8-K
MATERION Corp (MTRN)
| 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) February 19, 2025
MATERION CORPORATION
| (Exact name of registrant as specified in its charter) |
|---|
Ohio 001-15885 34-1919973
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
|---|
6070 Parkland Blvd., Mayfield Hts., Ohio 44124
| (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:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|
Common Stock, no par value MTRN New York Stock Exchange
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 2.02 Results of Operations and Financial Condition.
On February 19, 2025, Materion Corporation issued a press release announcing its results for the fourth quarter and full year 2024. The press release is attached hereto as Exhibit 99.1, which is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Exhibits.
| Exhibit Number | Description of Exhibit |
|---|---|
| 99.1 | Materion Corporation press release, dated February 19, 2025 |
| 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 | ||
|---|---|---|
| February 19, 2025 | By: | /s/ Shelly M. Chadwick |
| Shelly M. Chadwick | ||
| Vice President, Finance and Chief Financial Officer |
Document
Materion Corporation Reports Fourth Quarter and Full-Year 2024 Results, Provides 2025 Outlook and Establishes New Mid-Term Profitability Target
MAYFIELD HEIGHTS, Ohio – February 19, 2025 - Materion Corporation (NYSE: MTRN) today reported fourth quarter and full-year 2024 financial results, provided 2025 earnings guidance and announced a new mid-term profitability target.
Fourth Quarter 2024 Financial Summary
•Net sales were $436.9 million; value-added sales1 were $296.1 million
•Net loss of $48.8 million, or $2.33 loss per share, diluted, versus net income of $19.5 million, or $0.93 per share, in the prior year quarter; record quarterly adjusted earnings of $1.55 per share versus $1.41 in the prior year quarter
•Operating loss of $38.3 million versus operating profit of $27.6 million in the prior year quarter; record quarterly adjusted EBITDA2 of $61.5 million versus $53.3 million in the prior year quarter
Full-Year 2024 Highlights
•Net sales were $1.68 billion; value-added sales were $1.10 billion
•Net income was $5.9 million, or $0.28 per share, diluted, versus $95.7 million, or $4.58 per share, in the prior year period; adjusted earnings of $5.34 per share versus $5.64 in the prior year period
•Adjusted EBITDA of $221.2 million, versus $217.7 million in the prior year
•Achieved mid-term target of 20% adjusted EBITDA margin for the year, first time in company history
•Established new mid-term adjusted EBITDA margin target of 23% based on the Company’s prospects and performance expectations
•Secured several significant new business wins and customer partnerships further strengthening the organic pipeline
•Precision Optics transformation underway with appointment of new business president
•Completed sale of non-core large area targets business in Albuquerque, New Mexico
"The fourth-quarter and full-year results showcase the significant impact of our initiatives to enhance operational performance, streamline our cost structure, and optimize the Company’s footprint. I am extremely proud of our global team for their relentless efforts to serve our customers and drive improvements across Materion, even in the face of ongoing challenging market conditions," said Jugal Vijayvargiya, President & CEO of Materion.
“2024 was a landmark year for Materion, as we achieved our mid-term target of 20% adjusted EBITDA margin for the first time in the Company's history. Achieving this level of performance in soft market conditions gives us confidence to look ahead to what’s next, as our end markets strengthen, and we deliver on our organic initiatives while executing further operational improvements. With this in mind, we have established a new mid-term adjusted EBITDA margin target of 23%, delivering an additional 300 basis points of improvement over the next several years. We expect to deliver another year of strong performance in 2025, as a result of our improved operational performance, and strengthening market conditions as we move through the year.”
FOURTH QUARTER 2024 RESULTS
Net sales for the quarter were $436.9 million, compared to $421.0 million in the prior year period. Value-added sales were $296.1 million for the quarter, up 2% from the prior year period primarily driven by strength in space & defense and improvement in semiconductor. This increase was partially offset by continued headwinds across automotive, industrial and energy.
Operating loss for the quarter was $38.3 million and net loss was $48.8 million, or $2.33 loss per diluted share, compared to operating profit of $27.6 million and net income of $19.5 million, or $0.93 per share, in the prior year period.
Excluding special items3 including a non-cash goodwill and intangible impairment in Precision Optics, adjusted EBITDA was a quarterly record $61.5 million, or 20.8% of value-added sales, compared to $53.3 million or 18.4% of value-added sales in the prior year period. This record adjusted EBITDA was driven by higher volume, favorable price/mix, strong cost management and operational performance.
Adjusted net income was $32.4 million excluding acquisition amortization, or $1.55 per diluted share, compared to $1.41 per share in the prior year period.
