'll also provide our outlook for the third quarter. Following my remarks, I'll turn the call back over to Doug to cover some highlights from our latest sustainability report. Now, let's review our financial results. Before I get into the details, let me summarize by saying we had a solid quarter, and our earnings performance was a reflection of our team's ability to execute, despite near-term variations in a few end markets. We remain positive on our end market outlook, and we're solidly on track for our target margin expansion. Now, let's begin with the sequential quarter bridges on the left hand side. Sales were $552 million in the quarter, up 1% from the first quarter, primarily driven by higher pricing.

Volumes were relatively flat sequentially as destocking activity in a few of our end markets offset growth in other areas. Operating income increased 12% sequentially to $71 million, and operating margin improved 120 basis points. Our negotiated and contractual price increases are taking effect as planned, which, along with stabilizing input costs, are helping us recapture margin from the inflationary cost increases we absorbed last year. Operating margins improved in both segments sequentially as expected. Turning to the year-over-year bridges on the right side, sales were 1% lower than last year. Foreign exchange had an $8 million unfavorable impact on sales. And on a constant currency basis, sales were slightly higher than last year. As Doug mentioned, we continued to see growth in several of our end products and markets such as pet litter and bleaching earth, and demands remains strong in other key end markets such as steel and foundry in North America.

However, volumes were impacted by weaker conditions in our project-based businesses within Environmental & Infrastructure, as well as inventory destocking in the paper market and in some of our consumer end markets, such as personal care and food additives. Second quarter operating income was 4% lower than prior year, primarily driven by the impact of lower volumes in the markets I mentioned. In total, we delivered $43 million of price increases compared with $29 million of cost increases. It's worth noting that this was the largest favorable net impact from price versus cost we've delivered in any quarter since the beginning of this inflationary cycle. Now, before we get into the results for each of our segments, I'll review our second quarter EPS and the special items in the quarter.

Reported earnings per share of $0.82 in the second quarter included special items of $0.49, including $0.16 of severance-related costs associated with our cost savings program, and $0.33 of litigation costs. As Doug mentioned, we initiated a cost savings program in the second quarter. Following our reorganization and re-segmentation earlier this year, we identified opportunities to further streamline the company's cost structure. We recorded $6.6 million of severance costs in the second quarter associated with this program, and we expect to deliver $10 million of annualized savings starting late in the third quarter and ramping up to full run rate by the first half of 2024. This cost savings program solidifies our margin improvement trajectory and gives us further confidence that we will remain on track to deliver our target margins.

The litigation costs we incurred were incurred to defend against claims associated with certain Talc products from the Barretts Minerals Inc. subsidiary, and to restore our reserve back to the level that is appropriate for the existing claims. Excluding these special items, earnings per share was $1.31 in the second quarter. Now I'll review the performance of our two segments, beginning with Consumer & Specialties. Second quarter sales in the Consumer & Specialties segment were $290 million, an increase of 3% compared with last year. Sales in the household and personal care product line were 6% above last year. Our pet litter business remained on its strong growth trend, with sales increasing 15% year-over-year. We also saw significant growth over last year in bleaching earth, up 13%, and in animal health, which grew 29%.

Partially offsetting this growth was the impact of inventory destocking we are seeing in personal care and food additives. While these markets are currently a small part of the portfolio from a sales perspective, we're highlighting the impacts because of the higher margins they carry and because the company's margins will benefit when the current destocking cycle ends. Specialty additive sales were flat compared to last year due to several offsetting market dynamics in this product line. Sales are benefiting from higher prices, the ramp-up of new PCC satellites, and continued solid demands from automotive and pharmaceutical end markets. Residential construction has been more of a mixed picture, with resilient demand for our products going into home improvement, mostly offsetting softness in the products with more exposure to new housing starts.

Meanwhile, we experienced customer inventory destocking in the North American paper market, as well as ongoing general market softness in Europe. Segment operating income improved 1% over the prior year and was 5% higher sequentially. This segment continued to make progress in recovering the inflationary cost incurred throughout the prior year, and operating margin improved to 90 basis points sequentially as a result. Looking ahead to the third quarter, we expect to see similar market conditions overall in the household and personal care product line, with pet litter and bleaching earth remaining strong. And we don't expect a significant pickup in personal care order patterns until the fourth quarter. In specialty additives, we expect North America paper production to increase in the third quarter to be more in balance with paper consumption.

Demand conditions across other geographies and end markets should be similar sequentially. Altogether for the segment, we expect to see continued improvement in operating income and margin in the third quarter, driven by modest demand improvement, additional price increases, and stabilizing costs. Operating income should be approximately 5% higher sequentially on continued margin improvement. I'll note that the Consumer & Specialties segment is the biggest driver of the company's overall margin improvement toward our target level, and it's on track to deliver that improvement. Now, let's review the Engineered Solutions segment. Second quarter sales in the Engineered Solutions segment were 5% lower than last year, but 5% higher sequentially.

