MTRN - Earnings call transcript Q1 2022

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Operator

00:04 Good day, ladies and gentlemen, and welcome to the Materion First Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on listen-only mode. We open for questions and comments after the presentation. 00:19 It is now my pleasure to turn the floor over to your host, John Zaranec, Vice President and Corporate Controller and Investor Relations for Materion Corporation. Sir, the floor is yours.

John Zaranec

thank XXXX for earnings and our us morning, quarter first conference Good you joining everyone on XX:XX call. This Corporate is Corporation. Controller President, and Investor John Relations for Zaranec, Vice Materion like remarks materials posted the quarterly of company's will morning, our today's we we on begin that as we out that Before I X:XX results. would reference to website review point have the this part of

Jugal the the With Chief access also Vice materials President is earnings me webcast can download Chadwick, on throughout Executive You feature Financial Chief XX:XX call link. today Shelly Officer; Vijayvargiya, and the Officer. and and President

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

the in of certain special section including Jugal The presentation, performance the differ I'll Following XX:XX comparative for for our period in for this in adjusted by items, the four release. turn investors The depreciation, and reflect adjustments. amortization, Jugal, depletion any from Shelly to a over shown Then listed company's review XXXX. questions. as result we issued and variety regarding taxes, charges that interest, Those per made current seven detailed year remind this that and numbers his And the may press share for income through tax will are up this the statements of quarter the factors and release adjustments to during in comments. in are discrete comments now, net earnings forward-looking before morning. the XX:XX XX:XX those are factors. of addition morning's remove actual in prior expectations earnings the call Additionally, the non-cash remainder purposes financial press materially a GAAP earnings attachments contemplated will the income the outlook we made open discussing me call Let based on for statements expectations. forward-looking and question-and-answer in portion results

Jugal Vijayvargiya

track our started everyone. Thanks, on strong, the in John, welcome, have XX:XX building and QX QX, and our is record of of earnings, some XX% another year and strong advancements on XX:XX I'm to cover momentum we strategic We value-added we're up when an initiatives. to achieved sales year In with QX sales out compared share year. performance. already record record our and as EBITDA last and performance details almost XX%, to deliver pleased up significant

across conditions, challenging acquisition markets, largest market. semiconductor, our from HCS-Electronic our full critical in the as QX increase industrial, as demand to to energy, which position marked results the were to and outgrowth continue sales growth. with chain develop products team's significantly for strong market to and end customers continues tireless our last macroeconomic the drive Our initiatives history. impact end our significant semiconductor growth, of Shanghai our fast-growing to transformation a year. growing the the has supply our partner organic efforts versus Our along possible, strategy customers content first of supplier quarter such also record thanks fast with our we with XX:XX solutions We position despite results to helped coupled serve saw with on VA organic XX:XX Robust innovative to XX% applications. Materials, up and us aerospace strengthened company's our double-digit many as lockdown. and

XX:XX capacity, facility quickly teams in Our excited shared company. to this support on of are expectations, and about to future inorganic contributing integration than our our are and seamless, and results with far, are is has driving customers. capabilities, our joined organic our higher as expected, focus a increase holds. acquisition investing XX:XX together collaboratively initiatives better add to reshape and we We levels broaden of have and been we So ahead helping new yields the what even delivering performance. The to our already the

meaningfully As of of Materials The of reflect segments. our in transformation and operating names updating Performance In the Materials recent two along advancing we new portfolios the names second we progress is phase, the in to our strong precision strength of are project this year. half our to XX:XX our and businesses. our remaining qualification our progress better both strip and the we've the of made of on addition Electronic journey, the with project organic success growth through track acquisition, clad contribute the

to by even our us expansion service approximately $XX levels expected million the higher for demand. capacity our XX:XX million, As of total allow two-thirds from we will positive The project and that the in second about feedback result successful of by trust confidence the with being contributed to a have expand they and continue awarded upfront have We customer. business this is been a customer investment and increment strengthen company. receive of our relationship, $XX

