MTRN - Earnings call transcript Q1 2020

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Operator

Greetings and welcome to the Materion First Quarter 2020 Earnings Conference Call. At this time, all participants are in 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 Mr. Corporate Investor President, Vice Shamrock, Controller Relations. and Steve you, sir. Thank

You begin. may

Steve Shamrock

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

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

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

we statements begin, and based including the let any Before are me remind expectations. section made those that investors outlook during forward-looking portion current announcement, the question-and-answer in this on in

result future differ this factors. may materially of actual in by Those from factors company’s are the earnings performance issued a as we of press release listed variety contemplated The a the morning. that forward-looking statements

comments Additionally, the purposes net and and in are comparative made in reflect earnings year tax items, to periods share X The Number adjustments this per numbers Attachment for profit, with certain the charges remove income regard prior and in release. adjustments. non-cash press morning’s gap income, adjusted operating special shown

to I it now, turn for over will comments. his And Jugal

Jugal Vijayvargiya

to remains initiatives. I key everyone. has our company Steve some and people COVID-XX you safety progress loved and and and your are on all Thanks, welcome then and you strategic safe, these times. our overriding hope the of Today of share been impacts of unprecedented ones update through we as Health our priority. I’ll first

our year. focus in by have on recordable had zero past keen injuries XX% a three global last Over have years injuries we our facilities the prevention. XX of the with reduced

same we protect started employed focus level COVID-XX to As emerge, of to people. our the

globally. have they’re family Three this have to confirmed changes well in our have Materion doing available resources been and global position people listened at enacted We and time.

home. majority employees working our office We from of have

products to we’re essential by for defense staff provide critical of world. against are particular, in virus fight to healthcare healthcare, factories a All of and operating industries used proud services such support support the products the around equipment In by medical our telecommunications, energy. supplying this as we and

is For systems medical supplying as COX test gas for in filters Coatings are used business as which for Precision example, optical to detection applications. and capnography well our COVID-XX critical ventilator in

product Our ventilators. used strip is copper beryllium which PAC for business supplying are

have the seen help for We products demand COVID-XX. fight maintain and increased determined supply are these against to to

gas, products markets. demand this demand to see experiencing we Semiconductors oil significantly and industrial lower automotive, defense we’re these end and end and increased hold While aerospace in market time. at demand in continued is

forward. expect company comparable In total, second demand the than Despite been for first challenges focused presented have slightly on quarter quarter moving by to COVID-XX be demand. teams our we better the

our Materion Let me share progress exciting with towards profitable multi-pillar you growth One strategy. some

As you priority. our know, for investing organic top growth been has

opportunity. line. ramped spending targets. and to growth This commercial have our the strip aluminum-scandium highlighted time our R&D last In call, align in Today growth I up with investments another share future clad We opportunities. to premium engineered excited growth I’m earnings in made product major significant

have design vibration custom most the in space thermal and and We unmatched challenges per pressing management, capability clad material high to solutions customer solve extreme voltage.

of next capacity generation strip. highly model used our a new an in a material Therefore clad electronic pleased into business in serve automotive, customer This energy to exists with industrial. entered to used the we’ve a report of consumer markets is overall strip will today. market product. end very existing electronics, variety including clad engineered arrangement Our applications and which expand be end for demand manufacturing that a I’m engineered

demand product expect acceptance We continues to gain as globally. fulfill market support customers the end and to this demand increased

edge we’re manufacturing the businesses. portfolio also future same go decisions exciting exit this leading $XX a provided At taking that finalizing product long-term The to agreement We time, also anticipate supply. customer later has facility driving year. our a opportunity the the we’re for forward in non-strategic prepayment tough for new new growth million the establishing supply towards profitable

aligning Today In I’m Large optical driving expertise. to significant will intent sale business. announcing our and opportunities occur growth cost the Coatings one be structural and our where this our facilities. the structure. in and to teams our are on Area facilities integrated to the to focus closure Coatings we have we our remaining exciting closing of will in Precision the Today PAC the the anticipate two only announcing work We parallel allow our we’re existing with beryllium significant sell fully world. improve the reduction to coatings to the later organic consolidating action This year. This business of vertically efforts cost where growing continuing producer I’m differentiated portfolio the business a

