Press Release Details

Materion Corporation Reports Record Fourth Quarter and Full-Year 2022 Financial Results and Provides 2023 Outlook

February 16, 2023

Materion Corporation (NYSE: MTRN) today reported record fourth quarter and full-year 2022 financial results, provided 2023 earnings guidance, and shared an update on key strategic initiatives.

Fourth Quarter 2022 Highlights

  • Net sales were $434.6 million; value-added sales¹ increased 30% year over year to a record $309.2 million
  • Operating profit was $39.2 million; adjusted earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) was a record at $55.6 million, or 18.0% of value-added sales, a 120-basis point margin expansion year over year
  • Net income of $1.38 per share, diluted; adjusted earnings per share of $1.49, up 32% year over year and an all-time record for the Company

Full Year 2022 Highlights

  • Net sales were $1.76 billion; value-added sales were a record $1.14 billion, up 33% from the prior year
  • Operating profit was $119.8 million; adjusted earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) was an annual record at $196.0 million, or 17.1% of value-added sales
  • Net income of $4.14 per share, diluted; record adjusted earnings per share of $5.27, up 30% from prior year

Announcing Two New Customer Partnerships

  • Secured a customer funded project with a $15 million upfront investment to expand production capabilities to supply critical materials for clean energy power generation
  • Awarded a 3-year supply agreement, with an initial $10 million order, to supply materials for space propulsion systems

“Our people continue to execute exceptionally well, growing our pipeline of organic initiatives, building out a leading-edge portfolio and developing new and deeper partnerships with our customers,” Jugal Vijayvargiya, Materion President and CEO said. “Our global team continues to raise the bar for performance, delivering another quarter of outstanding results, capping off another record year for our company.”

“This year we made many important advancements in our transformation, starting with the successful integration of HCS Electronic Materials, where the power of our combined teams is generating value beyond our expectations,” Vijayvargiya added. “The combination of our organic and inorganic initiatives has led to eleven consecutive quarters of top line growth and has positioned us well to continue our growth trajectory in 2023.”

FOURTH QUARTER 2022 RESULTS

Net sales for the quarter were $434.6 million, compared to $397.2 million in the prior year period. Value-added sales of $309.2 million were a quarterly record, up 30% from the prior year. In addition to the benefit of the HCS-Electronic Materials acquisition, organic² value-added sales were up 26% driven by strong performance across several major end markets including industrial, energy and aerospace, as well as contribution from the precision clad strip project.

Operating profit for the quarter was $39.2 million and net income was $28.8 million, or $1.38 per diluted share, compared to operating profit of $15.5 million and net income of $19.7 million, or $0.95 per diluted share in the prior year period.

Excluding special items, detailed in the attached tables, adjusted EBITDA was $55.6 million in the quarter, another quarterly record for the company, compared to $39.8 million in the prior year. The increase was driven by higher volume and favorable pricing more than offsetting cost inflation.

Adjusted net income was $30.9 million excluding acquisition amortization, or $1.49 per diluted share, an increase of 32% compared to $1.13 per share in the prior year period.

FULL-YEAR 2022 RESULTS

Net sales were $1.76 billion, an increase of 16% as compared to the prior year. Value-added sales of $1.14 billion were up 33% from the prior year. Double-digit organic value-added sales growth across most major end markets, as well as incremental sales related to the acquisition of HCS-Electronic Materials drove the increase.

Operating profit for the full year was $119.8 million and net income was $86.0 million, or $4.14 per diluted share, compared to operating profit of $77.1 million and net income of $72.5 million, or $3.50 per diluted share in the prior year period.

Excluding special items, detailed in the attached tables, adjusted EBITDA was $196.0 million for the full year, another annual record for the company, compared to $143.6 million in the prior year. The significant increase was driven mainly by higher volume, favorable pricing more than offsetting cost inflation and the benefit of the HCS Electronic Materials acquisition.

Adjusted net income was $109.5 million excluding acquisition amortization, or $5.27 per diluted share, an increase of 30% compared to $4.06 per share in the prior year period.

