Materion Corporation Reports Strong Fourth Quarter and Record Full-Year 2023 Financial Results and Provides 2024 Outlook

Rhea-AI Summary

Materion Corporation (MTRN) reported strong financial results for Q4 2023 and full-year 2023, with record earnings and sales despite market challenges. The company announced new customer partnerships and provided optimistic 2024 earnings guidance. Materion's focus on operational excellence and organic pipeline positions them well for future growth.

Positive

• Record full-year 2023 net sales of $1.67 billion and value-added sales of $1.13 billion, up 1% from the prior year.
• Net income for full-year 2023 was $95.7 million, an increase from $86.0 million in the prior year.
• Adjusted earnings per share for full-year 2023 reached $5.64, a 7% increase from the prior year.
• Adjusted EBITDA for full-year 2023 was $217.7 million, representing 19.3% of value-added sales, a record for the company.
• Announced new customer partnerships, including a $36 million order for space propulsion materials and a $4 million government award for additive manufacturing processes.
• Guiding adjusted earnings per share for full-year 2024 in the range of $6.10 to $6.50, a 12% increase from the prior year at the midpoint.

Negative

• None.

Insights

Financial Analyst

The reported financial results by Materion Corporation indicate a noteworthy performance, particularly in the context of a challenging semiconductor market. The company's ability to achieve record value-added sales growth of 1% year-over-year, despite market weaknesses, is a sign of robust business resilience and a diversified product portfolio. The increase in net income from $86.0 million to $95.7 million and a 7% rise in adjusted earnings per share from the prior year reflect effective cost management and possibly a favorable product mix.

Investors should note the expansion in adjusted EBITDA margins by 170 basis points, which is indicative of operational efficiency and could signal strong pricing power or cost reduction success. The guidance for 2024 with an expected 12% increase in adjusted earnings per share at the midpoint suggests confidence in the company's strategic initiatives and operational excellence. However, the reliance on organic pipeline growth and customer partnerships, while positive, should be monitored in the context of broader market conditions which could impact these growth drivers.

Market Research Analyst

Materion's strategic focus on megatrend-aligned markets, such as aerospace & defense and advanced materials for space propulsion, LIDAR technologies and additive manufacturing, is significant. These sectors are expected to grow due to technological advancements and increased demand for sophisticated materials. The company's ability to secure new customer contracts and government-funded projects demonstrates competitive strength and potential for sustained growth.

However, the semiconductor market, being a significant end market for Materion, remains a concern. The reported weakness in this sector could represent a risk if the downturn persists longer than anticipated. Investors should evaluate the company's diversification strategies and the potential impact of semiconductor market recovery or further decline on Materion's performance.

Economist

The macroeconomic conditions cited by Materion, including challenges in key end markets, suggest that the company is not immune to broader economic trends. The guidance for 2024, while optimistic, may hinge on the trajectory of global economic recovery. It is important to consider the potential for inflationary pressures, interest rate changes and supply chain disruptions that could affect operational costs and margins.

Furthermore, the company's focus on operational excellence and cost improvement initiatives could be a critical factor in maintaining profitability in an uncertain economic environment. The strategic advancements in new technologies and sectors may also serve as a hedge against cyclical downturns in traditional markets, such as semiconductors. Stakeholders should keep an eye on economic indicators that could influence Materion's performance in the near to medium term.

MAYFIELD HEIGHTS, Ohio--(BUSINESS WIRE)-- Materion Corporation (NYSE: MTRN) today reported fourth quarter and record full-year 2023 financial results, provided 2024 earnings guidance and shared an update on key strategic initiatives.

