MAYFIELD HEIGHTS, Ohio--(BUSINESS WIRE)--
Materion Corporation (NYSE:MTRN) today reported first quarter 2017
financial results.
-
Earnings per share for the first quarter of 2017 were $0.15 per share,
diluted. Adjusted earnings per share, diluted, for the first quarter
of 2017 were $0.29 compared to $0.27 for the first quarter of 2016.
-
Net sales for the first quarter of 2017 were $240.7 million compared
to $235.5 million for the first quarter of 2016. Value-added sales for
the first quarter of 2017 were $149.0 million, an increase of 4%
compared to the first quarter of 2016.
-
Acquisition of the Heraeus high-performance target materials business
was successfully completed and contributed to profitable growth.
-
The Company confirms its previously announced 2017 annual earnings
guidance range of $1.45 - $1.60 per share, diluted.
FIRST QUARTER 2017 RESULTS
Net sales for the first quarter of 2017 were $240.7 million, compared to
net sales of $235.5 million for the first quarter of 2016. Value-added
sales were $149.0 million for the first quarter of 2017, a 4% increase
compared to value-added sales of $143.9 million for the first quarter of
2016. We experienced year-over-year growth in the consumer electronics
and industrial components end markets due to new product sales and
improved end market demand. The Company has achieved year-over-year
growth for the fourth consecutive quarter in consumer electronics, our
largest end market. This improvement was partially offset by a decline
in sales into the medical and telecommunications infrastructure end
markets. Although the defense end market value-added sales remained
relatively strong in historical terms, value-added sales were not as
high as the prior-year first quarter levels.
Operating profit for the first quarter of 2017 was $3.4 million versus
$7.5 million for the first quarter of the prior year. Adjusted operating
profit in the first quarter of 2017 was $7.7 million, an increase of 3%
over the prior-year first quarter and sequentially an increase of 7%
compared to the $7.2 million recorded in the fourth quarter of 2016.
Adjusted operating profit excludes non-recurring costs related to the
Company's CEO transition, acquisition and integration, cost realignment,
and legacy environmental remediation. The improvement in adjusted
operating profit is due to sales growth offset slightly by an
unfavorable product mix.
Net income for the first quarter of 2017 was $3.1 million, or $0.15 per
share, diluted, versus $5.4 million, or $0.27 per share, diluted, for
the first quarter of the prior year. Adjusted earnings for the first
quarter of 2017 were $0.29 per share, diluted, a 7% increase compared to
$0.27 per share, diluted, in the first quarter of 2016.
Jugal Vijayvargiya, President and Chief Executive Officer, commented, "I
am pleased with our first quarter results and the momentum we have
moving into the second quarter and second half of 2017. We grew
value-added sales on both a sequential and year-over-year basis, and the
acquisition of Heraeus high-performance target materials business was
successfully completed late in the quarter."
Mr. Vijayvargiya, continued, "After having the opportunity to spend the
past few weeks meeting with employees and visiting Company locations, I
am even more excited about Materion's future growth potential based on
our highly differentiated product platforms. I look forward to
continuing to drive Materion in the areas of innovation and technology,
focusing on profitable growth coupled with a commitment to operational
and commercial excellence."
BUSINESS SEGMENT REPORTING
Advanced Materials
Advanced Materials' net sales for the first quarter of 2017 were $114.7
million, versus first quarter 2016 net sales of $108.1 million.
Value-added sales for the first quarter of 2017 were $47.3 million, an
increase of 12% compared to first quarter 2016 value-added sales of
$42.1 million. Acquisition of the Heraeus high-performance target
materials business contributed $2.9 million of value-added sales in the
quarter.
Operating profit for the first quarter of 2017 was $6.4 million,
compared to operating profit of $5.2 million in the first quarter of
2016. Excluding non-recurring acquisition and integration costs,
adjusted operating profit for the first quarter of 2017 was $7.4
million, a 42% year-over-year increase. This improvement in adjusted
operating profit is due to favorable product mix driven by new product
sales growth and stronger demand in several key end markets, including
the segment's largest end market of consumer electronics.
