Attached files
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| 8-K - 8-K - MATERION Corp | d437722d8k.htm |
 November 2012
Materion
Corporation
–
Investor
Presentation
Exhibit 99.1 |
 Forward-Looking Statements
These slides contain (and the accompanying oral discussion will contain)
“forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve known and unknown risks, uncertainties and other factors
that could cause the actual results of the Company to differ materially from
the results expressed or implied by these statements, including health
issues, litigation and regulation relating to our business, our ability to
achieve and/or maintain profitability, significant
cyclical
fluctuations
in
our
customers’
businesses,
competitive
substitutes
for
our products, risks associated with our international operations, including foreign
currency rate fluctuations, energy costs and the availability and prices of
raw materials, the timing and ability to achieve further efficiencies and
synergies resulting from our name change and product line alignment under
the Materion name and brand, and other factors disclosed in periodic reports
filed with the Securities and Exchange Commission. Consequently these
forward-looking statements should be regarded as the Company’s
current plans, estimates and beliefs.
The Company does not undertake and specifically declines any obligation to publicly
release the results of any revisions to these forward-looking statements
that may be made to reflect any future events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events. 2 |
 Materion (MTRN)
•
An Advanced Material Company
–
Lighter, stronger, faster, smaller, reliable
•
Strong Global Positions in Attractive and Growing Markets
•
Solid Record of Long-term Growth
•
Strong Value-added* Margins
•
Market Cap: $486 Million 9/28/12
•
Shares Outstanding: 20.7 million
•
Annual EPS: $1.40-$1.45 (Forecast 2012)
•
Strong Balance Sheet: Debt-to-Debt Plus Equity <23%
•
EBITDA**: $85-$90 Million (Forecast 2012)
*
**
3
Excludes metal pass-through
for reconciliation to GAAP.
Earnings
before
interest,
taxes,
depreciation
and
amortization.
See
A-27
in
the
Appendix |
 Identify High Growth Secular Markets
4
Market
Q3 2012
% of Value-
added Sales
Macro
Trends
Key Drivers
Consumer Electronics
26%
Industrial Components &
Commercial Aerospace
20%
Defense & Science
13%
Automotive Electronics
9%
Medical
8%
Energy
7%
Telecommunications
Infrastructure
7%
•
Smartphone growth
•
Tablet computers & LEDs
•
Miniaturization
•
New airplane builds & retrofits
•
Increasing air travel
•
Heavy equipment builds
•
DoD & foreign military budgets
•
Demand for communications satellites
•
High performance optical devices
•
Increasing global car production
•
HEV/EV lithium ion battery components
•
Engine control & electronic systems
•
Glucose testing
•
Blood analysis test coating for medical diagnosis
•
Diagnostics equipment
•
Directional drilling
•
Rig counts
•
Solar, batteries & smart grid devices
•
Global 3G/4G builds
•
Base stations
•
Undersea fiber-optics expansion |
 Unique Global Positions –
Advanced Materials
•
World’s Only Fully Integrated Producer of Beryllium
and Beryllium Alloys
–
Over 75 years of reserves at Utah
5
Leading Global
Position
•
Unique Copper-Nickel-Tin Material ToughMet®
–
Multiple advanced applications growing at over 30%
annually
•
Precision Optical Coatings –
Visible to Infrared
Bandwidth
–
“Go To”
Supplier for defense, thermal imaging, space,
medical and advanced consumer applications
•
High Purity Gold Products for Semiconductor
Fabrication (Wireless & LED)
–
Offering
“full
metal
management”
•
Specialty Coatings for Blood Analysis Test Strips for
Medical Diagnosis
–
Diabetes
5
capabilities |
 M
A
T
E
R
I
O
N
T
O
D
A
Y
:
New Name, Same Impressive Performance
6
12%*
CAGR
Sales
growth
(2005
–
2011)
19%
CAGR
Operating profit
growth
(2005
–
2011)
Successful
Repositioning
of company
*Excluding metal pass-through |
 Broadening our Reach Through Acquisitions and
Materials Innovation
2002
Today
7
Key Markets:
Automotive Electronics
Defense and Science
Telecom & Infrastructure
Semiconductor
Appliance
Key Markets:
Automotive Electronics
Defense and Science
Telecom & Infrastructure
Semiconductor
Appliance
Plus
Expansion and/or entry into the
following:
Consumer Electronics
Commercial Aerospace
Heavy Industrial Equipment
Services
Optical
Energy –
Conventional and Alternative
Medical
Beryllium
and Alloys
New Non-Be
Alloys and
Composites
Industrial Precious
Metals and
Microelectronics
Packaging
Industrial Precious
Metals and
Microelectronics
Packaging
Optical and
Medical Coatings
Specialty
Chemicals
Broadened Precious
and Semi-Precious
Metals
Beryllium
and Alloys |
 High
Operating Margins 8
Removing High Value Metals Clarifies Margins
(1) Value-added sales excludes metal pass-through
GAAP Margin
Value-added
(1)
Margin
Gross Profit
14% -
16%
38% -
42%
Operating Profit
3% -
5%
10% -
12% |
 Successful
Repositioning
–
Snapshot
9
* A/R, Inventory & A/P
2002
2011
Revenue
$373M
$1.5B
Revenue % in Advanced
Materials
47%
76%
Plus-Equity
43%
17%
Working capital*
% of sales
41%
23%
Cyclicality
High
Lower
Growth
Low
Higher
Debt-to-Debt- |
 High Value-added Business Model
10
1.
