Slide 1: KeyBank Capital Markets Basic Materials & Packaging Conference
KeyBank Capital Markets Basic Materials & Packaging Conference September 14, 2006 .... creating innovative engineered material solutions and services to make our customers competitive on a global basis .... while enhancing earnings growth and stability by broadening technology, market, and geographi
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: Company Overview
Company: Brush Engineered Materials Inc. founded 1931, publicly traded since 1956 NYSE Ticker: BW Shares Outstanding: Approximately 19.9 million at 6/30/06 Market Cap: Approximately $400 million at 6/30/06 Component of: S&P Super Composite 1500 Russell 2000 S&P Small Cap 600 Annual Revenue: $541 mil
Slide 4: First Half 2006
First Half 2006 Fourteen consecutive quarters of sales growth A new high, even after adjusting for metal price inflation Sales up 34% to $355 million Pretax profit up 69% Earnings per share up 22%
Slide 5: Stronger conditions in most markets driving sales growth
Stronger conditions in most of our markets driving solid sales growth in the first half of 2006 Strong sales growth driven by Broad based demand increase and new products Added sales from acquisitions Higher metal prices Consumer electronics a primary factor Cell phones Hard disk drives Disk drive a
Slide 6: Brush Engineered Materials Inc. Profile
Brush Engineered Materials Inc. Profile A leading manufacturer of high performance specialty engineered materials ... an enabling materials technology company Operations, service centers and major office locations in North America, Europe and Asia Serving long-term growth oriented global markets fro
Slide 7: Strong customer collaboration
Strong customer collaboration ... providing enabling technology solutions and service Typical advanced material solutions - Strength - Reliability - Thermal & electrical - Miniaturization conductivity - Weight reduction - Corrosion resistance - Reflectivity Targeting growth applications in growing m
Slide 8: Typical End Uses
Typical End Uses Magnetic & Optical Data Storage for hard disk drives Industrial products For Oil & Gas and mining Medical Cellular phones and other wireless communications Notebook and network computers Electronic components in cars and trucks Aerospace and Defense
Slide 9: Global Leader in High Performance Engineered Materials
Global Leader in High Performance Engineered Materials Note: Total 6 month YTD 2006 revenues were $354.8 million YTD 2006 Revenue by Segment YTD 2006 Revenue by Market Metal Systems Group Microelectronics Group 0.51 0.49 Other Telecommunications Automotive Magnetic and Data Storage Industrial Compon
Slide 10: Global Sales and Distribution Network
Global Sales and Distribution Network Operations in the U.S. and ten foreign locations International sales YTD Q2 were 33% and growing Act globally ... service locally! ?-------------- Asia / Pacific ------------? ? ---------------- Europe -------------- ? ? - Exports from USA -? Singapore Korea Hon
Slide 11: Targeting Growth Applications in Growing Markets
BEM - Targeting Growth Applications in Growing Markets Mobile Telecommunications Oil & Gas Disk Drive Head Demand 2001 2002 2003 2004 2005 Est. 2006 2007 2008 2009 Pico 640 634 713 885 1180 1385 1580 1666 1687 Commercial and Military New Jet Aircraft Forecast
Slide 12: Major Business Units
Brush Engineered Materials - Major Business Units Alloy Be Products TMI Other WAM East 0.36 0.05 0.1 0.04 0.45 West North Williams Advanced Materials PVD Targets Optical Coatings Refining Electronic Packaging 45% Alloy Electronic Connectors Industrial Components 36% Be Products Defense/Aerospace Spe
Slide 13: Williams Advanced Materials broad capabilities
Williams Advanced Materials also has broad capabilities in precious and non-precious materials Comprehensive product line High purity / proprietary PVD targets Micro-electronic packaging materials Specialty inorganic chemicals Strong end use markets Data storage Wireless/handsets semiconductor Optic
Slide 14: Physical Vapor Deposition (PVD) Process
Physical Vapor Deposition (PVD) Process
Slide 15: Building Synergies through Smart Acquisitions
Building Synergies through Smart Acquisitions Acquisitions of OMC Scientific, Thin Film Technology and CERAC augment Williams' technologies, markets and service capabilities Expected to be strongly accretive and open up exciting new market opportunities
Slide 16: Williams Advanced Materials - PVD Products
Cellular Phone (wireless) Sputtering Targets Williams Advanced Materials - Physical Vapor Deposition(PVD) Products Products Precious Metal Sputtering Targets and Evaporation Materials Precious Metal Refining and Chamber Services Non-precious Metal Sputtering Targets and Evaporation Materials Inorgan
Slide 17: Williams Advanced Materials - Packaging Materials
Solder preforms and clad materials Hybrid Microelectronic Device Williams Advanced Materials - Packaging Material Products Products Markets Wireless, Photonics and Hybrid/ Traditional Microelectronic Devices Typical End-uses Cell phones, LEDs, fiber-optic networks, PC's, military electronics, avioni