has for We million have towards equipment. XX:XX receive started, project time next long expect another new lead Engineering already and been week. and to already work million have orders the $X.X $X.X received been placed

placed grow relationship to in our capacity important the year, and billion as customers in XX:XX ensuring development time business we levels innovative Materion demonstrates to end most meaningful with track for higher new of our sales years an to and exceed $X technical VA commitment markets. to outpace have the a For our available for as first their expect for our for partner history, win this for confidence challenges. we of our continue on company, the in remain in solutions The further additional our a We in deepening even position important come. This XXXX. is growth our customer critical

for of Our can value-added already strong broader the guidance earnings and uncertainty XX:XX mind, year, environment. exists are full increasing sales in achieve With again order giving highly even book year. record optimism the in quarter, in the I the first we that remain that of has team confidence rest earnings confident grew for another performance the forward we let on we XX:XX our that us with as accomplished let how setting the to journey. Now, the financials. Shelly call outstanding the to transformation cover me turn to path step start XX:XX record our on closing, our In XXXX. the what and take proud year, over us the delivering me reiterate and for I’m

Shelly Chadwick

XX:XX And morning, Thanks, Jubal. everyone. good

starting I slide this comments, on my on During website posted will the our reference slides XX. morning,

sales, XX% earnings Organically, which XX%, first the for were excludes including sales XX:XX As increased metal adjusted VA most year. precious record we quarterly $XXX.X markets, Jubal demand of Value-added the impact million prior by the our share strong value-added costs sales, and quarter. pass-through driven per QX share, outlined, in EBITDA compared achieved from of quarter, data across up and quarter HCS-Electronic in the prior last industrial, XX:XX was up first energy Materials semiconductor, as million, telecom from adjusted earnings XX% also year. of quarter marked of $XX.X results, which XX% at exceeded $X.XX aerospace, adjusted up full the delivered and our to We per EBITDA our center. year. Looking expectations. XX, the slide end

was of and fully impact contribute increment by the strip year as of $XXX.X quarter improved outlook adjusted ago. to strong, starting business coupled accretive energy. on market full hydroxide, Materials. not period sales was Start-up XX. in for from review primarily precision XX% Now, let of were margin costs full The driven the the point strong XX.X% higher on EBITDA operational the well initiatives, end the any year. by pricing was The improvement XXX our was quarter volume, semiconductor favorable new and in sales me end March. XX. HCS $XXX.X and of of new capacity some or segment, increase second up is an expected, year Electronic inflation but of million, as XX% The of of well QX the cost slide and impact due on will as basis Our prior markets, is the half business represents primarily by Electronic performance the in a HCS Value-added fall acquisition. turning higher online. of the sales a slide HCS-Electronic largely we mix, off increase of demand in compared of a performance increase as in costs the QX first the first by in year to same sales and EBITDA Next, were XX:XX facility XX.X% project million, partially impacted compared with and related of The to clad costs repeat growing energy before in and We in growth VA XX.X% a industrial, the Materials mix, million, R&D, clad book, and the as The volumes, prior facility value-added to second sales as which EBITDA, even performance HCS year were and impact record beryllium lockdown, strong and acquisition. quarter start-up year-over-year and excluding positive of pricing increase meaningfully marketing, project quarter, These the up start-up were organically. order our of the by COVID-related by $XX.X XX.X% been with began Performance the sales January the the yet value-added half increase impact in $XX.X comes Electronic Materials drivers new Materials value-added XX:XX driven year. offset offset for special XXXX. shipments Materials have in our investments also the costs. strip The startup versus were driven to absences and in aerospace acquisition, the to track by million, seen XX:XX or The items, accelerating precision will plant. our the contemplated. XX:XX partially with negatively Shanghai strong the remains a

of also with volume, year, excluding of items impact initial favorable As mentioned, million, $XX.X value-added expectations. XX:XX an compared was the to our increase very price, million last primarily the by XX%. was performance quarter of acquisition. special and XX.X% results in the first EBITDA, HCS driven $XX.X quarter was or the exceeding increase in sales The strong,

the expect As we especially Electronic XXXX, we space. Materials to energy strong another business outlook, the and forward semiconductor look deliver year in of to

