MTRN Materion Corporation

Materion Corporation (NYSE: MTRN) today reported record second quarter 2024 financial results and updated 2024 earnings guidance.

Financial Summary

• Net sales were $425.9 million; value-added sales1 were a second quarter record of $279.8 million, an increase of 4% year over year
• Net income was $19.0 million, or $0.91 per share, diluted; adjusted earnings of $1.42 per share, an increase of 3% year over year and a second quarter record
• Operating profit of $32.1 million; record quarterly adjusted EBITDA2 of $57.8 million versus $55.5 million in the prior year
• Updated full year adjusted earnings per share range to $5.60–5.90, a 2% increase from prior year at the midpoint

Business Highlights

• Awarded a new $150 million, multi-year contract to supply critical materials for space propulsion systems
• Leading Aerospace and Defense customer to invest ~$10 million to expand capacity and capabilities at existing Materion site
• Announcing Precision Clad Strip application is PMI’s IQOS ILUMA, a smoke-free product gaining popularity in Europe and Japan
• Outperformed adjusted EBITDA margin target of 20% in the second quarter

“Our return to record profitability in the second quarter exemplifies the talent and commitment of our global team and the power of our diverse portfolio, as we delivered strong top- and bottom-line growth against a notably mixed market backdrop,” Jugal Vijayvargiya, Materion President and CEO said. “Our unwavering focus on operational excellence and delivering on our organic initiatives is driving margin expansion despite the end-market conditions.”

“We are also pleased to share several exciting new wins and customer initiatives that continue to seed our organic growth pipeline and strengthen our position as a critical partner for the development of advanced materials solutions aligned with compelling global megatrends,” Vijayvargiya added. “Our teams are doing a great job of working with customers to demonstrate the critical and unique role that Materion can play in accelerating their innovation and driving future growth.”

SECOND QUARTER 2024 RESULTS

Net sales for the quarter were $425.9 million, compared to $398.6 million in the prior year period. Value-added sales were $279.8 million for the quarter, up 4% from the prior year period primarily driven by strength in aerospace and defense, semiconductor and consumer electronics (precision clad strip).

Operating profit for the quarter was $32.1 million and net income was $19.0 million, or $0.91 per diluted share, compared to operating profit of $35.4 million and net income of $24.1 million, or $1.15 per share, in the prior year period.

Excluding special items3, EBITDA2 was $57.8 million in the quarter or 20.7% of value-added sales, compared to $55.5 million or 20.7% of value-added sales in the prior year period. This increase was driven by higher volume, improving operational performance and strong cost management.

Adjusted net income was $29.7 million excluding acquisition amortization, or $1.42 per diluted share, compared to $1.38 per share in the prior year period.

OUTLOOK

While we have continued to win new business and drive operational improvements throughout the company, the outlook for semiconductor, automotive and industrial end-market demand has softened since our last earnings report. Despite the softer end-market outlook, we remain confident in our ability to execute and deliver another year of record results. With that, we are lowering the top end of our guide, revising our range to $5.60 to $5.90 for the full year 2024 adjusted earnings per share, an increase of 2% from prior year at the midpoint.

ADJUSTED EARNINGS GUIDANCE

It is not possible for the Company to identify the amount or significance of future adjustments associated with potential insurance and litigation claims, legacy environmental costs, acquisition and integration costs, certain income tax items, or other non-routine costs that the Company adjusts in the presentation of adjusted earnings guidance. These items are dependent on future events that are not reasonably estimable at this time. Accordingly, the Company is unable to reconcile without unreasonable effort the forecasted range of adjusted earnings guidance for the full year to a comparable GAAP range. However, items excluded from the Company's adjusted earnings guidance include the historical adjustments noted in Attachments 4 through 8 to this press release.

CONFERENCE CALL

Materion Corporation will host an investor conference call with analysts at 9:00 a.m. Eastern Time, August 6, 2024. The conference call will be available via webcast through the Company’s website at www.materion.com. By phone, please dial (888) 506-0062. Calls outside the U.S. can dial (973) 528-0011; please reference participant access code of 876666. A replay of the call will be available until August 20, 2024 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 49165. The call will also be archived on the Company’s website.