FULL-YEAR 2024 RESULTS
Net sales for the year were $1.68 billion, compared to $1.67 billion in the prior year. Value-added sales were $1.10 billion for the year, down 3% from the prior year due to weakness in several key end markets including industrial, energy and automotive. This decrease was partially offset by strength in space & defense and precision clad strip.
Operating profit for the year was $47.2 million and net income was $5.9 million, or $0.28 per diluted share, compared to operating profit of $136.4 million and net income of $95.7 million, or $4.58 per diluted share, in the prior year.
Excluding special items, adjusted EBITDA for the year was $221.2 million, compared to $217.7 million in the prior year. The increase was driven primarily by strong operational performance, cost management and improved mix driven by new business.
Adjusted net income was $111.8 million excluding acquisition amortization, or $5.34 per diluted share, compared to $5.64 per diluted share in the prior year.
OUTLOOK
After a challenged macroenvironment in 2024, we remain cautiously optimistic about the market dynamics entering 2025, and are expecting mid-single digit top-line growth from our businesses,
excluding precision clad strip. The precision clad strip inventory correction is expected to continue through 2025, returning to growth in 2026. Despite this impact, we expect earnings growth in 2025 from market outperformance, continued operational excellence, cost management and portfolio optimization actions. With this, we are guiding to the range of $5.30 to $5.70 for full year 2025 adjusted earnings per share, an increase of 3% from prior year at the midpoint.
ADJUSTED EARNINGS GUIDANCE
It is not possible for the Company to identify the amount or significance of future adjustments associated with potential insurance and litigation claims, legacy environmental costs, acquisition and integration costs, certain income tax items, or other non-routine costs that the Company adjusts in the presentation of adjusted earnings guidance. These items are dependent on future events that are not reasonably estimable at this time. Accordingly, the Company is unable to reconcile without unreasonable effort the forecasted range of adjusted earnings guidance for the full year to a comparable GAAP range. However, items excluded from the Company's adjusted earnings guidance include the historical adjustments noted in Attachments 4 through 8 to this press release.
CONFERENCE CALL
Materion Corporation will host an investor conference call with analysts at 10:00 a.m. Eastern Time, February 19, 2025. The conference call will be available via webcast through the Company’s website at www.materion.com. By phone, please dial (888) 506-0062. Calls outside the U.S. can dial (973) 528-0011; please reference participant access code of 357106. A replay of the call will be available until March 5, 2025 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 51061. The call will also be archived on the Company’s website.
FOOTNOTES
1 Value-added sales deducts the impact of pass-through metals from net sales
2 EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization
3 Details of the special items can be found in Attachments 4 through 8
ABOUT MATERION
Materion Corporation is a global leader in advanced materials solutions for high-performance industries including semiconductor, industrial, aerospace & defense, energy and automotive. With nearly 100 years of expertise in specialty engineered alloy systems, inorganic chemicals and powders, precious and non-precious metals, beryllium and beryllium composites, and precision filters and optical coatings, Materion partners with customers to enable breakthrough solutions that move the world forward. Headquartered in Mayfield Heights, Ohio, the Company employs more than 3,000 talented people worldwide, serving customers in more than 60 countries.
FORWARD-LOOKING STATEMENTS
Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein: the global economy, including inflationary pressures, potential future recessionary conditions and the impact of tariffs and trade agreements; the impact of any U.S. Federal Government shutdowns or sequestrations; the condition of the markets which we serve, whether defined geographically or by segment; changes in product mix and the financial condition of customers; our success in developing and introducing new products and new product ramp-up rates; our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values; our success in identifying acquisition candidates and in acquiring and integrating such businesses; the impact of the results of acquisitions on our ability to fully achieve the strategic and financial objectives related to these acquisitions; our success in implementing our strategic plans and the timely and successful start-up and completion of any capital projects; other financial and economic factors, including the cost and availability of raw materials (both base and precious metals), physical inventory valuations, metal consignment fees, tax rates, exchange rates, interest rates, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, credit availability, and the impact of the Company’s stock price on the cost of incentive compensation plans; the uncertainties related to the impact of war, terrorist activities, and acts of God; changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; the conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; the disruptions in operations from, and other effects of, catastrophic and other extraordinary events including outbreaks from infectious diseases and the conflict between Russia and Ukraine and other hostilities; realization of expected financial benefits expected from the Inflation Reduction Act of 2022; and the risk factors set forth in Part 1, Item 1A of the Company's 2023 Annual Report on Form 10-K and in other reports that we file with the SEC.
