MATERION Corp 8-K, filed Apr 30, 2020
MATERION Corp (MTRN)
8-K
2020-04-30
For: 2020-04-30
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April 07, 2026
About this 8-K
MATERION Corp filed this 8-K on April 30, 2020.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES | ||||
SECURITIES AND EXCHANGE COMMISSION | ||||
Washington, D.C. 20549 | ||||
FORM 8-K
CURRENT REPORT | ||||
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||
Date of Report (Date of earliest event reported) April 30, 2020
(Exact name of registrant as specified in its charter) | ||||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) | |
Registrant's telephone number, including area code (216 ) 486-4200
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§204.12b-2 of this chapter).
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 revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Item 7.01 Regulation FD Disclosure.
On April 30, 2020, Materion Corporation issued an updated slide presentation that will be presented to investors. A copy of the presentation is attached hereto as Exhibit 99.1. The Company undertakes no obligation to update, supplement or amend the materials attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
Exhibits.
Exhibit Number | Description of Exhibit | |
99.1 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
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 hereunto duly authorized.
Materion Corporation | ||
April 30, 2020 | By: | /s/ Stephen Shamrock |
Stephen Shamrock | ||
Vice President, Corporate Controller and Investor Relations | ||
Exhibit 99.1 INVESTOR PRESENTATION April 2020
Forward-looking Statements These slides contain (and the accompanying oral discussion will contain, where applicable) “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by these statements, including health issues, litigation and regulation relating to our business, our ability to achieve and/or maintain profitability, significant cyclical fluctuations in our customers’ businesses, competitive substitutes for our products, risks associated with our international operations, including foreign currency rate fluctuations, energy costs and the availability and prices of raw materials, and other factors disclosed in periodic reports filed with the Securities and Exchange Commission. Consequently, these forward-looking statements should be regarded as the Company’s current plans, estimates, and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. These slides include certain non-GAAP financial measures as defined by the rules and regulations of the Securities and Exchange Commission. A reconciliation of those measures to the most directly comparable GAAP equivalent is provided in the Appendix to this presentation. 2
First Quarter 2020 Highlights ► Announced three significant strategic actions as part of our One Materion multi-pillar strategy ► Reached major business agreement with large, new customer for long-term future product supply ► Announced intent to sell LAC business to continue portfolio optimization ► Closing two PAC facilities to further reduce structural cost ► More than adequate liquidity to operate in this difficult environment ► Record first quarter cash level of $108M 3
PAC Engineered Clad Strip Project ► Full alignment with organic growth strategy ► Technical collaboration on next-generation product with customer ► Demand for product exists today ► Non-beryllium containing product ► Materion will invest ~ $85M in new manufacturing facility to expand existing capacity ► Customer will prepay ~ $70M related to future product shipments to fund majority of investment Significant future organic growth opportunity 4
Key Financial Trends TTM Value-added1 (VA) Sales TTM Earnings Before Interest and Taxes (EBIT)1 $800 $90 12% 82.9 82.3 757 79.7 745 750 734 739 734 $80 11% $750 724 71.5 72.0 710 705 $70 63.8 10% $700 59.9 $60 55.0 9% $650 51.9 ($ millions) ($ $50 8% 1 1 % of VA ofVA % Sales $600 1 ($ millions) ($ $40 7% $550 $30 6% TTM EBIT TTM TTMEBIT $500 $20 5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2018 2018 2018 2019 2019 2019 2019 2020 2018 2018 2018 2018 2019 2019 2019 2019 2020 TTM Return on Invested Capital (ROIC) %1,2 TTM Free Cash Flow3 15% $100 13.8% 89.0 13.3% 13.4% 12.6% 13% 12.0% $80 72.7 11.5% 11.1% 61.1 10.6% 59.7 11% 10.2% $60 46.3 46.0 48.4 42.5 38.3 9% $40 ($ millions) ($ 7% $20 5% $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2018 2018 2018 2019 2019 2019 2019 2020 2018 2018 2018 2018 2019 2019 2019 2019 2020 1 Non-GAAP, excludes pass-through metal costs and special items. Refer to the Appendix for additional detail. 5 2 ROIC is calculated as TTM adjusted EBIT divided by total debt plus equity. Refer to the Appendix for additional detail. 3 Free Cash Flow is calculated as net cash provided by operating activities less net cash used in investing activities
Materion Company Profile Company Overview Value-added Sales 1 1 • Materion is an integrated producer of high- 2019 VA Sales by Segment 2019 VA Sales by End Market performance advanced engineered materials Precision Performance Alloys Other Coatings & Composites Semiconductor - Leading market position for specialty 12% Telecom and 11% Data Center 20% products across multiple end markets 7% Automotive 8% - Strong positions in growing markets with 30% 58% 18% 9% Industrial high barriers to entry Consumer Advanced Electronics 10% Materials 17% - Only global vertically integrated producer Energy Aerospace and of beryllium (Be) and Be alloys Defense $800 14% • One Materion focus on building 739.0 733.7 performance excellence in five main areas: $700 677.7 12% - Commercial $600 10% - Innovation $500 8% - Operational $400 6% - Acquisitions $300 4% $200 2% - Digital 2017 2018 2019 Value-added Sales1 (millions) Adjusted EBIT Margin1 6 1 Non-GAAP, excludes pass-through metal costs and special items. Refer to the Appendix for additional detail.
