Materion Corporation Reports Second Quarter 2020 Financial Results

MAYFIELD HEIGHTS, Ohio–(BUSINESS WIRE)–Materion Corporation (NYSE: MTRN) today reported second quarter 2020 financial results and provided an update on key strategic initiatives.

  • Net sales were $271.5 million; value-added sales increased 2% sequentially to $161.6 million
  • Net income was $0.32 per share, diluted; adjusted earnings were $0.49 per share, up 14% vs. the first quarter
  • Closed Optics Balzers acquisition to create a global industry leader in optical thin film coating solutions
  • Significant new customer opportunity for precision clad engineered strip product on schedule

“I am very pleased with our team’s performance in the second quarter amid the COVID-19 pandemic, as we delivered sequential growth in both value-added sales and earnings,” stated Jugal Vijayvargiya, President and Chief Executive Officer. “The health and safety of our people remains our utmost priority. We are continuing to follow all recommended guidelines as all our facilities continue to operate in support of essential industries.”

Mr. Vijayvargiya continued, “Our key strategic initiatives remain on schedule. We completed the Optics Balzers acquisition just 6 weeks after signing, and I would like to welcome their talented team to the Materion family. The customer project on precision clad engineered strip product which we announced during our last earnings call continues to progress. To date, we have received $31 million of funding from the customer, and we remain on the schedule previously communicated.”

SECOND QUARTER 2020 RESULTS

Net sales for the second quarter of 2020 were $271.5 million, compared to $297.8 million in the prior year. Second quarter value-added sales of $161.6 million were up 2% from the first quarter of 2020, despite challenging market conditions, and down 17% versus the prior year. Consumer electronics, industrial, energy, aerospace, and automotive end markets were heavily impacted by the COVID-19 pandemic.

Operating profit for the second quarter was $8.7 million, and net income was $6.7 million, or $0.32 per diluted share, compared to a net loss of $3.1 million, or $0.15 per share, in the first quarter. Excluding special items for COVID-19 direct expenses ($2.7 million), restructuring ($2.4 million), merger and acquisition costs ($1.4 million), and a foreign currency hedge gain ($2.2 million) related to the acquisition of Optics Balzers, earnings before interest and tax expense were $13.9 million. Adjusted net income was $10.0 million, or $0.49 per diluted share, an increase of 14% compared to the first quarter.

OUTLOOK

We continue to experience significant levels of uncertainty regarding future demand in our end markets due to the COVID-19 pandemic. Based on current demand levels and assuming our factories remain operational, we expect adjusted earnings in the third quarter to be comparable to slightly better than the second quarter.

The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore we cannot predict the extent to which our business, results of operations, financial condition, or cash flows will ultimately be impacted. Therefore, we are not providing full-year earnings guidance. We anticipate resuming our practice of providing full-year earnings guidance once the degree of economic uncertainty driven by the COVID-19 pandemic subsides.

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 and 5 to this press release.

CONFERENCE CALL

Materion Corporation will host an investor conference call with analysts at 9:00 a.m. Eastern Time, July 23, 2020. The conference call will be available via webcast through the Company’s website at www.materion.com or through www.InvestorCalendar.com. By phone, please dial (877) 407-0778. Callers outside the U.S. can dial (201) 689-8565. A replay of the call will be available until August 6, 2020 by dialing (877) 481-4010 or (919) 882-2331; please reference replay ID number 57377. The call will also be archived on the Company’s website.

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, in particular, the outlook provided above. 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:

  • Our ability to achieve the strategic and other objectives related to the acquisition of Optics Balzers, including any expected synergies;
  • Our ability to successfully integrate the Optics Balzers business and achieve the expected results of the acquisition, including, without limitation, the acquisition being accretive in the expected timeframe or at all;
  • Actual net sales, operating rates, and margins for 2020;
  • The global economy, including the impact of tariffs and trade agreements;
  • The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition, and liquidity;
  • The impact of any U.S. Federal Government shutdowns and sequestrations;
  • The condition of the markets which we serve, whether defined geographically or by segment, with the major market segments being: semiconductor, industrial, aerospace and defense, automotive, energy, consumer electronics, and telecom and data center;
  • 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 other acquisition candidates and in acquiring and integrating such businesses;
  • The impact of the results of other 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 completion and start-up 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 financing 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 Materion’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;
  • Our ability to successfully complete the disposition of our LAC business;
  • The disruptions on operations from, and other effects of, catastrophic and other extraordinary events including the COVID-19 pandemic; and
  • The risk factors as set forth in Item 1A of our 2019 Annual Report on Form 10-K and in our Quarterly Report on Form 10-Q for the quarterly period ended March 27, 2020.

Materion Corporation is headquartered in Mayfield Heights, Ohio. The Company, through its wholly owned subsidiaries, supplies highly engineered advanced enabling materials to global markets. Products include precious and non-precious specialty metals, inorganic chemicals and powders, specialty coatings, specialty engineered beryllium alloys, beryllium and beryllium composites, and engineered clad and plated metal systems.

Attachment 1

Materion Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

Second Quarter Ended

 

Six Months Ended

(In thousands except per share amounts)

June 26, 2020

 

June 28, 2019

 

June 26, 2020

 

June 28, 2019

Net sales

$

271,468

 

 

$

297,843

 

 

$

549,414

 

 

$

599,284

 

Cost of sales

223,378

 

 

228,249

 

 

455,749

 

 

460,378

 

Gross margin

48,090

 

 

69,594

 

 

93,665

 

 

138,906

 

Selling, general, and administrative expense

32,852

 

 

39,891

 

 

63,596

 

 

79,955

 

Research and development expense

4,502

 

 

4,062

 

 

8,687

 

 

7,802

 

Goodwill impairment charges

 

 

 

 

9,053

 

 

 

Held for sale impairment charges

 

 

 

 

1,713

 

 

 

Restructuring expense

2,387

 

 

 

 

4,551

 

 

 

Other — net

(357)

 

 

2,891

 

 

1,922

 

 

7,012

 

Operating profit

8,706

 

 

22,750

 

 

4,143

 

 

44,137

 

Other non-operating (income) expense—net

(851)

 

 

3,112

 

 

(1,795)

 

 

3,357

 

Interest expense — net

1,259

 

 

500

 

 

1,505

 

 

966

 

Income before income taxes

8,298

 

 

19,138

 

 

4,433

 

 

39,814

 

Income tax expense

1,620

 

 

3,598

 

 

858

 

 

7,368

 

Net income

$

6,678

 

 

$

15,540

 

 

$

3,575

 

 

$

32,446

 

Basic earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

0.33

 

 

$

0.76

 

 

$

0.18

 

 

$

1.60

 

Diluted earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

0.32

 

 

$

0.75

 

 

$

0.17

 

 

$

1.57

 

Weighted-average number of shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

20,317

 

 

20,383

 

 

20,350

 

 

20,326

 

Diluted

20,554

 

 

20,666

 

 

20,587

 

 

20,635

 

Attachment 2

Materion Corporation and Subsidiaries

Consolidated Balance Sheets

 

 

(Unaudited)

 

 

(Thousands)

 

June 26, 2020

 

December 31, 2019

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

265,068

 

 

$

125,007

 

Accounts receivable, net

 

146,527

 

 

154,751

 

Inventories, net

 

209,847

 

 

190,390

 

Prepaid and other current assets

 

29,191

 

 

21,839

 

Assets held for sale

 

5,811

 

 

 

Total current assets

 

656,444

 

 

491,987

 

Deferred income taxes

 

1,669

 

 

1,666

 

Property, plant, and equipment

 

924,620

 

 

916,965

 

Less allowances for depreciation, depletion, and amortization

 

(685,355)

 

 

(684,689)

 

Property, plant, and equipment—net

 

239,265

 

 

232,276

 

Operating lease, right-of-use assets

 

48,942

 

 

23,413

 

Intangible assets

 

5,732

 

 

6,380

 

Other assets

 

19,169

 

 

17,937

 

Goodwill

 

70,001

 