FOOTNOTES

1 Value-added sales deducts the impact of pass-through metals from net sales 2 EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization 3 Details of the special items can be found in Attachments 4 through 8

ABOUT MATERION

Materion Corporation is a global leader in advanced materials solutions for high-performance industries including semiconductor, industrial, aerospace & defense, energy and automotive. With nearly 100 years of expertise in specialty engineered alloy systems, inorganic chemicals and powders, precious and non-precious metals, beryllium and beryllium composites, and precision filters and optical coatings, Materion partners with customers to enable breakthrough solutions that move the world forward. Headquartered in Mayfield Heights, Ohio, the company employs more than 3,500 talented people worldwide, serving customers in more than 60 countries.

FORWARD-LOOKING STATEMENTS

Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein: the global economy, including inflationary pressures, potential future recessionary conditions and the impact of tariffs and trade agreements; the impact of any U.S. Federal Government shutdowns or sequestrations; the condition of the markets which we serve, whether defined geographically or by segment; changes in product mix and the financial condition of customers; our success in developing and introducing new products and new product ramp-up rates; our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values; our success in identifying acquisition candidates and in acquiring and integrating such businesses; the impact of the results of acquisitions on our ability to fully achieve the strategic and financial objectives related to these acquisitions; our success in implementing our strategic plans and the timely and successful start-up and completion of any capital projects; other financial and economic factors, including the cost and availability of raw materials (both base and precious metals), physical inventory valuations, metal consignment fees, tax rates, exchange rates, interest rates, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, credit availability, and the impact of the Company’s stock price on the cost of incentive compensation plans; the uncertainties related to the impact of war, terrorist activities, and acts of God; changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; the conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; the disruptions in operations from, and other effects of, catastrophic and other extraordinary events including outbreaks from infectious diseases and the conflict between Russia and Ukraine and other hostilities; realization of expected financial benefits expected from the Inflation Reduction Act of 2022; and the risk factors set forth in Part 1, Item 1A of the Company's 2023 Annual Report on Form 10-K and in other reports that we file with the SEC.

Attachment 1

Materion Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(In thousands except per share amounts)

June 28, 2024

 

June 30, 2023

 

June 28, 2024

 

June 30, 2023

Net sales

$

425,866

 

 

$

398,551

 

 

$

811,153

 

 

$

841,076

 

Cost of sales

 

345,007

 

 

 

309,496

 

 

 

659,082

 

 

 

660,685

 

Gross margin

 

80,859

 

 

 

89,055

 

 

 

152,071

 

 

 

180,391

 

Selling, general, and administrative expense

 

33,601

 

 

 

38,911

 

 

 

69,445

 

 

 

79,247

 

Research and development expense

 

7,702

 

 

 

7,154

 

 

 

14,844

 

 

 

14,776

 

Restructuring expense

 

3,048

 

 

 

1,454

 

 

 

4,668

 

 

 

2,118

 

Other — net

 

4,446

 

 

 

6,192

 

 

 

8,803

 

 

 

11,966

 

Operating profit

 

32,062

 

 

 

35,344

 

 

 

54,311

 

 

 

72,284

 

Other non-operating income—net

 

(640

)

 

 

(726

)

 

 

(1,283

)

 

 

(1,456

)

Interest expense — net

 

8,802

 

 

 

7,641

 

 

 

17,081

 

 

 

15,142

 

Income before income taxes

 

23,900

 

 

 

28,429

 

 

 

38,513

 

 

 

58,598

 

Income tax expense

 

4,864

 

 

 

4,347

 

 

 

6,068

 

 

 

8,928

 

Net income

$

19,036

 

 

$

24,082

 

 

$

32,445

 

 

$

49,670

 

Basic earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

0.92

 

 

$

1.17

 

 

$

1.57

 

 

$

2.41

 

Diluted earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

0.91

 

 

$

1.15

 

 

$

1.55

 

