MTRN 10-Q
MATERION Corp (MTRN)
10-Q
2024-05-02
For: 2024-03-29
View Original
Added on
April 07, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________
FORM 10-Q
(Mark One)
For the quarterly period ended March 29, 2024
OR
For the transition period from to
Commission file number 001-15885
(Exact name of Registrant as specified in charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(216 )-486-4200
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Non-accelerated filer ¨ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
Number of Shares of Common Stock, without par value, outstanding at March 29, 2024: 20,730,895 .
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Materion Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
| First Quarter Ended | ||||||||||||||
| (Thousands, except per share amounts) | March 29, 2024 | March 31, 2023 | ||||||||||||
| Net sales | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||
| Gross margin | ||||||||||||||
| Selling, general, and administrative expense | ||||||||||||||
| Research and development expense | ||||||||||||||
| Restructuring expense (income) | ||||||||||||||
| Other—net | ||||||||||||||
| Operating profit | ||||||||||||||
| Other non-operating income—net | ( | ( | ||||||||||||
| Interest expense—net | ||||||||||||||
| Income before income taxes | ||||||||||||||
| Income tax expense | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Basic earnings per share: | ||||||||||||||
| Net income per share of common stock | $ | $ | ||||||||||||
| Diluted earnings per share: | ||||||||||||||
| Net income per share of common stock | $ | $ | ||||||||||||
| Weighted-average number of shares of common stock outstanding: | ||||||||||||||
| Basic | ||||||||||||||
| Diluted | ||||||||||||||
See notes to these consolidated financial statements.
2
Materion Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
| First Quarter Ended | ||||||||||||||
| March 29, | March 31, | |||||||||||||
| (Thousands) | 2024 | 2023 | ||||||||||||
| Net income | $ | $ | ||||||||||||
| Other comprehensive (loss) income: | ||||||||||||||
| Foreign currency translation adjustment | ( | |||||||||||||
| Derivative and hedging activity, net of tax | ( | |||||||||||||
| Pension and post-employment benefit adjustment, net of tax | ( | ( | ||||||||||||
| Other comprehensive loss | ( | |||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
See notes to these consolidated financial statements.
3
Materion Corporation and Subsidiaries
Consolidated Balance Sheets
| (Unaudited) | ||||||||||||||
| March 29, | Dec. 31, | |||||||||||||
| (Thousands) | 2024 | 2023 | ||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Accounts receivable, net | ||||||||||||||
| Inventories, net | ||||||||||||||
| Prepaid and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Deferred income taxes | ||||||||||||||
| Property, plant, and equipment | ||||||||||||||
| Less allowances for depreciation, depletion, and amortization | ( | ( | ||||||||||||
| Property, plant, and equipment, net | ||||||||||||||
| Operating lease, right-of-use assets | ||||||||||||||
| Intangible assets, net | ||||||||||||||
| Other assets | ||||||||||||||
| Goodwill | ||||||||||||||
| Total Assets | $ | $ | ||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||
| Current liabilities | ||||||||||||||
| Short-term debt | $ | $ | ||||||||||||
| Accounts payable | ||||||||||||||
| Salaries and wages | ||||||||||||||
| Other liabilities and accrued items | ||||||||||||||
| Income taxes | ||||||||||||||
| Unearned revenue | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Other long-term liabilities | ||||||||||||||
| Operating lease liabilities | ||||||||||||||
| Finance lease liabilities | ||||||||||||||
| Retirement and post-employment benefits | ||||||||||||||
| Unearned income | ||||||||||||||
| Long-term income taxes | ||||||||||||||
| Deferred income taxes | ||||||||||||||
| Long-term debt | ||||||||||||||
| Shareholders’ equity | ||||||||||||||
Serial preferred stock (no par value; | ||||||||||||||
Common stock (no par value; | ||||||||||||||
| Retained earnings | ||||||||||||||
| Common stock in treasury | ( | ( | ||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Other equity | ||||||||||||||
| Total shareholders' equity | ||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||||||||
See the notes to these consolidated financial statements.
4
Materion Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended | ||||||||||||||
| March 29, | March 31, | |||||||||||||
| (Thousands) | 2024 | 2023 | ||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation, depletion, and amortization | ||||||||||||||
| Amortization of deferred financing costs in interest expense | ||||||||||||||
| Stock-based compensation expense (non-cash) | ||||||||||||||
| Deferred income tax (benefit) expense | ( | ( | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Accounts receivable | ||||||||||||||
| Inventory | ( | ( | ||||||||||||
| Prepaid and other current assets | ( | ( | ||||||||||||
| Accounts payable and accrued expenses | ( | ( | ||||||||||||
| Unearned revenue | ( | |||||||||||||
| Interest and taxes payable | ( | |||||||||||||
| Unearned income due to customer prepayments | ||||||||||||||
| Other-net | ( | |||||||||||||
| Net cash (used in) provided by operating activities | ( | |||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Payments for purchase of property, plant, and equipment | ( | ( | ||||||||||||
| Payments for mine development | ( | |||||||||||||
| Proceeds from sale of property, plant, and equipment | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Proceeds from borrowings under revolving credit agreement, net | ||||||||||||||
| Repayment of debt | ( | ( | ||||||||||||
| Principal payments under finance lease obligations | ( | ( | ||||||||||||
| Cash dividends paid | ( | ( | ||||||||||||
| Payments of withholding taxes for stock-based compensation awards | ( | ( | ||||||||||||
| Net cash provided by financing activities | ( | |||||||||||||
| Effects of exchange rate changes | ( | |||||||||||||
| Net change in cash and cash equivalents | ( | |||||||||||||
| Cash and cash equivalents at beginning of period | ||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||
See notes to these consolidated financial statements.
5
Materion Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Unaudited)
| Common Shares | Shareholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||
| (Thousands, except per share amounts) | Common Shares | Common Shares Held in Treasury | Common Stock | Retained Earnings | Common Stock in Treasury | Accumulated Other Comprehensive Loss | Other Equity | Total | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation activity | ( | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Payments of withholding taxes for stock-based compensation awards | ( | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Directors’ deferred compensation | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||
| Balance at March 29, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation activity | ( | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Payments of withholding taxes for stock-based compensation awards | ( | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Directors’ deferred compensation | ( | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
See notes to these consolidated financial statements.
6
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note A — Accounting Policies
Basis of Presentation:
The accompanying consolidated financial statements of Materion Corporation and its subsidiaries (referred to herein as the Company, our, we, or us) contain all of the adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. All adjustments were of a normal and recurring nature.
Recently Issued Accounting Standards:
In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-07 “Improvements to Reportable Segment Disclosures (Topic 280)”. This ASU updates current reportable segment disclosure requirements to require disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. This ASU will be effective for the annual period ending December 31, 2024. Adoption of this ASU will result in additional disclosure, but it will not impact the Company’s consolidated financial position, results of operations or cash flows.
In December 2023, the FASB issued ASU No. 2023-09 “Improvements to Income Tax Disclosures (Topic 740)”. This ASU updates current income tax disclosure requirements to require disclosures of specific categories of information within the effective tax rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. This ASU will be effective for the annual period ending December 31, 2025. Adoption of this ASU will result in additional disclosure, but it will not impact the Company’s consolidated financial position, results of operations or cash flows.
Note B — Segment Reporting
The Company has the following reportable segments: Performance Materials, Electronic Materials, Precision Optics, and Other. The Company’s reportable segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, the Company's chief operating decision maker, in determining how to allocate the Company’s resources and evaluate performance.