Investor Contact:
Kyle Kelleher
(216) 383-4931
kyle.kelleher@materion.com
Media Contact:
Jason Saragian
(216) 383-6893
jason.saragian@materion.com
https://materion.com
Attachment 1
Materion Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
| Fourth Quarter Ended | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| (In thousands except per share amounts) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||
| Net sales | $ | 436,871 | $ | 421,043 | $ | 1,684,739 | $ | 1,665,187 |
| Cost of sales | 343,895 | 341,328 | 1,358,754 | 1,316,145 | ||||
| Gross margin | 92,976 | 79,715 | 325,985 | 349,042 | ||||
| Selling, general, and administrative expense | 41,134 | 39,858 | 145,588 | 157,911 | ||||
| Research and development expense | 6,316 | 6,442 | 29,028 | 27,540 | ||||
| Goodwill impairment | 56,067 | — | 56,067 | — | ||||
| Long-lived asset impairment | 17,134 | — | 17,134 | — | ||||
| Loss on asset disposal | 6,412 | — | 6,412 | — | ||||
| Restructuring expense | 687 | 630 | 6,848 | 3,824 | ||||
| Other — net | 3,573 | 5,145 | 17,685 | 23,323 | ||||
| Operating profit (loss) | (38,347) | 27,640 | 47,223 | 136,444 | ||||
| Other non-operating (income) expense—net | (518) | (569) | (2,443) | (2,710) | ||||
| Interest expense — net | 8,844 | 8,503 | 34,764 | 31,323 | ||||
| Income (loss) before income taxes | (46,673) | 19,706 | 14,902 | 107,831 | ||||
| Income tax (benefit) expense | 2,177 | 238 | 9,014 | 12,129 | ||||
| Net income (loss) | $ | (48,850) | $ | 19,468 | $ | 5,888 | $ | 95,702 |
| Basic earnings per share: | ||||||||
| Net income (loss) per share of common stock | $ | (2.35) | $ | 0.94 | $ | 0.28 | $ | 4.64 |
| Diluted earnings per share: | ||||||||
| Net income (loss) per share of common stock | $ | (2.33) | $ | 0.93 | $ | 0.28 | $ | 4.58 |
| Weighted-average number of shares of common stock outstanding: | ||||||||
| Basic | 20,758 | 20,644 | 20,732 | 20,619 | ||||
| Diluted | 20,923 | 20,936 | 20,928 | 20,911 |
Attachment 2
Materion Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| (Thousands) | December 31, 2024 | December 31, 2023 | ||
|---|---|---|---|---|
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 16,713 | $ | 13,294 |
| Accounts receivable, net | 193,793 | 192,747 | ||
| Inventories, net | 441,299 | 441,597 | ||
| Prepaid and other current assets | 72,419 | 61,744 | ||
| Total current assets | 724,224 | 709,382 | ||
| Deferred income taxes | 2,964 | 4,908 | ||
| Property, plant, and equipment | 1,315,586 | 1,281,622 | ||
| Less allowances for depreciation, depletion, and amortization | (804,781) | (766,939) | ||
| Property, plant, and equipment—net | 510,805 | 514,683 | ||
| Operating lease, right-of-use assets | 64,449 | 57,645 | ||
| Intangible assets | 109,312 | 133,571 | ||
| Other assets | 22,140 | 21,664 | ||
| Goodwill | 263,738 | 320,873 | ||
| Total Assets | $ | 1,697,632 | $ | 1,762,726 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities | ||||
| Short-term debt | $ | 34,274 | $ | 38,597 |
| Accounts payable | 105,901 | 125,663 | ||
| Salaries and wages | 20,939 | 25,912 | ||
| Other liabilities and accrued items | 47,523 | 45,773 | ||
| Income taxes | 4,906 | 5,207 | ||
| Unearned revenue | 13,191 | 13,843 | ||
| Total current liabilities | 226,734 | 254,995 | ||
| Other long-term liabilities | 12,013 | 13,300 | ||
| Operating lease liabilities | 62,626 | 53,817 | ||
| Finance lease liabilities | 12,404 | 13,744 | ||
| Retirement and post-employment benefits | 26,411 | 26,334 | ||
| Unearned income | 75,769 | 103,983 | ||
| Long-term income taxes | 1,818 | 3,815 | ||
| Deferred income taxes | 3,242 | 20,109 | ||
| Long-term debt | 407,734 | 387,576 | ||
| Shareholders’ equity | 868,881 | 885,053 | ||
| Total Liabilities and Shareholders’ Equity | $ | 1,697,632 | $ | 1,762,726 |
Attachment 3
Materion Corporation and Subsidiaries
Consolidated Statements of Cash Flows