Fourth Quarter 2023 Financial Summary

• Net sales were $421.0 million; value-added sales¹ were $289.7 million
• Net income was $19.5 million, or $0.93 per share, diluted, and adjusted earnings of $1.41 per share

Full-Year 2023 Highlights

• Net sales were $1.67 billion; value-added sales were $1.13 billion, a record for the company, up 1% from prior year despite significant semiconductor market weakness
• Net income of $95.7 million, versus $86.0 million in the prior year
• Earnings per share of $4.58, diluted, versus $4.14 in the prior year, and record adjusted earnings of $5.64 per share, versus $5.27 in the prior year, an increase of 7%
• Adjusted EBITDA² of $217.7 million, or 19.3% of value-added sales, both records for the company, versus $196.0 million, or 17.6% in the prior year, with 170 bps of margin expansion year on year

Newly Announced Customer Partnerships

• Announced three new advancements as we continue to strengthen our organic pipeline
  • Secured a fourth order valued at $36 million to supply critical materials for space propulsion systems
  • Awarded $4 million from a government agency for the development of additive manufacturing processes for advanced materials to serve the Aerospace, Defense and Energy markets
  • Secured another customer contract to supply optical components for LIDAR technologies within NextGen autonomous vehicle applications in Europe

“I am proud of our global team for delivering another record year, despite the significant headwinds facing our largest end market,” Materion President and CEO Jugal Vijayvargiya said. “Our strong performance reflects the power of our diverse megatrend aligned portfolio, which continues to open new pathways for growth, and the importance of our relentless focus on driving operational excellence.”

“We have made remarkable progress expanding our margins, despite market softness,” Vijayvargiya said. “These efforts, combined with the continued strength of our organic pipeline, leave us well-positioned to take advantage of the market recoveries as they develop.”

FOURTH QUARTER 2023 RESULTS

Net sales for the quarter were $421.0 million, compared to $434.6 million in the prior year period. Value-added sales were $289.7 million for the quarter, down 4% from prior year due to significant semiconductor market weakness, partially offset by strength in aerospace & defense.

Operating profit for the quarter was $27.6 million and net income was $19.5 million, or $0.93 per diluted share, compared to operating profit of $39.2 million and net income of $28.8 million, or $1.38 per share, in the prior year period.

Excluding special items³ primarily related to targeted cost improvement initiatives and precision clad strip start-up costs, adjusted EBITDA was $53.3 million in the quarter, compared to $55.6 million in the prior year period. The strong performance was driven mainly by focused operational execution and improved mix, despite softer volume.

Adjusted net income was $29.6 million excluding acquisition amortization, or $1.41 per diluted share, compared to $1.49 per share in the prior year period.

FULL-YEAR 2023 RESULTS

Net sales for the year were $1.67 billion, compared to $1.76 billion in the prior year. Value-added sales were $1.13 billion for the year, up 1% from prior year due to strength in aerospace & defense and precision clad strip, offset by softness in several key end markets.

Operating profit for the year was $136.4 million and net income was $95.7 million, or $4.58 per diluted share, compared to operating profit of $119.8 million and net income of $86.0 million, or $4.14 per diluted share, in the prior year.

Excluding special items, adjusted EBITDA for the year was $217.7 million, compared to $196.0 million in the prior year. The increase was driven mainly by strong operational performance, including the targeted cost improvement initiatives, and improved mix driven by new business.

Adjusted net income was $118.0 million excluding acquisition amortization, or $5.64 per diluted share, an increase of 7% compared to $5.27 per diluted share in the prior year.

OUTLOOK

While we expect some of our key end markets to remain challenged in the near term due to macroeconomic conditions, we expect another year of record results driven by our organic pipeline and close customer partnerships. We believe these growth drivers, along with continued operational excellence and targeted cost improvement initiatives, will help drive earnings growth. With this, we are guiding to the range of $6.10 to $6.50 for full year 2024 adjusted earnings per share, an increase of 12% from prior year at the midpoint.

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 through 8 to this press release.

CONFERENCE CALL

Materion Corporation will host an investor conference call with analysts at 9:00 a.m. Eastern Time, February 15, 2024. The conference call will be available via webcast through the Company’s website at www.materion.com. By phone, please dial (888) 506-0062. Calls outside the U.S. can dial (973) 528-0011; please reference participant access code of 570395. A replay of the call will be available until February 29, 2024 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 49161. The call will also be archived on the Company’s website.

FOOTNOTES

¹ Value-added sales deducts the impact of pass-through metals from net sales
² EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization
³ Details of the special items can be found in Attachments 4 through 8

ABOUT MATERION

Materion Corporation is a global leader in advanced materials solutions for high-performance industries including semiconductor, industrial, aerospace & defense, energy and automotive. With nearly 100 years of expertise in specialty engineered alloy systems, inorganic chemicals and powders, precious and non-precious metals, beryllium and beryllium composites, and precision filters and optical coatings, Materion partners with customers to enable breakthrough solutions that move the world forward. Headquartered in Mayfield Heights, Ohio, the company employs more than 3,500 talented people worldwide, serving customers in more than 60 countries.