Performance Materials provides advanced engineered solutions comprised of beryllium and non-beryllium containing alloy systems and custom engineered parts in strip, bulk, rod, plate, bar, tube, and other customized shapes.
Electronic Materials produces advanced chemicals, microelectric packaging, precious metal, non-precious metal, and specialty metal products, including vapor deposition targets, frame lid assemblies, clad and precious metal preforms and high temperature braze materials.
Precision Optics produces thin film coatings, optical filter materials, sputter-coated, and precision-converted thin film materials.
The Other reportable segment includes unallocated corporate costs and assets.
The primary measurement used by management to measure the financial performance of each segment is earnings before interest, taxes, depreciation and amortization (EBITDA). The below table presents financial information for each segment and a reconciliation of EBITDA to Net Income (the most directly comparable GAAP financial measure) for the first quarter of 2024 and 2023:
7
| (Thousands) | Three months ended March 29, 2024 | Three months ended March 31, 2023 | ||||||||||||
| Net sales: | ||||||||||||||
Performance Materials (1) | $ | $ | ||||||||||||
Electronic Materials(1) | ||||||||||||||
| Precision Optics | ||||||||||||||
| Other | ||||||||||||||
| Net sales | $ | $ | ||||||||||||
| Segment EBITDA: | ||||||||||||||
| Performance Materials | $ | $ | ||||||||||||
| Electronic Materials | ||||||||||||||
| Precision Optics | ( | |||||||||||||
| Other | ( | ( | ||||||||||||
| Total Segment EBITDA | $ | $ | ||||||||||||
| Income tax expense | ||||||||||||||
| Interest expense - net | ||||||||||||||
| Depreciation, depletion and amortization | ||||||||||||||
| Net income | $ | $ | ||||||||||||
(1) Excludes inter-segment sales of $1.5 million for the first quarter of 2024 and $3.1 million for the first quarter of 2023 for Electronic Materials. Inter-segment sales are eliminated in consolidation.
The following table disaggregates revenue for each segment by end market for the first quarter of 2024 and 2023:
8
| (Thousands) | Performance Materials | Electronic Materials | Precision Optics | Other | Total | |||||||||||||||||||||||||||
| First Quarter 2024 | ||||||||||||||||||||||||||||||||
| End Market | ||||||||||||||||||||||||||||||||
| Semiconductor | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Industrial | ||||||||||||||||||||||||||||||||
| Aerospace and defense | ||||||||||||||||||||||||||||||||
| Consumer electronics | ||||||||||||||||||||||||||||||||
| Automotive | ||||||||||||||||||||||||||||||||
| Energy | ||||||||||||||||||||||||||||||||
| Telecom and data center | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| First Quarter 2023 | ||||||||||||||||||||||||||||||||
| End Market | ||||||||||||||||||||||||||||||||
| Semiconductor | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Industrial | ||||||||||||||||||||||||||||||||
| Aerospace and defense | ||||||||||||||||||||||||||||||||
| Consumer electronics | ||||||||||||||||||||||||||||||||
| Automotive | ||||||||||||||||||||||||||||||||
| Energy | ||||||||||||||||||||||||||||||||
| Telecom and data center | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Note C — Revenue Recognition
Net sales consist primarily of revenue from the sale of precious and non-precious specialty metals, beryllium and copper-based alloys, beryllium composites, and other products into numerous end markets. The Company requires an agreement with a customer that creates enforceable rights and performance obligations. The Company generally recognizes revenue in an amount that reflects the consideration to which it expects to be entitled upon satisfaction of a performance obligation by transferring control over a product to the customer. Control over a product is generally transferred to the customer when the Company has a present right to payment, the customer has legal title, the customer has physical possession, the customer has the significant risks and rewards of ownership, and/or the customer has accepted the product.
After considering the practical expedient at March 29, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $57.9 million.
9
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Contract Balances: The timing of revenue recognition, billings, and cash collections resulted in the following contract assets and contract liabilities:
| (Thousands) | March 29, 2024 | December 31, 2023 | $ change | % change | ||||||||||||||||||||||
Accounts receivable, trade | $ | $ | $ | ( | ( | % | ||||||||||||||||||||
Unbilled receivables | % | |||||||||||||||||||||||||
Unearned revenue | % | |||||||||||||||||||||||||
Accounts receivable, trade represents payments due from customers relating to the transfer of the Company’s products and services. The Company believes that its receivables are collectible and appropriate allowances for doubtful accounts have been recorded. Impairment losses (bad debt) incurred related to our receivables were immaterial during the first three months of 2024.
Unbilled receivables represent expenditures on contracts, plus applicable profit margin, not yet billed. Unbilled receivables are generally billed and collected within one year. Billings made on contracts are recorded as a reduction of unbilled receivables. Unbilled receivables are included within the prepaid and other current assets line item on the Consolidated Balance Sheet.
Unearned revenue is recorded for consideration received from customers in advance of satisfaction of the related performance obligations. The Company recognized approximately $6.9 million of the December 31, 2023 unearned amounts as revenue during the first three months of 2024.
As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component because the period between the transfer of a product or service to a customer and when the customer pays for that product or service will be one year or less. The Company does not include extended payment terms in its contracts with customers.
Note D — Restructuring
The Company implemented various restructuring initiatives across the Performance Materials, Electronic Materials and Precision Optics segments to improve operational efficiency during the first three months of 2024 and 2023. This resulted in severance and related costs of approximately $1.6 million during the three months ended March 29, 2024 and $0.7 million during the three months ended March 31, 2023. Of the $1.6 million, approximately $0.9 million of those severance costs were paid as of March 29, 2024.
Note E — Other-net
Other-net for the first quarter of 2024 and 2023 is summarized as follows:
| First Quarter Ended | ||||||||||||||
| March 29, | March 31, | |||||||||||||
| (Thousands) | 2024 | 2023 | ||||||||||||
| Amortization of intangible assets | $ | $ | ||||||||||||
| Metal consignment fees | ||||||||||||||
| Foreign currency loss (gain) | ( | |||||||||||||
| Other items | ( | ( | ||||||||||||
| Total | $ | $ | ||||||||||||
10
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note F — Income Taxes
The Company's effective tax rate for the first quarter of 2024 and 2023 was 8.2 % and 15.2 %, respectively. The effective tax rate for the first quarter of 2024 was lower than the statutory tax rate primarily due to the impact of percentage depletion, the foreign derived intangible income deduction, and excess tax benefits from stock-based compensation awards. The effective tax rate for the first quarter of 2024 and 2023 included a net discrete income tax benefit of $1.2 million and $0.5 million, respectively, primarily related to excess tax benefits from stock-based compensation awards.
Government Tax Credits
Pursuant to The Inflation Reduction Act of 2022 (IRA), the Company is eligible for the Advanced Manufacturing Production Credit (“production credit”) beginning in 2023. The production credit provides an annual cash benefit for a portion of the production costs for the sale of certain critical minerals produced in the U.S. and sold during the year. On December 15, 2023, the U.S. Treasury Department published proposed regulations on the production credit that include clarifying guidance regarding the definition of production costs in the computation of the production credit. Although the proposed guidance is not authoritative and is subject to change in the regulatory review process, the guidance indicates that the Treasury Department may implement a narrower definition of eligible production costs in the final regulations. The ultimate amount of the benefit that the Company is entitled to receive in connection with the production credit will depend on the final regulations issued on the production credit.
