Materion Corporation · NYSE:MTRN
Materion — Q4 2021 Earnings Presentation
30 slides from Materion's earnings presentation, Feb 17, 2022
Slide 1: Materion Corporation 4Q 2021 Earnings Call
Materion Corporation 4Q 2021 Earnings Call February 17, 2022
Slide 2: Agenda
Agenda Tigers (teil) 7 John Zaranec — Vice President, Corporate Controller and Investor Relations Opening Remarks & * : F ‘ , Business Update Jugal Vijayvargiya — President and Chief Executive Officer Shelly Chadwick — Vice President and Chief Financial Officer eview Question and Answer Session XN M
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 statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown
Slide 4: Opening Remarks & Business Update
y J Opening Remarks & Business Update YA fof Jugal Viieywaraiya President and Chief Executive Officer LSPS Lf ae 4 A Pf e vA Jf J Pd : ye
Slide 5: Q4 2021 Performance Highlights
Q4 2021 Performance Highlights Record Value-Added Sales, Adjusted EBIT and EPS* Delivered value-added (VA) sales of $237.4 million, up 27% year-over-year Continued strong end-market demand combined with meaningful organic outgrowth - Closed transformational acquisition of HCS-Electronic Materials Da
Slide 6: 2021 Performance Highlights
2021 Performance Highlights Record Value-Added Sales, Adjusted EBIT and EPS Delivered record VA sales of $859.7 million, up 29% year-over-year = Double-digit organic VA sales growth across all major end markets with significant outgrowth = Acquisitions of Optics Balzers and HCS-Electronic Materials
Slide 7: 2021 Performance Highlights: Advancement of Strategic Initiatives
2021 Performance Highlights Significant Advancement of Our Strategic Initiatives Completed transformational acquisition of HCS-Electronic Materials « Largest acquisition in company’s history Completed construction of customer funded Precision Clad Strip plant - Ontrack to contribute more meaningfull
Slide 8: End Market Performance
End Market Performance Q4 2021 FY 2021 VA vs. FY Sales vs. Q4 2020 Q4 Comments VA Sales 2020 ts * Demand remains very strong led by increasing applications across customers C2 semiconductor $71.4 81% | and end market demand $214.5 45% * 27% increase without HCS 9 * Industrial market recovery driving
Slide 9: HCS-Electronic Materials Update
HCS-Electronic Materials Update Company Overview Early Integration Update Commercial Update Integration Highlights + Strong customer engagement, + Integration office established; positive meetings with all top key tasks identified; all on track customers * Management team set and highly * Ended year
Slide 10: Precision Clad Strip Project
Precision Clad Strip Project Major Equipment ( 9) 100% ( 8) Delivery Installation Commissioning Facility Construction ( 9) ( S) 100% ( 9) Electrical Piping Foundations Utilities Qualification Schedule nstaitation ¢-. ( 100% ) [=| z WXN Ramp Up a Customer Processes BO H == MATERION Qualified Qualifie
Slide 11: Looking Ahead to 2022
Looking Ahead to 2022 Expect to deliver another year of record sales and earnings * Value Added (VA) Sales to exceed $1B for the first time * Record adjusted EBIT, EBITDA and EPS, with margin expansion * Continued end-market strength with organic outgrowth * Strongest order book entering a new year
Slide 12: 2022 End-Market Growth Outlook
2022 End-Market Growth Outlook Low Single-Digits (1-3%) Mid Single-Digits (4-6%) High Single-Digits (7-8%) A “a -fite Consumer Electronics Industrial gO B Semiconductor <7) diz Te ry) A Telecom & Data Center SF Automotive ZN Aerospace Expecting another year of strong end-market demand m MATERION 12
Slide 13: Key Takeaways
Key Takeaways * Delivered record performance in 2021 * Made significant progress on key strategic initiatives * Built strong pipeline of organic opportunities, set to deliver * Completed transformational acquisition of HCS-Electronic Materials * Positioned the company to deliver another year of reco
Slide 14: Financial Review
Aff, Financial Review SAS Wy Shelly Chadwick - ig Vice President and Chief Financial Officer ae,
Slide 15: Q4 2021 Operating Performance
Q4 2021 Operating Performance Value-added Sales ($M) +27% $237.4 $187.2 Q4 2020 Q4 2021 Value-added sales were $237.4 million, up 27% from prior year = Strong demand across key end markets led by semiconductor, industrial, aerospace, defense and automotive + Meaningful contribution from organic init
Slide 16: Q4 2021 Financial Comparison
Q4 2021 Financial Comparison Adjusted EBIT of $28.1 million $2.3 or 11.8% of VA sales compared with $18.7M or 10.0% of VA sales $2.6 Ha im in the prior year period + — Significant increase in adjusted $(3.8) = EBIT driven by strong volumes, ° $(0.9) meaningful price improvements and operational perf
