Materion Corporation · NYSE:MTRN
Materion — Investor Presentation (March 2021)
33 slides from Materion's investor presentation, Mar 2, 2021
Slide 1: Investor Presentation March 2021
INVESTOR PRESENTATION March 2021 Exhibit 99.1
Slide 2: Forward-looking statements
These slides contain (and the accompanying oral discussion will contain, where applicable) “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 cause our a
Slide 3: Q4 and YE 2020 Highlights
► Delivered sales and earnings growth for the third consecutive quarter amid the ongoing COVID-19 pandemic ► Completed first full quarter of shipments for the new precision clad engineered strip project; project remains on schedule ► Continued Optics Balzers integration, creating a world leader in p
Slide 4: Company Overview
Value-added SalesCompany Overview Materion Company Profile 4 • Materion is an integrated producer of high- performance advanced engineered materials - Leading market position for specialty products across multiple end markets - Strong positions in growing markets with high barriers to entry - Only g
Slide 5: Key Facts and Materion Share Performance
Key Facts Share Statistics as of 2/19/2021 2020 Financial Information Research coverage: KeyBanc and Stonegate Adjusted EPS1 $2.03 Adjusted EBITDA1 $100M Debt-to-capitalization 6% Revenues $1,176M Value-added sales1 $679M Trading Symbol MTRN Stock Price $66.81 Shares O/S, Diluted 20.6M 52 wk Range $
Slide 6: Performance Alloys and Composites (PAC)
50% 30% 18% 2% Performance Alloys and Composites (PAC) 41% 15% 15% 12% 10% 7% Clad Strip ToughMet CuBe Be - Alloys Be – High Purity Europe United States Rest of World Asia 24% 19% 14% 13% 11% 5% 1% 13% 332.0 363.5 425.5 428.1 345.3 0% 4% 8% 12% 16% 20% $0 $100 $200 $300 $400 $500 2016 2017 2018 2019
Slide 7: Engineered Clad Strip Project
► Full alignment with organic growth strategy ► Technical collaboration on next-generation product with customer ► Demand for product exists today ► Non-beryllium containing product ► Completed first full quarter of shipments ► Shipments from an existing facility; will shift production to a new lead
Slide 8: Advanced Materials
67% 13% 10% 3% 1% 6% Semiconductor Other 61% 26% 12% 1% 176.3 228.0 223.7 224.3 234.0 0% 5% 10% 15% 20% 25% $0 $50 $100 $150 $200 $250 2016 2017 2018 2019 2020 Advanced Materials 58% 14% 14% 14% Services Packaging Targets Chemicals Europe United States Asia Product Mix2Geographic Mix2Value-added Sal
Slide 9: Precision Optics
Precision Optics 77% 12% 11% Projection Display Components Optical Filters & Arrays 31% 34% 32% 3% Europe United States Asia 21% 19% 18% 3% 1% 38% Product Mix2Geographic Mix2Value-added Sales by Market2 Growth DriversValue-added Sales E B IT 1 % o f V A S a le s V A S a le s1 ($ m il li o n s) 2 Ref
Slide 10: Optics Balzers is a Global Leader in Optical Thin Film Coating Solutions
Optics Balzers is a Global Leader in Optical Thin Film Coating Solutions 10 Company Overview Summary Financials (TTM 3/31/20) ► Leading optical thin film coating solutions provider ► Broad, highly differentiated product portfolio ► Pioneer in optical coating manufacturing technologies ► Serves diver
Slide 11: Profitable Growth Strategy
PROFITABLE GLOBAL GROWTH A ONE MATERION PERFORMANCE-BASED CULTURE COMMERCIAL EXCELLENCE OPERATIONAL EXCELLENCE INNOVATION ACQUISITIONS DIGITAL Profitable Growth Strategy 11Deliver sustained double-digit EPS growth
