Materion Corporation · NYSE:MTRN
Materion — Q4 2022 Earnings Presentation
28 slides from Materion's earnings presentation, Feb 16, 2023
Slide 1: Materion Corporation 4Q 2022 Earnings Call
Materion Corporation 4Q 2022 Earnings Call February 16, 2023
Slide 2: Agenda
Agenda Thigere(tfe ify 7 John Zaranec — Chief Accounting Officer 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 MATERION
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
oi J. Opening Remarks & Business Update J oF VA ugal VE President and Chief Executive Officer
Slide 5: Q4 2022 Financial Highlights
Q4 2022 Financial Highlights 4 Consecutive Quarter of Record Value-Added Sales, Adjusted EBITDA and EPS Delivered record value-added (VA) sales of $309.2 million, up 30% year over year - 11" consecutive quarter of VA sales growth - Organic* VA sales up 26%, with meaningful contribution from outgrowt
Slide 6: Record Value-Added Sales, Adjusted EBITDA and EPS
Record Value-Added Sales, Adjusted EBITDA and EPS Delivered record VA sales of $1.14 billion, up 33% year over year Up 18% organic with significant outgrowth in semiconductor, industrial, energy and aerospace Acquisition of HCS-Electronic Materials exceeding expectations Achieved record adjusted EBI
Slide 7: 2022 Performance Highlights
2022 Performance Highlights Significant Advancement of Our Strategic Init Secured key new business wins to deliver continued outgrowth in 2023 - Meaningful wins in defense, aerospace, semiconductor and automotive will contribute Completed qualification of customer funded Precision Clad Strip facilit
Slide 8: End Market Performance
End Market Performance Q4 2022 Q4 Comments eg : is be = Driven by increased content and new applications a Semiconcucton ae t 1 is 2% organic growth led by ALD and packaging portfolio oo35 ce = Continued strong demand from non-residential construction, e-commerce Industrial $55.9 t 11% ‘and 1 indust
Slide 9: Our Customers Continue to Choose Materion
Our Customers Continue to Choose Materion PREVIOUSLY ANNOUNCED 2022 Precision Clad Next Generation Strip Battery Tech Precision Clad Strip phase one investment complete; phase two expansion on track for 2024 start up * Announcement timing Partnership with leading battery manufacturer for development
Slide 10: 2023 End-Market Growth Outlook
2023 End-Market Growth Outlook Single-Digit (<0%) Low Single-Digit (0-3%) Mid Single-Digit (>3%) ALS z Semiconductor dk Defense ZN Aerospace Ib Consumer Electronics a Industrial . B : Energy ofa? oO SE Automotive ((\g) A Telecom & Data Center Expecting another year of end market outgrowth WN MATERIO
Slide 11: Looking Ahead to 2023
Looking Ahead to 2023 = Expect another year of record VA sales, EBITDA and EPS = Top line VA sales growth despite market uncertainty, supported by our organic outgrowth initiatives « Significant momentum on customer partnerships, further building out organic pipeline = Clad strip project at full run
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Slide 13: Q4 2022 Operating Performance
Q4 2022 Operating Performance Value-added Sales ($M) +30% $309.2 $237.4 Q4 2021 Q4 2022 Value-added sales were $309.2 million, up 30% from prior year » Strong demand across key end markets led by industrial, aerospace and energy, plus higher clad strip sales + VAup ~26% organic, with significant abo
Slide 14: Q4 2022 Financial Comparison
Q4 2022 Financial Comparison Record adjusted EBITDA of $55.6 million, or 18.0% of VA Sales $6.4 $3.4 $55.6 = Growth driven by strong volume, | meaningful price/mix and favorable impact of HCS Electronic Materials $11.0 $(5.0) acquisition « SG8A includes incentive 18.0% compensation driven by strong
Slide 15: Performance Materials Segment
Performance Materials Segment Value-added Sales ($M) 453% $177.6 $115.8 Q4 2021 Q4 2022 Q4 Performance by End Market t Industrial t Aerospace & Defense A | Automotive Adj. EBITDA ($M) +96% |_ $443 $22.6 Q4 2021 Q4 2022 t Energy Telecom & Data Center y Consumer Electronics measures. Certain data pres