 

$

2.38

 

Weighted-average number of shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

 

20,741

 

 

 

20,625

 

 

 

20,710

 

 

 

20,596

 

Diluted

 

20,914

 

 

 

20,896

 

 

 

20,937

 

 

 

20,892

 

Attachment 2

Materion Corporation and Subsidiaries

Consolidated Balance Sheets

 

 

(Unaudited)

 

 

(Thousands)

 

June 28, 2024

 

December 31, 2023

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

17,098

 

 

$

13,294

 

Accounts receivable, net

 

 

185,244

 

 

 

192,747

 

Inventories, net

 

 

462,963

 

 

 

441,597

 

Prepaid and other current assets

 

 

73,811

 

 

 

61,744

 

Total current assets

 

 

739,116

 

 

 

709,382

 

Deferred income taxes

 

 

4,782

 

 

 

4,908

 

Property, plant, and equipment

 

 

1,321,083

 

 

 

1,281,622

 

Less allowances for depreciation, depletion, and amortization

 

 

(793,008

)

 

 

(766,939

)

Property, plant, and equipment—net

 

 

528,075

 

 

 

514,683

 

Operating lease, right-of-use assets

 

 

60,217

 

 

 

57,645

 

Intangible assets, net

 

 

126,015

 

 

 

133,571

 

Other assets

 

 

25,922

 

 

 

21,664

 

Goodwill

 

 

319,752

 

 

 

320,873

 

Total Assets

 

$

1,803,879

 

 

$

1,762,726

 

Liabilities and Shareholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Short-term debt

 

$

38,765

 

 

$

38,597

 

Accounts payable

 

 

117,269

 

 

 

125,663

 

Salaries and wages

 

 

13,487

 

 

 

25,912

 

Other liabilities and accrued items

 

 

40,571

 

 

 

45,773

 

Income taxes

 

 

1,533

 

 

 

5,207

 

Unearned revenue

 

 

15,857

 

 

 

13,843

 

Total current liabilities

 

 

227,482

 

 

 

254,995

 

Other long-term liabilities

 

 

12,486

 

 

 

13,300

 

Operating lease liabilities

 

 

58,124

 

 

 

53,817

 

Finance lease liabilities

 

 

13,005

 

 

 

13,744

 

Retirement and post-employment benefits

 

 

25,226

 

 

 

26,334

 

Unearned income

 

 

89,418

 

 

 

103,983

 

Long-term income taxes

 

 

3,696

 

 

 

3,815

 

Deferred income taxes

 

 

21,367

 

 

 

20,109

 

Long-term debt

 

 

445,990

 

 

 

387,576

 

Shareholders’ equity

 

 

907,085

 

 

 

885,053

 

Total Liabilities and Shareholders’ Equity

 

$

1,803,879

 

 

$

1,762,726

 

Attachment 3

Materion Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Six Months Ended

(Thousands)

 

June 28, 2024

 

June 30, 2023

Cash flows from operating activities:

 

 

 

 

Net income

 

$

32,445

 

 

$

49,670

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation, depletion, and amortization

 

 

32,698

 

 

 

31,444

 

Amortization of deferred financing costs in interest expense

 

 

857

 

 

 

855

 

Stock-based compensation expense (non-cash)

 

 

5,334

 

 

 

5,042

 

Deferred income tax expense (benefit)

 

 

926

 

 

 

(166

)

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

 

5,274

 

 

 

26,886

 

Inventory

 

 

(24,312

)

 

 

(36,451

)

Prepaid and other current assets

 

 

(12,494

)

 

 

1,210

 

Accounts payable and accrued expenses

 

 

(20,863

)

 

 

(10,583

)

Unearned revenue

 

 

(10,340

)

 

 

(9,222

)

Interest and taxes payable

 

 

(3,906

)

 

 

(1,441

)

Unearned income due to customer prepayments

 

 

—

 

 

 

15,061

 

Other-net

 

 

858

 

 

 

(1,783

)

Net cash provided by operating activities

 

 

6,477

 

 

 

70,522

 