OUTLOOK

Despite an expectation of short-term softness in certain markets, we expect another year of strong end market outgrowth as a direct result of our organic initiatives. With this, we are guiding to the range of $5.50 to $5.90 for full year 2023 adjusted earnings per share, an increase of 8% at the midpoint versus 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 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, February 16, 2023. 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 450253. A replay of the call will be available until March 2, 2023 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 46830. The call will also be archived on the Company’s website.

FOOTNOTES

1 Value-added sales deducts the impact of pass-through metals from net sales

2 Organic results exclude the impact of both acquisition and currency

ABOUT MATERION

Materion Corporation is a global leader in advanced materials solutions for high-performance industries including semiconductor, industrial, aerospace & defense, energy and automotive. With nearly 100 years of expertise in specialty engineered alloy systems, inorganic chemicals and powders, precious and non-precious metals, beryllium and beryllium composites, and precision filters and optical coatings, Materion partners with customers to enable breakthrough solutions that move the world forward. Headquartered in Mayfield Heights, Ohio, the company employs more than 3,400 talented people worldwide, serving customers in more than 60 countries.

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.

Attachment 1

Materion Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

 

Fourth Quarter Ended

 

Year Ended

(In thousands except per share amounts)

December 31,
2022

 

December 31,
2021

 

December 31,
2022

 

December 31,
2021

Net sales

$

434,578

 

 

$

397,231

 

 

$

1,757,109

 

 

$

1,510,644

 

Cost of sales

 

336,159

 

 

 

324,159

 

 

 

1,413,229

 

 

 

1,226,882

 

Gross margin

 

98,419

 

 

 

73,072

 

 

 

343,880

 

 

 

283,762

 

Selling, general, and administrative expense

 

46,672

 

 

 

45,746

 

 

 

169,338

 

 

 

163,777

 

Research and development expense

 

6,881

 

 

 

7,411

 

 

 

28,977

 

 

 

26,575

 

Restructuring expense (income)

 

13

 

 

 

(60

)

 

 

1,573

 

 

 

(438

)

Other — net

 

5,662

 

 

 

4,465

 

 

 

24,237

 

 

 

16,737

 

Operating profit

 

39,191

 

 

 

15,510

 

 

 

119,755

 

 

 

77,111

 

Other non-operating (income) expense—net

 

(1,738

)

 

 

(1,283

)

 

 

(5,250

)

 

 

(5,115

)

Interest expense — net

 

7,580

 

 

 

2,421

 

 

 

21,905

 

 

 

4,901

 

Income before income taxes

 

33,349

 

 

 

14,372

 

 

 

103,100

 

 

 

77,325

 

Income tax (benefit) expense

 

4,585

 

 

 

(5,311

)

 

 

17,110

 

 

 

4,851

 

Net income

$

28,764

 

 

$

19,683

 

 

$

85,990

 

 

$

72,474

 

Basic earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

1.40

 

 

$

0.96

 

 

$

4.19

 

 

$

3.55

 

Diluted earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

1.38

 

 

$

0.95

 

 

$

4.14

 

 

$

3.50

 

Weighted-average number of shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

 

20,537

 

 

 

20,445

 

 

 

20,511

 

 

 

20,422

 

Diluted

 

20,790

 

 

 

20,732

 

 

 

20,760

 

 

 

20,689

 

Attachment 2

Materion Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

(Thousands)

 

December 31, 2022

 

December 31, 2021

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

13,101

 

 

$

14,462

 

Accounts receivable, net

 

 

215,211

 

 

 

213,819

 

Inventories, net

 

 

423,080

 

 

 

361,115

 

Prepaid and other current assets

 

 

39,056

 

 

 

37,856

 

Total current assets

 

 

690,448

 

 

 

627,252

 

Deferred income taxes

 

 

3,265

 

 

 

5,431

 

Property, plant, and equipment

 

 

1,209,205

 

 

 

1,132,223

 

Less allowances for depreciation, depletion, and amortization

 

 

(760,440

)

 

 

(723,248

)

Property, plant, and equipment—net

 

 

448,765

 

 

 

408,975

 

Operating lease, right-of-use assets

 

 

64,249

 

 

 

63,096

 

Intangible assets

 

 

143,219

 

 

 

156,736

 

Other assets

 

 

22,535

 

 

 

27,369

 

Goodwill

 

 

319,498

 

 

 

318,620

 

Total Assets

 

$

1,691,979

 

 

$

1,607,479

 

