Materion Corporation · NYSE:MTRN
Materion — Q3 2022 Earnings Presentation
24 slides from Materion's earnings presentation, Nov 2, 2022
Slide 1: Materion Corporation 3Q 2022 Earnings Call
Materion Corporation 3Q 2022 Earnings Call November 2, 2022
Slide 2: Agenda
Agenda Tigers (tie ifey 7 John Zaranec — Chief Accounting Officer Opening Remarks & re A F F , Business Update Jugal Vijayvargiya — President and Chief Executive Officer Shelly Chadwick — Vice President and Chief Financial Officer eview Question and Answer Session mN MATERION
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
y, ft iy D hip gi Opening Remarks & Business Update Pe ae gee ae
Slide 5: Record Value-Added Sales, Adjusted EBITDA and EPS
Record Value-Added Sales, Adjusted EBITDA and EPS Delivered record value-added (VA) sales of $290.4 million, up 35% year-over-year Organic* VA up 15%, with meaningful contribution from outgrowth initiatives, coupled with strong end market demand led by semiconductor, industrial, aerospace and energy
Slide 6: Accelerating Organic Outgrowth with Key Investments
Accelerating Organic Outgrowth with Key Investments Phase 1 Precision Clad Strip Q1 2020" ~$100M Investment Precision Clad Strip Project achieved ‘Qualified Status’; ramp up proceeding * Announcement timing Phase 2 Precision Clad Strip Q1 2022" ~$60M Investment Significant phase two expansion of Pre
Slide 7: End Market Performance
n End Market Performance Q3 2022 VA Sales Q3 Comments Organic growth of 7% driven by increased content and new applications in logic, Semizonducton ane t oN communications and other advanced chips +f, Industrial $52.6 25% demand nee 11% organic growth Ne & Aerospace continuing to strengthen with six
Slide 8: Key Takeaways
Key Takeaways Achieved another quarter of record results = Delivered record VA sales for the seventh consecutive quarter = Record adjusted EBITDA of $48.8M, margin of ~17%, approaching mid-term target of 20% * Achieved all-time-record quarterly adjusted EPS Delivering on key strategic growth initiat
Slide 9: Financial Review
a : ys oa ny SLi Financial Review Shelly Chadwick oy Vice President and ¢ Chief Financial Officer / fi Se y ff / VES he \ 3 J YN / A f/f \ fy XN a Jf ae %~.
Slide 10: Q3 2022 Operating Performance
Q3 2022 Operating Performance Value-added Sales ($M) Adj. EBITDA ($M) $290.4 $48.8 +35% +29%** $41.2 $215.8 Po! ‘mine amt. add back Q3 2021 Q3 2022 Q3 2021 Q3 2022 Value-added sales were $290.4 million, up 35% Adjusted EBITDA was $48.8 million; margin of from prior year 16.8% = Strong demand across
Slide 11: Q3 2022 Financial Comparison
Q3 2022 Financial Comparison Record adjusted EBITDA of $48.8 million Growth driven by strong volumes, meaningful price/mix and HCS Electronic $6.8 Materials acquisition E $(2.3) 5. Partially offset by Ei —_ we om Unfavorable semiconductor mix due to $(2.1) & lower precious metal target demand — Yiel
Slide 12: Performance Materials Segment
Performance Materials Segment Record value-added sales of $148.8 million, up 29% from prior year Value-added Sales ($M) +29% $115.2 Q3 2021 Q3 Performance by End Market t Industrial t Aerospace & Defense A | Automotive $148.8 Q3 2022 Adj. EBITDA ($M) +29%* | $33.0 $28.8 * an mine amt. add back Q3 20
Slide 13: Electronic Materials Segment
Electronic Materials Segment Value-added Sales ($M) Adj. EBITDA ($M) beta sales of $113.9 million, up 63% from +63% | $113.9 +52% » _HCS-Electronic Materials contributing meaningful VA $17.2 growth + Organic growth of 10%* driven by semiconductor and $11.3 industrial bia Adjusted EBITDA of $17.2 mil
