MTRN - Earnings call 4 2023 | Materion Corporation

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Operator

Greetings. Welcome to Materion's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions]. Please note this conference is being recorded. I will now turn the conference over to your host, Kyle Kelleher Manager of Investor Relations. begin. may you Sir,

Kyle Kelleher

thank earnings joining Kyle conference Investor and fourth Kelleher, on quarter Relations. XXXX call. you morning, us for our Manager, Good This is

point morning, begin the on review that as would remarks of we reference website we this will of Before like posted our company's to part out we materials the that have results. I today's quarterly

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

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

the expectations full discussing Following addition to XXXX. in for quarter and Jugal, review results Shelly will our year the detailed for financial

company's We the the will me including current contemplated release as that any by differ for the section a listed the from issued statements factors portion, remind based outlook in press morning. those actual we question-and-answer that the variety and investors are this statements questions.Let presentation, then made the are result of earnings in a up materially forward-looking forward-looking performance in The expectations. call open factors. of Those may on during

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

Jugal Vijayvargiya

deliver for welcome, leading be our focus year markets customer today resilience, our of the and strong team's and portfolio full It's talk results in the to XXXX. our of We and earnings. overcame performance with Kyle, headwinds our significant company balanced largest another about year our unique power you our proud of I'm our of to record everyone. partnerships. record to some and results, of Thanks, fourth potential quarter sales to great and extraordinary demonstrating

on preparing our maximize economic markets invest Our seeding costs we uncertain to excellence continued our for manage continued to is performance the structurally pipeline and organic for recover. In profitability markets focus operational to sales closely, meaningful a led adjusting experiencing diversity which the improving future, long-term while of us slightly. remain And expansion, continue as highlight, margin conditions, sharp largest market quarter, while portfolio to market, the our of we significant weakness, up semiconductor, fourth excluding When outgrowth. the our our several our be challenged. were to

nearly year-over-year, market. Aerospace representing XX% Defense for Our and sales consecutive growth the this of quarter grew XXth

wins also significant per plane. the benefits In and the in of continued increase Defense, saw organic from we addition to impact space in our content

of On semiconductor but and are signs stabilization. markets other quarter year-on-year consecutive semi our we In our show meaningful the of third hand, significant continued to starting weakness the QX. to declines, patterns in order saw industrial show end

the also indicators second in positive expect and are will We demand the seeing impact the half. starting that related some market in broader us in positively increase

and industrial warehouse to largest is related by the application space in impacted performance Our builds. its nonresidential construction

nickel With that inventory the sprinkle rates, space carry the significant through for year. correction is higher office demand impacts of interest a COVID with combined will seeing utilization, on the material beryllium our

position on market outlook to long-term our us initiatives significant growth. While for make that continue strategic we end mixed, remains advancements

propulsion our markets. track continues continue of space source compelling of be order projects ensure important business record orders to systems. growth aligned fourth organic recent Our other The outgrowing and new end underlying a megatrends market approximately a have new we our by orders, in us with demonstrated organic allowed global to million wins new with during for along and business year. contributed exciting this win space us These $XX in supply X market, materials strong that the for opportunities emerging to several critical

our into this materials a We as high-growth trusted partner company supplying positioned have critical market. exciting

continues materials develop capabilities expertise of a million drive technical key United year, that States were to for to new project In manufacturing Our markets. that end Today, Force lead opportunities a new partnerships we for projects us we in existing million both Energy announced the the announce award another Air beryllium R&D who components better with customers to contract other These applications. to Aerospace, additive we will are and advanced require $X manufacturing innovation across Defense new $X a and last to for more enable several serve materials. will new our awarded November for additive pleased from markets. complex agency fund next-generation and to government will

semiconductor for drive chain intelligence will in enabling AI chips, for and tools atomic X AI Materion for a be materials. We worldwide both deposition, capabilities important the applications, physical preparing manufacture and built-in proliferation increased semiconductor will That or devices directly of we are to vital greater for in highest high-power By artificial semi by such generative which the functionality. these is expanding the tablets demand. result the power The used chips. with providing layer Chips specifically recovery part of vapor market engineered of our for hardware on-device need highly AI demand smartphones, to as PCs support AI capabilities. mean it. in will methods in materials deposition supply our

