MTRN - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, greetings and welcome to Materion Corporation Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Steve Shamrock. begin. may you you, Thank

Steve Shamrock

President Good morning. and Vijayvargiya, President, Controller Kelley, Shamrock, and Officer. is Relations. With Steve Vice Joe Investor and Jugal Executive Vice Chief me Financial Chief Corporate Officer This and today President is

call today’s quarter will the as follows. an update on Our provide conference Jugal comments opening format is for initiatives. on and Vijayvargiya key strategic

then Joe we financial quarter results Jugal, for for detailed questions. Kelley call review open will and will up the Following the

performance remind me this actual let on we as Before listed that in factors any outlook future the in are begin, from of we issued by the The factors. contemplated forward-looking a during based made press earnings this statements Those investors portion announcement, materially the company’s forward-looking current in statements morning. expectations. are release those may a including differ that the result section variety of and question-and-answer

actions profit, adjusted attachment adjustments, per periods to the transition earnings and environmental to Jugal net tax purposes legacy, costs, comments. non-recurring legal current now, for certain acquisition in income cost regard turn and and comparative matters, with costs. both in X year adjustments number and numbers it over comments GAAP release. are removed this certain morning’s made and reduction prior And will merger CEO I for his operating Additionally, The income year press the shown and reflect share in

Jugal Vijayvargiya

in been at the cash operating $XXX with I am cash consecutive last am earnings added delivered a plus have profit, welcome an in with in to $X.XX. the bottom-line of the capabilities and sales, Thanks, marks long-term we value little over and of net $XX.X nearly the million was resulting profit sales I Value company the impressed added million potential. now, five share everyone. Steve of quarter, $XX year growth. and a quarter the year-over-year million. I per came years. that This level at and with pleased report for and for for highest second the top sixth Net quarter core EPS operating

new to energized capture tomorrow. world. around been better have deliver realigned, suit We today the team opportunities our to potential has responsibilities the a and Leadership for leadership

have strategy action Company-wide, the sales and year-over-year is of is performance, X% are sequentially. team added share This a is We times added results. segment have underway will five markets culture of a delivering. quarter plans had review Value a the a on of defined for let PAC million some the focused $XXX straight into X% but clearly past half and global value performance-based end financials globally. of Joe team for up driving the perspective year. on Sales me quarter. added the the our third were third in seven than six row of double-digit the record sales in sales four first value greater grown quarters. and the level

This last long-awaited double-digit per or for milestone. profit which share $X.XX up of million XX% the from full $X.XX. of X% New an in level profit consecutive operating second is quarter the million adjusted sequentially. up fourth $X.XX income deliver segment XX% highest the the XX of level XX.X% the profit, This quarter quarter XX year. for double-digit $XX.X $XX.X at in past was product came PAC with profit helping quarters. per and fuel sales to an second million segment delivered for profit, to Operating us year-over-year share was positions earnings the overall is in This highest operating quarter, quarters. X% represents $XX past the from Net a note year, growth. consecutive

sales. in record profit to In XX.X% sales milestones, working we delivered all-time achieving an capital and to addition at

set quarter have XX%. a year. $X the we Net in net that position was cash second to $XX a of recall quarter million million last debt may for target compared nearly of You

multi-color to improving is We're and full $X Our to into strategy profit half the drive growth, continue focus Materion performance. global leveraging We'll helping to are our of and second year the guidance deliver for greater to to One and cash. record $X.XX. achieve power growth results

results the give working. quarters for Our that is the confidence past us six strategy

carry We future have look the years. more in a momentum to future into us our forward sharing I and calls. required quarters performance about to

over call details. financial the turn the I'll cover to to Now, Joe

Joe Kelley

and Thank call the today. you, everyone on welcome us Jugal joining to

comments flow by my the During the XXXX. profitability cover modeling will outlook cash provide earnings balance and financial brief on review highlights, cover for assumptions segment, and comments, I sheet, XXXX second quarter finally,

pleased Following operating profit. my XXXX am to remarks, quarter and sixth report which consecutive represent with open in sales I year-over-year financial questions. line strong both growth adjusted second the results, quarter for value-added we the will

for value-added improved quarter any excludes XXXX year mix of prior driven sales, favorable the end X% which an was quarter product and product X% new million, sales, $XXX.X up precious second demand. up Second market and sequentially. the increase metals impact and pass-through quarter by record The versus all-time was

