Press Release Details

Materion Corporation Reports Record Second Quarter Results and Affirms Full Year 2022 Outlook

August 3, 2022

Materion Corporation (NYSE: MTRN), a world leader in high performance advanced materials, today reported record second quarter financial results, affirmed 2022 earnings guidance and shared an update on key strategic initiatives.

Second Quarter 2022 Highlights

  • Net sales were $445.3 million; value-added sales increased 33% year over year to a record $277.2 million
  • Operating profit was $31.9 million; adjusted earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) was a record $47.0 million, an increase of 44% and a 120-basis point margin expansion year over year
  • Net income of $1.12 per share, diluted; adjusted earnings per share (EPS) of $1.28, an all-time record, up 41% year over year

Recent Organic Growth Developments

  • Established a new advanced chemicals facility to accelerate growth in semiconductor and electric vehicle applications
  • Leading EV battery customer is funding $6M to establish a prototype line to produce advanced chemicals for their next-generation battery solutions
  • Materion and Kairos jointly commissioned a Molten Salt Purification Plant for use in clean energy production

“Our global team delivered an exceptional first half of the year with another record quarter of value-added sales and earnings,” Jugal Vijayvargiya, Materion President & Chief Executive Officer said. “Our organic outgrowth initiatives and strategic acquisitions combined with strong end market demand are accelerating the transformation of our company into a leading provider of advanced materials solutions.”

“Our relentless focus on commercial excellence, strong customer partnerships and investments in R&D are coming together as planned resulting in a fantastic pipeline of opportunities that will continue to deliver above market growth,” Vijayvargiya continued. “Our substantial organic initiatives, coupled with the HCS-Electronic Materials acquisition, which continues to exceed expectations, strengthened our performance during the quarter and enhances our ability to deliver on several exciting opportunities ahead of us.”

SECOND QUARTER 2022 RESULTS

Net sales for the second quarter of 2022 were $445.3 million, compared to $371.0 million in the prior year period. Value-added sales of $277.2 million were a quarterly record, up 33% from the prior year. In addition to the benefit of the HCS-Electronic Materials acquisition, value-added sales were up 12% organically, driven by strong performance across several major end markets including semiconductor, industrial, aerospace and energy.

Operating profit for the second quarter was $31.9 million and net income was $23.3 million, or $1.12 per diluted share, compared to operating profit of $20.7 million and net income of $17.9 million, or $0.87 per diluted share in the prior year period. Excluding acquisition and restructuring related costs as detailed in the attached tables, adjusted EBITDA was $47.0 million in the second quarter, another quarterly record and an increase of 44% versus the prior year period.

Adjusted net income was $26.4 million excluding acquisition amortization, or $1.28 per diluted share, an increase of 41% compared to $0.91 per share in the prior year period.

OUTLOOK

While we continue to monitor various macroeconomic factors that could intensify headwinds, we remain confident in our full year outlook with the strength of our order book, organic outgrowth resulting from our customer initiatives, and the full year impact of the HCS-Electronic Materials acquisition. As a result, we are affirming the 2022 adjusted earnings per share guidance in the range of $5.50 to $5.90.

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 through 7 to this press release.

CONFERENCE CALL

Materion Corporation will host an investor conference call with analysts at 9:00 a.m. Eastern Time, August 3, 2022. The conference call will be available via webcast through the Company’s website at www.materion.com. By phone, please dial (888) 506-0062. Calls outside the U.S. can dial (973) 528-0011; please reference participant access code of 380484. A replay of the call will be available until August 17, 2022 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 44231. 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. 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: our ability to achieve the strategic and other objectives related to the acquisition of HCS-Electronic Materials, including any expected synergies; our ability to successfully integrate the HCS-Electronic Materials business and other such acquisitions and achieve the expected results of the acquisition, the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition, and liquidity; the global economy, including inflationary pressures, potential future recessionary conditions, and the impact of tariffs and trade agreements; the condition of the markets which we serve, whether defined geographically or by segment; 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 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 consignment 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 Materion’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 disruptions on operations from, and other effects of, catastrophic and other extraordinary events; and the risk factors set forth in Part 1, Item 1A of our 2021 Annual Report on 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

(Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(In thousands except per share amounts)

July 1, 2022

 

July 2, 2021

 

July 1, 2022

 

July 2, 2021

Net sales

$

445,295

 

 

$

370,999

 

 

$

894,340

 

 

$

725,385

 

Cost of sales

 

357,868

 

