Reports Strong Sales Growth and Margin Expansion
Declares Fourth Quarter Dividend
MAYFIELD HEIGHTS, Ohio--(BUSINESS WIRE)--
Materion Corporation (NYSE:MTRN) today reported third quarter financial
results.
-
Third quarter 2014 earnings were $0.60 per share. This compares to
$0.24 per share earned in the third quarter of the prior year, and
sequentially to $0.47 per share earned in the second quarter of the
current year.
-
Adjusted third quarter earnings were $0.51 per share, up $0.27 per
share, or 113%, compared to the same quarter of the prior year.
Adjusted earnings excludes a benefit from a legal settlement related
to the beryllium pebble plant.
-
Sequentially, third quarter adjusted earnings were 42% ahead of the
second quarter of 2014 adjusted earnings of $0.36 per share.
-
Net sales for the third quarter were $291.6 million, 6% above
prior-year's third quarter. Value-added sales, a non-GAAP measure as
defined in Attachment 4, for the third quarter were $165.6 million, up
12% compared to the same quarter of the prior year and up 4%
sequentially from the second quarter of the current year.
-
Adjusted operating profit margin, as a percent of value-added sales,
expanded to 8.9%, a 530 basis point improvement, from prior-year third
quarter levels and improved sequentially by 220 basis points from the
second quarter of 2014 levels.
-
The facility closures and product line rationalizations completed in
2013 are continuing to deliver the expected margin benefits.
-
For the nine months to date, earnings were $1.42 per share, compared
to $0.76 per share for the same period of the prior year.
-
Adjusted earnings for the nine months to date were $1.15 per share,
51% ahead of the same period of last year.
-
During the third quarter, the Company repurchased approximately
400,000 shares of its common stock, or 2% of its outstanding shares.
-
The Company confirms its annual 2014 earnings guidance range of $1.55
- $1.70 adjusted earnings per share.
-
The Company declared a fourth quarter dividend of $0.085 per share
payable on November 20, 2014 to shareholders of record on November 6,
2014.
THIRD QUARTER 2014 RESULTS
Sales for the third quarter were $291.6 million, up 6%, compared to
sales of $275.4 million for the third quarter of 2013. Value-added sales
were $165.6 million, up $17.5 million, or 12%, compared to value-added
sales of $148.1 million for the third quarter of 2013 and up
sequentially 4% from the second quarter of 2014. The growth in
value-added sales in the third quarter compared to the same period of
last year was due primarily to stronger demand from customers in the
consumer electronics, industrial components, telecommunications
infrastructure and medical markets. The sequential improvement as
compared to the second quarter of 2014 was driven by strength across the
majority of the Company's key markets.
Adjusted operating profit margin, as a percent of value-added sales,
expanded by 530 basis points to 8.9% from the prior-year third quarter
levels and improved 220 basis points sequentially from the second
quarter of 2014. The margin improvement is a result of higher sales
volume, benefits from the facility closures and product line
rationalizations completed in 2013, higher production levels, and an
improved product mix, particularly in the Beryllium and Composites
segment.
Net income for the third quarter of 2014 was $12.4 million, or $0.60 per
share. This compares to net income of $5.0 million, or $0.24 per share
for the third quarter of the prior year. Excluding the net benefit of
the legal settlement related to the beryllium pebble plant, third
quarter adjusted earnings were $0.51 per share. Third quarter adjusted
earnings were also up 42% sequentially from the second quarter adjusted
earnings of $0.36 per share (see Attachment 5 for a reconciliation of
adjusted earnings).
For the first nine months of 2014, sales were $838.5 million compared to
sales of $880.7 million for the same period of last year. Value-added
sales for the first nine months of 2014 were up 4% to $470.1 million
compared to $451.9 million for the same period of last year. In the
first nine months, strong demand from customers in the consumer
electronics, science, and medical markets was offset by the weakness
noted earlier in the year in shipments to the automotive electronics and
defense industries. Year-to-date 2014 net income was $29.7 million
compared to $15.9 million for the first nine months of 2013.
Year-to-date adjusted net income was $24.2 million, or $1.15 per share,
an increase of 51% over the comparable period of the prior year.
STOCK BUYBACK
In January 2014, the Company announced that the Board of Directors
approved an authorization to repurchase up to $50.0 million of the
Company's common stock. During the third quarter, the Company
repurchased 393,184 shares of its common stock. This brings the
year-to-date total since the inception of the buyback to 479,554 shares
for a total purchase price of $15.6 million.