Key Facts Share Statistics as of 4/27/2020 Q1 2020 TTM Financial Information Trading Symbol MTRN Revenues Stock Price $51.03 $1,162M Shares O/S, Diluted 20.6M 52 wk Range $26.77 - $70.96 Value-added sales1 $705M 3 Mo Avg Vol 176,778 Market Cap $1,052M Adjusted EPS1 $2.80 Enterprise Value $947M $80 Materion Share Performance Trailing 3 Years Adjusted EBITDA1 $116M $70 $60 $50 Debt-to-capitalization <1% $40 $30 Operating cash flow $121M $20 $10 Dividend yield ~1% $0 Jun-17 Jun-18 Jun-19 Oct-17 Oct-18 Oct-19 Apr-17 Apr-18 Apr-19 Apr-20 Feb-18 Feb-19 Feb-20 Dec-17 Dec-18 Dec-19 Aug-18 Aug-19 Aug-17 7 Research coverage: KeyBanc, Jefferies, Sidoti, and Stonegate 1 Non-GAAP, excludes pass-through metal costs and special items. Refer to the Appendix for additional detail.
Performance Alloys and Composites (PAC) Value-added Sales Growth Drivers New product development $450 428.1 20% 425.5 • New proprietary non-Be alloys with improved durability & weight-to- strength ratio $400 16% • New high strength/high conductivity alloys with exceptional formability 363.5 • Advanced heat dissipating clad material $350 335.1 332.0 12% • Improving customer yields with “near net shape” products New application development ($ ($ millions) • Clad material serving the renewable energy market 1 % of VA Sales VA of % $300 8% 1 • Precision rolling to thinner strips opening new application opportunities EBIT ® VA Sales VA $250 4% • ToughMet couplings serving the oil and gas production market resist mechanical wear, thread damage, corrosion, and erosion Beryllium market $200 0% • World’s only fully integrated producer 2015 2016 2017 2018 2019 • Minimum of 75 years of proven mine reserves in Delta, Utah • New proprietary Be products with superior fatigue resistance Value-added Sales by Market2 Geographic Mix2 Product Mix2 Semiconductor Hydroxide Other 2% Rest of World 1% Be – High Purity Aerospace and 5% Energy 8% 17% Europe Defense 11% 9% 24% 22% Asia Consumer CuBe Clad Strip Electronics 11% 12% 43% 59% United States 12% 23% Industrial Automotive 14% Be - Alloys 12% 15% Telecom and Data Center ToughMet 1 Non-GAAP, excludes pass-through metal costs and special items. Refer to the Appendix for additional detail. 8 2 Reflects 2019 mix by market, geography, and product
Advanced Materials Value-added Sales Growth Drivers Market Development – High focus on Semiconductor $250 25% 228.0 223.7 224.3 • $400B market with strong growth outlook driven by macro consumer electronics, IoT, and automotive trends $200 182.8 176.3 20% • Continue to expand organically into new semiconductor high margin applications in core PVD targets and services, electronic packaging, and advanced chemicals $150 15% Technology and Innovation ($ ($ millions) • Invest in additional innovation based R&D capabilities and 1 % of VA Sales VA of % $100 10% 1 resources to meet market demand for quick turn prototypes and new material demands EBIT VA Sales VA $50 5% Geographic Expansion and Sales Development • Investing in factories, service centers, and personnel to be closer to the key customer base $0 0% • Improve web-based solutions to improve customer 2015 2016 2017 2018 2019 responsiveness Value-added Sales by Market2 Geographic Mix2 Product Mix2 Aerospace and 1% Packaging Defense Other Rest of World Automotive 1% 12% Europe 3% 9% 13% 22% Industrial Asia Chemicals 10% Semiconductor 14% Targets 65% United States 15% 57% Energy 62% 16% Services 1 Non-GAAP, excludes pass-through metal costs and special items. Refer to the Appendix for additional detail. 9 2 Reflects 2019 mix by market, geography, and product.
