Materion Corporation · NYSE:MTRN
Materion — Investor Presentation (August 2012)
46 slides from Materion's investor presentation, Aug 6, 2012
Slide 1: Materion Corporation – Investor Presentation
August 2012 Materion Corporation – Investor Presentation Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements These slides contain (and the accompanying oral discussion will contain) “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 ca
Slide 3: Unique Global Positions – Advanced Materials
Unique Global Positions – Advanced Materials • Only Fully Integrated Producer of Beryllium and Beryllium Alloys in the World – Over 75 years of reserves at Utah Leading Global Position • Unique Copper-Nickel-Tin Material ToughMet® – Multiple advanced applications growing at over 30% annually • Preci
Slide 4: Materion Today: New Name, Same Impressive Performance
MATERION TODAY: New Name, Same Impressive Performance Sales growth (2005 – 2011) Operating profit growth (2005 – 2011) Repositioning of company 12%* CAGR 19% CAGR Successful *Excluding pass-through metal
Slide 5: Thesis: Positioned to Deliver Long-Term, Sustainable Growth
THESIS Positioned to Deliver Long-Term, Sustainable Growth A company with a strong platform… … Leveraging a high value-added business model… … Executing a focused growth plan
Slide 6: The Repositioning of Materion
The Repositioning of Materion Prior to 2002 2002 – 2011 + Metals and mining focus Repositioning Advanced Materials
Slide 7: Successful Repositioning – Snapshot
Successful Repositioning – Snapshot 2002 2011 Revenue $373M $1.5B Revenue % in Advanced Materials 47% 76% Debt-to-Debt-Plus-Equity 43% 17% Working capital * % of sales 41% 23% Cyclicality High Lower Growth Low Higher * A/R, Inventory & A/P
Slide 8: Thesis: Positioned to Deliver Long-Term, Sustainable Growth
THESIS Positioned to Deliver Long-Term, Sustainable Growth A company with a strong platform… … Leveraging a high value-added business model… … Executing a focused growth plan
Slide 9: High Value-Added Business Model
High Value-Added Business Model 1. Identify high growth secular markets 2. Target the fastest growing niches of those markets 3. Expand with innovative products 4. Add synergistic acquisitions 5. Ensure financial discipline
Slide 10: 1. Identify High Growth Secular Markets
1. Identify High Growth Secular Markets Market Q2 2012 % of Value- added Sales Trends Key Drivers Consumer Electronics 26% • Smartphone growth • Tablet computers & LEDs • Miniaturization Industrial Components & Commercial Aerospace 19% • New airplane builds & retrofits • Increasing air travel • Heav
Slide 11: Positioned in Diverse Set of High-Growth Markets
Positioned in Diverse Set of High-Growth Markets Growth Entered multiple leading-edge growth markets since 2002 Defense Commercial Aerospace Disk Drives Optics Telecom Infrastructure LED’s Alternative Energy LCD Space / Science Notebooks Cellular phones (smartphones), Tablet computers Heavy Equipmen
Slide 12: High Operating Margins
High Operating Margins Operating Profit % Operating Profit % of Value-Added (1) Removing High Value Metals Clarifies Margins (1) Value added sales excludes metal pass-through Advanced Materials Integrated Metals 6% – 8% 16% – 18% 10% – 12% 8% – 10% Company 3% – 5% 3% – 5%
Slide 13: A Global Platform
A Global Platform 38% Operations in US and 11 Countries Significant International Sales* Q2 2012 • Customers in >50 countries • Expanded presence in Asia *Percentage of value added sales
Slide 14: 2. Target High Growth, Leading-Edge Markets
2. Target High Growth, Leading-Edge Markets ADVANCED MATERIAL TECHNOLOGIES PERFORMANCE ALLOYS BERYLLIUM & COMPOSITES TECHNICAL MATERIALS Key Markets Precious, Non-precious, Specialty Metal and Inorganic Materials, Electronic Packages and Components Bulk and Strip Form Products and Beryllium Hydroxid
Slide 15: Value Added Sales: Materion
Value Added Sales: Materion Q2 2012 Consumer Electronics 26% Industrial Components & Commercial Aerospace 19% Defense & Science 11% Automotive Electronics 10% Energy 8% Medical 8% Telecom Infrastructure 6% Services 4% Appliance 3% Other 5%
Slide 16: Strategy in Action: Outgrowing Growth Markets
Strategy in Action: Outgrowing Growth Markets Growth of Materion Oil and Gas Sales vs. Market Growth of Materion Aerospace Sales vs. Market Materion Sales Materion Sales Global Rig Count Aircraft Delivered +512% +85% +349% +80%
Slide 17: 3. Continually Develop Innovative Products