DIVIDEND
Today the Company also announced the declaration of its fourth quarter
dividend of $0.085 per share payable on November 20, 2014 to
shareholders of record on November 6, 2014. The dividend is a reflection
of the Company's continued confidence in the strength of its business,
its prospects for long-term growth, and its ability to continue to fund
organic growth while returning cash to shareholders.
BUSINESS SEGMENT REPORTING
Advanced Material Technologies
Advanced Material Technologies' sales for the third quarter of 2014 were
$177.5 million, which compares to sales of $176.3 million in the third
quarter of 2013. Value-added sales, which remove the impact of changes
in the market prices of pass-through metals as defined in Attachment 4,
were $71.2 million in the third quarter of 2014, up $3.5 million, or 5%,
compared to $67.7 million in the third quarter of 2013. Third quarter
value-added sales were also up sequentially by $1.3 million, or 2%,
compared to the second quarter of 2014 value-added sales of $69.9
million. As compared to the third quarter of 2013, the increase in
value-added sales was driven primarily by increased shipments to
customers in the consumer electronics and medical markets. These were
partially offset by lower sales to customers in the defense industry
compared to the same period of last year. Stronger demand from consumer
electronics and medical customers drove the sequential growth in the
third quarter of 2014 compared to the second quarter of 2014.
Operating profit for the third quarter of 2014 was $7.7 million, or 11%
of value-added sales, which compares to $4.1 million, or 6% of
value-added sales, for the third quarter of 2013. Facility closures and
product line rationalization initiatives undertaken in 2013 continued to
deliver the expected stronger product mix and margin expansion.
Operating profit also improved due to higher value-added sales and
improved yields. Operating margins improved 470 basis points over the
same period last year and were about flat sequentially as compared to
the second quarter of 2014 adjusted operating profit.
Performance Alloys
Performance Alloys' sales for the third quarter of 2014 were $80.9
million, which compares to the third quarter of 2013 sales of $69.6
million. Value-added sales for the third quarter of 2014 were $66.7
million, up $9.3 million, or 16%, compared to the third quarter 2013.
Value-added sales for the third quarter compared sequentially to the
second quarter of 2014 were up 5%. While value-added sales in this
segment tend to be seasonably lower in the third quarter, they were up
compared to both the prior-year period and sequentially. The improvement
in the third quarter value-added sales compared to the same period last
year was primarily driven by strength from customers in the industrial
components, telecommunications infrastructure and energy markets.
Sequentially, the value-added sales for the third quarter were up over
the second quarter of 2014 on strength from the energy, industrial
components and telecommunication infrastructure markets. Third quarter
value-added sales of ToughMet® products were up 35% compared to the same
period of last year.
Operating profit for the third quarter of 2014 was $6.5 million, up $2.0
million, or 44%, compared to an operating profit of $4.5 million in the
third quarter of 2013. Operating profit for the third quarter of 2014
was up sequentially by $1.3 million, or 25%, from the second quarter of
2014. The improvement in operating profit is from the higher sales
volume and improved product mix.
Beryllium and Composites
Beryllium and Composites' sales for the third quarter of 2014 were $17.9
million, up $4.2 million, or 31%, compared to sales of $13.7 million in
the third quarter of 2013. Third quarter sales were up sequentially by
8% from second quarter of 2014 sales of $16.6 million. Beryllium and
Composites does not directly pass through changes in the costs of its
materials sold, and, therefore, value-added sales for this segment are
the same as sales. The increase in sales compared to the prior-year
period and sequentially is primarily due to higher sales to customers in
the medical and science markets.
Operating profit for the third quarter of 2014 was $1.0 million compared
to an operating loss of $3.3 million in the third quarter of 2013.
Operating profit improved sequentially by $2.8 million compared to an
operating loss of $1.8 million in the second quarter of 2014. The
improvement from both the prior-year period and sequentially is due to
higher sales volume into the science market and improved product mix.
The beryllium pebble plant met production needs in the quarter and
continues to ramp up on schedule. Beryllium and Composites is on target
to achieve a $5.0 to $6.0 million improvement in operating profit for
the year compared to 2013.
Technical Materials
Technical Materials' sales for the third quarter of 2014 were $15.3
million, compared to $15.9 million for the same period of last year.