Slide 18: World's only Fully Integrated Beryllium Producer
World's only Fully Integrated Beryllium Producer Bertrandite Ore Mining & Extraction Delta, UT Casting, Rolling & Finishing Elmore, OH Thin Gauge Rolling & Finishing Reading, PA Service & Distribution Centers Global Network Also, new High Be Pebbles Plant underway with DOD Title III funding
Slide 19: Strip Alloy Applications
Strip Alloy Applications (strength, conductivity, spring characteristics ... typically 1% to 2% Beryllium) Current Carrying Springs and Relays Integrated Circuitry Sockets Electrical and Electronic Connectors Air Bag Sensors Pressure Responsive Devices Fire Extinguisher Sprinkler Heads
Slide 20: Bulk Alloy Applications
Bulk Alloy Applications (strength, corrosion resistance, non-galling, conductivity ... typically 1% to 2% Beryllium) Aircraft Bushings Heavy Equipment Bearing and Wear Applications Oilfield well drilling, completion and production equipment Plastic Injection & Blow Molds Power Generation Undersea/Ma
Slide 21: Toughmet solution for wear and load conditions
Toughmet - a new unique solution for the most challenging wear and load conditions Oil & Gas...deeper drilling...tougher conditions Rotary steering drills Sour well drilling and completion tools Sub-sea control valves Blow-out preventions Heavy equipment ... larger equipment ... critical uptime Heav
Slide 22: Beryllium Products - Applications
Beryllium Products - Applications (lightweight, strength, dimensional, stability...typically 40% to 100% Beryllium) - - Optical mirrors for NASA space-based telescopes - - Infrared sensors for fighter jet optical targeting, radar and navigation/guidance systems and special ops (FLIR) -Structural and
Slide 23: Technical Materials Inc.
Technical Materials Inc. - solving customers' problems with engineered strip metals Mill Products Specialty cladding and inlay Electron beam welding of dissimilar materials Profiling shapes by milling and/or grinding Close tolerance rolling Electroplating Precious and non-precious metals Overall and
Slide 24: New Products - Growing Applications in Growing Markets
New Products - Growing Applications in Growing Markets (all >10% annual growth expected) ... examples Product Market Driver Division PVD Magnetic Media Hard Disk Drive Increase storage capacity WAM PVD - UMB Consumer Electronics Miniaturization WAM PVD - Evap Pro Compound Semiconductor Miniaturizati
Slide 25: Capacity to Support Profitable Market Growth
Capacity to Support Profitable Market Growth Low capital requirement to expand capacity in Microelectronics Group Operating with significant available excess capacity in Metals Systems Group Significant on-going productivity and cycle time improvements Balance sheet which can support on-going "smart
Slide 26: Annual Revenue: Historical
Annual Revenue: Historical In 2001, the telecommunications and computer market declined; In 2003, our revenue growth began to return to historical rates 2000 2001 2002 2003 2004 2005 2006 564 473 373 401 496 541 700 Growth % 24% -16% -21% +8% +24% +9% +28-31% est.
Slide 27: Performance improvement initiatives
Our on-going performance improvement initiatives are focused on four key areas Expanding and diversifying the revenue base Targeting niche growth applications in growing markets New product innovation and service Improving operating efficiencies and margins Ongoing global expansion Strategic acquisi
Slide 28: Historical Gross Margin Trends
Margins have improved through cost reduction and productivity improvement initiatives Historical Gross Margin Trends Margin % Sales ($MM) 2000 2001 2002 2003 2004 2005 2006 YTD* 0.21 0.14 0.13 0.18 0.22 0.2 0.208 564 473 373 401 496 541 700 * Annual estimated revenue of $690-$710 million
Slide 29: Outlook
Outlook Assuming no change in recent market trends or metal prices, sales for 2006 are currently expected to be in the range of $690 to $710 million ... up 28% to 31% Order book remains strong across most sectors Consumer electronics ... steady growth Telecom infrastructure seems to be solid ... dri
Slide 30: Outlook
Outlook Includes an additional $.34 to $.36 per share tax expense compared to 2005 New effective tax rate of 31% to 33% vs 11% in 2005 The majority of tax expense is non-cash due to sizable NOL's Pretax income expected to improve by approximately 85% to 100% To $32.0 - $34.0 million range From $17.0
Slide 31: In Summary
In Summary, we are ... Encouraged by conditions in most of our markets and our initiatives to grow sales Very pleased with progress of acquisitions Confident about progress we're making with our margin improvement initiatives See a very good 2006
Slide 32: Strategic Highlights
Strategic Highlights Strong, diverse set of markets served Global market reach New products and services ... a culture of innovation Niche oriented product offerings Acquisitions adding to growth and earnings Focus on operational excellence paying dividends Strong cash flow Strong balance sheet prov
Slide 33: Material Solutions for the World's Leading Companies
Brush Engineered Materials - Material Solutions for the World's Leading Companies