Precision Coatings Value-added Sales Growth Drivers $110 24% Expanded Reach and Technology Leadership 101.8 • Redesigned and fully deployed global sales organization • Focus on high value products and segments with technology $100 97.7 20% 94.2 differentiation 90.7 Product and Capability Expansion $90 87.3 16% • Novel electrode alloys and laser patterning for medical sensors • Patented getter technology critical in MEMS devices ($ ($ millions) $80 12% • Enhanced phosphor wheels used in solid state display 1 % of VA Sales VA of % 1 • Diamond-like coatings for the defense, aerospace and thermal $70 8% imaging markets EBIT New market development VA Sales VA $60 4% • Roll-to-roll sputtered films for flexible sensors and electronics and energy storage markets $50 0% • Automotive and industrial sensing 2015 2016 2017 2018 2019 Value-added Sales by Market2 Geographic Mix2 Product Mix2 Projection Display Components Aerospace and 12% Europe Defense Optical Filters 17% 20% & Arrays 24% Asia 37% Other 71% 50% United States 21% Consumer Electronics 30% Blood 1% 16% Glucose Semiconductor 1% Test Strips Industrial Automotive 1 Non-GAAP, excludes pass-through metal costs and special items. Refer to the Appendix for additional detail. 10 2 Reflects 2019 mix by market, geography, and product.
Profitable Growth Strategy PROFITABLE GLOBAL GROWTH COMMERCIAL OPERATIONAL INNOVATION ACQUISITIONS DIGITAL EXCELLENCE EXCELLENCE A ONE MATERION PERFORMANCE-BASED CULTURE Deliver sustained double-digit EPS growth 11
Global Megatrends Play to Our Strengths Key Trends Characteristics of our Materials • Miniaturization of electronics/IoT Conductivity • Additional electronic instruments for Corrosion resistance autos, aircraft Weight savings (lighter) • Expanding high performance optical device opportunities Purity Wavelength management • Innovation in medical diagnostics and sensors Thermal management • Extraction of oil and gas from Lubricity previously inaccessible locations Reliability • Alternative energy Durability • New aircraft builds and retrofits Miniaturization • Advancements in lighting (LED) Strength 12
Well-diversified Market Penetration 2019 % of Key Market VA Sales1 Drivers • Smart device growth Semiconductor 20% • Non-volatile memory • Big data (data storage) • Heavy equipment builds Industrial 18% • Plastic tooling • Fire protection (R and C construction) • Structural and electronic components for satellites, combat Aerospace and vehicles, and aircraft Defense 17% • Precision-guided munitions • Deep sea drilling and completion Energy 10% • Directional drilling • Solar, batteries, and smart grid devices • Smart device growth Consumer • Sensing devices Electronics 9% • Internet of Things (IoT) • Electronic systems and engine control Automotive 8% • Increasing emissions standards • Electric vehicles and autonomous driving • 5G rollout Telecom and • Undersea repeater housings Data Center 7% • High reliability connectors Total 89% 13 1 Non-GAAP, excludes pass-through metal costs. Refer to the Appendix for additional detail.
Innovation Leading to Organic Growth New Product VA Sales1 as % of Total Example New Product Offerings Aluminum Scandium Targets • Key material used in 5G devices, fingerprint sensors, and piezoelectric 16% 16% microphones 15% • Replacement for lead-based alternatives 14% ALD Chemicals 12% • Atomic Layer Deposition (ALD) enables smaller semiconductor nodes • Improved purity, safety and handling driving rapid growth in semiconductor fabrication Dovetail Clad® Metal • Smaller, cooler, more reliable lithium-ion battery connections • High temperature stability • Superior vibration and fatigue strength SupremEX® MMCs • Ultrafine silicon-carbide reinforcement with aerospace aluminum alloys 2015 2016 2017 2018 2019 • Provides light weight properties with high strength and stiffness 14 1 Non-GAAP, excludes pass-through metal costs. Refer to the Appendix for additional detail. 2 CAGR calculated from 2015 – 2019.
