MAYFIELD HEIGHTS, Ohio--(BUSINESS WIRE)--
Materion Corporation (NYSE:MTRN) today reported second quarter 2016
financial results.
-
Net sales for the second quarter of 2016 were $249.8 million compared
to $235.5 million for the first quarter of 2016.
-
Second quarter 2016 value-added sales were $153.9 million, up 7% from
first quarter 2016 value-added sales of $143.9 million.
-
Second quarter 2016 earnings were $0.27 per share, diluted, in-line
with first quarter 2016 earnings of $0.27 per share, diluted.
-
Second quarter 2016 adjusted earnings were $0.31 per share, diluted,
up 15% from first quarter 2016 earnings of $0.27 per share, diluted.
-
The Company is narrowing the full-year adjusted earnings guidance to
$1.30 to $1.40 per share, diluted, from the previous annual guidance
range of $1.30 to $1.55 per share, diluted.
SECOND QUARTER 2016 RESULTS
Net sales for the second quarter were $249.8 million, compared to net
sales of $235.5 million in the first quarter of 2016 and $276.9 million
for the second quarter of 2015. Value-added sales were $153.9 million in
the second quarter of 2016, up sequentially 7% from the first quarter of
2016 value-added sales of $143.9 million and down compared to
value-added sales of $162.4 million for the second quarter of 2015.
The sequential growth in value-added sales in the second quarter of 2016
compared to the first quarter of 2016 was primarily due to stronger
demand from customers in the consumer electronics, industrial components
and telecommunications infrastructure markets. New product sales
accounted for 11% of total value-added sales in the quarter. The
year-over-year decline in value-added sales in the second quarter was
due almost entirely to the lack of raw material beryllium hydroxide
sales in 2016.
Net income for the second quarter of 2016 was $5.5 million, or $0.27 per
share, diluted. This compares to net income of $5.4 million for the
first quarter of 2016 and net income of $9.1 million for the second
quarter of the prior year. Adjusted earnings for the second quarter of
2016, which excludes due diligence costs for potential acquisitions, a
discrete tax benefit and legacy environmental costs, were $0.31 per
share, diluted, up 15% above first quarter 2016 earnings of $0.27 per
share, diluted.
For the first six months of 2016, net sales were $485.3 million compared
to net sales of $566.9 million for the same period of last year.
Value-added sales for the first six months of 2016 were $297.8 million,
compared to $325.0 million for the same period last year. The 8%
year-over-year decline in value-added sales is primarily reflective of
the absence of raw material beryllium hydroxide sales and a decrease in
product sales into the oil and gas exploration market.
Year-to-date net income was $10.9 million or $0.54 per share, diluted,
as compared to $18.1 million or $0.88 per share, diluted, in the
comparable period of the prior year. Excluding special items in both
periods, earnings for the first half of 2016 were $11.5 million, or
$0.57 per share, diluted, as compared to $16.8 million, or $0.82 per
share, diluted, for the same period last year. The $5.3 million decrease
in year-to-date adjusted earnings is driven by foreign exchange rate
impacts, primarily the lack of foreign exchange hedge gains in 2016, and
the temporary loss of beryllium hydroxide sales.
CHAIRMAN'S COMMENTS
Richard J. Hipple, Chairman, President and Chief Executive Officer,
stated, "The sequential value-added sales and earnings improvement we
experienced in the second quarter of 2016 in spite of a difficult global
economic environment is encouraging. We anticipate continued sequential
growth in the second half of 2016 as we are making progress on both our
organic and inorganic growth initiatives."
BUSINESS SEGMENT REPORTING
Performance Alloys and Composites
Net sales for Performance Alloys and Composites in the second quarter of
2016 were $97.7 million compared to net sales of $107.7 million in the
second quarter of 2015 and $90.6 million in the first quarter of 2016.
Value-added sales were $83.4 million in the second quarter of 2016,
compared to $91.5 million in the second quarter of 2015 and up
sequentially 7% or $5.2 million from the first quarter of 2016. The
year-over-year decline in sales was driven by the decrease in raw
material beryllium hydroxide sales, as segment product sales were flat
with the prior year period. The sequential improvement in value-added
sales was driven by customers in the consumer electronics and industrial
components end markets, particularly in the Asia region.