The Company records the production credit as a reduction in cost of goods sold as the applicable items are produced and sold. U.S. GAAP does not address the accounting for government grants received by a business entity that are outside the scope of ASC 740. Our accounting policy is to analogize to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, under IFRS Accounting Standards. We recognize the benefit of the production credits by applying IAS 20 in pretax income on a systematic basis in line with its recognition of the expenses that the grant is intended to compensate.
Pillar Two
The Organization for Economic Co-operation and Development (OECD) introduced rules to establish a global minimum corporate tax, commonly referred to as Pillar Two. Numerous foreign countries have enacted legislation to implement the Pillar Two rules, effective beginning in 2024, or are expected to enact similar legislation. The Company continues to evaluate the Pillar Two rules but does not expect Pillar Two to have a significant impact on its effective tax rate or consolidated results of operations, financial position, and cash flows.
11
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note G — Earnings Per Share (EPS)
The following table sets forth the computation of basic and diluted EPS:
| First Quarter Ended | ||||||||||||||
| March 29, | March 31, | |||||||||||||
| (Thousands, except per share amounts) | 2024 | 2023 | ||||||||||||
| Numerator for basic and diluted EPS: | ||||||||||||||
| Net income (loss) | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||
| Denominator for basic EPS: | ||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||
| Effect of dilutive securities: | ||||||||||||||
| Stock appreciation rights | ||||||||||||||
| Restricted stock units | ||||||||||||||
| Performance-based restricted stock units | ||||||||||||||
| Diluted potential common shares | ||||||||||||||
| Denominator for diluted EPS: | ||||||||||||||
| Adjusted weighted-average shares outstanding | ||||||||||||||
| Basic EPS | $ | $ | ||||||||||||
| Diluted EPS | $ | $ | ||||||||||||
Adjusted weighted-average shares outstanding - diluted exclude securities totaling 71,285 and 17,902 for the quarters ended March 29, 2024 and March 31, 2023, respectively. These securities are primarily related to restricted stock units (RSUs) and stock appreciation rights (SARs) with fair market values and exercise prices greater than the average market price of the Company's common shares and were excluded from the dilution calculation as the effect would have been anti-dilutive.
Note H — Inventories
Inventories on the Consolidated Balance Sheets are summarized as follows:
| March 29, | December 31, | |||||||||||||
| (Thousands) | 2024 | 2023 | ||||||||||||
| Raw materials and supplies | $ | $ | ||||||||||||
| Work in process | ||||||||||||||
| Finished goods | ||||||||||||||
| Inventories, net | $ | $ | ||||||||||||
12
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note I — Customer Prepayments
In 2020, the Company entered into an investment agreement and a master supply agreement with a customer to procure equipment to manufacture product for the customer. The customer provided prepayments to the Company to fund the necessary infrastructure improvements and procure the equipment necessary to supply the customer with the desired product. The Company owns, operates and maintains the equipment that is being used to manufacture product for the customer.
Revenue will be recognized as the Company fulfills purchase orders and ships the commercial product to the customer, as product delivery is considered the satisfaction of the performance obligation.
Additionally, during the second quarter of 2022, the Company entered into an amendment to the investment agreement with the same customer to procure additional equipment to manufacture product for the customer. In 2023 the Company received the remaining prepayment related to this amendment, the total of which approximated $38.6 million.
As of March 29, 2024 and December 31, 2023, $77.9 million and $84.7 million, respectively, of prepayments are classified as Unearned income on the Consolidated Balance Sheets. The prepayments will remain in Unearned income until commercial purchase orders are received for product serviced out of the equipment, at which time a portion of the purchase order value related to prepayments will be reclassified to Unearned revenue. As of March 29, 2024 $7.5 million of the prepayments are classified as Unearned revenue.
Note J — Pensions and Other Post-employment Benefits
The following is a summary of the net periodic benefit (income)/cost for the first quarter of 2024 and 2023 for the pension plans as shown below. The Pension Benefits columns aggregate defined benefit pension plans in the U.S., Germany, Liechtenstein, England, and the U.S. supplemental retirement plans. The Other Benefits columns include the domestic retiree medical and life insurance plan.
| Pension Benefits | Other Benefits | |||||||||||||||||||||||||
| First Quarter Ended | First Quarter Ended | |||||||||||||||||||||||||
| March 29, | March 31, | March 29, | March 31, | |||||||||||||||||||||||
| (Thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Components of net periodic benefit (income) cost | ||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ||||||||||||||||||||||||
| Amortization of prior service cost (benefit) | ( | ( | ( | |||||||||||||||||||||||
| Amortization of net loss (gain) | ( | ( | ( | |||||||||||||||||||||||
| Total net benefit (income) cost | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
The Company did not
13
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note K — Accumulated Other Comprehensive Income (Loss)
Changes in the components of accumulated other comprehensive income, including the amounts reclassified, for the first quarter of 2024 and 2023 are as follows:
| Gains and Losses on Cash Flow Hedges | |||||||||||||||||||||||||||||||||||||||||||||||
| (Thousands) | Foreign Currency | Interest Rate | Precious Metals | Total | Pension and Post-Employment Benefits | Foreign Currency Translation | Total | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net current period other comprehensive (loss) income before tax | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Deferred taxes | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Net current period other comprehensive (loss) income after tax | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Balance at March 29, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income (loss) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net current period other comprehensive (loss) income before tax | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Deferred taxes | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Net current period other comprehensive (loss) income after tax | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Reclassifications from accumulated other comprehensive income (loss) of gains and losses on foreign currency cash flow hedges are recorded in Net sales in the Consolidated Statements of Income (Loss). Reclassifications from accumulated other comprehensive income (loss) of gains and losses on precious metal and copper cash flow hedges are recorded in Cost of sales in the Consolidated Statements of Income. Reclassifications from accumulated other comprehensive income (loss) of gains and losses on the interest rate cash flow hedge is recorded in Interest expense in the Consolidated Statements of Income. Refer to Note N for additional details on cash flow hedges.
14
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note L — Stock-based Compensation Expense
Stock-based compensation expense, which includes awards settled in shares and in cash, was $2.6 million and $2.4 million in the first quarter of 2024 and 2023, respectively.
The Company granted 36,919 SARs to certain employees during the first quarter of 2024. The weighted-average exercise price per share and weighted-average fair value per share of the SARs granted during the three months ended March 29, 2024 were $135.58 and $50.46 , respectively. The Company estimated the fair value of the SARs using the following weighted-average assumptions in the Black-Scholes model:
| Risk-free interest rate | % | |||||||
| Dividend yield | % | |||||||
| Volatility | % | |||||||
| Expected term (in years) | ||||||||
The Company granted 37,466 stock-settled RSUs to certain employees during the first quarter of 2024. The Company measures the fair value of stock-settled RSUs based on the closing market price of a share of Materion common stock on the date of the grant. The weighted-average fair value per share was $135.57 for stock-settled RSUs granted to employees during the three months ended March 29, 2024. RSUs are generally expensed over the vesting period of three years for employees.
The Company granted stock-settled performance-based restricted stock units (PRSUs) to certain employees in the first quarter of 2024. The weighted-average fair value of the stock-settled PRSUs was $169.26 per share and will be expensed over the vesting period of three years . The final payout to the employees for all PRSUs will be based upon the Company’s return on invested capital and its total return to shareholders over the vesting period relative to a peer group’s performance over the same period.