Value-added sales were $9.8 million in the third quarter of 2014, up 5%
compared to $9.3 million for the third quarter of 2013. Sequentially,
value-added sales were up 2% from the second quarter of 2014.
Operating profit for the third quarter of 2014 of $1.4 million, or 14%
of value-added sales, was flat with the same period last year. Operating
profit improved sequentially in the third quarter compared to the second
quarter 2014 operating profit of $1.0 million.
OUTLOOK
As expected, earnings for the second half of 2014 will be up
significantly from the first half of the year as business levels and
margins have significantly improved. Although order entry trends
continue to be favorable, value-added sales to our customers in markets
such as consumer electronics, automotive electronics and
telecommunications infrastructure can be lumpy and are expected to be
affected by seasonal factors in the fourth quarter. In addition, we have
several large orders in the Beryllium and Composites business segment
that are scheduled for delivery late in the fourth quarter. These are
subject to possible delay into the first quarter of 2015. Despite the
stronger third quarter performance, recent macroeconomic news from Asia
and Europe may negatively impact our order rate and shipment schedule.
Considering the above factors, the Company is confirming its previous
guidance for the full-year 2014 to be in the range of $1.55 to $1.70 per
share, on an adjusted basis.
CHAIRMAN'S COMMENTS
Richard J. Hipple, Chairman, President and CEO, stated, "I am pleased
with the progress we have been making throughout the year, particularly
with the significant improvement in value-added sales, margins, and
earnings per share we experienced in the third quarter. Our strategic
growth and cost savings initiatives are now providing the leverage and
the earnings power that we anticipate as evidenced by the third quarter
adjusted earnings of $0.51 per share. We also continue to generate
strong cash flow which provides the flexibility to support our organic
growth, pursue strategic acquisitions and return cash to our
shareholders in the form of dividends and stock repurchases. I believe
we are well positioned to continue to enhance long-term shareholder
value."
CONFERENCE CALL
Materion Corporation will host a conference call with analysts at 9:00
a.m. Eastern Time, October 23, 2014. 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
November 7, 2014 by dialing (877) 660-6853 or (201) 612-7415; please
reference Conference ID Number 13592214. 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:
-
Actual sales, operating rates and margins for 2014;
-
Our ability to strengthen our internal control over financial
reporting and disclosure controls and procedures;
-
The global economy;
-
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:
consumer electronics, industrial components, commercial aerospace,
defense, science, automotive electronics, medical, energy, and
telecommunications infrastructure;
-
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 integrating acquired businesses;
-
The impact of the results of acquisitions on our ability to achieve
fully the strategic and financial objectives related to these
acquisitions;
-
Our success in achieving the expected benefits from our facility
consolidations;
-
Our success in implementing our strategic plans and the timely and
successful completion and start-up of any capital projects, including
the primary beryllium facility in Elmore, Ohio;
-
The availability of adequate lines of credit and the associated
interest rates;
-
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;
-
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; and
-
The risk factors set forth in Part 1, Item 1A of our Annual Report on
Form 10-K for the year ended December 31, 2013.
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.
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Materion Corporation
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Attachment 1
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Consolidated Statements of Income
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(Unaudited)
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Third Quarter Ended
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Nine Months Ended
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Sept. 26,
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Sept. 27,
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Sept. 26,
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Sept. 27,
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(In thousands except per share amounts)
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2014
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2013
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2014
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2013
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Net sales
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$
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291,570
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$
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275,434
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$
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838,465
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$
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880,744
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Cost of sales
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236,727
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230,951
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688,359
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741,930
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Gross margin
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54,843
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44,483
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150,106
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138,814
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Selling, general and administrative expense
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34,823
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31,804
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100,768
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97,910
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Research and development expense
