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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Materion Corporation | NYSE:MTRN | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 3.88 | 3.50% | 114.88 | 115.08 | 111.72 | 114.50 | 16,611 | 17:14:32 |
From Aug 2019 to Aug 2024
Materion Corporation (NYSE:MTRN) today reported first quarter 2017 financial results.
FIRST QUARTER 2017 RESULTS
Net sales for the first quarter of 2017 were $240.7 million, compared to net sales of $235.5 million for the first quarter of 2016. Value-added sales were $149.0 million for the first quarter of 2017, a 4% increase compared to value-added sales of $143.9 million for the first quarter of 2016. We experienced year-over-year growth in the consumer electronics and industrial components end markets due to new product sales and improved end market demand. The Company has achieved year-over-year growth for the fourth consecutive quarter in consumer electronics, our largest end market. This improvement was partially offset by a decline in sales into the medical and telecommunications infrastructure end markets. Although the defense end market value-added sales remained relatively strong in historical terms, value-added sales were not as high as the prior-year first quarter levels.
Operating profit for the first quarter of 2017 was $3.4 million versus $7.5 million for the first quarter of the prior year. Adjusted operating profit in the first quarter of 2017 was $7.7 million, an increase of 3% over the prior-year first quarter and sequentially an increase of 7% compared to the $7.2 million recorded in the fourth quarter of 2016. Adjusted operating profit excludes non-recurring costs related to the Company’s CEO transition, acquisition and integration, cost realignment, and legacy environmental remediation. The improvement in adjusted operating profit is due to sales growth offset slightly by an unfavorable product mix.
Net income for the first quarter of 2017 was $3.1 million, or $0.15 per share, diluted, versus $5.4 million, or $0.27 per share, diluted, for the first quarter of the prior year. Adjusted earnings for the first quarter of 2017 were $0.29 per share, diluted, a 7% increase compared to $0.27 per share, diluted, in the first quarter of 2016.
Jugal Vijayvargiya, President and Chief Executive Officer, commented, “I am pleased with our first quarter results and the momentum we have moving into the second quarter and second half of 2017. We grew value-added sales on both a sequential and year-over-year basis, and the acquisition of Heraeus high-performance target materials business was successfully completed late in the quarter.”
Mr. Vijayvargiya, continued, “After having the opportunity to spend the past few weeks meeting with employees and visiting Company locations, I am even more excited about Materion’s future growth potential based on our highly differentiated product platforms. I look forward to continuing to drive Materion in the areas of innovation and technology, focusing on profitable growth coupled with a commitment to operational and commercial excellence.”
BUSINESS SEGMENT REPORTING
Advanced Materials
Advanced Materials’ net sales for the first quarter of 2017 were $114.7 million, versus first quarter 2016 net sales of $108.1 million. Value-added sales for the first quarter of 2017 were $47.3 million, an increase of 12% compared to first quarter 2016 value-added sales of $42.1 million. Acquisition of the Heraeus high-performance target materials business contributed $2.9 million of value-added sales in the quarter.
Operating profit for the first quarter of 2017 was $6.4 million, compared to operating profit of $5.2 million in the first quarter of 2016. Excluding non-recurring acquisition and integration costs, adjusted operating profit for the first quarter of 2017 was $7.4 million, a 42% year-over-year increase. This improvement in adjusted operating profit is due to favorable product mix driven by new product sales growth and stronger demand in several key end markets, including the segment’s largest end market of consumer electronics.
The Heraeus acquisition also contributed favorably to the growth in adjusted operating profit during the first quarter of 2017. Integration of this acquisition into our global Advanced Materials business is progressing on schedule. We are encouraged that the strategic value drivers of geographic expansion and product diversification are forecasted to contribute profitable growth in 2017.
Performance Alloys and Composites
Net sales for Performance Alloys and Composites in the first quarter of 2017 were $92.6 million, versus net sales of $90.6 million in the first quarter of 2016. Value-added sales were $79.2 million in the first quarter of 2017 compared to $78.2 million in the first quarter of 2016. The year-over-year increase in value-added sales in the first quarter of 2017 is primarily due to growth in the consumer electronics and industrial components end markets, offset by decreased sales into the defense end market.
