Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Materion Corporation Reports First Quarter 2024 Financial Results By: Materion Corporation via Business Wire May 01, 2024 at 18:23 PM EDT Materion Corporation (NYSE: MTRN) today reported first quarter 2024 financial results and provided an update to 2024 earnings guidance. Financial Summary Net sales were $385.3 million; value-added sales1 were $257.8 million Net income was $13.4 million, or $0.64 per share, diluted, and adjusted earnings of $0.96 per share Full year adjusted earnings outlook updated to $5.60-$6.20 per share, a 5% increase year over year at the midpoint FIRST QUARTER 2024 RESULTS Net sales for the quarter were $385.3 million, compared to $442.5 million in the prior year period. Value-added sales were $257.8 million for the quarter, down 14% from the prior year primarily due to continued semiconductor and industrial market weakness combined with some temporary operational challenges. This year-over-year decline was partially offset by strength in the space & defense markets. Operating profit for the quarter was $22.2 million and net income was $13.4 million, or $0.64 per diluted share, compared to operating profit of $36.9 million and net income of $25.6 million, or $1.23 per share, in the prior year period. Excluding special items2, adjusted EBITDA3 was $45.2 million in the quarter or 17.5% of value-added sales, compared to $53.4 million or 17.9% of value-added sales in the prior year period. This decline was driven by lower volume, partially offset by the benefit of cost improvement initiatives, resulting in comparable margins year on year. Adjusted net income was $20.1 million excluding acquisition amortization, or $0.96 per diluted share, compared to $1.34 per share in the prior year period. “Temporary operational challenges and softer market demand led to results falling short of our expectations for the first time in several quarters,” Materion President & CEO Jugal Vijayvargiya said. “I am proud of our team for mobilizing quickly to mitigate the impact to the quarter and deliver strong margins comparable to last year. The actions taken are also driving structural improvements that will deliver even more value as key markets recover.” “As we manage through the current environment to drive another year of record results, we remain sharply focused on executing our strategy, delivering on our organic outgrowth initiatives and investing in new capacity and capabilities that will drive long term value for our stakeholders.” OUTLOOK Despite a weaker than anticipated first quarter, we expect to deliver another year of record results as we execute our organic and operational excellence initiatives. Since the beginning of the year, the outlook for the commercial aerospace and electric vehicle end-markets has softened and we expect some inventory correction from our precision clad strip customer in the second half. In addition, we expect higher interest expense with the current rate projections. While we expect to mitigate much of the impact of these items through targeted cost reduction initiatives and performance, we are adjusting our outlook to $5.60 to $6.20 for the full year 2024 adjusted earnings per share, an increase of 5% 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, May 2, 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 799148. A replay of the call will be available until May 16, 2024 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 49163. 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 Details of the special items can be found in Attachments 4 through 8 3 EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization 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) First Quarter Ended (Thousands, except per share amounts) March 29, 2024 March 31, 2023 Net sales $ 385,287 $ 442,526 Cost of sales 314,075 351,190 Gross margin 71,212 91,336 Selling, general, and administrative expense 35,844 40,336 Research and development expense 7,142 7,621 Restructuring expense (income) 1,620 664 Other — net 4,357 5,775 Operating profit 22,249 36,940 Other non-operating income—net (643 ) (730 ) Interest expense — net 8,279 7,502 Income before income taxes 14,613 30,168 Income tax expense 1,204 4,580 Net income $ 13,409 $ 25,588 Basic earnings per share: Net income per share of common stock $ 0.65 $ 1.24 Diluted earnings per share: Net income per share of common stock $ 0.64 $ 1.23 Weighted-average number of shares of common stock outstanding: Basic 20,679 20,566 Diluted 20,973 20,887 Attachment 2 Materion Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (Thousands) March 29, 2024 December 31, 2023 Assets Current assets Cash and cash equivalents $ 13,104 $ 13,294 Accounts receivable, net 188,282 192,747 Inventories, net 466,574 441,597 Prepaid and other current assets 71,748 61,744 Total current assets 739,708 709,382 Deferred income taxes 4,751 4,908 Property, plant, and equipment 1,304,336 