Note M — Fair Value of Financial Instruments
The Company measures and records financial instruments at fair value. A hierarchy is used for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 — Quoted market prices in active markets for identical assets and liabilities;
Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect
those that a market participant would use.
15
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheets as of March 29, 2024 and December 31, 2023:
| (Thousands) | Total Carrying Value in the Consolidated Balance Sheets | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||
| Financial Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation investments | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Precious metal swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Financial Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation liability | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Precious metal swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
The Company uses a market approach to value the assets and liabilities for financial instruments in the table above. Outstanding contracts are valued through models that utilize market observable inputs, including both spot and forward prices, for the same underlying currencies, metals, and interest rates. The carrying values of the other working capital items and debt in the Consolidated Balance Sheets approximate fair values as of March 29, 2024 and December 31, 2023. The Company's deferred compensation investments and liabilities are based on the fair value of the investments corresponding to the employees’ investment selections, primarily in mutual funds, based on quoted prices in active markets for identical assets. Deferred compensation investments are primarily presented in Other assets. Deferred compensation liabilities are primarily presented in Other long-term liabilities.
Note N — Derivative Instruments and Hedging Activity
The Company uses derivative contracts to hedge exposure to movements in interest rates associated with borrowings, foreign currency exposures, and precious metal and copper exposures. The objectives and strategies for using derivatives in these areas are as follows:
Interest Rate. On March 4, 2022, the Company entered into a $100.0 million interest rate swap to hedge the interest rate risk on the Credit Agreement described in Note P. The swap hedges the change in 1-month Secured Overnight Financial Rate (SOFR) from March 4, 2022 to November 2, 2026. On March 21, 2023, the Company entered into two $50.0 million interest rate swaps to hedge the interest rate risk on the Credit Agreement described in Note P. The swaps hedge the change in 1-month USD-SOFR. The purpose of these hedges is to manage the risk of changes in the monthly interest payments attributable to changes in the benchmark interest rate.
Foreign Currency. The Company sells a portion of its products to overseas customers in their local currencies, primarily the euro and yen. The Company secures foreign currency derivatives, mainly forward contracts and options, to hedge these anticipated sales transactions. The purpose of the hedge program is to protect against the reduction in the dollar value of foreign currency sales from adverse exchange rate movements. Should the dollar strengthen significantly, the decrease in the translated value of the foreign currency sales should be partially offset by gains on
16
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
the hedge contracts. Depending upon the methods used, the hedge contracts may limit the benefits from a weakening U.S. dollar.
The use of forward contracts locks in a firm rate and eliminates any downside from an adverse rate movement as well as any benefit from a favorable rate movement. The Company may from time to time choose to hedge with options or a tandem of options, known as a collar. These hedging techniques can limit or eliminate the downside risk but can allow for some or all of the benefit from a favorable rate movement to be realized. Unlike a forward contract, a premium is paid for an option; collars, which are a combination of a put and call option, may have a net premium but can be structured to be cash neutral. The Company will primarily hedge with forward contracts due to the relationship between the cash outlay and the level of risk.
The use of foreign currency derivative contracts is governed by policies approved by the Audit Committee of the Board of Directors. A team consisting of senior financial managers reviews the estimated exposure levels, as defined by budgets, forecasts, and other internal data, and determines the timing, amounts, and nature of instruments to use to hedge exposures. Management analyzes the effective hedged rates and the actual and projected gains and losses on the hedging transactions against the program objectives, targeted rates, and levels of risk assumed. Foreign currency contracts are typically layered in at different times for a specified exposure period in order to minimize the impact of market rate movements.
Precious Metals. The Company maintains the majority of its precious metal production requirements on consignment in order to reduce its working capital investment and the exposure to metal price movements. When a product containing precious metal is fabricated and delivered to the customer, the metal content is purchased out of consignment based on the current market price. The price paid by the Company for the precious metal forms the basis for the price charged to the customer for the metal content in the product. This methodology allows for changes in either direction in the market prices of the precious metals used by the Company to be passed through to the customer and reduces the impact that changes in prices could have on the Company's margins and operating profit. The consigned metal is owned by precious metal consignors that charge the Company consignment fees based upon the value of the metal as it fluctuates while on consignment. Each precious metal consignor retains title to its consigned precious metal until it is purchased by the Company, and it is the Company’s typical practice to purchase metal out of consignment only after a product containing that metal has been purchased by one of our customers.
In certain instances, a customer may want to fix the price for the precious metal at the time the sales order is placed rather than at the time of shipment. Setting the sales price at a different date than when the material would be purchased out of consignment potentially creates an exposure to movements in the market price of the metal. Therefore, in these limited situations, the Company may elect to enter into a forward contract to purchase precious metal. The forward contract allows the Company to purchase metal at a fixed price on a specific future date. The price in the forward contract serves as the basis for the price to be charged to the customer. By doing so, the selling price and purchase price are matched, and the Company's price exposure is reduced.
The Company refines precious metal-containing materials for its customers and typically will purchase the refined metal from the customer at current market prices. In limited circumstances, the customer may want to fix the price to be paid at the time of the order as opposed to when the material is refined. The customer may also want to fix the price for a set period of time. The Company may then elect to enter into a hedge contract, either a forward contract or a swap, to fix the price for the estimated quantity of metal to be refined and purchased, thereby reducing the exposure to adverse movements in the price of the metal. The Company may also enter into hedges to mitigate the risk relating to the prices of the metals that we process or refine.
In certain circumstances, the Company also refines metal from the customer and may retain a portion of the refined metal as payment. The Company may elect to enter into a forward contract to sell precious metal to reduce the Company's price exposure in these instances.
The Company may, from time to time, elect to purchase precious metal and hold in inventory rather than on consignment due to potential consignment line limitations or other factors. These purchases are infrequent and, when made are typically held for a short duration. A forward contract will be secured at the time of the purchase to fix the
17
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
price to be paid when the metal is transferred back to the consignment line, thereby limiting any price exposure during the time when the metal was owned by the Company.
The Company will only enter into a derivative contract if there is an underlying identified exposure. Contracts are typically held to maturity. The Company does not engage in derivative trading activities and does not use derivatives for speculative purposes. The Company only uses hedge contracts that are denominated in the same currency or metal as the underlying exposure.
All derivatives are recorded on the balance sheet at fair value. If a derivative is designated and effective as a cash flow hedge, changes in the fair value of the derivative are recognized in other comprehensive income (OCI) and reclassified into income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of a derivative's fair value, if any, is recognized in earnings immediately. If a derivative is not a hedge, changes in the fair value are adjusted through income. The fair values of the outstanding derivatives are recorded on the balance sheet as assets (if the derivatives are in a gain position) or liabilities (if the derivatives are in a loss position). The derivative assets and liabilities are classified as short-term or long-term depending upon the contract maturity date.
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives not designated as hedging instruments (on a gross basis) and the balance sheet classification as of March 29, 2024 and December 31, 2023:
March 29, 2024 | December 31, 2023 | |||||||||||||||||||||||||
| (Thousands) | Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||||
| Foreign currency forward contracts | ||||||||||||||||||||||||||
| Prepaid and other current assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Other liabilities and accrued items | ||||||||||||||||||||||||||
These outstanding foreign currency derivatives were related to balance sheet hedges and intercompany loans. Other-net included $0.4 million of foreign currency gains and $0.2 million of foreign currency losses related to derivatives in the first quarter of 2024 and 2023, respectively.