 

 

301,418

 

 

 

731,622

 

 

 

589,008

 

Gross margin

 

87,427

 

 

 

69,581

 

 

 

162,718

 

 

 

136,377

 

Selling, general, and administrative expense

 

42,047

 

 

 

38,060

 

 

 

83,708

 

 

 

74,836

 

Research and development expense

 

7,592

 

 

 

6,604

 

 

 

14,666

 

 

 

12,810

 

Restructuring expense (income)

 

 

 

 

 

 

 

1,076

 

 

 

(378

)

Other — net

 

5,928

 

 

 

4,194

 

 

 

11,801

 

 

 

8,668

 

Operating profit

 

31,860

 

 

 

20,723

 

 

 

51,467

 

 

 

40,441

 

Other non-operating income—net

 

(1,168

)

 

 

(1,277

)

 

 

(2,337

)

 

 

(2,553

)

Interest expense — net

 

4,701

 

 

 

858

 

 

 

8,437

 

 

 

1,619

 

Income before income taxes

 

28,327

 

 

 

21,142

 

 

 

45,367

 

 

 

41,375

 

Income tax expense

 

5,072

 

 

 

3,274

 

 

 

8,093

 

 

 

6,740

 

Net income

$

23,255

 

 

$

17,868

 

 

$

37,274

 

 

$

34,635

 

Basic earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

1.13

 

 

$

0.87

 

 

$

1.82

 

 

$

1.70

 

Diluted earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

1.12

 

 

$

0.87

 

 

$

1.80

 

 

$

1.68

 

Weighted-average number of shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

 

20,517

 

 

 

20,429

 

 

 

20,491

 

 

 

20,402

 

Diluted

 

20,723

 

 

 

20,651

 

 

 

20,743

 

 

 

20,647

 

Attachment 2

 

Materion Corporation and Subsidiaries

Consolidated Balance Sheets

 

 

 

(Unaudited)

 

 

(Thousands)

 

July 1, 2022

 

December 31, 2021

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

32,175

 

 

$

14,462

 

Accounts receivable, net

 

 

222,811

 

 

 

223,553

 

Inventories, net

 

 

422,376

 

 

 

361,115

 

Prepaid and other current assets

 

 

29,606

 

 

 

28,122

 

Total current assets

 

 

706,968

 

 

 

627,252

 

Deferred income taxes

 

 

5,018

 

 

 

5,431

 

Property, plant, and equipment

 

 

1,164,273

 

 

 

1,132,223

 

Less allowances for depreciation, depletion, and amortization

 

 

(739,776

)

 

 

(723,248

)

Property, plant, and equipment—net

 

 

424,497

 

 

 

408,975

 

Operating lease, right-of-use assets

 

 

68,045

 

 

 

63,096

 

Intangible assets, net

 

 

148,364

 

 

 

156,736

 

Other assets

 

 

30,228

 

 

 

27,369

 

Goodwill

 

 

319,994

 

 

 

318,620

 

Total Assets

 

$

1,703,114

 

 

$

1,607,479

 

Liabilities and Shareholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Short-term debt

 

$

15,333

 

 

$

15,359

 

Accounts payable

 

 

113,708

 

 

 

86,243

 

Salaries and wages

 

 

22,239

 

 

 

37,544

 

Other liabilities and accrued items

 

 

49,148

 

 

 

53,388

 

Income taxes

 

 

1,700

 

 

 

4,205

 

Unearned revenue

 

 

8,097

 

 

 

7,770

 

Total current liabilities

 

 

210,225

 

 

 

204,509

 

Other long-term liabilities

 

 

15,846

 

 

 

14,954

 

Operating lease liabilities

 

 

62,474

 

 

 

57,099

 

Finance lease liabilities

 

 

14,360

 

 

 

16,327

 

Retirement and post-employment benefits

 

 

30,992

 

 

 

33,394

 

Unearned income

 

 

108,126

 

 

 

97,962

 

Long-term income taxes

 

 

1,206

 

 

 

1,190

 

Deferred income taxes

 

 

28,766

 

 

 

27,216

 

Long-term debt

 

 

481,965

 

 

 

434,388

 

Shareholders’ equity

 

 

749,154

 

 

 

720,440

 

Total Liabilities and Shareholders’ Equity

 

$

1,703,114

 

 

$

1,607,479

 

Attachment 3

 

Materion Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Six Months Ended

(Thousands)

 

July 1, 2022

 

July 2, 2021

Cash flows from operating activities:

 

 

 

 

Net income

 

$

37,274

 

 

$

34,635

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation, depletion, and amortization

 

 

26,070

 

 

 

19,063

 

Amortization of deferred financing costs in interest expense

 

 

780

 

 

 

364

 

Stock-based compensation expense (non-cash)

 

 

 

3,694

 

 

 

3,512

 

Deferred income tax expense (benefit)

 

 

1,966

 

 

 

367

 

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

 

 

(2,566

)

 

 

(13,941

)

Inventory

 

 

(67,304

)

 

 

(40,651

)

Prepaid and other current assets

 

 

(2,462

)

 

 

(1,718

)

Accounts payable and accrued expenses

 

 

8,897

 

 

 

28,403

 

Unearned revenue

 

 

(141

)

 

 

3,246

 

Interest and taxes payable

 

 

 

(1,765

)

 

 

2,868

 

Unearned income due to customer prepayments

 

 

13,059

 

 

 

8,043

 

Other-net

 

 

3,913

 

 

 

(126

)

Net cash provided by operating activities

 

 

21,415

 

 

 

44,065

 

Cash flows from investing activities:

 

 

 

 

Payments for purchase of property, plant, and equipment

 

 

(37,730

)

 

 

(57,712

)

Proceeds from sale of property, plant, and equipment

 

 

105

 

 

 

603

 

Payments for acquisition, net of cash acquired

 

 

(2,971

)

 

 

 

Net cash used in investing activities

 

 

(40,596

)

 

 

(57,109

)

Cash flows from financing activities:

 

 

 

 

Proceeds from borrowings under revolving credit agreement, net

 

 

52,794

 

 

 

22,500

 

Proceeds from issuance of long-term debt

 

 

2,059

 

 

 

Repayment of long-term debt

 

 

(7,177

)

 

 

(1,654

)

Principal payments under finance lease obligations

 

 

(1,334

)

 

 

(1,512

)

Cash dividends paid

 

 

(5,112

)

 

 

(4,791

)

Payments of withholding taxes for stock-based compensation awards

 

 

(2,812

)

 

 

(3,021

)

Net cash provided by financing activities

 

 

38,418

 

 

 

11,522

 

Effects of exchange rate changes

 

 

(1,524

)

 

 

(11

)

Net change in cash and cash equivalents

 

 

17,713

 

 

 

(1,533

)

Cash and cash equivalents at beginning of period

 

 

14,462

 

 

 

25,878

 

Cash and cash equivalents at end of period

 

$

32,175

 

 

$

24,345

 

Attachment 4

 

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBITDA

(Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

July 1, 2022

 

July 2, 2021

 

July 1, 2022

 

July 2, 2021

Net Sales

 

 

 

 

 

 

 

Performance Materials (1)

$

154.9

 

 

$

125.3

 

 

$

304.5

 

 

$

239.4

 

Electronic Materials (1)

 

261.0

 

 

 

213.1

 

 

 

531.8

 

 

 

417.8

 

Precision Optics

 

29.4

 

 

 

32.6

 

 

 

58.0

 

 

 

68.2

 

Other

 

 

 

 

 

 

 

 

 

 

 

Total

$

445.3

 

 

$

371.0

 

 

$

894.3

 

 

$

725.4

 

 

 

 

 

 

 

 

 

Less: Pass-through Metal Cost

 

 

 

 

 

 

 

Performance Materials (1)

$

20.9

 

 

$

16.7

 

 

$

41.4

 

 

$

30.0

 

Electronic Materials (1)

$

146.8

 

 

 

146.2

 

 

$

307.7

 

 

 

287.9

 

Precision Optics

$

 

 

 

 

 

$

0.1

 

 

 

 

Other

$

0.4

 

 

 

0.2

 

 

$

1.1

 

 

 

1.0

 

Total

$

168.1

 

 

$

163.1

 

 

$

350.3

 

 

$

318.9

 

 

 

 

 

 

 

 

 

Value-added Sales (non-GAAP)

 

 

 

 

 

 

 

Performance Materials (1)

$

134.0

 

 

$

108.6

 

 

$

263.1

 

 

$

209.4

 

Electronic Materials (1)

 

114.2

 

 

 

66.9

 

 

 

224.1

 

 

 

129.9

 

Precision Optics

 

29.4

 

 

 

32.6

 

 

 

57.9

 

 

 

68.2

 

Other

 

(0.4

)

 

 

(0.2

)

 

 

