Materion Corporation · NYSE:MTRN
Materion — Investor Presentation (May 2018)
28 slides from Materion's investor presentation, May 1, 2018
Slide 1: Investor Presentation May 2018
INVESTOR PRESENTATION May 2018
Slide 2: 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 factors that could cause the
Slide 3: Materion Company Profile
Materion Company Profile 3 Company Overview Value-added (VA) Sales • Materion is an integrated producer of high- performance advanced engineered materials - Maintains a leading market position for niche products across multiple end markets - Strong positions in growing markets with high barriers to
Slide 4: Key Facts
Key Facts 4 Share Statistics as of 03/29/2018 Q1 2018 TTM Financial Information Research coverage: KeyBanc, Jefferies, Sidoti, and Stonegate Adjusted EPS1 Adjusted EBITDA1 Debt-to-capitalization1 Operating cash flow Revenues Value-added sales1 $1.94 $95M <1% $76M $1,202M $710M ~1% Trading Symbol MTR
Slide 5: Performance Alloys and Composites (PAC)
Performance Alloys and Composites (PAC) 5 48% 12% 11% 17% 8% 4% Clad Strip ToughMet CuBe Be - Alloys Be – High Purity 53% 26% 20% 1% Europe United States Rest of World Asia 21% 21% 20% 14% 9% 7% 6% 2% Telecom Infrastructure Automotive Electronics Defense Industrial Components Medical Other Consumer
Slide 6: Advanced Materials
59% 24% 17% 168.6 181.0 182.8 176.3 228.0 0% 5% 10% 15% 20% 25% 30% 35% $100 $120 $140 $160 $180 $200 $220 $240 2013 2014 2015 2016 2017 Advanced Materials 54% 19% 17% 10% Services Packaging Targets Chemicals Europe United States Asia 49% 17% 8% 13% 5% 3% 5% Telecom Infrastructure Defense Other Medi
Slide 7: Precision Coatings
104.2 102.4 101.8 97.7 90.7 0% 4% 8% 12% 16% 20% 24% $60 $70 $80 $90 $100 $110 $120 2013 2014 2015 2016 2017 Precision Coatings 7 36% 45% 19% Blood Glucose Test Strips Projection Display Components Optical Filters & Arrays 69% 15% 15% 1% Europe United States Rest of World Asia 45% 20% 17% 9% 7% 2% A
Slide 8: Consistently Deliver Profitable Growth
PROFITABLE GLOBAL GROWTH PERFORMANCE-BASED CULTURE AND RESULTS COMMERCIAL EXCELLENCE INNOVATION OPERATIONAL EXCELLENCE ACQUISITIONS DIGITAL EXCELLENCE Consistently Deliver Profitable Growth 8 Deliver sustained growth of double-digit EPS CAGR 153.9 157.0 145.1 143.9 176.1 171.4 181.2 149.0 181.3 Q2 Q
Slide 9: Well-positioned with Leading Global Product Offering
Well-positioned with Leading Global Product Offering 9 Product External Segment 2017 % of Value-added Sales1 Expected Annual Growth Next 3-5 Years Leading supplier of beryllium-containing products Performance Alloys & Composites ~39% Leading supplier of high-purity precious metal for physical vapor
Slide 10: Global Megatrends Play to Our Strengths
Global Megatrends Play to Our Strengths 10 Key Trends • Miniaturization of electronics/IoT • Additional electronic instruments for autos, aircraft • Expanding high performance optical device opportunities • Innovation in medical diagnostics and sensors • Extraction of oil and gas from previously ina
Slide 11: Well-diversified Market Penetration
Market 2017 % of Value-added Sales1 Key Drivers Consumer Electronics 30% • Smart device growth • Sensing devices • Internet of Things (IoT) Industrial Components 15% • Heavy equipment builds • Plastic tooling • Fire protection (R and C construction) Medical 9% • Blood analysis test coating for medic
Slide 12: Innovation Leading to Organic Growth
9.7% 11.2% 11.6% 14.1% 16.0% 17.3% 2013 2014 2015 2016 2017 Q1 2018 TTM Innovation Leading to Organic Growth 12 New Product Value-added Sales1 as % of Total Noteworthy New Products Offerings Phosphor Wheel • Provides high brightness, longer life • Offers low noise characteristics, individual precisi
Slide 13: PAC Recovery Plan/Opportunity
PAC Recovery Plan/Opportunity 13 $33.3 $23.6 $9.2 $0 $5 $10 $15 $20 $25 $30 $35 2014 2015 2016 m ill io n s PAC Operating Profit $33.3 $9.2 $10.8 $9.2 $4.1 $0 $5 $10 $15 $20 $25 $30 $35 2014 Oil & Gas Fx Price/Mix/ Volume/ Mfg Efficiency 2016 m ill io n s 1 How did we get here? 1. Reduce cost footpr