The Heraeus acquisition also contributed favorably to the growth in
adjusted operating profit during the first quarter of 2017. Integration
of this acquisition into our global Advanced Materials business is
progressing on schedule. We are encouraged that the strategic value
drivers of geographic expansion and product diversification are
forecasted to contribute profitable growth in 2017.
Performance Alloys and Composites
Net sales for Performance Alloys and Composites in the first quarter of
2017 were $92.6 million, versus net sales of $90.6 million in the first
quarter of 2016. Value-added sales were $79.2 million in the first
quarter of 2017 compared to $78.2 million in the first quarter of 2016.
The year-over-year increase in value-added sales in the first quarter of
2017 is primarily due to growth in the consumer electronics and
industrial components end markets, offset by decreased sales into the
defense end market.
Operating profit for the first quarter of 2017 was $0.2 million,
compared to $1.5 million in the first quarter of 2016. Excluding cost
reduction efforts, primarily related to the closure of our service
center in Fukaya, Japan, adjusted operating profit for the first quarter
of 2017 was $0.7 million. The decrease in adjusted operating profit
versus the same period in the prior year is due to unfavorable product
mix.
Precision Coatings
Precision Coatings' net sales for the first quarter of 2017 were $33.4
million, versus net sales of $36.8 million in the first quarter of 2016
and $30.5 million in the fourth quarter of 2016. Value-added sales for
the first quarter of 2017 were $23.3 million, compared to value-added
sales of $24.6 million for the same period of 2016 and $22.2 million in
the fourth quarter of 2016. The decrease in value-added sales on a
year-over-year basis is reflective of decreased medical end market
sales, offset partially by sales growth in defense applications.
Precision Coatings' operating profit for the first quarter of 2017 was
$2.2 million, compared to $4.1 million in the first quarter of 2016 and
$1.8 million in the fourth quarter of 2016. The decrease in operating
profit on a year-over-year basis was due to lower sales volume and
unfavorable product mix.
OUTLOOK
Based on the current order book, the Company confirms its previously
announced annual earnings guidance range of $1.45 to $1.60 per share.
The forecasted significant improvement in quarterly earnings as we
progress through the balance of 2017 is being driven by new product
sales growth, favorable product mix, end market demand growth, raw
material beryllium hydroxide shipments, an improved cost structure, and
acquisition of the Heraeus target materials business.
ADJUSTED EARNINGS GUIDANCE
It is not possible for the Company to identify the amount or
significance of future adjustments associated with potential insurance
and other litigation claims, legacy environmental costs, acquisition and
integration costs, certain income tax items, or other non-routine costs
that the Company adjusts in the presentation of adjusted earnings
guidance. These items are dependent on future events that are not
reasonably estimable at this time. Accordingly, the Company is unable to
reconcile without unreasonable effort the forecasted range of adjusted
earnings guidance for the full year to a comparable GAAP range. However,
items excluded from the Company's adjusted earnings guidance include the
historical adjustments noted in Attachments 4 and 5 to this press
release.
CONFERENCE CALL
Materion Corporation will host a conference call with analysts at 9:00
a.m. Eastern Time, April 28, 2017. 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 May 13,
2017 by dialing (877) 481-4010 or (919) 882-2331; please reference
Replay ID Number 10271. 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 2017;
-
Our ability to effectively integrate the acquisition of the principal
portion of the high-performance target materials business of Heraeus;
-
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, defense, medical,
automotive electronics, telecommunications infrastructure, energy,
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 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;
-
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;
-
Our ability to strengthen our internal control over financial
reporting and disclosure controls and procedures; and
-
The risk factors as set forth in Item 1A of our Form 10-K for the year
ended December 31, 2016.