New XXXX product were in of sales sales in quarter. the the or XX% value-added $XX.X second million quarter of

this quarter. Our largest the first in consumer continued portion and increased an second electronics market, the despite correction which inventory began and year-over-year the quarter end-market X% of display in

in reflecting this now robust, consecutive also quarters for increases sales demand end-market. program have overall were Defense delivered We wins. nine and year-over-year growth new

million, by prior $XX.X strategy. long-term added strategic XXX performance to drive to Selling, a basis of increase percent Our gross $XX.X the improvements quarter, focus increased $XXX,XXX mix and drive end expanded from profit to expense as Expressed to totaled and product up quarter second prior the margin initiatives continue of points over value was performance improved market million, driven second combined year growth. to due XX.X% sales, leveraging growth. in quarter. million introductions the and XX% on year sales a the of million commercial above administrative margin investments with our Gross $XX.X new primarily product demand general second market an $XX.X related in

totaled prior added the of As period. year quarter percentage year decreased XXXX second second prior to million. a second of in profit up quarter adjusted operating from XX% SG&A Operating the the expense in XXXX, XX% of million value in $XX.X the $XX.X to XX% compared quarter profit of down sales,

value an increase. of recorded initiatives the Net growth Performance in a led the $X.XX added $X.XX per profit profit XXXX $XX.X to of sales, diluted from year-over-year percentage million per operating for second As quarterly quarter the XX% and totaled income share, sales adjusted share up in commercial quarter operational quarter XXXX. related combined second or margin volume percentage the of the second XXXX. to X%, was XXXX since highest of with margin improvements

We delivered now more quarters. have consecutive or for $X.XX a four share

the at of million of second of Looking effective to some income tax tax rate expense year quarter of $X.X higher we in XXXX, an items. due than timing our XX.X% taxes, recorded guidance, full

continues the tax effective be range rate XX% full on the guidance year of Our XX%. to to in

Now, PAC Operating in market defense $XX.X operating exceeded released product ever second particularly this XXXX improved of The being in this million, value alloys XXXX Value added added to order with which Expressed were let consecutive were previously exceed Starting $XX.X $XXX PACs the sequentially. up composites. in bottleneck profit with the for $XXX.X in profit in working. The introductions, quarter sales value operating quarter. added a is the XXXX. for million performance plan recovery and Value segment. new a XXXX percentage segment. sales generated have highest performance second strong profit operating million, three of me review XXXX totaled by second level of XXXX. in year-to-date up was market as XX% end The record is added and quarter the of sales sales of due was profits demand. million increase quarter launched for of execution adjusted segment XX% XX% the now business versus amount clearly all commercial quarters. and

operational the initiatives these on profitability drive double-digit has delivered and schedule. others of in improvements and profit this performance to ahead We sustain on focused improvement Our initiatives plan segment. remain recovery commercial

were continued added display second the at business declined sales softer $XX demand $XX.X sales Value quarter added of Looking to second Value added million. XXXX the to primarily materials compared of million of quarter X% segment. sales value the portion XXXX end to out phase in target in advanced Alzenau, process due timing art business to materials the electronics new with Germany. the the move target in associated of the market, related customer of XG a high of performance applications and state requalification consumer the Heraeus facility manufacturing the

the for in adjusted move our the facility the facility move. quarter profit and the in decrease $X.X XXXX Operating up the compared operating demand $X to year completed integration totaled softer expenses third new have profit Germany to of due We operating quarter. production ramping to was profit unfavorable the segment million The related million mix at quarter. and relocation and second in product prior

up products of into profit consumer XXXX end-market. end in decrease in finally totaled to $XX.X and the second Precision $X.X the of optical quarter now Medical million, of products electronics compared the strength growth of the second and Coatings segment, market. the than display the million X% The in defense up $XX.X Sales Turning new wins to more area were for $X.X XX% million Precision compared Operating sold the of optical second were in value-added coating in the year-over-year XXXX. large quarter to million second by driven products segment program Coatings offset quarter the quarter projector portion in sales XXXX.