(1.1

)

 

 

(1.0

)

Total

$

277.2

 

 

$

207.9

 

 

$

544.0

 

 

$

406.5

 

 

 

 

 

 

 

 

 

Gross Margin

 

 

 

 

 

 

 

Performance Materials (1)

$

39.0

 

 

$

33.0

 

 

$

76.3

 

 

$

62.6

 

Electronic Materials (1)

 

38.6

 

 

 

25.0

 

 

 

68.1

 

 

 

48.8

 

Precision Optics

 

9.8

 

 

 

11.8

 

 

 

18.3

 

 

 

25.8

 

Other

 

 

 

 

(0.3

)

 

 

 

 

 

(0.8

)

Total

$

87.4

 

 

$

69.5

 

 

$

162.7

 

 

$

136.4

 

(1)The Company changed two segment names during the first quarter of 2022: Performance Alloys and Composites became Performance Materials, and Advanced Materials became Electronic Materials. See further discussion in the Form 10-Q for the period ended April 1, 2022.

 

Second Quarter Ended

 

Six Months Ended

(Millions)

July 1, 2022

 

July 2, 2021

 

July 1, 2022

 

July 2, 2021

Operating Profit

 

 

 

 

 

 

 

Performance Materials

$

21.8

 

 

$

17.3

 

 

$

40.9

 

 

$

30.8

 

Electronic Materials

 

18.2

 

 

 

8.3

 

 

 

26.2

 

 

 

17.2

 

Precision Optics

 

0.7

 

 

 

2.6

 

 

 

 

 

 

7.2

 

Other

 

(8.8

)

 

 

(7.5

)

 

 

(15.6

)

 

 

(14.8

)

Total

$

31.9

 

 

$

20.7

 

 

$

51.5

 

 

$

40.4

 

 

 

 

 

 

 

 

 

Non-Operating (Income)/Expense

 

 

 

 

 

 

 

Performance Materials

$

0.1

 

 

$

0.2

 

 

$

0.3

 

 

$

0.3

 

Electronic Materials

 

 

 

 

 

 

 

 

 

 

 

Precision Optics

 

(0.2

)

 

 

(0.2

)

 

 

(0.4

)

 

 

(0.4

)

Other

 

(1.1

)

 

 

(1.3

)

 

 

(2.2

)

 

 

(2.5

)

Total

$

(1.2

)

 

$

(1.3

)

 

$

(2.3

)

 

$

(2.6

)

 

 

 

 

 

 

 

 

Depreciation, Depletion, and Amortization

 

 

 

 

 

 

 

Performance Materials

$

5.5

 

 

$

5.2

 

 

$

11.4

 

 

$

8.6

 

Electronic Materials

 

4.2

 

 

 

2.1

 

 

 

8.3

 

 

 

4.1

 

Precision Optics

 

2.6

 

 

 

2.7

 

 

 

5.3

 

 

 

5.4

 

Other

 

0.6

 

 

 

0.5

 

 

 

1.1

 

 

 

1.0

 

Total

$

12.9

 

 

$

10.5

 

 

$

26.1

 

 

$

19.1

 

 

 

 

 

 

 

 

 

Segment EBITDA

 

 

 

 

 

 

 

Performance Materials

 

27.2

 

 

 

22.3

 

 

 

52.0

 

 

 

39.1

 

Electronic Materials

 

22.4

 

 

 

10.4

 

 

 

34.5

 

 

 

21.3

 

Precision Optics

 

3.5

 

 

 

5.5

 

 

 

5.7

 

 

 

13.0

 

Other

 

(7.1

)

 

 

(5.7

)

 

 

(12.3

)

 

 

(11.3

)

Total

 

46.0

 

 

 

32.5

 

 

 

79.9

 

 

 

62.1

 

 

 

 

 

 

 

 

 

Special Items

 

 

 

 

 

 

 

Performance Materials

$

 

 

$

 

 

$

2.7

 

 

$

 

Electronic Materials

 

0.4

 

 

 

 

 

 

7.2

 

 

 

 

Precision Optics

 

0.1

 

 

 

0.1

 

 

 

0.3

 

 

 

0.4

 

Other

 

0.5

 

 

 

 

 

 

1.5

 

 

 

0.1

 

Total

$

1.0

 

 

$

0.1

 

 

$

11.7

 

 

$

0.5

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Excluding Special Items

 

 

 

 

 

 

 

Performance Materials

 

27.2

 

 

 

22.3

 

 

 