are deposition of the X of rapidly innovating meeting who customers applications.In processing are centers. in chips new we've memory materials AI our that need chips future to pleased AI high power these addition, used employed bandwidth our materials tantalum are as We announce atomic layer as launched fabricate logic well memory to advanced for to recently power

we market next support are chips ensure are those to We that and for to the ready over investments significantly the demand. to years expect grow X making

evolution capabilities autonomous of semiconductor the and the shift Our be automotive as industry electric to advance. continues towards to will the also vehicles continued critical

our advanced As in is supporting vehicles components. mobility for require more growth these business, chips demand increase optical transition reminder, The is per to Precision an for in which a Optics seeing XXx X vehicle.

pleased that autonomous share to LiDAR technologies we've for contract vehicles. for supply another secured components to customer are optical We

LiDAR in X modules are are currently, materials vehicle OEMs to Our further. at prototypes expand and providing we actively

building exciting opportunities energy positioned to technical pipeline support of market. have ourselves opportunities clean We strong transition this are opportunities successful to looking as a emerging last to the a partner X development these energy in forward critical products clean next-generation We're the of additional with and serve year.

material and Salt Molten supplying work of additional our reactor. the have Power in We support will also be continued Cyrus nuclear with

power In to addition, provide customer-funded $XX support the million facility we completed successfully to materials upgrades for investment critical required generation. a

the customer of to shipments schedule. remain Our ahead

start Our which our fully now to Precision we facility expect end contributing capacity year. Strip at remain ramped of meaningfully and track with Clad performance. this expansion, to the is our on production We

We as strengthen have with orders continue in partners. relationships our million to Defense 'XX also secured a in record key we $XX new

and outlined critical applications. our performance to Our initiatives are we move materials the create I've to forward. to as Defense continue outgrowth the us underscore confidence give momentum of The of significance leading-edge advancements

cost in expanded has margins last been have This as XX.X% points we midterm our been our efficiency during focused performance key XXX we improve the improve of year, our sales to target on a label adjustments order approach of we by shared the and As structure making nearing basis to reaching targeted year, business. XX%. of

gradually to markets through and market in recover continue maximize as half the excellence will into second softness We XXXX focus on our we year. of performance as head operational to manage the

way have relentless in of results results delivered proud of Our this creating we are performance another and on volatile delivering we another for in paving year stakeholders. year. I'm market record our and work value confidence conditions. our hard strategy for the year focus 'XX in all of 'XX we The made despite record advances team's our strengthened as very the

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

Shelly Chadwick

and morning, everyone. Jugal Thanks, good

will quarter, metal remain impact on XX. strength this I looking & precious of from When excludes and earnings delivered quarter, of in per but slightly slides from we share, were fourth posted morning, in up sales, adjusted the prior reference which outlined. the industrial website $X.XX comments, our down Jugal the costs, as slightly the earnings million, my sequentially. Despite fourth pass-through value-added year, on starting $XXX.X Slide the In down X% Aerospace prior challenged, at semiconductor Defense, During year.

credit margin the production to also the sales, prior adjustment Moving is of volume initiatives include to in XX. XX year-over-year but cost from operational are including this year to year. strong performance, mix EBITDA price of XX.X% basis benefit These earlier the in decline, expansion contributing or as targeted margins. quarter the Slide year-to-date points. the was results Adjusted due with down mainly $XX.X expected decrease million improvement the we announced to X% value-added This manufacturers the increase and

Moving to Slide XX.

credit. now strength review & was to sales, quarter compared adjustment quarter and the me items, performance from price/mix segment. of 'XX. $XXX Value-added increase with strong Starting XX.X% to by year This year-to-date Performance the Let fourth sales This operational quarter up across and higher the in meaningful business EBITDA, record was favorable driven unfavorable primarily applications. space value-added prior million the X% volume, compared XX% up Defense $XX.X were or contributions year-over-year production manufacturer's million, due Materials. fourth million $XX growth special sequentially. X% including excluding up to was performance of by and end Aerospace to markets, despite

Moving to the outlook.

