Materion Corporation · NYSE:MTRN
Materion — Shareholder Meeting (May 2011)
38 slides from Materion's shareholder meeting presentation, May 4, 2011
Slide 1: Annual Meeting of Shareholders May 4, 2011
Annual Meeting of Shareholders May 4, 2011 Exhibit 99.2
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 Corporation
Materion Corporation
Slide 4: 2010 opened in a markedly different environment than 2009
3 2010 opened in a markedly different environment than 2009 Armed with a variety of actions taken, we expected to be solidly profitable Healthy, broad-based end market demand began improving Consumer markets improved first, followed by automotive and telecom infrastructure Industrial, commercial aer
Slide 5: We were in a strong position to leverage end market growth
4 We were in a strong position to leverage end market growth Scale larger Markets more diverse Growth opportunities greater Our operating structure was leaner and more efficient We had just completed two acquisitions Our balance sheet was strong Our margins were expanding
Slide 6: Our first time to cross $1.0 billion in revenues
5 Our first time to cross $1.0 billion in revenues Sales climbed 82% to $1.3 billion Acquisitions added $233 million Metal price pass through was $103 million Sales growth net of metal was 68% Organic, excluding metal and acquisitions was 35%
Slide 7: Profitability improved notably
6 Profitability improved notably Net income ... $46.4 million EPS ... $2.25 a share An extraordinary turnaround from the 2009 losses
Slide 8: Margins expanding rapidly
7 Margins expanding rapidly, driven by .... Growth Scale of cost actions taken Higher value mix Broader, more diversified base Less cyclical segments
Slide 9: Value added margins improved significantly
8 Value added margins improved significantly Measured excluding high value metal Gross margin greater than 40% Operating margin in the mid teens
Slide 10: Strategy is also about faster cash to cash cycle
9 Strategy is also about faster cash to cash cycle, a disciplined attack to Drive down infrastructure costs Reduce reinvestment capital Lower working capital
Slide 11: The result is a strong balance sheet and extraordinary flexibility
10 The result is a strong balance sheet and extraordinary flexibility Invested $76 million in two acquisitions Invested $175 million over past 5 years Debt net of cash at $70 million Debt-to-debt-plus-equity at 18% A recognized strength
Slide 12: Materion stock performance
11 Materion stock performance 8th best in S&P 600 20th best S&P overall Outperformed the S&P and the Russell each of the past five years Since 2005, $100 equals $125 in the S&P 600 and Russell 2000. $100 equals $243 in Materion
Slide 13: The company reported strong first quarter results
12 The company reported strong first quarter results Record sales of $374.8 million, up 27% An increase of $79.7 million Strong demand Organic growth was 12% Six consecutive quarters of growth
Slide 14: The company reported stronger than expected first quarter results
13 The company reported stronger than expected first quarter results Net income was $.57 per share Compares to $.33 per share in 2010 Margins expanded Results included $.09 per share of costs
Slide 15: The company raised its outlook for the year
14 The company raised its outlook for the year due to Continuing improvement in order entry A growing backlog Improving margins Expect 2011 sales to exceed $1.5 billion and earnings to be in the $2.35-$2.60 per share range
Slide 16: Materion Corporation
m MATERION Materion Corporation
Slide 17: Thesis: Positioned to Deliver Long-term, Sustainable Growth
17 Thesis Positioned to Deliver Long-term, Sustainable Growth 17 A company with a strong platform... ... Leveraging a high value-added business model... ... Executing a focused growth plan 1 2 3
Slide 18: Materion Today: New Name, Same Impressive Performance
18 Materion Today New Name, Same Impressive Performance 18 19% CAGR Sales growth (2005 - 2010) 30% CAGR Operating profit growth (2005 - 2010) Successful Repositioning of company
Slide 19: Successful Repositioning - Snapshot
19 Successful Repositioning - Snapshot 19 2002 2010 Revenues $373M ? $1.3B Revenue % in Advanced Materials 47% ? 75% Sales per employee (thousands) $200 ? $524 Debt-to-Debt-Plus-Equity 43% ? 18% Working capital % of sales 41% ? 25% Cyclicality High ? Low