Operating profit for the second quarter of 2016 was $0.2 million as
compared to $9.3 million for the same period last year and down
sequentially from the $1.5 million of operating profit recorded in the
first quarter of 2016. The reduction in operating profit is due to the
lack of foreign exchange hedge gains, the temporary loss of beryllium
hydroxide sales, higher operating costs and unfavorable product mix. The
poor product mix partially reflects the decrease in sales of oil and gas
related products offset by growth in strip product sales in Asia.
Advanced Materials
Advanced Materials' net sales for the second quarter of 2016 were $113.6
million, which compares to second quarter 2015 net sales of $131.4
million and $108.1 million net sales for the first quarter of 2016.
Value-added sales for the second quarter of 2016 were $47.0 million, up
1% compared to the second quarter 2015 value-added sales of $46.7
million and up 12% as compared to the first quarter 2016 value-added
sales of $42.1 million. The sequential improvement in value-added sales
was primarily driven by strength from customers serving the consumer
electronics end market.
Operating profit for the second quarter of 2016 was $7.3 million, flat
with the operating profit of $7.4 million in the second quarter of 2015
and up sequentially 40% from the $5.2 million of operating profit in the
first quarter of 2016. Operating profit as a percent of value-added
sales in the second quarter of 2016 was 16%, up approximately 300 basis
points sequentially, as compared to the first quarter of 2016. The
sequential improvement is primarily due to increased sales volumes with
consumer electronics customers as our strategy to penetrate the broader
semiconductor market is gaining traction.
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 2016 were $38.5 million, which compares to net sales of $38.3
million for the second quarter of 2015. Value-added sales for the second
quarter of 2016 were $25.1 million, compared to value-added sales of
$25.2 million for the same period of 2015.
Precision Coatings' operating profit for the second quarter of 2016 was
$2.3 million or 9% of value-added sales, compared to $0.6 million of
operating profit recorded in the same period last year. The increase in
profits is due to the improved product mix, increased manufacturing
yields and realization of restructuring cost savings.
OUTLOOK
The second quarter 2016 consolidated financial results were in-line with
our expectations despite the absence of beryllium hydroxide sales.
Favorable results in both Advanced Materials and Precision Coatings
offset the performance decline in the Performance Alloy and Composites
segment. We continue to forecast hydroxide sales in the second half of
2016 in anticipation of completing negotiations with our hydroxide
customers.
The relative strength of our end markets remain mixed. Defense remains
strong. Our largest end market, consumer electronics, while returning to
year-over-year growth in the second quarter, is not anticipated to be as
strong as previously forecasted in the second half. Therefore, the
combination of reduced hydroxide sales, the softer expected growth in
our largest end market, partially offset by enhanced performance in
several of our businesses, we are narrowing the full-year adjusted
earnings guidance to $1.30 to $1.40 per share, diluted, from the
previous annual guidance range of $1.30 to $1.55 per share, diluted.
CONFERENCE CALL
Materion Corporation will host a conference call with analysts at 9:00
a.m. Eastern Time, July 28, 2016. 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 12,
2016 by dialing (877) 660-6853 or (201) 612-7415; please reference
Conference ID Number 13640503. 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 2016;
-
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, defense, telecommunications infrastructure, energy,
commercial aerospace and science;
-
Our ability to successfully complete negotiations with our largest
customer regarding sales of beryllium hydroxide;
-
Changes in product mix and the financial condition of customers;
-
Our success in developing and introducing new products and new product
ramp-up rates;
-
Our success in passing through the costs of raw materials to customers
or otherwise mitigating fluctuating prices for those materials,
including the impact of fluctuating prices on inventory values;
-
Our success in identifying acquisition candidates and in acquiring and
integrating such businesses;
-
The impact of the results of acquisitions on our ability to fully
achieve the strategic and financial objectives related to these
acquisitions;
-
Our success in implementing our strategic plans and the timely and
successful 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;
-
Our ability to strengthen our internal control over financial
reporting and disclosure controls and procedures;
-
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 Part 1, Item 1A of our Form 10-K for
the year ended December 31, 2015.
