Materion Corporation · NYSE:MTRN
Materion — Shareholder Meeting (May 2012)
36 slides from Materion's shareholder meeting presentation, May 2, 2012
Slide 1: 2012 Annual Meeting of Shareholders
2012 Annual Meeting of Shareholders May 2, 2012 Materion Corporation Exhibit 99.2
Slide 2: Making a Difference: Our Vision, Mission and Values
Slide 3: 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 4: 2012 Annual Meeting of Shareholders
2012 Annual Meeting of Shareholders May 2, 2012 Materion Corporation
Slide 5: 2011 Began In a Solid Market Environment
2011 Began In a Solid Market Environment New highs in sales and earnings levels Annualized earnings were above $2.00 per share for six straight quarters Continued healthy, broad-based end market demand G-5 – Consumer Electronics – Automotive Electronics – Telecom Infrastructure – Industrial & Aerosp
Slide 6: In A Strong Position To Leverage End Market Growth
In A Strong Position To Leverage End Market Growth Scale larger Markets diverse Growth greater Balance sheet strong Higher profit levels, more sustainable G-6
Slide 7: A Solid 2011 First Half
A Solid 2011 First Half First half sales up 29% Organic growth of 11% Net income up 26% Margins expanding G-7
Slide 8: A Dramatically Different Second Half
A Dramatically Different Second Half Demand dropped in consumer electronics Widespread inventory adjustments Other markets also weaker Led to a disappointing fourth quarter Business levels down 17% Growth in Energy, Medical and Automotive G-8
Slide 9: First Time To Cross $1.5 Billion In Revenues
First Time To Cross $1.5 Billion In Revenues Sales climbed 17% to $1.5 billion Metal price pass-through accounted for the majority Organic was 2%, after 11% in the first half Growth for the year in: G-9 – Telecom Infrastructure – Commercial Aerospace – Heavy Equipment – Energy – Medical – Automotive
Slide 10: Profits, While Not What We Expected, Were Solid
Profits, While Not What We Expected, Were Solid Net income … $40.0 million EPS … $1.93 per share Included costs of three strategic initiatives G-10 – Rebranding – Beryllium Plant – Acquisition of EIS Optics
Slide 11: A Strong Balance Sheet and Added Financial Flexibility
A Strong Balance Sheet and Added Financial Flexibility Invested $24 million in EIS Optics Cumulative investment, more than $200 million, over 6 years Debt-to-debt-plus-equity at 17% Revolver and metal line expansions On going positive cash generation Flexibility to invest G-11
Slide 12: Today, We Are Initiating a Dividend
Today, We Are Initiating a Dividend Dividend is another milestone Recognizing confidence in Yield of 1.2%, is meaningful G-12 – Growth prospects – Convert growth to Earnings – Conversion of profit growth to cash – Fund organic growth and acquisitions – Return cash to shareholders
Slide 13: First Quarter 2012 Off to a Better Start
First Quarter 2012 Off to a Better Start Business levels improving Earnings improving An increase of $19.3 million Up 6% sequentially to $354.0 million Demand improving, especially in consumer electronics Expect stronger quarters going forward G-13
Slide 14: First Quarter Profits Improving
First Quarter Profits Improving Net income was $.30 per share Compares to $.57 per share in 2011 And, to $.04 per share in Q-4, 2011 Included $.07 per share of costs Business levels and mix changes G-14 – Hurt comparisons to Q-1, 2011 – Helped comparisons to Q-4, 2011
Slide 15: Order Entry Improving
Order Entry Improving G-15 First Quarter orders up 12% Yet, below what was initially anticipated Still below early 2011 record levels Markets unclear, mixed Expect sequentially stronger quarters Earnings range is $1.95 to $2.10 per share Includes initiative costs Should return to higher profit level
Slide 16: In Summary
In Summary, 2011 ending, 2012 beginning in a weak market environment Markets now improving Growth prospects are good Cash flow is solid Balance Sheet is strong Balance of 2012 sequentially better G-16
Slide 17: 2012 Annual Meeting of Shareholders
2012 Annual Meeting of Shareholders May 2, 2012 Materion Corporation
Slide 18: Materion Today: New Name, Same Strong Performance
MATERION TODAY: New Name, Same Strong Performance Sales growth (2005 – 2011) Operating profit growth (2005 – 2011) Repositioning of company 12%* CAGR 19% CAGR Successful * Excludes pass-through metal
Slide 19: Successful Repositioning – Snapshot 2002 2011
Successful Repositioning – Snapshot 19 2002 2011 Revenues $373M $1.5B Revenue % in Advanced Materials 47% 76% Sales per employee (thousands) $200 $506 Debt-to-Debt-Plus-Equity 43% 17% Working capital * % of sales 41% 23% Cyclicality High Lower Growth Low Higher * A/R, Inventory & A/P
Slide 20: Thesis: Positioned to Deliver Sustainable Long-Term Growth
