MTRN - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to the Materion Year-end 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Steve Shamrock, VP, Corporate Controller and Investor Relations. Please go ahead, sir.

Steve Shamrock

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

Vijayvargiya call company's the performance and as conference on initiatives. financial today's strategic for opening comments format follows. Our Jugal will key provide COVID-XX, is

questions. detailed Shelly then up open we review for quarter financial for Jugal, Following will and the will the results Chadwick full and call year,

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

in share comparative this and I'll Additionally, over earnings adjusted tax made remove GAAP to comments income and adjustments for The prior income net in shown Jugal noncash items, special his now regarding for and comments. number certain adjustments. before are earnings the turn per year the reflect press And taxes, release. attachment period X purposes it and interest numbers charges morning's in

Jugal Vijayvargiya

and end throughout all and fourth times. XXXX. challenging to We our as earnings Sales ones Market very over work all a office third we grew the up me from improve of hope Steve, we up from the to the pandemic let of of in majority the to progress and health with by acquisition Balzers continued reported XX% markets. business Thanks, factories they COVID-XX the started, other sequential Sales follow our Continuing segments saw safety welcome, home, led sales your highlights. quarter for every fully people for navigate All strong challenging everyone. protecting Despite since all over of quarter. our our our new one a continue through we first these environment, The are to remain few out XX%. profit health consecutive guidelines. made the quarter, pandemic. reached Optics demand quarters recent time, delivered operational close double-digit second and of loved cover the the XX% productively have been continue for Organically, as as X and the and you improvement last employees safety I of U.S. as X are key QX. margins consecutive outside recommended the on we in we good growth. focused

glad overall precision We R&D growth. our continued new despite recorded of for the shipments customer. engineered company quarter challenging to strip investment We the significant our conditions, positioning in full first organic market

the used COVID-XX delivered leading open facilities provider. of creating the face directly precision staff structure the to what coatings the equipment a of unprecedented the on made which thin and drive of care extremely medical completing Optic Balzers by film supported used to world's We by with facility balance all our to world. team we for we repaid year our in We Balzers cost acquisition, optical fight closures. of debt, Optics meaningful keep proud the supplying of ending managed continued the X We acquisition, And I'm integration challenges. progress improvements against $XX sheet. strong products health around million the finance by

about our more talk me initiatives. let a of some important bit strategic little Now

remains product. few on report Over clad I spoken the a precision about have for strip to I'm project the large schedule. last quarters, opportunity our business happy engineered

we to customer our the shipments first from existing mentioned, one As of completed quarter of facilities. I our full

new the facility facility finalized are leading project. prepayments existing date, an regards facility from agreement $XX in shipments million long-term and early project, for year. the starting to that, received to next we're new of a we we our quarter recall, edge track. remains setup will diligently we manufacturing supply the production may You and In production. working on the To for Also, towards during launching shift

to excited continue this the the about potential looking are We of be forward with customer. long-term business project to a very and relationship

Precision this then, Optics a a global We have global transition also precision Balzers, been we acquisition founding announced busy platform. of film one our Back in in continued of to Optics. the field. becoming Since leader we July, the creating thin optics in leaders

on customer collaboratively combining our businesses of on overall support in Our the growth objectives. identifying teams work opportunities to and continue

its underway and have large We of acquisition more integration of bring. what us gives focus initiatives opportunity strategy. closure Optics the the our this the Balzers coatings the In coatings, activities, business, segment combined business. large with finished Optics representing legacy closure parallel we Materion forward area Precision to looking are will our and to a and The Optics, number of of rename Precision clearly area synergistic combination to

positioning advanced Detroit, a short-term position initiatives, a facility structure, I us offerings opportunities. in current closures, year, and along for the to are a facility growth be on Fremont, us with of completed relentless our about manufacturing During macroenvironment, strong improved materials have we pipeline many that service others, These with in have to customers. organic wanted our and Michigan. high-performing to report mind, strategic center the X both this company important address California, a long focus in to With spoken cost I term, to

the With who improving thank a challenging challenging more us advancements would the seasonality As our In and to are XXXX. demonstrated teams the are to focus extremely the I people look the what day, I'm excited quarter. showing I'm and expect enter conditions expect in market positive objectives. we I'm every impacts first to XX% optimistic our leading by we earnings our many of signs. positioned despite deliver forward year-over-year markets meet have closing, for about QX, normal want well resilience of in our quarter, and as year direction the a tremendous improvement an to we first Despite company seeing. than particularly during I XXXX, sincerely

Now to cover let over turn the Shelly to me the call financials.