As both operating a percentage approximately margin of XX% was periods. in added sales profit value

flow flow. at second prior and quarter compared of cash year XXXX the million the the of to net sheet million working second Moving balance now compared to efficiency. capital of and earnings the a the net due $XX with end stronger ended Operating quarter of in company improved debt to million of cash improved position $XX.X position XXXX $X.X XXXX. to the The cash year-to-date

the further very have strong to further and capital sheet approximately dividend. including organic balance capital quarterly available year announced of opportunities increase to inorganic consecutive on calls, continue second mentioned an previous to a X%, support allocation opportunities, the of maintain representing opportunities, our opportunity We XXXX, the to In consistently return and inorganic growth sixth of we priorities shareholder liquidity quarter increasing growth growth shareholders. dividend significant

approximately For And million, $XX in development amortization million should investments mine $XX $XX outlook spending should for and million financially depreciation earnings run modeling annual $XX be should approximately to finally, million, million $XX to XXXX. million. capital now to purposes run $X XXXX,

top-line end a will represents view concludes driven by activity, market our of We product improvement cost Based our $X.XX demand per guidance XX% XXXX, efficiencies prepared improvements, product are performance range to a to improvement The new full on year and have quarters be consecutive growth expect earnings. order From XXXX $X current adjusted of XXXX earnings mix, we midpoint quarterly raising our initiatives delivered we profit now quarter XXXX to operational our and and improved remainder remarks, for favorable to including of sales the guidance growth, perspective, we questions. of structure. line sixth now third performance an range comparable year-over-year over for commercial the and XXXX This open quarter share. earnings this second manufacturing earnings.

Operator

and [Operator Ladies Q&A Instructions] you. line from question Our be first we of session. our gentlemen, Thank will the Jefferies. now conducting Martin from Englert comes

line ` Your now is live.

Martin Englert

Hi. everyone. Good morning,

Jugal Vijayvargiya

good morning, Hey, Martin.

Martin Englert

the on results. Congratulations strong

Jugal Vijayvargiya

Thanks, Martin. Yeah.

Martin Englert

and to what so and quarter How be the that expect progress of number the was and much XQ? A relocation a on XQ expenses. making question can in bit good. fronts here possibly we seem that’s on You quite for a here, integration

Joe Kelley

Yeah.

OLED newly quarter the the plant. at the of look One, related And combination there, to combination, and when of the decrease a anticipate as Martin. operating going continued the then, we softness it’s profits in period was screens. is display moved look due unfavorable you also, you a it quarter as out destocking here three when you at around -- year-over-year AM constructed the facility that and as the things, inability particularly relocation Heraeus we sell market mix impacted factor second of third sorry, the and profit improving tell for to forward, during That the I the that that our German in display to So, move. move it second, the start the would to into market it’s half. sales the the is the And is it’s

factory, news, ramp July have second on the the as new in it the to into cost, customer, that the but factory to it look large but we run to will up fully half, the our inefficiency end XX glass but As of we relocation have the rate. during relates and a qualification won’t ship the we mobile second facility ramping did we area out anticipate Good the factory. here our that at as up and of some to the will have relates half we year product get continue by

Martin Englert

there I is specific, everything understand topline of a number no there that well the So, as as different impacted from just. factor

Joe Kelley

number, but basis, year-over-year equally those year-over-year when referenced operating in three all you specific the tell in decrease. look at you profit No probably I to I the factors that decrease contributed would

Martin Englert

helpful, that’s to performance based you’re moving alloys and the composites, of you Okay, today. the your profitability value-added can okay. and year for seeing the And in on expectations somewhat here, sales back discuss on what half