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 global economy, including inflationary pressures, potential future recessionary conditions and the impact of tariffs and trade agreements; the impact of any U.S. Federal Government shutdowns or 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; the impact of the results of acquisitions on our ability to fully achieve the strategic and financial objectives related to these acquisitions; our success in implementing our strategic plans and the timely and successful start-up and completion 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 consignment 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 in operations from, and other effects of, catastrophic and other extraordinary events including outbreaks from infectious diseases and the conflict between Russia and Ukraine and other hostilities; realization of expected financial benefits expected from the Inflation Reduction Act of 2022; and the risk factors set forth in Part 1, Item 1A of the Company's 2022 Annual Report on Form 10-K and in other reports that we file with the SEC.

Attachment 1
Materion Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
	Fourth Quarter Ended								Year Ended
(In thousands except per share amounts)	December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Net sales	$	421,043			$	434,578			$	1,665,187			$	1,757,109
Cost of sales		341,328				336,159				1,316,145				1,413,229
Gross margin		79,715				98,419				349,042				343,880
Selling, general, and administrative expense		39,858				46,672				157,911				169,338
Research and development expense		6,442				6,881				27,540				28,977
Restructuring expense (income)		630				13				3,824				1,573
Other — net		5,145				5,662				23,323				24,237
Operating profit		27,640				39,191				136,444				119,755
Other non-operating (income) expense—net		(569	)			(1,738	)			(2,710	)			(5,250	)
Interest expense — net		8,503				7,580				31,323				21,905
Income before income taxes		19,706				33,349				107,831				103,100
Income tax (benefit) expense		238				4,585				12,129				17,110
Net income	$	19,468			$	28,764			$	95,702			$	85,990
Basic earnings per share:
Net income per share of common stock	$	0.94			$	1.40			$	4.64			$	4.19
Diluted earnings per share:
Net income per share of common stock	$	0.93			$	1.38			$	4.58			$	4.14
Weighted-average number of shares of common stock outstanding:
Basic		20,644				20,537				20,619				20,511
Diluted		20,936				20,790				20,911				20,760

Attachment 2
Materion Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Thousands)		December 31, 2023				December 31, 2022
Assets
Current assets
Cash and cash equivalents		$	13,294			$	13,101
Accounts receivable, net			192,747				215,211
Inventories, net			441,597				423,080
Prepaid and other current assets			61,744				39,056
Total current assets			709,382				690,448
Deferred income taxes			4,908				3,265
Property, plant, and equipment			1,281,622				1,209,205
Less allowances for depreciation, depletion, and amortization			(766,939	)			(760,440	)
Property, plant, and equipment—net			514,683				448,765
Operating lease, right-of-use assets			57,645				64,249
Intangible assets			133,571				143,219
Other assets			21,664				22,535
Goodwill			320,873				319,498
Total Assets		$	1,762,726			$	1,691,979
Liabilities and Shareholders’ Equity
Current liabilities
Short-term debt		$	38,597			$	21,105
Accounts payable			125,663				107,899
Salaries and wages			25,912				35,543
Other liabilities and accrued items			45,773				54,993
Income taxes			5,207				3,928
Unearned revenue			13,843				15,496
Total current liabilities			254,995				238,964
Other long-term liabilities			13,300				12,181
Operating lease liabilities			53,817				59,055
Finance lease liabilities			13,744				13,876
Retirement and post-employment benefits			26,334				20,422
Unearned income			103,983				107,736
Long-term income taxes			3,815				665
Deferred income taxes			20,109				28,214
Long-term debt			387,576				410,876
Shareholders’ equity			885,053				799,990
Total Liabilities and Shareholders’ Equity		$	1,762,726			$	1,691,979