Shelly Chadwick

growth the and great It's in morning, to I our the third look my those million, the the XX% to you the performance future. everyone. Materion and quarter to quarter $XXX market, third the were Despite million. yet driven in by sales was to up compared costs, report The passthrough Jugal, defense strong which end of the sequential $XXX new call, to improvement sales customer, compared forward sales of a Value-added ongoing large of to engineered precision joining strip metal clad sales area I we impact sales, I Optics fourth Balzers. be meeting from near good final sometime test coatings of again full first earnings impact am blood glucose saw and business, pleased Thanks, the not quarter COVID-XX, know, of exclude products do precious strip from in that quarter. of

last decision to first comment wanted of fourth out valuing the out to change made method. I profitability, the used XXXX, for the that the during we mention I quarter that inventories first the Before first it previously a on and change to in method tax inventory. our in We elected because account perspective. accounting book from vast LIFO of to The we attractive our timing how FIFO inventory for for peers manage better majority for with aligns also and was purposes from our our to tax how business method

results to income $X.X special report item this pretax because as QX basis change. forward. result intend as accounting a increased Our did we this FIFO going We on by million of not treat a

quarter and details issued to reflect third million We have also in fourth were Gross this those $XX.X release restated in change, $XX.X the the million quarter. periods prior press margin the in included this to was morning. compared we

third costs, value-added manufacturing $X $XX.X special expenses, from Balzers development items, spend. the quarter's acquisition the margin points quarter or charges, an compared sales, efficiencies. down and the XXX million XX% of basis and totaled $XX.X higher COVID-XX Selling, gross improved general and Excluding administrative improvement Optics including to of XX% due million, expenses mine third was million to volumes adjusted related

sales, of in expense basis quarter, XXX the percentage third was quarter. the SG&A a As points from adjusted value-added XX% down

uncertainty and new to We Research of taxes reported $X.X recorded related before products quarter approximately of long-term the the third pandemic. investments development X% manage to continue quarter and we given restructuring and with through to area million. consistent our the announced facilities to fourth as the we business. the drive quarter, We closure profitable quarter, by Fremont expense applications. aggressively coatings the in fourth our the development was COVID-XX expense of our driven interest and closure large sales make million value-added In and costs growth SG&A Detroit continue the of $X.X earnings of previously of fourth primarily

special Excluding $XX.X value-added million adjusted XX% EBIT items, of or was sales.

of recorded we taxes, million fourth of $X.X in benefit income the at quarter Looking tax a XXXX.

tax period, XX.X% with our was special previous Excluding for adjusted effective items, rate the in our guidance. line

includes net $X.XX The to in quarter totaled net income per Finally, third million. share in share was compared an On adjusted fourth the or fourth the in basis, $X.X $XX.X from the per the income $X.XX an sales increase driver million diluted the quarter. quarter to balance quarter. change performance of $X.XX of the per third FIFO share adjusted the to as increase of compared earnings primary was accounting. Improved

million. pandemic. other of market, $XXX precision than and $XX.X in XXXX. full defense, reduced million, me compared key year from in million ongoing Strong $X.XX markets. Full $XX.X new were the in per in financial or COVID-XX net year the were comment industrial year diluted of prior offset as semiconductor opportunity end by Adjusted clad share on performance. based strip income in demand end to share and sales to performance per $XXX hit diluted XXXX. was and EBIT all of Adjusted XXXX, incremental acquisition engineered the sales XXXX down the related Optics totaled $X.XX on the Let amount end consolidated $XX.X Particularly briefly from hard value-added million down million Balzers markets our the was aerospace energy more

business fourth Now segment. quarter by me review let performance

sales compared to global consecutive business, million, increase The EBIT, reported to or in Alloys customer. sales PAC improved is markets basis for engineered automotive special million value-added due million mainly The volumes. to double-digit sequential Looking approximately sales items, end Despite third EBIT the XX% $XX.X $X.X third quarter. value-added sales value-added of primarily at strip million increase increase EBIT our third were sequential XXth by the excluding of $XX points defense in EBIT to performance the sales and XXX precision to XX% margins higher quarter. is quarter quarter. clad and pandemic, and due compared an $X in the margins strong of the Performance or Composites the new compared to was the and

