Slide 1: Materion
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
M A T E R I O N T O D A Y : 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 4: Thesis: Positioned to Deliver Long-Term, Sustainable Growth
T H E S I S Positioned to Deliver Long-Term, Sustainable Growth
Slide 5: Materion
rm MATERION
Slide 6: The Repositioning of Materion
The Repositioning of Materion Prior to 2002 2002 – 2011 + Metals and mining focus Repositioning Sustained growth
Slide 7: Successful Repositioning – Snapshot 2002 2011
Successful Repositioning – Snapshot 2002 2011 Revenues $373M $1.5B Revenue % in Advanced Materials 47% 76% Sales per employee (thousands) $200 $506 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: Operating Businesses are Well-Positioned and Growing
Operating Businesses are Well-Positioned and Growing Business End Markets (Examples) Products (Examples) Advanced Materials • Wireless • LED • Optical Coatings • Medical • Alternative Energy • Defense & Science • PVD Targets • Optical / Medical Coatings • Electronic Packaging • Inorganic Powders 76%
Slide 9: 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 10: Thesis: Positioned to Deliver Long-Term, Sustainable Growth
T H E S I S Positioned to Deliver Long-Term, Sustainable Growth
Slide 11: 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 12: Identify High Growth Secular Markets
1. Identify High Growth Secular Markets Market Q1 2012 % of Value- added Sales 2012 Trends Key Drivers Consumer Electronics 21% • Smartphone growth • Tablet computers & LEDs • Miniaturization Industrial Components & Commercial Aerospace 20% • New airplane builds & retrofits • Increasing air travel •
Slide 13: 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 Disk Drives Optics Telecom Infrastructure LED’s Alternative Energy LCD Space / Science Notebooks Cellular phones (smartphones), Tablet computer
Slide 14: Materion
rm MATERION
Slide 15: A Global Platform
A Global Platform 38% Operations in US and 11 Countries Significant International Sales* Q1 2012 • Customers in >50 countries • Expanded presence in Asia *Percentage of value added sales
Slide 16: 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 17: Value Added Sales: Materion
Value Added Sales: Materion Q1 2012
Slide 18: 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 19: Continually Develop Innovative Products
3. Continually Develop Innovative Products • Customer-centric product development • Active research programs • New product areas include – LEDs – Medical – Commercial Optics – Computer Hard Drives – Alternative Energy – Science – Commercial Aerospace – Hybrid & Electric Vehicles – Wireless
Slide 20: 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 – Compliment to Thin Film Materials & Coating businesses – Nanotechnology Materials
Slide 21: 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 22: 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 Beryllium and Composites – Nearer net shape fabrication (hot isostatic pressing) – Truextent™ speaker diaphra
Slide 23: A Strong Record of Synergistic Acquisitions
4. A Strong Record of Synergistic Acquisitions Add complementary products / technology Expand market position Accretive in year 1 Added over $440M to sales and approximately 30% of company profit in 2011 Acquisitions 2005-2012 – Impact OMC – shield kit cleaning TFT – thin film coatings CERAC – inorg
Slide 24: Synergistic Acquisitions: Growing a Niche Business
Synergistic Acquisitions Barr (2009) Techni- Met (2008) TFT EIS Optics (2011) 2012 (F) 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, energ
Slide 25: Ensure Financial Discipline
5. Ensure Financial Discipline Resources to finance organic growth and acquisitions while returning cash to shareholders
Slide 26: Thesis: Positioned to Deliver Long-Term, Sustainable Growth
T H E S I S Positioned to Deliver Long-Term, Sustainable Growth
Slide 27: 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 28: 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 29: Materion
rm MATERION
Slide 30: Expand Margins – Key Drivers
S T R A T E G Y # 2 : M A R G I N S Expand Margins – Key Drivers 1 2 3 Lean Sigma operating efficiency Higher value added products Cost reductions Margin Today 10 - 12% Target Margin 14 - 18% (OP % VA)
Slide 31: Improve Fixed and Working 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 Based on 2012 projected sales, each 5% of working capital efficiency = $50M of cash Lean Sigma • Cycle time reduction • Yield improvement • On-time shipments Improve Working Capital Efficiency Workin
Slide 32: 2012 Outlook and Guidance
2012 Outlook and Guidance Revenues (Billions) EPS $1.5-$1.6 $1.95-$2.10
Slide 33: In Summary: Why Invest in Materion Corporation
I N S U M M A R Y 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,
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Slide 35: Value Added Sales: By Segment
Value Added Sales: By Segment A-1 Q1 2012
Slide 36: Value-Added Sales: Advanced Material Technologies
Value-Added Sales: Advanced Material Technologies A-2
Slide 37: Value-Added Sales: Performance Alloys
Value-Added Sales: Performance Alloys A-3 Q1 2012
Slide 38: Value-Added Sales: Beryllium and Composites
Value-Added Sales: Beryllium and Composites A-4
Slide 39: Value-Added Sales: Technical Materials
Value-Added Sales: Technical Materials A-5
Slide 40: 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 41: 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 42: 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 43: 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 44: 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 45: 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-11
Slide 46: 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 47: 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