Attachment 3
Materion Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Thousands)	December 31, 2023				December 31, 2022
Cash flows from operating activities:
Net income	$	95,702			$	85,990
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization		61,644				53,436
Amortization of deferred financing costs in interest expense		1,712				1,734
Stock-based compensation expense (non-cash)		10,092				8,813
Amortization of pension and post-retirement costs		(1,318	)			(146	)
(Gain) loss on sale of property, plant, and equipment		20				14
Deferred income tax (benefit) expense		(7,005	)			1,733
Net pension curtailments and settlements		142				(551	)
Changes in assets and liabilities, net of acquired assets and liabilities:
Decrease (increase) in accounts receivable		23,359				(4,377	)
Decrease (increase) in inventory		(18,700	)			(63,986	)
Decrease (increase) in prepaid and other current assets		(22,663	)			(1,604	)
Increase (decrease) in accounts payable and accrued expenses		6,631				12,860
Increase (decrease) in unearned revenue		(17,361	)			207
Increase (decrease) in interest and taxes payable		3,771				154
Increase (decrease) in unearned income due to customer prepayments		16,676				21,942
Other — net		(8,288	)			(261	)
Net cash provided by operating activities		144,414				115,958
Cash flows from investing activities:
Payments for acquisition, net of cash acquired		—				(2,971	)
Payments for purchase of property, plant, and equipment		(110,550	)			(77,608	)
Payments for mine development		(9,326	)			—
Proceeds from sale of property, plant, and equipment		654				850
Net cash used in investing activities		(119,222	)			(79,729	)
Cash flows from financing activities:
Proceeds from (repayment of) borrowings under credit facilities, net		8,065				230
Repayment of debt		(15,415	)			(19,299	)
Principal payments under finance lease obligations		(1,645	)			(2,736	)
Cash dividends paid		(10,621	)			(10,160	)
Payments of withholding taxes for stock-based compensation awards		(5,234	)			(3,593	)
Net cash provided by (used in) financing activities		(24,850	)			(35,558	)
Effects of exchange rate changes		(149	)			(2,032	)
Net change in cash and cash equivalents		193				(1,361	)
Cash and cash equivalents at beginning of period		13,101				14,462
Cash and cash equivalents at end of period	$	13,294			$	13,101

Attachment 4
Materion Corporation and Subsidiaries
Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBITDA
(Unaudited)
	Fourth Quarter Ended							Year Ended
(Millions)	December 31, 2023			December 31, 2022				December 31, 2023			December 31, 2022
Net Sales
Performance Materials	$	201.1		$	197.6			$	755.5		$	671.5
Electronic Materials		193.9			209.3				805.8			971.9
Precision Optics		26.0			27.7				103.9			113.7
Other		—			—				—			—
Total	$	421.0		$	434.6			$	1,665.2		$	1,757.1
Less: Pass-through Metal Cost
Performance Materials	$	15.1		$	20.0			$	66.9		$	82.0
Electronic Materials		116.2			111.5				471.1			559.1
Precision Optics		—			—				0.1			0.1
Other		—			0.1				—			1.5
Total	$	131.3		$	131.6			$	538.1		$	642.7
Value-added Sales (non-GAAP)
Performance Materials	$	186.0		$	177.6			$	688.6		$	589.5
Electronic Materials		77.7			97.8				334.7			412.8
Precision Optics		26.0			27.7				103.8			113.6
Other		—			(0.1	)			—			(1.5	)
Total	$	289.7		$	303.0			$	1,127.1		$	1,114.4
Gross Margin
Performance Materials(1)	$	50.5		$	57.7			$	216.5		$	175.1
Electronic Materials(1)		21.5			31.5				100.4			131.5
Precision Optics(1)		7.7			9.2				32.1			37.3
Other		—			—				—			—
Total(1)	$	79.7		$	98.4			$	349.0		$	343.9
(1) See reconciliation of gross margin to adjusted gross margin in Attachment 8
Note: Quarterly information presented within this document and previously disclosed quarterly information may not equal the total computed for the year due to rounding