1,281,622 Less allowances for depreciation, depletion, and amortization (779,893 ) (766,939 ) Property, plant, and equipment, net 524,443 514,683 Operating lease, right-of-use assets 62,055 57,645 Intangible assets, net 129,053 133,571 Other assets 25,231 21,664 Goodwill 319,943 320,873 Total Assets $ 1,805,184 $ 1,762,726 Liabilities and Shareholders’ Equity Current liabilities Short-term debt $ 46,569 $ 38,597 Accounts payable 134,542 125,663 Salaries and wages 16,030 25,912 Other liabilities and accrued items 40,602 45,773 Income taxes 2,079 5,207 Unearned revenue 14,793 13,843 Total current liabilities 254,615 254,995 Other long-term liabilities 13,304 13,300 Operating lease liabilities 59,887 53,817 Finance lease liabilities 13,242 13,744 Retirement and post-employment benefits 25,431 26,334 Unearned income 95,978 103,983 Long-term income taxes 3,686 3,815 Deferred income taxes 20,408 20,109 Long-term debt 428,710 387,576 Shareholders’ equity 889,923 885,053 Total Liabilities and Shareholders’ Equity $ 1,805,184 $ 1,762,726 Attachment 3 Materion Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Three Months Ended (Thousands) March 29, 2024 March 31, 2023 Cash flows from operating activities: Net income $ 13,409 $ 25,588 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization 16,185 15,092 Amortization of deferred financing costs in interest expense 429 424 Stock-based compensation expense (non-cash) 2,495 2,250 Deferred income tax (benefit) expense (253 ) (52 ) Changes in assets and liabilities: Accounts receivable 2,729 7,538 Inventory (26,539 ) (12,081 ) Prepaid and other current assets (10,274 ) (2,865 ) Accounts payable and accrued expenses (5,194 ) (1,904 ) Unearned revenue (5,860 ) 254 Interest and taxes payable (3,294 ) 657 Unearned income due to customer prepayments — 7,724 Other-net 2,362 (4,520 ) Net cash (used in) provided by operating activities (13,805 ) 38,105 Cash flows from investing activities: Payments for purchase of property, plant, and equipment (21,314 ) (30,014 ) Payments for mine development (5,333 ) — Proceeds from sale of property, plant, and equipment 348 212 Net cash used in investing activities (26,299 ) (29,802 ) Cash flows from financing activities: Proceeds from borrowings under credit facilities, net 56,779 4,600 Repayment of debt (7,586 ) (3,907 ) Principal payments under finance lease obligations (191 ) (799 ) Cash dividends paid (2,692 ) (2,571 ) Payments of withholding taxes for stock-based compensation awards (6,013 ) (3,614 ) Net cash provided by financing activities 40,297 (6,291 ) Effects of exchange rate changes (383 ) 130 Net change in cash and cash equivalents (190 ) 2,142 Cash and cash equivalents at beginning of period 13,294 13,101 Cash and cash equivalents at end of period $ 13,104 $ 15,243 Attachment 4 Materion Corporation and Subsidiaries Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBITDA (Unaudited) First Quarter Ended (Millions) March 29, 2024 March 31, 2023 Net Sales Performance Materials $ 168.6 $ 187.0 Electronic Materials 192.0 228.8 Precision Optics 24.7 26.7 Other — — Total $ 385.3 $ 442.5 Less: Pass-through Metal Cost Performance Materials $ 13.0 $ 19.0 Electronic Materials 114.4 124.9 Precision Optics 0.1 — Other — — Total $ 127.5 $ 143.9 Value-added Sales (non-GAAP) Performance Materials $ 155.6 $ 168.0 Electronic Materials 77.6 103.9 Precision Optics 24.6 26.7 Other — — Total $ 257.8 $ 298.6 Gross Margin Performance Materials(1) $ 40.1 $ 54.2 Electronic Materials(1) 25.0 28.6 Precision Optics(1) 6.1 8.5 Other — — Total (1) $ 71.2 $ 91.3 (1) See reconciliation of gross margin to adjusted gross margin in Attachment 8 First Quarter Ended (Millions) March 29, 2024 March 31, 2023 Operating Profit Performance Materials $ 22.6 $ 35.5 Electronic Materials 9.8 9.7 Precision Optics (3.3 ) (0.4 ) Other (6.9 ) (7.9 ) Total $ 22.2 $ 36.9 Non-Operating (Income) Expense Performance Materials $ 0.1 $ 0.1 Electronic Materials — — Precision Optics (0.1 ) (0.2 ) Other (0.7 ) (0.7 ) Total $ (0.7 ) $ (0.8 ) Depreciation, Depletion, and Amortization Performance Materials $ 8.2 $ 7.4 Electronic Materials 4.6 4.3 Precision Optics 2.9 2.9 Other 0.5 0.5 Total $ 16.2 $ 15.1 Segment EBITDA Performance Materials $ 30.7 $ 42.8 Electronic Materials 14.4 14.0 Precision Optics (0.3 ) 2.7 Other (5.7 ) (6.7 ) Total $ 39.1 $ 52.8 Special Items(2) Performance Materials $ 5.0 $ — Electronic Materials 0.1 0.4 Precision Optics 0.7 0.2 Other 0.3 — Total $ 6.1 $ 0.6 Adjusted EBITDA Excluding Special Items Performance Materials $ 35.7 $ 42.8 Electronic Materials 14.5 14.4 Precision Optics 0.4 2.9 Other (5.4 ) (6.7 ) Total $ 45.2 $ 53.4 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) Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 385.3 $ 442.5 Pass-through metal cost 127.5 143.9 Value-added sales $ 257.8 $ 298.6 Net income $ 13.4 5.2 % $ 25.6 8.6 % Income tax expense 1.2 0.5 % 4.6 1.5 % Interest expense - net 8.3 3.2 % 7.5 2.5 % Depreciation, depletion and amortization 16.2 6.3 % 15.1 5.1 % Consolidated EBITDA $ 39.1 15.2 % $ 52.8 17.7 % Special items Restructuring and cost reduction $ 2.4 0.9 % $ 0.6 0.2 % Additional start up resources and scrap 3.7 1.4 % — — % Total special items 6.1 2.4 % 0.6 0.2 % Adjusted EBITDA $ 45.2 17.5 % $ 53.4 17.9 % 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 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 such as restructuring and cost reductions (which includes costs associated with temporarily idled facilities as a result of decreased demand) and additional start up resources and scrap. 