Jugal Vijayvargiya

you as of quarters had we’ve Martin know, that strong three Yeah, business. in now sales

in we profit business, make the want first in communicated second in and continue exit the to sure that is and to that, you sure the do on progress, but three trends to continue order have good a we general we We’ve quarters past we over so, would performance business to that perspective, indicated then two advance two stage push to million here into see year $XXX the based have continue market we for want we trend well a that know, level that type continue into in had We’ve the the to a half. Now And for are double-digit continues we'll quarters that quarters, this demonstrated we We materials well the a we From trend we continue where focused as of second on. to how be and on double-digit at want we’ve focus at in the determined than double-digit quarters, his that, our is more the quarter. Joe expect remarks. as the make afterwards we in to half. and hope the row really to good sales. this first that

in was the second quarter up. We the defense DC there bottlenecks have side as opened really good in some of

But sure, not would I’m sales rate expect in have general, However, for if as a can that trend positive half. as profit. second good operating at on continue well we I that we the to say

Martin Englert

see that very Got can anything to holiday seeing That’s Okay. that you and it. about helpful are talk we or to some. related demand expecting

Jugal Vijayvargiya

the bit concern not play this rate, half. us second out that the whole here I it’s how consumer see say, would electronics that obviously probably early as Yeah, we how to tell enter in negative the pull-through. would sector, anything we'll at I in half, things the terms are a would seeing second too say little we but say, also of

we But feel quarter, to we'll be seeing that market, tend general, third into anything a negative. the have more in for. are things we outside As in better get not stable

Martin Englert

are portion policy you, could one of if in you you I a And chain activity seeing to understand is a one your I are supply for customer changes Okay. any being last good impact how implications impactful the base there with regarding the comment trade managed. any on lot that’s for of but that and directly can seeing if and and you front not this company,

Jugal Vijayvargiya

first of on with basis. all, on Yeah, are you things all so, in there the of trade is know, lot side, daily developments know that as a the, we a the all going

the course, with States. United European development and night, Of another Union last

closely. very that monitoring are We

company But, I may do see stage impact and talked are arena day But, can what’s to would the our of do and about. are and imposed this a of there with. be we're very say, being material see understanding the is a all and then tell We doing on our the not based any to material have have least the perhaps also end end what’s anytime. working stage, procurement impacted that us could We not on tariffs on want not impact. customers, it and at change I if understand customers so, developments and disciplined trade that that looking at the this some really all impact this process there side in happening to caution I to to the every we to it's we're at fact our you that and current if of

Martin Englert

for and the you congratulations Thank Okay. all result. the again on detail

Joe Kelley

Martin. Thanks,

Jugal Vijayvargiya

Martin. Thanks,

Operator

Thank you.

line Sidoti comes question the Marshall Company. next & Edward from of Our from

Your is line now live.

Edward Marshall

guys. Good morning,

of for just a to doing in you’re business the maybe wanted that I pass follow-up Which want I question line. can the in hammering follow-up just any can’t of – and any you through importantly you Just about of more the you to than kind and I to situation Martin’s what on value lines on guess lot offset do talk that seeing about inflation. know final tariff inflation revenue home that?

Jugal Vijayvargiya

through me do would actually things, disciplined I of able Yes, understanding got inflation if on start in have are mean our customers we we process two we that say I robust we with any very to are seeing with if case up. our inflation, I come doing say issues have are work excellence first sure we let process that making commercial and what a would that

think we regard and got impact. are we impact bit I With can general on inflation, very haven’t don’t it I just mean but more that a teams immaterial little again to So, experience employing. have our a Joe experience meaningful certainly any process really have any I I good on comment nothing

Joe Kelley

you bit consignment can in have working effectively are been and our so margin five highest metal that’s in lease gross to a through only I our little gross rates customers basis. as with with our margin percent the material, tell that that last years, along so precious that here at look – managing we say The we seen – you when on the I actively monitor, But which and would and you increase we XX.X% managing the the have is thing pass rates that been would lease that’s in levels daily of possible. that as see aggressively we terms