	Fourth Quarter Ended								Year Ended
(Millions)	December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Operating Profit (Loss)
Performance Materials	$	33.0			$	37.6			$	143.9			$	101.4
Electronic Materials		3.8				12.3				28.6				51.3
Precision Optics		(0.4	)			1.1				(2.0	)			1.9
Other		(8.8	)			(11.8	)			(34.1	)			(34.8	)
Total	$	27.6			$	39.2			$	136.4			$	119.8
Non-Operating (Income) Expense
Performance Materials	$	0.2			$	0.1			$	0.6			$	0.5
Electronic Materials		(0.1	)			—				(0.1	)			—
Precision Optics		—				(0.6	)			(0.6	)			(1.3	)
Other		(0.7	)			(1.2	)			(2.7	)			(4.4	)
Total	$	(0.6	)		$	(1.7	)		$	(2.8	)		$	(5.2	)
Depreciation, Depletion, and Amortization
Performance Materials	$	7.6			$	6.8			$	31.2			$	24.3
Electronic Materials		4.3				4.2				17.0				16.5
Precision Optics		2.6				2.7				11.3				10.5
Other		0.6				0.5				2.1				2.1
Total	$	15.1			$	14.2			$	61.6			$	53.4
Segment EBITDA
Performance Materials	$	40.4			$	44.3			$	174.5			$	125.2
Electronic Materials		8.2				16.5				45.7				67.8
Precision Optics		2.2				4.4				9.9				13.7
Other		(7.5	)			(10.1	)			(29.3	)			(28.3	)
Total	$	43.3			$	55.1			$	200.8			$	178.4
Special Items(2)
Performance Materials	$	5.6			$	—			$	6.7			$	6.8
Electronic Materials		2.8				0.6				7.3				8.2
Precision Optics		1.6				(0.4	)			2.8				0.3
Other		—				0.3				0.1				2.3
Total	$	10.0			$	0.5			$	16.9			$	17.6
Adjusted EBITDA Excluding Special Items
Performance Materials	$	46.0			$	44.3			$	181.2			$	132.0
Electronic Materials		11.0				17.1				53.0				76.0
Precision Optics		3.8				4.0				12.7				14.0
Other		(7.5	)			(9.8	)			(29.2	)			(26.0	)
Total	$	53.3			$	55.6			$	217.7			$	196.0
The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium 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 market 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.
(2) See additional details of special items in Attachment 5.

Attachment 5
Materion Corporation and Subsidiaries
Reconciliation of Net Sales to Value-added Sales, Net Income to EBITDA and Adjusted EBITDA
(Unaudited)
	Fourth Quarter Ended													Twelve Months Ended
(Millions)	December 31, 2023			% of VA			December 31, 2022				% of VA			December 31, 2023			% of VA			December 31, 2022				% of VA
Net sales	$	421.0					$	434.6						$	1,665.2					$	1,757.1
Pass-through metal cost		131.3						131.6							538.1						642.7
Value-added sales	$	289.7					$	303.0						$	1,127.1					$	1,114.4
Net income	$	19.5		6.7	%		$	28.8			9.5	%		$	95.7		8.5	%		$	86.0			7.7	%
Income tax expense		0.2		0.1	%			4.5			1.5	%			12.2		1.1	%			17.1			1.5	%
Interest expense - net		8.5		2.9	%			7.6			2.5	%			31.3		2.8	%			21.9			2.0	%
Depreciation, depletion and amortization		15.1		5.2	%			14.2			4.7	%			61.6		5.5	%			53.4			4.8	%
Consolidated EBITDA	$	43.3		14.9	%		$	55.1			18.2	%		$	200.8		17.8	%		$	178.4			16.0	%
Special items
Restructuring and cost reduction	$	4.2		1.4	%		$	—			—	%		$	11.1		1.0	%		$	1.5			0.1	%
Pension settlement		0.2		0.1	%			(0.5	)		(0.2	)%			0.2		—	%			(0.5	)		—	%
Additional start up resources and scrap		5.6		1.9	%			—			—	%			5.6		0.5	%			4.1			0.4	%
Merger and acquisition costs		—		—	%			1.0			0.3	%			—		—	%			12.5			1.1	%
Total special items		10.0		3.5	%			0.5			0.2	%			16.9		1.5	%			17.6			1.6	%
Adjusted EBITDA	$	53.3		18.4	%		$	55.6			18.3	%		$	217.7		19.3	%		$	196.0			17.6	%
In 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, earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), net income, and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation and Attachment 6, we have adjusted the results for certain special items such as restructuring and cost reductions (which includes costs associated with temporarily idled facilities as a result of decreased demand), additional start up resources and scrap and merger and acquisition costs. 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
Reconciliation of Net Income to Adjusted Net Income
and Diluted Earnings per Share to Adjusted Diluted Earnings per Share (Unaudited)
	Fourth Quarter Ended															Twelve Months Ended
(Millions)	December 31, 2023				Diluted EPS			December 31, 2022				Diluted EPS				December 31, 2023				Diluted EPS			December 31, 2022				Diluted EPS
Net income and EPS	$	19.5			$	0.93		$	28.8			$	1.38			$	95.7			$	4.58		$	86.0			$	4.14
Special items
Restructuring and cost reduction		4.2							—								11.1							1.5
Additional start up resources and scrap		5.6							—								5.6							4.1
Merger and acquisition costs		—							1.0								—							12.5
Pension settlement		0.2							(0.5	)							0.2							(0.5	)
Provision for income taxes (1)		(2.4	)						(0.8	)							(4.4	)						(3.9	)
Total special items		7.6				0.36			(0.3	)			(0.01	)			12.5				0.60			13.7				0.66
Adjusted net income and adjusted EPS	$	27.1			$	1.29		$	28.5			$	1.37			$	108.2			$	5.17		$	99.7			$	4.80
Acquisition amortization (net of tax)		2.5				0.12			2.4				0.12				9.8				0.47			9.8				0.47
Adjusted net income and adjusted EPS excl. amortization	$	29.6			$	1.41		$	30.9			$	1.49			$	118.0			$	5.64		$	109.5			$	5.27
(1) Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of certain discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods.

