MAYFIELD HEIGHTS, Ohio--(BUSINESS WIRE)--Feb. 14, 2019--
Materion Corporation (NYSE:MTRN) today reported record fourth quarter
and full-year 2018 financial results and provided 2019 earnings guidance.
Fourth Quarter 2018 Results
-
Net sales were $298.1 million; Value-added sales increased 3% to a
fourth quarter record of $185.8 million
-
Operating profit was $14.4 million; Adjusted operating profit improved
29% to a fourth quarter record of $18.1 million
-
Net loss was $1.03 per share, diluted; Adjusted earnings were up 27%
to a fourth quarter record of $0.65 per share
Full Year 2018 Results
-
Net sales were $1.2 billion; Value-added sales increased 9% to a
record $739.0 million
-
Operating profit was $61.5 million; Adjusted operating profit improved
39% to a record $66.0 million
-
Net income was $1.01 per share, diluted; Adjusted earnings were up 38%
to a record $2.38 per share
Earnings Guidance
-
The Company is providing full-year 2019 adjusted earnings guidance of
$2.62 to $2.74 per share, representing a double-digit increase for the
third consecutive year
“We had an exceptional quarter and year as our multi-pillar strategy
continued to drive significant improvements across the company,” stated
Jugal Vijayvargiya, President and Chief Executive Officer. “Our team
achieved record results for employee safety, value-added sales, and
adjusted operating profit and EPS, despite softening market conditions
in the fourth quarter. We have now delivered eight consecutive quarters
of sales and profit growth. Going into 2019, we have established a solid
base for sales and profit growth and expect to deliver double-digit
profit growth for the third consecutive year.”
FOURTH QUARTER 2018 RESULTS
Net sales for the fourth quarter were $298.1 million, compared to $308.7
million for the prior year. Value-added sales of $185.8 million were a
fourth quarter record, up 3% from the prior year. Continued focus on
commercial excellence initiatives and application wins led to sales
growth despite softening market conditions in the fourth quarter.
Operating profit for the fourth quarter was $14.4 million compared to
$14.3 million in the prior year. Adjusted operating profit for the
quarter was a record $18.1 million, up 29% from the prior year. For the
second consecutive quarter, adjusted operating profit reached 10% of
value-added sales. Adjustments for special, non-recurring items in the
quarter included severance expense related to headcount reductions of
approximately 40 employees in Alzenau, Germany and the favorable impact
of year-end LIFO copper adjustment.
Fourth quarter 2018 net loss was $20.8 million, or $1.03 per share,
diluted, as a result of a non-cash, non-operating pension settlement
charge of approximately $41.0 million for annuitizing a portion of the
U.S. pension obligations. On an adjusted basis, net income was $13.4
million or $0.65 per share, diluted, up 27% compared to the prior year.
FULL-YEAR 2018 RESULTS
For the full-year 2018, net sales were $1.2 billion compared to $1.1
billion in 2017. Value-added sales were an all-time record of $739.0
million, up 9% compared to $677.7 million for the prior year. Strong
commercial execution across many of our top end markets along with new
product and new application wins contributed to growth significantly
above market.
Operating profit for the full year was $61.5 million versus $40.0
million in the prior year. Adjusted operating profit was an all-time
record of $66.0 million, up 39% from the prior year. This is the second
consecutive year of delivering greater than 30% profit growth.
Net income for 2018 was $20.8 million, or $1.01 per share, diluted, as
compared to $11.5 million, or $0.56 per share, in the prior year.
Excluding special items and the non-cash pension settlement charge, net
income for 2018 was an all-time record of $49.0 million, or $2.38 per
share, diluted, as compared to $35.2 million, or $1.72 per share, for
the prior year.
OUTLOOK
The Company has now achieved eight consecutive quarters of value-added
sales and adjusted operating profit growth. Despite growing
macroeconomic uncertainty and continued market softness in consumer
electronics, we expect strong financial performance to continue through
the execution of our multi-pillar strategy. As a result, we are
providing 2019 full-year adjusted earnings guidance of $2.62 to $2.74
per share, diluted, representing a 10% to 15% increase over the prior
year.