Identify high growth
secular markets
2.
Target the fastest growing
niches of those markets
3.
Expand with
innovative
products
4.
Add synergistic
acquisitions
5.
Ensure
financial
discipline |
 A
Global Platform Operations in US
and 11 Countries
Significant Direct International Sales*
Q3 2012
40%
11
•
Customers in >50 countries
•
Expanded presence in Asia
*Percentage of value-added sales |
 Continually Develop Innovative Products
•
Leveraging customer-centric product development
•
Active research programs to take advantage of
secular trends
•
Key product areas include
–
LEDs
–
Wireless
–
Medical
–
Commercial Aerospace
–
Energy
–
Commercial Optics
–
Hybrid & Electric Vehicles
–
Computer Hard Drives
–
Science
12 |
 A
Strong Record of Synergistic Acquisitions Impact
Acquisitions
2005
-
2012
Add complementary
products / technology
Expand market
position
Accretive in
year 1
OMC –
shield kit cleaning –
2005
TFT
–
thin
film
coatings
–
2005
CERAC
–
inorganic
chemicals –
2006
Techni-Met
–
thin
film
coatings –
2008
Barr
–
thin
film
coatings
–
2009
Academy
–
precious
metals
–
2010
EIS
Optics
–
thin
film
coatings
–
2011
TBD
AMC
–
metal
matrix
composites
–
2012
TBD
13
Added over $440M to sales and approximately 30% of company profit in 2011
|
 Ensure Financial Discipline
14
Maintain strong balance
sheet
Debt-to-Debt-Plus-Equity
Maximum 30%
Strong
cash flow
•
Cash flow from operations
$30M -
$75M annually for
the past five years
•
Capex below depreciation
•
Reduction in working
capital goal to <20% sales
Resources to
finance organic
growth and
acquisitions while
returning cash to
shareholders
21%
18%
0%
10%
20%
30%
2005
2012(F)
After $228M in acquisitions |
 Financial Goals Next 3 -
5 Years
15
Past 3 -
5 Years
Next 3 -
5 years
Revenue growth –
organic
12%
>10%
Acquisitions
$35M -
$40M
Per Year
$50M -
$75M
Per Year
Margins (OP % VA)
10% -
14%
14% -
18%
Working capital % sales
23% -
25%
<20%
Debt-to-Debt-Plus-Equity
16% -
18%
<30%
ROIC (pre-tax)
9% -
12%
>20% |
 T
H
E
S
I
S
Positioned to Deliver Long-term, Sustainable Growth
16
A company
with a strong
platform…
…
Leveraging a
high value-added
business
model…
…
Executing
a focused
growth plan
Revenue Base
Margins
Capital Eff. |
 I
N S U M M A R Y Why Invest in Materion Corporation?
