MAYFIELD HEIGHTS, Ohio--(BUSINESS WIRE)--
Materion Corporation (NYSE:MTRN) today reported second quarter 2015
financial results.
-
Second quarter 2015 GAAP earnings were $0.43 per share, diluted. This
compares to second quarter 2014 GAAP earnings of $0.47 per share,
diluted, and represents a 19% improvement over the second quarter 2014
adjusted earnings of $0.36 per share, diluted.
-
Second quarter 2015 results reflect the fifth consecutive quarter of
year-over-year value-added sales and adjusted operating profit growth.
-
Net sales for the second quarter of 2015 were $276.9 million.
Value-added sales were $162.4 million, up 4% compared to value-added
sales in the prior-year period, excluding the negative impact of
foreign exchange rates.
-
Operating profit for the second quarter 2015 was $12.8 million, an
increase of 20% over the $10.7 million of adjusted operating profit
recorded in the prior-year second quarter.
-
Based on increasingly more volatile markets and slowing economic
conditions, especially in China, the Company is revising its
previously announced annual 2015 adjusted earnings forecast range to
$1.65 to $1.85 per share from $1.80 to $2.00 per share, diluted.
SECOND QUARTER 2015 RESULTS
Net sales for the second quarter were $276.9 million, compared to net
sales of $288.0 million for the second quarter of 2014. Value-added
sales grew 2% to $162.4 million compared to value-added sales of $159.6
million for the second quarter of 2014. Excluding the negative
year-over-year impact from foreign exchange rates, value-added sales
grew 4% over the second quarter of 2014.
The growth in value-added sales in the second quarter of 2015 compared
to the same period of last year was due primarily to stronger demand
from customers in the defense, industrial components, automotive
electronics and telecommunications infrastructure markets. New product
value-added sales grew 44% over the prior-year comparable period and
represented 11% of total second quarter 2015 value-added sales.
Operating profit for the second quarter of 2015 was $12.8 million, a 20%
increase over the prior-year second quarter adjusted operating profit of
$10.7 million. Adjusted operating profit margin, expressed as a percent
of value-added sales, expanded by 120 basis points to 7.9% from the 2014
second quarter level. The margin improvement is a result of leveraging
the higher sales volume and an improved product mix.
Net income for the second quarter of 2015 was $8.9 million, or $0.43 per
share, diluted. This compares to net income of $10.0 million, or $0.47
per share, diluted, for the second quarter of the prior year. Excluding
the net insurance settlement benefit recorded in the second quarter of
2014, earnings were up 19% compared to the second quarter 2014 adjusted
earnings of $0.36 per share, diluted.
For the first six months of 2015, net sales were $566.9 million compared
to net sales of $546.9 million for the same period of last year.
Value-added sales for the first six months of 2015 were $325.0 million,
up 7% compared to $304.5 million for the same period last year.
Excluding the negative impact of foreign exchange rates, first half 2015
value-added sales grew 9% over the first half of 2014. Year-to-date net
income was $18.5 million as compared to $17.3 million in the comparable
period of the prior year. Excluding special items in both periods,
adjusted earnings grew 31% year over year, from $0.64 per share,
diluted, in the first half of 2014, to $0.84 per share, diluted, in the
first half of 2015.
CHAIRMAN'S COMMENTS
Richard J. Hipple, Chairman, President and Chief Executive Officer,
stated, "I am pleased with the quarter and our team's ability to deliver
the fifth consecutive quarter of meaningful year-over-year value-added
sales and earnings growth. Our strategy of pursuing organic growth
through new product introductions and solving our customers' challenges
with advanced materials is working. Despite our successes over the past
several quarters, we are cautious about the current volatility in the
global market, particularly the continued strength of the U.S. dollar,
the greater than expected drop in oil and gas exploration, the recent
slowdown in the telecommunications infrastructure 4G build out in China,
and what the unknown impact may be of ongoing economic weakness in
China. We are revising our annual earnings estimate to reflect these
changing market and economic conditions. We remain committed to
strategies to deliver greater than GDP organic value-added sales growth
and margin expansion and remain confident in our long-term earnings
growth outlook."
BUSINESS SEGMENT REPORTING
Performance Alloys and Composites
Net sales for Performance Alloys and Composites in the second quarter of
2015 were $107.7 million compared to net sales of $109.6 million in the
second quarter of 2014. Value-added sales were $91.5 million in the
second quarter of 2015, up $1.6 million, or 2%, compared to $89.9
million in the second quarter of 2014. Excluding the impact of foreign
exchange rates, value-added sales increased 5% in the second quarter of
2015 over the prior-year period. Stronger value-added sales in the
defense and industrial components end markets offset the declines in the
energy and medical end markets.