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)
|
|
|
|
|
|
First Quarter Ended
|
(In thousands except per share amounts)
|
|
March 31, 2017
|
|
April 1, 2016
|
Net sales
|
|
$
|
240,669
|
|
|
$
|
235,511
|
Cost of sales
|
|
197,673
|
|
|
192,154
|
Gross margin
|
|
42,996
|
|
|
43,357
|
Selling, general, and administrative expense
|
|
33,628
|
|
|
30,487
|
Research and development expense
|
|
3,130
|
|
|
3,452
|
Other — net
|
|
2,818
|
|
|
1,886
|
Operating profit
|
|
3,420
|
|
|
7,532
|
Interest expense — net
|
|
493
|
|
|
415
|
Income before income taxes
|
|
2,927
|
|
|
7,117
|
Income tax (benefit) expense
|
|
(123
|
)
|
|
1,749
|
Net income
|
|
$
|
3,050
|
|
|
$
|
5,368
|
Basic earnings per share:
|
|
|
|
|
Net income per share of common stock
|
|
$
|
0.15
|
|
|
$
|
0.27
|
Diluted earnings per share:
|
|
|
|
|
Net income per share of common stock
|
|
$
|
0.15
|
|
|
$
|
0.27
|
Cash dividends per share
|
|
$
|
0.095
|
|
|
$
|
0.090
|
Weighted-average number of shares of common stock outstanding:
|
|
|
|
|
Basic
|
|
19,969
|
|
|
20,018
|
Diluted
|
|
20,375
|
|
|
20,228
|
|
|
|
|
|
|
Attachment 2
|
Materion Corporation and Subsidiaries Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Thousands)
|
|
March 31, 2017
|
|
December 31, 2016
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
16,341
|
|
|
$
|
31,464
|
|
Accounts receivable
|
|
115,497
|
|
|
100,817
|
|
Inventories
|
|
218,548
|
|
|
200,865
|
|
Prepaid and other current assets
|
|
14,157
|
|
|
12,138
|
|
Total current assets
|
|
364,543
|
|
|
345,284
|
|
Long-term deferred income taxes
|
|
41,727
|
|
|
39,409
|
|
Property, plant, and equipment
|
|
868,037
|
|
|
861,267
|
|
Less allowances for depreciation, depletion, and amortization
|
|
(612,286
|
)
|
|
(608,636
|
)
|
Property, plant, and equipment—net
|
|
255,751
|
|
|
252,631
|
|
Intangible assets
|
|
13,353
|
|
|
11,074
|
|
Other assets
|
|
6,214
|
|
|
5,950
|
|
Goodwill |
|
89,732
|
|
|
86,950
|
|
Total Assets
|
|
$
|
771,320
|
|
|
$
|
741,298
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
Current liabilities
|
|
|
|
|
Short-term debt
|
|
$
|
6,929
|
|
|
$
|
733
|
|
Accounts payable
|
|
40,654
|
|
|
32,533
|
|
Salaries and wages
|
|
19,239
|
|
|
29,885
|
|
Other liabilities and accrued items
|
|
23,655
|
|
|
21,340
|
|
Income taxes
|
|
3,647
|
|
|
4,781
|
|
Unearned revenue
|
|
2,231
|
|
|
1,105
|
|
Total current liabilities
|
|
96,355
|
|
|
90,377
|
|
Other long-term liabilities
|
|
17,321
|
|
|
17,979
|
|
Retirement and post-employment benefits
|
|
92,623
|
|
|
91,505
|
|
Unearned income
|
|
40,223
|
|
|
41,369
|
|
Long-term income taxes
|
|
1,994
|
|
|
2,100
|
|
Deferred income taxes
|
|
275
|
|
|
274
|
|
Long-term debt
|
|
25,430
|
|
|
3,605
|
|
Shareholders' equity
|
|
497,099
|
|
|
494,089
|
|
Total Liabilities and Shareholders' Equity
|
|
$
|
771,320
|
|
|
$
|
741,298
|
|
|
|
|
|
|
|
|
|
|
Attachment 3
|