 

79,011

 

Total Assets

 

$

1,041,222

 

 

$

852,670

 

Liabilities and Shareholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Short-term debt

 

$

151,731

 

 

$

868

 

Accounts payable

 

52,093

 

 

43,206

 

Salaries and wages

 

24,367

 

 

41,167

 

Other liabilities and accrued items

 

33,429

 

 

32,477

 

Income taxes

 

1,779

 

 

1,342

 

Unearned revenue

 

3,003

 

 

3,380

 

Liabilities held for sale

 

2,126

 

 

 

Total current liabilities

 

268,528

 

 

122,440

 

Other long-term liabilities

 

10,117

 

 

11,560

 

Operating lease liabilities

 

44,830

 

 

18,091

 

Finance lease liabilities

 

16,939

 

 

17,424

 

Retirement and post-employment benefits

 

32,389

 

 

32,466

 

Unearned income

 

57,799

 

 

32,891

 

Long-term income taxes

 

3,508

 

 

3,451

 

Deferred income taxes

 

2,172

 

 

2,410

 

Long-term debt

 

 

 

1,260

 

Shareholders’ equity

 

604,940

 

 

610,677

 

Total Liabilities and Shareholders’ Equity

 

$

1,041,222

 

 

$

852,670

 

Attachment 3

Materion Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Six Months Ended

(Thousands)

 

June 26, 2020

 

June 28, 2019

Cash flows from operating activities:

 

 

 

 

Net income

 

$

3,575

 

 

$

32,446

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation, depletion, and amortization

 

23,522

 

 

22,607

 

Amortization of deferred financing costs in interest expense

 

364

 

 

472

 

Stock-based compensation expense (non-cash)

 

3,966

 

 

3,541

 

Deferred income tax (benefit) expense

 

(234)

 

 

4,578

 

Net pension curtailments and settlements

 

94

 

 

3,296

 

Held for sale impairment charges

 

10,766

 

 

 

Changes in assets and liabilities:

 

 

 

 

Decrease (increase) in accounts receivable

 

5,331

 

 

(11,778)

 

Decrease (increase) in inventory

 

(20,585)

 

 

1,306

 

Decrease (increase) in prepaid and other current assets

 

(7,264)

 

 

(588)

 

Increase (decrease) in accounts payable and accrued expenses

 

(7,634)

 

 

(18,813)

 

Increase (decrease) in unearned revenue

 

(257)

 

 

(88)

 

Increase (decrease) in interest and taxes payable

 

1,058

 

 

(1,130)

 

Increase (decrease) in unearned income due to customer prepayments

 

26,713

 

 

 

Domestic pension plan contributions

 

 

 

(3,000)

 

Other-net

 

(2,982)

 

 

(2,803)

 

Net cash provided by operating activities

 

36,433

 

 

30,046

 

Cash flows from investing activities:

 

 

 

 

Payments for purchase of property, plant, and equipment

 

(32,034)

 

 

(13,833)

 

Payments for mine development

 

 

 

(1,591)

 

Proceeds from sale of property, plant, and equipment

 

33

 

 

15

 

Net cash used in investing activities

 

(32,001)

 

 

(15,409)

 

Cash flows from financing activities:

 

 

 

 

Short-term debt under revolving credit agreement

 

150,000

 

 

 

Repayment of long-term debt

 

(428)

 

 

(397)

 

Principal payments under finance lease obligations

 

(626)

 

 

(599)

 

Cash dividends paid

 

(4,582)

 

 

(4,368)

 

Repurchase of common stock

 

(6,766)

 

 

(199)

 

Payments of withholding taxes for stock-based compensation awards

 

(2,025)

 

 

(4,763)

 

Net cash provided by (used in) financing activities

 

135,573

 

 

(10,326)

 

Effects of exchange rate changes

 

56

 

 

(100)

 

Net change in cash and cash equivalents

 

140,061

 

 

4,211

 

Cash and cash equivalents at beginning of period

 

125,007

 

 

70,645

 

Cash and cash equivalents at end of period

 

$

265,068

 

 