Slide 12: Global Megatrends Play to Our Strengths
Global Megatrends Play to Our Strengths 12 Key Trends • Miniaturization of electronics/IoT • Additional electronic instruments for autos, aircraft • Expanding high performance optical device opportunities • Innovation in medical diagnostics and sensors • Extraction of oil and gas from previously ina
Slide 13: Well-diversified Market Penetration
Market 2020 % of VA Sales1 Key Drivers Semiconductor 24% • Smart device growth • Non-volatile memory • Big data (data storage) Industrial 18% • Heavy equipment builds • Plastic tooling • Fire protection (R and C construction) Aerospace and Defense 13% • Structural and electronic components for satel
Slide 14: Innovation Leading to Organic Growth
14% 16% 16% 15% 11%* 2016 2017 2018 2019 2020 Innovation Leading to Organic Growth 14 New Product VA Sales1 as % of Total Example New Product Offerings SupremEX® MMCs • Ultrafine silicon-carbide reinforcement with aerospace aluminum alloys • Provides light weight properties with high strength and st
Slide 15: Cash Flow and Dividends
$68.2 $67.8 $76.4 $99.2 $101.1 $0 $20 $40 $60 $80 $100 $120 2016 2017 2018 2019 2020 Cash Flow from Operations ($ in millions) Free Cash Flow Capital Expenditures Cash Flow and Dividends 15 1 Free Cash Flow calculated as cash flow from operations less capital expenditures. 2 Capital Expenditures inc
Slide 16: Disciplined Capital Deployment Going Forward
Disciplined Capital Deployment Going Forward 16 Return Cash to Shareholders • Dividends – increased 8 consecutive years • Share repurchases Organic Growth • Invest in new products • Invest in facilities and productivity projects Inorganic Growth • Complimentary products/technologies • Maintain finan
Slide 17: Materion Investment Thesis
► Differentiated product portfolio aligned with global megatrends to accelerate future growth ► Clearly defined One Materion multi-pillar strategy ► Focused on executing significant key initiatives ► Engineered clad strip project ► Optics Balzers acquisition Materion Investment Thesis 17
Slide 18: 2021 Forecasted Financial Guidance
► Q1 guidance ► Adjusted EPS of $0.58 – $0.62 ► Full-year guidance ► Capex approximately ~ $100M ► Depreciation and amortization expense ~ $50M ► Effective tax rate excluding special items 17% – 19% 2021 Forecasted Financial Guidance 18Note: This guidance was provided on February 18, 2021 and has no
Slide 19: Appendix
Appendix
Slide 20: Materion Key Financial Trends
Materion Key Financial Trends TTM Earnings Before Interest and Taxes (EBIT)1TTM Value-added1 (VA) Sales 1 Non-GAAP, excludes pass-through metal costs and special items. Refer to A-9 and A-10 for additional detail. 2 ROIC is calculated as TTM adjusted EBIT divided by total net debt plus equity. Refer
Slide 21: World's Only Vertically Integrated Beryllium Producer
World’s Only Vertically Integrated Beryllium Producer Ore Chemical Plant Hydroxide Whiting Arc Furnace Pebble Plant CuBe Master VCB1 / Be Powder CuBe Alloy Products High-Purity Be Products Strip/Bulk Manufacturing Be Manufacturing A-3 • Leading position in Beryllium market - Minimum of 75 years of p
Slide 22: Optics Balzers Transaction Overview
Optics Balzers Transaction Overview Synergies Transaction Value Financing ▪ $160 million enterprise value ▪ Represents 12x TTM EBITDA1, 8x including synergies ▪ Expected to be accretive to EBITDA margin, growth, and earnings ▪ Synergies from global procurement actions and gross margin management ▪ E