Cash flows from investing activities:

 

 

 

 

Payments for purchase of property, plant, and equipment

 

 

(38,412

)

 

 

(59,469

)

Payments for mine development

 

 

(10,375

)

 

 

(3,617

)

Proceeds from sale of property, plant, and equipment

 

 

527

 

 

 

409

 

Net cash used in investing activities

 

 

(48,260

)

 

 

(62,677

)

Cash flows from financing activities:

 

 

 

 

Proceeds from borrowings under credit facilities, net

 

 

73,649

 

 

 

15,151

 

Repayment of long-term debt

 

 

(15,172

)

 

 

(7,743

)

Principal payments under finance lease obligations

 

 

(382

)

 

 

(1,117

)

Cash dividends paid

 

 

(5,493

)

 

 

(5,254

)

Payments of withholding taxes for stock-based compensation awards

 

 

(6,402

)

 

 

(4,872

)

Net cash provided by/(used in) financing activities

 

 

46,200

 

 

 

(3,835

)

Effects of exchange rate changes

 

 

(613

)

 

 

(537

)

Net change in cash and cash equivalents

 

 

3,804

 

 

 

3,473

 

Cash and cash equivalents at beginning of period

 

 

13,294

 

 

 

13,101

 

Cash and cash equivalents at end of period

 

$

17,098

 

 

$

16,574

 

Attachment 4

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBITDA

(Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

June 30, 2023

 

June 28, 2024

 

June 30, 2023

Net Sales

 

 

 

 

 

 

 

Performance Materials

$

187.5

 

$

182.8

 

$

356.2

 

$

369.8

Electronic Materials

 

212.7

 

 

190.7

 

 

404.7

 

 

419.5

Precision Optics

 

25.7

 

 

25.1

 

 

50.3

 

 

51.7

Other

 

—

 

 

—

 

 

—

 

 

—

Total

$

425.9

 

$

398.6

 

$

811.2

 

$

841.0

 

 

 

 

 

 

 

 

Less: Pass-through Metal Cost

 

 

 

 

 

 

 

Performance Materials

$

14.4

 

$

17.2

 

$

27.5

 

$

36.2

Electronic Materials

 

131.6

 

 

113.1

 

 

245.9

 

 

238.0

Precision Optics

 

0.1

 

 

—

 

 

0.1

 

 

—

Other

 

—

 

 

—

 

 

—

 

 

—

Total

$

146.1

 

$

130.3

 

$

273.5

 

$

274.2

 

 

 

 

 

 

 

 

Value-added Sales (non-GAAP)

 

 

 

 

 

 

 

Performance Materials

$

173.1

 

$

165.6

 

$

328.7

 

$

333.6

Electronic Materials

 

81.1

 

 

77.6

 

 

158.8

 

 

181.5

Precision Optics

 

25.6

 

 

25.1

 

 

50.2

 

 

51.7

Other

 

—

 

 

—

 

 

—

 

 

—

Total

$

279.8

 

$

268.3

 

$

537.7

 

$

566.8

 

 

 

 

 

 

 

 

Gross Margin

 

 

 

 

 

 

 

Performance Materials(1)

$

48.7

 

$

54.5

 

$

88.8

 

$

108.7

Electronic Materials(1)

 

25.2

 

 

27.2

 

 

50.2

 

 

55.8

Precision Optics (1)

 

7.0

 

 

7.4

 

 

13.1

 

 

15.9

Other

 

—

 

 

—

 

 

—

 

 

—

Total

$

80.9

 

$

89.1

 

$

152.1

 

$

180.4

(1) See reconciliation of gross margin to adjusted gross margin in Attachment 8

Note: Quarterly information presented within this document and previously disclosed quarterly information may not equal the total computed for the year due to rounding.