Liabilities and Shareholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Short-term debt

 

$

21,105

 

 

$

15,359

 

Accounts payable

 

 

107,899

 

 

 

86,243

 

Salaries and wages

 

 

35,543

 

 

 

37,544

 

Other liabilities and accrued items

 

 

54,993

 

 

 

53,388

 

Income taxes

 

 

3,928

 

 

 

4,205

 

Unearned revenue

 

 

15,496

 

 

 

7,770

 

Total current liabilities

 

 

238,964

 

 

 

204,509

 

Other long-term liabilities

 

 

12,181

 

 

 

14,954

 

Operating lease liabilities

 

 

59,055

 

 

 

57,099

 

Finance lease liabilities

 

 

13,876

 

 

 

16,327

 

Retirement and post-employment benefits

 

 

20,422

 

 

 

33,394

 

Unearned income

 

 

107,736

 

 

 

97,962

 

Long-term income taxes

 

 

665

 

 

 

1,190

 

Deferred income taxes

 

 

28,214

 

 

 

27,216

 

Long-term debt

 

 

410,876

 

 

 

434,388

 

Shareholders’ equity

 

 

799,990

 

 

 

720,440

 

Total Liabilities and Shareholders’ Equity

 

$

1,691,979

 

 

$

1,607,479

 

Attachment 3

Materion Corporation and Subsidiaries

Consolidated Statements of Cash Flows

 

(Thousands)

December 31, 2022

 

December 31, 2021

Cash flows from operating activities:

 

 

 

Net income

$

85,990

 

 

$

72,474

 

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

 

 

 

Depreciation, depletion, and amortization

 

53,436

 

 

 

44,137

 

Amortization of deferred financing costs in interest expense

 

1,734

 

 

 

967

 

Stock-based compensation expense (non-cash)

 

8,813

 

 

 

6,517

 

Amortization of pension and post-retirement costs

 

(146

)

 

 

437

 

(Gain) loss on sale of property, plant, and equipment

 

14

 

 

 

(282

)

Deferred income tax (benefit) expense

 

1,733

 

 

 

(12,957

)

Net pension curtailments and settlements

 

(551

)

 

 

 

Changes in assets and liabilities, net of acquired assets and liabilities:

 

 

 

Decrease (increase) in accounts receivable

 

(4,377

)

 

 

(30,490

)

Decrease (increase) in inventory

 

(63,986

)

 

 

(43,458

)

Decrease (increase) in prepaid and other current assets

 

(1,604

)

 

 

(3,855

)

Increase (decrease) in accounts payable and accrued expenses

 

12,860

 

 

 

40,219

 

Increase (decrease) in unearned revenue

 

207

 

 

 

106

 

Increase (decrease) in interest and taxes payable

 

154

 

 

 

(220

)

Increase (decrease) in unearned income due to customer prepayments

 

21,942

 

 

 

13,752

 

Other — net

 

(261

)

 

 

2,894

 

Net cash provided by operating activities

 

115,958

 

 

 

90,241

 

Cash flows from investing activities:

 

 

 

Payments for acquisition, net of cash acquired

 

(2,971

)

 

 

(392,240

)

Payments for purchase of property, plant, and equipment

 

(77,608

)

 

 

(102,910

)

Proceeds from sale of property, plant, and equipment

 

850

 

 

 

881

 

Net cash used in investing activities

 

(79,729

)

 

 

(494,269

)

Cash flows from financing activities:

 

 

 

Proceeds from borrowings under revolving credit agreement, net

 

(9,046

)

 

 

118,297

 

Proceeds from issuance of debt

 

9,276

 

 

 

300,000

 

Repayment of debt

 

(19,299

)

 

 

(2,054

)

Principal payments under finance lease obligations

 

(2,736

)

 

 

(2,819

)

Cash dividends paid

 

(10,160

)

 

 

(9,697

)

Deferred financing costs

 

 

 

 

(7,403

)

Payments of withholding taxes for stock-based compensation awards

 

(3,593

)

 

 

(3,318

)

Net cash provided by (used in) financing activities

 

(35,558

)

 

 

393,006

 

Effects of exchange rate changes

 

(2,032

)

 

 

(394

)

Net change in cash and cash equivalents

 

(1,361

)

 

