Slide 1: Q3 2021 Earnings Investor Presentation
Q3 2021 Earnings Investor Presentation November 2, 2021 © 2021 Materion Corporation
Slide 2: Agenda
Agenda Introduction John Zaranec – Vice President, Corporate Controller and Investor Relations Opening Remarks & Jugal Vijayvargiya – President and Chief Executive Officer Business Update Financial Shelly Chadwick – Vice President and Chief Financial Officer Review Q&A Question and Answer Session 2
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
Opening Remarks & Business Update Jugal Vijayvargiya President and Chief Executive Officer 4 © 2021 Materion Corporation
Slide 5: Q3 Highlights
Q3 Highlights Record Value-Added Sales, Adjusted EBIT and Adjusted EPS • Delivered value-added (VA) sales of $216 million, up 31% year- over-year ▪ Continued strong end market demand combined with meaningful organic growth • Achieved adjusted EBIT of $27.8 million, an increase of 97% year- over-year
Slide 6: Q3 2021 End Market Performance
Q3 2021 End Market Performance Q3 2021 vs. Q3 Full Year Market % Comments VA Sales 2020 Outlook • Demand remains very strong led by increasing applications across Semiconductor $51.3 24% 33% customers and end markets • Industrial market recovery driving expansion across all products Industrial $42.0
Slide 7: HCS-Electronic Materials Overview
HCS-Electronic Materials Overview Company Overview Transaction Summary Location Newton, MA Transaction Value Financing • $380M purchase price; represents • Transaction structured as a carve-out, 2021E Sales1 $145M 13x expected 2021 Adj. EBITDA stock purchase multiple and <10x post-synergies • New, 5
Slide 8: HCS-Electronic Materials | Compelling Strategic and Financial Benefits
HCS-Electronic Materials | Compelling Strategic and Financial Benefits Market & Trends Scale & TAM Portfolio Technology & Talent Financials Increases Access to Creates Significant Adds Proprietary High-Growth Semiconductor End Market Scale Broadens Portfolio and Enhances Financial Process Technology
Slide 9: Key Takeaways
Key Takeaways • Record results in the third quarter ▪ Record delivery for VA sales, adjusted EBIT and EPS ▪ Strong EBIT margins, good progress towards goal of mid-teens ▪ Sixth consecutive quarter of sequential sales and profit growth ▪ Growing organic pipeline supports continued above-market growth
Slide 10: Financial Review
Financial Review Shelly Chadwick Vice President and Chief Financial Officer 10 © 2021 Materion Corporation
Slide 11: Q3 2021 Operating Performance
Q3 2021 Operating Performance Value-added Sales ($M) Adj. EBIT ($M) Adj. EPS $1.10 $27.8 $215.8 $164.9 12.9% $0.50 $14.1 8.6% Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 • Value-added sales were $215.8 million, up • Adjusted EBIT margin of 12.9%, up 430 bps • Adjusted EPS of $1.10 versus $0.50 i
Slide 12: Q3 2021 Financial Comparison
Q3 2021 Financial Comparison 12.9% 12.9% 8.6% 8.6% • Adjusted EBIT of $27.8 million or 12.9% of VA sales compared with $14.1M or 8.6% of VA sales in the prior year period ▪ Significant increase in adjusted EBIT driven by strong volumes, organic outgrowth, favorable mix, and meaningful price improvem
Slide 13: Performance Alloys and Composites Segment
Performance Alloys and Composites Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $115.2 million, up 41% from prior year $115.2 $20.8 ▪ Strong performance in automotive, industrial, and telecom & data center markets $81.9 ▪ Sequential and YOY improvement in aerospace and energy
Slide 14: Advanced Materials Segment
Advanced Materials Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $69.7 million, up 27% from prior year $9.2 $69.7 ▪ All-time record for quarterly VA sales, exceeding previous record set in Q2 2021 $5.8 ▪ Accelerating organic initiatives and strong demand $55.0 across all appli
Slide 15: Precision Optics Segment
Precision Optics Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $31.2 million, up 10% from prior year $3.5 $3.5 $31.2 ▪ Increased demand in consumer electronics, $28.3 industrial, and automotive markets; partially offset by declines in medical and defense markets 12.4% 11.2% •
Slide 16: Cash, Debt and Liquidity
Cash, Debt and Liquidity • Net debt position of $61.5M and approximately Q3 Q3 PF Q3 $319 million available on existing credit facility ($M) 2020 2021 20211 ▪ Target leverage range is 1.5x – 3x Net Short-term Debt $122.2 $0.5 $0.5 Debt/EBITDA Long-term Debt 6.4 79.0 459.0 ▪ Proforma leverage include
Slide 17: Q4 and Full Year Guidance
Q4 and Full Year Guidance Q4 2021 Adj. EPS Guidance • Q4 guidance $0.95 - $1.05 ▪ Adjusted EPS of $0.95 to $1.05, an increase of 43% versus prior year at the midpoint $0.70 ▪ Includes HCS Electronic Materials contribution of $0.05, $0.13 w/o acquisition amortization • Updated FY 21 Guidance ▪ Adjust
Slide 18: Invest in Materion as we Advance our Strategy
Invest in Materion as we Advance our Strategy Becoming a global leader in high-performing advanced materials serving diverse and attractive markets well aligned with megatrends Building robust pipeline with investments in R&D as we focus on developing innovative solutions for our customers Leveragin
Slide 19: Appendix
Appendix 19 © 2021 Materion Corporation
Slide 20: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales ($ in millions) Q3 2021 Q3 2020 Net Sales Performance Alloys and Composites $ 136.1 $ 91.2 Advanced Materials 220.7 165.6 Precision Optics 31.2 30.4 Other — — Total $ 388.0 $ 287.2 Less: Pass-through Metal Costs Performance Alloys and Composites $ 20.9 $ 9.3 Adva
Slide 21: Reconciliation for Non-GAAP Measures
Reconciliation for Non-GAAP Measures ($ in millions) Q3 2021 Q3 2020 Operating Profit (Loss) Performance Alloys and Composites $ 20.9 $ (0.4) Advanced Materials 9.3 5.7 Precision Optics 3.3 1.4 Other (12.3) (7.3) Total $ 21.2 $ (0.6) Special Items Performance Alloys and Composites $ — $ 9.9 Advanced
Slide 22: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) ($ in millions) Q3 2021 Q3 2020 GAAP as Reported Operating profit $ 21.2 $ (0.6) Non-operating (income) $ (1.2) $ (1.1) Net Income $ 18.2 $ 5.5 Shares outstanding-Diluted 20,657 20,592 EPS-Diluted $ 0.88 $ 0.27 Operating Profit Special Items Mine developm
Slide 23: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) ($ in millions) Q3 2021 TTM Q3 2020 TTM GAAP as Reported Net income $ 61.0 $ 21.7 Income tax expense (benefit) 9.0 (4.3) Interest expense 3.5 3.0 Depreciation, depletion, and amortization 42.9 41.1 Consolidated EBITDA $ 116.4 $ 61.5 Total Special Items 16