Materion Corporation Reports Strong First Quarter Financial Results and Provides Second Quarter and Full Year 2021 Earnings Guidance
Materion Corporation (NYSE: MTRN) reported first quarter 2021 net sales of $354.4 million, a significant increase from $277.9 million year-over-year. Value-added sales reached a record $198.6 million, driven by strong demand in semiconductor, automotive, and industrial sectors. Operating profit was $19.7 million, with net income of $0.81 per diluted share, up from a loss in the prior year. The company forecasts adjusted earnings of $0.72 to $0.76 per share for Q2 and $3.00 to $3.30 for the full year, a 55% increase from 2020.
- Net sales increased by 27% year-over-year to $354.4 million.
- Value-added sales reached a record $198.6 million, up 29% year-on-year.
- Adjusted earnings per share for Q1 were $0.82, a 111% increase from $0.39.
- Weakness in the energy end market affected sales.
- Sales decline attributed to the closure of the LAC business.
Materion Corporation (NYSE: MTRN) today reported first quarter financial results and provided second quarter and full year 2021 earnings guidance.
First Quarter 2021 Highlights
-
Net sales were
$354.4 million compared to$277.9 million in the prior year period; value-added sales increased29% year on year to a record$198.6 million for the quarter -
Operating profit of
$19.7 million ; adjusted earnings before interest and tax expense (EBIT) was$21.4 million , or10.8% of value-added sales, compared to$9.9 million in the prior year period -
Net income of
$0.81 per share, diluted; adjusted earnings of$0.82 per share, up from$0.39 in the prior year period - Customer funded precision clad engineered strip project remains on track; completed second quarter of shipments from existing facility
“I am pleased with our start to 2021, delivering a very strong quarter as we continue to manage through the pandemic. Our team is motivated and energized to serve our customers and return to pre-pandemic levels of performance, as demonstrated by our first quarter results,” said Jugal Vijayvargiya, President and Chief Executive Officer.
Mr. Vijayvargiya continued, “Many of our end markets are expanding, our Optics Balzers acquisition is performing well, and our organic investments are contributing, resulting in strong top line growth expectations for the full year. We continue to focus on building a robust pipeline of opportunities that will create value for our shareholders in the near, medium and longer term.”
FIRST QUARTER 2021 RESULTS
Net sales for the first quarter of 2021 were
Operating profit for the first quarter was
Adjusted net income was
OUTLOOK
While a fair amount of uncertainty still exists in the overall economy, we see strength in our organic pipeline and good underlying demand across many of our end markets, in particular semiconductor, automotive, and industrial. Based on current demand levels, we expect adjusted earnings per diluted share in the second quarter to be in the range of
For the full year, we expect adjusted earnings per diluted share to be in the range of
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 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 an investor conference call with analysts at 9:00 a.m. Eastern Time, April 29, 2021. The conference call will be available via webcast through the Company’s website at www.materion.com or through www.InvestorCalendar.com. Presentation materials will be available on the company’s website in advance of the call. 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, 2021 by dialing (877) 481-4010 or (919) 882-2331; please reference replay ID number 39481. 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. 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: the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition, and liquidity; the global economy, including the impact of tariffs and trade agreements; the impact of any U.S. Federal Government shutdowns and sequestrations; the condition of the markets which we serve, whether defined geographically or by segment; changes in product mix and the financial condition of customers; our success in developing and introducing new products and new product ramp-up rates; our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values; our success in identifying acquisition candidates and in acquiring and integrating such businesses, including the integration of Optics Balzers; the impact of the results of acquisitions on our ability to fully achieve the strategic and financial objectives related to these acquisitions, including, without limitation, the acquisition of Optics Balzers being accretive in the expected timeframe or at all; our success in implementing our strategic plans and the timely and successful completion and start-up of any capital projects; other financial and economic factors, including the cost and availability of raw materials (both base and precious metals), physical inventory valuations, metal financing fees, tax rates, exchange rates, interest rates, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, credit availability, and the impact of the Company’s stock price on the cost of incentive compensation plans; the uncertainties related to the impact of war, terrorist activities, and acts of God; changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; the conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; the disruptions on operations from, and other effects of, catastrophic and other extraordinary events including the COVID-19 pandemic; and the risk factors set forth in Part 1, Item 1A of our 2020 Annual Report on Form 10-K.