Slide 16: Electronic Materials Segment
Electronic Materials Segment Value-added sales of $104.0 million, up 16% from Value-added Sales ($M) Adj. EBITDA ($M) prior year +16% | $104.0 [8% | — . = Materials contributing meaningful VA $89.6 $159 - Organic sales up 2% Adjusted EBITDA of $17.1 million, or 16.4% of VA sales + Increase due to HC
Slide 17: Precision Optics Segment
Precision Optics Segment Value-added sales of $27.7 million Value-added Sales ($M) Adj. EBITDA ($M) = Decrease mainly driven by discontinued applications and i : - $325 [ey %8 [aoy consumer electronics softening $27.7 : - Currency negatively impacted VA by $2M aaa $4.0 Adjusted EBITDA of $4.0 millio
Slide 18: Full Year Operating Performance
Full Year Operating Performance Value-added Sales ($M) aay, | 811436 $859.7 2021 2022 Value-added sales were $1.14 billion, up 33% from prior year = Strong demand across key end markets led by semiconductor, industrial, energy and aerospace + VAup ~18% organic « Meaningful contribution from outgrowt
Slide 19: Cash, Debt and Liquidity
Cash, Debt and Liquidity ($M) 2021 2022 Leverage at mid point of target range of 1.5x - 3x Short-term Debt $15.4 $21.1 Approximately $185 million available on existing Long-term Debt $434.4 $410.8 comer « Adequate liquidity remains to support growth Total Debt $449.8 | $431.9 initiatives Cash & Cash
Slide 20: Full Year 2023 Guidance
Full Year 2023 Guidance Adj. EPS Guidance $5.50 - $5.90 2023 Guidance $827 ~8% - Full year adjusted EPS of $5.50 - $5.90, an increase of ~8% from 2022 at the midpoint 2022 2023E 2023 Modeling Assumptions Capital Expenditures $95M Interest Expense $30M HCS-Electronic Materials $11M Effective Tax Rate
Slide 21: 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 22: Appendix
Slide 23: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales (3 in milions) Q4 2022 Q4 2021 Net Sales Performance Materials $ 1976 $ 1364 Electronic Materials 209.3 228.3 Precision Optics 277 32.5 Other = = Total $ 4346 §$ 397.2 Less: Pass-through Metal Costs Performance Materials $ 200 $ 20.6 Electronic Materials 105.3 13
Slide 24: Reconciliation for Non-GAAP Measures
24 Reconciliation for Non-GAAP Measures (Sin millions) Q4 2022 2021 Operating Profit (Loss) Performance Materials $ 376 « $ 16.2 Electronic Materials 12.3 88 Precision Optics 414 oF Other 11.8) 13.2) Total $ 39.2 $ 15.5 Non-Operating (Income)/Expense Performance Materials $ 01 $ 01 Electronic Materi
Slide 25: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) (Sin milions) Q4 2022 Q4 2021 2022 2021 Special Items Performance Materials $ — $ 16 $ 68 $ 16 Electronic Materials 06 37 8.2 37 Precision Optics (0.4) _ 03 04 Other 03 6.0 23 11.5 Total $ 05 $ 11.3 $ 17.6 $ 17.2 Adjusted EBITDA Excluding Special Items Pe
Slide 26: Reconciliation for Non-GAAP Measures (Cont.)
26 ($ in millions) GAAP as Reported Net income Income tax expense (benefit) Interest expense Depreciation, depletion, and amortization Consolidated EBITDA Special Items Restructuring and cost reduction Merger and acquisition costs Additional start up resources and scrap Pension settlement Total Spec
Slide 27: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) Performance Materials Fourth Quarter Ended Twelve Months Ended (Mittions M2022 SeofVA M2021 Sof VA 34.2022 Sof VA S202 Sof VA Net sales Ss 1976 Ss B64 Ss os s sng Pass-through metal cost 200 206 $20 715 ‘Value-added sales $176 suse S s895 Ss 404 EBITDA S$
Slide 28: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) Fourth Quarter Ended Twelve Months Ended December Diluted December Diluted December Diluted += December _Diluted (Millions) 31, 2022 EPS 31, 2021 EPS 31, 2022 EPS 31, 2021 EPS Net income and EPS $ 288 $ 138 $ 19.7 $095 $ 86.0 $414 $ 725 $ 3.50 Special ite