54.7

 

 

 

39.1

 

Electronic Materials

 

22.8

 

 

 

10.4

 

 

 

41.7

 

 

 

21.3

 

Precision Optics

 

3.6

 

 

 

5.6

 

 

 

6.0

 

 

 

13.4

 

Other

 

(6.6

)

 

 

(5.7

)

 

 

(10.8

)

 

 

(11.2

)

Total

 

47.0

 

 

 

32.6

 

 

 

91.6

 

 

 

62.6

 

The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium 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 market 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 Net Sales to Value-added Sales, Net Income to EBITDA and Adjusted EBITDA

(Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

 

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

Net sales

$

445.3

 

 

 

$

371.0

 

 

 

$

894.3

 

 

 

$

725.4

 

 

Pass-through metal cost

 

168.1

 

 

 

$

163.1

 

 

 

 

350.3

 

 

 

 

318.9

 

 

Value-added sales

$

277.2

 

 

 

$

207.9

 

 

 

$

544.0

 

 

 

$

406.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

23.3

 

8.4

%

 

 

17.9

 

8.6

%

 

$

37.3

 

6.9

%

 

$

34.6

 

8.5

%

Income tax expense

 

5.1

 

1.8

%

 

 

3.3

 

1.6

%

 

 

8.1

 

1.5

%

 

 

6.8

 

1.7

%

Interest expense - net

 

4.7

 

1.7

%

 

 

0.8

 

0.4

%

 

 

8.4

 

1.5

%

 

 

1.6

 

0.4

%

Depreciation, depletion and amortization

 

12.9

 

4.7

%

 

 

10.5

 

5.1

%

 

 

26.1

 

4.8

%

 

 

19.1

 

4.7

%

Consolidated EBITDA

$

46.0

 

16.6

%

 

$

32.5

 

15.6

%

 

$

79.9

 

14.7

%

 

$

62.1

 

15.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and cost reduction

$

 

%

 

$

0.1

 

%

 

$

1.1

 

0.2

%

 

 

0.4

 

0.1

%

Merger and acquisition costs

 

1.0

 

0.4

%

 

 

 

%

 

 

10.6

 

1.9

%

 

 

0.1

 

%

Total special items

 

1.0

 

0.4

%

 

 

0.1

 

%

 

 

11.7

 

2.2

%

 

 

0.5

 

0.1

%

Adjusted EBITDA

$

47.0

 

17.0

%

 

$

32.6

 

15.7

%

 

$

91.6

 

16.8

%

 

$

62.6

 

15.4

%

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, earnings before earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), net income, and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation and Attachment 6, we have adjusted the results for certain special items such as restructuring and cost reductions and merger and acquisition costs. 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

Reconciliation of Net Income to Adjusted Net Income

and Diluted Earnings per Share to Adjusted Diluted Earnings per Share (Unaudited)

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

July 1, 2022

 

Diluted EPS

 

July 2, 2021

 

Diluted EPS

 

July 1, 2022

 

Diluted EPS

 

July 2, 2021

 

Diluted EPS

Net income and EPS

$

23.3

 

 

$

1.12

 

$

17.9

 

 

$

0.87

 

 

$

37.3

 

 

$

1.80

 

$

34.6

 

 

$

1.68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and cost reduction

 

 

 

 

 

 

0.1

 

 

 

 

 

1.1

 

 

 

 

 

0.4

 

 

 

Merger and acquisition costs

 

1.0

 

 

 

 

 

 

 

 

 

 

10.6

 

 

 

 

 

0.1

 

 

 

Provision for income taxes(1)

 

(0.3

)

 

 

 

 

(0.2

)

 

 

 

 

(2.6

)

 

 

 

 

(0.4

)

 

 

Total special items

 

0.7

 

 

 

0.04

 

 

(0.1

)

 

 

(0.01

)

 

 

9.1

 

 

 

0.44

 

 

0.1

 

 

 

Adjusted net income and adjusted EPS

$

24.0

 

 

$

1.16

 

$

17.8

 

 

$

0.86

 

 

$

46.4

 

 

$

2.24

 

$

34.7

 

 

$

1.68

Acquisition amortization (net of tax)

 

2.4

 

 

 

0.12

 

 

1.0

 

 

 

0.05

 

 

 

4.9

 

 

 

0.23

 

 

2.1

 

 

 

0.10

Adjusted net income and adjusted EPS excl. amortization

$

26.4

 

 

$

1.28

 

$

18.8

 

 

$

0.91

 

 

$

51.3

 

 

$

2.47

 

$

36.8

 

 

$

1.78

(1) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of certain discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods.