ADJUSTED EARNINGS GUIDANCE
It is not possible for the Company to identify the amount or
significance of future adjustments associated with potential insurance
and 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 an investor conference call with analysts
at 9:00 a.m. Eastern Time, February 14, 2019. 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 February
28, 2019 by dialing (877) 481-4010 or (919) 882-2331; please reference
replay ID number 41628. 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 2019;
-
The global economy, including the impact of tariffs and trade
agreements;
-
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;
-
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;
-
Other financial and economic factors, including the cost and
availability of raw materials (both base and precious metals),
physical inventory valuations, metal financing fees, tax rates,
exchange rates, interest rates, pension costs and required cash
contributions and other employee benefit costs, energy costs,
regulatory compliance costs, the cost and availability of insurance,
credit availability, and the impact of the Company’s stock price on
the cost of incentive compensation plans;
-
The uncertainties related to the impact of war, terrorist activities,
and acts of God;
-
Changes in government regulatory requirements and the enactment of new
legislation that impacts our obligations and operations;
-
The conclusion of pending litigation matters in accordance with our
expectation that there will be no material adverse effects; and
-
The risk factors as set forth in Item 1A of our Form 10-K.
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 (Loss) |
| (Unaudited) |
|
|
|
|
|
|
|
Fourth Quarter Ended |
|
Year Ended |
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
| (In thousands except per share amounts) |
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net sales
|
|
$
|
298,070
|
|
|
$
|
308,668
|
|
|
$
|
1,207,815
|
|
|
$
|
1,139,447
|
|
Cost of sales
|
|
232,018
|
|
|
249,683
|
|
|
956,710
|
|
|
926,618
|
|
Gross margin
|
|
66,052
|
|
|
58,985
|
|
|
251,105
|
|
|
212,829
|
|
Selling, general, and administrative expense
|
|
37,682
|
|
|
37,859
|
|
|
153,489
|
|
|
144,280
|
|
Research and development expense
|
|
3,434
|
|
|
3,878
|
|
|
15,187
|
|
|
13,981
|
|
Restructuring expense
|
|
5,599
|
|
|
(1,288
|
)
|
|
5,599
|
|
|
644
|
|
Other — net
|
|
4,950
|
|
|
4,258
|
|
|
15,334
|
|
|
13,893
|
|
Operating profit
|
|
14,387
|
|
|
14,278
|
|
|
61,496
|
|
|
40,031
|
|
Interest expense — net
|
|
461
|
|
|
462
|
|
|
2,471
|
|
|
2,183
|
|
Other non-operating expense — net
|
|
41,004
|
|
|
411
|
|
|
42,683
|
|
|
1,452
|
| Income (loss) before income taxes |
|
(27,078
|
)
|
|
13,405
|
|
|
16,342
|
|
|
36,396
|
|
Income tax (benefit) expense
|
|
(6,250
|
)
|
|
21,637
|
|
|