Operating profit for the first quarter of 2017 was $0.2 million, compared to $1.5 million in the first quarter of 2016. Excluding cost reduction efforts, primarily related to the closure of our service center in Fukaya, Japan, adjusted operating profit for the first quarter of 2017 was $0.7 million. The decrease in adjusted operating profit versus the same period in the prior year is due to unfavorable product mix.
Precision Coatings
Precision Coatings’ net sales for the first quarter of 2017 were $33.4 million, versus net sales of $36.8 million in the first quarter of 2016 and $30.5 million in the fourth quarter of 2016. Value-added sales for the first quarter of 2017 were $23.3 million, compared to value-added sales of $24.6 million for the same period of 2016 and $22.2 million in the fourth quarter of 2016. The decrease in value-added sales on a year-over-year basis is reflective of decreased medical end market sales, offset partially by sales growth in defense applications.
Precision Coatings’ operating profit for the first quarter of 2017 was $2.2 million, compared to $4.1 million in the first quarter of 2016 and $1.8 million in the fourth quarter of 2016. The decrease in operating profit on a year-over-year basis was due to lower sales volume and unfavorable product mix.
OUTLOOK
Based on the current order book, the Company confirms its previously announced annual earnings guidance range of $1.45 to $1.60 per share. The forecasted significant improvement in quarterly earnings as we progress through the balance of 2017 is being driven by new product sales growth, favorable product mix, end market demand growth, raw material beryllium hydroxide shipments, an improved cost structure, and acquisition of the Heraeus target materials business.
ADJUSTED EARNINGS GUIDANCE
It is not possible for the Company to identify the amount or significance of future adjustments associated with potential insurance and other litigation claims, legacy environmental costs, acquisition and integration costs, certain income tax items, or other non-routine costs that the Company adjusts in the presentation of adjusted earnings guidance. These items are dependent on future events that are not reasonably estimable at this time. Accordingly, the Company is unable to reconcile without unreasonable effort the forecasted range of adjusted earnings guidance for the full year to a comparable GAAP range. However, items excluded from the Company's adjusted earnings guidance include the historical adjustments noted in Attachments 4 and 5 to this press release.
CONFERENCE CALL
Materion Corporation will host a conference call with analysts at 9:00 a.m. Eastern Time, April 28, 2017. The conference call will be available via webcast through the Company’s website at www.materion.com or through www.InvestorCalendar.com. By phone, please dial (877) 407-0778. Callers outside the U.S. can dial (201) 689-8565. A replay of the call will be available until May 13, 2017 by dialing (877) 481-4010 or (919) 882-2331; please reference Replay ID Number 10271. The call will also be archived on the Company’s website.
FORWARD-LOOKING STATEMENTS
Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements, in particular, the outlook provided above. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors.
These factors include, in addition to those mentioned elsewhere herein:
Materion Corporation is headquartered in Mayfield Heights, Ohio. The Company, through its wholly owned subsidiaries, supplies highly engineered advanced enabling materials to global markets. Products include precious and non-precious specialty metals, inorganic chemicals and powders, specialty coatings, specialty engineered beryllium alloys, beryllium and beryllium composites, and engineered clad and plated metal systems.