Operating profit for the second quarter of 2015 was $9.3 million, up 48%
over the prior-year operating profit of $6.3 million. Expressed as a
percentage of value-added sales, operating profit margins expanded 320
basis points over the prior year to 10.2% in the second quarter of 2015.
The margin expansion was driven by successes with our value-added growth
strategy, improved product mix and our lean six-sigma program.
Advanced Materials
Advanced Materials' net sales for the second quarter of 2015 were $131.4
million, which compares to second quarter of 2014 net sales of $145.0
million. Value-added sales for the second quarter of 2015 were $46.7
million, up 4% compared to the second quarter 2014 value-added sales of
$45.0 million. The improvement in the second quarter value-added sales
compared to the same period last year was driven primarily by strength
from customers serving the energy markets, particularly the solar
market, the medical and telecommunications infrastructure end markets.
Operating profit for the second quarter of 2015 was $7.4 million, up 4%
over an adjusted operating profit of $7.1 million in the second quarter
of 2014. Operating profit as a percent of value-added sales for the
second quarter of 2015 was 15.8%, comparable to the prior-year period.
Other
The Other segment includes the operating results of the Precision
Coatings group and unallocated corporate costs.
Within the Other segment, Precision Coatings' net sales for the second
quarter of 2015 were $38.3 million, which compares to net sales of $34.1
million for the second quarter of 2014. Value-added sales for the second
quarter of 2015 were $25.2 million, compared to value-added sales of
$24.9 million for the same period of 2014. Stronger sales to customers
serving the medical and defense markets was offset in part by weaker
demand in the consumer electronics end market, particularly the
projector display market.
Precision Coatings' operating profit for the second quarter of 2015 was
$0.6 million, or 2.4% of value-added sales, which is comparable to the
second quarter of 2014 adjusted operating profit.
OUTLOOK
Despite the solid sales and earnings performance in the second quarter
of 2015 and the solid five quarters of growth momentum we have
delivered, global market and economic conditions are changing. China
demand is clearly slowing, particularly in the telecommunications
infrastructure 4G build out. Based on this change, coupled with the
greater than previously expected drop-off in the oil and gas market and
the continued strength of the U.S. dollar, the Company is revising its
2015 adjusted earnings forecast range to $1.65 to 1.85 per share. This
represents a range that is flat to 12% above 2014 adjusted earnings of
$1.65 per share, diluted.
CONFERENCE CALL
Materion Corporation will host a conference call with analysts at 9:00
a.m. Eastern Time, July 30, 2015. 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 14,
2015 by dialing (877) 660-6853 or (201) 612-7415; please reference
Conference ID Number 13612965. 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 net sales, operating rates and margins for 2015;
-
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, medical, automotive
electronics, energy, telecommunications infrastructure, defense,
commercial aerospace, and science;
-
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 implementing our strategic plans and the timely and
successful completion and start-up of any capital projects;
-
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;
-
The success of the realignment of our businesses; and
-
The risk factors as set forth in Item 1A of our Form 10-K for the year
ended December 31, 2014.
