Materion Corporation · NYSE:MTRN
Materion — Investor Presentation (October 2013)
42 slides from Materion's investor presentation, Oct 30, 2013
Slide 1: October 2013 Materion Corporation – Investor Presentation
October 2013 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) – An Advanced Materials Company
Materion (MTRN) • An Advanced Materials Company • Strong Global Positions in Attractive and Growing Markets • Solid Record of Long-term Growth • Strong Value-added1 Margins • Market Cap: $673 Million 9/27/13 • Shares Outstanding: 20.9 million • Annual EPS: $1.40 - $1.45 (Forecast 2013)2 • Strong Bal
Slide 4: Identify High Growth Secular Markets
Identify High Growth Secular Markets 4 Market Q3 2013 % of Value- added Sales Macro Trends Key Drivers Consumer Electronics 28% • Smartphone growth • Tablet computers & LEDs • Miniaturization Industrial Components & Commercial Aerospace 17% • New airplane builds & retrofits • Increasing air travel •
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: Broadening our Reach Through Acquisitions and Materials Innovation
Broadening our Reach Through Acquisitions and Materials Innovation 2002 Today 6 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 7: High Operating Margins
High Operating Margins GAAP Margin Value-added(1) Margin Gross Profit 16% - 18% 35% - 40% Operating Profit 3% - 5% 9% - 12% 7 Removing High Value Metals Clarifies Margins (1) Normal margin range excluding non-recurring items and pass-through metals
Slide 8: Successful Repositioning – Snapshot
Successful Repositioning – Snapshot 8 2002 2012 Revenue $0.4B $1.3B Debt-to-Debt-Plus-Equity 43% 19% Working capital* % of sales 41% 29% Cyclicality High Lower Growth Low Higher * A/R, Inventory & A/P
Slide 9: High Value-added Business Model
High Value-added Business Model 9 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: A Global Platform
A Global Platform Operations in US and 10 Countries Significant and Expanding International Sales Q3 2013 10 • Customers in >50 countries • Expanded presence in Asia “Direct” International Sales 29%
Slide 11: Continually Develop Innovative Products
Continually Develop Innovative Products • Leveraging customer-centric product development • Active development programs to take advantage of secular trends • Key product areas of focus include – LEDs – Wireless – Medical – Commercial Aerospace – Energy – Commercial Optics – Hybrid & Electric Vehicle
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 $30M - $75M annually for the past five years • Reduction in working capital* goal to <20% sales *AR, Inv & A/P Resources to finance organic growth and acquis
Slide 13: Financial Goals
Financial Goals Next 3 - 5 Years Next 3 - 5 years Value-added revenue growth >6% Margins (OP % VA) 12% - 16% Acquisitions $50M - $100M Annually Working capital % sales <20% Debt-to-Debt-Plus-Equity <30% ROIC (pre-tax) >18% 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 28% Industrial Components & Commercial Aerospace 17% Automotive Electronics 11% Medical 11% Defense & Science 10% Energy 8% Telecom Infrastructure 6% Services 4% Appliance 1% Other 4% Q3 2013 - $148.8M A-2 OP% of Value-added sales 4.0%
Slide 19: Value-added Sales: By Segment
Value-added Sales: By Segment Technical Materials 6% Advanced Material Technologies 46% Performance Alloys 39% Beryllium & Composites 9% Q3 2013 - $148.8M A-3
Slide 20: Value-added Sales: Advanced Material Technologies
Value-added Sales: Advanced Material Technologies Consumer Electronics 38% Medical 22% Defense & Science 10% Services 9% Industrial Components & Commercial Aerospace 8% Energy 5% Telecommunications Infrastructure 3% Automotive Electronics 1% Other 4% Q3 2013 - $68.4M A-4 OP% of Value-added Sales 7.0
Slide 21: Value-added Sales: Performance Alloys
Value-added Sales: Performance Alloys Industrial Components & Commercial Aerospace 30% Consumer Electronics 22% Automotive Electronics 18% Energy 13% Telecommunications Infrastructure 9% Appliance 4% Defense & Science 1% Other 3% Q3 2013 - $57.4M A-5 OP% of Value-added Sales 7.9%
Slide 22: Value-added Sales: Beryllium and Composites
Value-added Sales: Beryllium and Composites Defense & Science 53% Industrial Components & Commercial Aerospace 19% Medical 8% Energy 1% Other 11% Q3 2013 - $13.7 A-6 OP% of Value-added Sales (24.2%) Telecommunications Infrastructure 8%
Slide 23: Value-added Sales: Technical Materials
Value-added Sales: Technical Materials Automotive Electronics 63% Consumer Electronics 24% Energy 6% Other 7% Q3 2013 - $9.3M A-7 OP% of Value-added Sales 15.3%
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: Growth – Expand and Diversify Revenue Base
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: Margins – Expand Margins Key Drivers
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 - 16% (OP % VA) Excludes non-recurring items and pass-through metals
Slide 28: Strategy: 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 = $65M 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% +86% +520% +86%
Slide 30: New Product and Technology Development
New Product and Technology Development Advanced Material Technologies – Expanded Refining/Chamber Services – Complement to Thin Film Materials & Coating Businesses – Nanotechnology Materials – Materials for High Brightness LEDs – Specialty Inorganic Compounds (solar, security) – Global Refining and
Slide 31: New Product and Technology Development (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
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 Ratios
Value-added Sales Ratios A-25 Materion Corporation Value-Added Sales Ratios Third Quarter 2013 Third Third Second First Nine First Nine Quarter 2013 Quarter 2012 Quarter 2013 Months of 2013 Months of 2012 Gross Margin as a Percent of Value-Added Sales Advanced Material Technologies 37.3% 41.1% 36.3%
Slide 42: Value-added Sales - Reconciliation of Non-GAAP Measure
Value-added Sales - Reconciliation of Non-GAAP Measure A-26 Materion Corporation Value-Added Sales - Reconciliation of Non-GAAP Measure Third Quarter 2013 Dollars in Millions Third Third Second First Nine First Nine Quarter 2013 Quarter 2012 Quarter 2013 Months of 2013 Months of 2012 Sales Advanced