Materion Corporation and Subsidiaries Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
First Quarter Ended
|
(Thousands)
|
|
March 31, 2017
|
|
April 1, 2016
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
3,050
|
|
|
$
|
5,368
|
|
Adjustments to reconcile net income to net cash provided from
operating activities:
|
|
|
|
|
Depreciation, depletion and amortization
|
|
10,090
|
|
|
11,308
|
|
Amortization of deferred financing costs in interest expense
|
|
230
|
|
|
151
|
|
Stock-based compensation expense (non-cash)
|
|
2,338
|
|
|
888
|
|
(Gain) loss on sale of property, plant, and equipment
|
|
28
|
|
|
(720
|
)
|
Deferred tax (benefit) expense
|
|
(696
|
)
|
|
(1,118
|
)
|
Changes in assets and liabilities net of acquired assets and
liabilities:
|
|
|
|
|
Decrease (increase) in accounts receivable
|
|
(13,644
|
)
|
|
(14,689
|
)
|
Decrease (increase) in inventory
|
|
(9,593
|
)
|
|
(527
|
)
|
Decrease (increase) in prepaid and other current assets
|
|
(1,435
|
)
|
|
(7
|
)
|
Increase (decrease) in accounts payable and accrued expenses
|
|
(835
|
)
|
|
(15,085
|
)
|
Increase (decrease) in unearned revenue
|
|
1,126
|
|
|
(255
|
)
|
Increase (decrease) in interest and taxes payable
|
|
(1,237
|
)
|
|
1,009
|
|
Increase (decrease) in long-term liabilities
|
|
(5,291
|
)
|
|
(2,920
|
)
|
Other-net
|
|
(960
|
)
|
|
(79
|
)
|
Net cash (used in) operating activities
|
|
(16,829
|
)
|
|
(16,676
|
)
|
Cash flows from investing activities:
|
|
|
|
|
Payments for purchase of property, plant, and equipment
|
|
(6,128
|
)
|
|
(5,714
|
)
|
Payments for mine development
|
|
(200
|
)
|
|
(4,782
|
)
|
Payments for acquisition
|
|
(16,406
|
)
|
|
—
|
|
Proceeds from sale of property, plant, and equipment
|
|
16
|
|
|
752
|
|
Net cash (used in) investing activities
|
|
(22,718
|
)
|
|
(9,744
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Repayment of short-term debt
|
|
6,186
|
|
|
14,103
|
|
Proceeds from issuance of long-term debt
|
|
27,000
|
|
|
10,000
|
|
Repayment of long-term debt
|
|
(5,180
|
)
|
|
(227
|
)
|
Principal payments under capital lease obligations
|
|
(190
|
)
|
|
(241
|
)
|
Cash dividends paid
|
|
(1,895
|
)
|
|
(1,801
|
)
|
Deferred financing fees
|
|
(300
|
)
|
|
—
|
|
Common shares withheld for taxes
|
|
(1,480
|
)
|
|
(768
|
)
|
Repurchase of common stock
|
|
(405
|
)
|
|
(462
|
)
|
Net cash provided by financing activities
|
|
23,736
|
|
|
20,604
|
|
Effects of exchange rate changes
|
|
688
|
|
|
448
|
|
Net change in cash and cash equivalents
|
|
(15,123
|
)
|
|
(5,368
|
)
|
Cash and cash equivalents at beginning of period
|
|
31,464
|
|
|
24,236
|
|
Cash and cash equivalents at end of period
|
|
$
|
16,341
|
|
|
$
|
18,868
|
|
|
|
|
|
|
|
|
|
|
Attachment 4
|
Materion Corporation and Subsidiaries Reconciliation
of Non-GAAP Measure - Value-added Sales (Unaudited)
|
|
|
|
|
|
|
|
First Quarter Ended
|
|
Fourth Quarter Ended
|
(Millions)
|
|