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
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Attachment 1
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Consolidated Statements of Income
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|
|
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(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Second Quarter Ended
|
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Six Months Ended
|
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July 3,
|
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June 27,
|
|
July 3,
|
|
June 27,
|
(In thousands except per share amounts)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
276,855
|
|
$
|
287,965
|
|
|
$
|
566,879
|
|
|
$
|
546,894
|
|
Cost of sales
|
|
|
225,528
|
|
|
238,164
|
|
|
|
463,197
|
|
|
|
451,631
|
|
Gross margin
|
|
|
51,327
|
|
|
49,801
|
|
|
|
103,682
|
|
|
|
95,263
|
|
Selling, general and administrative expense
|
|
|
34,884
|
|
|
34,685
|
|
|
|
71,825
|
|
|
|
65,945
|
|
Research and development expense
|
|
|
3,586
|
|
|
3,443
|
|
|
|
6,934
|
|
|
|
6,230
|
|
Other - net
|
|
|
36
|
|
|
(2,895
|
)
|
|
|
(2,122
|
)
|
|
|
(2,533
|
)
|
Operating profit
|
|
|
12,821
|
|
|
14,568
|
|
|
|
27,045
|
|
|
|
25,621
|
|
Interest expense - net
|
|
|
650
|
|
|
672
|
|
|
|
1,307
|
|
|
|
1,367
|
|
Income before income taxes
|
|
|
12,171
|
|
|
13,896
|
|
|
|
25,738
|
|
|
|
24,254
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
3,293
|
|
|
3,922
|
|
|
|
7,231
|
|
|
|
6,949
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
8,878
|
|
$
|
9,974
|
|
|
$
|
18,507
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|
|
$
|
17,305
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Basic earnings per share:
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|
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Net income per share of common stock
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$
|
0.44
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|
$
|
0.48
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|
|
$
|
0.92
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|
$
|
0.84
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|
|
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Diluted earnings per share:
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|
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|
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Net income per share of common stock
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|
$
|
0.43
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|
$
|
0.47
|
|
|
$
|
0.90
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share
|
|
$
|
0.090
|
|
$
|
0.085
|
|
|
$
|
0.175
|
|
|
$
|
0.165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Weighted average number of shares of common stock outstanding
|
|
|
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|
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Basic
|
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20,153
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|
|
20,642
|
|
|
|
20,149
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|
|
|
20,625
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Diluted
|
|
|
20,461
|
|
|
21,001
|
|
|
|
20,453
|
|
|
|
20,983
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|
|
|
|
|
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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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July 3,
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|
Dec. 31,
|
(In thousands)
|
|
2015
|
|
2014
|
Assets
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|
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|
Current assets
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|
|
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|
Cash and cash equivalents
|
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$