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3,243
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3,190
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9,473
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9,901
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Other - net
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(644
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)
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4,161
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(3,177
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)
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9,592
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Operating profit
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17,421
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5,328
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43,042
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21,411
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Interest expense - net
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764
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715
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2,132
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2,356
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Income before income taxes
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16,657
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4,613
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40,910
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19,055
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Income tax expense (benefit)
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4,217
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(379
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)
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11,165
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3,123
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Net income
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$
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12,440
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$
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4,992
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$
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29,745
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$
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15,932
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Basic earnings per share:
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Net income per share of common stock
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$
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0.61
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$
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0.24
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$
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1.45
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$
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0.78
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Diluted earnings per share:
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Net income per share of common stock
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$
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0.60
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$
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0.24
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$
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1.42
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$
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0.76
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Cash dividends per share
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$
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0.085
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$
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0.080
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$
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0.250
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$
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0.235
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Weighted average number of shares of common stock outstanding
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Basic
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20,490
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20,604
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20,579
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20,551
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Diluted
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20,827
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20,931
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20,927
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20,874
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Materion Corporation
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Attachment 2
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Consolidated Balance Sheets
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(Unaudited)
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Sept. 26,
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Dec. 31,
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(In thousands)
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2014
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2013
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Assets
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Current assets
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Cash and cash equivalents
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$
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19,610
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$
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22,774
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Accounts receivable
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126,950
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113,012
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Inventories
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227,286
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232,800
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Prepaid expenses
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17,231