March 31, 2017
|
|
April 1, 2016
|
|
December 31, 2016
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloys and Composites
|
|
$
|
92.6
|
|
|
|
|
$
|
90.6
|
|
|
|
|
$
|
95.5
|
|
|
|
Advanced Materials
|
|
114.7
|
|
|
|
|
108.1
|
|
|
|
|
108.3
|
|
|
|
Precision Coatings
|
|
33.4
|
|
|
|
|
36.8
|
|
|
|
|
30.5
|
|
|
|
Other
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total
|
|
$
|
240.7
|
|
|
|
|
$
|
235.5
|
|
|
|
|
$
|
234.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Pass-through Metal Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloys and Composites
|
|
$
|
13.4
|
|
|
|
|
$
|
12.4
|
|
|
|
|
$
|
12.3
|
|
|
|
Advanced Materials
|
|
67.4
|
|
|
|
|
66.0
|
|
|
|
|
67.1
|
|
|
|
Precision Coatings
|
|
10.1
|
|
|
|
|
12.2
|
|
|
|
|
8.3
|
|
|
|
Other
|
|
0.8
|
|
|
|
|
1.0
|
|
|
|
|
1.5
|
|
|
|
Total
|
|
$
|
91.7
|
|
|
|
|
$
|
91.6
|
|
|
|
|
$
|
89.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-added Sales (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloys and Composites
|
|
$
|
79.2
|
|
|
|
|
$
|
78.2
|
|
|
|
|
$
|
83.2
|
|
|
|
Advanced Materials
|
|
47.3
|
|
|
|
|
42.1
|
|
|
|
|
41.2
|
|
|
|
Precision Coatings
|
|
23.3
|
|
|
|
|
24.6
|
|
|
|
|
22.2
|
|
|
|
Other
|
|
(0.8
|
)
|
|
|
|
(1.0
|
)
|
|
|
|
(1.5
|
)
|
|
|
Total
|
|
$
|
149.0
|
|
|
|
|
$
|
143.9
|
|
|
|
|
$
|
145.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
|
% of VA
|
|
|
|
% of VA
|
|
|
|
% of VA
|
Performance Alloys and Composites
|
|
$
|
16.3
|
|
|
21%
|
|
$
|
17.7
|
|
|
23%
|
|
$
|
19.0
|
|
|
23%
|
Advanced Materials
|
|
18.4
|
|
|
39%
|
|
15.8
|
|
|
38%
|
|
16.7
|
|
|
41%
|
Precision Coatings
|
|
8.3
|
|
|
36%
|
|
10.0
|
|
|
41%
|
|
7.6
|
|
|
34%
|
Other
|
|
—
|
|
|
—
|
|
(0.1
|
)
|
|
—
|
|
0.8
|
|
|
—
|
Total
|
|
$
|
43.0
|
|
|
29%
|
|
$
|
43.4
|
|
|
30%
|
|
$
|
44.1
|
|
|
30%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit
|
|
|
|
% of VA
|
|
|
|
% of VA
|
|
|
|
% of VA
|
Performance Alloys and Composites
|
|
$
|
0.2
|
|
|
—%
|
|
$
|
1.5
|
|
|
2%
|
|
$
|
0.5
|
|
|
1%
|
Advanced Materials
|
|
6.4
|
|
|
14%
|
|
5.2
|
|
|
12%
|
|
5.5
|
|
|
13%
|
Precision Coatings
|
|
2.2
|
|
|
9%
|
|
4.1
|
|
|
17%
|
|
1.8
|
|
|
8%
|
Other
|
|
(5.4
|
)
|
|
—
|
|
(3.3
|
)
|
|
—
|
|
(4.2
|
)
|
|
—
|
Total
|
|
$
|
3.4
|
|
|
2%
|
|
$
|
7.5
|
|
|
5%
|
|
$
|
3.6
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter Ended
|
|
Fourth Quarter Ended
|
(Millions)
|
|
March 31, 2017
|
|
April 1, 2016
|
|
December 31, 2016
|
Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloys and Composites
|
|
$
|
0.5
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
2.6
|
|
|
|
Advanced Materials
|
|
1.0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Precision Coatings
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Other
|
|
2.8
|
|
|
|
|
—
|
|
|
|
|
1.0
|
|
|
|
Total
|
|
$
|
4.3
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