(4,504
|
)
|
|
24,945
|
| Net income (loss) |
|
$
|
(20,828
|
)
|
|
$
|
(8,232
|
)
|
|
$
|
20,846
|
|
|
$
|
11,451
|
| Basic earnings per share: |
|
|
|
|
|
|
|
|
|
Net income (loss) per share of common stock
|
|
$
|
(1.03
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
1.03
|
|
|
$
|
0.57
|
| Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
Net income (loss) per share of common stock
|
|
$
|
(1.03
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
1.01
|
|
|
$
|
0.56
|
| Cash dividends per share |
|
$
|
0.105
|
|
|
$
|
0.100
|
|
|
$
|
0.415
|
|
|
$
|
0.395
|
|
Weighted-average number of shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
20,249
|
|
|
20,086
|
|
|
20,212
|
|
|
20,027
|
|
Diluted
|
|
20,249
|
|
|
20,086
|
|
|
20,613
|
|
|
20,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attachment 2
|
| Materion Corporation and Subsidiaries |
| Consolidated Balance Sheets |
| (Unaudited) |
|
|
|
|
|
| (Thousands) |
|
December 31, 2018 |
|
December 31, 2017 |
| Assets |
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
70,645
|
|
|
$
|
41,844
|
|
|
Accounts receivable
|
|
130,538
|
|
|
124,014
|
|
|
Inventories
|
|
214,871
|
|
|
220,352
|
|
|
Prepaid and other current assets
|
|
23,299
|
|
|
24,733
|
|
|
Total current assets
|
|
439,353
|
|
|
410,943
|
|
|
Deferred income taxes
|
|
5,616
|
|
|
17,047
|
|
|
Property, plant, and equipment
|
|
898,251
|
|
|
891,789
|
|
|
Less allowances for depreciation, depletion, and amortization
|
|
(647,233
|
)
|
|
(636,211
|
)
|
|
Property, plant, and equipment—net
|
|
251,018
|
|
|
255,578
|
|
|
Intangible assets
|
|
6,461
|
|
|
9,847
|
|
|
Other assets
|
|
7,236
|
|
|
6,992
|
|
|
Goodwill
|
|
90,657
|
|
|
90,677
|
|
| Total Assets |
|
$
|
800,341
|
|
|
$
|
791,084
|
|
| Liabilities and Shareholders’ Equity |
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Short-term debt
|
|
$
|
823
|
|
|
$
|
777
|
|
|
Accounts payable
|
|
49,622
|
|
|
49,059
|
|
|
Salaries and wages
|
|
47,501
|
|
|
42,694
|
|
|
Other liabilities and accrued items
|
|
33,301
|
|
|
28,044
|
|
|
Income taxes
|
|
2,615
|
|
|
1,084
|
|
|
Unearned revenue
|
|
5,918
|
|
|
5,451
|
|
|
Total current liabilities
|
|
139,780
|
|
|
127,109
|
|
|
Other long-term liabilities
|
|
14,764
|
|
|
14,895
|
|
|
Capital lease obligations
|
|
15,221
|
|
|
16,072
|
|
|
Retirement and post-employment benefits
|
|
38,853
|
|
|
93,225
|
|
|
Unearned income
|
|
32,563
|
|
|
36,905
|
|
|
Long-term income taxes
|
|
2,993
|
|
|
4,857
|
|
|
Deferred income taxes
|
|
195
|
|
|
213
|
|
|
Long-term debt
|
|
2,066
|
|
|
2,827
|
|
|
Shareholders’ equity
|
|
553,906
|
|
|
494,981
|
|
| Total Liabilities and Shareholders’ Equity |
|
$
|
800,341
|
|
|
$
|
791,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attachment 3
|
| Materion Corporation and Subsidiaries |
| Consolidated Statements of Cash Flows |