Precision Optics of year and step deliver Finally, full up segment XX. on in turning XX:XX a to a Additionally, value-added both sales slide will earnings. meaningful HCS

mentioned value-added the discontinued excluding well sales First COVID testing consumer declines down and temporary XX% X% shutdown. up Shanghai as million, application prior PCR were as electronics quarter unexpected but to year compared period, quarter, when the last the $XX.X

EBITDA in be move was begin lower Optics EBITDA, excluding XX:XX contributing driven items The of QX X.X% as meaningfully low was the million, forward. special their point year expected we for of are pipeline value-added organic or sales. expect the decrease to opportunities for We by to volume. Precision as $X.X

As opportunities growing return we anticipated in these near-term new our earnings and coming year-end headwinds to call, the growth online. segment's we mentioned into business have visibility with

and cash, a return in position slide on the EBITDA improve now the take of debt of with XX. to further available a QX step debt million expect We higher company's with $XXX million the liquidity and margins back forward facility. to on and a We half. Moving net credit XX:XX sales in and double-digit to quarter $XXX ended capacity

will we Transitioning higher expect slide me cover year expected cash and remainder the of strong quarter X.X now XX:XX year, With payroll full timing leverage remains down XXXX. usage, let free towards forma by to come cash the and the flow year-end. range tax record range. flow ratio the XX:XX Our of after at for target within our EBITDA payments contemplated Our this compensation middle XX, outlook. due pro expectations leverage the times first our our a of incentive to

now calling EPS, the the start with in modeling Fed a the our acquisition in performance year, XX:XX our and book, for of mix geographic current initiatives R&D our $X.XX out outlook. provided of $X.XX the tax in excellent QX, We be progress specifically for You'll will the range year the $XX opportunity. of XX:XX some amortization, clad in an spending, our HCS-Electronic increase XX% we to adjusted an million primarily order $XX the full are from precision Of With you, of assumptions by spend, credits XXXX increase detailed change of full midpoint. excluding laws. expense, higher outlook, strong at have tax and We on timing interest also new Materials, rate the with with expansion customer. by the capital a the combined organic higher increasing driven earnings expected for strip tax given prefunded evolving see and expected million the expect

funded fantastic opportunities investments joint Our year. flow continues many value-creating our organic customers. a investment In select provide QX our XX:XX was start to by to and closing, strong pipeline the free cash with

teams' deliver proud year prepared contributions our extremely global excited date, XX:XX and build of we are to another concludes and our our We record XXXX. to This momentum remarks. upon are in

questions. now will the We open line for

Operator

[Operator XX:XX coming Ladies gentlemen, the live. Thank questions. floor Capital the from from Phil line your Instructions] and Gibbs is for Phil, And you. now first open question is KeyBanc is Markets.

Phil Gibbs

morning. good Hey, XX:XX

Jugal Vijayvargiya

good Hey, XX:XX morning, Phil.

Shelly Chadwick

XX:XX Good morning.

