Materion Corporation · NYSE:MTRN
Materion — Investor Presentation (March 2013)
42 slides from Materion's investor presentation, Mar 25, 2013
Slide 1: March 2013 Materion Corporation – Investor Presentation
March 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 Material Company
Materion (MTRN) • An Advanced Material Company • Strong Global Positions in Attractive and Growing Markets • Solid Record of Long-term Growth • Strong Value-added* Margins • Market Cap: $527 Million 12/31/12 • Shares Outstanding: 20.7 million • Annual EPS: $1.75 - $2.00 (Forecast 2013) • Strong Bala
Slide 4: Identify High Growth Secular Markets
Identify High Growth Secular Markets 4 Market FY 2012 % of Value- added Sales Macro Trends Key Drivers Consumer Electronics 25% • Smartphone growth • Tablet computers & LEDs • Miniaturization Industrial Components & Commercial Aerospace 19% • 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 14% - 16% 34% - 40% Operating Profit 3% - 5% 9% - 12% 7 Removing High Value Metals Clarifies Margins (1) Value-added sales excludes 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 Direct International Sales* 2012 39% 10 • Customers in >50 countries • Expanded presence in Asia *Percentage of value-added sales
Slide 11: Continually Develop Innovative Products
Continually Develop Innovative Products • Leveraging customer-centric product development • Active research programs to take advantage of secular trends • Key product areas include – LEDs – Wireless – Medical – Commercial Aerospace – Energy – Commercial Optics – Hybrid & Electric Vehicles – Computer
Slide 12: A Strong Record of Synergistic Acquisitions
A Strong Record of Synergistic Acquisitions Acquisitions 2005 - 2012 Add complementary products / technology Expand market position OMC – shield kit cleaning – 2005 TFT – thin film coatings – 2005 CERAC – inorganic chemicals – 2006 Techni-Met – thin film coatings – 2008 Barr – thin f
Slide 13: Ensure Financial Discipline
Ensure Financial Discipline 13 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 14: Financial Goals
Financial Goals Next 3 - 5 Years Next 3 - 5 years Value-added revenue growth – organic >10% Margins (OP % VA) 12% - 16% Acquisitions $50M - $100M Per Year Working capital % sales <20% Debt-to-Debt-Plus-Equity <30% ROIC (pre-tax) >20% 14
Slide 15: Positioned to Deliver Long-term, Sustainable Growth
T H E S I S Positioned to Deliver Long-term, Sustainable Growth 15 A company with a strong platform… … Leveraging a high value-added business model… … Executing a focused growth plan Revenue Base Margins Capital Eff.
Slide 16: Why Invest in Materion Corporation?
I N S U M M A R Y Why Invest in Materion Corporation? 16 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 17: Appendix
Appendix
Slide 18: 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 19: Value-added Sales: Materion
Value-added Sales: Materion Consumer Electronics 25% Industrial Components & Commercial Aerospace 19% Defense & Science 13% Automotive Electronics 10% Medical 8% Energy 8% Telecom Infrastructure 7% Services 4% Appliance 2% Other 4% 2012 A-2
Slide 20: Value-added Sales: By Segment
Value-added Sales: By Segment Technical Materials 6% Advanced Material Technologies 41% Performance Alloys 42% Beryllium & Composites 11% 2012 A-3
Slide 21: Value-added Sales: Advanced Material Technologies
Value-added Sales: Advanced Material Technologies Consumer Electronics 33% Defense & Science 16% Medical 16% Services 10% Industrial Components & Commercial Aerospace 7% Energy 4% Telecommunications Infrastructure 2% Automotive Electronics 1% Other 11% 2012 A-4
Slide 22: Value-added Sales: Performance Alloys
Value-added Sales: Performance Alloys Industrial Components & Commercial Aerospace 31% Consumer Electronics 19% Automotive Electronics 14% Energy 13% Telecommunications Infrastructure 11% Appliance 6% Defense & Science 1% Medical 1% Other 4% 2012 A-5
Slide 23: Value-added Sales: Beryllium and Composites
Value-added Sales: Beryllium and Composites Defense & Science 54% Industrial Components & Commercial Aerospace 23% Medical 8% Telecommunications Infrastructure 6% Energy 1% Other 8% 2012 A-6
Slide 24: Value-added Sales: Technical Materials
Value-added Sales: Technical Materials Automotive Electronics 47% Consumer Electronics 42% Energy 6% Medical 1% Other 4% 2012 A-7
Slide 25: 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 26: 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 27: 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 28: 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 Margin Today 9 - 12% Target Margin 12 - 16% (OP % VA)
Slide 29: 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% of working capital efficiency = $65M of cash Improve Working Capital Efficiency Working capital % of sales 41% 2
Slide 30: 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 0 100 200 300 400 500 600 700 800 0 100 200 300 400 500 600 Materion Sales Materion Sales Global Rig Count Aircraft Delivered +587% +90% +400% +80%
Slide 31: New Product and Technology Development – Advanced Material Technologies
New Product and Technology Development Advanced Material Technologies – Thin Film Electrodes (medical diagnostics) – Expanded Refining/Chamber Services – Complement to Thin Film Materials & Coating Businesses – Nanotechnology Materials – Materials for High Brightness LEDs – Specialty Inorganic Compo
Slide 32: New Product and Technology Development – Coatings and Packaging
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 33: New Product and Technology Development – Alloys, Composites, Technical Materials
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 – “Next Generation” Alloy for Oil & Gas – ToughMet® Alloy Sheet for Vehicle Gearboxes Beryllium and Composite
Slide 34: Positioned in Diverse Set of High-growth Markets
Positioned in Diverse Set of High-growth Markets and Product Applications A-17 Growth Entered multiple leading-edge growth markets since 2002 Defense Tablets Commercial Aerospace Medical Devices Disk Drives Optics Telecom Infrastructure LED’s Alternative Energy LCD Space / Science Cellular phones (s
Slide 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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-23
Slide 41: 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 42: 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