quarter versus in X% special to third now in margins in the as semiconductor was improvement by Moving up Advanced the from sales EBIT XXXX compared was as end EBIT, third to go we market fourth $X.X the initiatives manufacturing quarter EBIT forward. to improved $XX.X quarter on in were volume value-added market the the focused items, sequentially to million also margins growth. by $X.X The demand increased improved sales higher million performance. end continuing the XXX commercial Materials, and remain to quarter, third of to excluding performance basis XX.X%. improve driven and points margins million, materials due quarter. drove We the higher advanced

quarter. legacy to blood quarter $XX of in sales, glucose XX% the compared sales special Balzers volume. in in segment, third Turning our Optics in strip items, up strength $X.X or due of the million area $X.X full increase Precision compared value-added and products EBIT the part a Optics higher third was quarter Precision of coatings The XX% quarter, fourth million, excluding in to test EBIT, Optics due sales final to million to primarily business. were the to sales business, large value-added finally our was sales

of facility. available Moving the quarter company approximately company's sheet on flow, ended balance the and the $XX.X $XXX cash a of credit net the now debt million XXXX with only fourth to position and million

$XX year with growth to than adequate more challenging is We the spending this of completed opportunity. environment. engineered million. prior related manage the capital year continue The the to increase versus We customer-funded liquidity through to have strip

organic additional spending is project segments. should strip spend For me Capital as of exciting to expect amount to effective our the and special for approximately need pipeline XXXX. mine that opportunities new is at the for engineered not of development purposes, new due pond million $XX items. Annual of year, excluding $XXX growth from each particularly our a operations, the million. financial material strong opportunities, to in collects few a should spend. XXXX. well XX% portion million of construct our and do modeling tailings review the let a costs we waste expect depreciation $XX We which attributed This in tax as identified rate, approximately also to mining come amortization run approximately for expectations A higher the accounts in XX%

outlook, the full earnings to create heightened uncertainty, difficult now to to impact the making COVID-XX Moving of levels it year expectations. predict of continues

providing first time. from levels, on we be over we only per $X.XX increase Based quarter guidance earnings an $X.XX of As in the for diluted of share share, current first at be first will quarter demand this a to XXXX. expect result, range XX% to our adjusted per the in the quarter the of

our balance our on in execute for to our strategic We manage growth and value XXXX key beyond. strong continue utilize cost will initiatives, shareholders deliver aggressively our and structure sheet to

ahead. our I'd complete company. say here thus far great with with like conclude the people, to an we clear and This pipeline Materion by the strategy and together I'm will years open that, days is what remarks, the first see And questions. quarter As in now what to opportunities. as I we for that we of do I look will organization I encouraged line at a prepared forward with strong very my

Operator

first Thank is Stonegate Marco Capital Instructions] Markets. The question you. [Operator Rodriguez, from

Marco Rodriguez

wondering your the could bit mentioned know work. bit was little me, I Jugal, Yes, it, talk excuse Optics if more in I Balzers, remarks. a little you you a prepared about integration on

back progressing announced little better the as a sense bit kind you just that line those along you where guys of you high of a from outlined acquisition could are far level time as would give itself revenue when us sort towards of had synergies the be you If a helpful.

Jugal Vijayvargiya

happy that. I'm Marco, do Yes, to

side, together Optics we now we've frame. the Balzers Optics the is up putting you then, both it's legacy Precision have team July ran a Ian the Tribick, who as really COO done. of have with of And then got people Optics which new led I We've as up Materion leadership global of since So the know, place as a time indicated, working I is folks Materion by said, being we side Balzers business as business. the of acquired the Optics. side as have sides created [Detlef], together in fantastic in team a the name, And from made the the team Balzers on really And been organization. organization, made from well

in So we're really, and running. and is really excited about that and have the actually put place, that off team

our we We us. opportunity every you for standpoint, also I of to for think acquisition teams is a how opportunities us. not cost a play I am tell mean, When great I multiple mentioned, think, about standpoint, together. really from This regional presents opportunities growth that synergy and those a I this for I areas, standpoint, a our play one think after market the of technology And work the is times that, can't really is growth for about us. during excited course this