|
20,629
|
|
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$
|
13,150
|
|
Accounts receivable
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|
117,178
|
|
|
|
112,780
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|
Inventories
|
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|
229,232
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|
|
|
232,409
|
|
Prepaid expenses
|
|
|
18,992
|
|
|
|
14,953
|
|
Deferred income taxes
|
|
|
13,806
|
|
|
|
13,402
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|
Total current assets
|
|
|
399,837
|
|
|
|
386,694
|
|
|
|
|
|
|
Long-term deferred income taxes
|
|
|
17,722
|
|
|
|
17,722
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|
|
|
|
|
|
Property, plant and equipment
|
|
|
811,645
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|
|
800,671
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Less allowances for depreciation, depletion and amortization
|
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(557,369
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)
|
|
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(553,083
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)
|
Property, plant, and equipment - net
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|
|
254,276
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|
|
|
247,588
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|
Intangible assets
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|
15,717
|
|
|
|
18,559
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Other assets
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|
4,985
|
|
|
|
4,781
|
|
Goodwill
|
|
|
86,725
|
|
|
|
86,725
|
|
Total Assets
|
|
$
|
779,262
|
|
|
$
|
762,069
|
|
|
|
|
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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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|
$
|
3,427
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|
|
$
|
653
|
|
Accounts payable
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|
31,508
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|
|
|
36,239
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|
Other liabilities and accrued items
|
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|
48,687
|
|
|
|
59,151
|
|
Income taxes
|
|
|
5,875
|
|
|
|
3,144
|
|
Unearned revenue
|
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|
4,597
|
|
|
|
4,879
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|
Total current liabilities
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|
94,094
|
|
|
|
104,066
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
18,060
|
|
|
|
18,203
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|
Retirement and post-employment benefits
|
|
|
100,782
|
|
|
|
103,891
|
|
Unearned income
|
|
|
48,523
|
|
|
|
51,796
|
|
Long-term income taxes
|
|
|
1,750
|
|
|
|
1,750
|
|
Deferred income taxes
|
|
|
3,377
|
|
|
|
617
|
|
Long-term debt
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|
|
41,213
|
|
|
|
23,613
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
471,463
|
|
|
|
458,133
|
|
Total Liabilities and Shareholders' Equity
|
|
$
|
779,262
|
|
|
$
|
762,069
|
|
|
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Materion Corporation
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Attachment 3
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Consolidated Statements of Cash Flows
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|
|
|
|
(Unaudited)
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|
|
|
|
|
|
Six Months Ended
|
|
|
July 3,
|
|
June 27,
|
(In thousands)
|
|
2015
|
|
2014
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
18,507
|
|
|
$
|
17,305
|
|
Adjustments to reconcile net income to net cash provided from
operating activities:
|
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|
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Depreciation, depletion and amortization