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16,353
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Deferred income taxes
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9,965
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10,325
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Total current assets
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401,042
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395,264
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Long-term deferred income taxes
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5,502
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5,941
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Property, plant and equipment
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793,983
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782,879
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Less allowances for depreciation, depletion and amortization
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(545,183
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(520,986
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Property, plant, and equipment - net
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248,800
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261,893
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Intangible assets
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20,046
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24,248
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Other assets
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4,693
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3,874
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Goodwill
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86,725
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86,725
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Total Assets
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$
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766,808
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$
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777,945
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Liabilities and Shareholders' Equity
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Current liabilities
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Short-term debt
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$
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6,613
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$
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35,566
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Accounts payable
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32,158
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36,556
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Other liabilities and accrued items
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59,562
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54,851
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Income taxes
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7,955
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1,564
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Unearned revenue
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1,239
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479
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Total current liabilities
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107,527
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129,016
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Other long-term liabilities
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16,187
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16,531
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Retirement and post-employment benefits
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53,493
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|
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80,275
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Unearned income
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52,970
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|
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56,490
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Long-term income taxes
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|
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|
|
1,576
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|
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|
|
1,576
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Deferred income taxes
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|
|
|
|
|
4,895
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|
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|
|
1,469
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Long-term debt
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|
43,780
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29,267
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Shareholders' equity
|
|
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|
|
486,380
|
|
|
|
|
463,321
|
|
Total Liabilities and Shareholders' Equity
|
|
|
|
|
$
|
766,808
|
|
|
|
$
|
777,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materion Corporation
|
Attachment 3
|
Consolidated Statements of Cash Flows
|
|
(Unaudited)
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
Sept. 26,
|
|
|
Sept. 27,
|
(In thousands)
|
|
|
|
|
2014
|
|
|
2013
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$
|
29,745
|
|
|
|
$
|
15,932
|
|
Adjustments to reconcile net income to net cash (used in) provided
from operating activities:
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
|
|
32,333
|
|
|
|
|
30,842
|
|
Amortization of deferred financing costs in interest expense
|
|
|
|
|
|
627
|
|
|
|
|
501
|
|
Stock-based compensation expense
|
|
|
|
|
|
4,123
|
|
|
|
|
4,103
|
|
Changes in assets and liabilities net of acquired assets and
liabilities:
|
|
|
|
|
|
|
|
|
Decrease (increase) in accounts receivable
|
|
|
|
|
|
(15,184
|
)
|
|
|
|
3,143
|
|
Decrease (increase) in inventory
|
|
|
|
|
|
(24,148
|
)
|
|
|
|
(13
|
)
|
Decrease (increase) in prepaid and other current assets
|
|
|
|
|
|
(579
|
)
|
|
|
|
2,055
|
|
Decrease (increase) in deferred income taxes
|
|
|
|
|
|
8
|
|
|
|
|
249
|
|
Increase (decrease) in accounts payable and accrued expenses