18
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives designated as cash flow hedges (on a gross basis) and the balance sheet classification as of March 29, 2024 and December 31, 2023:
March 29, 2024 | ||||||||||||||||||||||||||||||||
| Fair Value | ||||||||||||||||||||||||||||||||
| (Thousands) | Notional Amount | Prepaid and other current assets | Other assets | Other liabilities and accrued items | Other long-term liabilities | |||||||||||||||||||||||||||
| Foreign currency forward contracts - yen | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Foreign currency forward contracts - euro | ||||||||||||||||||||||||||||||||
| Precious metal swaps | ||||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||||||||
| Fair Value | ||||||||||||||||||||||||||||||||
| Notional Amount | Prepaid and other current assets | Other assets | Other liabilities and accrued items | Other long-term liabilities | ||||||||||||||||||||||||||||
| Foreign currency forward contracts - yen | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Foreign currency forward contracts - euro | ||||||||||||||||||||||||||||||||
| Precious metal swaps | ||||||||||||||||||||||||||||||||
| Interest rate swaps | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
All of the contracts summarized above were designated and effective as cash flow hedges. We expect to reclassify $4.7 million of gains into earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. At March 29, 2024, the maximum term of derivative instruments that hedge forecasted transactions was approximately four years . Refer to Note K for additional OCI details.
The following table summarizes the amounts reclassified from accumulated other comprehensive income related to the Company’s outstanding derivatives designated as cash flow hedges and associated income statement classification as of the first quarter of 2024 and 2023:
| First Quarter Ended | ||||||||||||||||||||
| (Thousands) | March 29, 2024 | March 31, 2023 | ||||||||||||||||||
| Hedging relationship | Line item | |||||||||||||||||||
| Foreign currency forward contracts | $ | $ | ( | |||||||||||||||||
| Precious metal swaps | Cost of sales | |||||||||||||||||||
| Interest rate swap | Interest expense - net | ( | ( | |||||||||||||||||
| Total | $ | ( | $ | ( | ||||||||||||||||
Note O — Contingencies
Legal Proceedings. The Company is party to several pending legal proceedings and claims arising in the normal course of business. The Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matters. To the extent there is a reasonable possibility that the losses could exceed any amounts accrued, the Company will adjust the accrual in the period the determination is made, disclose an estimate of the
19
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.
Environmental Proceedings. The Company has an active environmental compliance program and records reserves for the probable cost of identified environmental remediation projects. The reserves are established based upon analyses conducted by the Company’s engineers and outside consultants and are adjusted from time to time based upon ongoing studies, the difference between actual and estimated costs, and other factors. The reserves may also be affected by rulings and negotiations with regulatory agencies. The undiscounted reserve balance was $4.5 million and $4.6 million at March 29, 2024 and December 31, 2023, respectively, and is included in Other liabilities and accrued items and Other long-term liabilities on the Consolidated Balance Sheet. Environmental projects tend to be long-term, and the final actual remediation costs may differ from the amounts currently recorded.
Note P — Debt
| (Thousands) | March 29, 2024 | December 31, 2023 | ||||||||||||
| Borrowings under Credit Agreement | $ | $ | ||||||||||||
| Borrowings under the Term Loan Facility | ||||||||||||||
| Overdraft Sweep Facility | ||||||||||||||
| Foreign debt | ||||||||||||||
| Total debt outstanding | ||||||||||||||
| Current portion of long-term debt | ( | ( | ||||||||||||
| Gross long-term debt | ||||||||||||||
| Unamortized deferred financing fees | ( | ( | ||||||||||||
| Long-term debt | $ | $ | ||||||||||||
As of March 29, 2024 and December 31, 2023, the Company had $197.8 million outstanding at an average interest rate of 6.92 % and $149.3 million outstanding at an average interest rate of 6.96 %, respectively, under its revolving credit facility. The available borrowing capacity under the revolving credit facility as of March 29, 2024 was $130.2 million. The Company has the option to repay or borrow additional funds under the revolving credit facility until the maturity date in 2026. The amended and restated credit agreement governing the revolving credit facility (Credit Agreement) includes covenants subject to a maximum leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with all of our debt covenants as of March 29, 2024.
The balance outstanding on the term loan facility as of March 29, 2024 and December 31, 2023 was $262.5 million and $270.0 million, respectively.
At both March 29, 2024 and December 31, 2023, there was $47.0
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
OVERVIEW
We are an integrated producer of high-performance advanced engineered materials used in a variety of electrical, electronic, thermal, and structural applications. Our products are sold into numerous end markets, including semiconductor, industrial, aerospace and defense, automotive, consumer electronics, energy, and telecom and data center.
20
RESULTS OF OPERATIONS
First Quarter
| First Quarter Ended | ||||||||||||||||||||||||||
| March 29, | March 31, | $ | % | |||||||||||||||||||||||
| (Thousands, except per share data) | 2024 | 2023 | Change | Change | ||||||||||||||||||||||
| Net sales | $ | 385,287 | $ | 442,526 | $ | (57,239) | (13) | % | ||||||||||||||||||
| Value-added sales | 257,848 | 298,558 | (40,710) | (14) | % | |||||||||||||||||||||
| Gross margin | 71,212 | 91,336 | (20,124) | (22) | % | |||||||||||||||||||||
| Gross margin as a % of value-added sales | 28 | % | 31 | % | ||||||||||||||||||||||
| Selling, general, and administrative (SG&A) expense | 35,844 | 40,336 | (4,492) | (11) | % | |||||||||||||||||||||
| SG&A expense as a % of value-added sales | 14 | % | 14 | % | ||||||||||||||||||||||
| Research and development (R&D) expense | 7,142 | 7,621 | (479) | (6) | % | |||||||||||||||||||||
| R&D expense as a % of value-added sales | 3 | % | 3 | % | ||||||||||||||||||||||
| Restructuring (income) expense | 1,620 | 664 | 956 | 144 | % | |||||||||||||||||||||
| Other—net | 4,357 | 5,775 | (1,418) | (25) | % | |||||||||||||||||||||
| Operating profit | 22,249 | 36,940 | (14,691) | (40) | % | |||||||||||||||||||||
| Other non-operating (income)—net | (643) | (730) | 87 | (12) | % | |||||||||||||||||||||
| Interest expense—net | 8,279 | 7,502 | 777 | 10 | % | |||||||||||||||||||||
| Income before income taxes | 14,613 | 30,168 | (15,555) | (52) | % | |||||||||||||||||||||
| Income tax expense (benefit) | 1,204 | 4,580 | (3,376) | (74) | % | |||||||||||||||||||||
| Net income | $ | 13,409 | $ | 25,588 | $ | (12,179) | (48) | % | ||||||||||||||||||
| Diluted earnings per share | $ | 0.64 | $ | 1.23 | $ | (0.59) | (48) | % | ||||||||||||||||||
NM = Not Meaningful
Net sales of $385.3 million in the first quarter of 2024 decreased $57.2 million from $442.5 million in the first quarter of 2023. Volume decreases in the semiconductor (13%), industrial (28%), energy (34%) and automotive (28%) end markets were partially offset by volume increases in the aerospace and defense end market (32%). See Note B to the Consolidated Financial Statements for additional details on the year over year changes in our net sales by segment and market.
The change in precious metal and copper prices favorably impacted net sales during the first quarter of 2024 by $3.7 million.