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

June 30, 2023

 

June 28, 2024

 

June 30, 2023

Operating Profit

 

 

 

 

 

 

 

Performance Materials

$

31.9

 

 

$

36.5

 

 

$

54.5

 

 

$

72.0

 

Electronic Materials

 

8.9

 

 

 

9.1

 

 

 

18.7

 

 

 

18.8

 

Precision Optics

 

(1.4

)

 

 

(1.5

)

 

 

(4.7

)

 

 

(1.9

)

Other

 

(7.3

)

 

 

(8.7

)

 

 

(14.2

)

 

 

(16.6

)

Total

$

32.1

 

 

$

35.4

 

 

$

54.3

 

 

$

72.3

 

 

 

 

 

 

 

 

 

Non-Operating (Income)/Expense

 

 

 

 

 

 

 

Performance Materials

$

0.2

 

 

$

0.1

 

 

$

0.3

 

 

$

0.2

 

Electronic Materials

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Precision Optics

 

(0.2

)

 

 

(0.2

)

 

 

(0.3

)

 

 

(0.4

)

Other

 

(0.6

)

 

 

(0.6

)

 

 

(1.3

)

 

 

(1.3

)

Total

$

(0.6

)

 

$

(0.7

)

 

$

(1.3

)

 

$

(1.5

)

 

 

 

 

 

 

 

 

Depreciation, Depletion, and Amortization

 

 

 

 

 

 

 

Performance Materials

$

8.7

 

 

$

8.5

 

 

$

16.9

 

 

$

15.9

 

Electronic Materials

 

4.5

 

 

 

4.3

 

 

 

9.1

 

 

 

8.6

 

Precision Optics

 

2.8

 

 

 

3.0

 

 

 

5.7

 

 

 

5.9

 

Other

 

0.5

 

 

 

0.5

 

 

 

1.0

 

 

 

1.0

 

Total

$

16.5

 

 

$

16.3

 

 

$

32.7

 

 

$

31.4

 

 

 

 

 

 

 

 

 

Segment EBITDA

 

 

 

 

 

 

 

Performance Materials

$

40.4

 

 

$

44.9

 

 

$

71.1

 

 

$

87.7

 

Electronic Materials

 

13.4

 

 

 

13.4

 

 

 

27.8

 

 

 

27.4

 

Precision Optics

 

1.6

 

 

 

1.7

 

 

 

1.3

 

 

 

4.4

 

Other

 

(6.2

)

 

 

(7.6

)

 

 

(11.9

)

 

 

(14.3

)

Total

$

49.2

 

 

$

52.4

 

 

$

88.3

 

 

$

105.2

 

 

 

 

 

 

 

 

 

Special Items(2)

 

 

 

 

 

 

 

Performance Materials

$

2.7

 

 

$

1.0

 

 

$

7.7

 

 

$

1.0

 

Electronic Materials

 

3.7

 

 

 

1.2

 

 

 

3.8

 

 

 

1.6

 

Precision Optics

 

0.5

 

 

 

0.9

 

 

 

1.2

 

 

 

1.1

 

Other

 

1.7

 

 

 

—

 

 

 

2.0

 

 

 

—

 

Total

$

8.6

 

 

$

3.1

 

 

$

14.7

 

 

$

3.7

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Excluding Special Items

 

 

 

 

 

 

 

Performance Materials

$

43.1

 

 

$

45.9

 

 

$

78.8

 

 

$

88.7

 

Electronic Materials

 

17.1

 

 

 

14.6

 

 

 

31.6

 

 

 

29.0

 

Precision Optics

 

2.1

 

 

 

2.6

 

 

 

2.5

 

 

 

5.5

 

Other

 

(4.5

)

 

 

(7.6

)

 

 

(9.9

)

 

 

(14.3

)

Total

$

57.8

 

 

$

55.5

 

 

$

103.0

 

 

$

108.9

 

The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium is passed through to customers and, therefore, the trends and comparisons of net sales are affected by movements in the market price of these metals. Internally, management also reviews net sales on a value-added basis. Value-added sales is a non-GAAP financial measure that deducts the value of the pass-through metals sold from net sales. Value-added sales allows management to assess the impact of differences in net sales between periods or segments and analyze the resulting margins and profitability without the distortion of the movements in pass-through market metal prices. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. The Company sells other metals and materials that are not considered direct pass throughs, and these costs are not deducted from net sales to calculate value-added sales.

