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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 | |
|---|---|---|---|---|---|---|---|---|
| 3.58 | 3.10% | 118.94 | 119.70 | 116.32 | 116.86 | 177,627 | 22:07:22 |
From Jul 2019 to Jul 2024
Materion Corporation (NYSE:MTRN) today reported second quarter 2018 financial results.
SECOND QUARTER 2018 RESULTS
Net sales for the second quarter 2018 were $309.1 million, compared to $295.8 million for the prior year. Value-added sales of $189.9 million were a record for any quarter, up 8% compared to $176.1 million for the prior year. Focus on commercial execution and new product sales, as well as strong end market demand, led to the year-over-year improvement. New product sales were $30.7 million in the quarter, representing 16% of value-added sales.
Operating profit for the second quarter totaled $15.2 million compared to $10.1 million in the prior year. Adjusted operating profit improved 26% compared to $12.1 million in 2017 due to performance improvements and leveraging sales growth.
Second quarter 2018 net income was $11.1 million compared to $7.3 million in the prior year. On a per share basis, second quarter 2018 net income of $0.54 per share, diluted, improved 29% versus adjusted earnings of $0.42 in the second quarter 2017.
“This quarter represents a sales and profit milestone for us and is the sixth consecutive quarter of both value-added sales and earnings growth. We remain focused on executing our multi-pillar strategy in the second half of 2018 and beyond to consistently deliver profitable growth,” stated Jugal Vijayvargiya, President and Chief Executive Officer. “Based on our solid first half performance and disciplined execution of our strategy, we are raising the full-year adjusted earnings guidance to $2.00 to $2.15 per share.”
For the first six months of 2018, net sales were $612.6 million, compared to net sales of $536.5 million for the same period last year. Value-added sales for the first six months of 2018 were $371.2 million, an increase of 14%, versus $325.1 million for the first six months of 2017. Excluding the Heraeus high-performance target materials business (HTB), value-added sales have grown 10% in 2018 compared to 2017, attributable to new product sales, commercial execution, and improved end market demand.
Year-to-date net income was $21.7 million or $1.05 per share, diluted, as compared to $10.4 million, or $0.51 per share, in the comparable prior-year period. Excluding special items in both periods, earnings for the first half of 2018 were $21.7 million, or $1.05 per share, as compared to $14.5 million, or $0.71 per share, for the same period in the prior year. Performance improvements across the company combined with sales growth are contributing to the nearly 50% earnings growth.
BUSINESS SEGMENT SECOND QUARTER 2018 RESULTS
Performance Alloys and Composites
Net sales for Performance Alloys and Composites were $129.7 million for second quarter 2018 compared to $108.5 million in the second quarter of 2017. Value-added sales were a record $110.1 million versus $92.7 million in the prior year. This significant 19% sales increase was primarily driven by new product sales, improved product mix, and strengthening end market demand.
Operating profit for the second quarter of 2018 was $12.3 million, or 11% of value-added sales, compared to $5.5 million in the second quarter of 2017. Operating profit nearly doubled compared to the prior-year adjusted operating profit of $6.2 million leveraging sales growth and performance improvements.
Advanced Materials
Advanced Materials’ net sales for the second quarter of 2018 were $150.4 million, versus $157.1 million in the prior year. Value-added sales were $57.3 million, versus $62.0 million in the prior-year quarter, due primarily to lower demand in the consumer electronics display market and facility relocation in Germany as part of the previously announced HTB acquisition.
Operating profit was $5.6 million, compared to adjusted operating profit of $9.0 million in the prior year with softening demand in the display market, unfavorable product mix, and planned relocation and integration expenses.
Precision Coatings
Precision Coatings’ net sales for the second quarter of 2018 were $29.0 million versus prior-year sales of $30.2 million. Value-added sales of $23.4 million were up 4% compared to $22.6 million for the same period of 2017. Operating profit was $2.2 million versus $2.3 million in the prior year.
OUTLOOK
The Company delivered favorable second quarter 2018 financial results for both top and bottom line, led by performance improvements, increased new product sales, and favorable end market demand. Based on these factors and current order entry levels, we are raising full-year 2018 adjusted earnings guidance from $1.95 to $2.10 per share, diluted, to $2.00 to $2.15 per share. The midpoint of the revised guidance represents an approximate 21% increase from the prior year.