Attachment 7

 

 

Reconciliation of Segment Net sales to Segment Value-added sales and Segment EBITDA to Adjusted Segment EBITDA (Unaudited)

Performance Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

 

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

Net sales

$

154.9

 

 

 

 

$

125.3

 

 

 

 

$

304.5

 

 

 

 

$

239.4

 

 

 

Pass-through metal cost

 

20.9

 

 

 

 

 

16.7

 

 

 

 

 

41.4

 

 

 

 

 

30.0

 

 

 

Value-added sales

$

134.0

 

 

 

 

$

108.6

 

 

 

 

$

263.1

 

 

 

 

$

209.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

27.2

 

 

20.3

%

 

$

22.3

 

 

20.5

%

 

$

52.0

 

 

19.8

%

 

$

39.1

 

 

18.7

%

Merger and acquisition costs

 

 

 

%

 

 

 

 

%

 

 

2.7

 

 

1.0

%

 

 

 

 

%

Adjusted EBITDA

$

27.2

 

 

20.3

%

 

$

22.3

 

 

20.5

%

 

$

54.7

 

 

20.8

%

 

$

39.1

 

 

18.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

 

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

Net sales

$

261.0

 

 

 

 

$

213.1

 

 

 

 

$

531.8

 

 

 

 

$

417.8

 

 

 

Pass-through metal cost

 

146.8

 

 

 

 

 

146.2

 

 

 

 

 

307.7

 

 

 

 

 

287.9

 

 

 

Value-added sales

$

114.2

 

 

 

 

$

66.9

 

 

 

 

$

224.1

 

 

 

 

$

129.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

22.4

 

 

19.6

%

 

$

10.4

 

 

15.5

%

 

$

34.5

 

 

15.4

%

 

$

21.3

 

 

16.4

%

Restructuring and cost reduction

 

 

 

%

 

 

 

 

%

 

 

0.8

 

 

0.4

%

 

 

 

 

%

Merger and acquisition costs

 

0.4

 

 

0.4

%

 

 

 

 

%

 

 

6.4

 

 

2.9

%

 

 

 

 

%

Adjusted EBITDA

$

22.8

 

 

20.0

%

 

$

10.4

 

 

15.5

%

 

$

41.7

 

 

18.6

%

 

$

21.3

 

 

16.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Precision Optics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

 

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

Net sales

$

29.4

 

 

 

 

$

32.6

 

 

 

 

$

58.0

 

 

 

 

$

68.2

 

 

 

Pass-through metal cost

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

 

Value-added sales

$

29.4

 

 

 

 

$

32.6

 

 

 

 

$

57.9

 

 

 

 

$

68.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

3.5

 

 

11.9

%

 

$

5.5

 

 

16.9

%

 

$

5.7

 

 

9.8

%

 

$

13.0

 

 

19.1

%

Restructuring and cost reduction

 

 

 

%

 

 

0.1

 

 

0.3

%

 

 

0.2

 

 

0.3

%

 

 

0.4

 

 

0.6

%

Merger and acquisition costs

 

0.1

 

 

0.3

%

 

 

 

 

%

 

 

0.1

 

 

0.2

%

 

 

 

 

%

Adjusted EBITDA

$

3.6

 

 

12.2

%

 

$

5.6

 

 

17.2

%

 

$

6.0

 

 

10.4

%

 

$

13.4

 

 

19.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Ended

 

Six Months Ended

(Millions)

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

 

July 1, 2022

 

% of VA

 

July 2, 2021

 

% of VA

EBITDA

$

(7.1

)

 

 

 

$

(5.7

)

 

 

 

$

(12.3

)

 

 

 

$

(11.3

)

 

 

Restructuring and cost reduction

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

 

Merger and acquisition costs

 

0.5

 

 

 

 

 

 

 

 

 

 

1.4

 

 

 

 

 

0.1

 

 

 

Adjusted EBITDA

$

(6.6

)

 

 

 

$

(5.7

)

 

 

 

$

(10.8

)

 

 

 

$

(11.2

)

 

 

 

Investor Contact:
Kyle Kelleher
(216) 383-4931
kyle.kelleher@materion.com

Media Contact:
Shannon Bennett
(216) 383-4094
shannon.bennett@materion.com

https://materion.com
Mayfield Hts-g

Source: Materion Corporation