Value-added sales is a non-GAAP financial measure that removes the impact of pass-through metal costs and allows for analysis without the distortion of the movement or volatility in metal prices and changes in mix due to customer-supplied material. Internally, we manage our business on this basis, and a reconciliation of net sales, the most directly comparable GAAP financial measure, to value-added sales is included herein. Value-added sales of $257.8 million in the first quarter of 2024 decreased $40.7 million, or 14%, compared to the first quarter of 2023. The decrease was driven by volume decrease in the semiconductor (25%), industrial (29%), energy (36%) and automotive (32%) end markets partially off set by a volume increase in the aerospace and defense (41%) end market.
Gross margin in the first quarter of 2024 was $71.2 million, a decrease of 22% compared to the first quarter of 2023. Gross margin expressed as a percentage of value-added sales decreased to 28% in the first quarter of 2024 from 31% in the first quarter of 2023. Gross margin decreased from the prior year primarily due to impact of lower volumes and related unabsorbed costs. Additionally, gross margin was unfavorably impacted by higher pre-production costs associated with the expansion of the new wide area clad facility.
SG&A expense was $35.8 million in the first quarter of 2024, compared to $40.3 million in the first quarter of 2023. The decrease in SG&A expense was primarily due to various cost savings initiatives implemented throughout 2023 and during the first quarter of 2024. Expressed as a percentage of value-added sales, SG&A expense was 14% in both the first quarter of 2024 and 2023.
R&D expense consists primarily of direct personnel costs for pre-production evaluation and testing of new products, prototypes, and applications. R&D spend was 3% of value-added sales in both the first quarter of 2024 and 2023.
21
Restructuring (income) expense consists primarily of cost reduction actions taken in order to reduce our fixed cost structure. In the first quarter of 2024, we recorded a combined total of $1.6 million of restructuring charges across all segments, compared to $0.7 million of restructuring charges in the first quarter of 2023 recorded in our Electronic Materials and Precision Optics segments.
Other-net was $4.4 million of expense in the first quarter of 2024, or a $1.4 million decrease from the first quarter of 2023, primarily driven by a $0.9 million decrease in metal consignment fees. Refer to Note E to the Consolidated Financial Statements for details of the major components within Other-net.
Other non-operating (income) expense-net includes components of pension and post-retirement expense other than service costs. Refer to Note J to the Consolidated Financial Statements for details of the components.
Interest expense-net was $8.3 million and $7.5 million in the first quarter of 2024 and 2023, respectively. The increase in interest expense is primarily due to an increase in interest rates compared to the prior year period.
Income tax expense for the first quarter of 2024 was expense of $1.2 million, compared to $4.6 million in the first quarter of 2023. The effective tax rate for the first quarter of 2024 and 2023 was 8.2% and 15.2%, respectively. The effective tax rate for the first quarter of 2024 was lower than the statutory tax rate primarily due to the impact of percentage depletion, the foreign derived intangible income deduction, and excess tax benefits from stock-based compensation awards. See Note F to the Consolidated Financial Statements for additional discussion.
Value-Added Sales - Reconciliation of Non-GAAP Financial Measure
A reconciliation of net sales to value-added sales, a non-GAAP financial measure, for each reportable segment and for the total Company for the first quarter of 2024 and 2023 is as follows:
| First Quarter Ended | ||||||||||||||
| March 29, | March 31, | |||||||||||||
| (Thousands) | 2024 | 2023 | ||||||||||||
| Net sales | ||||||||||||||
| Performance Materials | $ | 168,646 | $ | 187,014 | ||||||||||
| Electronic Materials | 191,971 | 228,820 | ||||||||||||
| Precision Optics | 24,670 | 26,692 | ||||||||||||
| Other | — | — | ||||||||||||
| Total | $ | 385,287 | $ | 442,526 | ||||||||||
| Less: pass-through metal costs | ||||||||||||||
| Performance Materials | $ | 13,072 | $ | 19,004 | ||||||||||
| Electronic Materials | 114,341 | 124,942 | ||||||||||||
| Precision Optics | 26 | 22 | ||||||||||||
| Other | — | — | ||||||||||||
| Total | $ | 127,439 | $ | 143,968 | ||||||||||
| Value-added sales | ||||||||||||||
| Performance Materials | $ | 155,574 | $ | 168,010 | ||||||||||
| Electronic Materials | 77,630 | 103,878 | ||||||||||||
| Precision Optics | 24,644 | 26,670 | ||||||||||||
| Other | — | — | ||||||||||||
| Total | $ | 257,848 | $ | 298,558 | ||||||||||
Internally, management 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 metal costs from net sales. Value-added sales allow management to assess the impact of differences in net sales between periods, segments, or markets, and analyze the resulting margins and profitability without the distortion of movements in pass-through metal costs. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. We sell other metals and materials that are not considered direct pass-throughs, and these
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costs are not deducted from net sales when calculating value-added sales. Non-GAAP financial measures, such as value-added sales, have inherent limitations and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.
The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium can be quite volatile. Our pricing policy is to directly pass the cost of these metals on to the customer in order to mitigate the impact of metal price volatility on our results from operations. Trends and comparisons of net sales are affected by movements in the market prices of these metals, but changes in net sales due to metal price movements may not have a proportionate impact on our profitability.
Our net sales are also affected by changes in the use of customer-supplied metal. When we manufacture a precious metal product, the customer may purchase metal from us or may elect to provide its own metal, in which case we process the metal on a toll basis and the metal value does not flow through net sales or cost of sales. In either case, we generally earn our margin based upon our fabrication efforts. The relationship of this margin to net sales can change depending upon whether or not the product was made from our metal or the customer’s metal. The use of value-added sales removes the potential distortion in the comparison of net sales caused by changes in the level of customer-supplied metal.
By presenting information on net sales and value-added sales, it is our intention to allow users of our financial statements to review our net sales with and without the impact of the pass-through metals.
Segment Results
The Company consists of four reportable segments: Performance Materials, Electronic Materials, Precision Optics, and Other. The Other reportable segment includes unallocated corporate costs.
The primary measurement used by management to measure the financial performance of each segment is EBITDA. Refer to Note B to the Consolidated Financial Statements for the reconciliation of EBITDA by segment to consolidated net income.
Performance Materials
First Quarter
| First Quarter Ended | ||||||||||||||||||||||||||
| March 29, | March 31, | $ | % | |||||||||||||||||||||||
| (Thousands) | 2024 | 2023 | Change | Change | ||||||||||||||||||||||
| Net sales | $ | 168,646 | $ | 187,014 | $ | (18,368) | (10) | % | ||||||||||||||||||
| Value-added sales | 155,574 | 168,010 | (12,436) | (7) | % | |||||||||||||||||||||
| EBITDA | 30,676 | 42,770 | (12,094) | (28) | % | |||||||||||||||||||||
Net sales from the Performance Materials segment of $168.6 million in the first quarter of 2024 decreased 10% compared to net sales of $187.0 million in the first quarter of 2023. The decrease in sales was due to lower volume in the industrial (30%) and automotive (30%) end markets, partially offset by a volume increase in the aerospace and defense end market (37%).
Value-added sales of $155.6 million in the first quarter of 2024 were 7% lower than value-added sales of $168.0 million in the first quarter of 2023. The decrease in value-added sales was due to the same factors driving the decrease in net sales.