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)
|
|
July 1, 2016
|
|
July 3, 2015
|
|
July 1, 2016
|
|
July 3, 2015
|
|
Net sales
|
|
$
|
249,776
|
|
|
$
|
276,855
|
|
|
$
|
485,287
|
|
|
$
|
566,879
|
|
|
Cost of sales
|
|
204,470
|
|
|
225,528
|
|
|
396,624
|
|
|
463,197
|
|
|
Gross margin
|
|
45,306
|
|
|
51,327
|
|
|
88,663
|
|
|
103,682
|
|
|
Selling, general, and administrative expense
|
|
32,437
|
|
|
34,594
|
|
|
62,924
|
|
|
72,527
|
|
|
Research and development expense
|
|
3,171
|
|
|
3,586
|
|
|
6,623
|
|
|
6,934
|
|
|
Other — net
|
|
3,921
|
|
|
36
|
|
|
5,807
|
|
|
(2,122
|
)
|
|
Operating profit
|
|
5,777
|
|
|
13,111
|
|
|
13,309
|
|
|
26,343
|
|
|
Interest expense — net
|
|
512
|
|
|
650
|
|
|
927
|
|
|
1,307
|
|
|
Income before income taxes
|
|
5,265
|
|
|
12,461
|
|
|
12,382
|
|
|
25,036
|
|
|
Income tax (benefit) expense
|
|
(284
|
)
|
|
3,394
|
|
|
1,465
|
|
|
6,985
|
|
|
Net income
|
|
$
|
5,549
|
|
|
$
|
9,067
|
|
|
$
|
10,917
|
|
|
$
|
18,051
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
Net income per share of common stock
|
|
$
|
0.28
|
|
|
$
|
0.45
|
|
|
$
|
0.55
|
|
|
$
|
0.90
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Net income per share of common stock
|
|
$
|
0.27
|
|
|
$
|
0.44
|
|
|
$
|
0.54
|
|
|
$
|
0.88
|
|
|
Cash dividends per share
|
|
$
|
0.095
|
|
|
$
|
0.090
|
|
|
$
|
0.185
|
|
|
$
|
0.175
|
|
|
Weighted-average number of shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
20,015
|
|
|
20,153
|
|
|
20,016
|
|
|
20,149
|
|
|
Diluted
|
|
20,214
|
|
|
20,499
|
|
|
20,220
|
|
|
20,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attachment 2
|
|
Materion Corporation and Subsidiaries
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Thousands)
|
|
July 1, 2016
|
|
December 31, 2015
|
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,985
|
|
|
$
|
24,236
|
|
|
Accounts receivable
|
|
111,752
|
|
|
97,236
|
|
|
Inventories
|
|
211,965
|
|
|
211,820
|
|
|
Prepaid expenses
|
|
13,663
|
|
|
12,799
|
|
|
Total current assets
|
|
358,365
|
|
|
346,091
|
|
|
Long-term deferred income taxes
|
|
27,443
|
|
|
25,743
|
|
|
Property, plant and equipment
|
|
856,795
|
|
|
833,834
|
|
|
Less allowances for depreciation, depletion and amortization
|
|
(592,117
|
)
|
|
(570,205
|
)
|
|
Property, plant and equipment—net
|
|
264,678
|
|
|
263,629
|
|
|
Intangible assets
|
|
10,936
|
|
|
13,389
|
|
|
Other assets
|
|
5,760
|
|
|
6,716
|
|
|
Goodwill |
|
86,725
|
|
|
86,725
|
|
|
Total Assets
|
|
$
|
753,907
|
|
|
$
|
742,293
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Short-term debt
|
|
$
|
14,823
|
|
|
$
|
8,990
|
|
|
Accounts payable
|
|
30,213
|
|
|
31,888
|
|
|
Salaries and wages
|
|
21,665
|
|
|
27,494
|
|
|
Other liabilities and accrued items
|
|
23,355
|
|
|
22,035
|
|
|
Income taxes
|
|
4,254
|
|
|
2,373