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) |
||||||||
|
First Quarter Ended |
|||||||
(In thousands except per share amounts) |
April 2, 2021 |
|
March 27, 2020* |
|||||
Net sales |
$ |
354,386 |
|
|
$ |
277,946 |
|
|
Cost of sales |
287,590 |
|
|
233,376 |
|
|||
Gross margin |
66,796 |
|
|
44,570 |
|
|||
Selling, general, and administrative expense |
36,776 |
|
|
30,744 |
|
|||
Research and development expense |
6,206 |
|
|
4,185 |
|
|||
Impairment charges |
— |
|
|
10,766 |
|
|||
Restructuring (income) expense |
(378 |
) |
|
2,164 |
|
|||
Other — net |
4,474 |
|
|
2,279 |
|
|||
Operating profit (loss) |
19,718 |
|
|
(5,568 |
) |
|||
Other non-operating income—net |
(1,276 |
) |
|
(944 |
) |
|||
Interest expense — net |
761 |
|
|
246 |
|
|||
Income (loss) before income taxes |
20,233 |
|
|
(4,870 |
) |
|||
Income tax expense (benefit) |
3,466 |
|
|
(992 |
) |
|||
Net income (loss) |
$ |
16,767 |
|
|
$ |
(3,878 |
) |
|
Basic earnings per share: |
|
|
|
|||||
Net income (loss) per share of common stock |
$ |
0.82 |
|
|
$ |
(0.19 |
) |
|
Diluted earnings per share: |
|
|
|
|||||
Net income (loss) per share of common stock |
$ |
0.81 |
|
|
$ |
(0.19 |
) |
|
Weighted-average number of shares of common stock outstanding: |
|
|
|
|||||
Basic |
20,374 |
|
|
20,384 |
|
|||
Diluted |
20,628 |
|
|
20,384 |
|
|||
*Prior period has been adjusted to reflect the change in inventory method, as described in the Company's Quarterly Report on Form 10-Q for the period ended April 2, 2021.
Attachment 2 |
||||||||
Materion Corporation and Subsidiaries |
||||||||
Consolidated Balance Sheets |
||||||||
(Unaudited) |
||||||||
(Thousands) |
|
April 2, 2021 |
|
December 31, 2020 |
||||
Assets |
|
|
|
|
||||
Current assets |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
18,934 |
|
|
$ |
25,878 |
|
Accounts receivable, net |
|
180,544 |
|
|
166,447 |
|
||
Inventories, net |
|
272,828 |
|
|
250,778 |
|
||
Prepaid and other current assets |
|
22,449 |
|
|
20,896 |
|
||
Total current assets |
|
494,755 |
|
|
463,999 |
|
||
Deferred income taxes |
|
1,932 |
|
|
3,134 |
|
||
Property, plant, and equipment |
|
1,021,174 |
|
|
998,312 |
|
||
Less allowances for depreciation, depletion, and amortization |
|
(692,101 |
) |
|
(688,626 |
) |
||
Property, plant, and equipment—net |
|
329,073 |
|
|
309,686 |
|
||
Operating lease, right-of-use assets |
|
59,826 |
|
|
62,089 |
|
||
Intangible assets, net |
|
51,503 |
|
|
54,672 |
|
||
Other assets |
|
20,791 |
|
|
19,364 |
|
||
Goodwill |
|
140,392 |
|
|
144,916 |
|
||
Total Assets |
|
$ |
1,098,272 |
|
|
$ |
1,057,860 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
||||
Current liabilities |
|
|
|
|
||||
Short-term debt |
|
$ |
1,541 |
|
|
$ |
1,937 |
|
Accounts payable |
|
72,489 |
|
|
55,640 |
|
||
Salaries and wages |
|
22,803 |
|
|
18,809 |
|
||
Other liabilities and accrued items |
|
36,927 |
|
|
40,887 |
|
||
Income taxes |
|
5,102 |
|
|
1,898 |
|
||
Unearned revenue |
|
8,573 |
|
|
7,713 |
|
||
Total current liabilities |
|
147,435 |
|
|
126,884 |
|
||
Other long-term liabilities |
|
17,777 |
|
|
17,002 |
|
||
Operating lease liabilities |
|
54,593 |
|
|
56,761 |
|
||
Finance lease liabilities |
|
18,937 |
|
|
20,539 |
|
||
Retirement and post-employment benefits |
|
39,662 |
|
|
41,877 |
|
||
Unearned income |
|
92,301 |
|
|
86,761 |
|
||
Deferred income taxes |
|
14,824 |
|
|
15,864 |
|
||
Long-term debt |
|
51,407 |
|
|
36,542 |
|
||
Shareholders’ equity |
|
661,336 |
|
|
655,630 |
|
||
Total Liabilities and Shareholders’ Equity |
|
$ |
1,098,272 |
|
|
$ |
1,057,860 |
|
Attachment 3 |
||||||||
Materion Corporation and Subsidiaries |
||||||||
Consolidated Statements of Cash Flows |
||||||||
(Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
(Thousands) |
|
April 2, 2021 |
|
March 27, 2020* |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income (loss) |
|
$ |
16,767 |
|
|
$ |
(3,878 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation, depletion, and amortization |
|
8,599 |
|
|
14,274 |
|
||
Amortization of deferred financing costs in interest expense |
|
182 |
|
|
182 |
|
||
Stock-based compensation expense (non-cash) |
|
1,473 |
|
|
1,492 |
|
||
Deferred income tax expense (benefit) |
|
382 |
|
|
(1,457 |
) |
||
Impairment charges |
|
— |
|
|
10,766 |
|
||
Changes in assets and liabilities: |
|
|
|
|
||||
Accounts receivable |
|
(15,697 |
) |
|
11,049 |
|
||
Inventory |
|
(23,219 |
) |
|
(15,718 |
) |
||
Prepaid and other current assets |
|
(2,107 |
) |
|
1,127 |
|
||
Accounts payable and accrued expenses |
|
19,224 |
|
|
(13,002 |
) |
||
Unearned revenue |
|
932 |
|
|
(938 |
) |
||
Interest and taxes payable |
|
3,164 |
|
|
368 |
|
||
Unearned income due to customer prepayments |
|
5,890 |
|
|
7,113 |
|
||
Other-net |
|
(140 |
) |
|
(2,248 |
) |
||
Net cash provided by operating activities |
|
15,450 |
|
|
9,130 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Payments for purchase of property, plant, and equipment |
|
(31,250 |
) |
|
(14,789 |
) |
||
Proceeds from sale of property, plant, and equipment |
|
575 |
|
|
10 |
|
||
Net cash used in investing activities |
|
(30,675 |
) |
|
(14,779 |
) |
||
Cash flows from financing activities: |
|
|
|
|
||||
Proceeds from borrowings under revolving credit agreement, net |
|
14,955 |
|
|
— |
|
||
Repayment of long-term debt |
|
(377 |
) |
|
(142 |
) |
||
Principal payments under finance lease obligations |
|
(675 |
) |
|
(233 |
) |
||
Cash dividends paid |
|
(2,338 |
) |
|
(2,245 |
) |
||
Repurchase of common stock |
|
— |
|
|
(6,766 |
) |
||
Payments of withholding taxes for stock-based compensation awards |
|
(2,838 |
) |
|
(2,015 |
) |
||
Net cash provided by (used in) financing activities |
|
8,727 |
|
|
(11,401 |
) |
||
Effects of exchange rate changes |
|
(446 |
) |
|
(381 |
) |
||
Net change in cash and cash equivalents |
|
(6,944 |
) |
|
(17,431 |
) |
||
Cash and cash equivalents at beginning of period |
|
25,878 |
|
|
125,007 |
|
||
Cash and cash equivalents at end of period |
|
$ |
18,934 |
|
|
$ |
107,576 |
|
*Prior period has been adjusted to reflect the change in inventory method, as described in the Company's Quarterly Report on Form 10-Q for the period ended April 2, 2021.
Attachment 4 |
||||||||
Materion Corporation and Subsidiaries |
||||||||
Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBIT |
||||||||
(Unaudited) |
||||||||
|
First Quarter Ended |
|||||||
(Millions) |
April 2, 2021 |
|
March 27, 2020* |
|||||
Net Sales |
|
|
|
|||||
Performance Alloys and Composites |
$ |
114.1 |
|
|
$ |
99.1 |
|
|
Advanced Materials |
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FAQ
What were Materion's first quarter 2021 revenue figures?
Materion reported net sales of $354.4 million for Q1 2021.
How much did Materion's earnings per share increase in the first quarter of 2021?
Adjusted earnings per share increased to $0.82, up from $0.39 in the prior year.
What is Materion's second quarter guidance for adjusted earnings per share?
For Q2 2021, Materion expects adjusted earnings per share to range from $0.72 to $0.76.
How are Materion's sales performing in their key end markets?
Sales grew particularly in the semiconductor, automotive, and industrial sectors.
What is the outlook for Materion's full year earnings per share?
Materion forecasts adjusted earnings per diluted share of $3.00 to $3.30 for the full year.
Materion Corporation
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