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) Three Months Ended Diluted Three Months Ended Diluted (Millions) March 29, 2024 EPS March 31, 2023 EPS Net income and EPS $ 13.4 $ 0.64 $ 25.6 $ 1.23 Special items Restructuring and cost reduction 2.4 0.6 Additional start up resources and scrap 3.7 — Provision for income taxes(1) (1.9 ) (0.7 ) Total special items 4.2 0.20 (0.1 ) (0.01 ) Adjusted net income and adjusted EPS $ 17.6 $ 0.84 $ 25.5 $ 1.22 Acquisition amortization (net of tax) 2.5 0.12 2.5 0.12 Adjusted net income and adjusted EPS excl. amortization $ 20.1 $ 0.96 $ 28.0 $ 1.34 (1) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of 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 Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 168.6 $ 187.0 Pass-through metal cost 13.0 19.0 Value-added sales $ 155.6 $ 168.0 EBITDA $ 30.7 19.7 % $ 42.8 25.5 % Restructuring and cost reduction 1.3 0.8 % — — % Additional start up resources and scrap 3.7 2.4 % — — % Adjusted EBITDA $ 35.7 22.9 % $ 42.8 25.5 % Electronic Materials Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 192.0 $ 228.8 Pass-through metal cost 114.4 124.9 Value-added sales $ 77.6 $ 103.9 EBITDA $ 14.4 18.6 % $ 14.0 13.5 % Restructuring and cost reduction 0.1 0.1 % 0.4 0.4 % Adjusted EBITDA $ 14.5 18.7 % $ 14.4 13.9 % Precision Optics Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 24.7 $ 26.7 Pass-through metal cost 0.1 — Value-added sales $ 24.6 $ 26.7 EBITDA $ (0.3 ) (1.0 )% $ 2.7 10.1 % Restructuring and cost reduction 0.7 2.8 % 0.2 0.7 % Adjusted EBITDA $ 0.4 1.8 % $ 2.9 10.8 % Other Three Months Ended Three Months Ended (Millions) March 29, 2024 March 31, 2023 EBITDA $ (5.7 ) $ (6.7 ) Restructuring and cost reduction 0.3 — Adjusted EBITDA $ (5.4 ) $ (6.7 ) Attachment 8 Materion Corporation and Subsidiaries Reconciliation of Non-GAAP Measure - Gross Margin to Adjusted Gross Margin (Unaudited) Three Months Ended (Millions) March 29, 2024 March 31, 2023 Gross Margin Performance Materials $ 40.1 $ 54.2 Electronic Materials 25.0 28.6 Precision Optics 6.1 8.5 Other — — Total $ 71.2 $ 91.3 Special Items (1) Performance Materials $ 4.2 $ — Electronic Materials — — Precision Optics 0.1 — Other — — Total $ 4.3 $ — Adjusted Gross Margin Performance Materials $ 44.3 $ 54.2 Electronic Materials 25.0 28.6 Precision Optics 6.2 8.5 Other — — Total $ 75.5 $ 91.3 (1) Special items impacting gross margin represent restructuring and cost reduction and additional start up resources and scrap in 2024. View source version on businesswire.com: https://www.businesswire.com/news/home/20240501578376/en/Contacts Investor Contact: Kyle Kelleher (216) 383-4931 kyle.kelleher@materion.com Media Contact: Jason Saragian (216) 383-6893 jason.saragian@materion.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Materion Corporation Reports First Quarter 2024 Financial Results By: Materion Corporation via Business Wire May 01, 2024 at 18:23 PM EDT Materion Corporation (NYSE: MTRN) today reported first quarter 2024 financial results and provided an update to 2024 earnings guidance. Financial Summary Net sales were $385.3 million; value-added sales1 were $257.8 million Net income was $13.4 million, or $0.64 per share, diluted, and adjusted earnings of $0.96 per share Full year adjusted earnings outlook updated to $5.60-$6.20 per share, a 5% increase year over year at the midpoint FIRST QUARTER 2024 RESULTS Net sales for the quarter were $385.3 million, compared to $442.5 million in the prior year period. Value-added sales were $257.8 million for the quarter, down 14% from the prior year primarily due to continued semiconductor and industrial market weakness combined with some temporary operational challenges. This year-over-year decline was partially offset by strength in the space & defense markets. Operating profit for the quarter was $22.2 million and net income was $13.4 million, or $0.64 per diluted share, compared to operating profit of $36.9 million and net income of $25.6 million, or $1.23 per share, in the prior year period. Excluding special items2, adjusted EBITDA3 was $45.2 million in the quarter or 17.5% of value-added sales, compared to $53.4 million or 17.9% of value-added sales in the prior year period. This decline was driven by lower volume, partially offset by the benefit of cost improvement initiatives, resulting