Materion Corporation · NYSE:MTRN
Materion — Investor Presentation (February 2020)
28 slides from Materion's investor presentation, Feb 14, 2020
Slide 1: Investor Presentation February 2020
INVESTOR PRESENTATION February 2020
Slide 2: Forward-looking Statements
Forward-looking Statements 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 risks, uncertainties and other fa
Slide 3: Q4 and Full-Year 2019 Highlights
Q4 and Full-Year 2019 Highlights ► Sixth consecutive quarter with double-digit adjusted operating profit margins, finishing at 11% for full year ► PAC operating profit margins ≥ 15% for six consecutive quarters; full-year operating profit margin of 17% ► Third consecutive year with adjusted EPS grow
Slide 4: Key Financial Trends
Key Financial Trends TTM Value-added1 (VA) Sales TTM Operating Profit1 (OP) $800 $90 12% 83.5 82.4 757 80.9 745 750 734 739 $80 11% $750 724 734 73.4 710 $70 66.0 10% $700 678 62.0 56.7 $60 53.4 9% $650 47.5 ($ millions) ($ $50 8% 1 1 % of VA ofVA % Sales $600 1 ($ millions) ($ $40 7% $550 OP TTM $3
Slide 5: Materion Company Profile
Materion Company Profile Company Overview Value-added Sales 1 1 • Materion is an integrated producer of high- 2019 VA Sales by Segment 2019 VA Sales by End Market performance advanced engineered materials Precision Performance Alloys Other Coatings & Composites Semiconductor - Leading market positio
Slide 6: Key Facts
Key Facts Share Statistics as of 12/31/2019 2019 Financial Information Trading Symbol MTRN Revenues Stock Price $59.45 $1,185M Shares O/S, Diluted 20.7M 52 wk Range $42.56 - $70.96 Value-added sales1 $734M 3 Mo Avg Vol 104,698 Market Cap $1,230M Adjusted EPS1 $3.19 Enterprise Value $1,107M $80 Mater
Slide 7: Performance Alloys and Composites (PAC)
Performance Alloys and Composites (PAC) Value-added Sales Growth Drivers New product development $450 428.1 20% 425.5 • New proprietary non-Be alloys with improved durability & weight-to- strength ratio $400 16% • New high strength/high conductivity alloys with exceptional formability 363.5 • Advanc
Slide 8: Advanced Materials
Advanced Materials Value-added Sales Growth Drivers Market Development – High focus on Semiconductor $250 25% 228.0 223.7 224.3 • $400B market with strong growth outlook driven by macro consumer electronics, IoT, and automotive trends $200 182.8 176.3 20% • Continue to expand organically into new se
Slide 9: Precision Coatings
Precision Coatings Value-added Sales Growth Drivers $110 24% Expanded Reach and Technology Leadership 101.8 • Redesigned and fully deployed global sales organization • Focus on high value products and segments with technology $100 97.7 20% 94.2 differentiation 90.7 Product and Capability Expansion $
Slide 10: Profitable Growth Strategy
Profitable Growth Strategy PROFITABLE GLOBAL GROWTH COMMERCIAL OPERATIONAL INNOVATION ACQUISITIONS DIGITAL EXCELLENCE EXCELLENCE A ONE MATERION PERFORMANCE-BASED CULTURE Deliver sustained double-digit EPS growth 10
Slide 11: Global Megatrends Play to Our Strengths
Global Megatrends Play to Our Strengths Key Trends Characteristics of our Materials • Miniaturization of electronics/IoT Conductivity • Additional electronic instruments for Corrosion resistance autos, aircraft Weight savings (lighter) • Expanding high performance optical device opportunities Purity
Slide 12: Well-diversified Market Penetration
Well-diversified Market Penetration 2019 % of Key Market VA Sales1 Drivers • Smart device growth Semiconductor 20% • Non-volatile memory • Big data (data storage) • Heavy equipment builds Industrial 18% • Plastic tooling • Fire protection (R and C construction) • Structural and electronic components
Slide 13: Innovation Leading to Organic Growth
Innovation Leading to Organic Growth New Product VA Sales1 as % of Total Example New Product Offerings Aluminum Scandium Targets • Key material used in 5G devices, fingerprint sensors, and piezoelectric 16% 16% microphones 15% • Replacement for lead-based alternatives 14% ALD Chemicals 12% • Atomic
Slide 14: Cash Flow and Working Capital Efficiency Focus