| (Thousands) | December 31, 2024 | December 31, 2023 | ||
|---|---|---|---|---|
| Cash flows from operating activities: | ||||
| Net income | $ | 5,888 | $ | 95,702 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation, depletion, and amortization | 68,676 | 61,644 | ||
| Amortization of deferred financing costs in interest expense | 1,714 | 1,712 | ||
| Stock-based compensation expense (non-cash) | 10,560 | 10,092 | ||
| Amortization of pension and post-retirement costs | (307) | (1,318) | ||
| Loss on sale of property, plant, and equipment | 1,201 | 20 | ||
| Deferred income tax (benefit) expense | (16,598) | (7,005) | ||
| Impairment charges | 73,201 | — | ||
| Loss on asset disposal | 6,412 | — | ||
| Net pension curtailments and settlements | — | 142 | ||
| Changes in assets and liabilities, net of acquired assets and liabilities: | ||||
| Decrease (increase) in accounts receivable | (3,723) | 23,359 | ||
| Decrease (increase) in inventory | (468) | (18,700) | ||
| Decrease (increase) in prepaid and other current assets | (11,345) | (22,663) | ||
| Increase (decrease) in accounts payable and accrued expenses | (15,757) | 6,631 | ||
| Increase (decrease) in unearned revenue | (24,692) | (17,361) | ||
| Increase (decrease) in interest and taxes payable | (2,619) | 3,771 | ||
| Increase (decrease) in unearned income due to customer prepayments | — | 16,676 | ||
| Other — net | (4,326) | (8,288) | ||
| Net cash provided by operating activities | 87,817 | 144,414 | ||
| Cash flows from investing activities: | ||||
| Payments for purchase of property, plant, and equipment | (68,649) | (110,550) | ||
| Payments for mine development | (12,159) | (9,326) | ||
| Proceeds from sale of property, plant, and equipment | 1,203 | 654 | ||
| Net cash used in investing activities | (79,605) | (119,222) | ||
| Cash flows from financing activities: | ||||
| Proceeds from (repayment of) borrowings under credit facilities, net | 45,692 | 8,065 | ||
| Repayment of debt | (30,342) | (15,415) | ||
| Principal payments under finance lease obligations | (683) | (1,645) | ||
| Cash dividends paid | (11,087) | (10,621) | ||
| Deferred financing costs | (156) | — | ||
| Payments of withholding taxes for stock-based compensation awards | (7,610) | (5,234) | ||
| Net cash used in financing activities | (4,186) | (24,850) | ||
| Effects of exchange rate changes | (607) | (149) | ||
| Net change in cash and cash equivalents | 3,419 | 193 | ||
| Cash and cash equivalents at beginning of period | 13,294 | 13,101 | ||
| Cash and cash equivalents at end of period | $ | 16,713 | $ | 13,294 |
Attachment 4
Materion Corporation and Subsidiaries
Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBITDA
(Unaudited)
| Fourth Quarter Ended | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| (Millions) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||
| Net Sales | ||||||||
| Performance Materials | $ | 211.0 | $ | 201.1 | $ | 744.5 | $ | 755.5 |
| Electronic Materials | 204.2 | 193.9 | 845.7 | 805.8 | ||||
| Precision Optics | 21.7 | 26.0 | 94.5 | 103.9 | ||||
| Other | — | — | — | — | ||||
| Total | $ | 436.9 | $ | 421.0 | $ | 1,684.7 | $ | 1,665.2 |
| Less: Pass-through Metal Cost | ||||||||
| Performance Materials | $ | 15.2 | $ | 15.1 | $ | 56.5 | $ | 66.9 |
| Electronic Materials | 125.6 | 116.2 | 530.4 | 471.1 | ||||
| Precision Optics | — | — | 0.2 | 0.1 | ||||
| Other | — | — | — | — | ||||
| Total | $ | 140.8 | $ | 131.3 | $ | 587.1 | $ | 538.1 |
| Value-added Sales (non-GAAP) | ||||||||
| Performance Materials | $ | 195.8 | $ | 186.0 | $ | 688.0 | $ | 688.6 |
| Electronic Materials | 78.6 | 77.7 | 315.3 | 334.7 | ||||
| Precision Optics | 21.7 | 26.0 | 94.3 | 103.8 | ||||
| Other | — | — | — | — | ||||
| Total | $ | 296.1 | $ | 289.7 | $ | 1,097.6 | $ | 1,127.1 |
| Gross Margin | ||||||||
| Performance Materials(1) | $ | 62.6 | $ | 50.5 | $ | 203.2 | $ | 216.5 |