So aggressively and has opportunities. working team the been sales identify to marketing

As we've you times, that to bit of materialize certainly and longer than growth opportunities a that cost can opportunities. a take though, said imagine, number little

which market is our And very so in having, with a our Optics We're with extensive to I and good great, really, out then brand actually course, well would Balzers both the Materion as We've great recognition, the we're leverage brand. study the European to customers. marketing say, brand, a customers done success. of brand and Asian really some

set fantastic reasons will excited. we that about over one to you number want we're really talking bit have for little capital of capitalize This able our higher see Because that growth of a the more is I'm those And spending. next quarters of be opportunities. a I hopefully organic So think growth opportunities. to the we on

virtually. progressing challenged well. think, But proud environment, I I COVID what excited more and in very working doing, more So are is Marco, a be especially team things couldn't of the

Marco Rodriguez

Can And remarks and as revenues prepared the your clad for to you Got thinking release I shifting the kind there. And that in should helpful. well obviously that the in as then have know that were your frame into here the you revenue strip to ramp revenue press how you started to up quarter? ramp new in it. we customer help about a Was we year? move that of mentioned level of expecting? just then fiscal Very it kind be as facility, this prepayments

Jugal Vijayvargiya

Yes.

is the doing, with about excited the what very COVID especially again, team challenged again, environment. So

One with facility As upgrading. project of been we've you near-term know, existing X our we aspects an project. that that have is

project longer-term The is the other the with facility. one new

that you're really get We expected facility. were would I able revenue the about so from QX, that. in we're So we near-term our what what is excited referencing to say

think look beyond, near-term we we and facility. QX now I expect revenue forward would go we profile and at as our similar a from

Our is only plant. to deliver block have for just really being our we capacity the in more that able

and the the facility be targeted first got to And And we've for ramp. now, running, think year. I right can the we able sooner so get accelerate up of that quarter we new should next then

As all but in situations that just really difficult on that done of you schedule. through project it's fantastic we our keeping job have a working team imagine, of us, can has front been the

So a we're next accelerator QX still looking at year ramp.

Marco Rodriguez

new tailings CapEx facility. opportunities spend pond, mentioned then segment, versus in of each just for maybe you then for increase CapEx you the million, identification new the right what throw $XX hear clad if part did $XXX of facility of and there, new where revenue of in I on that are for this online you once could other the but when in some guidance -- apologize increase kind a or the I million I And the would And also if capacity it. have goes Got on call, sort from now?

dollar facility? you to maybe I new missed that If be don't could -- I if know going amount the the might

Jugal Vijayvargiya

Yes.

of the not a acceleration with the new new on. confidential of about project and plant, you as This that the the size So terms the we're is capacity talked we've in know, put in we'll working opportunity. that

you So we have low basically to it customer, now, to what delivery volume come to what volume call higher I next of year. type of providing I that a can and a the is expect delivery QX right we're would customer the tell

setup meaningful a $XXX CapEx, what is doing. About regard pond expect that So half million, XXXX. we would about do exciting million on really, safety-related our and project the opportunities, rest have we're to And we tailings we to new course, growth expect the levels continued of into into approximately for to has from adjustment current maintenance this would then $XX yearly have With would and basis. we mentioned. the would as increase make that projects normally to expect related be that new facility. a the have we would that really been be facility We and

we're pipeline. excited growth So organic quite our about

Marco Rodriguez

last of kind it. just high-level And here. quick a question question, Got

purchasing? be time? you supply changes start once an during Whether bit? period Just making obviously to this might the can increase have footprint any accelerated have, in facility things you that smart that of chain may to manufacturing sites the been automation, effective of your on impact that's you kind maybe of techniques at more guys given Anything a pandemic's sort talk normalize that about your

Jugal Vijayvargiya

falls actually right this transformation. line Marco, with digital in Yes. our

the to to really we're the our digital way the of been our way years our to one improvements, that handle things across we've key I floor. last of of into mean we HR I from have. our of And it we getting result manufacturing dedicated really on activities and that one the is activities for we pillars wouldn't something on our as That's transactional to you this a financial all activities say actually COVID. know, drive the transformation focused that have company, using efficiency couple accelerated necessarily improvements the company. As that's that

number have So a projects we actually on the side, manufacturing of underway.