|
|
|
Unearned revenue
|
|
2,953
|
|
|
3,695
|
|
|
Total current liabilities
|
|
97,263
|
|
|
96,475
|
|
|
Other long-term liabilities
|
|
18,049
|
|
|
18,435
|
|
|
Retirement and post-employment benefits
|
|
86,864
|
|
|
92,794
|
|
|
Unearned income
|
|
43,661
|
|
|
45,953
|
|
|
Long-term income taxes
|
|
1,293
|
|
|
1,293
|
|
|
Deferred income taxes
|
|
167
|
|
|
110
|
|
|
Long-term debt
|
|
13,884
|
|
|
4,276
|
|
|
Shareholders' equity
|
|
492,726
|
|
|
482,957
|
|
|
Total Liabilities and Shareholders' Equity
|
|
$
|
753,907
|
|
|
$
|
742,293
|
|
|
|
|
|
|
|
|
|
|
|
|
Attachment 3
|
|
Materion Corporation and Subsidiaries
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
Six Months Ended
|
|
(Thousands)
|
|
July 1, 2016
|
|
July 3, 2015
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
10,917
|
|
|
$
|
18,051
|
|
|
Adjustments to reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
23,497
|
|
|
20,117
|
|
|
Amortization of deferred financing costs in interest expense
|
|
281
|
|
|
331
|
|
|
Stock-based compensation expense
|
|
1,919
|
|
|
3,357
|
|
|
(Gain) loss on sale of property, plant, and equipment
|
|
(695
|
)
|
|
308
|
|
|
Deferred income tax (benefit) expense
|
|
(1,489
|
)
|
|
1,931
|
|
|
Changes in assets and liabilities net of acquired assets and
liabilities:
|
|
|
|
|
|
Decrease (increase) in accounts receivable
|
|
(13,013
|
)
|
|
(4,622
|
)
|
|
Decrease (increase) in inventory
|
|
1,153
|
|
|
2,150
|
|
|
Decrease (increase) in prepaid and other current assets
|
|
(782
|
)
|
|
(4,037
|
)
|
|
Increase (decrease) in accounts payable and accrued expenses
|
|
(7,871
|
)
|
|
(16,882
|
)
|
|
Increase (decrease) in unearned revenue
|
|
(743
|
)
|
|
(283
|
)
|
|
Increase (decrease) in interest and taxes payable
|
|
1,310
|
|
|
3,240
|
|
|
Increase (decrease) in long-term liabilities
|
|
(6,221
|
)
|
|
(1,801
|
)
|
|
Other-net
|
|
771
|
|
|
(817
|
)
|
|
Net cash provided by operating activities
|
|
9,034
|
|
|
21,043
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Payments for purchase of property, plant, and equipment
|
|
(14,326
|
)
|
|
(16,564
|
)
|
|
Payments for mine development
|
|
(7,806
|
)
|
|
(10,100
|
)
|
|
Proceeds from sale of property, plant, and equipment
|
|
827
|
|
|
18
|
|
|
Net cash used in investing activities
|
|
(21,305
|
)
|
|
(26,646
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of short-term debt
|
|
5,805
|
|
|
2,346
|
|
|
Proceeds from issuance of long-term debt
|
|
10,000
|
|
|
51,000
|
|
|
Repayment of long-term debt
|
|
(399
|
)
|
|
(33,110
|
)
|
|
Principal payments under capital lease obligations
|
|
(425
|
)
|
|
(404
|
)
|
|
Cash dividends paid
|
|
(3,704
|
)
|
|
(3,523
|
)
|
|
Repurchase of common stock
|
|
(2,663
|
)
|
|
(2,748
|
)
|
|
Net cash provided by financing activities
|
|
8,614
|
|
|
13,561
|
|
|