Edward Marshall

are then also cost say looks Got top Can the some going performance not even alloys about and what’s you what year-over-year? out and on am a defense that’s was to a I talk were maybe But there energy break extent. then sure exercise you revenues composites. sales line it. both I outperforming exercise and necessarily And like on fine. telecom could it hydroxide it thought you in which maybe specifically and

Jugal Vijayvargiya

that plan My much is a much it recovery can cost big a some take. on the an anytime not recovery certainly the more factor only so of take we to that through to at Yes, line part in there is costs plan, be integral go point, and we any recovery plan. out view has top is

not us but oil to so on oil recovery gas quarter. in of of up So, the count part the really a and I certain we really focused Good on half at put and which critical mean plan rig the our coming strong some of we place is the and on time sure be in top last to key does needless any an gas. recovery the it line products year us, disciplined attack some have activities was have business as say in was can that QX am year sustained good tough indicated in because a around its as to that’s an in good performance as to be corner is example of has rig the Defense being at I integral level the we XXXX, the up, mat around the this drive part XXX, pick segments was I line for plan. a that the recovery help second mean said and of this I good count top

telecom on share the gaining are We side.

you can a part this line I that top of business. critical the definitely growth in So, tell recovery plan is

Joe Kelley

hydroxide to it you shipments quarters. three four your answer there year recall out I when the And of this spread last so sell question quarters contract was over year last on the year, signing was

terms the quarter million, hydroxide in added in value about of So, actually down QX $X sales. is

Edward Marshall

And actual the number? what was

Joe Kelley

Approximately $X.X million.

Edward Marshall

entire balance the due of to consumer then mean the was electronics okay million, like the shift the I $X.X for most actually declines – of looks softness mentioned – business that advance it kind look the are the AMT, When what’s look year, great. and broad across the base down plan X.X%, materials. lines only of I that in across And on it like you relocation.

into kind I both your business your look guidance at the EBIT Can the for guess that what’s of year for line. talk new and you looking So, from when you what – about of that, perspective. built at remainder plans an you

Jugal Vijayvargiya

comment you'll just record mean for I the of a but the just business. half of performance, you bit at markets think all markets have end base really the an the I are where about second up so except for second basis, telecom little a let this which on tough comps out the year, in me quarter I quarter the the Yes, that was mean so XG year-to-date continued absolute about and of you it alone, quarter. for us first second see business for kind when end talk stands Ed, look we really that year last our of is

in QX, consumer we go the the the on the here on year-to-date business. we side markets. basis, second decline the to in up, year certainly a markets see see continue recovery particularly to of as the the display half in of number So, as the across What electronics was are all we

the first see year. after destocking to of continue in We half the the the here recovery that happened

ramp the in up the now see to continue We relocation.

second there we deal yes, up in the and of be see continue year. we cost some the so And to ramp but half inefficiencies a some that will ramp with, up

so, And would continued QX. improvement business that QX we in a see in into

as XXXX has years. stay the few that last business of it over Our expectation was on done really, steady performance the a that entering is we're

our half and have So in guidance this for the into built plan we second year. that's our pretty much into of what

Edward Marshall

much. very Got it, thanks

Jugal Vijayvargiya

thanks Okay, Ed.

Operator

Thank you.

Capital Our next from question Partners. comes Rodriguez Stonegate the Marco of from line

now line live. Your is

Marco Rodriguez

little there. decent Obviously as top-line least go strategic was could for the six main kind the of obviously year talk at have Good bit the my you demand. last out pretty and some you the for you've morning about some well fairly taking seeing growth for I some guys. questions. more are Understand if proven drivers you forth put that first focuses months end-market of here. that we you have wondering Thank different

wondering kind if or kind you a there you So, terms if a maybe When can all bit will share. in demand, you've I parse little of play of into at versus market allowing kind been you kind of focuses that possible. was skew taking that everybody increasing is look share phrase if raising ships the to wallet of the strategic putting

growth maybe can that's a you If and kind played sort bit talk dynamics two your those of of out little for how about rates?