Phil Gibbs

How making here the I with saw it, does you're some see and XX:XX embedding guys are momentum? in think Can the near-term I last related, and to bit to guidance the impacts typically year Chinese increases I think appears lockdowns. related. room least jive your investment what saw a the Instruments Texas that you're more for about, but weakness. these its just community from at don't for market, just know is supply pointing demand talk we to And full the the but semis everybody you they're semi's elephant some you in

Jugal Vijayvargiya

Yeah. semi forward know, on think at up. XX:XX you products semi, and tremendous to is as us side. business. big its on of for type semi, downturn this semi the of really, of, the we I our semi by, side, our a will We're let's of fact supply XX:XX other been a any same for is there's the we Phil, we But one, continue made, impacting time, for But has add which on acquisition the adding which the think been great I us great us impacted at not hope, shortage a that side. as a that's seeing market say, growth set pick automotive go got upside we've side for the stage that for the semi

the we and mix our We expect have, year. products -- that well, expect the of the to products, semi with new I throughout think, I we continue, continue with think,

demand that come mean, some certainly, react say, So market we'll I there's issues to well. stage, to move continues short-term would at if those. But supply up, semi I this our

Phil Gibbs

in the remarks, XX:XX of mentioned targeted in couple at And end is is order that broad-based, then that that the book prepared pickup or on a you the specific markets?

Jugal Vijayvargiya

the for going that's is oil continue in a well really are the all businesses that's recovery defense us. When across I has I that's in think three to on strong going throughout clearly right automotive I and for especially to all semi aerospace, with continues contributing. comment across just nickel XX:XX of a Industrial No, gas, it be really The you to those year, markets. for products. our especially of on, do we our be beryllium everything to end and and -- example, with look been our now. going XX:XX market in Defense, expect us, that with the to expect world market the strong continue at, recovery mean, we think, we on made,

to We expect continue defense to increase.

seeing increase across the So I good a board. think we're

Phil Gibbs

on II place. here, clad sounds there last strip I it appreciate it new same I is And types materials Is one same mean, taking I, this the the that. customer like, Phase the mean, investment on a I of and just like then customer? doing facility, that -- be this you'd a is sounds or Phase the XX:XX

Jugal Vijayvargiya

just They higher what's see next out as prepared. the the happen they This sure to same kind to and demand of they project few make No. a is customer the years, want product. same over and XX:XX significantly they're going

that us increased with working to in are place. they capacity so put And

think, this I for our win a mean, in prepared indicated, we is As us. I remarks, great

had the our facility got gotten, in able fact be we to about additional and incremental space prepared talked that have add to we were capacity. we've that We

in is with to this before. the $XX $XX worth as think a be two-thirds good I about total really for So a going customer type investment customer, with the have done million from we really, step-up same model approximately million, roughly of what us, of

So us. this add is for great a

Phil Gibbs

the then you expectations here? in are quarter update us to provide give second earnings color of full Thank idea first quarter, guidance. did an some of give did you the XX:XX on just to year the you. tempo And any terms what relative lastly, But just

Jugal Vijayvargiya

know, clad XX:XX we the Yeah. mean, speed into full year. in I happens really of as half. big so come our Well, the I board, the as mean, second up strip as step-up on to speak ramp you half have the second project we

of would incremental similar Our from expect second it with in big the quarter quarter. of half will back We really, first timeframe, be is the kind continue move some so from improvements QX, to QX our step-up QX. the then But QX the to year. to

Phil Gibbs

XX:XX you. Thank

Operator

the And from your Rodriguez Marco Stonegate live. is Capital. you. Thank is XX:XX from coming line question next Marco,

Marco Rodriguez

XX:XX taking questions. my Good morning, everybody. Thank you for

Shelly Chadwick

XX:XX Hi, Marco.

Jugal Vijayvargiya

Marco. Hi XX:XX

Marco Rodriguez

was the of and and us seemed kind kind kind mix Hey, if wondering had we puts commentary of expecting. from your through XX:XX of of gross Can benefits I there? margins. what bit lot in It And start takes aspect. were little on a a about to little given maybe walk light, drivers also then the price could performance revenue some relation a of you and a you there we the

Shelly Chadwick

second taken about strip just sure. in Jugal half. was the Yeah, clad XX:XX project talking really the off

margin so that it half, with really you what has been all the we've that. on in start-up think And with been first if taking costs no about associated

actions, We've orders hand. in been working on that's feather So were drain a over on really also already we're bit taken the of a through gross pricing as some which margin. year that