involved that are in external of drive up we an and fact, intelligence could company. perhaps We're type in to some on projects AI, artificial efficiency of utilize our work working, one yields. We the with

so which of will approach. And that, a started we're factory getting drive, on smart think, certainly more I

hope that so about quarters, I that. to next the in talk And more able we're

Operator

KeyBanc We Markets. have question Capital a Gibbs, Phil from

Phil Gibbs

Regarding obviously, quarter, bottom topline within and of ahead. recurring not the looking you? line piece how fourth going Because was impact glucose to the blood coatings, specifically for it's much be that

Jugal Vijayvargiya

Yes.

million worth the in of So QX, started sure into approximately going necessarily with I'm just number, our I'm topline. Phil, things, to through But and had timeframe. say mean, line impact kind won't I bottom we an million normal I line specific about get but yourself estimate $X $X maybe bottom you can those think be. what may a get you in flow around the it's of on the impact QX

Phil Gibbs

fully number, Okay. Is you $XX the first increase Great. roughly for number? going there And million to the single-digit in is that high XXXX, that D&A million year-on-year. reflected be ramp Shelly, Or provided a to quarter?

Shelly Chadwick

this move big as you should we're through about investments year. ramp the especially think making That we year, as the

I move that we the you'll quarters So the flow think year. as through through see

Phil Gibbs

helpful. fourth annualized That's that QX? $X maneuvers of to million making PAC side, on $X then in benefit quarter? the in to expected hit is And Okay. you million get cost you're Or did in the any that the

Jugal Vijayvargiya

Yes.

QX I and the juggling on think transitions going getting are through XXXX a closed back and impact. of facilities an of lot type still done. it's those a more getting And forth of we

interrupt the most in any customer sure important was we make Our I we objective not a that customer flawless to can bottom think way. from make line viewpoint. a just now activity it did on was And focus the that impact of on wanted sure actual seamless, more it. We to

Phil Gibbs

What what we've the point. from quarter, the first more some still midway coming getting at look Auto so the this the we're favorably. been look this got cost you good. to puts at minuses? talked the year, the and business PAC are perhaps just the fourth of visibility fourth versus the are the -- at the takes in takes part Semis looking recovering. the versus you as piece out quarter puts as decent is quarter? side on the first quarter? We just then and What's And What Perfect. has the are about through pluses

Jugal Vijayvargiya

Yes.

that tends I probably glucose impact a all XXXX, XXXX that very you we in are think is of QX Typically, QX. would I I be QX QX roughly of standpoint, that lighter. market something I seasonality, things on business about won't then, about items. a QX. We QX course very going have $X to the said, you of the look I'll XX% as out there's X, to a back that very, datapoint, was blood business, large area and QX, give a the when mean to QX is say, tell defense give topline then, market indicated QX QX. this there From coatings you QX X from in at to defense and larger and Phil, I'll in being seasonality particular, to just reference decline here in our million the idea, impact market in just from in to an that's just There's based market. course, strong the you and the defense of business orders weak

and that continuing on the keep good one would the was an a right, the on more The much have I everything a that you on in move say, tear have general, XXXX, pickup eye market is side right market are also said. like markets semiconductor. with in closely, direction, semiconductor semiconductor as to I been would mean, QX to You well. has happened say I other we in

So is? I of would how continue at does sort is grow or just what we an other levels the on then it to will that progress. semiconductor of direction. I the And it to see more think let's markets say right a I move to further type can in have would maintain the continues keep say it is, of So eye it

FIFO I be restatement, the $X.XX. QX is other the about operational so of roughly around thing mean, related to QX the is to to this $X.XX QX, a for from to our the and would $X.XX. accounting more and that the performance of LIFO, think I note

that would I from QX. So that few I factors think going are say there's QX those to

Phil Gibbs

to just a the we're -- fourth a FIFO clear, number provided Is be the the Jugal, $X.XX LIFO quarter, that restatement, accounting number? So the and $X.XX is in is what

Jugal Vijayvargiya

That's exactly it is, what yes.