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20,117
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|
|
22,093
|
|
Amortization of deferred financing costs in interest expense
|
|
|
331
|
|
|
|
356
|
|
Stock-based compensation expense (non-cash)
|
|
|
2,655
|
|
|
|
3,027
|
|
Changes in assets and liabilities net of acquired assets and
liabilities:
|
|
|
|
|
Decrease (increase) in accounts receivable
|
|
|
(4,622
|
)
|
|
|
(8,680
|
)
|
Decrease (increase) in inventory
|
|
|
2,150
|
|
|
|
(16,559
|
)
|
Decrease (increase) in prepaid and other current assets
|
|
|
(4,037
|
)
|
|
|
(2,658
|
)
|
Decrease (increase) in deferred income taxes
|
|
|
2,177
|
|
|
|
58
|
|
Increase (decrease) in accounts payable and accrued expenses
|
|
|
(16,882
|
)
|
|
|
(8,965
|
)
|
Increase (decrease) in unearned revenue
|
|
|
(283
|
)
|
|
|
1,637
|
|
Increase (decrease) in interest and taxes payable
|
|
|
3,240
|
|
|
|
5,432
|
|
Increase (decrease) in long-term liabilities
|
|
|
(1,801
|
)
|
|
|
(11,419
|
)
|
Other - net
|
|
|
(509
|
)
|
|
|
(3,111
|
)
|
Net cash provided from (used in) operating activities
|
|
|
21,043
|
|
|
|
(1,484
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Payments for purchase of property, plant and equipment
|
|
|
(16,564
|
)
|
|
|
(12,859
|
)
|
Payments for mine development
|
|
|
(10,100
|
)
|
|
|
(337
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
18
|
|
|
|
3,009
|
|
Other investments - net
|
|
|
-
|
|
|
|
(2
|
)
|
Net cash (used in) investing activities
|
|
|
(26,646
|
)
|
|
|
(10,189
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from issuance (repayment) of short-term debt
|
|
|
2,346
|
|
|
|
(4,886
|
)
|
Proceeds from issuance of long-term debt
|
|
|
51,000
|
|
|
|
33,170
|
|
Repayment of long-term debt
|
|
|
(33,110
|
)
|
|
|
(15,492
|
)
|
Principal payments under capital lease obligations
|
|
|
(404
|
)
|
|
|
(328
|
)
|
Cash dividends paid
|
|
|
(3,523
|
)
|
|
|
(3,405
|
)
|
Repurchase of common stock
|
|
|
(2,748
|
)
|
|
|
(2,672
|
)
|
Issuance of common stock under stock option plans
|
|
|
-
|
|
|
|
360
|
|
Tax benefit from stock compensation realization
|
|
|
-
|
|
|
|
109
|
|
Net cash provided from financing activities
|
|
|
13,561
|
|
|
|
6,856
|
|
Effects of exchange rate changes
|
|
|
(479
|
)
|
|
|
105
|
|
Net change in cash and cash equivalents
|
|
|
7,479
|
|
|
|
(4,712
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
13,150
|
|
|
|
22,774
|
|
Cash and cash equivalents at end of period
|
|
$
|
20,629
|
|
|
$
|
18,062
|
|
|
|
|
|
|
|
|
|
|
Materion Corporation
|
|
|
|
|
|
|
|
|
|
Attachment 4
|
Reconciliation of Non-GAAP Measure Value-added sales
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
Second Quarter Ended
|
|
Six Months Ended
|
|
|
|
July 3, 2015
|
|
June 27, 2014
|
|
July 3, 2015
|
|
June 27, 2014
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
107.7
|
|
|
|
|
|
|
$
|
109.6
|
|
|
|
|
|
|
$
|
211.0
|
|
|
|
|
|
|
$
|
206.8
|
|
|
|
|
|
|
AM
|
|
|
131.4
|
|
|
|
|
|
|
|
145.0
|
|
|
|
|
|
|
|
281.3
|
|
|
|
|
|
|
|
274.3
|
|
|
|
|
|
|
Other
|
|
|
37.8
|
|
|
|
|
|
|
|
33.4
|
|
|
|
|
|
|
|
74.6
|
|
|
|
|
|
|
|
65.8
|
|
|
|
|
|
|
PC
|
|
|
|
38.3
|
|
|
|
|
|
|
34.1
|
|
|
|
|
|
|
74.9
|
|
|
|
|
|
|
68.0
|
|
|
|
|
Corp
|
|
|
|
(0.5
|
)
|
|
|
|
|
|
(0.7
|
)
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
(2.2
|
)
|
|
|
|
Total
|
|
$
|
276.9
|
|
|
|
|
|
|
$
|
288.0
|
|
|
|
|
|
|
$
|
566.9
|
|
|
|
|
|
|
$
|
546.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Pass-through Metal Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
16.2
|
|
|
|
|
|
|
$
|
19.7
|
|
|
|
|
|
|
$
|
33.9
|
|
|
|
|
|
|
$
|
36.9
|
|
|
|
|
|
|
AM
|
|
|
84.7
|
|
|
|
|
|
|
|
100.0
|
|
|
|
|
|
|
|
182.9
|
|
|
|
|
|
|
|
187.6
|
|
|
|
|
|
|
Other
|
|
|
13.6
|
|
|
|
|
|
|
|
8.7
|
|
|
|
|
|
|
|
25.1
|
|
|
|
|
|
|
|
17.9
|
|
|
|
|
|
|
PC
|
|
|
|
13.1
|
|
|
|
|
|
|
9.2
|
|
|
|
|
|
-
|
|
|
25.1
|
|
|
|
|
|
|
19.2
|
|
|
|
|
Corp
|
|
|
-
|
|
|
0.5