| (Unaudited) |
|
|
|
|
|
| (Thousands) |
|
2018 |
|
2017 |
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
20,846
|
|
|
$
|
11,451
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation, depletion, and amortization
|
|
35,524
|
|
|
42,751
|
|
|
Amortization of deferred financing costs in interest expense
|
|
1,009
|
|
|
919
|
|
|
Stock-based compensation expense (non-cash)
|
|
5,313
|
|
|
4,957
|
|
|
Amortization of pension and post-retirement costs
|
|
5,551
|
|
|
4,865
|
|
|
Loss (gain) on the sale of property, plant, and equipment
|
|
518
|
|
|
234
|
|
|
Deferred income tax (benefit) expense
|
|
(1,318
|
)
|
|
20,256
|
|
|
Pension settlement charges
|
|
41,406
|
|
|
—
|
|
|
Changes in assets and liabilities net of acquired assets and
liabilities:
|
|
|
|
|
|
Decrease (increase) in accounts receivable
|
|
(7,219
|
)
|
|
(18,484
|
)
|
|
Decrease (increase) in inventory
|
|
4,234
|
|
|
(9,462
|
)
|
|
Decrease (increase) in prepaid and other current assets
|
|
1,162
|
|
|
(11,606
|
)
|
|
Increase (decrease) in accounts payable and accrued expenses
|
|
8,820
|
|
|
34,433
|
|
|
Increase (decrease) in unearned revenue
|
|
477
|
|
|
4,336
|
|
|
Increase (decrease) in interest and taxes payable
|
|
435
|
|
|
(514
|
)
|
|
Domestic pension plan contributions
|
|
(42,000
|
)
|
|
(16,000
|
)
|
|
Other-net
|
|
1,616
|
|
|
(341
|
)
|
| Net cash provided by operating activities |
|
76,374
|
|
|
67,795
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Payments for purchase of property, plant, and equipment
|
|
(27,702
|
)
|
|
(27,516
|
)
|
|
Payments for mine development
|
|
(6,558
|
)
|
|
(1,560
|
)
|
|
Payments for acquisition
|
|
—
|
|
|
(16,504
|
)
|
|
Proceeds from sale of property, plant, and equipment
|
|
432
|
|
|
2,222
|
|
| Net cash (used in) investing activities |
|
(33,828
|
)
|
|
(43,358
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
—
|
|
|
55,000
|
|
|
Repayment of long-term debt
|
|
(777
|
)
|
|
(55,797
|
)
|
|
Principal payments under capital lease obligations
|
|
(861
|
)
|
|
(843
|
)
|
|
Cash dividends paid
|
|
(8,389
|
)
|
|
(7,913
|
)
|
|
Deferred financing costs
|
|
—
|
|
|
(300
|
)
|
|
Repurchase of common stock
|
|
(422
|
)
|
|
(1,086
|
)
|
|
Payments of withholding taxes for stock-based compensation awards
|
|
(3,156
|
)
|
|
(4,506
|
)
|
| Net cash (used in) financing activities |
|
(13,605
|
)
|
|
(15,445
|
)
|
|
Effects of exchange rate changes
|
|
(140
|
)
|
|
1,388
|
|
| Net change in cash and cash equivalents |
|
28,801
|
|
|
10,380
|
|
| Cash and cash equivalents at beginning of period |
|
41,844
|
|
|
31,464
|
|
| Cash and cash equivalents at end of period |
|
$
|
70,645
|
|
|
$
|
41,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attachment 4
|
| Materion Corporation and Subsidiaries |
| Reconciliation of Non-GAAP Measure - Value-added Sales |