EBITDA for the Performance Materials segment was $30.7 million in the first quarter of 2024 compared to $42.8 million in the first quarter of 2023. The decrease in EBITDA was primarily driven by the impact of lower volumes and related unabsorbed costs. Additionally, EBITDA was unfavorably impacted by higher pre-production costs associated with the production ramp of the new wide area clad facility.
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Electronic Materials
First Quarter
| First Quarter Ended | ||||||||||||||||||||||||||
| March 29, | March 31, | $ | % | |||||||||||||||||||||||
| (Thousands) | 2024 | 2023 | Change | Change | ||||||||||||||||||||||
| Net sales | $ | 191,971 | $ | 228,820 | $ | (36,849) | (16) | % | ||||||||||||||||||
| Value-added sales | 77,630 | 103,878 | (26,248) | (25) | % | |||||||||||||||||||||
| EBITDA | 14,352 | 13,955 | 397 | 3 | % | |||||||||||||||||||||
Net sales from the Electronic Materials segment of $192.0 million in the first quarter of 2024 decreased 16% from net sales of $228.8 million in the first quarter of 2023. The decrease in net sales was primarily due to lower sales volumes in the semiconductor (13%) and energy (32%) end markets. Additionally, pass-through metal pricing increased net sales by $4.3 million compared to the first quarter of 2023.
Value-added sales of $77.6 million in the first quarter of 2024 were 25% lower than value-added sales of $103.9 million in the first quarter of 2023. The decrease in value-added sales was due to the same factors driving the decrease in net sales.
EBITDA for the Electronic Materials segment was $14.4 million in the first quarter of 2024 compared to $14.0 million in the first quarter of 2023. Despite the impact of decreased sales volumes, EBITDA increased slightly as a result of favorable product mix and various targeted cost control initiatives implemented throughout 2023 and during the first quarter of 2024.
Precision Optics
First Quarter
| (Thousands) | First Quarter Ended | |||||||||||||||||||||||||
| March 29, | March 31, | $ | % | |||||||||||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||||||||||||
| Net sales | $ | 24,670 | $ | 26,692 | $ | (2,022) | (8) | % | ||||||||||||||||||
| Value-added sales | 24,644 | 26,670 | (2,026) | (8) | % | |||||||||||||||||||||
| EBITDA | (252) | 2,692 | (2,944) | (109) | % | |||||||||||||||||||||
Net sales from the Precision Optics segment of $24.7 million in the first quarter of 2024 decreased 8% compared to net sales of $26.7 million in the first quarter of 2023. The decrease was primarily due to lower sales volumes in the industrial end market (22%).
Value-added sales of $24.6 million in the first quarter of 2024 decreased 8% compared to value-added sales of $26.7 million in the first quarter of 2023. The decrease in value-added sales was due to the same factors driving the decrease in net sales.
EBITDA for the Precision Optics segment was a loss of $0.3 million in the first quarter of 2024, compared to EBITDA of $2.7 million in the first quarter of 2023. The decrease in EBITDA was primarily driven by the impact of lower sales volumes and unfavorable mix.
Other
First Quarter
| (Thousands) | First Quarter Ended | |||||||||||||||||||||||||
| March 29, | March 31, | $ | % | |||||||||||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||||||||||||
| Net sales | $ | — | $ | — | $ | — | — | % | ||||||||||||||||||
| Value-added sales | — | — | — | — | % | |||||||||||||||||||||
| EBITDA | (5,699) | (6,655) | 956 | (14) | % | |||||||||||||||||||||
The Other reportable segment in total includes unallocated corporate costs.
Corporate costs were $5.7 million in the first quarter of 2024 compared to $6.7 million in the first quarter of 2023. Corporate costs were 2% of Company-wide value-added sales in the first quarter of 2024 and 2023. The decrease in corporate costs in the
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first quarter of 2024 compared to the first quarter of 2023 is the result of various targeted cost control initiatives implemented throughout 2023 and during the first quarter of 2024
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FINANCIAL POSITION
Cash Flow
A summary of cash flows provided by (used in) operating, investing, and financing activities is as follows:
| Three Months Ended | ||||||||||||||||||||
| March 29, | March 31, | $ | ||||||||||||||||||
| (Thousands) | 2024 | 2023 | Change | |||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (13,805) | $ | 38,105 | $ | (51,910) | ||||||||||||||
| Net cash used in investing activities | (26,299) | (29,802) | 3,503 | |||||||||||||||||
| Net cash provided by financing activities | 40,297 | (6,291) | 46,588 | |||||||||||||||||
| Effects of exchange rate changes | (383) | 130 | (513) | |||||||||||||||||
| Net change in cash and cash equivalents | $ | (190) | $ | 2,142 | $ | (2,332) | ||||||||||||||
Net cash used in operating activities totaled $13.8 million in the first three months of 2024 compared to net cash provided by operating activities of $38.1 million in the prior-year period. The decrease in operating cash flow was driven by lower earnings as well as unfavorable working capital usage. Working capital requirements used cash of $29.0 million in the first quarter of 2024 compared to $6.4 million in the first quarter of 2023 compared. The increase in cash used for working capital was primarily due to increased inventory levels as a result of the ramp for aerospace and defense projects as well as the second phase of the clad strip project. Additionally, the Company received $7.7 million of customer prepayments in the first quarter of 2023, and none in the first quarter of 2024.
Net cash used in investing activities was $26.3 million in the first quarter of 2024 compared to $29.8 million in the prior-year period. The decrease in cash used in investing activities is due to timing of capital expenditures, partially offset by outflow for mine development in the first quarter of 2024.
Capital expenditures are made primarily for new product development, replacing and upgrading equipment, infrastructure investments, and implementing information technology initiatives. For the full year 2024, the Company expects payments for property, plant, and equipment to be approximately $90 million.
Net cash provided by financing activities totaled $40.3 million in the first three months of 2024 compared to net cash used in financing activities of $6.3 million in the prior-year period. The net financing cash inflow in 2024 was primarily due financing used to support ongoing business growth.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the inherent use of estimates and management’s judgment in establishing those estimates. For additional information regarding critical accounting policies, please refer to our 2023 Annual Report on Form 10-K.
Liquidity
We believe cash flow from operations plus the available borrowing capacity and our current cash balance are adequate to support operating requirements, capital expenditures, projected pension plan contributions, the current dividend program, environmental remediation projects, and strategic acquisitions for at least the next twelve months and for the foreseeable future thereafter. At March 29, 2024, cash and cash equivalents held by our foreign operations totaled $12.5 million. We do not expect restrictions on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition, or results of operations for the foreseeable future.
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A summary of key data relative to our liquidity, including outstanding debt, cash, and available borrowing capacity, as of March 29, 2024 and December 31, 2023 is as follows:
| March 29, | December 31, | |||||||||||||
| (Thousands) | 2024 | 2023 | ||||||||||||
| Cash and cash equivalents | $ | 13,104 | $ | 13,294 | ||||||||||
| Total outstanding debt | 475,279 | 426,173 | ||||||||||||
| Net debt | $ | (462,175) | $ | (412,879) | ||||||||||
| Available borrowing capacity | $ | 130,236 | $ | 178,734 | ||||||||||
Net debt is a non-GAAP financial measure. We are providing this information because we believe it is more indicative of our overall financial position. It is also a measure our management uses to assess financing and other decisions. We believe that based on our typical cash flow generated from operations, we can support a higher leverage ratio in future periods.