Strip markets is with corrections. in growth challenged expected Defense XXXX, & part of end the track in latter remain inventory the to Aerospace on expect to strong remain we expect automotive Clad these which Despite our XXXX. and facility, remain to they ramp and continued while expansion industrial drivers, of We see the Precision we

semiconductor the The Next, turning million, the improvement softness. quarter. market on special targeted EBITDA, million the items, to $XX XX. XX% year Slide volume in compared cost or was prior a mitigate were to decline, initiatives of Electronic value-added weakness significant as added excluding Despite sizable Materials the sales the market. XX.X% sales of in down the helped to semiconductor $XX.X result

to we gradual XXXX, we expect semiconductor the with a forward recovery challenged first in remain through the As of year look second the half half. starting to

inventory based the market saw chain. the downturns we we in will the our delay experience on position with a similar As material, upturn impact a in overall market on delay

in through quarter among our downturn, strongest beginning excellence the see decline to the initiatives. with The And in continued the while we the end XXXX first QX. of history for we the expect from company's semi, benefit was of manage operational

special Value-added Finally, sales. turning by in items, softening driver $X.X million points was general value-added were of was the by segment year-over-year million, improvement volume excluding and prior to initiatives. the X% decline, this Slide of cost reduced partially offset a compared of growth XXX offset mainly another on was or of standpoint, a XX.X% with electronics demand year. This price/mix meaningful expansion. decrease consumer The to $XX and sequential in Optics the driven From sales decrease XX. we filter Precision quarter basis down targeted saw benefit Defense. margin PCR positive strength in EBITDA, market, of EBITDA along by

Looking benefit XXXX, continued a expect cost automotive out line implemented. Defense, expect initiatives to and space drive to improvement we from top the growth and

Moving to Slide XX.

of Strip per & comment year. Aerospace margin EBITDA year. the offset record credit from was on sales, our from adjusted benefit high mainly adjusted The all-time of and XX.X% and tax prior We earnings significant headwind. did year the weakness. the X% operational was XX.X% with in year the prior initiatives production up increase value-added million the strength third as in Value-added the consecutive from Defense X% despite by expansion largely targeted was or the Clad from $XXX.X of the rate the $X.X XXXX provide an including from a market and a by sales This $X.XX an XXX expense share. billion, Adjusted favorable earnings. price/mix, up cost about nontaxable up per me for significant outsized interest year-over-year value-added the reached of foreign benefit of to favorable credit. basis compared EBITDA XX% Let for year delivered We Precision manufacturer's semiconductor attributed share margin full and year, driven delivered performance, sales, impact $X.XX of strong improvement performance the to points. prior earnings adjusted production year the

debt now position liquidity on ended quarter on $XXX Moving million million XX. facility. of existing net with We Slide and the available cash, approximately debt capacity company's approximately $XXX a to the of credit and

of Our X.Xx leverage below target slightly range. the at remains midpoint our

Slide and to year full me the XX let transition address Lastly, outlook.

the remain record to along organic markets conditions, partnerships. These impact growth driven increase end we by the key the our customer this, of from in guiding pipeline help of $X.XX a XX% with and earnings due growth to in are of our challenged results, some the targeted earnings year. expect per and will we excellence drive to operational While close cost our $X.XX the With prior initiatives another adjusted term of macroeconomic share, expect versus midpoint range near continued to XXXX. year we drivers,

exciting to our yet be up record see sequential leading QX another XXXX is quarter to year, and despite market thereafter. of from to comparable year expect last prepared year remarks. execution outgrowth In some but we'll This be headwinds, improvement closing, to We another each shaping concludes strong results. market Materion, of

will open line questions. the We now for

Operator

Moore CJS coming from is And Securities. Instructions]. [Operator today first the Daniel question from