closing We Detroit, in Michigan year. later this a closing manufacturing service in Fremont, facility be are a California and will center

this our has global team expect our by million improve We the structure posed who challenges to action I to annually. cost to pandemic. million thank like $X to $X risen global would this by

key With equipment for critical medical their supplying components in against COVID-XX. used dedication, the we’re fight

advanced more addition, In teams continuing to materials focused transfer business. our are Materion and an broadly into

cover to financials. Now Joe over turn the I’ll the call to

Joe Kelley

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

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

my line questions. Following we for the open remarks will

start $X.XX on me financials. of sales. summary million adjusted a Let added value of of share our quarter first $XXX.X with We delivered per earnings

operations. cash ended quarter. strong $XXX.X first for with in We of quarter generation with million any from $X.X a cash, million record flow cash the our continued We

Going into detail. more financial

increased exclude pass $XXX.X million XX% First quarter the the to sales versus in $XXX.X quarter in the into end continued the fourth XX% year. sales down precious and the and first prior first XXXX in sequentially the market value quarter which cost X% added quarter metal were versus market value X% through the recovery as of added The million end compared of largest impact XXXX. semiconductor our down

of quarter consecutive growth. second year-over-year The

defense impacted weakness in heavily to were orders market. sales timing continued of market end due the defense and the aerospace and Aerospace

COVID-XX from including In center. pandemic automotive, and addition, energy, and impacted end industrial demand of data markets a telecom the number

first to in was Gross in first $XX.X million profit quarter the million the compared $XX.X prior year quarter.

million Excluding lower Adjusted a specific resulting sales situation. $X.X gross oil inventory decrease for and profit other our of volumes or The margin and profit write-down driven business the and was in gas XX% non-cash to million was non-recurring and value related PAC added by COVID-XX items inefficiencies. sales. gross $XX.X manufacturing in

million, and administrative $XX.X and decrease the versus a managing general totaled Due the combination to response of compensation aggressively prior of million in variable year expense. current $X.X a cost lower conditions $XX.X Selling business to million. expense of

of year in a from As period. added sales the percentage the down SG&A was expense XX% XX% value prior in basis points XXX quarter

million increased development and $X.X of expense versus XX% Research XXXX.

to new As growth applications. to make through profitable continue we drive new products investments long-term and development of

million we for the to Fremont expense Detroit of of our closure facility plant and obligations. $X.X recorded During the related quarter closure other primarily employee restructuring and severance facilities

for the Jugal the LAC plant LAC Based as mentioned. classified We as sale. of sale on business held business the

$X.X million we a balance remaining assets the impairment to fair LAC net million value. result, charges and remaining $XX.X As of to write-off of adjust recorded non-cash goodwill the

in profitability, to EBIT changes earnings company to a before utilize interest plan maintain and As to change tax we’re practice, measure to given XXXX moving from from pension the the XXXX. comparability past moving

the We of first before EBIT and reported of to in quarter interest the loss a year XXXX million. $XX.X $X.X million taxes first compared quarter prior

million impairments, or asset added charges items non-cash to restructuring and related items of special X% Excluding value non-recurring other facility was closures EBIT sales. $XX.X for adjusted

at the quarter taxes, benefit an Looking $XXX,XXX of of recorded first income XXXX. income we tax in

or effective line of was with tax rate $X.X special tax previous million Excluding tax our an in of adjusted the impact guidance. expense items XX%

or year-over-year quarter per loss net share net cost on totaled XXXX adjusted for in million income sales $X.X an million value the were decrease a resulted basis reported Our $XX added decrease diluted earnings compared On or the of Decremental $X.XX by a million margins $XX.X XX% first decrease from $X.X $X.X million year. million. value prior XX% share per management. of aggressive $X.XX in in sales. in to we added offset The

performance review business XXXX, me quarter by let Now segment. first

business. million and result were of was million Looking demand timing items a impacts can to across continued markets all decrease in added Value in in and million $X.X now value $XX.X to performance of added sales $XXX.X the XXXX. sales tariff of $XX.X excluding EBIT to to as COVID-XX million XXXX. of defense EBIT compared special XX% The sales composites be lower alloys compared primarily or attributed sales.