Cash Flow and Working Capital Efficiency Focus Dividends per share Cash Flow from Operations ($ in millions) $0.50 $120 $0.40 $0.30 $99.2 $100 $91.0 $0.20 $0.10 $80 $76.4 $68.2 $67.8 $0.00 2012 2013 2014 2015 2016 2017 2018 2019 $60 Improve Working Capital3 Efficiency $40 Working capital % of net sales4 29.4% $20 $0 < 25% 2015 2016 2017 2018 2019 Free Cash Flow 1 Capital Expenditures 2 1 Free Cash Flow calculated as cash flow from operations less capital expenditures. 2 Capital Expenditures includes mine development costs. 2016 2020 (F) 15 3 Working capital is calculated as accounts receivable plus inventory less accounts payable less unearned revenue. 4 Working capital % of net sales is calculated as TTM average working capital divided by TTM net sales.
Disciplined Capital Deployment Going Forward Organic Growth • Invest in new products • Invest in facilities and productivity projects 35% Debt & Inorganic Growth Shareholder • Complimentary 65% products/technologies Growth • Maintain financial discipline Return Cash to Shareholders • Dividends – increased 7 consecutive years • Share repurchases 16
Materion Investment Thesis ► Clearly defined strategy and execution led by new management team ► Differentiated product portfolio aligned with global megatrends to accelerate future growth ► Driving significant improvement in profitability and cash flow growth ► Consistently delivering profitable growth ► Third consecutive year with adjusted EPS growth > 30% 17
2020 Forecasted Financial Guidance ► Full-year guidance ► Capex ~ $100M, including customer funded capex of ~ $70M ► Mine development investments ~ $10M ► Depreciation and amortization expense of ~ $40M ► Effective tax rate excluding special items 18% – 20% 18
Appendix
PAC Recovery Plan Delivered How did we get here? Recovery Plan PAC EBIT 1 1. Improve product portfolio mix and profitability $35 33.3 through pricing and manufacturing process changes $30 2. Reduce cost footprint and move to a more variable cost structure $25 23.6 3. Leverage beryllium market supply opportunity $20 $15 PAC EBIT 1 ($ ($ millions) 9.2 $10 $80 $5 70.0 $70 $0 2014 2015 2016 $60 56.6 2014 – 2016 Bridge $50 $35 33.3 10.8 $40 33.3 $30 ($ millions) ($ $30 $25 9.2 23.6 22.1 $20 $20 $15 4.1 9.2 ($ millions) ($ $10 9.2 $10 $5 $0 $0 2014 Oil & Gas Fx Price/Mix/ 2016 2014 2015 2016 2017 2018 2019 Volume/ Mfg Efficiency Exceeded historical profitability levels A-2 1 Non-GAAP, excludes special items. Refer to the Appendix for additional detail.
Beryllium Market Supply Opportunity Materion – leading position in beryllium market • Only global integrated producer – Minimum of 75 years of proven reserves in Utah mine – Supplies over 70% of world’s mined beryllium • ~40% of company sales include beryllium in some form • Global stockpiled sources depleting • Only significant commercially active bertrandite ore mine • Materion positioned to support world demand • Significant incremental profit potential A-3
World’s Only Vertically Integrated Beryllium Producer Ore Competitor Chemical Plant A Hydroxide Whiting Arc Pebble Plant Furnace Competitor B VCB1 / CuBe Master Be Powder Strip/Bulk Be Manufacturing Manufacturing High-Purity Be CuBe Alloy Products Products A-4 1 Vacuum Cast Billet
Financial Information