THESIS Positioned to Deliver Sustainable Long-Term Growth A company with a strong platform… … Leveraging a high value-added business model… … Executing a focused growth plan
Slide 21: Positioned in Diverse Set of High-Growth Markets
Positioned in Diverse Set of High-Growth Markets Growth Entered multiple leading-edge growth markets since 2002 Defense Commercial Aerospace Medical Devices Disk Drives Optics Telecom Infrastructure LED’s Alternative Energy LCD Space / Science Notebooks Cellular phones (smartphones), Tablet computer
Slide 22: Operating from a Global Platform
Operating from a Global Platform 38% Operations in US and 11 Other Countries Significant International Sales* Q-1 2012 Customers in 50+ countries Expanded presence in Asia * Percentage of value added sales
Slide 23: A Unified Collaborative Organization
A Unified Collaborative Organization Leveraging the power of Materion across technology, production, procurement, materials and markets Cross-unit teams established for the wireless, LED and solar photovoltaic markets, with others to follow in 2013 Businesses are taking advantage of specialized expe
Slide 24: Thesis: Positioned to Deliver Sustainable Long-Term Growth
THESIS Positioned to Deliver Sustainable Long-Term Growth A company with a strong platform… … Leveraging a high value-added business model… … Executing a focused growth plan
Slide 25: High Value-Added Business Model
High Value-Added Business Model 1. Identify high growth secular markets 2. Target the fastest-growing niches of those markets 3. Expand with innovative products 4. Add synergistic acquisitions 5. Ensure financial discipline
Slide 26: 1. Identify High Growth Secular Markets
1. Identify High Growth Secular Markets Market Q1 2012 % of Value- added Sales 2012 Trends Key Drivers Consumer Electronics 21% Smartphone growth Tablet computers & LEDs Miniaturization Industrial Components & Commercial Aerospace 20% New airplane builds & retrofits Increasing air travel Heavy equip
Slide 27: Unique Global Positions
Unique Global Positions Only Fully Integrated Producer of Beryllium and Beryllium Alloys – Over 75 years of reserves at Utah Leading Global Position Unique Copper-Nickel-Tin Material ToughMet® – multiple advanced applications growing at over 30% annually Precision Optical Coatings – Visible to Infra
Slide 28: Continually Develop Innovative Products
Continually Develop Innovative Products Customer-centric product development Active research programs New product areas include – LEDs – Medical – Commercial Optics – Computer Hard Drives – Alternative Energy – Science – Commercial Aerospace – Hybrid & Electric Vehicles – Wireless
Slide 29: A Strong Record of Synergistic Acquisitions
A Strong Record of Synergistic Acquisitions Add complementary products / technology Expand market position Accretive in year 1 Added over $440M to sales and approximately 30% of company profit in 2011 Acquisitions 2005-2012 – Impact OMC – shield kit cleaning TFT – thin film coatings CERAC – inorgani
Slide 30: Ensure Financial Discipline
Ensure Financial Discipline Maintain strong balance sheet Debt-to-Debt-Plus-Equity Maximum 30% Strong cash flow Cash flow from operations $30M - $75M annually for the past five years Capex below depreciation Reduction in working capital goal to <20% sales Resources to finance acquisitions of $50M to
Slide 31: Thesis: Positioned to Deliver Sustainable Long-Term Growth
THESIS Positioned to Deliver Sustainable Long-Term Growth A company with a strong platform… … Leveraging a high value-added business model… … Executing a focused growth plan
Slide 32: Continuing to Execute Three-Point Strategy
Continuing to Execute Three-Point Strategy Grow and diversify the revenue base Expand margins Improve fixed and working capital utilization Increasing Shareholder Value
Slide 33: Financial Goals Next 3-5 Years
Financial Goals Next 3-5 Years Past 3-5 Years Next 3-5 years 33 Revenue growth – organic 12% >10% Acquisitions $35M - $40M Per year $50 - $100M Per Year Margins (OP % VA) 10% - 14% 14% - 18% Working capital % sales 23% - 25% <20% Debt-to-Debt-Plus-Equity 16% - 18% <30% ROIC (pre-tax) 9% - 12% >20%
Slide 34: 2012 Outlook and Guidance
2012 Outlook and Guidance Revenues (Billions) EPS $1.5-$1.6 $1.95-$2.10 $1.93 2011 2012 (F) $ 1.5 2011 2012 (F)
Slide 35: In Summary: Why Invest in Materion Corporation
IN SUMMARY Why Invest in Materion Corporation Positioning Performance Growth A leader in high-growth markets Strong performance record Executing three point strategy Global player, strong secular market drivers Sustainable long-term growth Proven business model Target, capture niche, then expand Cle
Slide 36: Questions
Questions