 

(11,416

)

Cash and cash equivalents at beginning of period

 

14,462

 

 

 

25,878

 

Cash and cash equivalents at end of period

$

13,101

 

 

$

14,462

 

Attachment 4

Materion Corporation and Subsidiaries

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

(Unaudited)

 

 

Fourth Quarter Ended

 

Year Ended

(Millions)

December 31,
2022

 

December 31,
2021

 

December 31,
2022

 

December 31,
2021

Net Sales

 

 

 

 

 

 

 

Performance Materials(1)

$

197.6

 

 

$

136.4

 

 

$

671.5

 

 

$

511.9

 

Electronic Materials(1)

209.3

 

 

 

228.3

 

 

 

971.9

 

 

 

866.8

 

Precision Optics

27.7

 

 

 

32.5

 

 

 

113.7

 

 

 

131.9

 

Other

 

 

 

 

 

 

 

 

 

 

 

Total

$

434.6

 

 

$

397.2

 

 

$

1,757.1

 

 

$

1,510.6

 

 

 

 

 

 

 

 

 

Less: Pass-through Metal Cost

 

 

 

 

 

 

 

Performance Materials(1)

$

20.0

 

 

$

20.6

 

 

$

82.0

 

 

$

71.5

 

Electronic Materials(1)

 

105.3

 

 

 

138.7

 

 

 

529.9

 

 

 

577.7

 

Precision Optics

 

 

 

 

 

 

 

0.1

 

 

 

0.1

 

Other

 

0.1

 

 

 

0.5

 

 

 

1.5

 

 

 

1.6

 

Total

$

125.4

 

 

$

159.8

 

 

$

613.5

 

 

$

650.9

 

 

 

 

 

 

 

 

 

Value-added Sales (non-GAAP)

 

 

 

 

 

 

 

Performance Materials(1)

$

177.6

 

 

$

115.8

 

 

$

589.5

 

 

$

440.4

 

Electronic Materials(1)

 

104.0

 

 

 

89.6

 

 

 

442.0

 

 

 

289.1

 

Precision Optics

 

27.7

 

 

 

32.5

 

 

 

113.6

 

 

 

131.8

 

Other

 

(0.1

)

 

 

(0.5

)

 

 

(1.5

)

 

 

(1.6

)

Total

$

309.2

 

 

$

237.4

 

 

$

1,143.6

 

 

$

859.7

 

 

 

 

 

 

 

 

 

Gross Margin

 

 

 

 

 

 

 

Performance Materials(1)(2)

$

57.7

 

 

$

33.0

 

 

$

175.1

 

 

$

132.4

 

Electronic Materials(1)(2)

 

31.5

 

 

 

27.3

 

 

 

131.5

 

 

 

100.8

 

Precision Optics

 

9.2

 

 

 

12.5

 

 

 

37.3

 

 

 

51.0

 

Other

 

 

 

 

0.3

 

 

 

 

 

 

(0.4

)

Total(2)

$

98.4

 

 

$

73.1

 

 

$

343.9

 

 

$

283.8

 

(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.

(2) Adjusted gross margin without special items impacting COGS for Performance Materials for the twelve months ended December 31, 2022 and December 31, 2021 was $181.8 million and $134.0 million, respectively. Adjusted gross margin without special items impacting COGS for Electronic Materials for the twelve months ended December 31, 2022 and December 31, 2021 was $136.6 million and $104.2 million, respectively. Consolidated adjusted gross margin without special items impacting COGS for the twelve months ended December 31, 2022 and December 31, 2021 was $355.6 million and $289.6 million, respectively. For the fourth quarter of 2021, adjusted gross margin without special items impacting COGS for Performance Materials and Electronic Materials was $34.7 million and $30.7 million, respectively.