Reconciliation for Value-added Sales $ in millions Q1 2020 Q1 2020 TTM 2019 2018 2017 2016 2015 Net Sales Performance Alloys and Composites $ 99.1 $ 472.2 $ 500.2 $ 500.6 $ 429.5 $ 387.5 $ 394.8 Advanced Materials 160.1 589.7 573.8 586.6 590.8 437.2 482.3 Precision Coatings 18.7 99.9 111.4 120.6 119.2 144.5 148.4 Other - - - - - - (0.2) Total $ 277.9 $ 1,161.9 $ 1,185.4 $ 1,207.8 $ 1,139.5 $ 969.2 $ 1,025.3 Less: Pass-through Metal Costs Performance Alloys and Composites $ 15.4 $ 69.9 $ 72.1 $ 75.1 $ 66.0 $ 55.5 $ 59.7 Advanced Materials 100.9 363.9 349.5 362.9 362.8 260.9 299.5 Precision Coatings 1.7 18.2 24.1 26.4 28.5 46.8 46.6 Other 1.2 5.2 6.0 4.4 4.5 6.1 2.3 Total $ 119.2 $ 457.2 $ 451.7 $ 468.8 $ 461.8 $ 369.3 $ 408.1 Value-added Sales Performance Alloys and Composites $ 83.7 $ 402.3 $ 428.1 $ 425.5 $ 363.5 $ 332.0 $ 335.1 Advanced Materials 59.2 225.8 224.3 223.7 228.0 176.3 182.8 Precision Coatings 17.0 81.7 87.3 94.2 90.7 97.7 101.8 Other (1.2) (5.2) (6.0) (4.4) (4.5) (6.1) (2.5) Total $ 158.7 $ 704.7 $ 733.7 $ 739.0 $ 677.7 $ 599.9 $ 617.2 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. Internally, we manage our business on this basis, and a reconciliation of net sales to value-added sales is included above. A-6
Reconciliation for Adjusted EPS In millions, except per share amounts Q1 2020 Q1 2020 TTM 2019 2018 2017 2016 2015 GAAP As Reported Operating (loss) profit $ (4.6) $ 41.1 $ 67.0 $ 61.5 $ 40.1 $ 27.1 $ 45.3 Non-operating (income) expense $ (0.9) $ 2.3 $ 3.4 $ 42.7 $ 1.5 $ - $ - Net (loss) income $ (3.1) $ 30.7 $ 50.7 $ 20.8 $ 11.5 $ 25.7 $ 32.2 EPS - Diluted $ (0.15) $ 1.48 $ 2.45 $ 1.01 $ 0.56 $ 1.27 $ 1.58 Operating Profit Special Items Cost reduction initiatives $ 2.2 $ 3.0 $ 0.8 $ 5.6 $ 0.7 $ 2.6 $ 1.9 Impairment charges 10.8 24.9 14.1 - - - - Legacy legal & environmental costs (benefits) - 0.1 0.1 0.8 0.5 1.4 (1.4) Non-cash inventory adjustment 1.3 1.3 - (1.9) - - - COVID-19 related costs 0.2 0.2 - - - - - CEO transition costs - - - - 4.1 - - Acquisition & divestiture costs 0.1 0.5 0.4 - 2.1 3.9 - Total Operating Profit Special Items $ 14.6 $ 30.0 $ 15.4 $ 4.5 $ 7.4 $ 7.9 $ 0.5 Total Other Non-Operating Expense Special Items $ - $ 3.3 $ 3.3 $ 40.5 $ - $ - $ - Operating Profit Special Items - net of tax $ 11.2 $ 23.9 $ 12.7 $ 4.7 $ 4.8 $ 5.1 $ 0.3 Other Non-Operating Expense Special Items - net of tax $ - $ 2.6 $ 2.6 $ 31.4 $ - $ - $ - Tax Special Items $ 0.7 $ 0.6 $ (0.1) $ (7.9) $ 18.9 $ (4.2) $ 0.2 Non-GAAP Measures - Adjusted Profitability Operating profit $ 10.0 $ 71.1 $ 82.4 $ 66.0 $ 47.5 $ 35.0 $ 45.8 EBIT $ 10.9 $ 72.0 $ 82.3 $ 63.8 $ 46.0 $ 35.0 $ 45.8 Net income $ 8.8 $ 57.8 $ 65.9 $ 49.0 $ 35.2 $ 26.6 $ 32.7 EPS - Diluted $ 0.43 $ 2.80 $ 3.19 $ 2.38 $ 1.72 $ 1.32 $ 1.60 As detailed in the above reconciliation, we have adjusted the results for certain special items such as non-cash impairment charges, COVID-19 related costs, non-cash pension charges, cost reduction initiatives, legacy legal and environmental costs, acquisition and divestiture costs, certain non-cash inventory adjustments, certain income tax items, and CEO transition costs from the applicable GAAP financial measure. Internally, management reviews the results of operations without the impact of these costs in order to assess the profitability from ongoing activities. We are providing this information because we believe it will assist investors in analyzing our financial results and, when viewed in conjunction with the GAAP results, provide a more comprehensive understanding of A-7 the factors and trends affecting our operations.