Dan Moore

outlook. Maybe start with the

sense associated the a little us And within just assumptions? much embedded as talk for cadence guide give a your QX, 'XX. of level you growth what bit value-added a described, tougher with comp sales those in to is for maybe given Just

Jugal Vijayvargiya

of low several & that particularly Dan, serve. and more favorable Aerospace markets see as and single would we've new with growth, wins the of you various a digits say, that markets frankly we between the the look at our contracting. growth of I'd Defense end say, markets space of We a the X% then segment we a of positive business outlook of couple couple had. more of some provided, that side, Aerospace see type markets the I that we on market did a we on than our share deck

at look full overall mid-single the we say when for I would our So it's reasonable probably growth year-over-year, for digits, year.

year. the back However, to I of half skewed the would see that

for the the we're I up us. the in was I QX, year, will strongest, here the noted, in now, it of quarter semi year. Whereas a our the in year half to mode, one course, think the of as us very half strong full signs the semi think, very, slowdown and QX recovery last show as especially to not with had slowdown Shelly company's caught semi, second the start history of first the of of in comps,

expect markets business new the but well would growth slight So half the just of more well, in the a as by semi, I then but growth robust also led half year, the in back much other as of first as year activities.

see roughly for And the year. so mid-single-digit I could overall a

Shelly Chadwick

my fourth comments, look is lot And a quarter to quarter last as in you first heard going like year.

earnings So half a expecting when XX%, from I think about the year I'm from perspective, weighting first to half. an maybe X% XX% second a

Dan Moore

shifting And then gears bit term. longer a little

On for the growth, should higher powered described, your some of by remarks. gains how side, Jugal, prepared think the in the we beyond in opportunity which those, chips driven market content about semi you logic

all? next the has years over outlook changed to out Looking X X at that

Jugal Vijayvargiya

we very years. in excited longer excited about to term. the Frankly, largest next outlook things about, we're headed for very changed us that the and very, has all are X for one where our to X continue It's market. Semi not at is be

to space. are the We continuing semi in invest

tantalum example, are For our used for AI that materials X layer well And today materials that memory as on for applications. and hearing we're front. as advanced we're mentioned launching as the going both logic that new to really, other well atomic going These portfolio AI I we really prepared be deposition of We well ALD advanced that what's are all have. with number are memory just the think we as materials. advanced

also semi able side on investments short-term long-term when we're you growth. capacity the the to side, capture for that, in on at the be addition think the to the uptick, overall putting investments look In but right capacity I

think So excited. happen the more than say X on in to side, continued the probably because would then semi remain earlier uptick of were we I even years. I the here X going term, the but near so we growth to in that's

think, with applications that industrial on I important the it's applications. we would know, as Last increase, semiconductor semi, power the the portfolio. strong. other or have, well positioned. to our just continuing an semiconductor really Our for but And I product our portfolio as power applications is extremely We have equally it's that part of portfolio EV say, the whether important, also, is power side, comment, power on positioning you portfolio the we customer see

So think, the both we're feeling very long I confident, ability grow in term to and our for short market. semi term

Dan Moore

margin that the on goal. EBITDA Last implies and guide jump I'll is XX% in out one, closing

if Just the X necessarily of last wondering beyond to the over years. business ability updated what but talk not already operating providing X goal you've the an maybe generated leverage today, about

Jugal Vijayvargiya

that bit, Let said XX% this consistent able X me of able X I we're then consistent consistent first of margins. that 'XX number a on not And end little And just the would for us. to XX. a basis on on quarters, be XX% be a delivered more to at clearly, and we'd to more basis margin represents more the positioning ourselves we more like feel much that that to times a of not see be all, surprised a and deliver for comment that's that I've delivery. basis.

think we perhaps sure that 'XX. that talking ourselves we we'll to at and know, to an some in forward more, from having during you more X now. looking to that And I'm setting we're something years be you As and we and will challenge X objective can defines be what continue that's discussion be we point to

