Materion Corporation · NYSE:MTRN
Materion — Investor Presentation (July 2011)
29 slides from Materion's investor presentation, Jul 13, 2011
Slide 1: Investor Presentation July 2011
Investor Presentation July 2011 Materion Corporation 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 Today: New Name, Same Impressive Performance
MATERION TODAY: New Name, Same Impressive Performance Sales growth (2005 – 2010) Operating profit growth (2005 – 2010) Repositioning of company 19% CAGR 30% CAGR Successful
Slide 4: Thesis: Positioned to Deliver Long-Term, Sustainable Growth
THESIS Positioned to Deliver Long-Term, Sustainable Growth A company with a strong platform…
Slide 5: The Repositioning of Materion
The Repositioning of Materion Prior to 2002 2002 – 2011 + Metals and mining focus Repositioning Sustained growth
Slide 6: Successful Repositioning – Snapshot
Successful Repositioning – Snapshot 2010 2002 Revenues Revenue % in Advanced Materials Sales per employee (thousands) Debt-to-Debt-Plus-Equity Working capital % of sales Cyclicality $373M 47% $200 43% 41% High $1.3B 75% $524 18% 25% Low
Slide 7: Operating Businesses are Well-Positioned and Growing
Operating Businesses are Well-Positioned and Growing Business End Markets (Examples) Products (Examples) Sales Growth (2002-2010) Advanced Materials • Wireless • LED • Optical • Medical • Alternative energy • PVD targets • Optical / medical coatings • Electronic packaging • Inorganic powders 453% 75
Slide 8: 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 Medical Devices Optics Telecom Infrastructure LED’s Alternative Energy LCD Space / Science Notebooks Cellular phones (smartphones), Tablet computers Heavy Equi
Slide 9: High Operating Margins
High Operating Margins Operating Profit % Operating Profit % of Value-Added (1) Integrated Metals 11 – 13% 14 – 16% Advanced Materials 5 – 7% 22 – 24% Company 5 – 7% 13 – 15% Removing High Value Metals Clarifies True Margins Note (1): Excludes high value metals from sales
Slide 10: A Global Platform
A Global Platform 28% Operations in US and 11 Countries Significant and Expanding International Sales “Direct” International Sales Customers in >50 countries Expect “direct” international sales to be 40 - 50% in 3-5 years
Slide 11: Leveraging a high value-added business model
THESIS Positioned to Deliver Long-Term, Sustainable Growth … Leveraging a high value-added business model…
Slide 12: High Value-Added Business Model
High Value-Added Business Model 1. Target high growth markets 2. Own fast growing niches 3. Expand with innovative products 4. Add synergistic acquisitions 5. Ensure financial discipline
Slide 13: Target High Growth, Leading-Edge Markets
Market Q1 2011 % of Value- Added Sales 2011 Trends Key Drivers 1. Target High Growth, Leading-Edge Markets Consumer Electronics 26% • Smartphone growth • Tablet computers & LEDs • Miniaturization Industrial Components & Commercial Aerospace 14% • New airplane builds & retrofits • Increasing air trav
Slide 14: Target High Growth, Leading-Edge Markets: Reportable Segments
1. 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: Own The Niche – Examples
2. Own The Niche – Examples • Only fully integrated producer of beryllium – one-of-a-kind business Leading position in niche • Unique copper-nickel material ToughMet – multiple advanced applications growing at over 30% annually • Optical coatings – highly sophisticated uses for defense and medical a
Slide 16: Continually Develop Innovative Products
3. Continually Develop Innovative Products • Customer-centric product development • Active research programs • New product areas include – LEDs – Medical – Commercial Optics – Disk drive arms – Solar – Batteries – Science – Commercial Aerospace
Slide 17: Synergistic Acquisitions – Strong Record
4. Synergistic Acquisitions – Strong Record Add complementary products / technology Expand market position Accretive in year 1 By 2010, added over $300M to sales and approximately 25% of company profit Acquisitions 2005-2010 – Impact OMC – shield kit cleaning TFT – thin film coatings CERAC – inorgan
Slide 18: Synergistic Acquisitions: Growing a Niche Business
4. Synergistic Acquisitions Barr (2009) Techni- Met (2008) Case Study of Growing a Niche Business – Optical Filters and Medical Coatings (Revenues) Today (2010) • Revenues of $91M • 78% CAGR • Positioned in $1.2B+ market growing at 11% annually $9M $82M Barr (2009) Techni- Met (2008) TFT - Acquisiti
Slide 19: Ensure Financial Discipline
5. Ensure Financial Discipline Maintain strong balance sheet Debt-to-Debt-Plus-Equity Strong cash flow • Cash flow from operations $30M - $75M annually • Capex below depreciation • Reduction in working capital goal to <20% sales Resources to finance acquisitions of $50M to $100M annually After $175M
Slide 20: Executing a focused growth plan
THESIS Positioned to Deliver Long-Term, Sustainable Growth … Executing a focused growth plan
Slide 21: Financial Goals Next 3-5 Years
Financial Goals Next 3-5 Years 2010 Next 3-5 years Revenue growth – organic 35% >10% Acquisitions $21M $50 - $100M per year Margins (OP % VA) 14% 14% - 18% Working capital % sales 25% <20% Debt to Debt-Plus-Equity 18% <30% ROIC (pre-tax) 17% >20%
Slide 22: 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 23: Strategy #1: Growth – Expand and Diversify Revenue Base
STRATEGY #1: GROWTH Expand and Diversify Revenue Base • Targeting expansion in 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 – Technology – Glo
Slide 24: Strategy in Action: Outgrowing Growth Markets
STRATEGY #1: GROWTH Strategy in Action: Outgrowing Growth Markets Growth of Materion Oil and Gas Sales vs. Market Growth of Materion Aerospace Sales vs. Market 1.00 2.00 3.00 4.00 5.00 6.00 Index numbers 2002 = 1.00 Materion sales Rig count 12-F 14-F +450% +80% 1.00 2.00 3.00 4.00 Index numbers 2002
Slide 25: Strategy #2: Margins – Expand Margins Key Drivers
STRATEGY #2: MARGINS Expand Margins – Key Drivers 1 2 3 Lean Sigma operating efficiency Higher value added products Cost reductions Margin Today 12 - 14% Target Margin 14 - 18% (OP % VA)
Slide 26: Strategy #3: Improve Fixed and Working Capital Efficiency
STRATEGY #3: CAPITAL EFFICIENCY Improve Fixed and Working Capital Efficiency Based on 2011 projected sales, each 5% of working capital efficiency = $43M of cash Lean Sigma • Cycle time reduction • Yield improvement • On-time shipments Improve Working Capital Efficiency Working capital % of sales Tar
Slide 27: 2011 Outlook and Guidance
2011 Outlook and Guidance Revenues ($B) EPS ($) $1.55B $2.35 - $2.60 $1.3B 2011(F) $2.25 2011(F)
Slide 28: In Summary: Why Invest in Materion Corporation
IN SUMMARY Why Invest in Materion Corporation Positioning Performance Growth Niche 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, expand, then own n
Slide 29: Materion Corporation
Investor Presentation July 2011 Materion Corporation