Also Comments on Its Outlook and Initiatives to Reduce Costs and
Improve Margins
MAYFIELD HEIGHTS, Ohio--(BUSINESS WIRE)--
Materion Corporation (NYSE:MTRN) today provided an update on expected
third quarter 2013 results and also commented on its outlook and
initiatives to reduce costs and improve margins.
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Third quarter markets weaker and high-margin shipments delayed
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Fourth quarter expected to be the strongest of the year
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Cost reduction actions taken in the fourth quarter driving significant
operating performance improvement beginning in 2014
THIRD QUARTER 2013 WEAKER THAN EXPECTED
The previously announced weaker business conditions being experienced at
the beginning of the third quarter of 2013 did not improve during the
third quarter to the level that the Company originally anticipated.
Order entry has been highly variable, and business levels have been
increasing at a slower than expected rate. In addition, shipments of
certain high-margin beryllium-based defense and nuclear science as well
as defense optics orders have been delayed. Profits were also adversely
affected by lower manufacturing yields and efficiencies in the quarter.
The impact of these factors has been offset, in part, by continued
strong business levels in the medical, commercial aerospace, automotive
electronics and commercial optics markets.
As a result of these factors, earnings for the third quarter are
expected to be approximately $0.20 per share.
FOURTH QUARTER TO BE THE STRONGEST OF THE YEAR
The aforementioned delayed orders are expected to ship in the fourth
quarter. In addition, production levels at the Company's new beryllium
pebble plant continued to increase throughout the third quarter and were
at record levels in the month of September, well ahead of the fourth
quarter target. As a result of these and other factors, the Company
expects results for the fourth quarter to be well ahead of the third
quarter and the strongest of the year, exceeding the $0.43 per share
reported in the second quarter, absent the impact of the actions
discussed below.
COST REDUCTION AND MARGIN IMPROVEMENT
INITIATIVES
The Company is planning to take additional facility and product line
rationalization actions during the fourth quarter which will further
reduce costs and significantly improve margins beginning in 2014. These
actions will result in a charge of up to $0.15 per share in the fourth
quarter, approximately 25% of which is non-cash. These are expected to
favorably impact 2014 performance by up to $0.30 per share.
CHAIRMAN'S COMMENTS
Richard J. Hipple, Chairman, President and Chief Executive Officer,
stated, "In spite of the unexpected weakness visible in the order book
and the noted unexpected delay of specific high-margin shipments that
occurred in the third quarter, I am encouraged by the progress in the
new beryllium pebble plant and our new product initiatives. These, along
with improving overall market conditions and the lower cost structure,
should result in significantly improved earnings in 2014."
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:
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Actual sales, operating rates and margins for 2013 and 2014;
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Uncertainties relating to the fourth quarter 2012 physical inventory
and possible theft at our Albuquerque facility, including (i) the
costs and outcome of our investigations and (ii) the timing and
amount, if any, of any insurance proceeds that we might receive;
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The global economy;
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The impact of the Federal Government shutdown;
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The condition of the markets which we serve, whether defined
geographically or by segment, with the major market segments being:
consumer electronics, industrial components and commercial aerospace,
defense and science, automotive electronics, medical, energy and
telecommunications infrastructure;
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Changes in product mix and the financial condition of customers;
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Our success in developing and introducing new products and new product
ramp-up rates;
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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;
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Our success in integrating acquired businesses, including EIS Optics
Limited and Aerospace Metal Composites Limited;
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Our success in moving the microelectronics packaging operations to
Singapore;
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Our success in completing the announced facility consolidations and
the product line rationalizations and achieving the expected benefits;
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Our success in implementing our strategic plans and the timely and
successful completion and start-up of any capital projects, including
the new primary beryllium facility in Elmore, Ohio;
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The availability of adequate lines of credit and the associated
interest rates;
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The impact of the results of acquisitions on our ability to achieve
fully the strategic and financial objectives related to these
acquisitions;
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Other financial factors, including the cost and availability of raw
materials (both base and precious metals), physical inventory
valuations, metal financing fees, tax rates, exchange rates, pension
costs and required cash contributions and other employee benefit
costs, energy costs, regulatory compliance costs, the cost and
availability of insurance, and the impact of the Company's stock price
on the cost of incentive compensation plans;
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The uncertainties related to the impact of war, terrorist activities
and acts of God;
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Changes in government regulatory requirements and the enactment of new
legislation that impacts our obligations and operations;
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The conclusion of pending litigation matters in accordance with our
expectation that there will be no material adverse effects;
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The timing and ability to achieve further efficiencies and synergies
resulting from our name change and product line alignment under the
Materion name and Materion brand; and
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The risk factors set forth in Part 1, Item 1A of our Annual Report on
Form 10-K for the year ended December 31, 2012.
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.
Materion Corporation
Investor Contact:
Michael
C. Hasychak, 216-383-6823
mike.hasychak@materion.com
or
Media
Contact:
Patrick S. Carpenter, 216-383-6835
patrick.carpenter@materion.com
or
http://www.materion.com
Mayfield
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Source: Materion Corporation
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