Slide 1: Q2 2021 Earnings Investor Presentation
Q2 2021 Earnings Investor Presentation August 3, 2021
Slide 2: Agenda
Agenda Introduction Andrew Vento – Manager, Investor Relations and Corporate Development Opening Remarks & Jugal Vijayvargiya – President and Chief Executive Officer Business Update Financial Review Shelly Chadwick – Vice President and Chief Financial Officer Q&A Question and Answer Session
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
Slide 5: Q2 2021 Highlights
Q2 2021 Highlights • Record quarterly value-added (VA) sales of $208 million, up 31% year- over-year ▪ Fifth quarter of sequential top line growth driven by market outperformance in semiconductor, automotive, industrial, and consumer electronics ▪ All-time high VA sales in Advanced Materials segment
Slide 6: Key Strategic Initiatives
Key Strategic Initiatives • Engineered precision clad strip project ramping up ▪ Construction of new leading-edge manufacturing facility nears completion; commencing start-up activities ▪ Received $67M in prepayments for the project to date ▪ Continuing to ship product from existing facility • Optic
Slide 7: Materion Solutions Enable Growing Space Sector
Materion Solutions Enable Growing Space Sector Strong Partnership with NASA to Develop ToughMET® and Preform Products Faster Travel and Greater Propellant Integral in Recent and Future Efficiency Technologies Commercial Space Travel Optical Filter Arrays Provide Leading-Edge Space Imaging in Extreme
Slide 8: Q2 2021 End Market Performance
Q2 2021 End Market Performance Q2 2021 vs. Q2 Full Year Market % Comments VA Sales 2020 Outlook • Overall demand remains very strong led by growth drivers such as 5G, Cloud, Semiconductor $47.8 23% 35% automotive and IoT digital infrastructure build-out • Continued ramp-up and implementation of new
Slide 9: Key Takeaways
Key Takeaways • Accelerating performance in the second quarter ▪ Another record quarter for value-added sales for Materion and Advanced Materials segment ▪ Fifth consecutive quarter of sequential sales and profit growth ▪ Strong underlying market demand across key end markets ▪ Growing organic pipel
Slide 10: Financial Review
Financial Review Shelly Chadwick Vice President and Chief Financial Officer
Slide 11: Q2 2021 Operating Performance
Q2 2021 Operating Performance Value-added Sales ($M) Adj. EBIT ($M) Adj. EPS $207.9 $22.1 $0.86 $159.1 $0.45 10.6% $12.8 8.0% Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 • Value-added sales were $207.9 million, • Adjusted EBIT margin of 10.6%, up 260 • Adjusted EPS of $0.86 versus $0.45 in up 31
Slide 12: Q2 2021 Financial Comparison
Q2 2021 Financial Comparison 10.6% 8.0% • Adjusted EBIT of $22.1 million or 10.6% of VA sales compared with $12.8M or 8.0% of VA sales in the prior year period ▪ Significant increase in adjusted EBIT driven by strong volumes, favorable price/mix, and improved operating performance ▪ SG&A reflects in
Slide 13: Performance Alloys and Composites Segment
Performance Alloys and Composites Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $108.6 million, up 21% from $17.1 prior year $108.6 ▪ New engineered precision clad strip opportunity $89.8 $11.0 ▪ Significant market demand and new automotive connector applications 15.7% ▪ Stron
Slide 14: Advanced Materials Segment
Advanced Materials Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $66.9 million, up 28% from $8.3 prior year $66.9 ▪ All-time record for quarterly VA, exceeding previous record set in Q1 2021 $5.3 $52.2 ▪ Higher sales to the semiconductor market led by 12.4% commercial initiati
Slide 15: Precision Optics Segment
Precision Optics Segment Value-added Sales ($M) Adj. EBIT ($M) • Value-added sales of $32.6 million, up 83% from prior year $32.6 $2.9 ▪ Increase across key end markets; favorably impacted by $2.4 acquisition of Optics Balzers $17.8 8.9% • Adjusted EBIT of $2.9 million, or 8.9% of VA sales 13.5% ▪ U
Slide 16: Cash, Debt and Liquidity
Cash, Debt and Liquidity Q2 Q2 • Net debt position of $35M and approximately $273 ($M) 2021 2020 million available on existing credit facility Short-term Debt $0.4 $151.8 ▪ Net debt increase due to Optics Balzers acquisition ▪ Target leverage range is 1.5x – 3x Net Debt/EBITDA Long-term Debt 58.8 —
Slide 17: Q3 and Full Year 2021 Guidance
Q3 and Full Year 2021 Guidance • Q3 Guidance Q3 Adj. EPS Guidance ▪ Adjusted EPS of $0.80 to $0.84, an increase of $0.80 - $0.84 64% versus prior year at the midpoint • Updated FY 2021 Guidance $0.50 ▪ Adjusted EPS of $3.25 to $3.45, an increase of 65% versus prior year at the midpoint ▪ Includes ne
Slide 18: Appendix
Appendix
Slide 19: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales ($ in millions) Q2 2021 Q2 2020 Net Sales Performance Alloys and Composites $ 125.3 $ 101.6 Advanced Materials 213.1 150.1 Precision Optics 32.6 19.8 Other — — Total $ 371.0 $ 271.5 Less: Pass-through Metal Costs Performance Alloys and Composites $ 16.7 $ 11.8 Ad
Slide 20: Reconciliation for Non-GAAP Measures
Reconciliation for Non-GAAP Measures ($ in millions) Q2 2021 Q2 2020 Operating Profit (Loss) Performance Alloys and Composites $ 17.3 $ 6.9 Advanced Materials 8.3 4.7 Precision Optics 2.6 2.1 Other (7.5) (6.1) Total $ 20.7 $ 7.6 Special Items Performance Alloys and Composites $ — $ 4.2 Advanced Mate
Slide 21: Reconciliation for Non-GAAP Measures Cont.
Reconciliation for Non-GAAP Measures Cont. ($ in millions) Q2 2021 Q2 2020 GAAP as Reported Operating profit $ 20.7 $ 7.6 Non-operating (income) $ (1.3) $ (0.9) Net Income $ 17.9 $ 5.8 Shares outstanding-Diluted 20,651 20,554 EPS-Diluted $ 0.87 $ 0.28 Operating Profit Special Items Cost reduction in
Slide 22: Reconciliation for Non-GAAP Measures Cont.
Reconciliation for Non-GAAP Measures Cont. ($ in millions) Q2 2021 TTM Q2 2020 TTM GAAP as Reported Net income $ 48.3 $ 20.7 Income tax (benefit) expense (0.8) 4.6 Interest expense 4.0 2.1 Depreciation, depletion, and amortization 38.0 42.0 Consolidated EBITDA $ 89.4 $ 69.4 Total Special Items $ 24.