Core Viewpoint - Materion (MTRN) has revised its profitability outlook for 2024, leading to a significant shift in investor sentiment and a stock price decline to $105.35, reflecting a 4.9% change in valuation [1] Financial Performance - The adjusted EPS guidance for Materion has been lowered to a range of $5.20 to $5.40, primarily due to slower-than-expected order intake in the latter half of 2024, which has weakened investor confidence [2] - Materion's current market capitalization is approximately $2.19 billion, with a price-to-earnings (P/E) ratio of 28.09 and a price-to-book (P/B) ratio of 2.41, indicating a potential premium compared to its intrinsic value [3] Valuation Metrics - The GF Value for Materion is $98.71, suggesting that the stock is fairly valued at present [3] - The stock's price-to-sales (P/S) ratio is nearing a 1-year low, which may signal a buying opportunity for value investors [4] Financial Health Indicators - Materion has an Altman Z-score of 3.55, indicating strong financial health [4] - The company's dividend yield is approaching a 1-year high, which could attract income-focused investors [4] Risk Factors - Materion has been issuing new debt, and its return on invested capital (ROIC) is below its weighted average cost of capital (WACC), raising concerns about capital efficiency [5] - Insider transaction trends show selling activity, which may be a red flag for potential investors [5] Conclusion - Materion faces near-term challenges due to revised profitability projections and lowered price targets, but its financial health and valuation metrics present a mixed picture for investors [6]

Core Viewpoint - Investors are avoiding Materion stock due to lower-than-expected profitability projections for 2024 and a bearish outlook from analysts [1][2]. Group 1: Financial Performance and Guidance - Materion's management initially projected 2024 adjusted earnings per share (EPS) of $5.60 to $5.90, indicating a 2% increase from 2023 [4]. - The company later revised its guidance down to an adjusted EPS of $5.20 to $5.40, citing a slower intake of orders in the second half of 2024 [5]. - As a result of these changes, shares of Materion have declined by 10.7% from the end of last week to Thursday's market close [3]. Group 2: Market Reaction and Analyst Outlook - Following the revised guidance, Seaport Research lowered its price target for Materion stock from $150 to $135, reflecting a more cautious outlook [5]. - Despite the recent sell-off, Materion shares are still trading at 26.8 times trailing earnings, which may not be attractive for investors [6]. - Investors are advised to consider alternative opportunities in the semiconductor industry rather than rushing to buy Materion stock [6].

Company Overview - Materion (MTRN) shares increased by 3.5% to $100.43 in the last trading session, following a higher-than-average trading volume, contrasting with a 9.6% loss over the past four weeks [1] - An analyst at Seaport Global Securities maintained a Buy rating on MTRN but reduced the target price from $150.00 to $135.00 [1] Earnings Forecast - Materion revised its earnings per share (EPS) forecast for 2024 to a range of $5.20-5.40 due to lower-than-expected incoming order rates for the second half of 2024 [2] - The company anticipates an EBITDA margin above 20% for the second half of 2024, driven by cost-reduction initiatives and lower incentive compensation [2] Market Outlook - The analyst at Seaport expects sequential improvement in MTRN's performance in Q4 2024 and momentum into 2025, particularly from key markets such as semiconductor, aerospace & defense, and consumer electronics [3] - Materion is projected to report quarterly earnings of $1.41 per share, reflecting a year-over-year increase of 1.4%, with revenues expected to reach $444.35 million, up 10.2% from the previous year [5] Management Changes - Jason Moore has been appointed as the President of Materion's Precision Optics business segment, which focuses on customized optical and thin-film coatings for various industries including space and defense, life sciences, and automotive [4] Earnings Estimate Trends - The consensus EPS estimate for Materion has been revised 5.9% lower over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not correlate with price appreciation [7] - Materion currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [7]

| --- | --- | --- | --- | |-------------------------------|-------|-------|-------| | | | | | | Materion Corporation | | | | | | | | | | 2Q 2024 Earnings Presentation | | | | | August 5, 2024 | | | | | | | | | | | | | | | | | | | © 2024 Materion Corporation Agenda Introduction Kyle Kelleher – Director, Investor Relations and Corporate FP&A Opening Remarks & Business Update Jugal Vijayvargiya – President and Chief Executive Officer Financial Review Shelly Chadwick – Vice President and Chief Financial Officer ...