$

74,856

 

 

Attachment 4

Materion Corporation and Subsidiaries

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

(Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

 

June 26, 2020

 

June 28, 2019

 

June 26, 2020

 

June 28, 2019

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

Performance Alloys and Composites

 

$

101.6

 

 

 

$

135.2

 

 

 

$

200.7

 

 

 

$

262.3

 

 

Advanced Materials

 

150.1

 

 

 

133.2

 

 

 

310.3

 

 

 

277.3

 

 

Precision Coatings

 

19.8

 

 

 

29.4

 

 

 

38.4

 

 

 

59.7

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

271.5

 

 

 

$

297.8

 

 

 

$

549.4

 

 

 

$

599.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Pass-through Metal Cost

 

 

 

 

 

 

 

 

 

 

 

 

Performance Alloys and Composites

 

$

11.8

 

 

 

$

19.9

 

 

 

$

27.2

 

 

 

$

37.4

 

 

Advanced Materials

 

95.4

 

 

 

74.9

 

 

 

196.4

 

 

 

161.5

 

 

Precision Coatings

 

2.0

 

 

 

6.3

 

 

 

3.7

 

 

 

14.1

 

 

Other

 

0.7

 

 

 

1.8

 

 

 

1.9

 

 

 

3.7

 

 

Total

 

$

109.9

 

 

 

$

102.9

 

 

 

$

229.2

 

 

 

$

216.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value-added Sales (non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

Performance Alloys and Composites

 

$

89.8

 

 

 

$

115.3

 

 

 

$

173.5

 

 

 

$

224.9

 

 

Advanced Materials

 

54.7

 

 

 

58.3

 

 

 

113.9

 

 

 

115.8

 

 

Precision Coatings

 

17.8

 

 

 

23.1

 

 

 

34.7

 

 

 

45.6

 

 

Other

 

(0.7)

 

 

 

(1.8)

 

 

 

(1.9)

 

 

 

(3.7)

 

 

Total

 

$

161.6

 

 

 

$

194.9

 

 

 

$

320.2

 

 

 

$

382.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

 

% of VA

 

 

% of VA

 

 

% of VA

 

 

% of VA

Performance Alloys and Composites

 

$

25.4

 

28%

 

$

41.6

 

36%

 

$

47.5

 

27%

 

$

80.8

 

36%

Advanced Materials

 

16.1

 

29%

 

20.2

 

35%

 

33.7

 

30%

 

42.2

 

36%

Precision Coatings

 

7.1

 

40%

 

10.3

 

45%

 

13.1

 

38%

 

19.7

 

43%

Other

 

(0.5)

 

 

(2.5)

 

 

(0.6)

 

 

(3.8)

 

Total

 

$

48.1

 

30%

 

$

69.6

 

36%

 

$

93.7

 

29%

 

$

138.9

 

36%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Profit (Loss)

 

 

% of VA

 

 

% of VA

 

 

% of VA

 

 

% of VA

Performance Alloys and Composites

 

$

8.2

 

9%

 

$

19.3

 

17%

 

$

13.0

 

7%

 

$

38.3

 

17%

Advanced Materials

 

4.4

 

8%

 

6.1

 

10%

 

9.2

 

8%

 

13.2

 

11%

Precision Coatings

 

2.1

 

12%

 

3.9

 

17%

 

(7.5)

 

(22)%

 

6.0

 

13%

Other

 

(6.0)

 

 

(6.5)

 

 

(10.6)

 

 

(13.4)

 

Total

 

$

8.7

 

5%

 

$

22.8

 

12%

 

$

4.1

 

1%

 

$

44.1

 

12%

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

 

June 26, 2020

 

June 28, 2019

 

June 26, 2020

 

June 28, 2019

Special Items

 

 

 

 

 

 

 

 

 

 

 

 

Performance Alloys and Composites

 

$

4.2

 

 

 

$

 

 

 

$

7.8

 

 

 

$

 

 

Advanced Materials

 

0.6

 

 

 

 

 

 

0.7

 

 

 

 

 

Precision Coatings

 

0.3

 

 

