Materion Corporation Reports Record Second Quarter Results and Affirms 2023 Outlook

Materion Corporation (NYSE: MTRN) today reported second quarter financial results and affirmed 2023 earnings guidance.

Second Quarter 2023 Highlights

• Net sales were $398.6 million; value-added sales¹ were roughly flat year over year at $268.3 million
• Strong second quarter operating profit was $35.4 million; record second quarter adjusted EBITDA² of $55.5 million versus $47.0 million in the prior year, an increase of 18%
• Second quarter records for both net income of $1.15 per share, diluted, and adjusted earnings of $1.38 per share
• Affirmed adjusted earnings outlook of $5.60 - $6.00/share

Growth Highlights

• Outperformed midterm adjusted EBITDA target margin of 20%
• Delivered eleventh consecutive quarter of adjusted EBITDA and EPS growth
• Robust pipeline of new customer projects positioning Materion for sustainable long-term market outgrowth

“I am proud of our global team for delivering record second quarter results despite significant softness in the semiconductor market,” Jugal Vijayvargiya, Materion President and CEO said. “The diversity of our portfolio combined with our proven operational excellence track record contributed to our performance and further demonstrated the underlying strength of our company.”

“Our deep technical expertise and strong customer partnerships continue to yield fantastic new growth opportunities aligned with compelling global megatrends, positioning us to continue to deliver sustainable long-term market outgrowth.”

SECOND QUARTER 2023 RESULTS

Net sales for the quarter were $398.6 million, compared to $445.3 million in the prior year period. Value-added sales were $268.3 million for the quarter, roughly flat with prior year due to the expected semiconductor demand softness, offset by strength in aerospace & defense, telecom & data center and precision clad strip.

Operating profit for the quarter was $35.4 million and net income was $24.1 million, or $1.15 per diluted share, compared to operating profit of $31.9 million and net income of $23.3 million, or $1.12 per diluted share in the prior year period.

Excluding special items³ primarily related to the targeted cost improvement initiatives, adjusted EBITDA was $55.5 million in the quarter, compared to $47.0 million in the prior year period. The increase was driven mainly by favorable price/mix, strong operational performance and the benefit of cost improvement initiatives.

Adjusted net income was $28.9 million excluding acquisition amortization, or $1.38 per diluted share, an increase of 8% compared to $1.28 per share in the prior year period.

OUTLOOK

With accelerating contributions from our organic pipeline, a semiconductor recovery expected to start in the fourth quarter, and the benefit of our targeted cost improvement initiatives, we remain confident in our ability to execute and deliver another year of record results. With that, we are affirming our adjusted earnings per share guidance in the range of $5.60 to $6.00, an increase of 10% 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 8 to this press release.

CONFERENCE CALL

Materion Corporation will host an investor conference call with analysts at 9:00 a.m. Eastern Time, August 2, 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 268050. A replay of the call will be available until August 16, 2023 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 46838. 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 EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization
³ Details of the special items can be found in Attachments 4 through 8

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 3,700 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: the global economy, including inflationary pressures, potential future recessionary conditions and the impact of tariffs and trade agreements; the impact of any U.S. Federal Government shutdowns or sequestrations; 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 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 start-up and completion 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 Company’s stock price on the cost of incentive compensation plans; the uncertainties related to the impact of war, terrorist activities, and acts of God; changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; the conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; the disruptions in operations from, and other effects of, catastrophic and other extraordinary events including outbreaks from infectious diseases and the conflict between Russia and Ukraine; realization of expected financial benefits expected from the Inflation Reduction Act of 2022; and the risk factors set forth in Part 1, Item 1A of the Company's 2022 Annual Report on Form 10-K.