Slide 1: Q1 2021 Earnings Investor Presentation
Q1 2021 Earnings Investor Presentation April 29, 2021
Slide 2: Agenda
Agenda Introduction Andrew Vento – Manager, Investor Relations and Corporate Development Opening Remarks & Jugal Vijayvargiya – President and Chief Executive Officer Business Update Financial Review Shelly Chadwick – Vice President and Chief Financial Officer Q&A Question and Answer Session
Slide 3: Forward Looking Statements and Non-GAAP Financial Information
Forward Looking Statements and Non-GAAP Financial Information These slides contain (and the accompanying oral discussion will contain, where applicable) “forward-looking statement” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown
Slide 4: Opening Remarks & Business Update
Opening Remarks & Business Update Jugal Vijayvargiya President and Chief Executive Officer
Slide 5: Q1 2021 Financial Highlights
Q1 2021 Financial Highlights • Record for quarterly value-added (VA) sales of $199 million, up 29% year-over-year ▪ Fourth straight quarter of sequential top line growth ▪ All-time high VA sales in Advanced Materials segment ▪ Strong demand in several key end markets including semiconductor, automot
Slide 6: Key Strategic Initiatives
Key Strategic Initiatives • Precision clad engineered strip project remains on schedule ▪ Construction of new leading-edge manufacturing facility remains on track ▪ Received $65M in prepayments for the project to date ▪ Shipping product today from existing facility • Optics Balzers integration nearl
Slide 7: Materion Enables Next Gen Applications
Materion Enables Next Gen Applications Materion Wins Contract For Optical Lens Components Materion Marks 50 Years Supporting Space Observation, In NextGen Luxury Automobile 3D Cockpits Exploration and Aerospace Missions With Advanced Technology Enabling Solutions Materion’s Breakthrough Aluminum Sca
Slide 8: Q1 2021 End Market Performance
Q1 2021 End Market Performance Q1 2021 vs. Q1 Full Year Market % Comments VA Sales 2020 Outlook • Overall demand remains very strong, monitoring chip shortage dynamics Semiconductor $43.9 22% 27% • Secular growth drivers such as 5G, AI and big data, combined with digital infrastructure build-out, dr
Slide 9: Key Takeaways
Key Takeaways • Delivered a very strong first quarter ▪ Record for value-added sales in a quarter for Materion and Advanced Materials segment ▪ Fourth consecutive quarter of sequential sales and profit growth ▪ Market demand continued to improve; sequential and YOY improvement in majority of key end
Slide 10: Financial Review
Financial Review Shelly Chadwick Vice President and Chief Financial Officer
Slide 11: Q1 2021 Operating Performance
Q1 2021 Operating Performance Value-added Sales ($M) Adj. EBIT ($M) Adj. EPS $0.82 $21.4 $198.6 $154.0 $0.39 $9.9 10.8% 6.5% Q1 2020 Q1 2021 Q1 2020 Q1 2021 Q1 2020 Q1 2021 • Value-added sales were $198.6 million, • Adjusted EBIT margin of 10.8%, up 430 • Adjusted EPS of $0.82 versus $0.39 in up 29%
Slide 12: Q1 2021 Financial Comparison
Q1 2021 Financial Comparison 10.8% 6.5% • Adjusted EBIT of $21.4 million or 10.8% of VA sales compared with $9.9M or 6.5% of VA sales in the prior year period ▪ Significant increase in adjusted EBIT driven by strong volumes, favorable price/mix and improved operating performance ▪ SG&A reflects incr
Slide 13: Performance Alloys and Composites Segment
Performance Alloys and Composites Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $100.8 million, up 20% from $100.8 prior year $13.4 ▪ Strong performance in the industrial, automotive, aerospace and defense end markets $83.7 ▪ Early sales of Precision Clad Engineered Strip $6.9
Slide 14: Advanced Materials Segment
Advanced Materials Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $63.0 million, up 16% from $63.0 prior year $8.9 ▪ All-time record for quarterly VA $54.5 ▪ Higher sales to the semiconductor end market led by $5.1 commercial initiatives and increased demand 14.3% ▪ Strong grow
Slide 15: Precision Optics Segment
Precision Optics Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $35.6 million, up 109% from prior year $35.6 $5.1 ▪ Increase in every key end market; impacted by acquisition of Optics Balzers 14.2% $17.0 • Adjusted EBIT of $5.1 million, or 14.2% of VA sales, $1.2 up 720 bps fro
Slide 16: Cash, Debt and Liquidity
Cash, Debt and Liquidity Q1 Q1 • Net debt position of $34M and approximately $250 ($M) 2021 2020 million available on existing credit facility Short-term Debt $ 1.5 $ 0.9 ▪ Continue to have significant available liquidity to support meaningful organic and inorganic growth opportunities Long-term Deb
Slide 17: Q2 and Full Year 2021 Guidance
Q2 and Full Year 2021 Guidance • Q2 Guidance Q2 2021 Adj. EPS Guidance ▪ Adjusted EPS of $0.72 to $0.76, a year-on-year One-time defense order $0.82 $0.72 - $0.76 increase of 68% at the midpoint timing • FY 2021 Guidance $0.44 ▪ Adjusted EPS of $3.00 to $3.30, a year-on-year increase of over 55% at
Slide 18: Appendix
Appendix
Slide 19: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales ($ in millions) Q1 2021 Q1 2020 Net Sales Performance Alloys and Composites $ 114.1 $ 99.1 Advanced Materials 204.7 160.1 Precision Optics 35.6 18.7 Other - - Total $ 354.4 $ 277.9 Less: Pass-through Metal Costs Performance Alloys and Composites $ 13.3 $ 15.4 Adv
Slide 20: Reconciliation for Non-GAAP Measures
Reconciliation for Non-GAAP Measures ($ in millions) Q1 2021 Q1 2020 Operating Profit (Loss) Performance Alloys and Composites $ 13.5 $ 3.5 Advanced Materials 8.9 5.0 Precision Optics 4.6 (9.6) Other (7.3) (4.5) Total $ 19.7 $ (5.6) Special Items Performance Alloys and Composites $ — $ 3.6 Advanced
Slide 21: Reconciliation for Non-GAAP Measures Cont.
Reconciliation for Non-GAAP Measures Cont. ($ in millions) Q1 2021 Q1 2020 GAAP as Reported Operating profit (loss) $ 19.7 $ (5.6) Non-operating (income) expense $ (1.3) $ (0.9) Net Income (loss) $ 16.8 $ (3.9) Shares outstanding-Diluted 20,628 20,384 EPS-Diluted $ 0.81 $ (0.19) Operating Profit Spe
Slide 22: Reconciliation for Non-GAAP Measures Cont.
Reconciliation for Non-GAAP Measures Cont. ($ in millions) Q1 2021 TTM Q1 2020 TTM GAAP as Reported Net income $ 36.2 $ 32.3 Income tax (benefit) expense (2.6) 7.3 Interest expense 4.4 1.3 Depreciation, depletion, and amortization 36.7 46.3 Consolidated EBITDA $ 74.7 $ 87.2 Total Special Items $ 29.
Slide 23: Precious Metals Included in Pass-through Metal Costs
Precious Metals Included in Pass-through Metal Costs ($ in millions) ($ in millions) 2020 Total Company 2020 Advanced Materials Segment Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Selected Items Selected Items Net Sales $ 277.9 $ 271.5 $ 287.2 $ 339.7 $ 1,176.3 Net Sales $ 160.1 $ 150.1 $ 165.6 $ 195.1 $ 670.9 Pa