17
A leader in high-growth markets
Strong performance record
Executing three point strategy
•
Global player in strong secular growth markets
•
Sustainable long-term growth
•
Proven business model
•
Target, capture niche, then expand
•
Clear financial goals, performance continuing to improve
•
Strong value today
Positioning
Performance
Growth |
 Appendix |
 Target High Growth, Leading-edge Markets
A-1
Reportable Segments
ADVANCED MATERIAL
TECHNOLOGIES
PERFORMANCE
ALLOYS
BERYLLIUM &
COMPOSITES
TECHNICAL
MATERIALS
Key Markets
Precious, Non-precious,
Specialty Metal and Inorganic
Materials, Electronic
Packages and Components
Bulk and Strip Form Products
and Beryllium Hydroxide
Beryllium and Beryllia Ceramic
Products
Specialty Strip Metal
Products
CONSUMER ELECTRONICS
DEFENSE & SCIENCE
INDUSTRIAL COMPONENTS &
COMM. AEROSPACE
TELECOM INFRASTRUCTURE
AUTOMOTIVE ELECTRONICS
ENERGY
MEDICAL |
 Value-added Sales: Materion
Q3 2012
A-2
Consumer Electronics
26%
Industrial
Components &
Commercial
Aerospace
20%
Defense & Science
13%
Automotive
Electronics
9%
Medical
8%
Energy
7%
Telecom
Infrastructure
7%
Services
4%
Appliance
3%
Other
3% |
 Value-added Sales: By Segment
Q3 2012
A-3
Technical Materials
6%
Advanced Material
Technologies
42%
Performance Alloys
41%
Beryllium &
Composites
11% |
 Value-added Sales: Advanced Material Technologies
Q3 2012
A-4
Consumer Electronics
35%
Defense & Science
17%
Medical
15%
Services
8%
Industrial
Components &
Commercial
Aerospace
8%
Energy
4%
Telecommunications
Infrastructure
2%
Automotive
Electronics
1%
Other
10% |
 Value-added Sales: Performance Alloys
Q3 2012
A-5
Industrial
Components &
Commercial
Aerospace
32%
Consumer Electronics
20%
Automotive
Electronics
14%
Energy
12%
Telecommunications
Infrastructure
12%
Appliance
8%
Defense & Science
1%
Medical
1% |
 Value-added Sales: Beryllium and Composites
Q3 2012
A-6
Defense & Science
52%
Industrial
Components &
Commercial
Aerospace
26%
Medical
8%
Telecommunications
Infrastructure
7%
Other
7% |
 Value-added Sales: Technical Materials
Q3 2012
A-7
Automotive
Electronics
52%
Consumer Electronics
39%
Energy
5%
Medical
1%
Other
3% |
 Core Technologies
1.
High Purity Gold and Silver for Industrial Applications
2.
Powder Science and Processing (Vacuum, Hot and Cold Isostatic
Pressing ) …
Metal and Chemical
3.
Full Metal Processing Technology (Melting, Casting, Rolling, Extrusion)
4.
Selective Electroplating
5.
Light Wave Management and Coating Technology
6.
Thin Film Large Area Coating
7.
Numerous “Specialties”
…
Cladding, Electron Beam Welding, Diffusion
Bonding
8.
Shield Kit Cleaning
9.
Chemical Synthesis
10.
Amorphous Metals
A-8 |
 Continuing to Execute Three Point Strategy
A-9
1
Grow and diversify revenue base
2
Expand margins
3
Improve fixed and working capital utilization
Increasing Shareholder Value |
 •
Targeting expansion in secular growth markets including:
–
Smart mobile devices, 3G / 4G, commercial aerospace, oil &
gas, alternative energy, optics, LED / LCD
•
Ongoing global expansion
–
Asia
•
Strategic acquisition
fast accretion
–
Technology breadth
–
Global reach
–
Product diversification
A-10
S
T R
A
T
E
G
Y
#
1
:
G
R
O
W
T
H
Expand and Diversify Revenue Base |
 A-11
Margin
Today
10
-
12%
Target
Margin
14
-
18%
(OP % VA)
1
Lean Sigma
operating
efficiency
2
Higher value-
added products
3
Cost
reductions
S
T
R
A
T
E
G
Y #
2 : M
A
R
G
I
N
S
Expand
Margins
–
Key
Drivers |
 S
T
R
A
T
E
G
Y
#
3 :
C
A
P
I
T
A
L
E
F
F
I
C
I
E
N
C
Y
Improve Fixed and Working Capital Efficiency
A-12
Each 5% of working capital efficiency = $65M of cash
Working capital % of sales
Lean Sigma
•
Cycle time reduction
•
Yield improvement
•
On-time shipments
Improve Working Capital
Efficiency
41%
23%
<20
2002
2011
Target
% |
 Strategy in Action: Outgrowing Growth Markets
Growth of Materion
Oil and Gas Sales vs. Market
Growth of Materion
Aerospace Sales vs. Market
A-13
Materion Sales
Global Rig Count
Aircraft Delivered
+512%
+85%
+349%
+80%
Materion Sales |
 Synergistic Acquisitions
Case Study of Growing a Niche Business
–
Optical Filters and Medical Coatings
(Pro-Forma Revenues)
A-14
•
Positioned in $1.2B+ market with
significant long-term growth potential
•
Markets served include: defense,
aerospace, medical, energy,
semiconductor, telecommunications,
lighting and astronomy
•
The recent acquisition of EIS Optics
continues to expand our global
footprint in Asia
$9M
$155M
Barr
(2009)
Barr
(2009)
Techni-
Met
(2008)
Techni-
Met
(2008)
TFT
TFT
EIS Optics
(2011)
EIS Optics
(2011)
2006
2012 (F) |
 New
Product and Technology Development Advanced Material Technologies
–
Optics Coating Materials and Large Format Components
–
Thin Film Electrodes (medical diagnostics)
–
Expanded
Refining/Chamber
Services
–
Complement
to
Thin
Film
Materials
& Coating Businesses
–
Nanotechnology Materials
–
Materials for High Brightness LEDs
–
Specialty Inorganic Compounds (solar, security)
–
Precious
Metal
Materials
–
Rod,
Bar,
Sheet,
Slugs,
etc.