Phil Gibbs

Okay.

up LIFO or anything, versus the wasn't number. FIFO you're just saying So there catch accrual any like

Okay.

Shelly Chadwick

Yes.

prior were periods restated. So

So of a $X.XX our for the full at actually, results. year benefit. sorry, if the But the was the off LIFO a for impact it going $X.XX decline look restated for year, was quarter, you year,

Phil Gibbs

getting can moved made it the those sequential comment the Right. prepared as has We've last then question of the terms over, on more in you I'll focus turn is and about your the AM in And just levers? improving your margins. terms you during seen remarks What do year continued on. of a what to progress obviously are drivers that? And

Jugal Vijayvargiya

at quarter QX so we've about business. made do QX improvement. along, are to saying of from I I you improvement is XXXX, that been we exited Yes, of And margins the a the the that. to are QX And business QX. roughly just here that for go committed the sequential we the a mean committed, it And that at back If we XX.X%, year margins. committed X.X% team all point margins. Phil, back on we're to improved historical was we XXX-basis every to get type that to throughout and note

manufacturing. product got just are the but COVID the general I in to with business PC that drive right our to inefficiencies RAMS, lot have products COVID improvements business, so As related a we've that launches, new our along think larger now we look continue factor, targets through and a on with we Certainly, of based at rotatable related inefficiencies, scandium, improvement yield on. manufacturing going with new aluminum

to our continue we've in so manufacturing improve business. got And to that

a is introducing as think pipeline, contributing Of new got. through strong and organic platforms then factor certainly growth sales we we've forward, growth move I course more even our and more products

continuing us that it's are push XXXX, play continuing of So business to QX. XXXX the to things in we're the reported AM made happy those the that now with that are progress But and beyond a on that going and has XX.X% the quite during in to role some key we the progress. business

Operator

[Operator Instructions] Gabelli question from The next Company. Bergner, & Justin is

Justin Bergner

maybe for with congratulations of precision project? more I $XX joining I morning, CapEx engineered number. by levels dam, out Good share how take the honing clad sure guide, is XXXX in I that you. spent there, if looking guess clad XXXX? of rate to Shelly. more I'm growth Thank or And should much run us start CFO, or strip on CapEx for in in $XX the sort Jugal, remind you then precision how the CapEx XXXX in $XX really Could engineered not remaining with on as the in in the a the and about at tailings I there's was us think wanted like business new investment, if the million million. strip left for I'm understand, CapEx looking I million the

Jugal Vijayvargiya

higher a million sizable specific talk don't and imagine No, much when $XX don't CapEx our Justin, you, that the that that clad spend prior had the CapEx for the break we out for project. we about including with year that Right. any that. strip -- But can our was report you amount We was projects, spend that because Yes. we we we can absolutely last than shared year.

that a clearly, project So part big contributed to spend. of that

pond, you've growth. $XXX more. market million the in be say backlog. of new which typical opportunities. at for million then can we allows It have our $XX would then approximately for is to equipment I activity that products sell end or the expense. our efficiency really day, the of produce get That that the a once so, maintenance tailings remaining allows us maintenance, if more. And improve our And even us we to our to and million allows as the growth is of on us of half more, up, is heavy $XX supporting the our done sort and of we our Because look I calculation. XX-year yields as would project. a an reduce And that organic at roughly As indicated, And type this

as maybe one maintenance are of And I activities just to opportunity and the course annual our clearly and a there's I general improvements new at our workers our each look look opportunities. safety So as safety of opportunities growth as business facilities. and then well growth health at of

the over I if safety Our onboard just over I came I mean, in day that difference that of to we're we of look I night at, and when go I at mean, terms of improved mean recordable well where a I timeframe. record, the we've to say back we're years, rate last in kind I have. XX% XXXX X if would type OSHA

kind are our the So we businesses. of that happy about, nature really safe for nature of think, environment the and we're people of much our providing I our, safer

some I spending is majority all there business spending. would that, related really certainly growth, So but is and to growth-oriented new of that between say the maintenance

Justin Bergner

for CapEx materially estimate That's embarked Okay. the you the helpful. just for clad this addition the when changed the precision portfolio? CapEx. Has of your project one topic required on Maybe to from on strip question follow-up