Effects of exchange rate changes
|
|
406
|
|
|
(479
|
)
|
|
Net change in cash and cash equivalents
|
|
(3,251
|
)
|
|
7,479
|
|
|
Cash and cash equivalents at beginning of period
|
|
24,236
|
|
|
13,150
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
20,985
|
|
|
$
|
20,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attachment 4
|
|
Materion Corporation and Subsidiaries
Reconciliation
of Non-GAAP Measure - Value-added Sales
(Unaudited)
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
Six Months Ended
|
|
(Millions)
|
|
July 1, 2016
|
|
|
July 3, 2015
|
|
July 1, 2016
|
|
July 3, 2015
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
97.7
|
|
|
|
|
|
|
|
$
|
107.7
|
|
|
|
|
|
|
$
|
188.3
|
|
|
|
|
|
|
$
|
211.0
|
|
|
|
|
|
|
AM
|
|
113.6
|
|
|
|
|
|
|
|
131.4
|
|
|
|
|
|
|
221.7
|
|
|
|
|
|
|
|
281.3
|
|
|
|
|
|
|
Other
|
|
38.5
|
|
|
|
|
|
|
|
37.8
|
|
|
|
|
|
|
75.3
|
|
|
|
|
|
|
|
74.6
|
|
|
|
|
|
|
PC
|
|
|
|
38.5
|
|
|
|
|
|
|
|
38.3
|
|
|
|
|
|
|
75.3
|
|
|
|
|
|
|
74.9
|
|
|
|
|
Corp
|
|
|
|
—
|
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
Total
|
|
$
|
249.8
|
|
|
|
|
|
|
|
$
|
276.9
|
|
|
|
|
|
|
$
|
485.3
|
|
|
|
|
|
|
$
|
566.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Pass-through Metal Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
14.3
|
|
|
|
|
|
|
|
$
|
16.2
|
|
|
|
|
|
|
$
|
26.7
|
|
|
|
|
|
|
|
33.9
|
|
|
|
|
|
|
AM
|
|
66.6
|
|
|
|
|
|
|
|
84.7
|
|
|
|
|
|
|
132.6
|
|
|
|
|
|
|
|
182.9
|
|
|
|
|
|
|
Other
|
|
15.0
|
|
|
|
|
|
|
|
13.6
|
|
|
|
|
|
|
28.2
|
|
|
|
|
|
|
|
25.1
|
|
|
|
|
|
|
PC
|
|
|
|
13.4
|
|
|
|
|
|
|
|
13.1
|
|
|
|
|
|
|
25.6
|
|
|
|
|
|
|
25.1
|
|
|
|
|
Corp
|
|
|
|
1.6
|
|
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
2.6
|
|
|
|
|
|
|
—
|
|
|
|
|
Total
|
|
$
|
95.9
|
|
|
|
|
|
|
|
$
|
114.5
|
|
|
|
|
|
|
$
|
187.5
|
|
|
|
|
|
|
$
|
241.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-added Sales (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
83.4
|
|
|
|
|
|
|
|
$
|
91.5
|
|
|
|
|
|
|
$
|
161.6
|
|
|
|
|
|
|
$
|
177.1
|
|
|
|
|
|
|
AM
|
|
47.0
|
|
|
|
|
|
|
|
46.7
|
|
|
|
|
|
|
89.1
|
|
|
|
|
|
|
|
98.4
|
|
|
|
|
|
|
Other
|
|
23.5
|
|
|
|
|
|
|
|
24.2
|
|
|
|
|
|
|
47.1
|
|
|
|
|
|
|
|
49.5
|
|
|
|
|
|
|
PC
|
|
|
|
25.1
|
|
|
|
|
|
|
|
25.2
|
|
|
|
|
|
|
49.7
|
|
|
|
|
|
|
49.8
|
|
|
|
|
Corp
|
|
|
|
(1.6
|
)
|
|
|
|
|
|
|
(1.0
|
)
|
|
|
|
|
|
(2.6
|
)
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
Total
|
|
$
|
153.9
|
|
|
|
|
|
|
|
$
|
162.4
|
|
|
|
|
|
|
$
|
297.8
|
|
|
|
|
|
|
$
|
325.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
|
|
|
% of
VA
|
|
|
|
|
|
|
% of
VA
|
|
|
|
|
% of
VA
|
|
|
|
|
|
|
|
% of
VA
|
|
PAC
|
|
$
|
16.3
|
|
|
|
|
20
|
%
|
|
|
$
|
25.5
|
|
|
|
|
28
|
%
|
|
$
|
34.0
|
|
|
|
21
|
%
|
|
|
$
|
48.6
|
|
|
|
27
|
%
|
|
AM
|
|
19.1
|
|
|
|
|
41
|
%