Attachment 7
Reconciliation of Segment Net sales to Segment Value-added sales and Segment EBITDA to Adjusted Segment EBITDA (Unaudited)
Performance Materials
	Fourth Quarter Ended														Twelve Months Ended
(Millions)	December 31, 2023				% of VA			December 31, 2022				% of VA			December 31, 2023				% of VA			December 31, 2022					% of VA
Net sales	$	201.1						$	197.6						$	755.5						$	671.5
Pass-through metal cost		15.1							20.0							66.9							82.0
Value-added sales	$	186.0						$	177.6						$	688.6						$	589.5
EBITDA	$	40.4			21.7	%		$	44.3			24.9	%		$	174.5			25.3	%		$	125.2				21.2	%
Restructuring and cost reduction		—			—	%			—			—	%			1.1			0.2	%			—				—	%
Additional start up resources and scrap		5.6			3.0	%			—			—	%			5.6			0.8	%			4.1				0.7	%
Merger and acquisition costs		—			—	%			—			—	%			—			—	%			2.7				0.5	%
Adjusted EBITDA	$	46.0			24.7	%		$	44.3			24.9	%		$	181.2			26.3	%		$	132.0				22.4	%
Electronic Materials
	Fourth Quarter Ended														Twelve Months Ended
(Millions)	December 31, 2023				% of VA			December 31, 2022				% of VA			December 31, 2023				% of VA			December 31, 2022					% of VA
Net sales	$	193.9						$	209.3						$	805.8						$	971.9
Pass-through metal cost		116.2							111.5							471.1							559.1
Value-added sales	$	77.7						$	97.8						$	334.7						$	412.8
EBITDA	$	8.2			10.6	%		$	16.5			16.9	%		$	45.7			13.7	%		$	67.8				16.4	%
Restructuring and cost reduction		2.8			3.6	%			—			—	%			7.3			2.2	%			0.8				0.2	%
Merger and acquisition costs		—			—	%			0.6			0.6	%			—			—	%			7.4				1.8	%
Adjusted EBITDA	$	11.0			14.2	%		$	17.1			17.5	%		$	53.0			15.8	%		$	76.0				18.4	%
Precision Optics
	Fourth Quarter Ended														Twelve Months Ended
(Millions)	December 31, 2023				% of VA			December 31, 2022				% of VA			December 31, 2023				% of VA			December 31, 2022					% of VA
Net sales	$	26.0						$	27.7						$	103.9						$	113.7
Pass-through metal cost		—							—							0.1							0.1
Value-added sales	$	26.0						$	27.7						$	103.8						$	113.6
EBITDA	$	2.2			8.5	%		$	4.4			15.9	%		$	9.9			9.5	%		$	13.7				12.1	%
Restructuring and cost reduction		1.4			5.4	%			—			—	%			2.6			2.5	%			0.6				0.5	%
Pension settlement		0.2			0.8	%			(0.5	)		(1.8	)%			0.2			0.2	%			(0.5	)			(0.4	)%
Merger and acquisition costs		—			—	%			0.1			0.4	%			—			—	%			0.2				0.2	%
Adjusted EBITDA	$	3.8			14.7	%		$	4.0			14.4	%		$	12.7			12.2	%		$	14.0				12.3	%
Other
	Fourth Quarter Ended														Twelve Months Ended
(Millions)	December 31, 2023				% of VA			December 31, 2022				% of VA			December 31, 2023				% of VA			December 31, 2022					% of VA
EBITDA	$	(7.5	)					$	(10.1	)					$	(29.3	)					$	(28.3	)
Restructuring and cost reduction		—							—							0.1							0.1
Merger and acquisition costs		—							0.3							—							2.2
Adjusted EBITDA	$	(7.5	)					$	(9.8	)					$	(29.2	)					$	(26.0	)