 

The Company’s pricing policy is to pass the cost of these metals on to customers in order to mitigate the impact of price volatility on the Company’s results from operations. Value-added information is being presented since changes in metal prices may not directly impact profitability. It is the Company’s intent to allow users of the financial statements to review sales with and without the impact of the pass-through metals.

 

(2) See additional details of special items in Attachment 5

Attachment 5

Materion Corporation and Subsidiaries

Reconciliation of Net Sales to Value-added Sales, Net Income to EBITDA and Adjusted EBITDA

(Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

 

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

Net sales

$

425.9

 

 

 

$

398.6

 

 

 

$

811.2

 

 

 

$

841.0

 

 

Pass-through metal cost

 

146.1

 

 

 

 

130.3

 

 

 

 

273.5

 

 

 

 

274.2

 

 

Value-added sales

$

279.8

 

 

 

$

268.3

 

 

 

$

537.7

 

 

 

$

566.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

19.0

 

6.8

%

 

$

24.1

 

9.0

%

 

$

32.4

 

6.0

%

 

$

49.7

 

8.8

%

Income tax expense

 

4.9

 

1.8

%

 

 

4.3

 

1.6

%

 

 

6.1

 

1.1

%

 

 

8.9

 

1.6

%

Interest expense - net

 

8.8

 

3.1

%

 

 

7.7

 

2.8

%

 

 

17.1

 

3.2

%

 

 

15.2

 

2.7

%

Depreciation, depletion and amortization

 

16.5

 

5.9

%

 

 

16.3

 

6.1

%

 

 

32.7

 

6.1

%

 

 

31.4

 

5.5

%

Consolidated EBITDA

$

49.2

 

17.6

%

 

$

52.4

 

19.5

%

 

$

88.3

 

16.4

%

 

$

105.2

 

18.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and cost reduction(1)

$

6.7

 

2.4

%

 

$

3.1

 

1.2

%

 

$

9.1

 

1.7

%

 

$

3.7

 

0.7

%

Additional start up resources and scrap(2)

 

1.2

 

0.4

%

 

 

—

 

—

%

 

 

4.9

 

0.9

%

 

 

—

 

—

%

Merger, acquisition and divestiture related costs(3)

 

0.7

 

0.3

%

 

 

—

 

—

%

 

 

0.7

 

0.1

%

 

 

—

 

—

%

Total special items

 

8.6

 

3.1

%

 

 

3.1

 

1.2

%

 

 

14.7

 

2.7

%

 

 

3.7

 

0.7

%

Adjusted EBITDA

$

57.8

 

20.7

%

 

$

55.5

 

20.7

%

 

$

103.0

 

19.2

%

 

$

108.9

 

19.2

%

In addition to presenting financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains financial measures, including operating profit, segment operating profit, earnings before earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), net income, and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation and Attachment 6, we have adjusted the results for certain special items, including the following:

 

(1) Restructuring and cost reduction – Costs include restructuring charges, costs associated with temporarily idled facilities as a result of decreased demand and costs associated with strategic asset disposals.

 

(2) Additional start up resources and scrap – Represents incremental costs incurred related to the ramp of the precision clad strip facility.

 

(3) Merger, acquisition and divestiture related costs – Includes due diligence costs associated with potential merger, acquisition and divestitures.

 

Internally, management reviews the results of operations without the impact of these costs in order to assess the profitability from ongoing activities. We are providing this information because we believe it will assist investors in analyzing our financial results and, when viewed in conjunction with the GAAP results, provide a more comprehensive understanding of the factors and trends affecting our operations.