to deliver of production double-digit The lower PAC related sales eighth decrease margin the quarter to historical consecutive current to managed profit environment Far comparable XXXX to is and levels north profit reduced profit efficiency manufacturing volumes. and sales challenging at margins. lower compared volumes. Despite in the of the due

added quarter million. the to quarter end Materials, million $XX.X of year in X% XXXX. up compared amount first market the XX% and $XX.X Advanced prior versus to sales value sales first Moving Semiconductor increased XXXX sequentially the X% were of

products to commercial drove As market new combined with performance specific end demand the initiatives increased growth.

million mix led new these for improving and $X.X EBIT focused Manufacturing to efficiency to on unfavorable new inefficiencies compared product demand in the strong related product excluding in decrease. was XXXX. new is the to products profit launches. items combined special on $X.X quarter launches million existing with The we’re the manufacturing

Precision Coatings segment. the Turning finally to now

added the glucose due to of quarter Primarily the value Coatings down compared in market. $XX blood XXXX. sales lower were the sales the to Large Area $XX.X First first XX% for product million strip quarter test million of

XXXX. sales which million driven X% in led special for decrease the quarter business issues. added XXXX $X.X by million to $X.X sale. compared the of sales Excluding as first COVID-XX items were is was the decline held the down EBIT entirely year-over-year quarter first in LAC $XX.X in business value now LAC by profits excluding million year-over-year within classified The was

of at the on quarter cash XXXX company’s on strip a balance facility. first the million is sheet to of company capital ended $XXX.X increase XXXX Moving investments to the $XX.X customer available of with million $XXX.X of $XX flow. opportunity quarter of versus the and spent in Jugal This related which The the net and a growth million We covered. position position The cash XXXX. million funded quarter. end compares the credit engineered cash net first to the

repurchase stock. on common shares spent was of the million $X.X of Additionally XXX,XXX

For financial development approximately engineered be $XX strip XXXX, Mine to of should Annual investments million. million. run purposes new run depreciation modeling amortization $XX million customer capital should prepayments net $XX the related approximately project. in approximately should spending and

XX% tax rate effective to XX% an special Assume excluding items.

ultimately will the the predict operations, extent therefore cannot impacted. pandemic XXXX. to and to continues conditions to we our or cash earnings financial now impact flows results and finally fluid The outlook which the be of is COVID for And business, evolve

previously to For these our $X.XX guidance share. earnings per reasons we’re of withdrawing $X.XX full announced year

term to entry Related optimistic such adversely current more our cautiously aerospace second levels. based as to economic expected end near outlook, industrial. are about Certain order quarter be we environment and automotive, by markets current the energy, impacted on results are

other like demand and markets seeing semiconductor, improving end or steady medical While are defense.

the we Assuming remain factories against or our be to second than results comparable in rapidly expect COVID-XX changing quarter. slightly quarter better fight operational first

remarks. prepared our concludes This

the now We open for will line questions.

Operator

first Instructions] your comes question question. Company. Marshall and of our from Edward Please the with with line [Operator proceed Sidoti

Edward Marshall

you of detail, give in? is you gave new customer? could lot market new what Can the curious this talk a about customer You I’m

Jugal Vijayvargiya

Ed, that. let me on start

facing. difficult situation and very all. family for in is that hope an This of your exciting you I first are So all opportunity this we’re us. safe

we’ve done over team over talking I our As the result last this by and know top R&D, being about plus. investing is years, more really last or work couple think year a in growth been organic our of great of you the priority

capability too been played perfect we’ve into a is This the much that great leverage some we and that a a have past. really in match to able market where capability we’ve not

is intended can’t of to will is is a It activity type about what be not for cyclical tell specifically with and been be it trying excited is. can will be that within about we the R&D think an market. It’s long-term what it team an So an is drive something example going a market that, the But a I seasonal market activity. a forward we’re and great that one I our important we’ve doing very company? think to us. hopefully But or talk a exciting to you part that I of you the collaboration that it’s think it I this company a work of our is