| Electronic Materials(1) | 26.0 | 21.5 | 99.5 | 100.4 | ||||
| Precision Optics(1) | 4.4 | 7.7 | 23.3 | 32.1 | ||||
| Other | — | — | — | — | ||||
| Total(1) | $ | 93.0 | $ | 79.7 | $ | 326.0 | $ | 349.0 |
| (1) See reconciliation of gross margin to adjusted gross margin in Attachment 8 | ||||||||
| Note: Quarterly information presented within this document and previously disclosed quarterly information may not equal the total computed for the year due to rounding | ||||||||
| Fourth Quarter Ended | Year Ended | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Millions) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||
| Operating Profit (Loss) | ||||||||
| Performance Materials | $ | 43.4 | $ | 33.0 | $ | 132.1 | $ | 143.9 |
| Electronic Materials | 2.9 | 3.8 | 29.4 | 28.6 | ||||
| Precision Optics | (77.0) | (0.4) | (84.7) | (2.0) | ||||
| Other | (7.6) | (8.8) | (29.6) | (34.1) | ||||
| Total | $ | (38.3) | $ | 27.6 | $ | 47.2 | $ | 136.4 |
| Non-Operating (Income) Expense | ||||||||
| Performance Materials | $ | 0.1 | $ | 0.2 | $ | 0.5 | $ | 0.6 |
| Electronic Materials | — | (0.1) | — | (0.1) | ||||
| Precision Optics | — | — | (0.4) | (0.6) | ||||
| Other | (0.6) | (0.7) | (2.5) | (2.7) | ||||
| Total | $ | (0.5) | $ | (0.6) | $ | (2.4) | $ | (2.8) |
| Depreciation, Depletion, and Amortization | ||||||||
| Performance Materials | $ | 10.1 | $ | 7.6 | $ | 37.7 | $ | 31.2 |
| Electronic Materials | 4.4 | 4.3 | 18.0 | 17.0 | ||||
| Precision Optics | 2.4 | 2.6 | 11.0 | 11.3 | ||||
| Other | 0.4 | 0.6 | 2.0 | 2.1 | ||||
| Total | $ | 17.3 | $ | 15.1 | $ | 68.7 | $ | 61.6 |
| Segment EBITDA | ||||||||
| Performance Materials | $ | 53.4 | $ | 40.4 | $ | 169.3 | $ | 174.5 |
| Electronic Materials | 7.3 | 8.2 | 47.4 | 45.7 | ||||
| Precision Optics | (74.6) | 2.2 | (73.3) | 9.9 | ||||
| Other | (6.6) | (7.5) | (25.1) | (29.3) | ||||
| Total | $ | (20.5) | $ | 43.3 | $ | 118.3 | $ | 200.8 |
| Special Items(2) | ||||||||
| Performance Materials | $ | 0.2 | $ | 5.6 | $ | 9.5 | $ | 6.7 |
| Electronic Materials | 7.4 | 2.8 | 14.6 | 7.3 | ||||
| Precision Optics | 73.5 | 1.6 | 75.2 | 2.8 | ||||
| Other | 0.9 | — | 3.6 | 0.1 | ||||
| Total | $ | 82.0 | $ | 10.0 | $ | 102.9 | $ | 16.9 |
| Adjusted EBITDA Excluding Special Items | ||||||||
| Performance Materials | $ | 53.6 | $ | 46.0 | $ | 178.8 | $ | 181.2 |
| Electronic Materials | 14.7 | 11.0 | 62.0 | 53.0 | ||||
| Precision Optics | (1.1) | 3.8 | 1.9 | 12.7 | ||||
| Other | (5.7) | (7.5) | (21.5) | (29.2) | ||||
| Total | $ | 61.5 | $ | 53.3 | $ | 221.2 | $ | 217.7 |
The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium is passed through to customers and, therefore, the trends and comparisons of net sales are affected by movements in the market price of these metals. Internally, management also reviews net sales on a value-added basis. Value-added sales is a non-GAAP financial measure that deducts the value of the pass-through metals sold from net sales. Value-added sales allows management to assess the impact of differences in net sales between periods or segments and analyze the resulting margins and profitability without the distortion of the movements in pass-through market metal prices. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. The Company sells other metals and materials that are not considered direct pass throughs, and these costs are not deducted from net sales to calculate value-added sales.
The Company’s pricing policy is to pass the cost of these metals on to customers in order to mitigate the impact of price volatility on the Company’s results from operations. Value-added information is being presented since changes in metal prices may not directly impact profitability. It is the Company’s intent to allow users of the financial statements to review sales with and without the impact of the pass-through metals.
(2) See additional details of special items in Attachment 5.