Attachment 1
Materion Corporation and SubsidiariesConsolidated Statements of Income(Unaudited)
First Quarter Ended (In thousands except per share amounts) March 31, 2017 April 1, 2016 Net sales $ 240,669 $ 235,511 Cost of sales 197,673 192,154 Gross margin 42,996 43,357 Selling, general, and administrative expense 33,628 30,487 Research and development expense 3,130 3,452 Other — net 2,818 1,886 Operating profit 3,420 7,532 Interest expense — net 493 415 Income before income taxes 2,927 7,117 Income tax (benefit) expense (123 ) 1,749 Net income $ 3,050 $ 5,368 Basic earnings per share: Net income per share of common stock $ 0.15 $ 0.27 Diluted earnings per share: Net income per share of common stock $ 0.15 $ 0.27 Cash dividends per share $ 0.095 $ 0.090 Weighted-average number of shares of common stock outstanding: Basic 19,969 20,018 Diluted 20,375 20,228Attachment 2
Materion Corporation and SubsidiariesConsolidated Balance Sheets
(Unaudited) (Thousands) March 31, 2017 December 31, 2016 Assets Current assets Cash and cash equivalents $ 16,341 $ 31,464 Accounts receivable 115,497 100,817 Inventories 218,548 200,865 Prepaid and other current assets 14,157 12,138 Total current assets 364,543 345,284 Long-term deferred income taxes 41,727 39,409 Property, plant, and equipment 868,037 861,267 Less allowances for depreciation, depletion, and amortization (612,286 ) (608,636 ) Property, plant, and equipment—net 255,751 252,631 Intangible assets 13,353 11,074 Other assets 6,214 5,950 Goodwill 89,732 86,950 Total Assets $ 771,320 $ 741,298 Liabilities and Shareholders’ Equity Current liabilities Short-term debt $ 6,929 $ 733 Accounts payable 40,654 32,533 Salaries and wages 19,239 29,885 Other liabilities and accrued items 23,655 21,340 Income taxes 3,647 4,781 Unearned revenue 2,231 1,105 Total current liabilities 96,355 90,377 Other long-term liabilities 17,321 17,979 Retirement and post-employment benefits 92,623 91,505 Unearned income 40,223 41,369 Long-term income taxes 1,994 2,100 Deferred income taxes 275 274 Long-term debt 25,430 3,605 Shareholders’ equity 497,099 494,089 Total Liabilities and Shareholders’ Equity $ 771,320 $ 741,298Attachment 3
Materion Corporation and SubsidiariesConsolidated Statements of Cash Flows(Unaudited)
First Quarter Ended (Thousands) March 31, 2017 April 1, 2016 Cash flows from operating activities: Net income $ 3,050 $ 5,368 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation, depletion and amortization 10,090 11,308 Amortization of deferred financing costs in interest expense 230 151 Stock-based compensation expense (non-cash) 2,338 888 (Gain) loss on sale of property, plant, and equipment 28 (720 ) Deferred tax (benefit) expense (696 ) (1,118 ) Changes in assets and liabilities net of acquired assets and liabilities: Decrease (increase) in accounts receivable (13,644 ) (14,689 ) Decrease (increase) in inventory (9,593 ) (527 ) Decrease (increase) in prepaid and other current assets (1,435 ) (7 ) Increase (decrease) in accounts payable and accrued expenses (835 ) (15,085 ) Increase (decrease) in unearned revenue 1,126 (255 ) Increase (decrease) in interest and taxes payable (1,237 ) 1,009 Increase (decrease) in long-term liabilities (5,291 ) (2,920 ) Other-net (960 ) (79 ) Net cash (used in) operating activities (16,829 ) (16,676 ) Cash flows from investing activities: Payments for purchase of property, plant, and equipment (6,128 ) (5,714 ) Payments for mine development (200 ) (4,782 ) Payments for acquisition (16,406 ) — Proceeds from sale of property, plant, and equipment 16 752 Net cash (used in) investing activities (22,718 ) (9,744 ) Cash flows from financing activities: Repayment of short-term debt 6,186 14,103 Proceeds from issuance of long-term debt 27,000 10,000 Repayment of long-term debt (5,180 ) (227 ) Principal payments under capital lease obligations (190 ) (241 ) Cash dividends paid (1,895 ) (1,801 ) Deferred financing fees (300 ) — Common shares withheld for taxes (1,480 ) (768 ) Repurchase of common stock (405 ) (462 ) Net cash provided by financing activities 23,736 20,604 Effects of exchange rate changes 688 448 Net change in cash and cash equivalents (15,123 ) (5,368 ) Cash and cash equivalents at beginning of period 31,464 24,236 Cash and cash equivalents at end of period $ 16,341 $ 18,868Attachment 4
Materion Corporation and SubsidiariesReconciliation of Non-GAAP Measure - Value-added Sales(Unaudited)