Note: Quarterly information presented within this document and previously disclosed quarterly information may not equal the total computed for the year due to rounding

 

 

Fourth Quarter Ended

 

Year Ended

(Millions)

December 31,
2022

 

December 31,
2021

 

December 31,
2022

 

December 31,
2021

Operating Profit (Loss)

 

 

 

 

 

 

 

Performance Materials

$

37.6

 

 

$

16.2

 

 

$

101.4

 

 

$

67.9

 

Electronic Materials

 

12.3

 

 

 

8.8

 

 

 

51.3

 

 

 

35.3

 

Precision Optics

 

1.1

 

 

 

3.7

 

 

 

1.9

 

 

 

14.2

 

Other

 

(11.8

)

 

 

(13.2

)

 

 

(34.8

)

 

 

(40.3

)

Total

$

39.2

 

 

$

15.5

 

 

$

119.8

 

 

$

77.1

 

 

 

 

 

 

 

 

 

Non-Operating (Income) Expense

 

 

 

 

 

 

 

Performance Materials

$

0.1

 

 

$

0.2

 

 

$

0.5

 

 

$

0.6

 

Electronic Materials

 

 

 

 

 

 

 

 

 

 

0.1

 

Precision Optics

 

(0.6

)

 

 

(0.2

)

 

 

(1.3

)

 

 

(0.8

)

Other

 

(1.2

)

 

 

(1.3

)

 

 

(4.4

)

 

 

(5.0

)

Total

$

(1.7

)

 

$

(1.3

)

 

$

(5.2

)

 

$

(5.1

)

 

 

 

 

 

 

 

 

Depreciation, Depletion, and Amortization

 

 

 

 

 

 

 

Performance Materials

$

6.8

 

 

$

5.0

 

 

$

24.3

 

 

$

21.7

 

Electronic Materials

4.2

 

 

3.4

 

 

16.5

 

 

9.6

 

Precision Optics

2.7

 

 

2.7

 

 

10.5

 

 

10.9

 

Other

0.5

 

 

0.6

 

 

2.1

 

 

2.0

 

Total

$

14.2

 

 

$

11.7

 

 

$

53.4

 

 

$

44.2

 

 

 

 

 

 

 

 

 

Segment EBITDA

 

 

 

 

 

 

 

Performance Materials

$

44.3

 

 

$

21.0

 

 

$

125.2

 

 

$

89.0

 

Electronic Materials

16.5

 

 

12.2

 

 

67.8

 

 

44.8

 

Precision Optics

4.4

 

 

6.6

 

 

13.7

 

 

25.9

 

Other

(10.1

)

 

(11.3

)

 

(28.3

)

 

(33.3

)

Total

$

55.1

 

 

$

28.5

 

 

$

178.4

 

 

$

126.4

 

 

 

 

 

 

 

 

 

Special Items

 

 

 

 

 

 

 

Performance Materials

$

 

 

$

1.6

 

 

$

6.8

 

 

$

1.6

 

Electronic Materials

 

0.6

 

 

 

3.7

 

 

 

8.2

 

 

 

3.7

 

Precision Optics

 

(0.4

)

 

 

 

 

 

0.3

 

 

 

0.4

 

Other

 

0.3

 

 

 

6.0

 

 

 

2.3

 

 

 

11.5

 

Total

$

0.5

 

 

$

11.3

 

 

$

17.6

 

 

$

17.2

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Excluding Special Items

 

 

 

 

 

 

 

Performance Materials

$

44.3

 

 

$

22.6

 

 

$

132.0

 

 

$

90.6

 

Electronic Materials

17.1

 

 

15.9

 

 

76.0

 

 

48.5

 

Precision Optics

4.0

 

 

6.6

 

 

14.0

 

 

26.3

 

Other

(9.8

)

 

(5.3

)

 

(26.0

)

 

(21.8

)

Total

$

55.6

 

 

$

39.8

 

 

$

196.0

 

 

$

143.6

 

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)

 

 

Fourth Quarter Ended

 

Twelve Months Ended

(Millions)

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

 

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

Net sales

$

434.6

 

 

 

 

$

397.2

 

 

 

 

$

1,757.1

 

 

 

 

$

1,510.6

 

 

Pass-through metal cost

 

125.4

 

 

 

 

 

159.8

 

 

 

 

 

613.5

 

 

 

 

 

650.9

 

 

Value-added sales

$

309.2

 

 

 

 

$

237.4

 

 

 

 

$

1,143.6

 

 

 

 

$

859.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

28.8

 

 

9.3

%

 

 

19.7

 

 

8.3

%

 

$

86.0

 

 

7.5

%

 

$

72.5

 

8.4

%

Income tax expense

 

4.5

 

 

1.5

%

 

 

(5.3

)