3.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit Excluding Special Items
|
|
|
|
% of VA
|
|
|
|
% of VA
|
|
|
|
% of VA
|
Performance Alloys and Composites
|
|
$
|
0.7
|
|
|
1%
|
|
$
|
1.5
|
|
|
2%
|
|
$
|
3.1
|
|
|
4%
|
Advanced Materials
|
|
7.4
|
|
|
16%
|
|
5.2
|
|
|
12%
|
|
5.5
|
|
|
13%
|
Precision Coatings
|
|
2.2
|
|
|
9%
|
|
4.1
|
|
|
17%
|
|
1.8
|
|
|
8%
|
Other
|
|
(2.6
|
)
|
|
—
|
|
(3.3
|
)
|
|
—
|
|
(3.2
|
)
|
|
—
|
Total
|
|
$
|
7.7
|
|
|
5%
|
|
$
|
7.5
|
|
|
5%
|
|
$
|
7.2
|
|
|
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 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)
|
|
|
|
|
|
|
|
First Quarter Ended
|
|
Fourth Quarter Ended
|
(Millions except per share amounts)
|
|
March 31, 2017
|
|
April 1, 2016
|
|
December 31, 2016
|
GAAP as Reported
|
|
|
|
|
|
|
Net Sales |
|
$
|
240.7
|
|
|
$
|
235.5
|
|
|
$
|
234.3
|
|
Operating profit
|
|
3.4
|
|
|
7.5
|
|
|
3.6
|
|
Net income
|
|
3.1
|
|
|
5.4
|
|
|
6.8
|
|
EPS - Diluted
|
|
$
|
0.15
|
|
|
$
|
0.27
|
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
Operating Profit Special Items
|
|
|
|
|
|
|
Cost reductions
|
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
2.6
|
|
Legacy environmental costs
|
|
0.2
|
|
|
—
|
|
|
—
|
|
CEO transition
|
|
1.7
|
|
|
—
|
|
|
—
|
|
Acquisition costs
|
|
1.7
|
|
|
—
|
|
|
1.0
|
|
Total operating profit special items
|
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
3.6
|
|
Operating Profit Special Items - net of tax
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
Tax Special Item
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3.3
|
)
|
|
|
|
|
|
|
|
Non-GAAP Measures - Adjusted Profitability
|
|
|
|
|
|
|
Value-added (VA) sales
|
|
$
|
149.0
|
|
|
$
|
143.9
|
|
|
$
|
145.1
|
|
Operating profit
|
|
7.7
|
|
|
7.5
|
|
|
7.2
|
|
Operating profit % of VA |
|
5.2
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
Net income
|
|
5.9
|
|
|
5.4
|
|
|
5.8
|
|
EPS - Diluted
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, segment operating profit, net income, and earnings per share, on
a non-GAAP basis. As detailed in the above reconciliation and Attachment
4, we have adjusted the results for certain special items such as CEO
transition costs, cost reduction initiatives (i.e., asset impairment
charges and severance), 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)
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter Ended
|
|
|
|
Fourth Quarter
|
|
|
(Millions)
|
|
March 31, 2017
|
|
April 1, 2016
|
|
% Change
|
|
2016
|
|
% Change
|
Materion Corporation
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
41.3
|
|
|
$
|
38.1
|
|
|
8.4
|
%
|
|
$
|
41.5
|
|
|
(0.5
|
)%
|
Industrial Components
|
|
25.5
|
|
|
22.7
|
|
|
12.3
|
%
|
|
25.1
|
|
|
1.6
|
%
|
Medical
|
|
16.6
|
|
|
18.3
|
|
|
(9.3
|
)%
|
|
13.9
|
|
|
19.4
|
%
|
Defense
|
|
12.9
|
|
|
14.3
|
|
|
(9.8
|
)%
|
|
14.8
|
|
|
(12.8
|
)%
|
Automotive Electronics |
|
12.6
|
|
|
12.7
|
|