Attachment 5
Materion Corporation and Subsidiaries
Reconciliation of Net Sales to Value-added Sales, Net Income to EBITDA and Adjusted EBITDA
(Unaudited)
| Fourth Quarter Ended | Twelve Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Millions) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||||||
| Net sales | $ | 436.9 | $ | 421.0 | $ | 1,684.7 | $ | 1,665.2 | ||||
| Pass-through metal cost | 140.8 | 131.3 | 587.1 | 538.1 | ||||||||
| Value-added sales | $ | 296.1 | $ | 289.7 | $ | 1,097.6 | $ | 1,127.1 | ||||
| Net income (loss) | $ | (48.8) | $ | 19.5 | $ | 5.9 | $ | 95.7 | ||||
| Income tax expense | 2.2 | 0.2 | 9.0 | 12.2 | ||||||||
| Interest expense - net | 8.8 | 8.5 | 34.7 | 31.3 | ||||||||
| Depreciation, depletion and amortization | 17.3 | 15.1 | 68.7 | 61.6 | ||||||||
| Consolidated EBITDA | $ | (20.5) | $ | 43.3 | $ | 118.3 | $ | 200.8 | ||||
| Net Income as a % of Net sales | (11.2) | % | 4.6 | % | 0.4 | % | 5.7 | % | ||||
| Net Income as a % of Value-added sales | (16.5) | % | 6.7 | % | 0.5 | % | 8.5 | % | ||||
| EBITDA as a % of Net sales | (4.7) | % | 10.3 | % | 7.0 | % | 12.1 | % | ||||
| EBITDA as a % of Value-added sales | (6.9) | % | 14.9 | % | 10.8 | % | 17.8 | % | ||||
| Special items | ||||||||||||
| Restructuring and cost reduction | $ | 0.7 | $ | 4.2 | $ | 11.4 | $ | 11.1 | ||||
| Electronic Materials inventory adjustment | — | — | 2.8 | — | ||||||||
| Business transformation costs | 0.7 | — | 1.3 | — | ||||||||
| Pension settlement | — | 0.2 | — | 0.2 | ||||||||
| Additional start up resources and scrap | — | 5.6 | 6.1 | 5.6 | ||||||||
| Precision Optics impairments | 73.2 | — | 73.2 | — | ||||||||
| Merger, acquisition and divestiture related costs | 7.4 | — | 8.1 | — | ||||||||
| Total special items | 82.0 | 10.0 | 102.9 | 16.9 | ||||||||
| Adjusted EBITDA | $ | 61.5 | $ | 53.3 | $ | 221.2 | $ | 217.7 | ||||
| Adjusted EBITDA as a % of Net sales | 14.1 | % | 12.7 | % | 13.1 | % | 13.1 | % | ||||
| Adjusted EBITDA as a % of Value-added sales | 20.8 | % | 18.4 | % | 20.2 | % | 19.3 | % |
In addition to presenting financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains financial measures, including operating profit, segment operating profit, earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), net income, and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation and Attachment 6, we have adjusted the results for certain special items, including the following:
1.Restructuring and cost reduction – Costs include restructuring charges, costs associated with temporarily idled facilities as a result of decreased demand and costs associated with disposal of assets associated with obsolete products.
2.Electronic Materials inventory adjustment – During the third quarter of 2024, the Company determined that material costs from prior years were understated due to unrecognized metal refine expense and other inventory adjustments.
3.Business transformation costs – Represents project management and implementation expenses related to the Company's automation and transformation initiatives.
4.Pension settlement - Represents settlement charges related to the Company's international pension plans.
5.Additional start up resources and scrap – Represents incremental resource, consulting and specialists costs incurred related to the ramp of the precision clad strip facility and scrap related to product qualifications.
6.Precision Optics impairments - Represents goodwill and long-lived asset impairment charges within the Precision Optics segment taken in the fourth quarter of 2024.
7.Merger, acquisition and divestiture related costs – Includes due diligence costs associated with potential merger, acquisition and divestitures as well as loss on asset disposals.
Internally, management reviews the results of operations without the impact of these costs in order to assess the profitability from ongoing activities. We are providing this information because we believe it will assist investors in analyzing our financial results and, when viewed in conjunction with the GAAP results, provide a more comprehensive understanding of the factors and trends affecting our operations.