Operator

Harrison is from question Seaport coming Mike next from The Partners. Research

Michael Harrison

double-digit end markets wondering destocking here what's X could of us Slide them there it's a going Or that at your of bit just X striking out, the issues? timing on And performance. you market your going Is call more of key Maybe dramatic declines. on is looking a I'm little was declines, indication I -- you that showing some this end shows or Jugal, in bit underlying X color. an market? are give if

understand declines talk we in going the detail industrial, what's in and on energy, big about fourth think I those what's those X you automotive, But could in a quarter. little if semiconductor. more driving

Jugal Vijayvargiya

I think, which Mike, here, to is it's highlighted important the I keyword, quarter. you the fourth note and think,

it on full the you can underlying course basis, these are market/destocking full in declines we share we numbers have look much 'XX we terms right our growth you and be extensive wins into year, the are growth business on less, confidence the year at where done have of teams with a markets. good around, of that new know 'XX. I declines we'll have the the in And higher 'XX but turn quarter. the as reviews -- much that on going business in growth, and wins to If We've good fourth is in the markets we tell that and

market, So and help can able market/destocking, help course, really of that a this through that. talk each walk be is and clearly through to I understand

As I industrial I we related nickel sprinkler there, of at that I correction. sprinkler In thing to of as systems special that's sort have more look beryllium going the the provide one think onetime on our that we 'XX, those. we and a market, industrial market, would in do say for or the see

I'll that, really for we time mix are happen that a do reductions see improvements, frame. whether the really the has to note actions, destocking despite see done 'XX, whether going of in these thing The QX, probably would things cost all team and related SG&A cost turning our that during that's these fantastic fantastic around the situation the expect think job 'XX markets in just team us. a is and I market those. I other this as across performance you one plants, performance. has of a those But during performance job driving should be operational it's it's company, targeted doing, price, our driving done that control, than The

weighted So as is expect that the would about year. we around, earlier half heavily we indicated temporary a back towards that to see of this me, growth, I we situation think a really the mid-single-digit turning

Michael Harrison

has market a And Aerospace strong here. maybe extremely Defense note, the & been on brighter

that You to $XX you've can I some the secured. noted have Defense that in market, orders know that, of million additional particular, it. lumpiness

that So are seeing some just you're if related? I'm timing curious applications a opportunities optimistic just the you're you seeing Or within and sustained market? in of pickup that strength that

Jugal Vijayvargiya

market. Well, that all, X then just there's little commercial is third should first the the would is emerging major the and Aerospace it of talk the say, is market. and components, space market market, other about. then Defense take And that peel let's I very we one a One bit, the

me systems. of for indicated business new market. about Let We emerging order. us. market fantastic propulsion $XX supply Today, that That's space quarter is $XX this a orders. space the been start with we million for million announced for fourth of fourth This

at last If that first space Combine you year business looking market. happened million. of so that's our Optical about look look market, just or we're in about space and at X market, add $XX the roughly at what's the the that Assistance up, orders Toughmet and orders space $XX over million the business our in roughly the in with

pre-pandemic strong last for market and few for in very side gained side. good as the now continue just more Boeing can hope the as 'XX, market years, we've us both commercial Airbus well would on on growing, 'XX, versus average In that, XX% in Aerospace that that. planes beyond we the the accelerating market, at content in So us

all So rates good aware the we build as, increase as content rates to airplane. growth side, know, general, of. continue the the But as are increase. situation you to as the Boeing in well continue for on build Temporary

to ingrained would Defense our the And team job to expect more And has increase. the our continue fantastic materials getting on I the side, and we Defense material of So done a applications. for to content we that I there and that overall Defense good good the market expect you Defense lumpiness, growth there's is agree for expect though would completely with on even and a would orders, year. the lumpiness more

for about positioning the well Defense of for and all we feel 'XX think & 'XX I really components good Aerospace X beyond. So and market,

Michael Harrison

a And in onetime in margin couple the Electronic we those some you business mentioned quick progression that the EBITDA were? that business. maybe in a just how Can on of or more color business? items commentary, The EBITDA hitting unfavorable little give think ones. should about EM you Materials margin XXXX then items what And