–
Global Refining and Metal Recovery and Management Services
–
Ultra High Purity Precious Metals for Medical and Semiconductor Applications
–
Next Generation Magnetic Data Storage Thin Film Head Materials
–
Alternative Chemistry for Shield Kit Cleaning
A-15 |
 New
Product and Technology Development Advanced Material Technologies
Coatings
–
Precision Optical Thin Film Coatings (specialty filters)
–
Large format Thin Film Materials for Large Area Coatings (energy, solar)
–
Solar Panel Thin Film, Concentrator Materials and Barrier Film Coatings
Packaging
–
Optical Package for New Photonics Applications
–
RF Packages for the Latest Transistor Technology (3G and 4G infrastructure)
–
MEMS and Photovoltaic Packaging Materials
A-16
Advanced Material Technologies
Packaging
Coatings |
 New
Product and Technology Development Performance Alloys
–
ToughMet®
Alloy for High Volume Bearing Applications
–
BrushForm 158 for Voice Coil Motor (VCM) Applications
–
Materion R270 Strip
–
“Next Generation”
Alloy for Oil & Gas
–
ToughMet®
Alloy for High Volume Automotive Gearboxes
Beryllium and Composites
–
Nearer Net Shape Fabrication (hot isostatic pressing)
–
Truextent™
Speaker Diaphragms
–
Investment Casting
–
Amorphous Metals
–
SupremEX™
Aluminum Metal Matrix Composites
Technical Materials
–
Hybrid & Electric Vehicle Battery Components
–
Power Electronics
–
Smart Grid Meters
–
Computer Hard Drives (dual stage activation)
–
Medical Applications
A-17 |
 Positioned in Diverse Set of High-growth Markets
and Product Applications
A-18
Growth
Entered multiple leading-edge growth markets since 2002
Medical
Devices
Disk Drives
Space /
Science
Cellular phones
(smartphones),
Tablet computers
Heavy
Equipment
Alternative
Energy
Commercial Aerospace
Notebooks
Defense
LED’s
Optics
LCD
Telecom
Infrastructure |
 I/O
Connector Contacts
Battery Contacts
Internal Antenna Contacts
Grounding Clips
and Audio Jacks
Micro Mezzanine
Connectors for
LCD Screen
Internal Electronics and LED
•
Thin
Film
Materials
–
Power
amplifiers, LED, SAW and
BAW devices, filters, and ICs
•
Hermetic Solutions for SAW
•
Refining / Recycling
•
Precision Parts Cleaning
Other Smart Phone Applications:
•
Circuit Board and IC Inspection
•
RoHS Compliance Assurance
•
Cellular Infrastructure with High Power
RF Packaging
•
Voice Coil Motor (auto-focus lens
stabilizer)
Internal Electronics
•
Precursor materials for GaAs
wafer production
Applications: Smart Phones
A-19 |
 Avionics/Electrical
Systems
Airframe Structure
Landing Gear
Attachments
Engine and Pylon
Attachments
Flight Control
Mechanisms
Horizontal Stabilizer &
Rudder Attachments
Hydraulic Systems
Fuel Systems
Wing Attachments
Doors & Hatches
Landing Gear
Components
Flight Attendant
Jumpseat Spring
Safety Slide
Mechanism
Other Aerospace Applications:
•
Baggage Inspection
•
Nondestructive Evaluation (Cracked
Component Detection)
A-20
Applications: Aerospace |
 Under Water Wellhead Equipment
Directional Drilling
Equipment
MWD, LWD, MPT Systems
Drill Bits
Structural Rig
Components
Wellhead Control Equipment
Other Oil & Gas Applications:
•
Artificial Lift Equipment
•
Elemental Analysis
•
Down Hole X-Ray Inspection
ROV’s, blow out preventers,
hydraulic actuators, control fluid couplings
Applications: Oil & Gas
A-21 |
 Technology: Amorphous Silicon
(a-Si, tandem and multi-junction)
Thin Film (PVD) Materials
Silicon based photovoltaic cells
Front and back contact layers
TCO Transparent Conductive Oxide layers
Technology: Cadmium Telluride
(CdTe)
Thin
Film
(PVD)
Materials
Cadmium based solar cell architecture. N and
P type Cadmium Semiconductor materials
TCO Transparent Conductive Oxide layers
Front and Back-contact layers
Technology: Copper
Indium Gallium Selenide
(CIGS)
Thin
Film
(PVD)
Materials
as
well
as
Powders
for
Printing
CIGS
applications
Copper Indium Gallium
Selenide thin film and screen
printing applications for flexible
and rigid solar cells.