Attachment 6
Materion Corporation and Subsidiaries
Reconciliation of Net Income to Adjusted Net Income
and Diluted Earnings per Share to Adjusted Diluted Earnings per Share (Unaudited)
| Fourth Quarter Ended | Twelve Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Millions) | December 31, 2024 | Diluted EPS | December 31, 2023 | Diluted EPS | December 31, 2024 | Diluted EPS | December 31, 2023 | Diluted EPS | ||||||||
| Net income (loss) and EPS | $ | (48.8) | $ | (2.33) | $ | 19.5 | $ | 0.93 | $ | 5.9 | $ | 0.28 | $ | 95.7 | $ | 4.58 |
| Special items | ||||||||||||||||
| Restructuring and cost reduction | 0.7 | 4.2 | 11.4 | 11.1 | ||||||||||||
| Electronic Materials inventory adjustment | — | — | 2.8 | — | ||||||||||||
| Business transformation costs | 0.7 | — | 1.3 | — | ||||||||||||
| Pension settlement | — | 0.2 | — | 0.2 | ||||||||||||
| Additional start up resources and scrap | — | 5.6 | 6.1 | 5.6 | ||||||||||||
| Precision Optics impairments | 73.2 | — | 73.2 | — | ||||||||||||
| Merger, acquisition and divestiture related costs | 7.4 | — | 8.1 | — | ||||||||||||
| Provision for income taxes (1) | (3.0) | (2.4) | (6.6) | (4.4) | ||||||||||||
| Total special items | 79.0 | 3.77 | 7.6 | 0.36 | 96.3 | 4.60 | 12.5 | 0.60 | ||||||||
| Adjusted net income and adjusted EPS | $ | 30.2 | $ | 1.44 | $ | 27.1 | $ | 1.29 | $ | 102.2 | $ | 4.88 | $ | 108.2 | $ | 5.17 |
| Acquisition amortization (net of tax) | 2.2 | 0.11 | 2.5 | 0.12 | 9.6 | 0.46 | 9.8 | 0.47 | ||||||||
| Adjusted net income and adjusted EPS excl. amortization | $ | 32.4 | $ | 1.55 | $ | 29.6 | $ | 1.41 | $ | 111.8 | $ | 5.34 | $ | 118.0 | $ | 5.64 |
(1) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of certain discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods.
Attachment 7
| Reconciliation of Segment Net sales to Segment Value-added sales and Segment EBITDA to Adjusted Segment EBITDA (Unaudited) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Performance Materials | Fourth Quarter Ended | Twelve Months Ended | ||||||||||
| (Millions) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||||||
| Net sales | $ | 211.0 | $ | 201.1 | $ | 744.5 | $ | 755.5 | ||||
| Pass-through metal cost | 15.2 | 15.1 | 56.5 | 66.9 | ||||||||
| Value-added sales | $ | 195.8 | $ | 186.0 | $ | 688.0 | $ | 688.6 | ||||
| EBITDA | $ | 53.4 | $ | 40.4 | $ | 169.3 | $ | 174.5 | ||||
| Restructuring and cost reduction | 0.1 | — | 2.9 | 1.1 | ||||||||
| Additional start up resources and scrap | — | 5.6 | 6.1 | 5.6 | ||||||||
| Business transformation costs | 0.1 | — | 0.5 | — | ||||||||
| Adjusted EBITDA | $ | 53.6 | $ | 46.0 | $ | 178.8 | $ | 181.2 | ||||
| EBITDA as a % of Net sales | 25.3 | % | 20.1 | % | 22.7 | % | 23.1 | % | ||||
| EBITDA as a % of Value-added sales | 27.3 | % | 21.7 | % | 24.6 | % | 25.3 | % | ||||
| Adjusted EBITDA as a % of Net sales | 25.4 | % | 22.9 | % | 24.0 | % | 24.0 | % | ||||
| Adjusted EBITDA as a % of Value-added sales | 27.4 | % | 24.7 | % | 26.0 | % | 26.3 | % | ||||
| Electronic Materials | Fourth Quarter Ended | Twelve Months Ended | ||||||||||
| (Millions) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||||||
| Net sales | $ | 204.2 | $ | 193.9 | $ | 845.7 | $ | 805.8 | ||||
| Pass-through metal cost | 125.6 | 116.2 | 530.4 | 471.1 | ||||||||
| Value-added sales | $ | 78.6 | $ | 77.7 | $ | 315.3 | $ | 334.7 | ||||
| EBITDA | $ | 7.3 | $ | 8.2 | $ | 47.4 | $ | 45.7 | ||||
| Restructuring and cost reduction | 0.2 | 2.8 | 4.5 | 7.3 | ||||||||
| Merger, acquisition and divestiture related costs | 7.0 | — | 7.0 | — | ||||||||