Jugal Vijayvargiya

certainly can that. We Yeah. do

I on addition is product the number that growth to would so top-line on One continued just to pool course things of for shift of lot sales. a the general put that a new speak. we of raises focus end-market in is all be think there the that

now. on look focus R&D shifted the product development and We've ago our tremendous expense the actually to from actually versus expense had accelerate that a you year increased have have growth. we R&D expense We new at the if product our that. really in new We've R&D company R&D we

we on getting the sure we've the a I value cases and to In customers. so We have there, providing we're we're excellence. on is return that weren't that. mean that of is And number many one focused excellence for making really commercial right focused that commercial things. our

product sure mix. right of is making excellence aspect commercial the Another

of could the simply our rate rather have lot a just impact. impact we the So, of on the mix market having than product

us marketing push technical the to areas on focused making resources been right we're our to and that return. we've dedicating so, sales And in resources sure give sales that and our the

is product mix a And factor. big so,

I been think of So, number things that we've is there a involved in.

two where sales And that setting organizations organization product mean the up the getting providing, regions. them, those Europe were actually influencing value an the that frankly, mix. sales then in we're We organization set Presidents in we've product we've We in regional push right changed Asia. appointed I New and up for underneath growing regions. can return our the

have one customers awards, reacting it and delivering. performance from very that -- two received We've recognizing last favorably. we've think mentioned the Instruments, from night, customer Our think been we're I Skyworks, I one

sales part to delighting so, is key customer the of well. gain as And a trying

rather So, things I we that GDP relying perspective a than just maybe general trends there. pushing growth what on we're think there that is a on do to number of or the can influence simply from sales out market directly

Marco Rodriguez

have Got it. the last maybe can is over little that a That Again, focus implemented you've very if four Jugal, about. helpful. strategic bit to And for your the back What talk this a time so. say. just down you months might drilled or specifically, over maybe or coming Let's need months? learned next little period further of be pillars here you to perhaps that bit XX XX maybe

Jugal Vijayvargiya

of as continue and that my to untapping And in each mean, I the things. there we these it's a opportunity. in remarks, and they I of unleashing capabilities and indicated, that of sort have a we have tremendous really, pillars, matter learn core is think great think of I potential our strengths all core Yeah, of amount I just

whether those or industry it's access, focus it's Materion on, Materion focused access whether excellence, to whether one commercial to that for excellence for functional are we focus operational looking M&A Materion company. excellence, items. a focus each at innovation excellence, driving look one one for it's customer are our at So, We're one we of trying

place about three, we've I the now, leadership that think is really months place. leadership in as for a had four team full take the starting now to that we've foothold strong team So, put in

the can Materion focus on globally organization, across markets, capturing that We industry be are one so customers, there whether regions, our modifying that trends. its

all that to next So, drill opportunity over months. I things the deeper think we XX those on are the have

-- performance base. that time as can really, employee have I'm delivered some contagious, the see base last the think employee glad mean, the we're really over it that bug our I and motivated growth, we growth. they enthusiasm the catching this bottom quarters six from I It's, I energized say be and line we're we line think is of they top

Marco Rodriguez

helpful. And you're switching met, year-to-date. or the to as here alloys at those a it. performance on goal performance tracking head double-digit if you Got - to will, it alloys if least of gears returning Obviously, here Very has margins. been appears performance then of the goal the

operating the you to trying is on the that some understand potential kind higher? fair? of get maintaining Is that VA have margin just that there I that main that Or is forward, now sales. in other low-double-digit impression there leverage on kind of drive focus that Just perhaps going can

Jugal Vijayvargiya

that would the the I the word say first know, main you focus, thing use Well, maintaining. I

Our main anything. not really is focus maintain, to

Our improve. to everything on focus main is

improve And in delivering continually performance this the absolutely so, tell back in can of and QX you sure QX double-digit we're year. But half on I'm this focused yet. I the not in can that year, we

stated we results customers. I've As business. then business as is that the that have in has alloy capability number That we it, better The technical and XXXX should solution business business. that we the into type be we much that highly we're of complex, have, of value-added go providing that we've That XXXX, The company. that learned our The it results, number have. we a PhDs making past advanced delivered. as highly to before, generating are of materials resources

and we're bring in the going that with making returns sure what the on them. forward And we're solutions value forward, the that's will customers associated is then it 'XX so into focused as realize move the on able be and to that realize to we

Marco Rodriguez

time. guys. helpful. a Very your lot, Thanks Appreciate Understood.