In our High Temperature Technologies product line, sales were 2% below last year and 2% higher than the first quarter. Demand for foundry and refractory products in North America remains strong, and overall sales were similar to prior year levels. Market conditions in Europe have remained soft through the first half. However, we are seeing sequential improvement in Asia, and foundry volumes in China are now above the levels we experienced last year. In our Environmental & Infrastructure product line, growth continued for wastewater and remediation applications, as well as for our drilling products. However, we experienced lower activity levels in commercial construction and for environmental lining systems. Overall, sales were 10% lower than the prior year, but improved 12% sequentially as the business entered its peak seasonal period.

Operating income for the segment was 8% below the prior year, as resilient sales and solid execution in High Temperature Technologies was offset by slower project activity in the Environmental & Infrastructure product line. Operating income grew 9% from the first quarter, and operating margin improved 50 basis points to 14.7% of sales. In the third quarter, we expect demands for High Temperature Technologies will remain strong in North America, and continued modest improvement in China, with Europe remaining slower. In Environmental & Infrastructure, we expect commercial construction and large scale environmental project activity to remain similar to what we experienced in the second quarter. In total, we expect segment operating income to be similar sequentially.

Now let's move to our balance sheet and cashflow highlights. Cash from operations in the first half was $79 million, more than double the prior year. Our working capital at the end of the quarter was $20 million higher than the same period last year. While the inflationary impact on our working capital has moderated significantly, it is still having an impact on cashflow, and our businesses are still working through higher cost inventory. We expect working capital levels to normalize further in the second half, and we expect significantly higher operating cashflow as a result. Capital expenditures have totaled $46 million so far this year, bringing free cashflow to $33 million. Our CapEx this year includes the construction of new PCC satellites, as well as the completion of several new Scantrol automated refractory maintenance systems.

For the full year, we expect capital spending to be approximately $90 million and free cashflow to be in the range of $100 million to $125 million. Our balance sheet remains very strong. Total liquidity at the end of the second quarter was $437 million, and net leverage was 2.4 times EBITDA. So far this year, we've used free cashflow to pay down $20 million of debt. I'll note here that approximately 50% of our debt has a fixed interest rate, which we achieved through our fixed rate notes and by fixing a portion of our variable rate debt with a hedge instrument, and we've had that 50% fixed variable ratio for the last several years. In the second quarter, our average interest rate was approximately 6%, which was 160 basis points higher than the same period last year, and this translated to more than $4 million of higher interest expense in the quarter or approximately $0.10 of EPS.

Year-to-date, that figure is $8.5 million, or approximately $0.20 of EPS. Our near-term priority for capital deployment continues to be debt repayments to move toward our target net leverage of two times EBITDA, as well as mitigate the higher cost of interest. Our fixed floating debt ratio also positions the company well should the interest environment change. Now I'll summarize our outlook for the third quarter. Overall, for MTI, we expect another solid performance in the third quarter. We are forecasting market conditions to remain relatively stable from the second quarter. Demand for pet litter, bleaching earth, and animal health products should remain strong, and we should see modest sequential improvement in North American paper volumes.

We expect residential construction and automotive will be similar sequentially and that other consumer end markets will remain mixed, with personal care destocking likely to continue until later in the year. We expect North American steel and foundry markets to remain stable, and we are assuming modest sequential improvement in China foundry volumes. However, commercial construction activity and environmental lining systems will likely remain slower. We have incremental pricing actions taking effect in the third quarter, which will help to keep us on track for continued margin improvement. Our cost savings program will support continued margin improvement later in the year, as will the expected rebound of orders for our personal care and food additive products.

Overall, for MTI, we expect operating income for the third quarter to be in the range of $70 million to $73 million, or approximately 4% to 9% above last year, and earnings per share between $1.30 and $1.35. The company is on track for continued margin improvement and higher levels of cashflow, and we are taking action to ensure we stay on track. With that, I'll pass it back to Doug for a quick preview of our latest sustainability report. Doug?

Doug Dietrich: Thanks, Erik. Before we conclude, I just want to make a brief mention of the publication of our latest sustainability report. This is the 15th year we've published the report, demonstrating that sustainability is not new at MTI. For us, it's always been part of how we do business. Sustainability has been a central tenant of our values and an essential part of our business strategy, innovation pipeline, and employee engagement. Leading with our values, our entire organization is passionate about reducing our environmental impact, protecting natural resources, ensuring the safety of our employees, creating an open, welcoming and transparent work environment, being accountable, being humble, and always winning with integrity.

A couple of highlights from this year's report. You'll see that we've already exceeded our 2025 environmental targets in four of six categories. We've made progress on moving to sustainable energy sources. Our largest processing site recently converted to 100% renewable diesel for their heavy equipment fleet, and we've significantly increased the amount of power we're sourcing from renewable sources. Our core technologies are being leveraged to provide sustainable products to the market, and the report outlines how we see further development of more sustainable solutions as a significant growth driver for us. There are several other highlights shared in the report, along with extensive data on our progress. I want to thank everyone at MTI for their hard work and dedication to these efforts, and particularly those who participate in our sustainability lead team.

I encourage you to take a read through the report, which is available on our website. Okay, let's open it up for some questions.

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