ADJUSTED EARNINGS GUIDANCE
It is not possible for the Company to identify the amount or significance of future adjustments associated with potential insurance and litigation claims, legacy environmental costs, acquisition and integration costs, certain income tax items, or other special items 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 an investor conference call with analysts at 9:00 a.m. Eastern Time, July 26, 2018. 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 August 9, 2018 by dialing (877) 481-4010 or (919) 882-2331; please reference replay ID number 23767. 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 Subsidiaries Consolidated Statements of Income(Unaudited)
Second Quarter Ended Six Months Ended June 29, June 30, June 29, June 30, (In thousands except per share amounts) 2018 2017 2018 2017 Net sales $ 309,085 $ 295,842 $ 612,552 $ 536,511 Cost of sales 247,247 241,064 492,434 438,577 Gross margin 61,838 54,778 120,118 97,934 Selling, general, and administrative expense 38,473 37,928 76,935 71,449 Research and development expense 3,860 3,544 7,503 6,674 Other — net 4,313 3,204 7,237 6,022 Operating profit 15,192 10,102 28,443 13,789 Interest expense — net 667 695 1,397 1,188 Other non-operating expense—net 437 368 879 635 Income before income taxes 14,088 9,039 26,167 11,966 Income tax expense 2,944 1,726 4,459 1,603 Net income $ 11,144 $ 7,313 $ 21,708 $ 10,363 Basic earnings per share: Net income per share of common stock $ 0.55 $ 0.37 $ 1.08 $ 0.52 Diluted earnings per share: Net income per share of common stock $ 0.54 $ 0.36 $ 1.05 $ 0.51 Cash dividends per share $ 0.105 $ 0.100 $ 0.205 $ 0.195 Weighted-average number of shares of common stock outstanding: Basic 20,221 20,012 20,178 19,991 Diluted 20,593 20,347 20,583 20,348Attachment 2
Materion Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (Thousands) June 29, 2018 December 31, 2017 Assets Current assets Cash and cash equivalents $ 42,895 $ 41,844 Accounts receivable 135,699 124,014 Inventories 209,204 220,352 Prepaid and other current assets 19,617 24,733 Total current assets 407,415 410,943 Long-term deferred income taxes 16,588 17,047 Property, plant, and equipment 894,306 891,789 Less allowances for depreciation, depletion, and amortization (637,730 ) (636,211 ) Property, plant, and equipment—net 256,576 255,578 Intangible assets—net 7,899 9,847 Other assets 6,991 6,992 Goodwill 90,697 90,677 Total Assets $ 786,166 $ 791,084 Liabilities and Shareholders’ Equity Current liabilities Short-term debt $ 798 $ 777 Accounts payable 46,240 49,059 Salaries and wages 32,299 42,694 Other liabilities and accrued items 27,182 28,044 Income taxes 2,994 1,084 Unearned revenue 7,576 5,451 Total current liabilities 117,089 127,109 Other long-term liabilities 14,203 14,895 Capital lease obligations 15,896 16,072 Retirement and post-employment benefits 80,944 93,225 Unearned income 34,734 36,905 Long-term income taxes 4,896 4,857 Long-term deferred income taxes 210 213 Long-term debt 2,453 2,827 Shareholders’ equity 515,741 494,981 Total Liabilities and Shareholders’ Equity $ 786,166 $ 791,084Attachment 3
Materion Corporation and Subsidiaries Consolidated Statements of Cash Flows(Unaudited)