 

(2.2

)%

 

 

17.1

 

 

1.5

%

 

 

4.8

 

0.6

%

Interest expense - net

 

7.6

 

 

2.5

%

 

 

2.4

 

 

1.0

%

 

 

21.9

 

 

1.9

%

 

 

4.9

 

0.6

%

Depreciation, depletion and amortization

 

14.2

 

 

4.6

%

 

 

11.7

 

 

4.9

%

 

 

53.4

 

 

4.7

%

 

 

44.2

 

5.1

%

Consolidated EBITDA

$

55.1

 

 

17.8

%

 

$

28.5

 

 

12.0

%

 

$

178.4

 

 

15.6

%

 

$

126.4

 

14.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and cost reduction

$

 

 

%

 

$

 

 

%

 

$

1.5

 

 

0.1

%

 

$

0.4

 

%

Pension settlement

 

(0.5

)

 

(0.2

)%

 

 

 

 

%

 

 

(0.5

)

 

%

 

 

 

%

Additional start up resources and scrap

 

 

 

%

 

 

 

 

%

 

 

4.1

 

 

0.4

%

 

 

 

%

Merger and acquisition costs

 

1.0

 

 

0.3

%

 

 

11.3

 

 

4.8

%

 

 

12.5

 

 

1.1

%

 

 

16.8

 

2.0

%

Total special items

 

0.5

 

 

0.2

%

 

 

11.3

 

 

4.8

%

 

 

17.6

 

 

1.5

%

 

 

17.2

 

2.0

%

Adjusted EBITDA

$

55.6

 

 

18.0

%

 

$

39.8

 

 

16.8

%

 

$

196.0

 

 

17.1

%

 

$

143.6

 

16.7

%

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 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, additional start up resources and scrap 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)

 

 

Fourth Quarter Ended

 

Twelve Months Ended

(Millions)

December 31,
2022

 

Diluted
EPS

 

December 31,
2021

 

Diluted
EPS

 

December 31,
2022

 

Diluted
EPS

 

December 31,
2021

 

Diluted
EPS

Net income and EPS

$

28.8

 

 

$

1.38

 

 

$

19.7

 

 

$

0.95

 

$

86.0

 

 

$

4.14

 

$

72.5

 

 

$

3.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and cost reduction

 

 

 

 

 

 

 

 

 

 

 

1.5

 

 

 

 

 

0.4

 

 

 

Additional start up resources and scrap

 

 

 

 

 

 

 

 

 

 

 

4.1

 

 

 

 

 

 

 

 

Merger and acquisition costs

 

1.0

 

 

 

 

 

11.3

 

 

 

 

 

12.5

 

 

 

 

 

16.8

 

 

 

Pension settlement

 

(0.5

)

 

 

 

 

 

 

 

 

(0.5

)

 

 

 

 

 

 

Provision for income taxes (1)

 

(0.8

)

 

 

 

 

(9.6

)

 

 

 

 

(3.9

)

 

 

 

 

(10.9

)

 

 

Total special items

 

(0.3

)

 

 

(0.01

)

 

 

1.7

 

 

 

0.08

 

 

13.7

 

 

 

0.66

 

 

6.3

 

 

 

0.31

Adjusted net income and adjusted EPS

$

28.5

 

 

$

1.37

 

 

$

21.4

 

 

$

1.03

 

$

99.7

 

 

$

4.80

 

$

78.8

 

 

$

3.81

Acquisition amortization (net of tax)

 

2.4

 

 

 

0.12

 

 

 

2.0

 

 

 

0.10

 

 

9.8

 

 

 

0.47

 

 

5.2

 

 

 

0.25

Adjusted net income and adjusted EPS excl. amortization

$

30.9

 

 

$

1.49

 

 

$

23.4

 

 

$

1.13

 

$

109.5

 

 

$

5.27

 

$

84.0

 

 

$

4.06

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter Ended

 

Twelve Months Ended

(Millions)

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

 

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

Net sales

$

197.6

 

 

 

 

$

136.4

 

 

 

 

$

671.5

 

 

 

 

$

511.9

 

 

 

Pass-through metal cost

 

20.0

 

 

 

 

 

20.6

 

 

 

 

 

82.0

 

 

 

 

 

71.5

 

 

 