in comparable margins year on year. Adjusted net income was $20.1 million excluding acquisition amortization, or $0.96 per diluted share, compared to $1.34 per share in the prior year period. “Temporary operational challenges and softer market demand led to results falling short of our expectations for the first time in several quarters,” Materion President & CEO Jugal Vijayvargiya said. “I am proud of our team for mobilizing quickly to mitigate the impact to the quarter and deliver strong margins comparable to last year. The actions taken are also driving structural improvements that will deliver even more value as key markets recover.” “As we manage through the current environment to drive another year of record results, we remain sharply focused on executing our strategy, delivering on our organic outgrowth initiatives and investing in new capacity and capabilities that will drive long term value for our stakeholders.” OUTLOOK Despite a weaker than anticipated first quarter, we expect to deliver another year of record results as we execute our organic and operational excellence initiatives. Since the beginning of the year, the outlook for the commercial aerospace and electric vehicle end-markets has softened and we expect some inventory correction from our precision clad strip customer in the second half. In addition, we expect higher interest expense with the current rate projections. While we expect to mitigate much of the impact of these items through targeted cost reduction initiatives and performance, we are adjusting our outlook to $5.60 to $6.20 for the full year 2024 adjusted earnings per share, an increase of 5% 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, May 2, 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 799148. A replay of the call will be available until May 16, 2024 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 49163. 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 Details of the special items can be found in Attachments 4 through 8 3 EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization 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) First Quarter Ended (Thousands, except per share amounts) March 29, 2024 March 31, 2023 Net sales $ 385,287 $ 442,526 Cost of sales 314,075 351,190 Gross margin 71,212 91,336 Selling, general, and administrative expense 35,844 40,336 Research and development expense 7,142 7,621 Restructuring expense (income) 1,620 664 Other — net 4,357 5,775 Operating profit 22,249 36,940 Other non-operating income—net (643 ) (730 ) Interest expense — net 8,279 7,502 Income before income taxes 14,613 30,168 Income tax expense 1,204 4,580 Net income $ 13,409 $ 25,588 Basic earnings per share: Net income per share of common stock $ 0.65 $ 1.24 Diluted earnings per share: Net income per share of common stock $ 0.64 $ 1.23 Weighted-average number of shares of common stock outstanding: Basic 20,679 20,566 Diluted 20,973 20,887 Attachment 2 Materion Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (Thousands) March 29, 2024 December 31, 2023 Assets Current assets Cash and cash equivalents $ 13,104 $ 13,294 Accounts receivable, net 188,282 192,747 Inventories, net 466,574 441,597 Prepaid and other current assets 71,748 61,744 Total current assets 739,708 709,382 Deferred income taxes 4,751 4,908 Property, plant, and equipment 1,304,336 1,281,622 Less allowances for depreciation, depletion, and amortization (779,893 ) (766,939 ) Property, plant, and equipment, net 524,443 514,683 Operating lease, right-of-use assets 62,055 57,645 Intangible assets, net 129,053 133,571 Other assets 25,231 21,664 Goodwill 319,943 320,873 Total Assets $ 1,805,184 $ 1,762,726 Liabilities and Shareholders’ Equity Current liabilities Short-term debt $ 46,569 $ 38,597 Accounts payable 134,542 125,663 Salaries and wages 16,030 25,912 Other liabilities and accrued items 40,602 45,773 Income taxes 2,079 5,207 Unearned revenue 14,793 13,843 Total current liabilities 254,615 254,995 Other long-term liabilities 13,304 13,300 Operating lease liabilities 59,887 53,817 Finance lease liabilities 13,242 13,744 Retirement and post-employment benefits 25,431 26,334 Unearned income 95,978 103,983 Long-term income taxes 3,686 3,815 Deferred income taxes 20,408 20,109 Long-term debt 428,710 387,576 Shareholders’ equity 889,923 885,053 Total Liabilities and Shareholders’ Equity $ 1,805,184 $ 1,762,726 Attachment 3 Materion Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Three Months Ended (Thousands) March 29, 2024 March 31, 2023 Cash flows from operating activities: Net income $ 13,409 $ 25,588 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization 16,185 15,092 Amortization of deferred financing costs in interest expense 429 424 Stock-based compensation expense (non-cash) 2,495 2,250 Deferred income tax (benefit) expense (253 ) (52 ) Changes in assets and liabilities: Accounts receivable 2,729 7,538 Inventory (26,539 ) (12,081 ) Prepaid