QX move the a year. bigger the rest So step we'll price see of take we as and forward into

Jugal Vijayvargiya

XX:XX Yeah.

with we've done, the this margins. the we've as for lower gross the us, think we've margin other acquisition got that EBITDA margins that thing is, talked gross in comes side, great but I acquisition on as

which fantastic. just the then but has margin were side, the done has gross what the by mix a that positive results way, mix QX certainly So on about we've in Really, earning us. this side. a that's on happening the got really excited acquisition, But for with the negative mix

Shelly Chadwick

XX:XX inventory out. the step-up P&L, impact Yeah. you're at And the the for acquisition, to face just last of which just looking the mention, if it's got adjusted the thing is

year So really quarter. like versus gross look adjust need you see margin to last we'd last to what almost the and

Marco Rodriguez

Where on notice real Or from XX:XX million Got was M&A helpful. did that had costs all that then SG&A? excluded Very cost is spread? that adjusted $X.X in in I here were that Was quick. about standpoint. it. And you the P&L? an

Shelly Chadwick

the I the in COGS. that mentioned step-up and inventory of So is XX:XX part would just be biggest that,

Marco Rodriguez

XX:XX Okay.

Shelly Chadwick

XX:XX And the rest would SG&A. be

Marco Rodriguez

lower? it. then bit higher Or items in is lower quarter, any expect that XX:XX you higher run also guys? than for given rate recent caused a rates. in variable beneficial Okay. that Got to though, SG&A or And Were of revenue, run of kind a good issues to that of would there sort to quarterly there. relation a seemed costs obviously, kind And then, the bit of that onetime be type SG&A were we be timing the the any

Shelly Chadwick

of to on so comp year-on-year, get ramping incentive a and know, our out we return one that's was the customers, we're There's some traveling spending think investments just as as cetera. different into little of seeing and road we Yeah. then, timing XX:XX back the seeing et I move kind on -- bit year item. I And

Jugal Vijayvargiya

We through to and, I make XX:XX our to the would ramp sure getting mean, has Shelly continue exactly growing customers to reasons want just I frankly, the think, that, business. expect we to we're our mentioned. that out Yeah. for year, SG&A

far, engagement we've and plans think we've the key employee engagement key. that so and got, growth what customer is With demonstrated is I

of important of for that's do going year. so the And element rest what the we be an to

Marco Rodriguez

update give revenue on on where sense can you have more maybe us HCS quick XX:XX Got that just be a little about touched a you sort integration kind integration, me, And the can you for you bit little marketing better prepared but as at maybe that little far And of of would efforts the last know talk looking are timeline integration. in sales I us can a the on roadmap you're remarks, synergy of bit it. the there? If question your as as a full time or if and bit you spend and helpful. of them well? you on where if

Jugal Vijayvargiya

always We've Yeah. has of is of really TSA gone well. the Well, to that -- we were is process the off sort kind elements side, starting in-house. things mean, the making been of of the Agreements, integration, Services integration which Transition look as there's XX:XX involved move think the I side those two all those that at One getting of on we and I we're it. sure in

Materials business other health process-related and -- those. as been marketing things our side, point two that's really, Our Electronic things Materials within and into on XX:XX safety, fully well. units, it's good that, the really sales the the to and integrated We mean, I progress like business and we've things organization From our such and finance, basic Performance making well. your on the side, units, gone going the business

customer calls, I do can and really a and from acquisition we line I innovation are joint we product perspective top say, drive growth, what We the on. think, is, which based would looking at development making, what

And so, about we're excited that.

Marco Rodriguez

Very it. it. I you time. Got for guys really helpful. Thank appreciate your XX:XX

Shelly Chadwick

Marco. XX:XX Thanks,

Operator

is from Securities. coming your Daniel, line XX:XX CJS you. question next And Moore from Daniel live. the Thank is

Daniel Moore

Jugal. XX:XX morning, the good for Thank morning, taking Thanks Good and questions. you, Shelly.