First Quarter Ended Fourth Quarter Ended (Millions) March 31, 2017 April 1, 2016 December 31, 2016 Net Sales Performance Alloys and Composites $ 92.6 $ 90.6 $ 95.5 Advanced Materials 114.7 108.1 108.3 Precision Coatings 33.4 36.8 30.5 Other — — — Total $ 240.7 $ 235.5 $ 234.3 Less: Pass-through Metal Cost Performance Alloys and Composites $ 13.4 $ 12.4 $ 12.3 Advanced Materials 67.4 66.0 67.1 Precision Coatings 10.1 12.2 8.3 Other 0.8 1.0 1.5 Total $ 91.7 $ 91.6 $ 89.2 Value-added Sales (non-GAAP) Performance Alloys and Composites $ 79.2 $ 78.2 $ 83.2 Advanced Materials 47.3 42.1 41.2 Precision Coatings 23.3 24.6 22.2 Other (0.8 ) (1.0 ) (1.5 ) Total $ 149.0 $ 143.9 $ 145.1 Gross Margin % of VA % of VA % of VA Performance Alloys and Composites $ 16.3 21% $ 17.7 23% $ 19.0 23% Advanced Materials 18.4 39% 15.8 38% 16.7 41% Precision Coatings 8.3 36% 10.0 41% 7.6 34% Other — — (0.1 ) — 0.8 — Total $ 43.0 29% $ 43.4 30% $ 44.1 30% Operating Profit % of VA % of VA % of VA Performance Alloys and Composites $ 0.2 —% $ 1.5 2% $ 0.5 1% Advanced Materials 6.4 14% 5.2 12% 5.5 13% Precision Coatings 2.2 9% 4.1 17% 1.8 8% Other (5.4 ) — (3.3 ) — (4.2 ) — Total $ 3.4 2% $ 7.5 5% $ 3.6 2% First Quarter Ended Fourth Quarter Ended (Millions) March 31, 2017 April 1, 2016 December 31, 2016 Special Items Performance Alloys and Composites $ 0.5 $ — $ 2.6 Advanced Materials 1.0 — — Precision Coatings — — — Other 2.8 — 1.0 Total $ 4.3 $ — $ 3.6 Operating Profit Excluding Special Items % of VA % of VA % of VA Performance Alloys and Composites $ 0.7 1% $ 1.5 2% $ 3.1 4% Advanced Materials 7.4 16% 5.2 12% 5.5 13% Precision Coatings 2.2 9% 4.1 17% 1.8 8% Other (2.6 ) — (3.3 ) — (3.2 ) — Total $ 7.7 5% $ 7.5 5% $ 7.2 5%The cost of gold, silver, platinum, palladium, and copper is passed through to customers and, therefore, the trends and comparisons of net sales are affected by movements in the market price of these metals. Internally, management also reviews net sales on a value-added basis. Value-added sales are a non-GAAP measure that deducts the value of the pass-through metals sold from net sales. Value-added sales allows management to assess the impact of differences in net sales between periods or segments and analyze the resulting margins and profitability without the distortion of the movements in pass-through metal prices. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. The Company sells other metals and materials that are not considered direct pass throughs, and these costs are not deducted from net sales to calculate value-added sales.
The Company’s pricing policy is to pass the cost of these metals on to customers in order to mitigate the impact of price volatility on the Company’s results from operations. Value-added information is being presented since changes in metal prices may not directly impact profitability. It is the Company’s intent to allow users of the financial statements to review sales with and without the impact of the pass-through metals.
Attachment 5
Materion Corporation and SubsidiariesReconciliation of Non-GAAP Measures - Profitability(Unaudited)
First Quarter Ended Fourth Quarter Ended (Millions except per share amounts) March 31, 2017 April 1, 2016 December 31, 2016 GAAP as Reported Net Sales $ 240.7 $ 235.5 $ 234.3 Operating profit 3.4 7.5 3.6 Net income 3.1 5.4 6.8 EPS - Diluted $ 0.15 $ 0.27 $ 0.33 Operating Profit Special Items Cost reductions $ 0.7 $ — $ 2.6 Legacy environmental costs 0.2 — — CEO transition 1.7 — — Acquisition costs 1.7 — 1.0 Total operating profit special items $ 4.3 $ — $ 3.6 Operating Profit Special Items - net of tax $ 2.8 $ — $ 2.3 Tax Special Item $ — $ — $ (3.3 ) Non-GAAP Measures - Adjusted Profitability Value-added (VA) sales $ 149.0 $ 143.9 $ 145.1 Operating profit 7.7 7.5 7.2 Operating profit % of VA 5.2 % 5.0 % 5.0 % Net income 5.9 5.4 5.8 EPS - Diluted $ 0.29 $ 0.27 $ 0.28In addition to presenting financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains financial measures, including gross margin, operating profit, segment operating profit, net income, and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation and Attachment 4, we have adjusted the results for certain special items such as CEO transition costs, cost reduction initiatives (i.e., asset impairment charges and severance), legacy environmental costs, merger and acquisition costs, and certain income tax items from the applicable GAAP measure. Internally, management reviews the results of operations without the impact of these costs in order to assess the profitability from ongoing activities. We are providing this information because we believe it will assist investors in analyzing our financial results and, when viewed in conjunction with the GAAP results, provide a more comprehensive understanding of the factors and trends affecting our operations.