and other current assets (10,274 ) (2,865 ) Accounts payable and accrued expenses (5,194 ) (1,904 ) Unearned revenue (5,860 ) 254 Interest and taxes payable (3,294 ) 657 Unearned income due to customer prepayments — 7,724 Other-net 2,362 (4,520 ) Net cash (used in) provided by operating activities (13,805 ) 38,105 Cash flows from investing activities: Payments for purchase of property, plant, and equipment (21,314 ) (30,014 ) Payments for mine development (5,333 ) — Proceeds from sale of property, plant, and equipment 348 212 Net cash used in investing activities (26,299 ) (29,802 ) Cash flows from financing activities: Proceeds from borrowings under credit facilities, net 56,779 4,600 Repayment of debt (7,586 ) (3,907 ) Principal payments under finance lease obligations (191 ) (799 ) Cash dividends paid (2,692 ) (2,571 ) Payments of withholding taxes for stock-based compensation awards (6,013 ) (3,614 ) Net cash provided by financing activities 40,297 (6,291 ) Effects of exchange rate changes (383 ) 130 Net change in cash and cash equivalents (190 ) 2,142 Cash and cash equivalents at beginning of period 13,294 13,101 Cash and cash equivalents at end of period $ 13,104 $ 15,243 Attachment 4 Materion Corporation and Subsidiaries Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBITDA (Unaudited) First Quarter Ended (Millions) March 29, 2024 March 31, 2023 Net Sales Performance Materials $ 168.6 $ 187.0 Electronic Materials 192.0 228.8 Precision Optics 24.7 26.7 Other — — Total $ 385.3 $ 442.5 Less: Pass-through Metal Cost Performance Materials $ 13.0 $ 19.0 Electronic Materials 114.4 124.9 Precision Optics 0.1 — Other — — Total $ 127.5 $ 143.9 Value-added Sales (non-GAAP) Performance Materials $ 155.6 $ 168.0 Electronic Materials 77.6 103.9 Precision Optics 24.6 26.7 Other — — Total $ 257.8 $ 298.6 Gross Margin Performance Materials(1) $ 40.1 $ 54.2 Electronic Materials(1) 25.0 28.6 Precision Optics(1) 6.1 8.5 Other — — Total (1) $ 71.2 $ 91.3 (1) See reconciliation of gross margin to adjusted gross margin in Attachment 8 First Quarter Ended (Millions) March 29, 2024 March 31, 2023 Operating Profit Performance Materials $ 22.6 $ 35.5 Electronic Materials 9.8 9.7 Precision Optics (3.3 ) (0.4 ) Other (6.9 ) (7.9 ) Total $ 22.2 $ 36.9 Non-Operating (Income) Expense Performance Materials $ 0.1 $ 0.1 Electronic Materials — — Precision Optics (0.1 ) (0.2 ) Other (0.7 ) (0.7 ) Total $ (0.7 ) $ (0.8 ) Depreciation, Depletion, and Amortization Performance Materials $ 8.2 $ 7.4 Electronic Materials 4.6 4.3 Precision Optics 2.9 2.9 Other 0.5 0.5 Total $ 16.2 $ 15.1 Segment EBITDA Performance Materials $ 30.7 $ 42.8 Electronic Materials 14.4 14.0 Precision Optics (0.3 ) 2.7 Other (5.7 ) (6.7 ) Total $ 39.1 $ 52.8 Special Items(2) Performance Materials $ 5.0 $ — Electronic Materials 0.1 0.4 Precision Optics 0.7 0.2 Other 0.3 — Total $ 6.1 $ 0.6 Adjusted EBITDA Excluding Special Items Performance Materials $ 35.7 $ 42.8 Electronic Materials 14.5 14.4 Precision Optics 0.4 2.9 Other (5.4 ) (6.7 ) Total $ 45.2 $ 53.4 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) Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 385.3 $ 442.5 Pass-through metal cost 127.5 143.9 Value-added sales $ 257.8 $ 298.6 Net income $ 13.4 5.2 % $ 25.6 8.6 % Income tax expense 1.2 0.5 % 4.6 1.5 % Interest expense - net 8.3 3.2 % 7.5 2.5 % Depreciation, depletion and amortization 16.2 6.3 % 15.1 5.1 % Consolidated EBITDA $ 39.1 15.2 % $ 52.8 17.7 % Special items Restructuring and cost reduction $ 2.4 0.9 % $ 0.6 0.2 % Additional start up resources and scrap 3.7 1.4 % — — % Total special items 6.1 2.4 % 0.6 0.2 % Adjusted EBITDA $ 45.2 17.5 % $ 53.4 17.9 % 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 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 such as restructuring and cost reductions (which includes costs associated with temporarily idled facilities as a result of decreased demand) and additional start up resources and scrap. 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) Three Months Ended Diluted Three Months Ended Diluted (Millions) March 29, 2024 EPS March 31, 2023 EPS Net income and EPS $ 13.4 $ 0.64 $ 25.6 $ 1.23 Special items Restructuring and cost reduction 2.4 0.6 Additional start up resources and scrap 3.7 — Provision for income taxes(1) (1.9 ) (0.7 ) Total special items 4.2 0.20 (0.1 ) (0.01 ) Adjusted net income and adjusted EPS $ 17.6 $ 0.84 $ 25.5 $ 1.22 Acquisition amortization (net of tax) 2.5 0.12 2.5 0.12 Adjusted net income and adjusted EPS excl. amortization $ 20.1 $ 0.96 $ 28.0 $ 1.34 (1) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of 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 Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 168.6 $ 187.0 Pass-through metal cost 13.0 19.0 Value-added sales $ 155.6 $ 168.0 EBITDA $ 30.7 19.7 % $ 42.8 25.5 % Restructuring and cost reduction 1.3 0.8 % — — % Additional start up resources and scrap 3.7 2.4 % — — % Adjusted EBITDA $ 35.7 22.9 % $ 42.8 25.5 % Electronic Materials Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 192.0 $ 228.8 Pass-through metal cost 114.4 124.9 Value-added sales $ 77.6 $ 103.9 EBITDA $ 14.4 18.6 % $ 14.0 13.5 % Restructuring and cost reduction 0.1 0.1 % 0.4 0.4 % Adjusted EBITDA $ 14.5 18.7 % $ 14.4 13.9 % Precision Optics Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 24.7 $ 26.7 Pass-through metal cost 0.1 — Value-added sales $ 24.6 $ 26.7 EBITDA $ (0.3 ) (1.0 )% $ 2.7 10.1 % Restructuring and cost reduction 0.7 2.8 % 0.2 0.7 % Adjusted EBITDA $ 0.4 1.8 % $ 2.9 10.8 % Other Three Months Ended Three Months Ended (Millions) March 29, 2024 March 31, 2023 EBITDA $ (5.7 ) $ (6.7 ) Restructuring and cost reduction 0.3 — Adjusted EBITDA $ (5.4 ) $ (6.7 ) Attachment 8 Materion Corporation and Subsidiaries Reconciliation of Non-GAAP Measure - Gross Margin to Adjusted Gross Margin (Unaudited) Three Months Ended (Millions) March 29, 2024 March 31, 2023 Gross Margin Performance Materials $ 40.1 $ 54.2 Electronic Materials 25.0 28.6 Precision Optics 6.1 8.5 Other — — Total $ 71.2 $ 91.3 Special Items (1) Performance Materials $ 4.2 $ — Electronic Materials — — Precision Optics 0.1 — Other — — Total $ 4.3 $ — Adjusted Gross Margin Performance Materials $ 44.3 $ 54.2 Electronic Materials 25.0 28.6 Precision Optics 6.2 8.5 Other — — Total $ 75.5 $ 91.3 (1) Special items impacting gross margin represent restructuring and cost reduction and additional start up resources and scrap in 2024. View source version on businesswire.com: https://www.businesswire.com/news/home/20240501578376/en/Contacts Investor Contact: Kyle Kelleher (216) 383-4931 kyle.kelleher@materion.com Media Contact: Jason Saragian (216) 383-6893 jason.saragian@materion.com
Materion Corporation (NYSE: MTRN) today reported first quarter 2024 financial results and provided an update to 2024 earnings guidance. Financial Summary Net sales were $385.3 million; value-added sales1 were $257.8 million Net income was $13.4 million, or $0.64 per share, diluted, and adjusted earnings of $0.96 per share Full year adjusted earnings outlook updated to $5.60-$6.20 per share, a 5% increase year over year at the midpoint FIRST QUARTER 2024 RESULTS Net sales for the quarter were $385.3 million, compared to $442.5 million in the prior year period. Value-added sales were $257.8 million for the quarter, down 14% from the prior year primarily due to continued semiconductor and industrial market weakness combined with some temporary operational challenges. This year-over-year decline was partially offset by strength in the space & defense markets. Operating profit for the quarter was $22.2 million and net income was $13.4 million, or $0.64 per diluted share, compared to operating profit of $36.9 million and net income of $25.6 million, or $1.23 per share, in the prior year period. Excluding special items2, adjusted EBITDA3 was $45.2 million in the quarter or 17.5% of value-added sales, compared to $53.4 million or 17.9% of value-added sales in the prior year period. This decline was driven by lower volume, partially offset by the benefit of cost improvement initiatives, resulting in comparable margins year on year. Adjusted net income was $20.1 million excluding acquisition amortization, or $0.96 per diluted share, compared to $1.34 per share in the prior year period. “Temporary operational challenges and softer market demand led to results falling short of our expectations for the first time in several quarters,” Materion President & CEO Jugal Vijayvargiya said. “I am proud of our team for mobilizing quickly to mitigate the impact to the quarter and deliver strong margins comparable to last year. The actions taken are also driving structural improvements that will deliver even more value as key markets recover.” “As we manage through the current environment to drive another year of record results, we remain sharply focused on executing our strategy, delivering on our organic outgrowth initiatives and investing in new capacity and capabilities that will drive long term value for our stakeholders.” OUTLOOK Despite a weaker than anticipated first quarter, we expect to deliver another year of record results as we execute our organic and operational excellence initiatives. Since the beginning of the year, the outlook for the commercial aerospace and electric vehicle end-markets has softened and we expect some inventory correction from our precision clad strip customer in the second half. In addition, we expect higher interest expense with the current rate projections. While we expect to mitigate much of the impact of these items through targeted cost reduction initiatives and performance, we are adjusting our outlook to $5.60 to $6.20 for the full year 2024 adjusted earnings per share, an increase of 5% 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, May 2, 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 799148. A replay of the call will be available until May 16, 2024 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 49163. 