Six Months Ended (Thousands) June 29, 2018 June 30, 2017 Cash flows from operating activities: Net income $ 21,708 $ 10,363 Adjustments to reconcile net income to net cash provided from (used in) operating activities: Depreciation, depletion, and amortization 18,349 20,725 Amortization of deferred financing costs in interest expense 514 440 Non-cash compensation expense 5,412 5,816 Deferred income tax expense 429 658 Changes in assets and liabilities net of acquired assets and liabilities: Decrease (increase) in accounts receivable (12,060 ) (30,882 ) Decrease (increase) in inventories 10,428 (6,498 ) Decrease (increase) in prepaid and other current assets 4,928 (9,267 ) Increase (decrease) in accounts payable and accrued expenses (14,189 ) 15,519 Increase (decrease) in unearned revenue 2,132 1,685 Increase (decrease) in interest and taxes payable 2,084 (1,115 ) Domestic pension plan contributions (13,000 ) (4,000 ) Other-net 2,569 (3,141 ) Net cash provided by operating activities 29,304 303 Cash flows from investing activities: Payments for purchase of property, plant, and equipment (17,153 ) (11,252 ) Payments for mine development (3,425 ) (509 ) Payments for acquisition — (16,504 ) Proceeds from sale of property, plant, and equipment 27 27 Net cash used in investing activities (20,551 ) (28,238 ) Cash flows from financing activities: Proceeds from issuance of short-term debt — 2,387 Proceeds from issuance of long-term debt — 45,000 Repayment of long-term debt (383 ) (25,362 ) Principal payments under capital lease obligations (425 ) (383 ) Cash dividends paid (4,137 ) (3,899 ) Deferred financing costs — (300 ) Repurchase of common stock — (1,086 ) Payments of withholding taxes for stock-based compensation awards (2,765 ) (2,302 ) Net cash (used in) provided by financing activities (7,710 ) 14,055 Effects of exchange rate changes 8 913 Net change in cash and cash equivalents 1,051 (12,967 ) Cash and cash equivalents at beginning of period 41,844 31,464 Cash and cash equivalents at end of period $ 42,895 $ 18,497Attachment 4
Materion Corporation and Subsidiaries Reconciliation of Non-GAAP Measure - Value-added Sales(Unaudited)
Second Quarter Ended Six Months Ended (Millions) June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017 Net Sales Performance Alloys and Composites $ 129.7 $ 108.5 $ 248.0 $ 201.1 Advanced Materials 150.4 157.1 303.9 271.8 Precision Coatings 29.0 30.2 60.7 63.6 Other — — — — Total $ 309.1 $ 295.8 $ 612.6 $ 536.5 Less: Pass-through Metal Cost Performance Alloys and Composites $ 19.6 $ 15.8 $ 37.6 $ 29.2 Advanced Materials 93.1 95.1 188.3 162.5 Precision Coatings 5.6 7.6 13.7 17.7 Other 0.9 1.2 1.8 2.0 Total $ 119.2 $ 119.7 $ 241.4 $ 211.4 Value-added Sales (non-GAAP) Performance Alloys and Composites $ 110.1 $ 92.7 $ 210.4 $ 171.9 Advanced Materials 57.3 62.0 115.6 109.3 Precision Coatings 23.4 22.6 47.0 45.9 Other (0.9 ) (1.2 ) (1.8 ) (2.0 ) Total $ 189.9 $ 176.1 $ 371.2 $ 325.1 % of % of % of % of Gross Margin VA VA VA VA Performance Alloys and Composites $ 31.1 28% $ 22.8 25% $ 58.9 28% $ 39.1 23% Advanced Materials 21.3 37% 23.3 38% 42.1 36% 41.7 38% Precision Coatings 9.1 39% 8.9 39% 19.1 41% 17.2 37% Other 0.3 — (0.2 ) — — — (0.1 ) — Total $ 61.8 33% $ 54.8 31% $ 120.1 32% $ 97.9 30% % of % of % of % of Operating Profit VA VA VA VA Performance Alloys and Composites $ 12.3 11% $ 5.5 6% $ 22.2 11% $ 5.7 3% Advanced Materials 5.6 10% 8.7 14% 11.5 10% 15.1 14% Precision Coatings 2.2 9% 2.3 10% 5.6 12% 4.5 10% Other (4.9 ) — (6.4 ) — (10.8 ) — (11.5 ) — Total $ 15.2 8% $ 10.1 6% $ 28.5 8% $ 13.8 4% Second Quarter Ended Six Months Ended (Millions) June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017 Special Items Performance Alloys and Composites $ — $ 0.7 $ — $ 1.2 Advanced Materials — 0.3 — 1.3 Precision Coatings — — — — Other — 1.0 0.7 3.8 Total $ — $ 2.0 $ 0.7 $ 6.3 % of % of % of % ofOperating Profit Excluding Special Items
VA VA VA VA Performance Alloys and Composites $ 12.3 11% $ 6.2 7% $ 22.2 11% $ 6.9 4% Advanced Materials 5.6 10% 9.0 15% 11.5 10% 16.4 15% Precision Coatings 2.2 9% 2.3 10% 5.6 12% 4.5 10% Other (4.9 ) — (5.4 ) — (10.1 ) — (7.7 ) — Total $ 15.2 8% $ 12.1 7% $ 29.2 8% $ 20.1 6%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 is a non-GAAP financial 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 Subsidiaries Reconciliation of Non-GAAP Measures - Profitability(Unaudited)
