Materion Corporation (NYSE: MTRN) today reported fourth quarter and full-year 2021 financial results, provided 2022 earnings guidance, and shared an update on key strategic initiatives.

Fourth Quarter 2021 Highlights

• Net sales were $397.2 million; value-added sales increased 27% year over year to a record $237.4 million

• Operating profit was $15.5 million; adjusted earnings before interest and taxes (EBIT) was a record at $28.1 million, or 11.8% of value-added sales, a 180-basis point margin expansion year over year

• Net income of $0.95 per share, diluted; adjusted earnings per share of $1.03, up 47% year over year

Full Year 2021 Highlights

• Net sales were $1.5 billion; value-added sales were a record $859.7 million, up 29% from the prior year

• Operating profit was $77.1 million; record adjusted EBIT of $99.4 million, an increase of 79% over prior year

• Net income of $3.50 per share, diluted; record adjusted earnings per share of $3.81, up 88% from prior year

• Completed transformational acquisition of HCS-Electronic Materials, largest in company’s history

• Completed construction of customer funded Precision Clad Strip facility positioning for step-change growth in 2022

“Our team continues to raise the bar for outstanding performance, meeting continued strong end market demand from our customers while also delivering the substantial benefits of our organic and inorganic growth initiatives,” Jugal Vijayvargiya, Materion President and Chief Executive Officer said. “The achievement of another record quarter caps off a record year where our strategic transformation and related initiatives aimed at delivering above market growth combined with improved pricing and operational excellence contributed to significantly higher earnings and enhanced margins.”

“We expect to deliver another record year in 2022, as the integrations of both HCS-Electronic Materials and Optics Balzers and the completion of our customer-funded precision clad strip project expand our access to high-growth, high value markets and applications,” Vijayvargiya added. “These initiatives, combined with the progress we’re making on numerous megatrend-aligned growth projects have us well-positioned for long-term sustainable growth.”

FOURTH QUARTER 2021 RESULTS

Net sales for the fourth quarter of 2021 were $397.2 million, compared to $339.7 million in the prior year fourth quarter. Value-added sales of $237.4 million were a record for any quarter, up 27% from the prior year quarter, driven by strong performance across several major end markets including semiconductor, industrial and automotive, as well as the benefit of the HCS-Electronic Materials acquisition.

Operating profit for the fourth quarter was $15.5 million and net income was $19.7 million, or $0.95 per diluted share, compared to an operating profit of $6.8 million and net income of $8.1 million, or $0.39 per diluted share in the prior year period. Excluding special items, detailed in the attached tables, adjusted EBIT was $28.1 million in the fourth quarter, another quarterly record and an increase of 50% versus the prior year period.

Adjusted net income was $21.4 million, or $1.03 per diluted share, an increase of 47% compared to $0.70 per share in the prior year period.

FULL-YEAR 2021 RESULTS

Net sales were $1.5 billion, an increase of 28% as compared to the prior year. Value-added sales of $859.7 million were up 29% from the prior year. Double-digit organic value-added sales growth across all major end markets, as well as incremental sales related to the acquisition of HCS-Electronic Materials drove the increase.

Operating profit for the full year was $77.1 million and net income was $72.5 million, or $3.50 per diluted share. Excluding special items (detailed in the attached tables), adjusted EBIT was $99.4 million, up 79% from the prior year of $55.4 million. The year-over-year increase in earnings was primarily driven by higher demand, improved pricing, and strong operating performance.

Adjusted net income was $78.8 million, or $3.81 per diluted share, as compared to $2.03 per diluted share in 2020, an increase of 88%.

OUTLOOK

With strong end market demand, organic outgrowth resulting from our customer initiatives, and the full year impact of our HCS-Electronic Materials acquisition, 2022 adjusted earnings per share is expected to be in the range of $4.80 to $5.20. Excluding acquisition related amortization, adjusted earnings per share is expected to be in the range of $5.30 to $5.70, an increase of 35% at the midpoint versus the comparable prior year metric.

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, February 17, 2022. 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 (888) 506-0062. Calls outside the U.S. can dial (973) 528-0011; please reference participant access code of 651701 if dialing in. A replay of the call will be available until March 3, 2022 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 44225. 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: our ability to achieve the strategic and other objectives related to the acquisition of HCS-Electronic Materials, including any expected synergies; our ability to successfully integrate the HCS-Electronic Materials business and other such acquisitions and achieve the expected results of the acquisition, the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition, and liquidity; the global economy, including the impact of tariffs and trade agreements; 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 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 Materion’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; 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.

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 quarter 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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