Materion (MTRN) - 2025 Q4 - Annual Results

Financial Performance - Fourth quarter net sales were $489.7 million, up from $436.9 million in the prior year, representing a growth of 12%[7] - Full-year net sales reached $1.79 billion, compared to $1.68 billion in the previous year, marking a 6.5% increase[9] - Net income for the fourth quarter was $6.6 million, or $0.31 per diluted share, compared to a net loss of $48.8 million, or $2.33 loss per share, in the prior year quarter[6] - Full-year net income was $74.8 million, or $3.58 per diluted share, compared to $5.9 million, or $0.28 per diluted share, in the prior year[9] - Total net cash provided by operating activities rose to $103,243,000 in 2025, up from $87,817,000 in 2024, reflecting an increase of 17.5%[23] - Net income surged to $74,823,000 in 2025, a significant increase from $5,888,000 in 2024, marking a growth of 1166.5%[23] - The company reported a net income of $6.6 million in Q4 2025, a significant recovery from a net loss of $48.8 million in Q4 2024, with a full-year net income of $74.8 million compared to $5.9 million in 2024[28] EBITDA and Margins - Adjusted EBITDA for the fourth quarter was $57.0 million, or 22.5% of value-added sales, compared to $61.5 million, or 20.8% in the prior year[8] - Full-year adjusted EBITDA was $217.0 million, or 20.7% of value-added sales, compared to $221.2 million, or 20.2% in the prior year[10] - Consolidated EBITDA for Q4 2025 was $28.9 million, compared to a loss of $20.5 million in Q4 2024, with total EBITDA for the year at $181.3 million, up from $118.3 million[28] - Adjusted EBITDA for Q4 2025 was $57.0 million, representing 11.6% of net sales, while for the twelve months, it was $217.0 million, or 12.1% of net sales[28] - Adjusted EBITDA for the Performance Materials segment was $35.8 million in Q4 2025, representing 24.1% of net sales, compared to $53.6 million and 25.4% in Q4 2024[33] - The Electronic Materials segment achieved an adjusted EBITDA of $22.0 million in Q4 2025, which is 7.0% of net sales, compared to $14.7 million and 7.2% in Q4 2024[33] Sales Performance by Segment - Electronic Materials achieved 8% organic year-over-year value-added sales growth with approximately 300 basis points of margin expansion[6] - Performance Materials segment net sales for Q4 2025 were $148.3 million, a decrease from $211.0 million in Q4 2024, while total net sales for the twelve months ended December 31, 2025, were $675.9 million compared to $744.5 million in 2024[33] - Electronic Materials segment net sales increased significantly to $313.9 million in Q4 2025 from $204.2 million in Q4 2024, with total net sales for the twelve months reaching $1,010.0 million, up from $845.7 million[33] - Value-added sales for the year ended December 31, 2025, totaled $1,046,200,000, compared to $1,097,600,000 in 2024, indicating a decrease of 4.7%[24] - Value-added sales decreased to $253.9 million in Q4 2025 from $296.1 million in Q4 2024, with total value-added sales for the twelve months at $1,046.2 million, down from $1,097.6 million[28] Investments and Future Outlook - The company secured a $65 million investment from a major defense prime to expand beryllium capacity in support of U.S. defense initiatives[6] - For 2026, the company expects adjusted earnings per share in the range of $6.00 to $6.50, reflecting a 15% increase from the prior year at the midpoint[11] - The company aims for a mid-term adjusted EBITDA margin target of 23%[11] - The company plans to continue focusing on automation and transformation initiatives, which are expected to enhance operational efficiency and profitability[31] Asset and Debt Management - Total assets increased to $1,802,801,000 in 2025 from $1,697,632,000 in 2024, representing a growth of 6.2%[21] - Long-term debt increased to $436,348,000 in 2025 from $407,734,000 in 2024, representing a rise of 7%[21] - Cash and cash equivalents decreased to $13,681,000 at the end of 2025 from $16,713,000 at the end of 2024, a decline of 18.2%[23] Special Items and Costs - Special items in Q4 2025 totaled $28.1 million, including $27.3 million related to a product quality issue, impacting overall profitability[28][29] - The company incurred $3.5 million in merger, acquisition, and divestiture-related costs for the twelve months ended December 31, 2025[28] - The company reported a restructuring and cost reduction expense of $0.5 million for the Performance Materials segment over the twelve months ended December 31, 2025[33] Impairments and Quality Issues - The Precision Optics segment recorded impairments of $73.2 million in 2024, impacting overall performance metrics[34] - Total gross margin for the company in Q4 2025 was $63.7 million, down from $93.0 million in Q4 2024, with special items impacting gross margin primarily due to product quality issues and environmental remediation[36] - The total adjusted gross margin for the twelve months ended December 31, 2025, was $335.0 million, slightly down from $338.4 million in 2024[36]