|
|
|
|
|
|
2,315
|
|
|
|
|
(21,216
|
)
|
Increase (decrease) in unearned revenue
|
|
|
|
|
|
760
|
|
|
|
|
(1,082
|
)
|
Increase (decrease) in interest and taxes payable
|
|
|
|
|
|
6,017
|
|
|
|
|
108
|
|
Increase (decrease) in long-term liabilities
|
|
|
|
|
|
(14,976
|
)
|
|
|
|
1,152
|
|
Other - net
|
|
|
|
|
|
(14
|
)
|
|
|
|
2,741
|
|
Net cash provided from operating activities
|
|
|
|
|
|
21,027
|
|
|
|
|
38,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Payments for purchase of property, plant and equipment
|
|
|
|
|
|
(19,843
|
)
|
|
|
|
(19,830
|
)
|
Payments for mine development
|
|
|
|
|
|
(670
|
)
|
|
|
|
(4,407
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
|
|
|
3,084
|
|
|
|
|
23
|
|
Other investments - net
|
|
|
|
|
|
(2
|
)
|
|
|
|
20
|
|
Net cash used in investing activities
|
|
|
|
|
|
(17,431
|
)
|
|
|
|
(24,194
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Repayment of short-term debt
|
|
|
|
|
|
(291
|
)
|
|
|
|
(13,263
|
)
|
Proceeds from issuance of long-term debt
|
|
|
|
|
|
33,252
|
|
|
|
|
70,333
|
|
Repayment of long-term debt
|
|
|
|
|
|
(18,739
|
)
|
|
|
|
(62,789
|
)
|
Principal payments under capital lease obligations
|
|
|
|
|
|
(497
|
)
|
|
|
|
(491
|
)
|
Cash dividends paid
|
|
|
|
|
|
(5,156
|
)
|
|
|
|
(4,847
|
)
|
Debt issuance costs
|
|
|
|
|
|
-
|
|
|
|
|
(1,554
|
)
|
Repurchase of common stock
|
|
|
|
|
|
(15,615
|
)
|
|
|
|
Issuance of common stock under stock option plans
|
|
|
|
|
|
360
|
|
|
|
|
1,075
|
|
Tax benefit from stock compensation realization
|
|
|
|
|
|
109
|
|
|
|
|
1,664
|
|
Net cash used in financing activities
|
|
|
|
|
|
(6,577
|
)
|
|
|
|
(9,872
|
)
|
Effects of exchange rate changes
|
|
|
|
|
|
(183
|
)
|
|
|
|
(348
|
)
|
Net change in cash and cash equivalents
|
|
|
|
|
|
(3,164
|
)
|
|
|
|
4,101
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
22,774
|
|
|
|
|
16,056
|
|
Cash and cash equivalents at end of period
|
|
|
|
|
$
|
19,610
|
|
|
|
$
|
20,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materion Corporation
|
|
Attachment 4
|
Reconciliation of Non-GAAP Measure - Value-added sales
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
Third Quarter Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
Sept. 26, 2014
|
|
|
|
Sept. 27, 2013
|
|
|
|
Sept. 26, 2014
|
|
|
|
Sept. 27, 2013
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Material Technologies
|
|
|
|
|
$
|
177,483
|
|
|
|
|
$
|
176,294
|
|
|
|
|
$
|
519,792
|
|
|
|
|
$
|
566,158
|
|
|
|
Performance Alloys
|
|
|
|
|
|
80,863
|
|
|
|
|
|
69,578
|
|
|
|
|
|
224,289
|
|
|
|
|
|
218,435
|
|
|
|
Beryllium and Composites
|
|
|
|
|
|
17,946
|
|
|
|
|
|
13,685
|
|
|
|
|
|
50,042
|
|
|
|
|
|
42,194
|
|
|
|
Technical Materials |
|
|
|
|
|
15,278
|
|
|
|
|
|
15,877
|
|
|
|
|
|
44,342
|
|
|
|
|
|
53,957
|
|
|
|
All Other
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
Total
|
|
|
|
|
$
|
291,570
|
|
|
|
|
$
|
275,434
|
|
|
|
|
$
|
838,465
|
|
|
|
|
$
|
880,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Pass-through Metal Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Material Technologies
|
|
|
|
|
$
|
106,313
|
|
|
|
|
$
|
108,554
|
|
|
|
|
$
|
313,150
|
|
|
|
|
$
|
364,485
|
|
|
|
Performance Alloys
|
|
|
|
|
|
14,151
|
|
|
|
|
|
12,211
|
|
|
|
|
|
39,463
|
|
|
|
|
|
43,113
|
|
|
|
Beryllium and Composites
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(19
|
)
|
|
|
Technical Materials |
|
|
|
|
|
5,466
|
|
|
|
|
|
6,600
|
|
|
|
|
|
15,786
|
|
|
|
|
|
21,285
|
|
|
|
All Other
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
Total
|
|
|
|
|
$
|
125,930
|
|
|
|
|
$
|
127,365
|
|
|
|
|
$
|
368,399
|
|
|
|
|
$
|
428,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-added Sales (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Material Technologies
|
|
|
|
|
$
|
71,170
|
|
|
|
|
$
|
67,740
|
|
|
|
|
$
|
206,642
|
|
|
|
|
$
|
201,595
|
|
|
|
Performance Alloys
|
|
|
|
|
|
66,712
|
|
|
|
|
|
57,367
|
|
|
|
|
|
184,826
|
|
|
|
|
|
175,424
|
|
|
|
Beryllium and Composites
|
|
|
|
|
|
17,946
|
|
|
|
|
|
13,685
|
|
|
|
|
|
50,042
|
|
|
|
|
|
42,194
|
|
|
|
Technical Materials |
|
|
|
|
|
9,812
|
|
|
|
|
|
9,277
|
|
|
|
|
|
28,556
|
|
|
|
|
|
32,657
|
|
|
|
All Other
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
Total
|
|
|
|
|
$
|
165,640
|
|
|
|
|
$
|
148,069
|
|
|
|
|
$
|
470,066
|
|
|
|
|
$
|
451,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of VA
|
|
|
|
% of VA
|
|
|
|
% of VA
|
|
|
|
% of VA
|
Gross Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Material Technologies
|
|
|
|
|
$
|
28,201
|
|
|
40
|
%
|
|
$
|
24,885
|
|
|
37
|
%
|
|
$
|
77,218
|
|
|
37
|
%
|
|
$
|
69,038
|
|
|
34
|
%
|
Performance Alloys
|
|
|
|
|
|
18,057
|
|
|
27
|
%
|
|
|
15,525
|
|
|
27
|
%
|
|
|
52,161
|
|
|
28
|
%
|
|
|
50,675
|
|
|
29
|
%
|
Beryllium and Composites
|
|
|
|
|
|
5,553
|
|
|
31
|
%
|
|
|
695
|
|
|
5
|
%
|
|
|
13,128
|
|
|
26
|
%
|
|
|
7,958
|
|
|
19
|
%
|
Technical Materials |
|
|
|
|
|
3,277
|
|
|
33
|
%
|
|
|
3,538
|
|
|
38
|
%
|
|
|
8,405
|
|
|
29
|
%
|
|
|
11,752
|
|
|
36
|
%
|
All Other
|
|
|
|
|
|
(245
|
)
|
|
-
|
|
|
|
(160
|
)
|
|
-
|
|
|
|
(806
|
)
|
|
-
|
|
-
|
|
(609
|
)
|
|
-
|
|
Total
|
|
|
|
|
$
|
54,843
|
|
|
33
|
%
|
|
$
|
44,483
|
|
|
30
|
%
|
|
$
|
150,106
|
|
|
32
|
%
|
|
$
|
138,814
|
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of VA
|
|
|
|
% of VA
|
|
|
|
% of VA
|
|
|
|
% of VA
|
Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Material Technologies
|
|
|
|
|
$
|
7,691
|
|
|
11
|
%
|
|
$
|
4,146
|
|
|
6
|
%
|
|
$
|
26,790
|
|
|
13
|
%
|
|
$
|
5,211
|
|
|
3
|
%
|
Performance Alloys
|
|
|
|
|
|
6,529
|
|
|
10
|
%
|
|
|
4,520
|
|
|
8
|
%
|
|
|
15,307
|
|
|
8
|
%
|
|
|
18,654
|
|
|
11
|
%
|
Beryllium and Composites
|
|
|
|
|
|
992
|
|
|
6
|
%
|
|
|
(3,306
|
)
|
|
(24
|
%)
|
|
|
282
|
|
|
1
|
%
|
|
|
(3,780
|
)
|
|
(9
|
%)
|
Technical Materials |
|
|
|
|
|
1,445
|
|
|
15
|
%
|
|
|
1,421
|
|
|
15
|
%
|
|
|
2,586
|
|
|
9
|
%
|
|
|
5,246
|
|
|
16
|
%
|
All Other
|
|
|
|
|
|
764
|
|
|
-
|
|
|
|
(1,453
|
)
|
|
-
|
|
|
|
(1,923
|
)
|
|
-
|
|
-
|
|
(3,920
|
)
|
|
-
|
|
Total
|
|
|
|
|
$
|
17,421
|
|
|
11
|
%
|
|
$
|
5,328
|
|
|
4
|
%
|
|
$
|
43,042
|
|
|
9
|
%
|
|
$
|
21,411
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The cost of gold, silver, platinum, palladium and copper is passed
through to customers and therefore the trends and comparisons of sales
are affected by movements in the market price of these metals.