Edward Marshall

service you Do already? market

Jugal Vijayvargiya

broader we in market Well serve happens that to the this fall already.

sub sub something various new market serve so say, that us it’s we you broader segment fall exciting. I yes, But quite is a So would has that this the segments know and to for is market. and each happens

Edward Marshall

Got it.

moving million I’m business, just XQ revenue that I will or was about results [ph]. remember or and business correctly and line if that’s onto and the you the annually divest included strip sell it. XQ curious, So that so test divested sales have discontinued in business that $XX you it

Jugal Vijayvargiya

go you that? Yes, take Joe. ahead Why don’t

Joe Kelley

Yes, so QX not profits. took last We But than today correct the the of the some Ed. $X will a not in million in that immaterial did business value material profit in included and is it relatively the our were our - place This approximately less so recall sense half and is a results. you’re $XX sales that have the QX historically changes Materion’s and was QX year impact XXXX added be the business. QX million back was of in results in

divestiture our current change be from going it So forward to a a baseline. standpoint won’t

Edward Marshall

The you million it. do when rolls you that savings the cost through? that in place; it $X to of put timing million Got have $X

Jugal Vijayvargiya

Yes, let just about. me first talk

the think in cost I savings general.

years driving of And delivered the the just was and back continuation we’re where we’ve the of in that is business strategic few company. of our business because you profitable just this going improvements know and growth driving for then in our driving across to a so we’ve company. business operational seen As I you’ve that’s PAC we’ve impact particular that operational been growth our improvement in had profitability that operational the think that has and of the our one pillars objectives improvements company. But been

off. So actually were for last really the about I that, we’ve think been talking that then and to months it we several pull able

the the basically first service of is finishing I closure center. It now [indiscernible] As indicated started up. part to

Fremont, think of will The both year savings therefore would be California the and a and this after second actually done in those so which later that. be run full will by the the expect rate of I is completely the we part site year of that end be should the fact

Edward Marshall

next Got year. it,

Okay. beryllium it further the that pushed And sales was beryllium in QX? you didn’t sales. mention there like or Was was hydroxide hydroxide

Joe Kelley

No, beryllium hydroxide. there were

Jugal Vijayvargiya

customer in relationship our and have sales continue think We I we a to with therefore QX. did have

we’ve I progress our to think be them same you communicated expect the would - of it we year, with to this kind before. what as

Edward Marshall

unclear. me. so I from one that Final guidance you right. All provided. - The just

and you You specific talked about referring relatively value rather referring or to just flattish quarter-to-quarter potentially EPS slightly to were you item, revenue, up. revenue added Were one just curious?

Jugal Vijayvargiya

added value Obviously, I be think EPS to say sales. than so both added slightly will QX and believe and I mean sales general or is I value elements. our related we related better I in to comparable compasses business, the so would probably directly think

Edward Marshall

Thanks well. Be Perfect. it much for guys comments. very all be I your and safe appreciate

Operator

Thank you.

Our your line the Please next Rodriguez, Rodriguez Marco Stonegate. question comes Mr. from question. with with line of now live. your is proceed

Marco Rodriguez

you Can on questions. there. mute me? Sorry my about was for taking guys. hear Thanks that I

Joe Kelley

Yes, we can hear you Marco.

Marco Rodriguez

efficiency on to little you here called a of earlier. the bit I manufacturing guys wanted out about Okay, kind the that more great. call talk

mentioned in basis, the which were some manufacturing on but specifically I’m mostly a inefficiencies there assuming only You materials. business advanced was volume then PAC

higher have did I volumes, manufacturing product launches about you but new spoke as efficiency believe there. being You a

least at areas can the on a of can, you maybe saw more launches. talk the advanced of the think and product material about quantification kind So help little the specific the two if that from side about you new you bit drag us