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 Details of the special items can be found in Attachments 4 through 8 3 EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization 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) First Quarter Ended (Thousands, except per share amounts) March 29, 2024 March 31, 2023 Net sales $ 385,287 $ 442,526 Cost of sales 314,075 351,190 Gross margin 71,212 91,336 Selling, general, and administrative expense 35,844 40,336 Research and development expense 7,142 7,621 Restructuring expense (income) 1,620 664 Other — net 4,357 5,775 Operating profit 22,249 36,940 Other non-operating income—net (643 ) (730 ) Interest expense — net 8,279 7,502 Income before income taxes 14,613 30,168 Income tax expense 1,204 4,580 Net income $ 13,409 $ 25,588 Basic earnings per share: Net income per share of common stock $ 0.65 $ 1.24 Diluted earnings per share: Net income per share of common stock $ 0.64 $ 1.23 Weighted-average number of shares of common stock outstanding: Basic 20,679 20,566 Diluted 20,973 20,887 Attachment 2 Materion Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (Thousands) March 29, 2024 December 31, 2023 Assets Current assets Cash and cash equivalents $ 13,104 $ 13,294 Accounts receivable, net 188,282 192,747 Inventories, net 466,574 441,597 Prepaid and other current assets 71,748 61,744 Total current assets 739,708 709,382 Deferred income taxes 4,751 4,908 Property, plant, and equipment 1,304,336 1,281,622 Less allowances for depreciation, depletion, and amortization (779,893 ) (766,939 ) Property, plant, and equipment, net 524,443 514,683 Operating lease, right-of-use assets 62,055 57,645 Intangible assets, net 129,053 133,571 Other assets 25,231 21,664 Goodwill 319,943 320,873 Total Assets $ 1,805,184 $ 1,762,726 Liabilities and Shareholders’ Equity Current liabilities Short-term debt $ 46,569 $ 38,597 Accounts payable 134,542 125,663 Salaries and wages 16,030 25,912 Other liabilities and accrued items 40,602 45,773 Income taxes 2,079 5,207 Unearned revenue 14,793 13,843 Total current liabilities 254,615 254,995 Other long-term liabilities 13,304 13,300 Operating lease liabilities 59,887 53,817 Finance lease liabilities 13,242 13,744 Retirement and post-employment benefits 25,431 26,334 Unearned income 95,978 103,983 Long-term income taxes 3,686 3,815 Deferred income taxes 20,408 20,109 Long-term debt 428,710 387,576 Shareholders’ equity 889,923 885,053 Total Liabilities and Shareholders’ Equity $ 1,805,184 $ 1,762,726 Attachment 3 Materion Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Three Months Ended (Thousands) March 29, 2024 March 31, 2023 Cash flows from operating activities: Net income $ 13,409 $ 25,588 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization 16,185 15,092 Amortization of deferred financing costs in interest expense 429 424 Stock-based compensation expense (non-cash) 2,495 2,250 Deferred income tax (benefit) expense (253 ) (52 ) Changes in assets and liabilities: Accounts receivable 2,729 7,538 Inventory (26,539 ) (12,081 ) Prepaid and other current assets (10,274 ) (2,865 ) Accounts payable and accrued expenses (5,194 ) (1,904 ) Unearned revenue (5,860 ) 254 Interest and taxes payable (3,294 ) 657 Unearned income due to customer prepayments — 7,724 Other-net 2,362 (4,520 ) Net cash (used in) provided by operating activities (13,805 ) 38,105 Cash flows from investing activities: Payments for purchase of property, plant, and equipment (21,314 ) (30,014 ) Payments for mine development (5,333 ) — Proceeds from sale of property, plant, and equipment 348 212 Net cash used in investing activities (26,299 ) (29,802 ) Cash flows from financing activities: Proceeds from borrowings under credit facilities, net 56,779 4,600 Repayment of debt (7,586 ) (3,907 ) Principal payments under finance lease obligations (191 ) (799 ) Cash dividends paid (2,692 ) (2,571 ) Payments of withholding taxes for stock-based compensation awards (6,013 ) (3,614 ) Net cash provided by financing activities 40,297 (6,291 ) Effects of exchange rate changes (383 ) 130 Net change in cash and cash equivalents (190 ) 2,142 Cash and cash equivalents at beginning of period 13,294 13,101 Cash and cash equivalents at end of period $ 13,104 $ 15,243 Attachment 4 Materion Corporation and Subsidiaries Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBITDA (Unaudited) First Quarter Ended (Millions) March 29, 2024 March 31, 2023 Net Sales Performance Materials $ 168.6 $ 187.0 Electronic Materials 192.0 228.8 Precision Optics 24.7 26.7 Other — — Total $ 385.3 $ 442.5 Less: Pass-through Metal Cost Performance Materials $ 13.0 $ 19.0 Electronic Materials 114.4 124.9 Precision Optics 0.1 — Other — — Total $ 127.5 $ 143.9 Value-added Sales (non-GAAP) Performance Materials $ 155.6 $ 168.0 Electronic Materials 77.6 103.9 Precision