Internally, management reviews sales on a value-added basis. Value-added
sales is a non-GAAP measure that deducts the value of the pass-through
metals sold from sales. Value-added sales allows management to assess
the impact of differences in 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 their costs are not deducted
from 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
|
|
|
|
Reconciliation of Non-GAAP Measure - Profitability
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended
|
|
|
Second Quarter Ended
|
|
|
Nine Months Ended
|
(In thousands except per share amounts)
|
|
|
|
|
Sept. 26, 2014
|
|
Sept. 27, 2013
|
|
|
June 27, 2014
|
|
|
Sept. 26, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP as Reported
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
$
|
291,570
|
|
|
$
|
275,434
|
|
|
|
$
|
287,965
|
|
|
|
$
|
838,465
|
|
Gross margin
|
|
|
|
|
|
54,843
|
|
|
|
44,483
|
|
|
|
|
49,801
|
|
|
|
|
150,106
|
|
Operating profit
|
|
|
|
|
|
17,421
|
|
|
|
5,328
|
|
|
|
|
14,568
|
|
|
|
|
43,042
|
|
Net income
|
|
|
|
|
|
12,440
|
|
|
|
4,992
|
|
|
|
|
9,974
|
|
|
|
|
29,745
|
|
EPS - Diluted
|
|
|
|
|
$
|
0.60
|
|
|
$
|
0.24
|
|
|
|
$
|
0.47
|
|
|
|
$
|
1.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility closure and reorganization costs (benefits)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
28
|
|
|
|
$
|
224
|
|
Selling, general and administrative
|
|
|
|
|
|
345
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
804
|
|
Other-net
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(2,627
|
)
|
Recovery from insurance and other litigation, net of expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
959
|
|
|
|
-
|
|
|
|
|
2,899
|
|
|
|
|
3,858
|
|
Other-net
|
|
|
|
|
$
|
(4,000
|
)
|
|
$
|
-
|
|
|
|
$
|
(6,750
|
)
|
|
|
$
|
(10,750
|
)
|
Total special items
|
|
|
|
|
$
|
(2,696
|
)
|
|
$
|
-
|
|
|
|
$
|
(3,823
|
)
|
|
|
$
|
(8,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items - net of tax
|
|
|
|
|
$
|
(1,752
|
)
|
|
$
|
-
|
|
|
|
$
|
(2,485
|
)
|
|
|
$
|
(5,578
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures - Adjusted Profitability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-added (VA) sales
|
|
|
|
|
$
|
165,640
|
|
|
$
|
148,069
|
|
|
|
$
|
159,566
|
|
|
|
$
|
470,066
|
|
Gross margin
|
|
|
|
|
|
54,843
|
|
|
|
44,483
|
|
|
|
|
49,829
|
|
|
|
|
150,330
|
|
Gross margin % of VA
|
|
|
|
|
|
33.1
|
%
|
|
|
30.0
|
%
|
|
|
|
31.2
|
%
|
|
|
|
32.0
|
%
|
Operating profit
|
|
|
|
|
|
14,725
|
|
|
|
5,328
|
|
|
|
|
10,745
|
|
|
|
|
34,551
|
|
Operating profit % of VA
|
|
|
|
|
|
8.9
|
%
|
|
|
3.6
|
%
|
|
|
|
6.7
|
%
|
|
|
|
7.4
|
%
|
Net income
|
|
|
|
|
|
10,688
|
|
|
|
4,992
|
|
|
|
|
7,489
|
|
|
|
|
24,167
|
|
EPS - Diluted
|
|
|
|
|
$
|
0.51
|
|
|
$
|
0.24
|
|
|
|
$
|
0.36
|
|
|
|
$
|
1.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to presenting financial statements prepared in accordance
with U.S. generally accepted accounting principles (GAAP), this earnings
release contains financial measures, including gross margin, operating
profit, net income and earnings per share, on a non-GAAP basis. As
detailed in the above reconciliation, we have adjusted out the cost
(benefit) impact of the plant consolidation and product line
reorganization efforts in and the net recovery from insurance and other
litigation claims in our All Other segment from the applicable GAAP
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.

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
Hts-g
Source: Materion Corporation
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