|
|
|
18.8
|
|
|
|
|
40
|
%
|
|
34.9
|
|
|
|
39
|
%
|
|
|
|
39.5
|
|
|
|
40
|
%
|
|
Other
|
|
9.9
|
|
|
|
|
—
|
|
|
|
7.0
|
|
|
|
|
—
|
|
|
19.8
|
|
|
|
—
|
%
|
|
|
|
15.6
|
|
|
|
—
|
|
|
PC
|
|
|
|
9.5
|
|
|
38
|
%
|
|
|
|
|
7.5
|
|
|
30
|
%
|
|
|
|
19.5
|
|
39
|
%
|
|
|
|
|
15.8
|
|
|
32
|
%
|
|
Corp
|
|
|
|
0.4
|
|
|
—
|
|
|
|
|
|
(0.5
|
)
|
|
—
|
|
|
|
|
0.3
|
|
—
|
%
|
|
|
|
|
(0.2
|
)
|
|
—
|
|
|
Total
|
|
$
|
45.3
|
|
|
|
|
29
|
%
|
|
|
$
|
51.3
|
|
|
|
|
32
|
%
|
|
$
|
88.7
|
|
|
|
30
|
%
|
|
|
$
|
103.7
|
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
|
|
|
% of
VA
|
|
|
|
|
|
|
% of
VA
|
|
|
|
|
% of
VA
|
|
|
|
|
|
|
|
% of
VA
|
|
PAC
|
|
$
|
0.2
|
|
|
|
|
—
|
%
|
|
|
$
|
9.3
|
|
|
|
|
10
|
%
|
|
$
|
1.7
|
|
|
|
1
|
%
|
|
|
$
|
16.1
|
|
|
|
9
|
%
|
|
AM
|
|
7.3
|
|
|
|
|
16
|
%
|
|
|
7.4
|
|
|
|
|
16
|
%
|
|
12.5
|
|
|
|
14
|
%
|
|
|
|
16.3
|
|
|
|
17
|
%
|
|
Other
|
|
(1.7
|
)
|
|
|
|
—
|
|
|
|
(3.6
|
)
|
|
|
|
—
|
|
|
(0.9
|
)
|
|
|
—
|
%
|
|
|
|
(6.1)
|
|
|
|
—
|
|
|
PC
|
|
|
|
2.3
|
|
|
9
|
%
|
|
|
|
|
0.6
|
|
|
2
|
%
|
|
|
|
6.4
|
|
13
|
%
|
|
|
|
|
2.3
|
|
|
5
|
%
|
|
Corp
|
|
|
|
(4.0
|
)
|
|
—
|
|
|
|
|
|
(4.2
|
)
|
|
—
|
|
|
|
|
(7.3
|
)
|
—
|
%
|
|
|
|
|
(8.4
|
)
|
|
—
|
|
|
Total
|
|
$
|
5.8
|
|
|
|
|
4
|
%
|
|
|
$
|
13.1
|
|
|
|
|
8
|
%
|
|
$
|
13.3
|
|
|
|
4
|
%
|
|
|
$
|
26.3
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
Six Months Ended
|
|
(Millions)
|
|
July 1, 2016
|
|
|
July 3, 2015
|
|
July 1, 2016
|
|
July 3, 2015
|
|
Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAC
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
AM
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Other
|
|
2.3
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
(2.1
|
)
|
|
|
|
|
|
PC
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
Corp
|
|
|
|
2.3
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
2.3
|
|
|
|
|
|
|
|
(2.1
|
)
|
|
|
|
Total
|
|
$
|
2.3
|
|
|
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
2.3
|
|
|
|
|
|
|
|
$
|
(2.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit Excluding Special Items
|
|
|
|
|
|
% of
VA
|
|
|
|
|
|
|
% of
VA
|
|
|
|
|
|
% of
VA
|
|
|
|
|
|
|
% of
VA
|
|
PAC
|
|
$
|
0.2
|
|
|
|
|
—
|
%
|
|
|
$
|
9.3
|
|
|
|
|
10
|
%
|
|
$
|
1.7
|
|
|
|
|
1
|
%
|
|
$
|
16.1
|
|
|
|
|
9
|
%
|
|
AM
|
|
7.3
|
|
|
|
|
16
|
%
|
|
|
7.4
|
|
|
|
|
16
|
%
|
|
12.5
|
|
|
|
|
14
|
%
|
|
|
16.3
|
|
|
|
|
17
|
%
|
|
Other
|
|
0.6
|
|
|
|
|
—
|
|
|
|
(3.6
|
)
|
|
|
|
—
|
|
|
1.4
|
|
|
|
|
—
|
|
|
|
(8.2
|
)
|
|
|
|
—
|
|
|
PC
|
|
|
|
2.3
|
|
|
9
|
%
|
|
|
|
|
0.6
|
|
|
2
|
%
|
|
|
|
6.4
|
|
|
13
|
%
|
|
|
|
2.3
|
|
|
5
|
%
|
|
Corp
|
|
|
|
(1.7
|
)
|
|
—
|
|
|
|
|
|
(4.2
|
)
|
|
—
|
|
|
|
|
(5.0
|
)
|
|
—
|
|
|
|
|
(10.5
|
)
|
|
—
|
|
|
Total
|
|
$
|
8.1
|
|
|
|
|
5
|
%
|
|
|
$
|
13.1
|
|
|
|
|
8
|
%
|
|
$
|
15.6
|
|
|
|