Core Viewpoint - The sustainability of immediate price changes and future earnings expectations will largely depend on management's discussion during the earnings call, with a focus on the potential for a positive EPS surprise [1]. Company Overview: Materion - Materion is expected to report quarterly earnings of $1.41 per share, reflecting a year-over-year increase of 2.2% [2]. - The consensus EPS estimate has been revised down by 1.25% over the last 30 days, indicating a reassessment by analysts [3]. - The Most Accurate Estimate for Materion aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [6]. - In the last reported quarter, Materion was expected to post earnings of $0.98 per share but delivered $0.96, resulting in a surprise of -2.04% [7]. - Materion currently holds a Zacks Rank of 4, suggesting it is not a compelling earnings-beat candidate [16][22]. Industry Overview: Nexa Resources - Nexa Resources is expected to report earnings per share of $0.18 for the quarter ended June 2024, indicating a significant year-over-year increase of 350% [10]. - Revenues for Nexa Resources are projected to be $674.2 million, up 7.6% from the previous year [10]. - The consensus EPS estimate for Nexa Resources has remained unchanged over the last 30 days, but a higher Most Accurate Estimate has resulted in an Earnings ESP of 27.78% [20]. - Nexa Resources has surpassed consensus EPS estimates two times over the last four quarters, indicating a positive trend [23]. Earnings Predictions and Market Reactions - The upcoming earnings report for Materion is anticipated to influence its stock price, depending on whether the actual results meet or exceed expectations [24]. - A positive or negative Earnings ESP reading can indicate the likely deviation of actual earnings from the consensus estimate, with predictive power being significant for positive readings only [25]. - Market reactions to earnings reports can be influenced by various factors beyond just the earnings beat or miss, including investor sentiment and unforeseen catalysts [26].

Okay, very good. And last one from me, and I'll apologize in advance if I misquote Jugal on this, but the topic would be your expansions on the electronic material side at Newton and Milwaukee. But one or two quarters ago, I believe Jugal, you talked about, I asked you about the timing of completion, has it changed or whatnot? And again, I'm paraphrasing, but I believe you said, well, the slowdown in electronic materials demand that was happening then you thought it would jibe very nicely with your planned ...

© 2024 Materion Corporation Introduction Opening Remarks & Business Update Jugal Vijayvargiya – President and Chief Executive Officer Q&A Question and Answer Session © 2024 Materion Corporation 3 Information The Company does not undertake and specifically declines any obligation to update or 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 anticipa ...

Materion (MTRN) came out with quarterly earnings of $0.96 per share, missing the Zacks Consensus Estimate of $0.98 per share. This compares to earnings of $1.34 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -2.04%. A quarter ago, it was expected that this supplier of engineered materials to technology companies would post earnings of $1.38 per share when it actually produced earnings of $1.41, delivering a surprise of 2.17%. ...

