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Materion Corp (MTRN) SEC Filing 8-K Material Event for the period ending Tuesday, August 3, 2021

Materion Corp

CIK: 1104657 Ticker: MTRN
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MATERION CORPORATION REPORTS STRONG SECOND QUARTER FINANCIAL RESULTS AND RAISES FULL YEAR OUTLOOK

MAYFIELD HEIGHTS, Ohio – August 3, 2021 - Materion Corporation (NYSE: MTRN), a world leader in high performing advanced materials, today reported strong second quarter financial results and raised its 2021 outlook.

Second Quarter 2021 Highlights

Net sales were $371.0 million compared to $271.5 million in the prior year period; value-added sales increased 31% year on year to a record $207.9 million for the quarter

Operating profit of $20.7 million; adjusted earnings before interest and taxes (EBIT) was $22.1 million, or 10.6% of value-added sales, a 260 basis point margin expansion year-over-year

Net income of $0.87 per share, diluted; adjusted earnings of $0.86 per share, an increase of 91% compared to $0.45 in the prior year period

Construction of new leading-edge manufacturing facility for customer funded engineered precision clad strip project nears completion; continuing to ship product from existing facility

Full Year 2021 Outlook

Full year outlook raised to $3.25 – $3.45, an increase of 65% versus prior year at the midpoint

“We posted exceptional results in the second quarter, with above market revenue growth, meaningful margin expansion and strong earnings,” said Jugal Vijayvargiya, President and Chief Executive Officer. “I am very proud of our team’s focus and dedication to serving our customers’ strong demand while continuing to execute on our key strategic initiatives. Based on our first half performance, continued market strength and a robust organic pipeline, we are increasing our outlook for the remainder of the year.”

SECOND QUARTER 2021 RESULTS
Net sales for the second quarter were $371.0 million, compared to $271.5 million in the prior year period. Value-added sales of $207.9 million were a record for any quarter, up 31% from the prior year quarter. Strong performance across several key end markets, including semiconductor, automotive, industrial, and consumer electronics drove the value-added sales
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growth.

Operating profit for the second quarter was $20.7 million, and net income was $17.9 million, or $0.87 per diluted share, compared to an operating profit of $7.6 million and net income of $5.8 million in the prior year period. Excluding special items, detailed in the attached tables, adjusted EBIT was $22.1 million in the second quarter, an increase of 73% versus the prior-year period. Strong commercial execution, favorable mix, and improved operating performance drove the increase.

Adjusted net income was $17.8 million, or $0.86 per diluted share, an increase of 91% compared to $0.45 per share in the prior year period.

OUTLOOK

We continue to see strength in our organic pipeline and good underlying demand across our end markets. Based on our first half performance and improved outlook, we expect adjusted earnings per diluted share in the third quarter to be in the range of $0.80 to $0.84 per share, an increase of 64% from the third quarter of 2020 at the midpoint. We are raising full-year 2021 adjusted earnings to $3.25 to $3.45 per diluted share. The midpoint of the revised guidance represents a 65% 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 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, August 3, 2021. 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 17, 2021 by dialing (877) 481-4010 or (919) 882-2331; please reference replay ID number 39482. 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
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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.

Investor Contact: Media Contact:
Andrew R. Vento Shannon Bennett
(216) 383-4098 (216) 383-4094
andrew.vento@materion.com shannon.bennett@materion.com
https://materion.com
Mayfield Hts-g
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Attachment 1
Materion Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)

Second Quarter EndedSix Months Ended
(In thousands except per share amounts)July 2, 2021June 26, 2020*July 2, 2021June 26, 2020*
Net sales$370,999 $271,468 $725,385 $549,414 
Cost of sales301,418 224,513 589,008 457,889 
Gross margin69,581 46,955 136,377 91,525 
Selling, general, and administrative expense38,060 32,852 74,836 63,596 
Research and development expense6,604 4,502 12,810 8,687 
Impairment charges —  10,766 
Restructuring expense (income) 2,387 (378)4,551 
Other — net4,194 (357)8,668 1,922 
Operating profit 20,723 7,571 40,441 2,003 
Other non-operating income—net(1,277)(851)(2,553)(1,795)
Interest expense — net858 1,259 1,619 1,505 
Income before income taxes21,142 7,163 41,375 2,293 
Income tax expense 3,274 1,360 6,740 368 
Net income$17,868 $5,803 $34,635 $1,925 
Basic earnings per share:
Net income per share of common stock$0.87 $0.29 $1.70 $0.09 
Diluted earnings per share:
Net income per share of common stock$0.87 $0.28 $1.68 $0.09 
Weighted-average number of shares of common stock outstanding:
Basic20,429 20,317 20,402 20,350 
Diluted20,651 20,554 20,647 20,587 
*Prior periods have been adjusted to reflect the change in inventory method, as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.





