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
(1.3
|
)
|
|
|
|
Total
|
|
$
|
114.5
|
|
|
|
|
|
|
$
|
128.4
|
|
|
|
|
|
|
$
|
241.9
|
|
|
|
|
|
|
$
|
242.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-added Sales (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
91.5
|
|
|
|
|
|
|
$
|
89.9
|
|
|
|
|
|
|
$
|
177.1
|
|
|
|
|
|
|
$
|
169.9
|
|
|
|
|
|
|
AM
|
|
|
46.7
|
|
|
|
|
|
|
|
45.0
|
|
|
|
|
|
|
|
98.4
|
|
|
|
|
|
|
|
86.7
|
|
|
|
|
|
|
Other
|
|
|
24.2
|
|
|
|
|
|
|
|
24.7
|
|
|
|
|
|
|
|
49.5
|
|
|
|
|
|
|
|
47.9
|
|
|
|
|
|
|
PC
|
|
|
|
25.2
|
|
|
|
|
|
|
24.9
|
|
|
|
|
|
|
49.8
|
|
|
|
|
|
|
48.8
|
|
|
|
|
Corp
|
|
|
|
(1.0
|
)
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
(0.9
|
)
|
|
|
|
Total
|
|
$
|
162.4
|
|
|
|
|
|
|
$
|
159.6
|
|
|
|
|
|
|
$
|
325.0
|
|
|
|
|
|
|
$
|
304.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
Gross Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
25.5
|
|
|
|
|
28
|
%
|
|
$
|
24.6
|
|
|
|
|
27
|
%
|
|
$
|
48.6
|
|
|
|
|
27
|
%
|
|
$
|
47.3
|
|
|
|
|
28
|
%
|
|
AM
|
|
|
18.8
|
|
|
|
|
40
|
%
|
|
|
17.6
|
|
|
|
|
39
|
%
|
|
|
39.5
|
|
|
|
|
40
|
%
|
|
|
33.7
|
|
|
|
|
39
|
%
|
|
Other
|
|
|
7.0
|
|
|
|
|
|
|
|
7.6
|
|
|
|
|
|
|
|
15.6
|
|
|
|
|
|
|
|
14.3
|
|
|
|
|
|
|
PC
|
|
|
|
7.5
|
|
|
30
|
%
|
|
|
|
7.7
|
|
|
31
|
%
|
|
|
|
15.8
|
|
|
32
|
%
|
|
|
|
14.8
|
|
|
30
|
%
|
|
Corp
|
|
|
|
(0.5
|
)
|
|
50
|
%
|
|
|
|
(0.1
|
)
|
|
-
|
|
|
|
|
(0.2
|
)
|
|
67
|
%
|
|
|
|
(0.5
|
)
|
|
-
|
|
|
Total
|
|
$
|
51.3
|
|
|
|
|
32
|
%
|
|
$
|
49.8
|
|
|
|
|
31
|
%
|
|
$
|
103.7
|
|
|
|
|
32
|
%
|
|
$
|
95.3
|
|
|
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
Operating Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
9.3
|
|
|
|
|
10
|
%
|
|
$
|
6.3
|
|
|
|
|
7
|
%
|
|
$
|
16.1
|
|
|
|
|
9
|
%
|
|
$
|
12.5
|
|
|
|
|
7
|
%
|
|
AM
|
|
|
7.4
|
|
|
|
|
16
|
%
|
|
|
12.5
|
|
|
|
|
28
|
%
|
|
|
16.3
|
|
|
|
|
17
|
%
|
|
|
17.6
|
|
|
|
|
20
|
%
|
|
Other
|
|
|
(3.9
|
)
|
|
|
|
|
|
|
(4.3
|
)
|
|
|
|
|
|
|
(5.4
|
)
|
|
|
|
|
|
|
(4.5
|
)
|
|
|
|
|
|
PC
|
|
|
|
0.6
|
|
|
2
|
%
|
|
|
|
0.5
|
|
|
2
|
%
|
|
|
|
2.3
|
|
|
5
|
%
|
|
|
|
4.6
|
|
|
9
|
%
|
|
Corp
|
|
|
|
(4.5
|
)
|
|
-
|
|
|
|
|
(4.8
|
)
|
|
-
|
|
|
|
|
(7.7
|
)
|
|
-
|
|
|
|
|
(9.1
|
)
|
|
-
|
|
|
Total
|
|
$
|
12.8
|
|
|
|
|
8
|
%
|
|
$
|
14.5
|
|
|
|
|
9
|
%
|
|
$
|
27.0
|
|
|
|
|
8
|
%
|
|
$
|
25.6
|
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
AM
|
|
|
|
|
|
|
|
|
(5.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.0
|
)
|
|
|
|
|
|
Other
|
|
|
-
|
|
|
|
|
|
|
|
1.6
|
|
|
|
|
|
|
|
(2.1
|
)
|
|
|
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
PC
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
(2.5
|
)
|
|
|
|
Corp
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
1.5
|
|
|
|
|
|
-
|
|
|
(2.1
|
)
|
|
|
|
|
-
|
|
|
1.7
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
|
|
|
|
$
|
(3.8
|
)
|
|
|
|
|
|
$
|
(2.1
|
)
|
|
|
|
|
|
$
|
(5.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit Excluding Special Items
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
|
|
|
|
|
% of VA
|
|
PAC
|
|
$
|
9.3
|
|
|
|
|
10.2
|
%
|
|
$
|
6.3
|
|
|
|
|
7.0
|
%
|
|
$
|
16.1
|
|
|
|
|
9.1
|
%
|
|
$
|
12.5
|
|
|
|
|
7.4
|
%
|
|
AM
|
|
|
7.4
|
|
|
|
|
15.8
|
%
|
|
|
7.1
|
|
|
|
|
15.8
|
%
|
|
|
16.3
|
|
|
|
|
16.6
|
%
|
|
|
12.6
|
|
|
|
|
14.5
|
%
|
|
Other
|
|
|
(3.9
|
)
|
|
|
|
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
(7.5
|
)
|
|
|
|
|
|
|
(5.3
|
)
|
|
|
|
|
|
PC
|
|
|
|
0.6
|
|
|
2.4
|
%
|
|
|
|
0.6
|
|
|
2.4
|
%
|
|
|
|
2.3
|
|
|
4.6
|
%
|
|
|
|
2.1
|
|
|
4.3
|
%
|
|
Corp
|
|
|
|
(4.5
|
)
|
|
-
|
|
|
|
|
(3.3
|
)
|
|
-
|
|
|
|
|
(9.8
|
)
|
|
-
|
|
|
|
|
(7.4
|
)
|
|
-
|
|
|
Total
|
|
$
|
12.8
|
|
|
|
|
7.9
|
%
|
|
$
|
10.7
|
|
|
|
|
6.7
|
%
|
|
$
|
24.9
|
|
|
|
|
7.7
|
%
|
|
$
|
19.8
|
|
|
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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 their 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.