|
5
|
%
|
|
$
|
24.2
|
|
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 are 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 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)
|
|
July 1, 2016
|
|
July 3, 2015
|
|
July 1, 2016
|
|
July 3, 2015
|
|
GAAP as Reported
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
$
|
249.8
|
|
|
$
|
276.9
|
|
|
$
|
485.3
|
|
|
$
|
566.9
|
|
|
Gross margin
|
|
45.3
|
|
|
51.3
|
|
|
88.7
|
|
|
103.7
|
|
|
Operating profit
|
|
5.8
|
|
|
13.1
|
|
|
13.3
|
|
|
26.3
|
|
|
Net income
|
|
5.5
|
|
|
9.1
|
|
|
10.9
|
|
|
18.1
|
|
|
EPS - Diluted
|
|
$
|
0.27
|
|
|
$
|
0.44
|
|
|
$
|
0.54
|
|
|
$
|
0.88
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for Special Items
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Selling, general, and administrative expense
|
|
1.9
|
|
|
—
|
|
|
1.9
|
|
|
1.7
|
|
|
Other-net
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
(3.8
|
)
|
|
Total special items
|
|
$
|
2.3
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
|
$
|
(2.1
|
)
|
|
Special items - net of tax
|
|
$
|
1.5
|
|
|
$
|
—
|
|
|
$
|
1.5
|
|
|
$
|
(1.5
|
)
|
|
Tax Special Item
|
|
$
|
(0.9
|
)
|
|
$
|
—
|
|
|
$
|
(0.9
|
)
|
|
$
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures - Adjusted Profitability
|
|
|
|
|
|
|
|
|
|
Value-added (VA) sales
|
|
$
|
153.9
|
|
|
$
|
162.4
|
|
|
$
|
297.8
|
|
|
$
|
325.0
|
|
|
Gross margin
|
|
45.3
|
|
|
51.3
|
|
|
88.7
|
|
|
103.7
|
|
|
Gross margin % of VA |
|
29.4
|
%
|
|
31.6
|
%
|
|
29.8
|
%
|
|
31.9
|
%
|
|
Operating profit
|
|
8.1
|
|
|
13.1
|
|
|
15.6
|
|
|
24.2
|
|
|
Operating profit % of VA |
|
5.3
|
%
|
|
8.1
|
%
|
|
5.2
|
%
|
|
7.4
|
%
|
|
Net income
|
|
6.1
|
|
|
9.1
|
|
|
11.5
|
|
|
16.8
|
|
|
EPS - Diluted
|
|
$
|
0.31
|
|
|
$
|
0.44
|
|
|
$
|
0.57
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 the results for certain special items such as the net
recovery from insurance and other litigation claims, legacy
environmental costs, merger and acquisition costs, 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.
|
|
|
|
|
|
|
|
|
|
|
Attachment 6
|
|
Materion Corporation and Subsidiaries
Value-added
sales by Market
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
|
|
Six Months Ended
|
|
|
|
(Millions)
|
|
July 1, 2016
|
|
July 3, 2015
|
|
% Change
|
|
July 1, 2016
|
|
July 3, 2015
|
|
% Change
|
|
Materion Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
43.6
|
|
$
|
42.7
|
|
2.1
|
%
|
|
$
|
81.7
|
|
$
|
87.2
|
|
(6.3
|
)%
|
|
Industrial Components
|
|
23.4
|
|
23.3
|
|
0.4
|
%
|
|
45.2
|
|
48.5
|
|
(6.8
|
)%
|
|
Medical
|
|
17.5
|
|
17.8
|
|
(1.7
|
)%
|
|
35.8
|
|
35.5
|
|
0.8
|
%
|
|
Defense
|
|
15.0
|
|
11.4
|
|
31.6
|
%
|
|
29.3
|
|
21.0
|
|
39.5
|
%
|
|
Automotive Electronics |
|
13.6
|
|
15.0
|
|
(9.3
|
)%
|
|
26.3
|
|
30.0
|
|
(12.3
|
)%
|
|