 

 

 

 

11.1

 

 

 

 

 

Other

 

(0.8)

 

 

 

 

 

 

(0.7)

 

 

 

 

 

Total

 

$

4.3

 

 

 

$

 

 

 

$

18.9

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Profit (Loss) Excluding Special Items

 

 

% of VA

 

 

% of VA

 

 

% of VA

 

 

% of VA

Performance Alloys and Composites

 

$

12.4

 

14%

 

$

19.3

 

17%

 

$

20.8

 

12%

 

$

38.3

 

17%

Advanced Materials

 

5.0

 

9%

 

6.1

 

10%

 

9.9

 

9%

 

13.2

 

11%

Precision Coatings

 

2.4

 

13%

 

3.9

 

17%

 

3.6

 

10%

 

6.0

 

13%

Other

 

(6.8)

 

 

(6.5)

 

 

(11.3)

 

 

(13.4)

 

Total

 

$

13.0

 

8%

 

$

22.8

 

12%

 

$

23.0

 

7%

 

$

44.1

 

12%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Operating (Income) Expense

 

 

% of VA

 

 

% of VA

 

 

% of VA

 

 

% of VA

Performance Alloys and Composites

 

$

0.1

 

—%

 

$

0.2

 

—%

 

$

0.3

 

—%

 

$

0.4

 

—%

Advanced Materials

 

 

—%

 

 

—%

 

 

—%

 

 

—%

Precision Coatings

 

 

—%

 

 

—%

 

 

—%

 

 

—%

Other

 

(1.0)

 

 

2.9

 

 

(2.1)

 

 

3.0

 

Total

 

$

(0.9)

 

—%

 

$

3.1

 

—%

 

$

(1.8)

 

—%

 

$

3.4

 

—%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Operating (Income) Expense Special Items

 

 

 

 

 

 

 

 

 

Other

 

$

 

 

 

$

3.3

 

 

 

$

 

 

 

$

3.3

 

 

Total

 

$

 

 

 

$

3.3

 

 

 

$

 

 

 

$

3.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT Excluding Special Items

 

 

% of VA

 

 

% of VA

 

 

% of VA

 

 

 

Performance Alloys and Composites

 

$

12.3

 

14%

 

$

19.1

 

17%

 

$

20.5

 

12%

 

$

37.9

 

17%

Advanced Materials

 

5.0

 

9%

 

6.1

 

10%

 

9.9

 

9%

 

13.2

 

11%

Precision Coatings

 

2.4

 

13%

 

3.9

 

17%

 

3.6

 

10%

 

6.0

 

13%

Other

 

(5.8)

 

 

(6.1)

 

 

(9.2)

 

 

(13.1)

 

Total

 

$

13.9

 

9%

 

$

23.0

 

12%

 

$

24.8

 

8%

 

$

44.0

 

12%

The cost of gold, silver, platinum, palladium, and copper 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 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.

Attachment 5

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measures – Profitability

(Unaudited)

 

Second Quarter Ended

 

Six Months Ended

(Millions except per share amounts)

June 26, 2020

 

June 28, 2019

 

June 26, 2020

 

June 28, 2019

GAAP as Reported

 

 

 

 

 

 

 

Net sales

$

271.5

 

 

$

297.8

 

 

$

549.4

 

 

$

599.3

 

Operating profit

8.7

 

 

22.8

 

 

4.1

 

 

44.1

 

Non-operating (income) expense

(0.9)

 

 

3.1

 

 

(1.8)

 

 

3.4

 

Net income

6.7

 

 

15.5

 

 

3.6

 

 

32.4

 

Shares outstanding – Diluted

20,554

 

 

20,666

 

 

20,587

 

 

20,635

 

EPS – Diluted

$

0.32

 

 

$

0.75

 

 

$

0.17

 

 

$

1.57

 

 

 

 

 

 

 

 

 

Operating Profit Special Items

 

 

 

 

 

 

 

Impairment charges

$

 

 

$

 

 

$

10.8

 

 

$

 

Non-cash inventory adjustment

 

 

 

 

1.3

 