Cash Flow and Working Capital Efficiency Focus Dividends per share Cash Flow from Operations ($ in millions) $0.50 $120 $0.40 $0.30 $99.2 $100 $91.0 $0.20 $0.10 $80 $76.4 $68.2 $67.8 $0.00 2012 2013 2014 2015 2016 2017 2018 2019 $60 Improve Working Capital3 Efficiency $40 Working capital % of net sa
Slide 15: Disciplined Capital Deployment Going Forward
Disciplined Capital Deployment Going Forward Organic Growth • Invest in facilities and productivity projects • Invest in new products 35% Debt & Inorganic Growth Shareholder • Complimentary 65% products/technologies Growth • Maintain financial discipline Return Cash to Shareholders • Dividends – inc
Slide 16: Materion Investment Thesis
Materion Investment Thesis ► Clearly defined strategy and execution led by new management team ► Differentiated product portfolio aligned with global megatrends to accelerate future growth ► Driving significant improvement in profitability and cash flow growth ► Consistently delivering profitable gr
Slide 17: 2020 Forecasted Financial Guidance
2020 Forecasted Financial Guidance ► Full-year guidance ► Adjusted EPS of $3.15 – $3.30 ► Capex ~ $30M ► Mine development investments ~ $10M ► Depreciation and amortization expense of ~ $35M ► Effective tax rate excluding special items 18% – 20% 17
Slide 18: Appendix
Appendix
Slide 19: PAC Recovery Plan Delivered
PAC Recovery Plan Delivered How did we get here? Recovery Plan 1 PAC Operating Profit 1. Improve product portfolio mix and profitability $35 33.3 through pricing and manufacturing process changes $30 2. Reduce cost footprint and move to a more variable cost structure $25 23.6 3. Leverage beryllium m
Slide 20: Beryllium Market Supply Opportunity
Beryllium Market Supply Opportunity Materion – leading position in beryllium market • Only global integrated producer – Minimum of 75 years of proven reserves in Utah mine – Supplies over 70% of world’s mined beryllium • ~40% of company sales include beryllium in some form • Global stockpiled source
Slide 21: World's Only Vertically Integrated Beryllium Producer
World’s Only Vertically Integrated Beryllium Producer Ore Competitor Chemical Plant A Hydroxide Whiting Arc Pebble Plant Furnace Competitor B VCB1 / CuBe Master Be Powder Strip/Bulk Be Manufacturing Manufacturing High-Purity Be CuBe Alloy Products Products A-4 1 Vacuum Cast Billet
Slide 22: Financial Information
Financial Information
Slide 23: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales $ in millions 2019 2018 2017 2016 2015 Net Sales Performance Alloys and Composites $ 500.2 $ 500.6 $ 429.5 $ 387.5 $ 394.8 Advanced Materials 573.8 586.6 590.8 437.2 482.3 Precision Coatings 111.4 120.6 119.2 144.5 148.4 Other - - - - (0.2) Total $ 1,185.4 $ 1,20
Slide 24: Reconciliation for Adjusted EPS
Reconciliation for Adjusted EPS In millions, except per share amounts 2019 2018 2017 2016 2015 GAAP As Reported Operating Profit $ 67.0 $ 61.5 $ 40.0 $ 27.1 $ 45.3 Net Income $ 50.7 $ 20.8 $ 11.5 $ 25.7 $ 32.2 EPS - Diluted $ 2.45 $ 1.01 $ 0.56 $ 1.27 $ 1.58 Operating Profit Special Items Cost reduc
Slide 25: Other Non-GAAP Items
Other Non-GAAP Items $ in millions 2019 2018 2017 2016 2015 Operating Profit $ 67.0 $ 61.5 $ 40.1 $ 27.1 $ 45.3 Special Items 15.4 4.5 7.4 7.9 0.5 Adjusted Operating Profit $ 82.4 $ 66.0 $ 47.5 $ 35.0 $ 45.8 Depreciation, depletion, and amortization 41.1 35.5 42.8 45.7 37.8 Mine Amortization (includ
Slide 26: Other Non-GAAP Items
Other Non-GAAP Items $ in millions Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 TTM Adjusted Operating Profit $ 82.4 $ 83.5 $ 81.0 $ 73.4 $ 66.0 $ 62.0 $ 56.7 $ 53.4 $ 47.5 Total Shareholders' Equity $ 610.7 $ 597.8 $ 594.8 $ 566.9 $ 553.9 $ 536.7 $ 515.7 $ 504.3 $ 495.0 T
Slide 27: Historical Financials
Historical Financials ($ in millions, except per share data) 2016 2017 2018 2019 Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4 2017 Q1 Q2 Q3 Q4 2018 Q1 Q2 Q3 Q4 2019 Sales PAC $ 90.6 $ 97.7 $ 103.7 $ 95.5 $ 387.5 $ 92.6 $ 108.5 $ 109.4 $ 119.0 $ 429.5 $ 118.3 $ 129.8 $ 124.1 $ 128.5 $ 500.6 $ 127.1 $ 135.2 $ 130.7 $
Slide 28: Materion
MATERION