Materion (NYSE:MTRN) Q4 2025 Earnings call February 12, 2026 09:00 AM ET Company ParticipantsDan Moore - Managing DirectorDave Storms - Director of Equity ResearchDavid Silver - Managing DirectorJugal Vijayvargiya - CEOKyle Kelleher - Director of Investor Relations and Corporate FP&AShelley Chadwick - CFOConference Call ParticipantsMike Harrison - Managing Director and Senior Chemicals AnalystPhil Gibbs - Managing Director and Metals Equity Research AnalystOperatorGreetings. Welcome to the Materion Fourth Q ...

Materion (NYSE:MTRN) Q4 2025 Earnings call February 12, 2026 09:00 AM ET Company ParticipantsDan Moore - Managing DirectorDave Storms - Director of Equity ResearchDavid Silver - Managing DirectorJugal Vijayvargiya - CEOKyle Kelleher - Director of Investor Relations and Corporate FP&AShelley Chadwick - CFOConference Call ParticipantsMike Harrison - Managing Director and Senior Chemicals AnalystPhil Gibbs - Managing Director and Metals Equity Research AnalystOperatorGreetings. Welcome to the Materion Fourth Q ...

Financial Data and Key Metrics Changes - Fourth quarter sales were impacted by a quality event with the largest customer, but excluding this event, the company delivered strong financial results with 7% year-on-year organic growth [4][6] - Adjusted EBITDA was $57 million, or 22.5% of Value-Added Sales, down 7% year-over-year but up 170 basis points from a margin perspective [16] - Adjusted earnings per share for the year was $5.44, up 2% compared to the prior year [20] Business Line Data and Key Metrics Changes - Electronic materials experienced a 20% increase in sales, driven by growth in the semiconductor market, marking the strongest sales quarter in nearly three years [6][16] - Precision optics delivered a 26% increase in sales, marking the third consecutive quarter of top-line improvement [8][18] - Performance materials saw a 32% decrease in Value-Added Sales, primarily due to lower Precision Clad Strip sales [16] Market Data and Key Metrics Changes - The semiconductor business saw order rates up 14% year-on-year, excluding China, indicating strong demand [9][54] - The new energy market sales more than doubled year-on-year, reflecting the company's focus on accelerating energy needs [10] - Defense sales surpassed $100 million for the second consecutive year, with a 10% yearly growth since 2020 [10] Company Strategy and Development Direction - The company aims for approximately 15% earnings growth in 2026, supported by new business wins and market recovery [11] - Focus on operational improvements and disciplined cost management to achieve a midterm EBITDA margin target of 23% [12] - Continued investment in capacity expansion, particularly in beryllium, to support long-term growth in defense and energy markets [11][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence entering 2026, citing strong order rates and market dynamics [4][12] - The quality event with the Precision Clad Strip customer was addressed with enhanced quality control measures, ensuring future production meets customer expectations [5][30] - The company anticipates a slower start to 2026 due to normal seasonality and ramping production, but expects sequential earnings growth throughout the year [22][52] Other Important Information - The company completed the acquisition of Conasol's semiconductor manufacturing footprint in Korea, enhancing its position in the semiconductor market [10] - New business bookings reached nearly $140 million, the highest ever, with a $200 million pipeline of new business RFQs [10] Q&A Session Summary Question: Details on the Precision Clad Strip quality issues and customer expectations - Management explained the quality event was due to a control failure in production, which was addressed with a revised quality system and additional resources [28][30] Question: Electronic materials business performance and margin expectations - Management noted that while sequential sales increased, margin performance was affected by mixed factors and one-time items, but overall improvement is expected in 2026 [33][36] Question: Beryllium capacity and strategic mineral reserves - Management confirmed a $65 million investment from a defense prime to expand beryllium capacity, with additional capacity expected by 2028 [41][42] Question: First quarter earnings expectations and China sales stability - Management indicated a slower start to Q1 due to seasonality and ramping production, but expects a 10% increase in earnings compared to last year [52][54] Question: Working capital needs and inventory management - Management acknowledged that growth has led to increased working capital needs, particularly in inventory, but emphasized ongoing initiatives to manage it efficiently [76][79]