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Attachment 2
Materion Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Thousands)July 2, 2021December 31, 2020
Assets
Current assets
Cash and cash equivalents$24,345 $25,878 
Accounts receivable, net179,326 166,447 
Inventories, net290,739 250,778 
Prepaid and other current assets22,155 20,896 
Total current assets516,565 463,999 
Deferred income taxes1,909 3,134 
Property, plant, and equipment1,052,464 998,312 
Less allowances for depreciation, depletion, and amortization(702,903)(688,626)
Property, plant, and equipment—net349,561 309,686 
Operating lease, right-of-use assets58,833 62,089 
Intangible assets, net50,851 54,672 
Other assets21,724 19,364 
Goodwill142,054 144,916 
Total Assets$1,141,497 $1,057,860 
Liabilities and Shareholders’ Equity
Current liabilities
Short-term debt$435 $1,937 
Accounts payable80,600 55,640 
Salaries and wages27,505 18,809 
Other liabilities and accrued items36,930 40,887 
Income taxes4,837 1,898 
Unearned revenue10,920 7,713 
Total current liabilities161,227 126,884 
Other long-term liabilities17,477 17,002 
Operating lease liabilities53,736 56,761 
Finance lease liabilities18,410 20,539 
Retirement and post-employment benefits40,001 41,877 
Unearned income95,290 86,761 
Deferred income taxes14,817 15,864 
Long-term debt58,838 36,542 
Shareholders’ equity681,701 655,630 
Total Liabilities and Shareholders’ Equity$1,141,497 $1,057,860 










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Attachment 3

Materion Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
(Thousands)July 2, 2021June 26, 2020*
Cash flows from operating activities:
Net income $34,635 $1,925 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization19,063 23,522 
Amortization of deferred financing costs in interest expense364 364 
Stock-based compensation expense (non-cash)
3,512 3,966 
Deferred income tax expense (benefit)367 (723)
Impairment charges 10,766 
Changes in assets and liabilities:
Accounts receivable
(13,941)5,331 
Inventory(40,651)(18,446)
Prepaid and other current assets(1,718)(7,264)
Accounts payable and accrued expenses28,403 (7,634)
Unearned revenue3,246 (257)
Interest and taxes payable
2,868 1,058 
Unearned income due to customer prepayments8,043 26,713 
Other-net(126)(2,888)
Net cash provided by operating activities44,065 36,433 
Cash flows from investing activities:
Payments for purchase of property, plant, and equipment(57,712)(32,034)
Proceeds from sale of property, plant, and equipment603 33 
Net cash used in investing activities(57,109)(32,001)
Cash flows from financing activities:
Proceeds from borrowings under revolving credit agreement, net22,500 150,000 
Repayment of long-term debt(1,654)(428)
Principal payments under finance lease obligations(1,512)(626)
Cash dividends paid(4,791)(4,582)
Repurchase of common stock (6,766)
Payments of withholding taxes for stock-based compensation awards(3,021)(2,025)
Net cash provided by financing activities11,522 135,573 
Effects of exchange rate changes(11)56 
Net change in cash and cash equivalents(1,533)140,061 
Cash and cash equivalents at beginning of period25,878 125,007 
Cash and cash equivalents at end of period$24,345 $265,068 
*Prior period has been adjusted to reflect the change in inventory method, as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
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Attachment 4
Materion Corporation and Subsidiaries
Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBIT
(Unaudited)
Second Quarter EndedSix Months Ended
(Millions)July 2, 2021June 26, 2020*July 2, 2021June 26, 2020*
Net Sales
Performance Alloys and Composites$125.3 $101.6 $239.4 $200.7 
Advanced Materials213.1 150.1 417.8 310.3 
Precision Optics32.6 19.8 68.2 38.4 
Other— — — — 
 Total$371.0 $271.5 $725.4 $549.4 
 Less: Pass-through Metal Cost
Performance Alloys and Composites$16.7 $11.8 $30.0 $27.2 
Advanced Materials146.2 97.9 287.9 203.6 
Precision Optics— 2.0 — 3.7 
Other0.2 0.7 1.0 1.9 
 Total$163.1 $112.4 $318.9 $236.4 
 Value-added Sales (non-GAAP)
Performance Alloys and Composites$108.6 $89.8 $209.4 $173.5 
Advanced Materials66.9 52.2 129.9 106.7 
Precision Optics32.6 17.8 68.2 34.7 
Other(0.2)(0.7)(1.0)(1.9)
 Total$207.9 $159.1 $406.5 $313.0 
Gross Margin
Performance Alloys and Composites$33.0 $24.0 $62.6 $44.8 
Advanced Materials25.0 16.4 48.8 34.2 
Precision Optics11.9 7.1 25.8 13.1 
Other(0.3)(0.5)(0.8)(0.6)
 Total$69.6 $47.0 $136.4 $91.5 
Operating Profit (Loss)
Performance Alloys and Composites$17.3 $6.9 $30.8 $10.4 
Advanced Materials8.3 4.7 17.2 9.7 
Precision Optics2.6 2.1 7.2 (7.5)
Other(7.5)(6.1)(14.8)(10.6)
 Total$20.7 $7.6 $40.4 $2.0 
*Prior periods have been adjusted to reflect the change in inventory method, as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
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Second Quarter EndedSix Months Ended
(Millions)July 2, 2021June 26, 2020*July 2, 2021June 26, 2020*
Special Items
Performance Alloys and Composites$— $4.2 $— $7.8 
Advanced Materials— 0.6 — 0.7 
Precision Optics0.1 0.3 0.4 11.1 
Other— (0.8)0.1 (0.7)
 Total$0.1 $4.3 $0.5 $18.9 
Operating Profit (Loss) Excluding Special Items
Performance Alloys and Composites$17.3 $11.1 $30.8 $18.2 
Advanced Materials8.3 5.3 17.2 10.4 
Precision Optics2.7 2.4 7.6 3.6 
Other(7.5)(6.9)(14.7)(11.3)
 Total$20.8 $11.9 $40.9 $20.9 
Non-Operating (Income) Expense
Performance Alloys and Composites$0.2 $0.1 $0.3 $0.3 
Advanced Materials— — — — 
Precision Optics(0.2)— (0.4)— 
Other(1.3)(1.0)(2.5)(2.1)
 Total$(1.3)$(0.9)$(2.6)$(1.8)
EBIT Excluding Special Items
Performance Alloys and Composites$17.1 $11.0 $30.5 $17.9 
Advanced Materials8.3 5.3 17.2 10.4 
Precision Optics2.9 2.4 8.0 3.6 
Other(6.2)(5.9)(12.2)(9.2)
 Total$22.1 $12.8 $43.5 $22.7 
*Prior periods have been adjusted to reflect the change in inventory method, as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