Jugal Vijayvargiya

level. jump Joe specifics. manufacturing start about more and the Yes, inefficiencies company we think When at then general some talk let with comments, can certainly I and me Marco talk

efficiencies really, I would a three result that One talking think as the I say COVID-XX manufacturing experiencing major categories. the of think we’re pandemic. about I we’re

structure in all to to changes, utmost we our sure cleaning that when know implement is implement so, facility so you do and make each things, and other our to what think other As other social had operating because shift things. about of safe we’ve priority had to, employees had is distancing and and that our we’ve that we’ve many had to elements are I

efficiencies resulted plant. our in manufacturing in has general So that

end manufacturing that the third are market the certain in Second exciting inefficiencies the product starting the part just of that that demand manufacturing us - much are on there see, tunnel lower to starting the we’ve inefficiencies. volume lower market of And semiconductor knew which some AM end for we’re one recover. generally volume. talking years prior market new that mean that and last about resulted launches we’re with light element that calls and markets the lower I is What’s to as business the well is starting the is at in that, then mentioned business. are is number we AM in we of to our been see to the couple

a products. recovery, more really So starting in R&D and investments little think only are that is not new those the bit to we that place of resulting market of we put seeing but I see importantly the some we’re

step as fantastic I two get and efficient think products produce job getting through is we’re launches. that through team activity done clearly our manufacturing on our we’re can focused it fully launched our it, on new new new which a focused sure that absolutely I has and which we getting can what fully, certainly plants new under these actually that’s get with make inefficiencies sales because one manner products right is customer we’re an sales of to control. some to and sure assure our can the So and in we you the actually go and is that putting step we causing cost is that, make

I manufacturing - that I’d inefficiencies in probably of encountered we here of QX. this three sort So high categories think level

Marco Rodriguez

maybe, for open look have capacity right businesses. in of I essential a are [indiscernible] like fact the a might [indiscernible] kind you about implement of that standpoint of talk that, like can that delivering social then little more. expectations just from kind product kind the changes And distancing. lot things you year. a the what to the utilization is mean bit talk Maybe utilization regard of rest to do that and then and if you to what up little to you procedural what given plants bit the your levels a for like of now can fiscal then look when going different if open look Understood this have start

Jugal Vijayvargiya

mean utilization has on some people said, something Well you put had the the One protect clearly to that I that general impacted. just lower volume. is the two and in based we’ve been policy as to of just place our

So actually so number can our talk don’t don’t area, utilization specific a is we have that certainly share But our percentage I challenging. more we typically that plants. I it of that you tell in about

just and it’s The we to open. that so by way plants of really it have just not mention, all that want of are the some plants our plants is our

this we All track on shift of our well. demand the that’s are get I continue all of practices then to continue our to as think back. in And to required that ensure plants does coming continue we’re people that so through come But support open safe. to when in the the smarter them. I intend to we mean mean and I are customers. our are we’ll

kind of proper plants. all more utilization driving make the sure learn about across we’re our and mean I of

actually. improve So I utilization continue would expect will that our to

more back through continue the mean I volume coming to market As demand the the key get is stronger. plant. we

I that’s what important. think

Marco Rodriguez

this far bit to a what expecting understand But looking any than sense sort you sense base necessarily how through about analysis But if I you guidance. play and as fiscal as next case a as for this conducted a you talk environment year do to Got else’s. not just get specific little have is difficult to you what any a next are here and from just of can very get anyone as guys trying out was the question is obviously, it. far scenario crystal are standpoint. ball trying guys And expecting of I sort maybe knowing guys wondering internally, better

Jugal Vijayvargiya

of imagine. you that to we company scenario first done ensure all things have as continue. every well can analysis looking Yes, and at various I’m that sure through is can going

a are I I few adequate one, Number we things. for think liquidity. to think I want have I a highlight liquidity mean company.

couple We forward. have coming to I we what years last and the generation to do very liquidity may trying seen, company. operational think that feel cash deal difficult the we’ve times that to blessed we’ve As whatever over that with delivered in improvements you’ve of adequate drive to be been continue the

here I term. term also near near tell is comparable improving can basis. second a What quarter. see I indicated Right as slightly results to more we’ve you, mean We the on in

on entry with we understanding that the So are us. on selling a markets kind and think have order I of near what term our