Attachment 6

Materion Corporation and Subsidiaries

Reconciliation of Net Income to Adjusted Net Income

and Diluted Earnings per Share to Adjusted Diluted Earnings per Share (Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

Diluted EPS

 

June 30, 2023

 

Diluted EPS

 

June 28, 2024

 

Diluted EPS

 

June 30, 2023

 

Diluted EPS

Net income and EPS

$

19.0

 

 

$

0.91

 

$

24.1

 

 

$

1.15

 

$

32.4

 

 

$

1.55

 

$

49.7

 

 

$

2.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and cost reduction

$

6.7

 

 

 

 

$

3.1

 

 

 

 

$

9.1

 

 

 

 

$

3.7

 

 

 

Additional start up resources and scrap

 

1.2

 

 

 

 

 

—

 

 

 

 

 

4.9

 

 

 

 

 

—

 

 

 

Merger, acquisition and divestiture related costs

 

0.7

 

 

 

 

 

—

 

 

 

 

 

0.7

 

 

 

 

 

—

 

 

 

Provision for income taxes(1)

 

(0.3

)

 

 

 

 

(0.8

)

 

 

 

 

(2.2

)

 

 

 

 

(1.5

)

 

 

Total special items

 

8.3

 

 

 

0.40

 

 

2.3

 

 

 

0.12

 

 

12.5

 

 

 

0.60

 

 

2.2

 

 

 

0.11

Adjusted net income and adjusted EPS

$

27.3

 

 

$

1.31

 

$

26.4

 

 

$

1.27

 

$

44.9

 

 

$

2.15

 

$

51.9

 

 

$

2.49

Acquisition amortization (net of tax)

 

2.4

 

 

 

0.11

 

 

2.5

 

 

 

0.11

 

 

4.9

 

 

 

0.23

 

 

4.9

 

 

 

0.23

Adjusted net income and adjusted EPS excl. amortization

$

29.7

 

 

$

1.42

 

$

28.9

 

 

$

1.38

 

$

49.8

 

 

$

2.38

 

$

56.8

 

 

$

2.72

(1) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of certain discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods.

Attachment 7

Reconciliation of Segment Net sales to Segment Value-added sales and Segment EBITDA to Adjusted Segment EBITDA (Unaudited)

 

Performance Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

 

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

Net sales

$

187.5

 

 

 

 

$

182.8

 

 

 

 

$

356.2

 

 

 

 

$

369.8

 

 

 

Pass-through metal cost

 

14.4

 

 

 

 

 

17.2

 

 

 

 

 

27.5

 

 

 

 

 

36.2

 

 

 

Value-added sales

$

173.1

 

 

 

 

$

165.6

 

 

 

 

$

328.7

 

 

 

 

$

333.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

40.4

 

 

23.3

%

 

$

44.9

 

 

27.1

%

 

$

71.1

 

 

21.6

%

 

$

87.7

 

 

26.3

%

Restructuring and cost reduction

 

1.5

 

 

0.9

%

 

 

1.0

 

 

0.6

%

 

 

2.8

 

 

0.9

%

 

 

1.0

 

 

0.3

%

Additional start up resources and scrap

 

1.2

 

 

0.7

%

 

 

—

 

 

—

%

 

 

4.9

 

 

1.5

%

 

 

—

 

 

—

%

Adjusted EBITDA

$

43.1

 

 

24.9

%

 

$

45.9

 

 

27.7

%

 

$

78.8

 

 

24.0

%

 

$

88.7

 

 

26.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

 

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

Net sales

$

212.7

 

 

 

 

$

190.7

 

 

 

 

$

404.7

 

 

 

 

$

419.5

 

 

 

Pass-through metal cost

 

131.6

 

 

 

 

 

113.1

 

 

 

 

 

245.9

 

 

 

 

 

238.0

 

 

 

Value-added sales

$

81.1

 

 

 

 

$

77.6

 

 

 

 

$

158.8

 

 

 

 

$

181.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

13.4

 

 

16.5

%

 

$

13.4

 

 

17.3

%

 

$

27.8

 

 

17.5

%

 

$

27.4

 

 

15.1

%

Restructuring and cost reduction

 

3.7

 

 

4.6

%

 

 

1.2

 

 

1.5

%

 

 

3.8

 

 

2.4

%

 

 

1.6

 

 

0.9

%

Adjusted EBITDA

$

17.1

 

 