Other Non-GAAP Items $ in millions Q1 2020 TTM 2019 2018 2017 2016 2015 Operating Profit $ 41.1 $ 67.0 $ 61.5 $ 40.1 $ 27.1 $ 45.3 Operating Profit Special Items 30.0 15.4 4.5 7.4 7.9 0.5 Adjusted Operating Profit $ 71.1 $ 82.4 $ 66.0 $ 47.5 $ 35.0 $ 45.8 Non-operating (Income) Expense (0.9) 3.4 42.7 1.5 - - Non-operating (Income) Expense Special Items - 3.3 40.5 - - - Adjusted EBIT $ 72.0 $ 82.3 $ 63.8 $ 46.0 $ 35.0 $ 45.8 Depreciation, depletion, and amortization 46.2 41.1 35.5 42.8 45.7 37.8 Mine Amortization (included above) 15.1 9.4 - 5.7 9.9 2.7 5-year Calendar Average 5.5 5.5 5.2 5.2 5.2 5.2 Normalized Mine Amortization Adjustment $ (9.6) $ (3.9) $ 5.2 $ (0.5) $ (4.7) $ 2.5 Non Cash Stock-Based Compensation 7.1 7.2 5.3 5.0 3.2 5.5 Adjusted EBITDA $ 115.8 $ 126.7 $ 109.9 $ 93.3 $ 79.2 $ 91.6 Cash & Cash Equivalents $ 107.6 $ 125.0 $ 70.6 $ 41.8 $ 31.5 $ 24.2 Less: Total Debt 2.1 2.2 3.0 3.8 4.6 13.6 Net Cash (Debt) $ 105.5 $ 122.8 $ 67.6 $ 38.0 $ 26.9 $ 10.6 Total Shareholders' Equity $ 596.5 $ 610.7 $ 553.9 $ 495.0 $ 494.1 $ 483.0 Adjusted EBITDA is calculated by adding depreciation, depletion, and amortization and certain special items (refer to A-7 for details) to our adjusted EBIT. Due to the variability of annual mine amortization related to the timing of pit openings, amortization is adjusted for a normalized mine amortization based on a 5-year average. Internally, we review the results of operations without the impact of these costs and adjustments in order to assess the profitability from ongoing operations. A-8
Other Non-GAAP Items $ in millions Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 TTM Adjusted EBIT $ 72.0 $ 82.3 $ 82.9 $ 79.7 $ 71.5 $ 63.8 $ 59.9 $ 55.0 $ 51.9 Total Shareholders' Equity $ 596.5 $ 610.7 $ 597.8 $ 594.8 $ 566.9 $ 553.9 $ 536.7 $ 515.7 $ 504.3 Total Debt 2.1 2.2 2.4 2.6 2.7 3.0 3.3 3.4 3.6 Total Capital $ 598.6 $ 612.9 $ 600.2 $ 597.4 $ 569.6 $ 556.9 $ 540.0 $ 519.1 $ 507.9 ROIC % 12.0% 13.4% 13.8% 13.3% 12.6% 11.5% 11.1% 10.6% 10.2% ROIC is non-GAAP financial measure that we use to measure how efficient we are in generating a return on capital invested by the Company. A-9
