Materion Corporation · NYSE:MTRN
Materion — Investor Presentation (March 2014)
42 slides from Materion's investor presentation, Mar 17, 2014
Slide 1: March 2014 Materion Corporation – Investor Presentation
March 2014 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: Materion (MTRN)
Materion (MTRN) • An Advanced Materials Company • Strong Global Positions in Attractive and Growing Markets • Long-term Growth Greater Than GDP • Strong Value-added1 Margins • Market Cap: $681 Million 3/7/14, Shares Outstanding: 20.9 million • Annual EPS: $0.94 GAAP, $1.10 Adjusted2 • Strong Balance
Slide 4: High Value-added Business Model
High Value-added Business Model 4 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 5: Unique Global Positions – Advanced Materials
Unique Global Positions – Advanced Materials • World’s Only Fully Integrated Producer of Beryllium and Beryllium Alloys – Over 75 years of reserves at Utah 5 Leading Global Position • Unique Copper-nickel-tin Material ToughMet® – Multiple advanced applications growing at over 30% annually • Precisio
Slide 6: Identify High Growth Secular Markets
Identify High Growth Secular Markets 6 Market FY 2013 % of Value- added Sales Macro Trends Key Drivers Consumer Electronics 27% • Smartphone growth • Tablet computers & LEDs • Miniaturization Industrial Components & Commercial Aerospace 18% • New airplane builds & retrofits • Increasing air travel •
Slide 7: Significant New Value Drivers
Significant New Value Drivers • Global Beryllium Supply Shortage • Government Stockpile Replenishment • Bulk Metallic Glass • Enhanced Capacity • Facility Consolidation and Product Line Rationalization • Company-wide Procurement to Optimize Spend • Pricing Tools • New Technology and Marketing Develo
Slide 8: Recent New Product Successes
Recent New Product Successes • LED Phosphors • Gesture Control • Rolled ToughMet® Bearings • Bulk Metallic Glass • Aluminum Metal Matrix Composites • Dovetail Connectors • Wafer Level Processing 8
Slide 9: Broadening our Reach Through Acquisitions and Materials Innovation
Broadening our Reach Through Acquisitions and Materials Innovation 2002 Today 9 Beryllium and Alloys Key Markets: Automotive Electronics Defense and Science Telecom & Infrastructure Semiconductor Appliance Key Markets: Automotive Electronics Defense and Science Telecom & Infrastructure Semiconductor
Slide 10: Successful Repositioning – Snapshot
Successful Repositioning – Snapshot 10 2002 2013 Revenue $0.4B $1.2B Debt-to-Debt-Plus-Equity 43% 12% Working capital* % of sales 41% 31% Cyclicality High Lower Growth GDP >GDP * A/R, Inventory & A/P
Slide 11: High Operating Margins
High Operating Margins GAAP Margin Value-added(1) Margin Gross Profit 16% - 18% 35% - 40% Operating Profit 3% - 5% 9% - 12% 11 Removing High Value Metals Clarifies Margins (1) Normal margin range excluding non-recurring items and pass-through metals
Slide 12: Ensure Financial Discipline
Ensure Financial Discipline 12 Maintain strong balance sheet Debt-to-Debt-Plus-Equity Maximum 30% Strong cash flow • Cash flow from operations averages approximately $50M for the past five years • Reduction in working capital* goal to <20% sales *AR, Inv & A/P Resources to finance organic growth and
Slide 13: Financial Goals
Financial Goals Next 3 - 5 Years Next 3 - 5 years Value-added revenue growth 6%/Year Margins (OP % VA) 12% - 14% Annual Free Cash Flow >$50M ROIC (pre-tax) >15% Working capital % sales <20% Debt-to-Debt-Plus-Equity <30% Acquisitions $50M - $100M Annually 13
Slide 14: Positioned to Deliver Long-term, Sustainable Growth
T H E S I S Positioned to Deliver Long-term, Sustainable Growth 14 A company with a strong platform… … Leveraging a high value-added business model… … Executing a focused growth plan Revenue Base Margins Capital Eff.
Slide 15: Why Invest in Materion Corporation?