 

 

Cost reduction initiatives

2.4

 

 

 

 

4.6

 

 

 

COVID-19 related costs

2.7

 

 

 

 

2.9

 

 

 

Acquisition & divestiture costs

1.4

 

 

 

 

1.5

 

 

 

Foreign currency hedge gain

(2.2)

 

 

 

 

(2.2)

 

 

 

Total Operating Profit Special Items

$

4.3

 

 

$

 

 

$

18.9

 

 

$

 

Operating Profit Special Items – net of tax

$

3.3

 

 

$

 

 

$

14.5

 

 

$

 

Non-Operating Expense Special Items

$

 

 

$

3.3

 

 

$

 

 

$

3.3

 

Non-Operating Expense Special Items – net of tax

$

 

 

$

2.6

 

 

$

 

 

$

2.6

 

Tax Special Items

$

 

 

$

 

 

$

0.7

 

 

$

 

Special items per diluted share

$

0.17

 

 

$

0.13

 

 

$

0.75

 

 

$

0.13

 

 

 

 

 

 

 

 

 

Non-GAAP Measures – Adjusted Profitability

 

 

 

 

 

 

 

Value-added (VA) sales

$

161.6

 

 

$

194.9

 

 

$

320.2

 

 

$

382.6

 

Operating profit

13.0

 

 

22.8

 

 

23.0

 

 

44.1

 

Operating profit % of VA

8.0

%

 

11.7

%

 

7.2

%

 

11.5

%

EBIT

13.9

 

 

23.0

 

 

24.8

 

 

44.0

 

EBIT % of VA

8.6

%

 

11.8

%

 

7.7

%

 

11.5

%

Net income

10.0

 

 

18.1

 

 

18.8

 

 

35.0

 

EPS – Diluted

$

0.49

 

 

$

0.88

 

 

$

0.92

 

 

$

1.70

 

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 and taxes (EBIT), net income, and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation and Attachment 4, we have adjusted the results for certain special items such as non-cash impairment charges, non-cash inventory adjustments, cost reduction initiatives (i.e., severance), COVID-19 related costs, acquisition and divestiture costs, foreign currency hedge gains, and certain discrete income tax items from the applicable GAAP financial measure. 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

Value-added sales by Market

(Unaudited)

 

Second Quarter Ended

 

 

 

Six Months Ended

 

 

(Millions)

June 26, 2020

 

June 28, 2019

 

% Change

 

June 26, 2020

 

June 28, 2019

 

% Change

Materion Corporation

 

 

 

 

 

 

 

 

 

 

 

Semiconductor

$

38.0

 

 

$

36.3

 

 

4.7

%

 

$

77.3

 

 

$

74.2

 

 

4.2

%

Industrial

29.6

 

 

36.4

 

 

(18.7)

%

 

59.8

 

 

70.0

 

 

(14.6)

%

Aerospace and Defense

22.1

 

 

29.6

 

 

(25.3)

%

 

41.3

 

 

60.1

 

 

(31.3)

%

Automotive

13.1

 

 

14.8

 

 

(11.5)

%

 

27.8

 

 

31.8

 

 

(12.6)

%

Energy

12.3

 

 

19.1

 

 

(35.6)

%

 

25.0

 

 

37.5

 

 

(33.3)

%

Consumer electronics

11.3

 

 

19.2

 

 

(41.1)

%

 

24.0

 

 

33.4

 

 

(28.1)

%

Telecom and Data Center

10.8

 

 

16.1

 

 

(32.9)

%

 

19.7

 

 

31.2

 

 

(36.9)

%

Other

24.4

 

 

23.4

 

 

4.3

%

 

45.3

 

 

44.4

 

 

2.0

%

Total

$

161.6

 

 

$

194.9

 

 

(17.1)

%

 

$

320.2

 

 

$

382.6

 

 

(16.3)

%

Performance Alloys and Composites

 

 

 

 

 

 

 

 

 

 

 

Semiconductor

$

1.4

 

 

$

1.3

 

 

7.7

%

 

$

2.2

 

 

$

3.2

 