21.1

%

 

$

14.6

 

 

18.8

%

 

$

31.6

 

 

19.9

%

 

$

29.0

 

 

16.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Precision Optics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

 

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

Net sales

$

25.7

 

 

 

 

$

25.1

 

 

 

 

$

50.3

 

 

 

 

$

51.7

 

 

 

Pass-through metal cost

 

0.1

 

 

 

 

 

—

 

 

 

 

 

0.1

 

 

 

 

 

—

 

 

 

Value-added sales

$

25.6

 

 

 

 

$

25.1

 

 

 

 

$

50.2

 

 

 

 

$

51.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

1.6

 

 

6.3

%

 

$

1.7

 

 

6.8

%

 

$

1.3

 

 

2.6

%

 

$

4.4

 

 

8.5

%

Restructuring and cost reduction

 

0.5

 

 

2.0

%

 

 

0.9

 

 

3.6

%

 

 

1.2

 

 

2.4

%

 

 

1.1

 

 

2.1

%

Adjusted EBITDA

$

2.1

 

 

8.2

%

 

$

2.6

 

 

10.4

%

 

$

2.5

 

 

5.0

%

 

$

5.5

 

 

10.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

 

June 28, 2024

 

% of VA

 

June 30, 2023

 

% of VA

EBITDA

$

(6.2

)

 

 

 

$

(7.6

)

 

 

 

$

(11.9

)

 

 

 

$

(14.3

)

 

 

Restructuring and cost reduction

 

1.0

 

 

 

 

 

—

 

 

 

 

 

1.3

 

 

 

 

 

—

 

 

 

Merger, acquisition and divestiture related costs

 

0.7

 

 

 

 

 

—

 

 

 

 

 

0.7

 

 

 

 

 

—

 

 

 

Adjusted EBITDA

$

(4.5

)

 

 

 

$

(7.6

)

 

 

 

$

(9.9

)

 

 

 

$

(14.3

)

 

 

Attachment 8

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measure - Gross Margin to Adjusted Gross Margin

(Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

June 28, 2024

 

June 30, 2023

 

June 28, 2024

 

June 30, 2023

Gross Margin

 

 

 

 

 

 

 

Performance Materials

$

48.7

 

$

54.5

 

$

88.8

 

$

108.7

Electronic Materials

 

25.2

 

 

27.2

 

 

50.2

 

 

55.8

Precision Optics

 

7.0

 

 

7.4

 

 

13.1

 

 

15.9

Other

 

—

 

 

—

 

 

—

 

 

—

Total

$

80.9

 

$

89.1

 

$

152.1

 

$

180.4

 

 

 

 

 

 

 

 

Special Items (1)

 

 

 

 

 

 

 

Performance Materials

$

2.0

 

$

0.7

 

$

6.2

 

$

0.7

Electronic Materials

 

2.0

 

 

0.6

 

 

2.0

 

 

0.6

Precision Optics

 

0.1

 

 

0.3

 

 

0.2

 

 

0.3

Other

—

 

 

—

 

 

—

 

 

—

Total

$

4.1

 

$

1.6

 

$

8.4

 

$

1.6

 

 

 

 

 

 

 

 

Adjusted Gross Margin

 

 

 

 

 

 

 

Performance Materials

$

50.7

 

$

55.2

 

$

95.0

 

$

109.4

Electronic Materials

 

27.2

 

 

27.8

 

 

52.2

 

 

56.4

Precision Optics

 

7.1

 

 

7.7

 

 

13.3

 

 

16.2

Other

 

—

 

 

—

 

 

—

 

 

—

Total

$

85.0

 

$

90.7

 

$

160.5

 

$

182.0

(1) Special items impacting gross margin represent restructuring and cost reduction and additional start up resources and scrap in 2024 and restructuring and cost reduction in 2023.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240805038851/en/

Investor Contact: Kyle Kelleher (216) 383-4931 kyle.kelleher@materion.com

Media Contact: Jason Saragian (216) 383-6893 jason.saragian@materion.com https://materion.com Mayfield Hts-g