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 metal prices. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. During the first half of 2021, the Company added ruthenium, iridium, rhodium, rhenium, and osmium to its definition of value-added sales as the costs of these materials are treated as pass-through. Prior period value-added sales amounts have been recast to reflect this change. 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.
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Attachment 5
Materion Corporation and Subsidiaries
Reconciliation of Non-GAAP Measures - Profitability
(Unaudited)
Second Quarter EndedSix Months Ended
(Millions except per share amounts)July 2, 2021June 26, 2020*July 2, 2021June 26, 2020*
GAAP as Reported
Net sales$371.0 $271.5 $725.4 $549.4 
Operating profit 20.7 7.6 40.4 2.0 
Non-operating income(1.3)(0.9)(2.6)(1.8)
Net income 17.9 5.8 34.6 1.9 
Shares outstanding - Diluted20,651 20,554 20,647 20,587 
EPS - Diluted$0.87 $0.28 $1.68 $0.09 
Operating Profit Special Items
Impairment charges$— $— $— $10.8 
Non-cash inventory adjustment— — — 1.3 
Cost reduction initiatives0.1 2.4 0.4 4.6 
COVID-19 related costs— 2.7 — 2.9 
Merger and acquisition costs— 1.4 0.1 1.5 
Foreign currency hedge gain— (2.2)— (2.2)
Total Operating Profit Special Items$0.1 $4.3 $0.5 $18.9 
Operating Profit Special Items - net of tax$0.1 $3.3 $0.4 $14.5 
Tax Special Items$(0.1)$— $(0.3)$0.7 
Special items per diluted share$(0.01)$0.17 $— $0.75 
Non-GAAP Measures - Adjusted Profitability
Value-added (VA) sales$207.9 $159.1 $406.5 $313.0 
Operating profit20.8 11.9 40.9 20.9 
Operating profit % of VA10.0 %7.5 %10.1 %6.7 %
EBIT22.1 12.8 43.5 22.7 
EBIT % of VA10.6 %8.0 %10.7 %7.3 %
Net income17.8 9.1 34.7 17.1 
EPS - Diluted$0.86 $0.45 $1.68 $0.84 
*Prior periods have been adjusted to reflect the change in inventory method, as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
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 and taxes (EBIT), 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 non-cash impairment charges, non-cash inventory adjustments, cost reduction initiatives (i.e., severance), COVID-19 related costs, merger and acquisition costs, certain foreign currency hedge gains, and certain discrete 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.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 3, 2021
MATERION CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 001-15885 34-1919973
(State or other jurisdiction of incorporation or organization)(Commission File Number)(I.R.S. Employer Identification No.)
6070 Parkland Blvd., Mayfield Hts., Ohio 44124
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (216) 486-4200

Not Applicable
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par value MTRN New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§204.12b-2 of this chapter).
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act







Item 2.02 Results of Operations and Financial Condition.

On August 3, 2021, Materion Corporation issued a press release announcing its results for the second quarter of 2021. The press release is attached hereto as Exhibit 99.1.



Item 9.01 Financial Statements and Exhibits.

Exhibits.
Exhibit NumberDescription of Exhibit
99.1
104Cover Page Interactive Data File (embedded within the Inline XBRL document)














































SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Materion Corporation
August 3, 2021By:/s/ John M. Zaranec
John M. Zaranec
Vice President, Corporate Controller and Investor Relations













































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Ticker: MTRN
CIK: 1104657
Form Type: 8-K Corporate News
Accession Number: 0001104657-21-000076
Submitted to the SEC: Tue Aug 03 2021 7:23:00 AM EST
Accepted by the SEC: Tue Aug 03 2021
Period: Tuesday, August 3, 2021
Industry: Metal Forgings And Stampings
Events:
  1. Earnings Release
  2. Financial Exhibit

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