 

(31.3)

%

Industrial

22.2

 

 

26.0

 

 

(14.6)

%

 

43.9

 

 

50.0

 

 

(12.2)

%

Aerospace and Defense

17.1

 

 

24.4

 

 

(29.9)

%

 

30.4

 

 

49.3

 

 

(38.3)

%

Automotive

11.9

 

 

12.7

 

 

(6.3)

%

 

25.0

 

 

28.2

 

 

(11.3)

%

Energy

5.0

 

 

10.0

 

 

(50.0)

%

 

9.7

 

 

19.9

 

 

(51.3)

%

Consumer electronics

7.9

 

 

14.7

 

 

(46.3)

%

 

17.0

 

 

25.3

 

 

(32.8)

%

Telecom and Data Center

10.7

 

 

16.0

 

 

(33.1)

%

 

19.3

 

 

31.0

 

 

(37.7)

%

Other

13.6

 

 

10.2

 

 

33.3

%

 

26.0

 

 

18.0

 

 

44.4

%

Total

$

89.8

 

 

$

115.3

 

 

(22.1)

%

 

$

173.5

 

 

$

224.9

 

 

(22.9)

%

Advanced Materials

 

 

 

 

 

 

 

 

 

 

 

Semiconductor

$

36.4

 

 

$

35.0

 

 

4.0

%

 

$

74.8

 

 

$

70.8

 

 

5.6

%

Industrial

4.9

 

 

6.6

 

 

(25.8)

%

 

10.3

 

 

12.1

 

 

(14.9)

%

Aerospace and Defense

0.9

 

 

0.5

 

 

80.0

%

 

1.6

 

 

1.2

 

 

33.3

%

Automotive

1.2

 

 

1.7

 

 

(29.4)

%

 

2.9

 

 

3.0

 

 

(3.3)

%

Energy

7.1

 

 

9.1

 

 

(22.0)

%

 

15.1

 

 

17.6

 

 

(14.2)

%

Consumer electronics

 

 

0.1

 

 

(100.0)

%

 

0.1

 

 

0.2

 

 

(50.0)

%

Telecom and Data Center

0.2

 

 

0.1

 

 

100.0

%

 

0.4

 

 

0.4

 

 

%

Other

4.0

 

 

5.2

 

 

(23.1)

%

 

8.7

 

 

10.5

 

 

(17.1)

%

Total

$

54.7

 

 

$

58.3

 

 

(6.2)

%

 

$

113.9

 

 

$

115.8

 

 

(1.6)

%

Precision Coatings

 

 

 

 

 

 

 

 

 

 

 

Semiconductor

$

0.2

 

 

$

0.1

 

 

100.0

%

 

$

0.2

 

 

$

0.2

 

 

%

Industrial

2.6

 

 

3.8

 

 

(31.6)

%

 

5.7

 

 

8.0

 

 

(28.8)

%

Aerospace and Defense

4.1

 

 

4.8

 

 

(14.6)

%

 

9.2

 

 

9.6

 

 

(4.2)

%

Automotive

 

 

0.4

 

 

(100.0)

%

 

 

 

0.6

 

 

(100.0)

%

Energy

 

 

 

 

%

 

 

 

 

 

%

Consumer electronics

3.4

 

 

4.4

 

 

(22.7)

%

 

6.9

 

 

7.9

 

 

(12.7)

%

Telecom and Data Center

 

 

 

 

%

 

 

 

 

 

%

Other

7.5

 

 

9.6

 

 

(21.9)

%

 

12.7

 

 

19.3

 

 

(34.2)

%

Total

$

17.8

 

 

$

23.1

 

 

(22.9)

%

 

$

34.7

 

 

$

45.6

 

 

(23.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

Eliminations

$

(0.7)

 

 

$

(1.8)

 

 

 

 

$

(1.9)

 

 

$

(3.7)

 

 

 

Contacts

Investor Contact:
Stephen F. Shamrock

(216) 383-4010

[email protected]

Media Contact:
John G. McCloskey

(216) 383-6835

[email protected]

https://materion.com
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