|
(0.8
|
)%
|
|
12.1
|
|
|
4.1
|
%
|
Energy
|
|
8.8
|
|
|
8.9
|
|
|
(1.1
|
)%
|
|
7.3
|
|
|
20.5
|
%
|
Telecom Infrastructure
|
|
7.0
|
|
|
7.8
|
|
|
(10.3
|
)%
|
|
8.5
|
|
|
(17.6
|
)%
|
Other
|
|
24.3
|
|
|
21.1
|
|
|
15.2
|
%
|
|
21.9
|
|
|
11.0
|
%
|
Total
|
|
$
|
149.0
|
|
|
$
|
143.9
|
|
|
3.5
|
%
|
|
$
|
145.1
|
|
|
2.7
|
%
|
Performance Alloy and Composites
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
16.5
|
|
|
$
|
14.7
|
|
|
12.2
|
%
|
|
$
|
17.8
|
|
|
(7.3
|
)%
|
Industrial Components
|
|
17.4
|
|
|
16.1
|
|
|
8.1
|
%
|
|
18.4
|
|
|
(5.4
|
)%
|
Medical
|
|
2.0
|
|
|
1.8
|
|
|
11.1
|
%
|
|
1.7
|
|
|
17.6
|
%
|
Defense
|
|
7.4
|
|
|
9.8
|
|
|
(24.5
|
)%
|
|
9.9
|
|
|
(25.3
|
)%
|
Automotive Electronics |
|
12.1
|
|
|
12.0
|
|
|
0.8
|
%
|
|
11.3
|
|
|
7.1
|
%
|
Energy
|
|
5.0
|
|
|
5.6
|
|
|
(10.7
|
)%
|
|
4.5
|
|
|
11.1
|
%
|
Telecom Infrastructure
|
|
5.1
|
|
|
5.4
|
|
|
(5.6
|
)%
|
|
6.8
|
|
|
(25.0
|
)%
|
Other
|
|
13.7
|
|
|
12.8
|
|
|
7.0
|
%
|
|
12.8
|
|
|
7.0
|
%
|
Total
|
|
$
|
79.2
|
|
|
$
|
78.2
|
|
|
1.3
|
%
|
|
$
|
83.2
|
|
|
(4.8
|
)%
|
Advanced Materials
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
21.3
|
|
|
$
|
19.3
|
|
|
10.4
|
%
|
|
$
|
18.7
|
|
|
13.9
|
%
|
Industrial Components
|
|
6.3
|
|
|
5.1
|
|
|
23.5
|
%
|
|
5.5
|
|
|
14.5
|
%
|
Medical
|
|
2.4
|
|
|
2.8
|
|
|
(14.3
|
)%
|
|
2.7
|
|
|
(11.1
|
)%
|
Defense
|
|
1.9
|
|
|
1.5
|
|
|
26.7
|
%
|
|
1.6
|
|
|
18.8
|
%
|
Automotive Electronics |
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
Energy
|
|
3.8
|
|
|
3.3
|
|
|
15.2
|
%
|
|
2.7
|
|
|
40.7
|
%
|
Telecom Infrastructure
|
|
1.9
|
|
|
2.4
|
|
|
(20.8
|
)%
|
|
1.7
|
|
|
11.8
|
%
|
Other
|
|
9.7
|
|
|
7.7
|
|
|
26.0
|
%
|
|
8.3
|
|
|
16.9
|
%
|
Total
|
|
$
|
47.3
|
|
|
$
|
42.1
|
|
|
12.4
|
%
|
|
$
|
41.2
|
|
|
14.8
|
%
|
Precision Coatings
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
3.5
|
|
|
$
|
4.2
|
|
|
(16.7
|
)%
|
|
$
|
5.0
|
|
|
(30.0
|
)%
|
Industrial Components
|
|
1.8
|
|
|
1.5
|
|
|
20.0
|
%
|
|
1.2
|
|
|
50.0
|
%
|
Medical
|
|
12.1
|
|
|
13.8
|
|
|
(12.3
|
)%
|
|
9.5
|
|
|
27.4
|
%
|
Defense
|
|
3.6
|
|
|
3.0
|
|
|
20.0
|
%
|
|
3.3
|
|
|
9.1
|
%
|
Automotive Electronics |
|
0.5
|
|
|
0.7
|
|
|
(28.6
|
)%
|
|
0.8
|
|
|
(37.5
|
)%
|
Energy
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
Telecom Infrastructure
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
Other
|
|
1.8
|
|
|
1.4
|
|
|
28.6
|
%
|
|
2.4
|
|
|
(25.0
|
)%
|
Total
|
|
$
|
23.3
|
|
|
$
|
24.6
|
|
|
(5.3
|
)%
|
|
$
|
22.2
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
$
|
(0.8
|
)
|
|
$
|
(1.0
|
)
|
|
|
|
$
|
(1.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|

View source version on businesswire.com: http://www.businesswire.com/news/home/20170428005367/en/
Materion Corporation
Investor Contact:
Stephen
F. Shamrock, 216-383-4010
stephen.shamrock@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