3. Continually Develop Innovative Products • Leveraging customer-centric product development • Active research programs to take advantage of secular trends • Key product areas include – LEDs – Medical – Commercial Optics – Computer Hard Drives – Alternative Energy – Science – Commercial Aerospace –
Slide 18: New Product and Technology Development
New Product and Technology Development Advanced Material Technologies Materials – Optics Coating Materials and Large Format Components – Thin Film Electrodes (medical diagnostics) – Expanded refining/chamber services – Complement to Thin Film Materials & Coating businesses – Nanotechnology Materials
Slide 19: New Product and Technology Development
New Product and Technology Development Advanced Material Technologies Coatings – Precision Optical Thin Film Coatings (specialty filters) – Large format Thin Film Materials for large area coatings (Energy, Solar) – Solar Panel Thin Film, Concentrator Materials and Barrier Film Coatings Packaging – O
Slide 20: New Product and Technology Development
New Product and Technology Development Performance Alloys – ToughMet® Alloy for High Volume Bearing Applications – BrushForm 158 for Voice Coil Motor (VCM) applications – Materion R270 Strip – “Next Generation” Alloy for Oil & Gas Beryllium and Composites – Nearer net shape fabrication (hot isostati
Slide 21: 4. A Strong Record of Synergistic Acquisitions
4. A Strong Record of Synergistic Acquisitions Impact Acquisitions 2005 - 2012 Add complementary products / technology Expand market position Accretive in year 1 Added over $440M to sales and approximately 30% of company profit in 2011 OMC – shield kit cleaning – TFT – thin film coatings – CERAC – i
Slide 22: Synergistic Acquisitions: Growing a Niche Business
Synergistic Acquisitions Barr (2009) Techni- Met (2008) TFT EIS Optics (2011) Case Study of Growing a Niche Business – Optical Filters and Medical Coatings (Pro-Forma Revenues) • Positioned in $1.2B+ market growing at 11% annually • Markets served include: defense, aerospace, medical, energy, semico
Slide 23: 5. Ensure Financial Discipline
5. Ensure Financial Discipline Maintain strong balance sheet Debt-to-Debt-Plus-Equity Maximum 30% Strong cash flow • Cash flow from operations $30M - $75M annually for the past five years • Capex below depreciation • Reduction in working capital goal to <20% sales Resources to finance organic growth
Slide 24: Thesis: Positioned to Deliver Long-Term, Sustainable Growth
THESIS Positioned to Deliver Long-Term, Sustainable Growth A company with a strong platform… … Leveraging a high value-added business model… … Executing a focused growth plan
Slide 25: Continuing to Execute Three Point Strategy
Continuing to Execute Three Point Strategy Grow and diversify revenue base Expand margins Improve fixed and working capital utilization Increasing Shareholder Value
Slide 26: Financial Goals Next 3-5 Years
Financial Goals Next 3-5 Years Past 3-5 Years Next 3-5 years 27 Revenue growth – organic 12% >10% Acquisitions $35M - $40M Per year $50 - $100M Per Year Margins (OP % VA) 10% - 14% 14% - 18% Working capital % sales 23% - 25% <20% Debt-to-Debt-Plus-Equity 16% - 18% <30% ROIC (pre-tax) 9% - 12% >20%
Slide 27: Strategy #1: Growth – Expand and Diversify Revenue Base
STRATEGY #1: GROWTH Expand and Diversify Revenue Base • Targeting expansion in secular growth markets including: – smart mobile devices, 3G / 4G, commercial aerospace, oil & gas, alternative energy, optics, LED / LCD • Ongoing global expansion – Asia • Strategic acquisition fast accretion – Technolo
Slide 28: Strategy #2: Margins – Expand Margins Key Drivers
STRATEGY #2: MARGINS Expand Margins – Key Drivers 1 3 2 Lean Sigma operating efficiency Higher value added products Cost reductions Margin Today 10 - 12% Target Margin 14 - 18% (OP % VA)
Slide 29: Strategy #3: Capital Efficiency
STRATEGY #3: CAPITAL EFFICIENCY Improve Fixed and Working Capital Efficiency Based on 2012 projected sales, each 5% of working capital efficiency = $50M of cash Lean Sigma • Cycle time reduction • Yield improvement • On-time shipments Working capital % of sales Improve Working Capital Efficiency
Slide 30: 2012 Outlook and Guidance
2012 Outlook and Guidance Revenues (Billions) EPS $1.375 - $1.425 $1.50-$1.60
Slide 31: In Summary: Why Invest in Materion Corporation