Value-added sales

$

177.6

 

 

 

 

$

115.8

 

 

 

 

$

589.5

 

 

 

 

$

440.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

44.3

 

 

24.9

%

 

$

21.0

 

 

18.1

%

 

$

125.2

 

 

21.2

%

 

$

89.0

 

 

20.2

%

Additional start up resources and scrap

 

 

 

%

 

 

 

 

%

 

 

4.1

 

 

0.7

%

 

 

 

 

%

Merger and acquisition costs

 

 

 

%

 

 

1.6

 

 

1.4

%

 

 

2.7

 

 

0.5

%

 

 

1.6

 

 

0.4

%

Adjusted EBITDA

$

44.3

 

 

24.9

%

 

$

22.6

 

 

19.5

%

 

$

132.0

 

 

22.4

%

 

$

90.6

 

 

20.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter Ended

 

Twelve Months Ended

(Millions)

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

 

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

Net sales

$

209.3

 

 

 

 

$

228.3

 

 

 

 

$

971.9

 

 

 

 

$

866.8

 

 

 

Pass-through metal cost

 

105.3

 

 

 

 

 

138.7

 

 

 

 

 

529.9

 

 

 

 

 

577.7

 

 

 

Value-added sales

$

104.0

 

 

 

 

$

89.6

 

 

 

 

$

442.0

 

 

 

 

$

289.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

16.5

 

 

15.9

%

 

$

12.2

 

 

13.6

%

 

$

67.8

 

 

15.3

%

 

$

44.8

 

 

15.5

%

Restructuring and cost reduction

 

 

 

%

 

 

 

 

%

 

 

0.8

 

 

0.2

%

 

 

 

 

%

Merger and acquisition costs

 

0.6

 

 

0.6

%

 

 

3.7

 

 

4.1

%

 

 

7.4

 

 

1.7

%

 

 

3.7

 

 

1.3

%

Adjusted EBITDA

$

17.1

 

 

16.4

%

 

$

15.9

 

 

17.7

%

 

$

76.0

 

 

17.2

%

 

$

48.5

 

 

16.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Precision Optics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter Ended

 

Twelve Months Ended

(Millions)

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

 

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

Net sales

$

27.7

 

 

 

 

$

32.5

 

 

 

 

$

113.7

 

 

 

 

$

131.9

 

 

 

Pass-through metal cost

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

0.1

 

 

 

Value-added sales

$

27.7

 

 

 

 

$

32.5

 

 

 

 

$

113.6

 

 

 

 

$

131.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$

4.4

 

 

15.9

%

 

$

6.6

 

 

20.3

%

 

$

13.7

 

 

12.1

%

 

$

25.9

 

 

19.7

%

Restructuring and cost reduction

 

 

 

%

 

 

 

 

%

 

 

0.6

 

 

0.5

%

 

 

0.4

 

 

0.3

%

Pension settlement

 

(0.5

)

 

(1.8

)%

 

 

 

 

%

 

 

(0.5

)

 

(0.4

)%

 

 

 

 

Merger and acquisition costs

 

0.1

 

 

0.4

%

 

 

 

 

%

 

 

0.2

 

 

0.2

%

 

 

 

 

%

Adjusted EBITDA

$

4.0

 

 

14.4

%

 

$

6.6

 

 

20.3

%

 

$

14.0

 

 

12.3

%

 

$

26.3

 

 

20.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter Ended

 

Twelve Months Ended

(Millions)

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

 

December 31,
2022

 

% of VA

 

December 31,
2021

 

% of VA

EBITDA

$

(10.1

)

 

 

 

$

(11.3

)

 

 

 

$

(28.3

)

 

 

 

$

(33.3

)

 

 

Restructuring and cost reduction

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

 

 

Merger and acquisition costs

 

0.3

 

 

 

 

 

6.0

 

 

 

 

 

2.2

 

 

 

 

 

11.5

 

 

 

Adjusted EBITDA

$

(9.8

)

 

 

 

$

(5.3

)

 

 

 

$

(26.0

)

 

 

 

$

(21.8

)

 

 

 

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

Media Contact:
Jason Saragian
(216) 383-6893
jason.saragian@materion.com
https://materion.com
Mayfield Hts-g

Source: Materion Corporation