Historical Financials ($ in millions, except per share data) 2016 2017 2018 2019 2020 Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4 2017 Q1 Q2 Q3 Q4 2018 Q1 Q2 Q3 Q4 2019 Q1 VA PAC 78.2 83.4 87.2 83.2 332.0 79.2 92.7 90.6 101.0 363.5 100.3 110.1 104.9 110.1 425.5 109.6 115.2 112.0 91.3 428.1 83.7 AM 42.1 47.0 46.0 41.2 176.3 47.3 62.0 60.4 58.3 228.0 58.3 57.3 55.3 52.8 223.7 57.5 58.3 55.6 52.8 224.3 59.2 PC 24.6 25.1 25.8 22.2 97.7 23.3 22.6 21.9 22.9 90.7 23.6 23.4 23.0 24.2 94.2 22.5 23.1 22.4 19.2 87.3 17.0 Other (1.0) (1.6) (2.0) (1.5) (6.1) (0.8) (1.2) (1.5) (1.0) (4.5) (0.9) (0.9) (1.3) (1.3) (4.4) (2.0) (1.7) (1.4) (0.8) (6.0) (1.2) Consolidated MTRN 143.9 153.9 157.0 145.1 599.9 149.0 176.1 171.4 181.2 677.7 181.3 189.9 181.9 185.8 739.0 187.7 194.9 188.6 162.5 733.7 158.7 Gross Margin PAC 17.7 16.3 20.6 19.0 73.6 16.3 22.8 23.6 27.0 89.7 27.8 31.1 35.3 38.7 133.0 39.3 41.5 38.2 29.4 148.4 22.0 AM 15.8 19.1 20.0 16.7 71.6 18.4 23.3 24.4 22.4 88.5 20.8 21.3 20.4 16.4 79.0 22.0 20.2 18.7 17.0 77.9 17.6 PC 10.0 9.5 10.7 7.6 37.8 8.3 8.9 7.4 9.1 33.7 10.0 9.1 9.9 10.2 39.1 9.4 10.3 9.1 7.0 35.8 6.0 Other (0.1) 0.4 (0.5) 0.8 0.5 0.2 (0.2) 0.1 0.5 0.6 (0.3) 0.3 (0.7) 0.8 0.1 (1.3) (2.5) (1.0) 1.6 (3.0) - Consolidated MTRN 43.4 45.3 50.8 44.1 183.5 43.2 54.8 55.5 59.0 212.5 58.3 61.8 64.9 66.1 251.1 69.3 69.6 64.9 55.0 259.1 45.6 Gross Margin as a % of VA PAC 22.6% 19.5% 23.6% 22.8% 22.2% 20.6% 24.6% 26.0% 26.7% 24.7% 27.7% 28.3% 33.7% 35.1% 31.3% 35.9% 36.0% 34.1% 32.2% 34.7% 26.3% AM 37.5% 40.6% 43.5% 40.5% 40.6% 38.9% 37.5% 40.5% 38.5% 38.8% 35.7% 37.2% 36.9% 31.1% 35.3% 38.2% 34.7% 33.6% 32.2% 34.7% 29.7% PC 40.7% 37.8% 41.5% 34.2% 38.7% 35.6% 39.4% 33.8% 39.6% 37.1% 42.2% 38.8% 43.0% 42.0% 41.5% 41.6% 44.7% 40.6% 36.5% 41.0% 35.3% Consolidated MTRN 30.2% 29.4% 32.4% 30.4% 30.6% 29.0% 31.1% 32.4% 32.6% 31.4% 32.1% 32.6% 35.7% 35.6% 34.0% 36.9% 35.7% 34.4% 33.8% 35.3% 28.7% Operating Profit PAC 1.5 0.2 4.4 0.5 6.6 0.2 5.5 6.8 9.5 22.0 9.9 12.3 16.7 19.9 58.8 18.9 19.3 18.8 13.6 70.7 4.8 AM 5.2 7.3 8.3 5.5 26.3 6.4 8.7 9.8 7.9 32.8 5.9 5.6 6.9 (0.7) 17.7 7.1 6.1 6.2 5.3 24.7 4.8 PC 4.1 2.3 3.4 1.8 11.6 2.2 2.3 1.6 2.3 8.4 3.4 2.2 3.5 2.4 11.5 2.1 3.9 (11.2) 1.6 (3.5) (9.6) Other (3.3) (4.0) (5.9) (4.2) (17.4) (5.1) (6.4) (6.2) (5.4) (23.1) (5.9) (4.9) (8.4) (7.2) (26.5) (6.7) (6.5) (7.5) (3.9) (24.9) (4.6) Consolidated MTRN 7.5 5.8 10.2 3.6 27.1 3.7 10.1 12.0 14.3 40.1 13.3 15.2 18.7 14.4 61.5 21.4 22.8 6.3 16.6 67.0 (4.6) Special Items - OP1 PAC - - - 2.6 2.6 0.5 0.6 0.2 (1.3) 0.1 - - - (1.9) (1.9) - - - - - 3.6 AM - - - - - 1.0 0.3 - - 1.3 - - - 5.7 5.7 - - - - - 0.1 PC - - - - - - - 0.4 - 0.4 - - - - - - - 14.5 - 14.5 10.8 Other - 2.3 2.0 1.0 5.3 2.8 1.0 0.8 1.0 5.6 0.8 - - - 0.8 - - 0.4 0.5 0.9 0.1 Consolidated MTRN - 2.3 2.0 3.6 7.9 