Look think think tell what talk can can I But I we that. guess are of anybody’s bring. is there on a what I longer you, about longer is term focused. we will term that basis, in terms

our business on of out strategic thing. financial this coming perspective are that Both and sure perspective. We making is properly from focused positioned

I that we’ve saw think to I three move strategic business continue announced I items today you the forward. here important mean very mean

you the levels last well know, In you’ve results over over fact forward the seen as from even for three years had last and we’ve the years the as the significantly that business. three

see in to continue think general, we move business forward. I So our

had We’re out. at less decremental we you going on the focused very comes when I that’s what’s respond results tell XX% sales we’ll on considering and environment. it, XX% I’ll our to look and you it only how mean healthy that, in margins. though

able being that. come you’ve hopefully today properly think heard starts handle this able to positioned initiatives thing going our and strong strategic to But to most I what’s lift to come whenever literally to focused be we’re we’re out. importantly demonstrate really about out So on that

Marco Rodriguez

question for that from Last additional color. me. Thanks

is Coatings provide of of cash any there savings, able conduct information any back sale. Large Area you might sort an expectations lined been you of an circling to up be sort to cost investment that’s the proceeds, there? have Just on auction Do or hired current bank buyers

Jugal Vijayvargiya

Yes. us expertise. business I the as continue be portfolio is where forward go we’ve Right. going We sure mean mean initiative great talked. forward. can important want we dedicate Precision our as very for we our optimize this able a we on have I resources to make to to Coatings great,

are We say intent it, relatively is in I on early So that the made to we’ll it want process. would as to that sell we and to communicate. sure we certainly this our communicate make we progress you business

Joe Kelley

And a I would cash flow from add standpoint.

If you look at held basis. net our balance sheet, the $X assets have on the million, been a sale written down assets approximately for

Marco Rodriguez

Yes.

Jugal Vijayvargiya

I before Marco go was And because you last to we that - Right? your the think question. mentioned

Marco Rodriguez

Yes.

Jugal Vijayvargiya

time Okay, I’m before I’m Really the have we with go to you exciting update. getting real question. I guys. it news. just this sharing next an so

that our mentioned this project. Regarding project customer we

about $XX we this customer is inform you our want prepayment now that agreement a the you have to that that you will and signed also making. mentioned with prepayment to that the customer. mentioned with all by $XX in I earlier I So agreement and fact. investment customer we can share actually I million talked result I investment million in actually our full

be will it So a prepayment.

we up so [ph] basis will that expect ahead that million in up facility have. we with business and this next on we in the XX applying get to be We to the remainder and course can of long-term running expectation that this a and product go months really $XX exciting this the be

that that I tremendous on share based handed, being I progress. with think you So update yes, can an I’m

want been I’m even so the make course update as COVID-XX customer continued sort Our that that to make difficult us you update. I situation, though this team very that in to have and has getting great news have and of sure

Marco Rodriguez

and and also speedy wishing Coronavirus, you stay safe for you, employees Thanks you your Wishing That’s excellent news. Thank the families time. your a guys have that your recovery. guys.

Operator

Thank you.

Please comes of question. KeyBanc question Phil from Capital your line Markets. the Gibbs proceed with with next Our

Phil Gibbs

this within would brownside $XX type by million is existing facility? facilities new brand our a of [ph] your this Is customer arrangement one within investment be this or

Jugal Vijayvargiya

in support things the adding that to start. that’s basis, us, start with we we’re and near can doing the and more have something facilities one with is order quickly that have relatively we’re customer then customer product to taking facility we’re supporting actually capacity our produce actually this in customer. a launch a I existing that investment two to we Phil existing new launch that that that term And so expect a making to with facility. So this ensure think we In of properly the

We working have and so be will been that facility out the on new laying a basically us. it for plan,

Phil Gibbs

some months a bigger Okay, then now. your and trialing things on scale it existing out, bugged so with some basically taking assets from several getting

Okay.