Slide 23: Optics Balzers Expands Portfolio to Serve Attractive Markets
Optics Balzers Expands Portfolio to Serve Attractive Markets with Exposure to Key Megatrends End Market Illustrative Applications ► Fluorescence microscopy ► Opthalmologic surgery ► BNA Microarrays (Biochips) ► Wafer level optics ► Digital photography ► Projection-displays ► Laser scanning ► Marking
Slide 24: Combination Creates an Industry Leading Portfolio in Precision Optics
Combination Creates an Industry Leading Portfolio in Precision Optics North America 38% EMEA 35% Asia 27% Globally Balanced Revenue Improved End Market Diversification UV Visible Light Near Infrared Mid-Wave Infrared Long-Wave Infrared Delivering Full Coverage Across the Electromagnetic Spectrum ▪ B
Slide 25: Highly Complementary Platforms Drive Multiple Synergy Opportunities
Highly Complementary Platforms Drive Multiple Synergy Opportunities Leverage Materion’s portfolio to drive growth in Europe and Asia Elevate technology platform to accelerate innovation Optimize Malaysian operation and expand Materion activity in Asia Leverage Optics Balzers’ portfolio to drive grow
Slide 26: Financial Information
Financial Information Note: The effects of the change in accounting principle from LIFO to FIFO were not retrospectively applied to 2016 and 2017
Slide 27: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales A-9 $ in millions Value-added sales is a non-GAAP financial measure that removes the impact of pass-through metal costs and allows for analysis without the distortion of the movement or volatility in metal prices. Internally, we manage our business on this basis,
Slide 28: Reconciliation for Adjusted EPS
Reconciliation for Adjusted EPS A-10 $ in millions, except per share amounts As detailed in the above reconciliation, we have adjusted the results for certain special items such as non-cash impairment charges, COVID-19 related costs, non-cash pension charges, cost reduction initiatives, mine develop
Slide 29: Reconciliation for Adjusted EBIT and EBITDA
2020 2019 2018 2017 2016 Operating Profit 8.2$ 70.5$ 61.8$ 40.1$ 27.1$ Operating Profit Special Items 43.3 15.4 4.5 7.4 7.9 Adjusted Operating Profit 51.5$ 85.9$ 66.3$ 47.5$ 35.0$ Non-Operating (Income) Expense (3.9) 3.4 42.7 1.5 - Non-Operating (Income) Expense Special Items - 3.3 40.5 - - Adjusted
Slide 30: Other Non-GAAP Items
Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 TTM Adjusted EBIT 55.4$ 53.4$ 61.6$ 74.1$ 85.8$ 87.0$ 82.6$ 72.1$ 64.1$ Total Shareholders' Equity 655.6$ 644.2$ 638.4$ 630.8$ 645.7$ 633.3$ 629.2$ 599.4$ 586.2$ Total Net Debt (Cash) 12.6 10.9 (113.3) (105.6) (122.8) (92.2) (72
Slide 31: Segment Sales and Value-added Sales
2016 2017 2018 Q1 Q2 Q3 Q4 2019 Q1 Q2 Q3 Q4 2020 Sales PAC 387.5$ 429.5$ 500.6$ 127.1$ 135.2$ 130.7$ 107.2$ 500.2$ 99.1$ 101.6$ 91.2$ 102.3$ 394.2$ AM 437.2 590.8 586.6 144.0 133.2 147.7 148.8 573.8 160.1 150.1 165.6 195.0 670.9 PO 144.5 119.2 120.6 30.3 29.4 27.6 24.2 111.4 18.7 19.8 30.4 42.4 111.
Slide 32: Operating Profit by Segment
2016 2017 2018 Q1 Q2 Q3 Q4 2019 Q1 Q2 Q3 Q4 2020 Operating Profit PAC 6.6$ 22.0$ 60.0$ 19.8$ 21.0$ 20.0$ 13.0$ 73.8$ 3.5$ 6.8$ (0.4)$ 3.7$ 13.6$ AM 26.3 32.8 16.7 6.5 6.9 6.3 5.4 25.1 5.0 4.7 5.7 6.7 22.1 PO 11.6 8.4 10.7 2.1 3.9 (11.1) 1.6 (3.5) (9.6) 2.1 1.4 1.7 (4.4) Other (17.4) (23.1) (25.6) (6
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