Second Quarter Ended Six Months Ended (Millions except per share amounts) June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017 GAAP as Reported Net Sales $ 309.1 $ 295.8 $ 612.6 $ 536.5 Operating profit 15.2 10.1 28.5 13.8 Net income 11.1 7.3 21.7 10.4 EPS - Diluted $ 0.54 $ 0.36 $ 1.05 $ 0.51 Operating Profit Special Items Cost reductions $ — $ 0.7 $ — $ 1.4 Legacy legal & environmental costs — — 0.7 0.2 CEO transition — 0.9 — 2.6 Acquisition costs — 0.4 — 2.1 Total operating profit special items $ — $ 2.0 $ 0.7 $ 6.3 Operating Profit Special Items - net of tax $ — $ 1.3 $ 0.6 $ 4.1 Tax Special Item $ — $ — $ (0.6 ) $ — Non-GAAP Measures - Adjusted Profitability Value-added (VA) sales $ 189.9 $ 176.1 $ 371.2 $ 325.1 Operating profit 15.2 12.1 29.2 20.1 Operating profit % of VA 8.0 % 6.9 % 7.9 % 6.2 % Net income 11.1 8.6 21.7 14.5 EPS - Diluted $ 0.54 $ 0.42 $ 1.05 $ 0.71In addition to presenting financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains financial measures, including 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 legal and environmental costs, merger and acquisition costs, and certain income tax items from the applicable GAAP financial 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 Subsidiaries Value-added sales by Market(Unaudited)
Second Quarter Ended Six Months Ended June 29, June 30, June 29, June 30, (Millions) 2018 2017 % Change 2018 2017 % Change Materion Corporation Consumer Electronics $ 57.3 $ 54.2 5.7 % $ 110.9 $ 100.3 10.6 % Industrial Components 28.9 28.1 2.8 % 61.0 51.7 18.0 % Defense 21.4 12.0 78.3 % 33.7 23.9 41.0 % Energy 16.3 13.1 24.4 % 33.7 22.0 53.2 % Automotive Electronics 14.7 13.3 10.5 % 29.5 25.8 14.3 % Medical 13.4 15.0 (10.7 )% 28.9 31.1 (7.1)%
Telecom Infrastructure 11.0 8.7 26.4 % 19.7 15.4 27.9 % Other 26.9 31.7 (15.1 )% 53.8 54.9 (2.0 )% Total $ 189.9 $ 176.1 7.8 % $ 371.2 $ 325.1 14.2 % Performance Alloy and Composites Consumer Electronics $ 21.1 $ 18.2 15.9 % $ 41.1 $ 34.7 18.4 % Industrial Components 22.9 21.0 9.0 % 48.7 38.6 26.2 % Defense 14.9 6.6 125.8 % 21.5 14.0 53.6 % Energy 8.6 4.6 87.0 % 15.0 9.6 56.3 % Automotive Electronics 14.3 13.0 10.0 % 28.9 25.1 15.1 % Medical 1.8 1.8 — % 3.4 3.8 (10.5 )% Telecom Infrastructure 9.5 6.6 43.9 % 16.6 11.7 41.9 % Other 17.0 20.9 (18.7 )% 35.2 34.4 2.3 % Total $ 110.1 $ 92.7 18.8 % $ 210.4 $ 171.9 22.4 % Advanced Materials Consumer Electronics $ 31.2 $ 32.0 (2.5 )% $ 60.5 $ 58.1 4.1 % Industrial Components 3.1 3.7 (16.2 )% 6.9 6.8 1.5 % Defense 1.6 1.7 (5.9 )% 3.0 2.9 3.4 % Energy 7.7 8.5 (9.4 )% 18.7 12.4 50.8 % Automotive Electronics — — — % — — — % Medical 2.7 3.2 (15.6 )% 5.6 5.6 — % Telecom Infrastructure 1.5 2.2 (31.8 )% 3.0 3.8 (21.1 )% Other 9.5 10.7 (11.2 )% 17.9 19.7 (9.1 )% Total $ 57.3 $ 62.0 (7.6 )% $ 115.6 $ 109.3 5.8 % Precision Coatings Consumer Electronics $ 5.0 $ 4.0 25.0 % $ 9.3 $ 7.5 24.0 % Industrial Components 2.9 3.5 (17.1 )% 5.4 6.4 (15.6 )% Defense 4.9 3.8 28.9 % 9.2 7.1 29.6 % Energy — — — % — — — % Automotive Electronics 0.5 0.3 66.7 % 0.7 0.7 — % Medical 9.0 10.0 (10.0 )% 20.0 21.7 (7.8 )% Telecom Infrastructure — — — % 0.1 — — % Other 1.1 1.0 10.0 % 2.3 2.5 (8.0 )% Total $ 23.4 $ 22.6 3.5 % $ 47.0 $ 45.9 2.4 % Eliminations $ (0.9 ) $ (1.2 ) $ (1.8 ) $ (2.0 )Prior year numbers have been restated to conform to the current year presentation.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180726005446/en/
Materion CorporationInvestor Contact:Stephen F. Shamrock, 216-383-4010stephen.shamrock@materion.comhttps://materion.comorMedia Contact:John G. McCloskey, 216-383-6835john.mccloskey@materion.comMayfield Hts-g
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