| Business transformation costs | 0.2 | — | 0.3 | — | ||||||||
| Electronic Materials inventory adjustment | — | — | 2.8 | — | ||||||||
| Adjusted EBITDA | $ | 14.7 | $ | 11.0 | $ | 62.0 | $ | 53.0 | ||||
| EBITDA as a % of Net sales | 3.6 | % | 4.2 | % | 5.6 | % | 5.7 | % | ||||
| EBITDA as a % of Value-added sales | 9.3 | % | 10.6 | % | 15.0 | % | 13.7 | % | ||||
| Adjusted EBITDA as a % of Net sales | 7.2 | % | 5.7 | % | 7.3 | % | 6.6 | % | ||||
| Adjusted EBITDA as a % of Value-added sales | 18.7 | % | 14.2 | % | 19.7 | % | 15.8 | % | ||||
| Precision Optics | Fourth Quarter Ended | Twelve Months Ended | ||||||||||
| (Millions) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||||||
| Net sales | $ | 21.7 | $ | 26.0 | $ | 94.5 | $ | 103.9 | ||||
| Pass-through metal cost | — | — | 0.2 | 0.1 | ||||||||
| Value-added sales | $ | 21.7 | $ | 26.0 | $ | 94.3 | $ | 103.8 | ||||
| EBITDA | $ | (74.6) | $ | 2.2 | $ | (73.3) | $ | 9.9 | ||||
| Restructuring and cost reduction | 0.3 | 1.4 | 2.0 | 2.6 | ||||||||
| Pension settlement | — | 0.2 | — | 0.2 | ||||||||
| Precision Optics impairments | 73.2 | — | 73.2 | — | ||||||||
| Adjusted EBITDA | $ | (1.1) | $ | 3.8 | $ | 1.9 | $ | 12.7 | ||||
| EBITDA as a % of Net sales | (343.8) | % | 8.5 | % | (77.6) | % | 9.5 | % | ||||
| EBITDA as a % of Value-added sales | (343.8) | % | 8.5 | % | (77.7) | % | 9.5 | % | ||||
| Adjusted EBITDA as a % of Net sales | (5.1) | % | 14.6 | % | 2.0 | % | 12.2 | % | ||||
| Adjusted EBITDA as a % of Value-added sales | (5.1) | % | 14.6 | % | 2.0 | % | 12.2 | % | ||||
| Other | Fourth Quarter Ended | Twelve Months Ended | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| (Millions) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||||||
| EBITDA | $ | (6.6) | $ | (7.5) | $ | (25.1) | $ | (29.3) | ||||
| Restructuring and cost reduction | 0.1 | — | 2.0 | 0.1 | ||||||||
| Business transformation costs | 0.4 | — | 0.5 | — | ||||||||
| Merger, acquisition and divestiture related costs | 0.4 | — | 1.1 | — | ||||||||
| Adjusted EBITDA | $ | (5.7) | $ | (7.5) | $ | (21.5) | $ | (29.2) |
Attachment 8
Materion Corporation and Subsidiaries
Reconciliation of Non-GAAP Measure - Gross Margin to Adjusted Gross Margin
(Unaudited)
| Fourth Quarter Ended | Twelve Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| (Millions) | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||||
| Gross Margin | ||||||||
| Performance Materials | $ | 62.6 | $ | 50.5 | $ | 203.2 | $ | 216.5 |
| Electronic Materials | 26.0 | 21.5 | 99.5 | 100.4 | ||||
| Precision Optics | 4.4 | 7.7 | 23.3 | 32.1 | ||||
| Other | — | — | — | — | ||||
| Total | $ | 93.0 | $ | 79.7 | $ | 326.0 | $ | 349.0 |
| Special Items (1) | ||||||||
| Performance Materials | $ | — | $ | 5.6 | $ | 7.5 | $ | 6.4 |
| Electronic Materials | — | 1.5 | 4.7 | 3.9 | ||||
| Precision Optics | — | 1.0 | 0.2 | 1.3 | ||||
| Other | — | — | — | — | ||||
| Total | $ | — | $ | 8.1 | $ | 12.4 | $ | 11.6 |
| Adjusted Gross Margin | ||||||||
| Performance Materials | $ | 62.6 | $ | 56.1 | $ | 210.7 | $ | 222.9 |
| Electronic Materials | 26.0 | 23.0 | 104.2 | 104.3 | ||||
| Precision Optics | 4.4 | 8.7 | 23.5 | 33.4 | ||||
| Other | — | — | — | — | ||||
| Total | $ | 93.0 | $ | 87.8 | $ | 338.4 | $ | 360.6 |
(1) Special items impacting gross margin represent restructuring and cost reduction, the Electronic Materials inventory adjustment, and additional start up resources and scrap in 2024, and restructuring and cost reduction and additional start up resources and scrap in 2023.
14