Telecom Infrastructure
|
|
10.2
|
|
10.4
|
|
(1.9
|
)%
|
|
18.7
|
|
19.6
|
|
(4.6
|
)%
|
|
Energy
|
|
7.5
|
|
9.1
|
|
(17.6
|
)%
|
|
16.4
|
|
21.5
|
|
(23.7
|
)%
|
|
Other
|
|
23.1
|
|
32.7
|
|
(29.4
|
)%
|
|
44.4
|
|
61.7
|
|
(28.0
|
)%
|
|
Total
|
|
$
|
153.9
|
|
$
|
162.4
|
|
(5.2
|
)%
|
|
$
|
297.8
|
|
$
|
325.0
|
|
(8.4
|
)%
|
|
Performance Alloy and Composites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
16.6
|
|
$
|
16.5
|
|
0.6
|
%
|
|
$
|
31.4
|
|
$
|
32.4
|
|
(3.1
|
)%
|
|
Industrial Components
|
|
17.1
|
|
17.4
|
|
(1.7
|
)%
|
|
32.4
|
|
35.5
|
|
(8.7
|
)%
|
|
Medical
|
|
1.8
|
|
1.7
|
|
5.9
|
%
|
|
3.6
|
|
3.6
|
|
—
|
%
|
|
Defense
|
|
9.6
|
|
6.8
|
|
41.2
|
%
|
|
19.3
|
|
11.7
|
|
65.0
|
%
|
|
Automotive Electronics |
|
13.0
|
|
13.7
|
|
(5.1
|
)%
|
|
24.9
|
|
27.5
|
|
(9.5
|
)%
|
|
Telecom Infrastructure
|
|
7.8
|
|
7.7
|
|
1.3
|
%
|
|
14.0
|
|
14.3
|
|
(2.1
|
)%
|
|
Energy
|
|
4.4
|
|
5.4
|
|
(18.5
|
)%
|
|
10.0
|
|
13.7
|
|
(27.0
|
)%
|
|
Other
|
|
13.1
|
|
22.3
|
|
(41.3
|
)%
|
|
26.0
|
|
38.4
|
|
(32.3
|
)%
|
|
Total
|
|
$
|
83.4
|
|
$
|
91.5
|
|
(8.9
|
)%
|
|
$
|
161.6
|
|
$
|
177.1
|
|
(8.8
|
)%
|
|
Advanced Materials
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
21.8
|
|
$
|
21.7
|
|
0.5
|
%
|
|
$
|
41.1
|
|
$
|
45.1
|
|
(8.9
|
)%
|
|
Industrial Components
|
|
5.7
|
|
5.1
|
|
11.8
|
%
|
|
10.7
|
|
11.4
|
|
(6.1
|
)%
|
|
Medical
|
|
3.0
|
|
2.6
|
|
15.4
|
%
|
|
5.8
|
|
5.3
|
|
9.4
|
%
|
|
Defense
|
|
1.7
|
|
1.5
|
|
13.3
|
%
|
|
3.2
|
|
3.5
|
|
(8.6
|
)%
|
|
Automotive Electronics |
|
—
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
|
—
|
%
|
|
Telecom Infrastructure
|
|
2.4
|
|
2.7
|
|
(11.1
|
)%
|
|
4.7
|
|
5.3
|
|
(11.3
|
)%
|
|
Energy
|
|
3.1
|
|
3.7
|
|
(16.2
|
)%
|
|
6.4
|
|
7.8
|
|
(17.9
|
)%
|
|
Other
|
|
9.3
|
|
9.4
|
|
(1.1
|
)%
|
|
17.2
|
|
20.0
|
|
(14.0
|
)%
|
|
Total
|
|
$
|
47.0
|
|
$
|
46.7
|
|
0.6
|
%
|
|
$
|
89.1
|
|
$
|
98.4
|
|
(9.5
|
)%
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
5.2
|
|
$
|
4.5
|
|
15.6
|
%
|
|
$
|
9.2
|
|
$
|
9.7
|
|
(5.2
|
)%
|
|
Industrial Components
|
|
0.6
|
|
0.8
|
|
(25.0
|
)%
|
|
2.1
|
|
1.6
|
|
31.3
|
%
|
|
Medical
|
|
12.7
|
|
13.5
|
|
(5.9
|
)%
|
|
26.4
|
|
26.6
|
|
(0.8
|
)%
|
|
Defense
|
|
3.7
|
|
3.1
|
|
19.4
|
%
|
|
6.8
|
|
5.8
|
|
17.2
|
%
|
|
Automotive Electronics |
|
0.6
|
|
1.3
|
|
(53.8
|
)%
|
|
1.4
|
|
2.5
|
|
(44.0
|
)%
|
|
Telecom Infrastructure
|
|
—
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
|
—
|
%
|
|
Energy
|
|
—
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
|
—
|
%
|
|
Other
|
|
0.7
|
|
1.0
|
|
(30.0
|
)%
|
|
1.2
|
|
3.3
|
|
(63.6
|
)%
|
|
Total
|
|
$
|
23.5
|
|
$
|
24.2
|
|
(2.9
|
)%
|
|
$
|
47.1
|
|
$
|
49.5
|
|
(4.8
|
)%
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160728005821/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