| (Unaudited) |
|
|
|
|
|
|
|
Fourth Quarter Ended |
|
Year Ended |
| (Millions) |
|
December 31, 2018 |
|
December 31, 2017 |
|
December 31, 2018 |
|
December 31, 2017 |
| Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloys and Composites
|
|
$
|
128.5
|
|
|
|
|
$
|
119.0
|
|
|
|
|
$
|
500.6
|
|
|
|
|
$
|
429.5
|
|
|
|
|
Advanced Materials
|
|
138.7
|
|
|
|
|
161.2
|
|
|
|
|
586.6
|
|
|
|
|
590.8
|
|
|
|
|
Precision Coatings
|
|
30.9
|
|
|
|
|
28.5
|
|
|
|
|
120.6
|
|
|
|
|
119.2
|
|
|
|
|
Other
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
Total
|
|
$
|
298.1
|
|
|
|
|
$
|
308.7
|
|
|
|
|
$
|
1,207.8
|
|
|
|
|
$
|
1,139.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less: Pass-through Metal Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloys and Composites
|
|
$
|
18.4
|
|
|
|
|
$
|
18.0
|
|
|
|
|
$
|
75.1
|
|
|
|
|
$
|
66.0
|
|
|
|
|
Advanced Materials
|
|
85.9
|
|
|
|
|
102.9
|
|
|
|
|
362.9
|
|
|
|
|
362.8
|
|
|
|
|
Precision Coatings
|
|
6.7
|
|
|
|
|
5.6
|
|
|
|
|
26.4
|
|
|
|
|
28.5
|
|
|
|
|
Other
|
|
1.3
|
|
|
|
|
1.0
|
|
|
|
|
4.4
|
|
|
|
|
4.5
|
|
|
|
|
Total
|
|
$
|
112.3
|
|
|
|
|
$
|
127.5
|
|
|
|
|
$
|
468.8
|
|
|
|
|
$
|
461.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Value-added Sales (non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloys and Composites
|
|
$
|
110.1
|
|
|
|
|
$
|
101.0
|
|
|
|
|
$
|
425.5
|
|
|
|
|
$
|
363.5
|
|
|
|
|
Advanced Materials
|
|
52.8
|
|
|
|
|
58.3
|
|
|
|
|
223.7
|
|
|
|
|
228.0
|
|
|
|
|
Precision Coatings
|
|
24.2
|
|
|
|
|
22.9
|
|
|
|
|
94.2
|
|
|
|
|
90.7
|
|
|
|
|
Other
|
|
(1.3
|
)
|
|
|
|
(1.0
|
)
|
|
|
|
(4.4
|
)
|
|
|
|
(4.5
|
)
|
|
|
|
Total
|
|
$
|
185.8
|
|
|
|
|
$
|
181.2
|
|
|
|
|
$
|
739.0
|
|
|
|
|
$
|
677.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
% of |
|
|
|
% of |
|
|
|
% of |
| Gross Margin |
|
|
|
VA |
|
|
|
VA |
|
|
|
VA |
|
|
|
VA |
|
Performance Alloys and Composites
|
|
$
|
38.7
|
|
|
35
|
%
|
|
$
|
27.0
|
|
|
27
|
%
|
|
$
|
133.0
|
|
|
31
|
%
|
|
$
|
89.8
|
|
|
25
|
%
|
|
Advanced Materials
|
|
16.4
|
|
|
31
|
%
|
|
22.4
|
|
|
38
|
%
|
|
79.0
|
|
|
35
|
%
|
|
88.5
|
|
|
39
|
%
|
|
Precision Coatings
|
|
10.2
|
|
|
42
|
%
|
|
9.1
|
|
|
40
|
%
|
|
39.1
|
|
|
42
|
%
|
|
34.0
|
|
|
37
|
%
|
|
Other
|
|
0.8
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
Total
|
|
$
|
66.1
|
|
|
36
|
%
|
|
$
|
59.0
|
|
|
33
|
%
|
|
$
|
251.1
|
|
|
34
|
%
|
|
$
|
212.8
|
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
% of |
|
|
|
% of |
|
|
|
% of |
| Operating Profit |
|
|
|
VA |
|
|
|
VA |
|
|
|
VA |
|
|
|
VA |
|
Performance Alloys and Composites
|
|
$
|
19.9
|
|
|
18
|
%
|
|
$
|
9.5
|
|
|
9
|
%
|
|
$
|
58.8
|
|
|
14
|
%
|
|
$
|
22.0
|
|
|
6
|
%
|
|
Advanced Materials
|
|
(0.7
|
)
|
|
(1
|
)%
|
|
7.9
|
|
|
14
|
%
|
|
17.6
|
|
|
8
|
%
|
|
32.8