Slide 14: Cash Flow and Working Capital Efficiency Focus
2016 2018 (F) <25% 28% $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 2013 2014 2015 2016 2017 Cash Flow from Operations ($ in millions) Free Cash Flow Capital Expenditures Cash Flow and Working Capital Efficiency Focus 14 Improve Working Capital3 Efficiency Working capital % of net sales 1 Free Cash F
Slide 15: Disciplined Capital Deployment Going Forward
Disciplined Capital Deployment Going Forward 15 Return Cash to Shareholders • Share repurchase - $50M authorization ($16M remaining) • Dividends – increased 5% in 2017 Organic Growth • Invest in facilities and productivity projects • Invest in new products Inorganic Growth • Complimentary products/t
Slide 16: Materion Investment Thesis
► Consistently delivering profitable growth ► Five consecutive quarters of year-over-year VA sales and OP growth ► PAC profitability improvement plan on track ► Sequential operating profit margin improvement last 4 quarters ► Q1 2018 adjusted operating profit margin highest level since Q2 2015 ► Glo
Slide 17: 2018 Forecasted Financial Guidance
►Full-year guidance ► Adjusted EPS of $1.95 - $2.10 ► Capex ~ $30M - $35M ► Mine development capital expenditures $5M - $10M ► Depreciation and amortization expense of $35M - $40M ► Effective tax rate excluding special items 16% – 18% 2018 Forecasted Financial Guidance 17
Slide 18: Appendix
Appendix
Slide 19: Making Advanced Materials That Improve the World
Consumer Electronics 30% Industrial Components 15% Medical 9% Defense 9% Automotive Electronics 8% Energy 7% Telecom Infrastructure 5% 0 82% Performance Alloys and Composites 54% Advanced Materials 33% Precision Coatings 13% Materion: Making Advanced Materials That Improve the World % of Value-added
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 Chemical Plant Hydroxide Whiting Arc Furnace Pebble Plant CuBe Master VCB1 / Be Powder CuBe Alloy Products High-Purity Be Products Strip/Bulk Manufacturing Be Manufacturing Competitor B Competitor A 1 Vacuum Cast Billet A-4
Slide 22: Heraeus – Augmentation through M&A
Heraeus – Augmentation through M&A Acquisition Description ► Acquisition of high-performance target materials business of Heraeus Group ► Provides broader market, technology, and geographic diversification ► Precious and non-precious metal targets for architectural and automotive glass, electronic d
Slide 23: Financial Information
> Financial Information MATERION
Slide 24: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales A-7 $ in millions Value-added sales is a non-GAAP financial measure that removes the impact of pass-through metal costs and allows for analysis without the distortion of the movement or volatility in metal prices. Internally, we manage our business on this basis,
Slide 25: Reconciliation for Adjusted EPS
Reconciliation for Adjusted EPS A-8 As detailed in the above reconciliation, we have adjusted the results for certain special items, such as cost reduction initiatives (i.e., asset impairment charges and severance), legacy legal and environmental costs, CEO transition costs, merger and acquisition c
Slide 26: Other Non-GAAP Items
Other Non-GAAP Items A-9 Adjusted EBITDA is calculated by adding depreciation, depletion, and amortization and certain special items such as cost reduction initiatives (i.e., asset impairment charges and severance), legacy legal and environmental costs, CEO transition costs, merger and acquisition c
Slide 27: Quarterly Sales and Value-added Sales by Segment
($ in millions, except per share data) 2018 Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4 2017 Q1 Sales PAC 103.3$ 107.7$ 93.6$ 90.3$ 394.8$ 90.6$ 97.7$ 103.7$ 95.5$ 387.5$ 92.6$ 108.5$ 109.4$ 119.0$ 429.5$ 118.3$ AM 149.9 131.4 113.6 87.4 482.3 108.1 113.6 107.2 108.3 437.2 114.7 157.1 157.8 161.2
Slide 28: Materion
MATERION