The available borrowing capacity in the table above represents the additional amounts that could be borrowed under our revolving credit facility and other secured lines existing as of the end of each period depicted. The applicable debt covenants have been taken into account when determining the available borrowing capacity, including the covenant that restricts borrowing capacity to a multiple of the twelve-month trailing earnings before interest, income taxes, depreciation and amortization, and other adjustments.
In January 2023, we amended the agreement governing our $375.0 million revolving credit facility and term loan (Credit Agreement). Pursuant to the amendment, we transitioned U.S. dollar denominated borrowings from LIBOR to SOFR for both the revolving credit agreement and the term loan and increased the cap on precious metals consignment line from $550 million to $615 million.
The Company had previously amended and restated the Credit Agreement in connection with the HCS-Electronic Materials acquisition in November 2021. A $300 million delayed draw term loan facility was added to the Credit Agreement and the maturity date of the Credit Agreement was extended from 2024 to 2026. Moreover, the Credit Agreement also provides for an uncommitted incremental facility whereby, under certain conditions, the Company may be able to borrow additional term loans in an aggregate amount not to exceed $150.0 million. The Credit Agreement provides the Company and its subsidiaries with additional capacity to enter into facilities for the consignment of precious metals and copper, and provides enhanced flexibility to finance acquisitions and other strategic initiatives. Borrowings under the Credit Agreement are secured by substantially all of the assets of the Company and its direct subsidiaries, with the exception of non-mining real property, precious metal, copper and certain other assets.
The Credit Agreement allows the Company to borrow money at a premium over SOFR, following the January 2023 amendment, or prime rate and at varying maturities. The premium resets quarterly according to the terms and conditions stipulated in the agreement. The Credit Agreement includes restrictive covenants relating to restrictions on additional indebtedness, acquisitions, dividends, and stock repurchases. In addition, the Credit Agreement includes covenants that limit the Company to a maximum leverage ratio and a minimum interest coverage ratio. We were in compliance with all of our debt covenants as of March 29, 2024 and December 31, 2023. Cash on hand up to $25 million can benefit the covenants and may benefit the borrowing capacity under the Credit Agreement.
In November 2021, we completed the acquisition of HCS-Electronic Materials. The Company financed the purchase price for the HCS-Electronic Materials acquisition with a new $300 million five-year term loan pursuant to its delayed draw term loan facility under the Credit Agreement and $103 million of borrowings under its amended revolving credit facility. The interest rate for the term loan is based on SOFR, following the January 2023 amendment, plus a tiered rate determined by the Company's quarterly leverage ratio.
Portions of our business utilize off-balance sheet consignment arrangements allowing us to use metal owned by precious metal consignors as we manufacture product for our customers. Metal is purchased from the precious metal consignor and sold to our customer at the time of product shipment. Expansion of business volumes and/or higher metal prices can put pressure on the consignment line limitations from time to time. In August 2022, we entered into a precious metals consignment agreement, maturing on August 31, 2025, which replaced the consignment agreements that would have matured on August 27, 2022. The available and unused capacity under the metal consignment agreements expiring in August 2025 totaled approximately $282.7 million as of March 29, 2024, compared to $263.5 million as of December 31, 2023. The availability is determined by Board approved levels and actual capacity.
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In January 2014, our Board of Directors approved a plan to repurchase up to $50.0 million of our common stock. The timing of the share repurchases will depend on several factors, including market and business conditions, our cash flow, debt levels, and other investment opportunities. There is no minimum quantity requirement to repurchase our common stock for a given year, and the repurchases may be discontinued at any time. We did not repurchase any shares under this program in the first quarter of 2024. Since the approval of the repurchase plan, we have purchased 1,254,264 shares at a total cost of $41.7 million, or an average of $33.23 per share.
We paid cash dividends of $2.7 million on our common stock in the first quarter of 2024. We intend to pay a quarterly dividend on an ongoing basis, subject to a determination that the dividend remains in the best interest of our shareholders.
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We maintain the majority of the precious metals and portions of the copper we use in production on a consignment basis in order to reduce our exposure to metal price movements and to reduce our working capital investment. The notional value of off-balance sheet precious metals and copper was $332.1 million and $351.5 million as of March 29, 2024 and December 31, 2023, respectively. We were in compliance with all of the covenants contained in the consignment agreements as of March 29, 2024. For additional information on our contractual and other obligations, refer to our 2023 Annual Report on Form 10-K.
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 the conflict between Russia and Ukraine; realization of 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 2023 Annual Report on Form 10-K.
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | ||||
For information regarding market risks, refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2023 Annual Report on Form 10-K. There have been no material changes in our market risks since the inclusion of this discussion in our 2023 Annual Report on Form 10-K.
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| Item 4. | Controls and Procedures | ||||
a)Evaluation of Disclosure Controls and Procedures
The Company carried out an evaluation under the supervision and with participation of the Company's management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of disclosure controls and procedures as of March 29, 2024 pursuant to Rule 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (Exchange Act). Based on that evaluation, management, including the chief executive officer and chief financial officer, concluded that disclosure controls and procedures are effective as of March 29, 2024.
b)Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended March 29, 2024 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II OTHER INFORMATION
| Item 1. | Legal Proceedings | ||||
Our subsidiaries and our holding company are subject, from time to time, to a variety of civil and administrative proceedings arising out of our normal operations, including, without limitation, product liability claims, health, safety, and environmental claims, and employment-related actions.
The information presented in the Legal Proceedings section of Note O ("Contingencies") of the Notes to Consolidated Financial Statements (Unaudited) is incorporated herein by reference.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||||
The following table presents information with respect to repurchases of common stock made by us during the three months ended March 29, 2024.
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||||||||||||||
| January 1 through February 2, 2024 | — | $ | — | — | $ | 8,316,239 | ||||||||||||||||||||
| February 3 through March 1, 2024 | — | — | — | 8,316,239 | ||||||||||||||||||||||
| March 2 through March 29, 2024 | — | — | — | 8,316,239 | ||||||||||||||||||||||
| Total | — | $ | — | — | $ | 8,316,239 | ||||||||||||||||||||
| (1) | On January 14, 2014, we announced that our Board of Directors had authorized the repurchase of up to $50.0 million of our common stock. During the three months ended March 29, 2024 we did not repurchase any shares under this program. As of March 29, 2024 $8.3 million may still be purchased under the program. | |||||||
| Item 4. | Mine Safety Disclosures | ||||
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this quarterly report on Form 10-Q.
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| Item 5. | Other Information | ||||
During the quarter ended March 29, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted terminated
| Item 6. | Exhibits | ||||
All documents referenced below were filed pursuant to the Exchange Act by Materion Corporation, file number 001-15885, unless otherwise noted.
| 10.1 | ||||||||
| 10.2 | ||||||||
| 31.1 | Certification of Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a)* | |||||||
| 31.2 | Certification of Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a)* | |||||||
| 32 | Certifications of Chief Executive Officer and Chief Financial Officer required by 18 U.S.C. Section 1350* | |||||||
| 95 | ||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document* | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document* | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document* | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Exhibit 101 attachments) | |||||||
*Submitted electronically herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MATERION CORPORATION | ||||||||||||||
| Dated: May 2, 2024 | ||||||||||||||
/s/ Shelly M. Chadwick | ||||||||||||||
| Shelly M. Chadwick | ||||||||||||||
| Vice President, Finance and Chief Financial Officer | ||||||||||||||
| (Principal Financial and Accounting Officer) | ||||||||||||||
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