Jugal Vijayvargiya

product would Yes, I would back I a I now with think been involved with we’ve and we’ve the say while than for say it’s customer little more trailing bit the the the developing. trialing been doing and because a prototyping and and forth

there’s start launching be would customer as with get I’m well large scale. soon sure the in new supply on as we by increased a to on the our made facility existing as basis we potential higher being much in intent a facility to I can facility large a able is production launching this that actually have our actually then customer. capacity think we $XX that a investment imagine you million that’s fairly can as the of and

What’s important making expertise of line here capability this clad we engineered that, with the have falls that this right in and is the to note strip.

exciting expansion existing product. that area demand existing we a great an about is today, this produce is significant that and of really our So what’s And that’s thing the businesses one that would that and has strip a have products from of engineering customer specialty replacing quite is it’s the sort an capability it. standpoint, so believe we in we so of we that clad

that existing capability, And set think some where as really with so demand. we’re to a expanding a nice win-win market I existing it’s existing skill

Phil Gibbs

this look Okay, a the into And just related are now. through about little just as you medical anything of increased government thank right would of you’re Any and bit to mean second It new out seeing describe in at can I’ll quarter keep like building maybe for what sounds you it defense, helpful. a COVID be is then those terms those texture Maybe semiconductor it launch. markets you. to some specifically. surge resilient I the and two spending give on that strengthen demand. Thanks Apple markets half. strong, three

Jugal Vijayvargiya

business as look with of certainly a you those indicated as supporting PAC so products -- is and can fight one proud privilege in a the know the related when mean markets quarter some strong COVID-XX we is really, very our really relatively you earlier. can lumpy. COVID of business our for quarter at always indicated be to Precision the of well medical sort have weak. I quarter against key The had Defense us. our next be Yes, Coatings the as as we particularly I as in

so what demand for quarter the QX. expect continuing expect we sequentially that there. we we is general defense us are think in And be stronger from defense and QX to are contractors But to that a I the that defense should seeing be the

semiconductor the be case. to see the anybody’s area? road I and to that. starting coming if and side the the that’s COVID-XX that it’s the producing at a on think there that’s benefits of last couple guess, suppliers really, years over how industry I The down impact downturn to they Tier seem that Will from that up. be producing obviously be an we’re X think I due are been semiconductor capacity faced and mean will in

think demand three seemed to areas as we general in good fundamentals and have I those solid So move forward. in

Operator

you. Thank

follow-up Edward a is with with question Please next proceed your Sidoti & question. Company. from Marshall Our

Edward Marshall

in it be gotten Gee, assuming or in ever [indiscernible] the that, don’t That call. it’s was email to fantastic. conference I - I’ve something. real mid know up that’s you if like I’m time

Jugal Vijayvargiya

We did, yes.

Edward Marshall

a that’s million investment. $XX big So

of how First, was I how investment guess CapEx? much QX company in that’s question. that much I first was funded versus the guess

Jugal Vijayvargiya

and the why so Yes, running mentioned is which million the and larger project received right. talk There on near term I specifics two is spend. we is $XX as there near you ahead for this and We there the term I indicated. QX. project elements, are prepayment don’t getting as the in up and Joe, capacity of then mentioned go that

Joe Kelley

Yes.

the statement you the pre-funding So cash on our already the with spend, we look the received. this was quarter approximately million spend $XX of had associated investment flow Ed that at capital $XX million if

Edward Marshall

Got the that, same one with If you carry This should on come here, way second one remember expect still with Plant. I with but remember D&A. I that the correctly, other can covering material I that [indiscernible] would was that of the the this facility? from customer, is is type Pebbles the in spend it. agreement the

Joe Kelley

on are They the accounting. Yes, similar.

commercial in of pre-funding we’re was to capital, We standpoint, start potentially. Ed but spending Plant. shipping Pebbles half that government the we’re products the cash that very a for are that This from back a different from pre-payment receiving the going the it’s is on XXXX

for So that to that sense the in the products is it different we’re going future. is pre-payment very ship in

Edward Marshall

Got it.

Joe Kelley

the be will But accounting very similar.