Attachment 6
Materion Corporation and SubsidiariesValue-added sales by Market(Unaudited)
First Quarter Ended Fourth Quarter (Millions) March 31, 2017 April 1, 2016 % Change 2016 % Change Materion Corporation Consumer Electronics $ 41.3 $ 38.1 8.4%
$ 41.5 (0.5 )% Industrial Components 25.5 22.7 12.3%
25.1 1.6%
Medical 16.6 18.3 (9.3 )% 13.9 19.4%
Defense 12.9 14.3 (9.8 )% 14.8 (12.8 )% Automotive Electronics 12.6 12.7 (0.8 )% 12.1 4.1%
Energy 8.8 8.9 (1.1 )% 7.3 20.5%
Telecom Infrastructure 7.0 7.8 (10.3 )% 8.5 (17.6 )% Other 24.3 21.1 15.2%
21.9 11.0%
Total $ 149.0 $ 143.9 3.5%
$ 145.1 2.7%
Performance Alloy and Composites Consumer Electronics $ 16.5 $ 14.7 12.2%
$ 17.8 (7.3 )% Industrial Components 17.4 16.1 8.1%
18.4 (5.4 )% Medical 2.0 1.8 11.1%
1.7 17.6%
Defense 7.4 9.8 (24.5 )%9.9
(25.3 )% Automotive Electronics 12.1 12.0 0.8%
11.3 7.1%
Energy 5.0 5.6 (10.7 )% 4.5 11.1%
Telecom Infrastructure 5.1 5.4 (5.6 )% 6.8 (25.0 )% Other 13.7 12.8 7.0%
12.8 7.0%
Total $ 79.2 $ 78.2 1.3%
$ 83.2 (4.8 )% Advanced Materials Consumer Electronics $ 21.3 $ 19.3 10.4%
$ 18.7 13.9%
Industrial Components 6.3 5.1 23.5%
5.5 14.5%
Medical 2.4 2.8 (14.3 )% 2.7 (11.1 )% Defense 1.9 1.5 26.7%
1.6 18.8%
Automotive Electronics — — —%
— —%
Energy 3.8 3.3 15.2%
2.7 40.7%
Telecom Infrastructure 1.9 2.4 (20.8 )% 1.7 11.8%
Other 9.7 7.7 26.0%
8.3 16.9%
Total $ 47.3 $ 42.1 12.4%
$ 41.2 14.8%
Precision Coatings Consumer Electronics $ 3.5 $ 4.2 (16.7 )% $ 5.0 (30.0 )% Industrial Components 1.8 1.5 20.0%
1.2 50.0%
Medical 12.1 13.8 (12.3 )% 9.5 27.4%
Defense 3.6 3.0 20.0%
3.3 9.1%
Automotive Electronics 0.5 0.7 (28.6 )% 0.8 (37.5 )% Energy — — —%
— —%
Telecom Infrastructure — — —%
— —%
Other 1.8 1.4 28.6%
2.4 (25.0 )% Total $ 23.3 $ 24.6 (5.3 )% $ 22.2 5.0%
Eliminations $ (0.8 ) $ (1.0 ) $ (1.5 )
View source version on businesswire.com: http://www.businesswire.com/news/home/20170428005367/en/
Materion CorporationInvestor Contact:Stephen F. Shamrock, 216-383-4010stephen.shamrock@materion.comorMedia Contact:Patrick S. Carpenter, 216-383-6835patrick.carpenter@materion.comorhttp://www.materion.comMayfield Hts-g
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