Technology: Concentrator Photovoltaic
(CPV)
Thin
Film
(PVD)
Materials
Solar technology based on concentrating Solar
rays into a semiconductor device via large lens.
Anti-Reflection Coating Materials
Precious metal contact materials
Micro
Electronic
Packaging
Products:
Bonding
Ribbon
-
Au
&
Ag
Lead-free Solders
Metalized Ceramic Substrates
Technology: Flexible Solar Cells /
Building Integrated Photovoltaic:
Thin
Film
Services:
Solar cells built in flexible substrates to
accommodate applications such as roofing tiles
or defense.
Technology: Crystalline
Silicon (Si)
Interconnect
Materials
Front and backplane systems for
high efficiency designs.
Applications: Solar Energy
A-22 |
 Cardiac Rhythm Management
•
Electronic Interconnects/Components
•
Niobium/Titanium Electron Beam Weld
Insulin Pump
•
EMI Shielding and Grounding
•
Electrical Terminals in Connectors
Seizure Control
•
Thin Film Deposition Implantable
Electrode –
Parkinson's disease
(R&D)
External Glucose Analysis
•
Subcutaneous sensors for glucose measurement
Subcutaneous Glucose Analysis
•
Thin Film Coatings –
Electrode Monitoring device
Radiation Therapy –
Neutron Reflectors
X-Ray Mammography
Other Medical Applications:
•
DNA Sequencing Optics
•
CT Scan
•
Diagnostic X-Rays
•
Advanced Drug Delivery Components
•
Diagnostic Electronic Components
•
Anesthesia Monitoring Components
•
Operating Instruments
Applications: Medical
A-23 |
 Applications: Telecommunications Infrastructure
Base Stations
•
Coaxial Connectors
•
High Power Amplifiers
Local Area Networks
•
Shielding
•
Modular Jacks
•
PCB Sockets
•
Processor Sockets
Other Telecommunications Infrastructure
Applications
•
Undersea Repeater Housings
A-24 |
 Lithium Ion Battery
Interconnects
Battery Management
Resistors
Electronic Power
Steering Modules
ABS Leadframes
Engine Efficiency Oxygen
Sensors
Mirror & Windshield Electronic
Connections
Air Bag Sensors
Lamp Socket Connectors
Auto Dimming Mirror
Connectors
Hybrid Vehicle Motor &
Module Connectors
Window and Door
Switches
Fuel Pump and Fuel
Level Sensors
Battery
Terminals
Engine Ignition and
Control Modules
Battery & Relay Control
Modules
Turn Signal and Emergency
Flasher Relays
On Board
Telematics
Applications: Automotive Electronics
A-25
Night Vision Optics
Speed Control Optics
Camera Optics |
 Applications: Defense
•
Infrared Sensors for Fighter
Jet and UAV Optical
Targeting
•
Electronic Packaging for
Defense Avionics, Radar
and Electronic
Countermeasure Systems
•
Structural and Electronic
Components for Satellites
•
X-ray Windows in Security
Imaging Systems
•
Laser Protection Optical
Coatings
•
Night Vision System Optics
A-26 |
 EBITDA: Reconciliation to GAAP
A-27
2012 Forecast
(Millions)
* Earnings before interest, taxes, depreciation and amortization
P&L
Net Income
$29.0 –
$30.0
Income Taxes
$13.0 –
$16.0
Interest Expense
$ 3.0 –
$ 3.0
Operating Profit
$45.0 –
$49.0
Depreciation & Amortization
$40.0 –
$41.0
EBITDA*
$85.0 –
$90.0
Balance Sheet
Capital Spending
$33.0 –
$33.0
Free Cash Flow
$23.5 –
$26.0
Debt-to-Debt Plus Equity
17% –
19% |