Shelly Chadwick

morning. Good XX:XX

Jugal Vijayvargiya

XX:XX good Dan. morning, Hey,

Daniel Moore

semi XX:XX I'll opportunity be maybe of your -- longer-term may opportunity gain with you opening? Marco's question. dialogues where of on you of some just initial Any kind talk share piggybacking customers, start for of more with creating examples about kind and see HCS to those within

Jugal Vijayvargiya

were meetings mentioned going bit. XX the about a from up the so in XX:XX be HCS the and very had house, to with me semiconductor let names, customer know, had, from Very, number I customers. actually a really number a number we I three, between you base we've the to their customer so, I of of XX:XX our And mean, that get that the developments, providing had of or And portfolio. I into that little to Dan. Yeah. can I top opportunities, we've manufacturers of that, had we meetings as customer mean, we mean, tell base imagine, with can but can't you specific back A existing that let's say, these sort say, year our sides talking two, world. as side. that going and, the are both customers customers customer I'm going had good the And we're top expect over of have good line because, accretion. cycle to the to speak, I next you longer interest

that very side, So our plan the the do We we XX:XX well. as, making reduce and I significant can investments. drive able as that's part margins. our want going And that's can make From about that. make cost talked in frankly, we're be capability, to investments. sure continued we capacity, increase capital business to actually mean, we sure to well cost of the continued

And making. so, to team our first speak it's the going really is I well. quarter progress And I our think think, results,

Daniel Moore

impact what Shanghai maybe gears XX:XX are can of QX bit, Shifting in both Very last as weeks for on all this little as couple the for well a you at your helpful. expectations stage? lockdowns just at quantify QX, the

Jugal Vijayvargiya

XX:XX Optics business. is for The our Precision lockdown Yeah. impacting us Shanghai

meaningful the impact I that of last makes impact a was did actually the a have part certainly not a say, to product entire in company, in QX. have million the an we situation meaningful impact And facility business. for it type We the going then a display we of between in Shanghai market. would continue the an million impact roughly $X Optics the better So And impact. to to to XX:XX second about, would I'm expect, here gets say, the until quarter. Precision our of for $X.X course,

meaningful it. optics how get one impact quickly it kind can So is But to. we we business and of the that hope see certainly that's to a I

Daniel Moore

second XX:XX expansion likely Just the Great. costs more incremental modeling the clad should 'XX, just facility, capacity incur And to strip of half for in about how one year? for Shelly, that? think those this we more, the purposes, versus

Shelly Chadwick

the costs the XX:XX capital? For versus start-up

Daniel Moore

Correct. XX:XX

Shelly Chadwick

Yeah. XX:XX

traditional this that we're could year, now more see there right some and 'XX. through kind we're costs now. working So into year next of costs incurring likely the But planning be late and to that yes, start-up

Daniel Moore

excludes guidance correct? And XX:XX the any incremental costs, those of

Shelly Chadwick

does. Yeah. XX:XX It

Daniel Moore

All Perfect. you. Okay. right. XX:XX Thank

Shelly Chadwick

you. Thank XX:XX

Operator

XX:XX line Thank David your CLK. you. The live. from next is Silver question David, coming from is

David Silver

you. Okay. XX:XX Thank

going bit saying, to by late, I your a I'm remarks my so apologize advance. I will joined So preface call little in

Shelly Chadwick

problem. No XX:XX

David Silver

I make yourself. If you XX:XX repeat

kind spend build looking I So why higher. the and pipeline R&D of in out a second I'm there the little wasn't going investments at -- robust the little overall you when R&D, at I looked a comment that slide curious And with to your deck, the build was bit out is XX, financials, broader your slide play you're as strategies.