Joe Kelley

Thank you.

Jugal Vijayvargiya

Marco. Thanks,

Operator

Thank Instructions]. you. [Operator

of Michael from Our next question line Hasychak comes KeyBanc. from

line Your live. now is

Phil Gibbs

Hey, this Phil Gibbs. morning. is Good

Jugal Vijayvargiya

Good morning. Phil. Hi,

Phil Gibbs

a know being Just this strong little bit you question defense it touched quarter. of on a I the market, terms in upon it

was about that in sense and idea products? you've for the some in kind an X months of a in or market your get specifics last terms whether in to what wanted administration defense of of side to Just under change XX some this the

Jugal Vijayvargiya

Yes.

a our teams balanced in good strength, quarter on all, to first business for mean, I good more typically we had job trying been a push of our defense. of done and So, we quarter defense as defense think defense a but QX, first that. scenario in our I been indicated, our really strong we've all has

opened number We as removed. and have uptick are I an the seen filled I so think and bottlenecks jobs think of were getting the being the from are that administration

we business a new and the name have able are system system sniper in these business, have won We’ve new FXX, been on businesses an programs EOTS defense image we by side have of we’ve offerings examples code that. put an are there’s is of which with capturing the that We the mean to new way, for place. a sensor MSXXX businesses get number that I all and

say on is as as would administration side increase from So, our defense trend us increasing think the well the the I certainly general I in well. share helping is

of pay optics the up the some the side so market. on a second I activity for see is not way level said on second optical that definitely half saw I half. is think but in continued business way pay the in overall XX% filters the overall we that trend with We promising an defense quarter the been Our side we’ve in evolving, defense as here the second certainly

Phil Gibbs

coatings or So, more business was business the in the that still Jugal of precision coatings is that’s optics that side? in

Jugal Vijayvargiya

Yeah that’s more…

Phil Gibbs

Okay.

Jugal Vijayvargiya

the way the No, do filters rates we that’s yes. I we satellites, for coatings coatings pay business out coming of do business our in missile for program, precision mean

Phil Gibbs

a cash that Is and a been Okay. in operations working taken or in is you’ve you $XX from And cash well? the $XX nice it Joe outlook your call, as seemingly for that your little million somewhere up was think second EBITDA from north that meaningful stride and in given quarter for mentioned I had million of capital made last higher. outlook expectations operations

Joe Kelley

even over year-to-date so operating prior are million year, are up formally flow working year have or flow efficiency front. Yeah, guidance. to but not the ops we year-to-date full on helping we cash previously improvements capital very on correct, and our success that a that our targeted forecast we have the on cash is strong flow But exceeding there, from updated cash QX side, $XX continue see haven’t are revised can you the you the

Phil Gibbs

Okay.

I day. a me. good takes appreciate think care that it. I of Have

Jugal Vijayvargiya

Thanks Thanks. Phil.

Operator

and queue Ladies have time. back floor the management to to closing. no questions this at you. like we Thank further for over gentlemen, turn I’d in

Steve Shamrock

be on concludes morning materion.com. Thank earnings in available will thank quarter website Shamrock, call. will is This recorded A this our Steve the any you. this like Thank XXXX playback to the follow-up second number would is on for call all answer My of company’s and I much. your interest and call to direct XXX-XXX-XXXX. of this be you participating Materion. available questions. you very We

Operator

and Thank for does our teleconference gentlemen. conclude This you, ladies today.

a at wonderful time. Thank lines participation and have may now you your day. You for this disconnect

Materion (MTRN) 26 Jul 182018 Q2 Earnings call transcript