4.3 1.9 1.4 (0.3) 7.4 0.8 - - 3.7 4.5 - - 14.9 0.5 15.4 14.6 Operating Profit ex Spec Items1 PAC 1.5 0.2 4.4 3.1 9.2 0.7 6.0 7.0 8.3 22.1 9.9 12.3 16.7 18.0 56.9 18.9 19.3 18.8 13.6 70.7 8.4 AM 5.2 7.3 8.3 5.5 26.3 7.4 9.0 9.8 7.9 34.1 5.9 5.6 6.9 5.0 23.3 7.1 6.1 6.2 5.3 24.7 4.9 PC 4.1 2.3 3.4 1.8 11.6 2.2 2.3 2.1 2.3 8.8 3.4 2.2 3.5 2.4 11.5 2.1 3.9 3.3 1.6 11.0 1.2 Other (3.3) (1.7) (3.9) (3.2) (12.1) (2.3) (5.4) (5.4) (4.4) (17.5) (5.1) (4.9) (8.4) (7.2) (25.7) (6.7) (6.5) (7.1) (3.4) (24.0) (4.5) Consolidated MTRN 7.5 8.1 12.2 7.2 35.0 8.0 11.9 13.5 14.0 47.5 14.0 15.2 18.7 18.1 66.0 21.4 22.8 21.2 17.1 82.4 10.0 OP ex Spec Items as a % of VA1 PAC 1.9% 0.2% 5.0% 3.7% 2.8% 0.9% 6.5% 7.7% 8.2% 6.1% 9.8% 11.2% 15.9% 16.3% 13.4% 17.2% 16.8% 16.8% 14.9% 16.5% 10.0% AM 12.4% 15.5% 18.0% 13.3% 14.9% 15.6% 14.5% 16.2% 13.5% 14.9% 10.1% 9.7% 12.5% 9.4% 10.4% 12.3% 10.5% 11.1% 10.0% 11.0% 8.3% PC 16.7% 9.2% 13.2% 8.1% 11.9% 9.4% 10.2% 9.5% 9.8% 9.7% 14.3% 9.5% 15.2% 9.8% 12.2% 9.3% 16.9% 14.7% 8.3% 12.6% 7.1% Consolidated MTRN 5.2% 5.3% 7.8% 5.0% 5.8% 5.4% 6.8% 7.9% 7.7% 7.0% 7.7% 8.0% 10.3% 9.7% 8.9% 11.4% 11.7% 11.2% 10.5% 11.2% 6.3% EBIT ex Spec Items 1 PAC 1.5 0.2 4.4 3.1 9.2 0.7 6.1 7.0 8.2 22.0 9.8 12.3 16.6 17.9 56.6 18.8 19.2 18.6 13.4 70.0 8.2 AM 5.2 7.3 8.3 5.5 26.3 7.4 9.0 9.8 7.9 34.1 5.9 5.6 6.9 5.0 23.4 7.1 6.1 6.2 5.3 24.7 4.9 PC 4.1 2.3 3.4 1.8 11.6 2.2 2.3 2.0 2.3 8.9 4.1 1.5 2.8 2.4 10.8 2.1 3.9 3.3 1.6 10.9 1.2 Other (3.3) (1.7) (3.9) (3.2) (12.1) (2.7) (5.7) (5.8) (4.8) (19.0) (6.1) (4.6) (8.4) (7.7) (26.8) (6.8) (6.2) (7.0) (3.2) (23.2) (3.4) Consolidated MTRN 7.5 8.1 12.2 7.2 35.0 7.7 11.7 13.0 13.6 46.0 13.6 14.8 17.9 17.6 63.8 21.2 23.0 21.1 17.1 82.3 10.9 EBIT ex Spec Items as a % of VA1 PAC 1.9% 0.2% 5.0% 3.7% 2.8% 0.9% 6.6% 7.7% 8.1% 6.1% 9.8% 11.2% 15.8% 16.3% 13.3% 17.2% 16.7% 16.6% 14.7% 16.4% 9.8% AM 12.4% 15.5% 18.0% 13.3% 14.9% 15.6% 14.5% 16.2% 13.5% 15.0% 10.1% 9.8% 12.5% 9.5% 10.5% 12.3% 10.5% 11.1% 10.0% 11.0% 8.3% PC 16.7% 9.2% 13.2% 8.1% 11.9% 9.4% 10.2% 9.1% 10.1% 9.8% 17.3% 6.4% 12.2% 9.9% 11.5% 9.3% 16.9% 14.7% 8.3% 12.6% 7.1% Consolidated MTRN 5.2% 5.3% 7.8% 5.0% 5.8% 5.2% 6.6% 7.6% 7.5% 6.8% 7.5% 7.8% 9.8% 9.5% 8.6% 11.3% 11.8% 11.2% 10.5% 11.2% 6.9% A-10 1Internally, management reviews the results of operations without the impact of special one-time costs in order to assess the profitability from ongoing operations. Refer to the note on page A-7 for a full reconciliation of adjusted earnings.