emphasis, So wondering I'm be -- you of and hit you. from highlight maybe any could could go year spend that targeted R&D would that rate helpful. areas if highlight, think to of if you full incremental think over to maybe wanted of what a you R&D the where I needs spend? XX:XX you just basis, period And time might secondarily, you if Thank

Jugal Vijayvargiya

substantial on X% Yeah. five investments from When you we've look compared to R&D XX:XX one years into know, made spend average our over as focused at item joined approximately company. that, since I it's it’s QX, good R&D. David, question. And quarterly you been X% the spend We've the extremely improved the 'XX. spend last to for the

we average we're actually Second our or on tends certain X% lumpy say projects because we've that the quarterly are case, times 'XX. have R&D to things in more X%, when on is, for of to more That's R&D, more investing be, in prototype point. first builds terms there spent than that. let's So XX:XX like

I from projects. next the roughly to maybe our tell focus on mean, X% then, variation. then gone would a about and continues in So to spend I you reach continue higher probably But past mentioned be R&D right XX:XX 'XX. approximately and a that that targeting our X.X% And I in R&D increase. expect we've to spend R&D on we've there to X% be expect few can that that to R&D continue would the to 'XX the would will years. a We And for be than some type expect R&D we of R&D spend.

and backlog we're what And at stronger our investments and the about think year our the making QX is I So to pipeline. R&D, it for excited compared than in pipeline we right been. talked I'm was increased end. It ever that really it's

where we're so we're kind of headed. about excited And

David Silver

XX:XX the in-house ADM, most deposition -- particular, most what bring to materials. product more footprint, in the My do develop value making? you you thin business optimize proposition, by chip would is of think and itself, -- attractive the I journey in optimizing way. or your need moment of the just I electronic but hone So in kind making for out investment maybe mean, organically I discuss some wondering material to like collaborative know I transformation very made et participate that really your question, most -- of advanced building R&D, or companies technical, inorganically of ability the Okay. exploiting the investment I'm to Thanks in in on you markets you companies the one -- to XX:XX in a what most -- terms HCS the that. with deposition the to in mean, the of you a to but they you the not the that the you've full service, capabilities what -- I for or just next Jugal, And brings incremental physical HCS and the regarding talked films the global cetera, about from significant kind advanced materials terms think lines follow, elements brings on, of strategic just strategic HCS. might

Jugal Vijayvargiya

great think Material one Well, this for a to chip a this that step business players Advanced limited I and of capability have needed actually been was that is which Electronic us, number is us acquiring HCS great market. process. looking as we've the material new we transitioned business that's And an in giving from is really in the tantalum, There unit. unit in something question making at Materials Yeah. XX:XX

that of here need are to really, taking this portfolio acquisition. technology about you with just So, in as well, North going -- a really think along deposition a is the on course, America add. it at I we're it's continue of add good a a are offering. to here there -- which number another on that broader When we been -- which a -- getting really ALD of XX:XX then, about that as our creating is are I you the technology, that I discussions think deposition much the is I think we America. and we've XX:XX facility think been do. been investments point has going your think a overall plus And look North And that some is really that, it deposition lot when things of to investing with place know, onshoring to mean, forward, I actually

is at of more One this significant we're When making significant have CapEx of to more related them, I HCS. our XX investments in able capacity, you slide to mentioned capability, look earlier, business to be spend. amount our

to that's capability definitely that have the the going of that's that right can that at greater that's America support capability to activity there want is able also place, XX:XX place. local make capacity how of local the chain, Asia sure not looking the when only at to in onshoring put And be be North a how the those companies. in we Asia. we put can you make of and and more customers. our And look we here we growth part how market we North we America. We're value in take are role we at be can can so, But and in big sure can semiconductor sort capability in a going type can in we market on as you on the to looking XX:XX particularly to so, know, need and And

we all make of on has more So some this to and on see talking the lot kind as making certainly team those be and It's about commitments in transformation business. exciting quite our it investments. it going of been we'll

David Silver

Thank much. XX:XX you That's great. very

Jugal Vijayvargiya

Thanks, XX:XX David.