|
|
Materion Corporation
|
|
|
|
Attachment 5
|
Reconciliation of Non-GAAP Measure - Profitability
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
Six Months Ended
|
|
|
(In millions except per share amounts)
|
|
July 3, 2015
|
|
June 27, 2014
|
|
July 3, 2015
|
|
June 27, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP as Reported
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
276.9
|
|
|
$
|
288.0
|
|
|
$
|
566.9
|
|
|
$
|
546.9
|
|
|
|
|
Gross margin
|
|
|
51.3
|
|
|
|
49.8
|
|
|
|
103.7
|
|
|
|
95.3
|
|
|
|
|
Operating profit
|
|
|
12.8
|
|
|
|
14.5
|
|
|
|
27.0
|
|
|
|
25.6
|
|
|
|
|
Net income
|
|
|
8.9
|
|
|
|
10.0
|
|
|
|
18.5
|
|
|
|
17.3
|
|
|
|
|
EPS - Diluted
|
|
$
|
0.43
|
|
|
$
|
0.47
|
|
|
$
|
0.90
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility closure and reorganization costs (benefits)
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0.2
|
|
|
|
|
Selling, general and administrative
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.5
|
|
|
|
|
Other-net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2.6
|
)
|
|
Recovery from insurance and other litigation, net of expenses
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
$
|
-
|
|
|
$
|
2.9
|
|
|
$
|
1.7
|
|
|
$
|
2.9
|
|
|
|
|
Other-net
|
|
|
-
|
|
|
|
(6.7
|
)
|
|
|
(3.8
|
)
|
|
|
(6.8
|
)
|
|
|
Total special items
|
|
$
|
-
|
|
|
$
|
(3.8
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
(5.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items - net of tax
|
|
$
|
-
|
|
|
$
|
(2.5
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(3.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Special Item
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0.2
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures - Adjusted Profitability
|
|
|
|
|
|
|
|
|
|
|
|
Value-added (VA) sales
|
|
$
|
162.4
|
|
|
$
|
159.6
|
|
|
$
|
325.0
|
|
|
$
|
304.5
|
|
|
|
|
Gross margin
|
|
|
51.3
|
|
|
|
49.8
|
|
|
|
103.7
|
|
|
|
95.5
|
|
|
|
|
Gross margin % of VA
|
|
|
31.6
|
%
|
|
|
31.2
|
%
|
|
|
31.9
|
%
|
|
|
31.4
|
%
|
|
|
|
Operating profit
|
|
|
12.8
|
|
|
|
10.7
|
|
|
|
24.9
|
|
|
|
19.8
|
|
|
|
|
Operating profit % of VA
|
|
|
7.9
|
%
|
|
|
6.7
|
%
|
|
|
7.7
|
%
|
|
|
6.5
|
%
|
|
|
|
Net income
|
|
|
8.9
|
|
|
|
7.5
|
|
|
|
17.2
|
|
|
|
13.5
|
|
|
|
|
EPS - Diluted
|
|
$
|
0.43
|
|
|
$
|
0.36
|
|
|
$
|
0.84
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 facility closure and
reorganization costs, the net recovery from insurance and other
litigation claims, and certain income tax items 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
|
|
|
|
|
|
Attachment 6
|
Value-added Sales by Market
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
July 3, 2015
|
|
June 27, 2014
|
|
% Change
|
|
July 3, 2015
|
|
June 27, 2014
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materion Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
42.7
|
|
$
|
44.9
|
|
-5
|
%
|
|
$
|
87.2
|
|
$
|
86.8
|
|
0
|
%
|
|
Industrial Components
|
|
|
23.3
|
|
|
21.9
|
|
6
|
%
|
|
|
48.5
|
|
|
41.2
|
|
18
|
%
|
|
Medical
|
|
|
17.8
|
|
|
19.2
|
|
-7
|
%
|
|
|
35.4
|
|
|
33.3
|
|
6