|
|
|
14
|
%
|
|
Precision Coatings
|
|
2.4
|
|
|
10
|
%
|
|
2.3
|
|
|
10
|
%
|
|
11.5
|
|
|
12
|
%
|
|
8.4
|
|
|
9
|
%
|
|
Other
|
|
(7.2
|
)
|
|
—
|
|
|
(5.4
|
)
|
|
—
|
|
|
(26.4
|
)
|
|
—
|
|
|
(23.2
|
)
|
|
—
|
|
|
Total
|
|
$
|
14.4
|
|
|
8
|
%
|
|
$
|
14.3
|
|
|
8
|
%
|
|
$
|
61.5
|
|
|
8
|
%
|
|
$
|
40.0
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter Ended |
|
Year Ended |
| (Millions) |
|
December 31, 2018 |
|
December 31, 2017 |
|
December 31, 2018 |
|
December 31, 2017 |
| Special Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Alloys and Composites
|
|
$
|
(1.9
|
)
|
|
|
|
$
|
(1.3
|
)
|
|
|
|
$
|
(1.9
|
)
|
|
|
|
$
|
0.1
|
|
|
|
|
Advanced Materials
|
|
5.6
|
|
|
|
|
—
|
|
|
|
|
5.6
|
|
|
|
|
1.3
|
|
|
|
|
Precision Coatings
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.4
|
|
|
|
|
Other
|
|
—
|
|
|
|
|
1.0
|
|
|
|
|
0.8
|
|
|
|
|
5.6
|
|
|
|
|
Total
|
|
$
|
3.7
|
|
|
|
|
$
|
(0.3
|
)
|
|
|
|
$
|
4.5
|
|
|
|
|
$
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
% of |
|
|
|
% of |
|
|
|
% of |
|
Operating Profit Excluding Special Items
|
|
|
|
VA
|
|
|
|
VA
|
|
|
|
VA
|
|
|
|
VA
|
|
Performance Alloys and Composites
|
|
$
|
18.0
|
|
|
16
|
%
|
|
$
|
8.2
|
|
|
8
|
%
|
|
$
|
56.9
|
|
|
13
|
%
|
|
$
|
22.1
|
|
|
6
|
%
|
|
Advanced Materials
|
|
4.9
|
|
|
9
|
%
|
|
7.9
|
|
|
14
|
%
|
|
23.2
|
|
|
10
|
%
|
|
34.1
|
|
|
15
|
%
|
|
Precision Coatings
|
|
2.4
|
|
|
10
|
%
|
|
2.3
|
|
|
10
|
%
|
|
11.5
|
|
|
12
|
%
|
|
8.8
|
|
|
10
|
%
|
|
Other
|
|
(7.2
|
)
|
|
—
|
|
|
(4.4
|
)
|
|
—
|
|
|
(25.6
|
)
|
|
—
|
|
|
(17.6
|
)
|
|
—
|
|
|
Total
|
|
$
|
18.1
|
|
|
10
|
%
|
|
$
|
14.0
|
|
|
8
|
%
|
|
$
|
66.0
|
|
|
9
|
%
|
|
$
|
47.4
|
|
|
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 is a non-GAAP financial 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) |
|
|
|
|
|
|
|
Fourth Quarter Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
| (Millions except per share amounts) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| GAAP as Reported |
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
298.1
|
|
|
$
|
308.7
|
|
|
$
|
1,207.8
|
|
|
$
|
1,139.5
|
|
|
Operating profit
|
|
14.4
|
|
|
14.3
|
|
|
61.5
|
|
|
40.0
|
|
|
Net income (loss)
|
|
(20.8
|
)
|
|
(8.2
|
)
|
|
20.8
|
|
|
11.5
|
|
|
EPS - Diluted
|
|
$
|
(1.03
|
)
|
|
$
|
(0.41
|
)
|
|
$
|
1.01
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
|
| Operating Profit Special Items |
|
|
|
|
|
|
|
|
|
Cost reductions
|
|
$
|
5.6
|
|
|
$
|
(1.3
|
)
|
|
$
|
5.6
|
|
|
$
|
0.7
|
|
|
Legacy legal & environmental costs
|
|
—
|
|
|
0.3
|
|
|
0.8
|
|
|
0.5
|
|
|
LIFO inventory adjustment
|
|
(1.9
|
)
|
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|
CEO transition
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
4.1
|
|
|
Acquisition costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