Optics 24.6 26.7 Other — — Total $ 257.8 $ 298.6 Gross Margin Performance Materials(1) $ 40.1 $ 54.2 Electronic Materials(1) 25.0 28.6 Precision Optics(1) 6.1 8.5 Other — — Total (1) $ 71.2 $ 91.3 (1) See reconciliation of gross margin to adjusted gross margin in Attachment 8 First Quarter Ended (Millions) March 29, 2024 March 31, 2023 Operating Profit Performance Materials $ 22.6 $ 35.5 Electronic Materials 9.8 9.7 Precision Optics (3.3 ) (0.4 ) Other (6.9 ) (7.9 ) Total $ 22.2 $ 36.9 Non-Operating (Income) Expense Performance Materials $ 0.1 $ 0.1 Electronic Materials — — Precision Optics (0.1 ) (0.2 ) Other (0.7 ) (0.7 ) Total $ (0.7 ) $ (0.8 ) Depreciation, Depletion, and Amortization Performance Materials $ 8.2 $ 7.4 Electronic Materials 4.6 4.3 Precision Optics 2.9 2.9 Other 0.5 0.5 Total $ 16.2 $ 15.1 Segment EBITDA Performance Materials $ 30.7 $ 42.8 Electronic Materials 14.4 14.0 Precision Optics (0.3 ) 2.7 Other (5.7 ) (6.7 ) Total $ 39.1 $ 52.8 Special Items(2) Performance Materials $ 5.0 $ — Electronic Materials 0.1 0.4 Precision Optics 0.7 0.2 Other 0.3 — Total $ 6.1 $ 0.6 Adjusted EBITDA Excluding Special Items Performance Materials $ 35.7 $ 42.8 Electronic Materials 14.5 14.4 Precision Optics 0.4 2.9 Other (5.4 ) (6.7 ) Total $ 45.2 $ 53.4 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) Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 385.3 $ 442.5 Pass-through metal cost 127.5 143.9 Value-added sales $ 257.8 $ 298.6 Net income $ 13.4 5.2 % $ 25.6 8.6 % Income tax expense 1.2 0.5 % 4.6 1.5 % Interest expense - net 8.3 3.2 % 7.5 2.5 % Depreciation, depletion and amortization 16.2 6.3 % 15.1 5.1 % Consolidated EBITDA $ 39.1 15.2 % $ 52.8 17.7 % Special items Restructuring and cost reduction $ 2.4 0.9 % $ 0.6 0.2 % Additional start up resources and scrap 3.7 1.4 % — — % Total special items 6.1 2.4 % 0.6 0.2 % Adjusted EBITDA $ 45.2 17.5 % $ 53.4 17.9 % 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 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 such as restructuring and cost reductions (which includes costs associated with temporarily idled facilities as a result of decreased demand) and additional start up resources and scrap. 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) Three Months Ended Diluted Three Months Ended Diluted (Millions) March 29, 2024 EPS March 31, 2023 EPS Net income and EPS $ 13.4 $ 0.64 $ 25.6 $ 1.23 Special items Restructuring and cost reduction 2.4 0.6 Additional start up resources and scrap 3.7 — Provision for income taxes(1) (1.9 ) (0.7 ) Total special items 4.2 0.20 (0.1 ) (0.01 ) Adjusted net income and adjusted EPS $ 17.6 $ 0.84 $ 25.5 $ 1.22 Acquisition amortization (net of tax) 2.5 0.12 2.5 0.12 Adjusted net income and adjusted EPS excl. amortization $ 20.1 $ 0.96 $ 28.0 $ 1.34 (1) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of 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 Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 168.6 $ 187.0 Pass-through metal cost 13.0 19.0 Value-added sales $ 155.6 $ 168.0 EBITDA $ 30.7 19.7 % $ 42.8 25.5 % Restructuring and cost reduction 1.3 0.8 % — — % Additional start up resources and scrap 3.7 2.4 % — — % Adjusted EBITDA $ 35.7 22.9 % $ 42.8 25.5 % Electronic Materials Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 192.0 $ 228.8 Pass-through metal cost 114.4 124.9 Value-added sales $ 77.6 $ 103.9 EBITDA $ 14.4 18.6 % $ 14.0 13.5 % Restructuring and cost reduction 0.1 0.1 % 0.4 0.4 % Adjusted EBITDA $ 14.5 18.7 % $ 14.4 13.9 % Precision Optics Three Months Ended Three Months Ended (Millions) March 29, 2024 % of VA March 31, 2023 % of VA Net sales $ 24.7 $ 26.7 Pass-through metal cost 0.1 — Value-added sales $ 24.6 $ 26.7 EBITDA $ (0.3 ) (1.0 )% $ 2.7 10.1 % Restructuring and cost reduction 0.7 2.8 % 0.2 0.7 % Adjusted EBITDA $ 0.4 1.8 % $ 2.9 10.8 % Other Three Months Ended Three Months Ended (Millions) March 29, 2024 March 31, 2023 EBITDA $ (5.7 ) $ (6.7 ) Restructuring and cost reduction 0.3 — Adjusted EBITDA $ (5.4 ) $ (6.7 ) Attachment 8 Materion Corporation and Subsidiaries Reconciliation of Non-GAAP Measure - Gross Margin to Adjusted Gross Margin (Unaudited) Three Months Ended (Millions) March 29, 2024 March 31, 2023 Gross Margin Performance Materials $ 40.1 $ 54.2 Electronic Materials 25.0 28.6 Precision Optics 6.1 8.5 Other — — Total $ 71.2 $ 91.3 Special Items (1) Performance Materials $ 4.2 $ — Electronic Materials — — Precision Optics 0.1 — Other — — Total $ 4.3 $ — Adjusted Gross Margin Performance Materials $ 44.3 $ 54.2 Electronic Materials 25.0 28.6 Precision Optics 6.2 8.5 Other — — Total $ 75.5 $ 91.3 (1) Special items impacting gross margin represent restructuring and cost reduction and additional start up resources and scrap in 2024. 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Investor Contact: Kyle Kelleher (216) 383-4931 kyle.kelleher@materion.com Media Contact: Jason Saragian (216) 383-6893 jason.saragian@materion.com