[First Quarter 2024 Financial Results](index=1&type=section&id=First%20Quarter%202024%20Financial%20Results) Materion's Q1 2024 results show declines in sales and profit due to semiconductor and industrial weakness, partially offset by space & defense strength [Financial Summary](index=1&type=section&id=Financial%20Summary) Materion's Q1 2024 net sales and value-added sales declined due to semiconductor and industrial market weakness, despite comparable adjusted EBITDA margins Q1 2024 Key Financial Metrics (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $385.3M | $442.5M | | Value-Added Sales | $257.8M | $298.6M (calculated) | | Operating Profit | $22.2M | $36.9M | | Net Income | $13.4M | $25.6M | | Diluted EPS | $0.64 | $1.23 | | Adjusted Diluted EPS | $0.96 | $1.34 | | Adjusted EBITDA | $45.2M | $53.4M | | Adjusted EBITDA Margin | 17.5% | 17.9% | - The year-over-year decline in sales was primarily driven by continued weakness in the semiconductor and industrial markets, combined with some temporary operational challenges[2](index=2&type=chunk) - The sales decline was partially offset by strength in the space & defense markets[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO acknowledged Q1 results fell short due to operational challenges and softer demand, while highlighting strong margins and continued strategic focus - CEO Jugal Vijayvargiya stated that "Temporary operational challenges and softer market demand led to results falling short of our expectations"[5](index=5&type=chunk) - Despite the challenges, the company delivered **strong margins comparable to last year**, thanks to quick mitigation efforts and cost improvements[5](index=5&type=chunk) - The company remains focused on executing its strategy, delivering on organic growth initiatives, and investing in new capacity to drive long-term value[5](index=5&type=chunk) [2024 Outlook](index=2&type=section&id=2024%20Outlook) Materion updated its 2024 adjusted EPS guidance, reflecting softened demand and inventory correction, with mitigation through cost reduction initiatives [Full Year 2024 Guidance](index=2&type=section&id=Full%20Year%202024%20Guidance) Materion adjusted its 2024 adjusted EPS outlook to $5.60-$6.20, reflecting market softness and higher interest, partially offset by cost reductions Full Year 2024 Adjusted EPS Guidance | Metric | Guidance Range | YoY Change (at Midpoint) | | :--- | :--- | :--- | | Adjusted EPS | $5.60 - $6.20 | +5% | - The outlook was adjusted due to several factors: softened outlook for commercial aerospace and electric vehicle end-markets, expected inventory correction from a precision clad strip customer in H2, and higher expected interest expense[7](index=7&type=chunk) - The company plans to mitigate these impacts through targeted cost reduction initiatives and performance improvements[7](index=7&type=chunk) [Financial Statements (Unaudited)](index=4&type=section&id=Financial%20Statements%20%28Unaudited%29) Unaudited financial statements detail Materion's Q1 2024 income, balance sheet, and cash flow performance, showing key changes year-over-year [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q1 2024 income statement shows declines in net sales, gross margin, operating profit, and net income compared to Q1 2023 Q1 2024 vs. Q1 2023 Income Statement Highlights (in thousands) | Account | Q1 2024 (ended Mar 29) | Q1 2023 (ended Mar 31) | | :--- | :--- | :--- | | Net sales | $385,287 | $442,526 | | Gross margin | $71,212 | $91,336 | | Operating profit | $22,249 | $36,940 | | Net income | $13,409 | $25,588 | | Diluted EPS | $0.64 | $1.23 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Materion's balance sheet as of March 29, 2024, shows increased total assets driven by inventories and PPE, alongside a rise in total liabilities Balance Sheet Highlights (in thousands) | Account | March 29, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $739,708 | $709,382 | | Total Assets | $1,805,184 | $1,762,726 | | Total current liabilities | $254,615 | $254,995 | | Long-term debt | $428,710 | $387,576 | | Total Liabilities | $915,261 | $877,673 | | Total Shareholders' equity | $889,923 | $885,053 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 cash flow from operations shifted to a net use of $13.8 million, primarily due to increased inventory, contrasting with prior year's cash generation Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended Mar 29, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(13,805) | $38,105 | | Net cash used in investing activities | $(26,299) | $(29,802) | | Net cash provided by (used in) financing activities | $40,297 | $(6,291) | | Net change in cash and cash equivalents | $(190) | $2,142 | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides consolidated and segment-level non-GAAP reconciliations, detailing adjusted financial performance for Q1 2024 [Consolidated Non-GAAP Reconciliations](index=7&type=section&id=Consolidated%20Non-GAAP%20Reconciliations) Consolidated non-GAAP results for Q1 2024 show declines in value-added sales and adjusted EBITDA, with relatively stable adjusted EBITDA margins Reconciliation of Net Income to Adjusted EBITDA (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $13.4 | $25.6 | | Adjustments (Taxes, Interest, D&A) | $25.7 | $27.2 | | Consolidated EBITDA | $39.1 | $52.8 | | Special Items | $6.1 | $0.6 | | **Adjusted EBITDA** | **$45.2** | **$53.4** | Reconciliation of Net Income to Adjusted Net Income (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $13.4 | $25.6 | | Special Items (pre-tax) | $6.1 | $0.6 | | Tax impact of adjustments | $(1.9) | $(0.7) | | Adjusted Net Income | $17.6 | $25.5 | | Acquisition Amortization (net of tax) | $2.5 | $2.5 | | **Adjusted Net Income (excl. amortization)** | **$20.1** | **$28.0** | [Segment-Level Non-GAAP Reconciliations](index=7&type=section&id=Segment-Level%20Non-GAAP%20Reconciliations) Segment-level non-GAAP performance reveals declines in Performance Materials and Precision Optics, while Electronic Materials maintained EBITDA despite lower sales [Performance Materials](index=7&type=section&id=Performance%20Materials) Performance Materials segment experienced declines in Q1 2024 value-added sales, adjusted EBITDA, and adjusted EBITDA margin year-over-year Performance Materials Q1 Performance (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Value-Added Sales | $155.6 | $168.0 | | Adjusted EBITDA | $35.7 | $42.8 | | Adjusted EBITDA Margin | 22.9% | 25.5% | [Electronic Materials](index=7&type=section&id=Electronic%20Materials) Electronic Materials segment saw decreased Q1 2024 value-added sales but maintained adjusted EBITDA, leading to a significant margin improvement Electronic Materials Q1 Performance (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Value-Added Sales | $77.6 | $103.9 | | Adjusted EBITDA | $14.5 | $14.4 | | Adjusted EBITDA Margin | 18.7% | 13.9% | [Precision Optics](index=7&type=section&id=Precision%20Optics) Precision Optics segment reported declines in Q1 2024 value-added sales and a sharp drop in adjusted EBITDA and its corresponding margin Precision Optics Q1 Performance (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Value-Added Sales | $24.6 | $26.7 | | Adjusted EBITDA | $0.4 | $2.9 | | Adjusted EBITDA Margin | 1.8% | 10.8% |

Wall Street expects a year-over-year decline in earnings on lower revenues when Materion (MTRN) reports results for the quarter ended March 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, the stock may move lo ...