Slide 14: Precision Optics Segment
Precision Optics Segment Value-added Sales ($M) Adj. EBITDA ($M) $312 10% -37% $28.0 $64 20.4% Q3 2024 Q3 2022 Q3 2021 Q3 2022 Q3 Performance by End Market t Semiconductor B edica A | Aerospace & Defense y Consumer Electronics Value-added sales of $28.0 million - Decrease mainly driven by discontinu
Slide 15: Cash, Debt and Liquidity
Cash, Debt and Liquidity ($M) Q3 2021 | Q3 2022 Short-term Debt $0.5 $19.7 Long-term Debt $79.0 $474.3 Total Debt $79.5 $494.0 Cash & Cash Equivalents $18.0 $20.7 Net Debt (Cash) $61.5 $473.3 TTM Adjusted EBITDA $132.9 | $180.2 Net Debt (Cash) / TTM Adj. EBITDA 0.5x 2.6x Leverage remains within targ
Slide 16: Full Year 2022 Guidance
Full Year 2022 Guidance Adj. EPS Guidance $5.15 - $5.25 2022 Guidance ~30% » Updated annual adjusted EPS of $5.15 - $5.25, an increase of ~30% from 2021, at the midpoint [1 2021 2022E 2022 Modeling Assumptions Capital Expenditures $90M Interest Expense $21.5M HCS-Electronic Materials $20M Effective
Slide 17: Invest in Materion as We Advance Our Strategy
Invest in Materion as We Advance Our Strategy Becoming a global leader in high-performing advanced materials serving diverse and attractive markets well aligned with megatrends Building robust pipeline with investments in R&D as we focus on developing innovative solutions for our customers Leveragin
Slide 18: Appendix
> 2s Y eh oe ths. “eh Ve, ea Sah ths ae ag Ce ae See Appendix yy, ae i Sf Fe VT oe. Y fae
Slide 19: Reconciliation for Value-added Sales
Reconciliation for Value-added Sales (S in mitions) Q3 2022 13. 2021 Net Sales Performance Materials $ 169.4 $ 136.1 Electronic Materials 230.8 2207 Precision Optics 28.0 312 Other = — Total $ 4282 $ 388.0 Less: Pass-through Metal Costs Performance Materials $ 206 $ 20.9 Electronic Materials 116.9 1
Slide 20: Reconciliation for Non-GAAP Measures
Reconciliation for Non-GAAP Measures (Sin millions) Operating Profit (Loss) Performance Materials Electronic Materials Precision Optics Other Total Non-Operating (Income)/Expense Performance Materials Electronic Materials Precision Optics Other Total Depreciation, Depletion, and Amortization Perform
Slide 21: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) (S in millions) Q3 2022 Q3 2021 Special Items Performance Materials $ 41 $ aa Electronic Materials 04 - Precision Optics 04 01 Other 05 5.3 Total $ 54 §$ 54 Adjusted EBITDA Excluding Special Items Performance Materials $ 330 $ 288 Electronic Materials 17.
Slide 22: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) (Sin millions) Q3 2022 Q3 2021 Q3 2022 TIM Q3 2021 TIM GAAP as Reported Net income $ 20.0 $ 18.1 $ 76.9 $ 60.8 Income tax expense (benefit) 44 3.4 72 89 Interest expense 59 09 16.7 3.5 Depreciation, depletion, and amortization 13.14 13.4 50.8 42.9 Consoli
Slide 23: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) Performance Materials Third Quarter Ended ber October 1, (Millions) 30, 2022 eof VA 2021 *eof VA Net sales S$ 16904 S$ 1361 Pass-through metal cost 206 209 ‘Value-added sales S$ 1488 Ss 1S2 EBITDA $ 289 194% $ 288 25.0% Additional start up resources and s
Slide 24: Reconciliation for Non-GAAP Measures (Cont.)
Reconciliation for Non-GAAP Measures (Cont.) Third Quarter Ended September Diluted October1, Diluted (Millions) 30, 2022 EPS 2021 EPS Net income and EPS $ 20.0 $ 0.96 $ 18.2 $ 0.88 Special items Restructuring and cost reduction 04 —_ Additional start up resources and scrap 4.1 = Merger and acquisiti