IN SUMMARY Why Invest in Materion Corporation Positioning Performance Growth A leader in high-growth markets Strong performance record Executing three point strategy • Global player, strong secular market drivers • Sustainable long-term growth • Proven business model • Target, capture niche, then ex
Slide 32: Appendix
Appendix
Slide 33: Value Added Sales: By Segment
Value Added Sales: By Segment Q2 2012 A-1 Technical Materials 6% Advanced Material Technologies 43% Performance Alloys 42% Composites 9% Beryllium &
Slide 34: Value Added Sales: Advanced Material Technologies
Value Added Sales: Advanced Material Technologies Q2 2012 A-2 Consumer Electronics 35% Medical 15% Services 9% Defense & Science 15% Industrial Components & Commercial Aerospace 6% Energy 4% Telecommunications Infrastructure 2% Automotive Electronics 2% Other 12%
Slide 35: Value Added Sales: Performance Alloys
Value Added Sales: Performance Alloys Q2 2012 A-3 commercial Aerospace 32% Automotive Electronics 15% Energy 14% Consumer Electronics 20% Telecommunications Infrastructure 10% Appliance 7% Defense & Science 1% Medical 1% Industrial Components &
Slide 36: Value Added Sales: Beryllium and Composites
Value Added Sales: Beryllium and Composites Q2 2012 A-4 Medical 9% Telecommunications Infrastructure 9% Defense & Science 47% Industrial Components & Commercial Aerospace 25% Energy 1% Other 9%
Slide 37: Value Added Sales: Technical Materials
Value Added Sales: Technical Materials Q2 2012 A-5 Automotive Electronics 48% Consumer Electronics 40% Energy 5% Medical 1% Other 6%
Slide 38: Core Technologies
Core Technologies 1. High Purity Gold and Silver for Industrial Applications 2. Powder Science and Processing (Vacuum, Hot and Cold Isostatic Pressing ) … Metal and Chemical 3. Full Metal Processing Technology (Melting, Casting, Rolling, Extrusion) 4. Selective Electroplating 5. Light Wave Managemen
Slide 39: Applications: Smart Phones
Applications: Smart Phones I/O Connector Contacts Battery Contacts Internal Antenna Contacts Grounding Clips and Audio Jacks Micro Mezzanine Connectors for LCD Screen Internal Electronics and LED • Thin Film Materials – Power amplifiers, LED, SAW and BAW devices, filters, and ICs • Hermetic Solution
Slide 40: Applications: Aerospace
Applications: Aerospace Avionics/Electrical Systems Airframe Structure Landing Gear Attachments Engine and Pylon Attachments Flight Control Mechanisms Horizontal Stabilizer & Rudder Attachments Hydraulic Systems Fuel Systems Wing Attachments Doors & Hatches Landing Gear Components Flight Attendant J
Slide 41: Applications: Oil & Gas
Applications: Oil & Gas Under Water Wellhead Equipment Directional Drilling Equipment MWD, LWD, MPT Systems Drill Bits Structural Rig Components Wellhead Control Equipment Other Oil & Gas Applications: • Artificial Lift Equipment • Elemental Analysis • Down Hole X-Ray Inspection ROV’s, blow out prev
Slide 42: Applications: Solar Energy
Applications: Solar Energy Technology: Amorphous Silicon (a-Si, tandem and multi-junction) Thin Film (PVD) Materials Silicon based photovoltaic cells Front and back contact layers TCO Transparent Conductive Oxide layers Technology: Cadmium Telluride (CdTe) Thin Film (PVD) Materials Cadmium based sol
Slide 43: Applications: Medical
Applications: Medical Cardiac Rhythm Management • Electronic Interconnects/Components • Niobium/Titanium Electron Beam Weld Insulin Pump • EMI Shielding and Grounding • Electrical Terminals in Connectors Seizure Control • Thin Film Deposition Implantable Electrode – Parkinson's disease (R&D) Externa
Slide 44: Applications: Telecommunications Infrastructure
Applications: Telecommunications Infrastructure Base Stations • Coaxial Connectors • High Power Amplifiers Local Area Networks • Shielding • Modular Jacks • PCB Sockets • Processor Sockets Other Telecommunications Infrastructure Applications • Undersea Repeater Housings A-12
Slide 45: Applications: Automotive Electronics
Applications: Automotive Electronics Lithium Ion Battery Interconnects Battery Management Resistors Electronic Power Steering Modules ABS Leadframes Engine Efficiency Oxygen Sensors Mirror & Windshield Electronic Connections Air Bag Sensors Lamp Socket Connectors Auto Dimming Mirror Connectors Hybri
Slide 46: Applications: Defense
Applications: Defense • Infrared Sensors for Fighter Jet and UAV Optical Targeting • Electronic Packaging for Defense Avionics, Radar and Electronic Countermeasure Systems • Structural and Electronic Components for Satellites • X-ray Windows in Security Imaging Systems • Laser Protection Optical Coa