| Total operating profit special items |
|
$
|
3.7
|
|
|
$
|
(0.3
|
)
|
|
$
|
4.5
|
|
|
$
|
7.4
|
|
| Operating Profit Special Items - net of tax |
|
$
|
4.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
4.7
|
|
|
$
|
4.8
|
|
| Other Non-Operating Expense Special Items - net of tax |
|
$
|
31.4
|
|
|
$
|
—
|
|
|
$
|
31.4
|
|
|
$
|
—
|
|
| Tax Special Items |
|
$
|
(1.3
|
)
|
|
$
|
18.9
|
|
|
$
|
(7.9
|
)
|
|
$
|
18.9
|
|
|
|
|
|
|
|
|
|
|
| Non-GAAP Measures - Adjusted Profitability |
|
|
|
|
|
|
|
|
|
Value-added (VA) sales
|
|
$
|
185.8
|
|
|
$
|
181.2
|
|
|
$
|
739.0
|
|
|
$
|
677.7
|
|
|
Operating profit
|
|
18.1
|
|
|
14.0
|
|
|
66.0
|
|
|
47.4
|
|
|
Operating profit % of VA
|
|
9.7
|
%
|
|
7.7
|
%
|
|
8.9
|
%
|
|
7.0
|
%
|
|
Net income
|
|
13.4
|
|
|
10.5
|
|
|
49.0
|
|
|
35.2
|
|
|
EPS - Diluted
|
|
$
|
0.65
|
|
|
$
|
0.51
|
|
|
$
|
2.38
|
|
|
$
|
1.72
|
|
In addition to presenting financial statements prepared in accordance
with U.S. generally accepted accounting principles (GAAP), this earnings
release contains financial measures, including 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 non-cash pension
settlement charges, cost reduction initiatives (i.e., severance, asset
impairment charges, and net gains on asset disposals), legacy legal and
environmental costs, merger and acquisition costs, certain LIFO
inventory adjustments, certain income tax items, and CEO transition
costs from the applicable GAAP financial 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) |
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter Ended |
|
|
|
Year Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
December 31, |
|
December 31, |
|
|
| (Millions) |
|
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
| Materion Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
52.9
|
|
|
$
|
57.9
|
|
|
(8.6
|
)%
|
|
$
|
215.7
|
|
|
$
|
215.2
|
|
|
0.2
|
%
|
|
Industrial Components
|
|
27.6
|
|
|
26.8
|
|
|
3.0
|
%
|
|
117.5
|
|
|
105.3
|
|
|
11.6
|
%
|
|
Defense
|
|
19.0
|
|
|
18.5
|
|
|
2.7
|
%
|
|
71.3
|
|
|
55.3
|
|
|
28.9
|
%
|
|
Energy
|
|
18.0
|
|
|
14.5
|
|
|
24.1
|
%
|
|
71.1
|
|
|
49.1
|
|
|
44.8
|
%
|
|
Medical
|
|
15.8
|
|
|
13.1
|
|
|
20.6
|
%
|
|
58.8
|
|
|
56.1
|
|
|
4.8
|
%
|
|
Automotive Electronics
|
|
13.1
|
|
|
12.9
|
|
|
1.6
|
%
|
|
58.9
|
|
|
53.2
|
|
|
10.7
|
%
|
|
Telecom Infrastructure
|
|
9.7
|
|
|
8.2
|
|
|
18.3
|
%
|
|
39.4
|
|
|
31.3
|
|
|
25.9
|
%
|
|
Other
|
|
29.7
|
|
|
29.3
|
|
|
1.4
|
%
|
|
106.3
|
|
|
112.2
|
|
|
(5.3
|
)%
|
|
Total
|
|
$
|
185.8
|
|
|
$
|
181.2
|
|
|
2.5
|
%
|
|
$
|
739.0
|
|
|
$
|
677.7
|
|
|
9.0
|
%
|
| Performance Alloy and Composites |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
20.7
|
|
|
$
|
20.4
|
|
|
1.5
|
%
|
|
$
|
81.0
|
|
|
$
|
75.4
|
|
|
7.4
|
%
|
|
Industrial Components
|
|
21.4
|
|
|
20.9