|
%
|
|
Automotive Electronics |
|
|
15.0
|
|
|
13.9
|
|
8
|
%
|
|
|
30.0
|
|
|
27.5
|
|
9
|
%
|
|
Energy
|
|
|
9.1
|
|
|
12.2
|
|
-25
|
%
|
|
|
21.5
|
|
|
24.4
|
|
-12
|
%
|
|
Defense
|
|
|
11.4
|
|
|
8.7
|
|
31
|
%
|
|
|
21.0
|
|
|
17.1
|
|
23
|
%
|
|
Telecom Infrastructure
|
|
|
10.4
|
|
|
9.8
|
|
6
|
%
|
|
|
19.6
|
|
|
18.0
|
|
9
|
%
|
|
Other
|
|
|
32.7
|
|
|
29.0
|
|
13
|
%
|
|
|
61.8
|
|
|
56.2
|
|
10
|
%
|
|
|
Total
|
|
$
|
162.4
|
|
$
|
159.6
|
|
2
|
%
|
|
$
|
325.0
|
|
$
|
304.5
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloy & Composites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
16.5
|
|
$
|
17.0
|
|
-3
|
%
|
|
$
|
32.4
|
|
$
|
32.0
|
|
1
|
%
|
|
Industrial Components
|
|
|
17.4
|
|
|
16.3
|
|
7
|
%
|
|
|
35.5
|
|
|
30.2
|
|
18
|
%
|
|
Medical
|
|
|
1.7
|
|
|
4.6
|
|
-63
|
%
|
|
|
3.6
|
|
|
6.4
|
|
-44
|
%
|
|
Automotive Electronics |
|
|
13.7
|
|
|
13.5
|
|
1
|
%
|
|
|
27.5
|
|
|
26.8
|
|
3
|
%
|
|
Energy
|
|
|
5.4
|
|
|
9.1
|
|
-41
|
%
|
|
|
13.7
|
|
|
18.2
|
|
-25
|
%
|
|
Defense
|
|
|
6.8
|
|
|
4.9
|
|
39
|
%
|
|
|
11.7
|
|
|
9.9
|
|
18
|
%
|
|
Telecom Infrastructure
|
|
|
7.7
|
|
|
7.5
|
|
3
|
%
|
|
|
14.3
|
|
|
13.4
|
|
7
|
%
|
|
Other
|
|
|
22.3
|
|
|
17.0
|
|
31
|
%
|
|
|
38.4
|
|
|
33.0
|
|
16
|
%
|
|
|
Total
|
|
$
|
91.5
|
|
$
|
89.9
|
|
2
|
%
|
|
$
|
177.1
|
|
$
|
169.9
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
21.7
|
|
$
|
21.5
|
|
1
|
%
|
|
$
|
45.1
|
|
$
|
41.6
|
|
8
|
%
|
|
Industrial Components
|
|
|
5.1
|
|
|
4.9
|
|
4
|
%
|
|
|
11.4
|
|
|
9.3
|
|
23
|
%
|
|
Medical
|
|
|
2.6
|
|
|
2.2
|
|
18
|
%
|
|
|
5.3
|
|
|
4.0
|
|
33
|
%
|
|
Automotive Electronics |
|
|
-
|
|
|
-
|
|
0
|
%
|
|
|
-
|
|
|
-
|
|
0
|
%
|
|
Energy
|
|
|
3.7
|
|
|
3.1
|
|
19
|
%
|
|
|
7.8
|
|
|
6.2
|
|
26
|
%
|
|
Defense
|
|
|
1.5
|
|
|
1.4
|
|
7
|
%
|
|
|
3.5
|
|
|
2.7
|
|
30
|
%
|
|
Telecom Infrastructure
|
|
|
2.7
|
|
|
2.3
|
|
17
|
%
|
|
|
5.3
|
|
|
4.6
|
|
15
|
%
|
|
Other
|
|
|
9.4
|
|
|
9.6
|
|
-2
|
%
|
|
|
20.0
|
|
|
18.3
|
|
9
|
%
|
|
|
Total
|
|
$
|
46.7
|
|
$
|
45.0
|
|
4
|
%
|
|
$
|
98.4
|
|
$
|
86.7
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other/Precision Coatings Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
4.5
|
|
$
|
6.4
|
|
-30
|
%
|
|
$
|
9.7
|
|
$
|
13.2
|
|
-27
|
%
|
|
Industrial Components
|
|
|
0.8
|
|
|
0.7
|
|
14
|
%
|
|
|
1.6
|
|
|
1.7
|
|
-6
|
%
|
|
Medical
|
|
|
13.5
|
|
|
12.4
|
|
9
|
%
|
|
|
26.6
|
|
|
22.9
|
|
16
|
%
|
|
Automotive Electronics |
|
|
1.3
|
|
|
0.4
|
|
225
|
%
|
|
|
2.5
|
|
|
0.7
|
|
257
|
%
|
|
Energy
|
|
|
-
|
|
|
-
|
|
-
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
Defense
|
|
|
3.1
|
|
|
2.4
|
|
29
|
%
|
|
|
5.8
|
|
|
4.5
|
|
29
|
%
|
|
Telecom Infrastructure
|
|
|
-
|
|
|
-
|
|
-
|
|
|
|
-
|
|
|
-
|
|
-
|
|
|
Other
|
|
|
1.0
|
|
|
2.4
|
|
0
|
%
|
|
|
3.3
|
|
|
4.9
|
|
0
|
%
|
|
|
Total
|
|
$
|
24.2
|
|
$
|
24.7
|
|
-2
|
%
|
|
$
|
49.5
|
|
$
|
47.9
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|

View source version on businesswire.com: http://www.businesswire.com/news/home/20150730005786/en/
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
News Provided by Acquire Media