Slide 17: Full Year Operating Performance
Full Year Operating Performance Value-added Sales ($M) $859.7 +29% $665.2 2020 2021 Value-added sales were $859.7 million, up 29% from prior year = Strong demand across key end markets led by semiconductor, industrial, aerospace and defense and automotive + Meaningful contribution from organic initi
Slide 18: Performance Alloys and Composites Segment
Performance Alloys and Composites Segment Value-added Sales ($M) Adj. EBIT ($M) Value-added sales of $115.8 million, up 29% from prior year +29% 452% = Strong performance in the automotive, industrial, energy $115.8 $17.6 and aerospace end markets + Precision clad strip opportunity contributed appro
Slide 19: Advanced Materials Segment
Advanced Materials Segment Naliie pa ceAS aie (88M) AGRESTIA SM Value-added sales of $89.5 million, up 52% from prior year +52% +74% | $12.5 - All-time record for quarterly VA sales, exceeding previous record set in Q3 2021 Accelerating initiatives and strong end market demand delivered 15.9% organi
Slide 20: Precision Optics Segment
Precision Optics Segment Adj. EBIT ($M) Value-added sales of $32.4 million Exited LAC business contributed $4M in Q4 ‘20 $38.8 -9% Ea - COVID-19 PCR testing orders peaked at $4M in Q4 ‘20 $32.4 $4.3 $3.9 - Excluding LAC and PCR, VA sales up 5% with increased demand in consumer electronics and indust
Slide 21: Cash, Debt and Liquidity
Cash, Debt and Liquidity Proforma leverage remains well within target range of 1.5x — 3x (SM) 2020 | 2021 2 + Repaid $35M of debt in Q4 with strong cash Short-term Debt $1.9 $15.4 flow and cash repatriation Long-term Debt 36.5 434.4 Approximately $176 million available on existing credit facility To
Slide 22: Disclosure Update: Non-GAAP Reporting
Disclosure Update: Non-GAAP Reporting As our company evolves, we are improving our reporting and disclosure practices Starting in 2022, we are adding non-GAAP metrics to reflect operational performance without the impact of non-cash charges * Disclosure for EBITDA and adjusted EBITDA as measure of c
Slide 23: Full Year 2022 Guidance
Full Year 2022 Guidance Adj. EPS Guidance Excluding Acq. Amortization 2022 Guidance 5:56 -65e70 - Adjusted EPS excluding acquisition amortization of $5.30 to $5.70, +35% an increase of 35% at the midpoint = Includes $3-4M/quarter of plant start-up costs in the first half ane + Equivalent to Adjusted
Slide 24: Invest in Materion as we Advance our Strategy
Invest in Materion as we Advance our Strategy Becoming a global leader in high-performing advanced materials serving diverse and attractive markets well aligned with megatrends Building robust pipeline with investments in R&D as we focus on developing innovative solutions for our customers Leveragin
Slide 25: Appendix
Slide 26: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales (Sin millions) Net Sales Performance Alloys and Composites Advanced Materials Precision Optics Other Total Less: Pass-through Metal Costs Performance Alloys and Composites Advanced Materials Precision Optics Other Total Value-added Sales Performance Alloys and Co
Slide 27: Reconciliation for Non-GAAP Measures
Reconciliation for Non-GAAP Measures (S in millions) Q4 2021 Q4 2020 2021 2020 Operating Profit (Loss) Performance Alloys and Composites $ 162 $ aT $ 67.9 $ 13.6 Advanced Materials 88 67 35.3 22.1 Precision Optics 37 “7 142 (4.4) Other 13.2 (§.3) (40.3) (23.1 Total $ 155 $ 68 $ 774 $ 82 Special Item
Slide 28: Reconciliation for Non-GAAP
Reconciliation for Non-GAAP Q4 2021 (sinmaions) GAAP as Reported Operating profit Non-operating (income) Net Income Shares outstanding-Diluted EPS - Diluted Operating Profit Special Items Impairment Charges Mine development costs Forfeiture of non-cash stock-based compensation Non-cash inventory adj
Slide 29: Reconciliation for Non-GAAP Measures (Cont.)
ny Reconciliation for Non-GAAP Measures (Cont.) ($ in millions) Q4 2021 Q42021TTM =. Q4.2020 TTM GAAP as Reported Net income $ 19.7 $ 725 $ 15.5 Income tax expense (benefit) (5.3) 49 (7.2) Interest expense 24 49 38 Depreciation, depletion, and amortization 17 441 42.4 Consolidated EBITDA 28.5 $ 126.
Slide 30: EPS Excluding Acquisition Amortization
EPS Excluding Acquisition Amortization Mar-19 Jun-19 Sep-19 Dec-19 2019 Mar-20 Jun-20 Sep-20 Dec-20 2020 Mar-21 Jun-21 Sep-21 Dec-21 2021 EPS(GAAP) $ 0.83 $ 0.84 $ 0.22 $ 0.69 $ 2:59 $ (0.19) $ 0.28 $ 0.27 $ 0.39 $ 0.75 $ 0.81 $ 087 $ 0.88 $ 0.95 $ 3.50 EPS (Adjusted) $ 0.83 $ 0.97 $ 0.86 $ 0.66 $ 3