Operator

from Gabelli Justin you. Funds. the Thank Bergner question [Operator is XX:XX Instructions] next And coming from

is line your live. Justin,

Justin Bergner

morning, Jugal. Shelly. Good morning, XX:XX Good

Jugal Vijayvargiya

Good XX:XX morning, Justin.

Shelly Chadwick

Justin. Hi, XX:XX

Justin Bergner

some weaker the given XX:XX markets couple that but highlight being questions. over there bit A exposure, market last quarter couple world would of just a weakening as the has just months? of end you or external challenges a end Within offered lot any your of additional progressed, as are has been the covered, the

Jugal Vijayvargiya

comment the automotive here say, build only approach in XX:XX probably really a timeframe. maybe is March Yeah. I would I and automotive would little the to take the a market, on, Justin, sales, tended cautious bit of

well, automotive a bit good. Part question do of I mean, well. underway. COVID of sales the had to And for a with of believe conflict a that to see that announcements that bit is the took progressing. situation in the automotive in to in do they I we're the the temporary of some it that's really think was situation. of But feel with then think I to they're had going China. EV February year, mark. side, they as a what continue of various little the particularly hear hearing. relatively that I more going the March, rate OEMs. of I that's do to that mean, January, do kind XX:XX a mean, as I to earnings Part rest from we continue you on really European -- the of see

content market So that's side, from the I types the but content question the see automated going perhaps you is content planes here our as full is the more think a look the rigs, bit increase don't I making automated they -- And of we've then at making, that that When on with industrial. When it's our example, at for we're significantly the what on. the maybe gas, on up and up is mark mean, the you build XX:XX look oil a mark much you at is semiconductor, that look look question increases QX, whether little I one for there content increases, really of I content a in that mean, year. airplanes. our the as that's at single-aisle and drilling, significantly. directional

to I now, direction. say market. see to continue the grow we the think all I markets our right And moving well above would objective in right is that

Justin Bergner

slide beneficial Thank plus headwinds, line highlights the driver the revised outlook. or XX:XX your to Within below some And that bit better number, earnings mainly on of you. Got margins, $X.XX a increased both? or it. of operating that note, the is primary net the volume then

Jugal Vijayvargiya

right in think sure taking pricing I into make it's the it's XX:XX expected which want well world, mean, to dynamic well HCS in is and perform a the project, year, strip of across board, all general demand the that's a performed of clad company account, the So the rest really acquisition, really what's we whether making pipeline. model new we're as whether improvement and I the hit QX to on it's that's driving above. right? things that the the go happening Look, we product sure we

of it's think we combination a that I make we're all sure well to on. do wanting

Justin Bergner

XX:XX the this Got investments. expansion strip clad lastly, the it. Phase then, II, And or of

cost as that and the So just stands compare now? two-thirds additional capacity, $XX to million phase million to gives to it total $XX is does you this for compare the the this how initial it initial first phase to or phase, the and

Jugal Vijayvargiya

now rounding I'm of okay, I with was $XX-ish similar Yeah. And, we approximately, here, mean, situation like from it's mean, customer. about XX:XX a like million, initial phase said this think for the here I well. second roughly kind million I $XXX the and phase as

Justin Bergner

of Okay. luck. you. best XX:XX And Thank

Shelly Chadwick

Justin. you, Thank XX:XX

Jugal Vijayvargiya

XX:XX Thank Justin. you,

Operator

would remarks. for in were the queue at no like There you. any to floor Thank closing back Zaranec questions to time, XX:XX other hand this John I

John Zaranec

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

Operator

ladies conclude XX:XX today's conference. Thank and you, does gentlemen. This

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

Materion (MTRN) 30 Apr 222022 Q1 Earnings call transcript