Slide 20: High Operating Margins
20 High Operating Margins 20 Removing High Value Metals Clarifies True Margins 2010 Note (1): Excludes high value metals from sales
Slide 21: Positioned in Diverse Set of High-growth Markets
21 Positioned in Diverse Set of High-growth Markets 21 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 co
Slide 22: The Power of Collaboration
22 The Power of Collaboration 22 Solar LED's Food & Toy Safety We increasingly collaborate on innovation, leveraging our combined capabilities
Slide 23: A Global Platform
23 A Global Platform 23 Operations in US and 11 Countries Significant and Expanding International Sales 2010 "Direct" International Sales Customers in >50 countries Expect "direct" international sales to be 50% in 3-5 years 28%
Slide 24: Thesis: Positioned to Deliver Long-term, Sustainable Growth
24 Thesis Positioned to Deliver Long-term, Sustainable Growth 24 ... Leveraging a high value-added business model... A company with a strong platform... ... Leveraging a high value-added business model... ... Executing a focused growth plan ... Leveraging a high value-added business model... 1 2 3
Slide 25: High Value-added Business Model
25 High Value-added Business Model 25 Target high growth markets Own fast growing niches Expand with innovative products Add synergistic acquisitions Ensure financial discipline
Slide 26: 1. Target High Growth, Leading-Edge Markets
26 1. Target High Growth, Leading-Edge Markets Market Q1 2011% of Value- Added Sales 2011 Trends Key Drivers Consumer Electronics 26% Smartphone growth Tablet computers & LEDs Miniaturization Industrial Components & Commercial Aerospace 14% New airplane builds & retrofits Increasing air travel Heavy
Slide 27: 2. Own The Niche - Examples
27 2. Own The Niche - Examples 27 Only fully integrated producer of beryllium one-of-a-kind business Unique copper-nickel material ToughMetTM multiple advanced applications growing at over 30% annually Optical coatings highly sophisticated uses for defense and medical applications u u u Leading posi
Slide 28: 3. Continually Develop Innovative Products
28 3. Continually Develop Innovative Products 28 Customer-centric product development Active research programs New product areas include LEDs Medical Commercial Optics Disk drive arms Solar Batteries Science Commercial Aerospace
Slide 29: 4. Synergistic Acquisitions - Strong Record
29 4. Synergistic Acquisitions - Strong Record 29 29 By 2010, added $300M to sales and 25% of company profit Acquisitions 2005-2010 - Impact
Slide 30: 5. Ensure Financial Discipline
30 5. Ensure Financial Discipline 30 Resources to finance acquisitions of $50M to $100M annually Maintain strong balance sheet Strong cash flow (CHART) Cash flow from operations $30M - $75M annually Capex below depreciation Reduction in working capital goal to <20% sales Debt-to-Debt-Plus-Equity Aft
Slide 31: Continuing to Execute Three Point Strategy
32 Continuing to Execute Three Point Strategy 32 1. Grow and diversify revenue base 2. Expand margins 3. Improve fixed and working capital utilization Increasing Shareholder Value
Slide 32: Strategy #1 Growth: Expand and Diversify Revenue Base
33 Strategy #1 Growth Expand and Diversify Revenue Base 33 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 Global rea
Slide 33: Strategy #2 Margins: Expand Margins - Key Drivers
34 Strategy #2 Margins Expand Margins - Key Drivers 34 1 Lean Sigma operating efficiency 2 Higher value added products 3 Cost reductions Margin Today 14% Target Margin 14-18% (OP % VA)
Slide 34: Strategy #3 Capital Efficiency
35 Strategy #3 Capital Efficiency Improve Fixed and Working Capital Efficiency 35 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 (CHART) Working capital % of sa
Slide 35: Financial Goals Next 3-5 Years
36 Financial Goals Next 3-5 Years 36
Slide 36: In Summary: Why Invest in Materion Corporation
37 In Summary Why Invest in Materion Corporation 37 Positioning Growth Performance 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 nic
Slide 37: The Repositioning of Materion
38 The Repositioning of Materion 38 Prior to 2002 2002 - 2010 2011 + Metals and mining focus Repositioning Sustained growth
Slide 38: Annual Meeting of Shareholders May 4, 2011
39 39 Annual Meeting of Shareholders May 4, 2011