Edward Marshall

next added another I’m strategically is [ph] JC why it. of a new and capacity capacity to it. into quite since and of to out it’s been this Greenfield sounds has like wouldn’t Got I’ve correctly there own a it be lot that Elmore If there. land around the kind I’m supply? capacity. as you just been facility trying the are facility positioning the the a But of that a source I remember But out which facility the Elmore curious, just and had while facility. figure you

Jugal Vijayvargiya

that looking Well be that’s something to I at we do number future. of do best have Right. a A the mean product able tell plus so the the of so you Where expertise we that and in I think different we’re things want on strip area what’s the options announce can which I I at Ed, are we’ll is, location we’ve where best us facility. one this in to looking non-beryllium that this that the not product highlight is to a for clad is settled area.

in we that that the That’s leverage we announced sometime future. expertise, So something where the put manufacturing the can have expertise that near can we’ll in we get place.

Edward Marshall

guess that a asking as a of customer I’m the advantageous somewhere is, might and there kind to what be I of as you you kind decision maybe ultimately well. power seeing pre-investment to any strategically here are that near them or is giving locating

Jugal Vijayvargiya

with that relying decision issue. is would it’s the if Yes, customer on I I many doing I’m obviously years. not for we’ve power for think what this, say the manufactured the capabilities mean a I been sure us expertise and

I we So the and expertise logistics best and with that the what’s think them more it’s offer can everything else.

they’re we’ll Now the that produce making. be discussion. the where something get involved Don’t decision making be certainly in me to but best wrong, it, think I will of

Edward Marshall

the you that mean the produce. could on at talk this that how I return about? and revenue ramp and we could look this some have potentially you do scale it obviously Got figures

Jugal Vijayvargiya

those and this facility period and Yes, put then mean certainly to time. in with investment. for about it’s finding certainly existing we’re figures. capacity can It’s in a our talk the long you prepared I near ramp start is to we that, and what our of in intent supply tell intent we’re But the this term to place our up I do and not

to the that project expect faced ever of on our overall conditions. by customer. Materion we to as that’s terms a for the intent continue supply in mean to this We terms work be a finalize and large has far us, I customer project of very with largest supply,

Edward Marshall

your I pillars put back And and in you I onboard. initiatives came if guess, look when to finally you place that

your big - win, a first or say I But been standalone, opportunities of but of say closed first kind how your obviously XX, one, of next months innings won’t middle either of this are other you’re many mean for is have XX What I it’s out look as kind first this think, just those You is focus to up is or for you you us. your the there curious? big win. this over you kind it’s

Jugal Vijayvargiya

mean all I types. through Well have growth, anytime go you think organic I you Right.

You I through. not pipeline, a let’s of the those have all the number the put the say you in the very have those $X.XX you changing. opportunities mean as very incremental I typically large very, mean game incremental, of it. to come segment $X.XX, mid to of course

or or to lucky it’s like of know that. maybe five You’re of I out two something bat. out one five don’t

You’re lucky bat. to

continue it’s from We into type you, the the can way priority ramp dime get these as to in one opportunities. the intent our to can’t have make I our organic improvements absolutely up nickel it’s company. number to on organic but elements intent are larger of R&D I the to and spending specifics, and opportunities. our all top growth, the focus larger continue drive all we to we can growth of tell working other that on do

Edward Marshall

any way You order just got I’m how number the the Got do it, curious. you provide the you that a book quarter. can such any have By it. talked book, bill? about in maybe on to strong

Joe Kelley

guidance disclose supportive don’t book order the But current a can ratio. we bill is disclose is provided entry QX. for we Yes, of our rate to we

Edward Marshall

guys. Got much. I there’s questions. a very of Thank know you. it. Thanks Appreciated been lot

Operator

There no Shamrock I like over you. questions for remarks. are at to Mr. Thank time. would back closing further turn the to call any this

Steve Shamrock

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

Operator

concludes today’s This conference. you. Thank

your and for nice You a lines. have day. you disconnect may participating Thank

Materion (MTRN) 23 Apr 202020 Q1 Earnings call transcript