I N S U M M A R Y Why Invest in Materion Corporation? 15 Positioning A leader in high-growth markets Performance Strong performance record Growth Executing three point strategy • Global player in strong secular growth markets • Sustainable long-term growth • Proven business model • Target, capture n
Slide 16: Appendix
Appendix
Slide 17: Target High Growth, Leading-edge Markets
Target High Growth, Leading-edge Markets A-1 Reportable Segments 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 a
Slide 18: Value-added Sales: Materion
Value-added Sales: Materion Consumer Electronics 27% Industrial Components & Commercial Aerospace 18% Automotive Electronics 11% Defense & Science 10% Medical 10% Energy 8% Telecom Infrastructure 6% Services 4% Appliance 2% Other 4% 2013 - $609.1M A-2 OP% of Value-added sales 4.4%
Slide 19: Value-added Sales: By Segment
Value-added Sales: By Segment Technical Materials 7% Advanced Material Technologies 44% Performance Alloys 39% Beryllium & Composites 10% 2013 - $609.1M A-3 OP% of Value-added sales 4.4%
Slide 20: Value-added Sales: Advanced Material Technologies
Value-added Sales: Advanced Material Technologies Consumer Electronics 38% Medical 20% Defense & Science 10% Services 10% Industrial Components & Commercial Aerospace 8% Energy 5% Telecommunications Infrastructure 4% Automotive Electronics 1% Other 4% 2013 - $270.0M A-4 OP% of Value-added Sales 1.7%
Slide 21: Value-added Sales: Performance Alloys
Value-added Sales: Performance Alloys Industrial Components & Commercial Aerospace 31% Consumer Electronics 20% Automotive Electronics 17% Energy 13% Telecommunications Infrastructure 10% Appliance 4% Defense & Science 1% Other 4% 2013 - $235.2M A-5 OP% of Value-added Sales 9.9%
Slide 22: Value-added Sales: Beryllium and Composites
Value-added Sales: Beryllium and Composites Defense & Science 51% Industrial Components & Commercial Aerospace 20% Telecommunications Infrastructure 8% Energy 1% Other 9% 2013 - $61.3M A-6 OP% of Value-added Sales (5.7%) Medical 11%
Slide 23: Value-added Sales: Technical Materials
Value-added Sales: Technical Materials Automotive Electronics 54% Consumer Electronics 30% Energy 10% Other 6% 2013 - $42.6M A-7 OP% of Value-added Sales 16.2%
Slide 24: Core Technologies
Core Technologies 1. High Purity Gold and Silver for Industrial Applications 2. Powder Science and Processing (Vacuum, Hot and Cold Isostatic Pressing, Press/Sinter) … Metal, Ceramic and Chemical 3. Full Metal Processing Technology (Melting, Casting, Rolling, Extrusion) 4. Selective Electroplating 5
Slide 25: Continuing to Execute Three-point Strategy
Continuing to Execute Three-point Strategy A-9 1 Grow and diversify revenue base 2 Expand margins 3 Improve fixed and working capital utilization Increasing Shareholder Value
Slide 26: Strategy #1: Growth
S T R A T E G Y # 1 : G R O W T H 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 accr
Slide 27: Strategy #2: Margins
S T R A T E G Y # 2 : M A R G I N S Expand Margins – Key Drivers A-11 1 Lean Sigma operating efficiency 2 Higher value- added products 3 Cost reductions Normalized Margin 9 - 12% Target Margin 12 - 14% (OP % VA) Excludes non-recurring items and pass-through metals
Slide 28: Strategy #3: Capital Efficiency
S T R A T E G Y # 3 : C A P I T A L E F F I C I E N C Y Improve Fixed and Working Capital Efficiency A-12 Lean Sigma • Cycle time reduction • Yield improvement • On-time shipments Each 5% reduction in working capital as a % of sales = $60M of cash Improve Working Capital Efficiency Working capital %
Slide 29: 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 A-13 0 100 200 300 400 500 600 700 0 100 200 300 400 500 600 Materion Sales Materion Sales Global Rig Count Aircraft Delivered +550% +90% +400% +80%
Slide 30: New Product and Technology Development – Advanced Material Technologies
New Product and Technology Development Advanced Material Technologies Materials and Services – Expanded Shield Kit Cleaning Services – Including New Technology to Improve Precious Metal Returns – Materials for High Brightness LEDs – Specialty Inorganic Compounds for Thin Film Solar Panels (solar, se
Slide 31: New Product and Technology Development – Advanced Material Technologies (cont.)
New Product and Technology Development Advanced Material Technologies (cont.) Coatings – Thin Film Vapor Deposited Electrodes for Medical Diagnostics – Precision Optical Thin Film Coatings (Specialty Filters) – Large Area Format Serving Astronomy, Space, Science – Multi-hyper – Spectral Array Filter
Slide 32: New Product and Technology Development – Performance Alloys and Others
New Product and Technology Development Performance Alloys – ToughMet® Alloy “Strip” for High Volume Bearing Applications – BrushForm 158 “Strip” for Cell Phone Camera Suspension Applications – ToughMet® Alloy “Wire” for Next Generation Cell Phone Camera Suspension Applications – ToughMet® Alloy “Bul
Slide 33: 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 Solutions for SAW • Refining / Recy
Slide 34: 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 Jumpseat Spring Safety Sl
Slide 35: Applications: Oil & Gas
Under Water Wellhead Equipment Directional Drilling Equipment Measuring While Drilling (MWD) Logging While Drilling (LWD) Mud Pulse Telemetry (MPT) Systems Drill Bits Structural Rig Components Wellhead Control Equipment Other Oil & Gas Applications: • Artificial Lift Equipment • Elemental Analysis •
Slide 36: Applications: Solar Technologies
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 solar cell architecture. N and
Slide 37: 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) External Glucose Analysis • S
Slide 38: 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-22
Slide 39: 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 Hybrid Vehicle Motor & Module Connectors W
Slide 40: 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
Slide 41: Value-added Sales - Reconciliation of Non-GAAP Measure
Value-added Sales - Reconciliation of Non-GAAP Measure A-25 (millions) 2013 2012 2011 Sales Advanced Material Technologies $744.3 $847.8 $1,051.8 Performance Alloys 292.2 292.5 335.3 Beryllium and Composites 61.3 60.0 60.6 Technical Materials 69.1 72.7 78.7 All Other - 0.1 0.3 Total $1,166.9 $1,273.
Slide 42: Non-GAAP Value-added Operating Profit Margins
Non-GAAP Value-added Operating Profit Margins A-26 (millions) 2013 2012 2011 Value-added Sales Advanced Material Technologies $270.0 $278.5 $278.0 Performance Alloys 235.2 231.6 257.8 Beryllium and Composites 61.3 60.6 60.6 Technical Materials 42.6 45.4 49.8 All Other - (0.5) 0.3 Total $609.1 $615.6