Attachment 8
Materion Corporation and Subsidiaries
Reconciliation of Non-GAAP Measure - Gross Margin to Adjusted Gross Margin
(Unaudited)
	Fourth Quarter Ended						Twelve Months Ended
(Millions)	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Gross Margin
Performance Materials	$	50.5		$	57.7		$	216.5		$	175.1
Electronic Materials		21.5			31.5			100.4			131.5
Precision Optics		7.7			9.2			32.1			37.3
Other		—			—			—			—
Total	$	79.7		$	98.4		$	349.0		$	343.9
Special Items (1)
Performance Materials	$	5.6		$	—		$	6.4		$	6.7
Electronic Materials		1.5			—			3.9			5.0
Precision Optics		1.0			—			1.3			—
Other		—			—			—			—
Total	$	8.1		$	—		$	11.6		$	11.7
Adjusted Gross Margin
Performance Materials	$	56.1		$	57.7		$	222.9		$	181.8
Electronic Materials		23.0			31.5			104.3			136.5
Precision Optics		8.7			9.2			33.4			37.3
Other		—			—			—			—
Total	$	87.8		$	98.4		$	360.6		$	355.6
(1) Special items impacting gross margin represent restructuring and cost reduction and additional start up resources and scrap in 2023 and merger and acquisition costs in 2022.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214669030/en/

Investor Contact:

Kyle Kelleher

(216) 383-4931

kyle.kelleher@materion.com

Media Contact:

Jason Saragian

(216) 383-6893

jason.saragian@materion.com

https://materion.com

Mayfield Hts-g

Source: Materion Corporation

FAQ

What were Materion Corporation's (MTRN) full-year 2023 net sales and value-added sales?

Materion Corporation reported full-year 2023 net sales of $1.67 billion and value-added sales of $1.13 billion, up 1% from the prior year.

How much was Materion Corporation's (MTRN) net income for full-year 2023?

Materion Corporation's net income for full-year 2023 was $95.7 million, an increase from $86.0 million in the prior year.

What was the adjusted earnings per share for Materion Corporation (MTRN) in full-year 2023?

Materion Corporation's adjusted earnings per share for full-year 2023 reached $5.64, a 7% increase from the prior year.

What was Materion Corporation's (MTRN) adjusted EBITDA for full-year 2023?

Materion Corporation's adjusted EBITDA for full-year 2023 was $217.7 million, representing 19.3% of value-added sales, a record for the company.

What new customer partnerships did Materion Corporation (MTRN) announce?

Materion Corporation announced new customer partnerships, including a $36 million order for space propulsion materials and a $4 million government award for additive manufacturing processes.

What is Materion Corporation's (MTRN) adjusted earnings per share guidance for full-year 2024?

Materion Corporation is guiding adjusted earnings per share for full-year 2024 in the range of $6.10 to $6.50, a 12% increase from the prior year at the midpoint.