Jugal Vijayvargiya

still the construction we and to say and it. the this equipment project. I trials the and mean the middle go everything way with long I then goes Yes. in of in launch a and that have get order and still ahead then on to would go we're

And be that go down. something that that's have up. and continue we So I be we'll there will forward. some then progress as certainly And go that, definitive more There would to elements will that go we of more elements as about, Justin, expect fluctuate. some it understanding talk to

Justin Bergner

expect you Or project on carryover do into up? wrap you But expect XXXX? it this Okay. do to some CapEx

Jugal Vijayvargiya

try the Our perhaps love that is there this we'd have quite current objective part some new environment to if we challenging. good because a to something delay, is year done to able QX we is year. to this of get have in mind are really year. wrap launch year. But with and our the up keep launch of this to really at to next in deal everything And certainly, the be program then is to that stage those first objective But this have this of come

Justin Bergner

Okay.

everything assumes So you this your guide that like seems done CapEx it get year.

Jugal Vijayvargiya

plan. the is That

Justin Bergner

guide? quantify EPS shift FIFO the possible it Understood. LIFO first is to from Okay. to quarter how impact much adjusted to your estimated Is

Shelly Chadwick

tough. that's Justin, really

of If you see the and kind up bounces look down. back restatement you at can of over years, the it last couple

of was it in a So the little good about It full it where bit year. guy for was QX, breakeven XXXX and a detriment was a positive for for XXXX.

So driver consider meaningful. profitability of a wouldn't I big it's really not going very been that forward.

I give you estimate there's not for an So QX. can really

Justin Bergner

which as to LIFO materials shifted have elements just fourth of sort to remind FIFO? led to sort us $X.XX your for you of would of raw earnings from Maybe quarter base of benefit cost that Okay.

Shelly Chadwick

which would that So you're materials inventory. the X the than would which carry was mining or about more of operation other the segments, decent-sized impacted talking We PAC business? business and say

So in that's PAC. again,

Jugal Vijayvargiya

Yes.

taking on Justin, raw material copper, mean LIFO. I common that that got business, your hydroxide in standard Just just your got there, nickel, materials raw were you've you've

Justin Bergner

of the year? of seems XXXX, consume helpful. And of amounts on the return to expect bulk like anything or of consume you there the the free large organically then that Is CapEx free flow. flow remainder That's inorganically through lastly, just elevated shareholders that cash for to Okay. free with sort else cash will this your it flow, or cash level

Jugal Vijayvargiya

Yes.

of philosophy, little I cash top just then specifics. general think this just sure a our terms I priority, which let our we've certainly about we'll our happens on the row, of think, me bit, same talk making talked million organic our use, our is initiatives, the obviously investments. done to then when after for that and what we programs look years also inorganic that, is And buyback a ways in return capital We've last done there. appropriate. increased We've the see but after can Certainly, shareholders. share figuring at it's we'll we've the dividend out that had I can that so -- comment and our X years. all organic further cash is $XXX use X Shelley which funding more this think, year, still we're is that in we've But or

we've types we're generates from cash business our well. But good at standpoint. flow concerned those a not of mean, cash. I really So as done moves all

certainly we're that that -- years, flow actually so in the about. than expect maybe a is this for there -- company. all And lower liquidity prior we'll we but we're our be quite at we're about not concerned cash will something have the would itself, the investment excited And cash or

Shelly Chadwick

Perfect.

Operator

Markets. question follow-on Gibbs a of Capital have from We KeyBanc Phil

Phil Gibbs

started My on itself? facility and actually break question as you've piece the ground the was not whether well or on to clad

Jugal Vijayvargiya

Yes.

have in of the to the of equipment do are lot the the getting over the of going in year the the majority really, towards remainder yes, we some starting up received, and So actually is of Phil, onsite, -- in of process just putting construction and we the the now to running where be and we're a end that facility equipment place, year. trials next

would a I way we're say into So good it.

Operator

there further go Ladies and like at remarks. closing no sir. this to to conference gentlemen, time. back Steve Mr. the turn are questions I'd for over Shamrock Please ahead,

Steve Shamrock

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

Operator

today's concludes conference. This

time your may participation. for You you disconnect your this lines and thank at

Materion (MTRN) 18 Feb 212020 Q4 Earnings call transcript