|
|
|
2.4
|
%
|
|
92.7
|
|
|
80.0
|
|
|
15.9
|
%
|
|
Defense
|
|
12.2
|
|
|
13.2
|
|
|
(7.6
|
)%
|
|
45.1
|
|
|
33.8
|
|
|
33.4
|
%
|
|
Energy
|
|
10.4
|
|
|
5.6
|
|
|
85.7
|
%
|
|
35.2
|
|
|
19.5
|
|
|
80.5
|
%
|
|
Medical
|
|
2.8
|
|
|
1.6
|
|
|
75.0
|
%
|
|
8.0
|
|
|
6.8
|
|
|
17.6
|
%
|
|
Automotive Electronics
|
|
12.8
|
|
|
12.7
|
|
|
0.8
|
%
|
|
57.4
|
|
|
51.7
|
|
|
11.0
|
%
|
|
Telecom Infrastructure
|
|
8.6
|
|
|
6.6
|
|
|
30.3
|
%
|
|
34.0
|
|
|
24.2
|
|
|
40.5
|
%
|
|
Other
|
|
21.2
|
|
|
20.0
|
|
|
6.0
|
%
|
|
72.1
|
|
|
72.1
|
|
|
—
|
%
|
|
Total
|
|
$
|
110.1
|
|
|
$
|
101.0
|
|
|
9.0
|
%
|
|
$
|
425.5
|
|
|
$
|
363.5
|
|
|
17.1
|
%
|
| Advanced Materials |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
27.4
|
|
|
$
|
32.1
|
|
|
(14.6
|
)%
|
|
$
|
115.8
|
|
|
$
|
121.8
|
|
|
(4.9
|
)%
|
|
Industrial Components
|
|
3.2
|
|
|
3.2
|
|
|
—
|
%
|
|
13.6
|
|
|
13.9
|
|
|
(2.2
|
)%
|
|
Defense
|
|
1.5
|
|
|
1.4
|
|
|
7.1
|
%
|
|
6.2
|
|
|
5.8
|
|
|
6.9
|
%
|
|
Energy
|
|
7.6
|
|
|
9.0
|
|
|
(15.6
|
)%
|
|
35.9
|
|
|
29.7
|
|
|
20.9
|
%
|
|
Medical
|
|
3.2
|
|
|
2.3
|
|
|
39.1
|
%
|
|
11.8
|
|
|
10.7
|
|
|
10.3
|
%
|
|
Automotive Electronics
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
Telecom Infrastructure
|
|
1.1
|
|
|
1.6
|
|
|
(31.3
|
)%
|
|
5.3
|
|
|
7.1
|
|
|
(25.4
|
)%
|
|
Other
|
|
8.8
|
|
|
8.7
|
|
|
1.1
|
%
|
|
35.1
|
|
|
39.0
|
|
|
(10.0
|
)%
|
|
Total
|
|
$
|
52.8
|
|
|
$
|
58.3
|
|
|
(9.4
|
)%
|
|
$
|
223.7
|
|
|
$
|
228.0
|
|
|
(1.9
|
)%
|
| Precision Coatings |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Electronics
|
|
$
|
4.9
|
|
|
$
|
5.4
|
|
|
(9.3
|
)%
|
|
$
|
18.9
|
|
|
$
|
18.0
|
|
|
5.0
|
%
|
|
Industrial Components
|
|
2.8
|
|
|
2.7
|
|
|
3.7
|
%
|
|
11.1
|
|
|
11.4
|
|
|
(2.6
|
)%
|
|
Defense
|
|
5.4
|
|
|
3.8
|
|
|
42.1
|
%
|
|
20.1
|
|
|
15.6
|
|
|
28.8
|
%
|
|
Energy
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
Medical
|
|
9.8
|
|
|
9.2
|
|
|
6.5
|
%
|
|
39.0
|
|
|
38.6
|
|
|
1.0
|
%
|
|
Automotive Electronics
|
|
0.3
|
|
|
0.2
|
|
|
50.0
|
%
|
|
1.5
|
|
|
1.4
|
|
|
7.1
|
%
|
|
Telecom Infrastructure
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
Other
|
|
1.0
|
|
|
1.6
|
|
|
(37.5
|
)%
|
|
3.6
|
|
|
5.7
|
|
|
(36.8
|
)%
|
|
Total
|
|
$
|
24.2
|
|
|
$
|
22.9
|
|
|
5.7
|
%
|
|
$
|
94.2
|
|
|
$
|
90.7
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Eliminations |
|
$
|
(1.3
|
)
|
|
$
|
(1.0
|
)
|
|
|
|
$
|
(4.4
|
)
|
|
$
|
(4.5
|
)
|
|
|
Prior year numbers have been restated to conform to the current year
presentation.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190214005457/en/
Source: Materion Corporation
Investor Contact:
Stephen F. Shamrock
(216)
383-4010
stephen.shamrock@materion.com
Media Contact:
John G. McCloskey
(216)
383-6835
john.mccloskey@materion.com
https://materion.com
Mayfield
Hts-g