Shelly Chadwick

was items, They big did do weren't a will There out, but the came couple accrual We onetime that that see we really we that of adjustments, 'XX. couple some there of stood enter positive at items. nothing margins that see of was the as a from expect end in quarter-on-quarter, a expenses a just year. move in the into

we a just and QX was pick bit impacted see So up by those things 'XX. onetime we'll items, think X in

Jugal Vijayvargiya

based that what's year. the mentioned significant also Mike, EBITDA to look the XX% the there memory last memory of in in was And items particularly for had QX Shelly on on QX the QX side, devices. onetime QX, impact we Certainly, time impact And at you happened the results, but to add frame. mix were a the you know XX%, and QX, that, our margins if we to

a for we indicated, that that QX, back pushing us. then margins towards mix that. expect onetime I and happening the see so would items those think, behind Shelly forward as and QX expect year, And those continued are But during progression was we type hit the this, us, we and after would

Michael Harrison

for me. And then one last

for start-up the looking you how unusual? of just considered phase worth of those Precision costs? just million I'm portion the late Or costs XXXX. out Clad that start-up You second is for modeling a guys that little this should called that costs $X.X a through and all we be Strip project, costs on more clarity scrap is start-up

If you could detail some provide more there?

Shelly Chadwick

that the some we Clad of tweaks those some we not facility, P&L, of to any some disclosed mask we working ramp were assume we we phases would Once in we costs. had the customer, call process or we that were. ramp took you we incur to initial the the As with were would full what when probably charges want that they additional performance formulation out them did that discussed And facility, through the and rate Strip we were at didn't on run the of we working of did unusual. and business. the special tweaks know, We and and

we a had again, specialed that So doing Similarly, that called out runs be that scrapped. and QX, of we in that some to those needed and did little process were them 'XX. we're in where for and charges qualifications we things we

in And just so is some to there ramp in, of we've lot brought to sure resources addition that it make well. a the goes

that we now want down business really costs. have we're those So the don't to running, by on fully and up skewed start-up results

if have worry costs, that margin so special them we up unusual during is down, to we will the continue hey, So have come don't to come to you about, that going year?

Michael Harrison

there going some forward, about On adjusted an that's guess, there's So basis. out? business, on going assume the be to those still headwinds, as should are we're an as costs be specialed basis thinking ramping? Materials are adjusted Or we to going Performance that no start-up I in that there

Shelly Chadwick

should related that. On start about, will we've the that ramp talked And an late adjusted will basis, assume as sales of be in those 'XX the specialed to you that out. of

Operator

Silver David King. CL is from The from next coming question

David Silver

I initially. the Electronic about on wanted the maybe softness just Materials side talk to

the delay But or So quarter you an -- right Materials to I inflection that or you led the an that I'm the out something many maybe got indicating it upturn a had to by was the issues maybe that number stabilization a an point I think me for of if in in of of correct group expectations has there there's at quarters? in was know think your I your so, been particular fourth point have maybe And and pushed I tone X, point bit. I group Jugal, little we wrong, X that maybe side. that commentary on last fourth some reach quarter the quarters. would been the guess the but inflection think quarter, see maybe upturn pressuring Electronic

Jugal Vijayvargiya

David, go fourth a quarters, I know couple you highlighted back if of we quarter. actually

in QX. out major market recovery were that really the and the happening delayed. of expected at but happening the the noticed, see that's And back companies, world slight point well market an year. as is usage this QX, And combination the now around thinking in semi a bottom just be in but that uptick companies. thinking think a the recovery world of all inventory we the most delayed, QX bit was to was of then QX half as and recent semi of I destocking was but all is from start recovery this the then delayed as more And to we low and that in the going got then the the to information semi

impacts I us what So semi follow a just slightly fit clearly the for based companies that we as the we are it us that But as the be that recovery and chain. happens. on than supplier cycle later value The will into recover where recovery value will key we'll in think chain.

in associated But would have through. a specific, drop the for QX us, every quarter, So I significant to And think market just inventory on us created mentioned, more a recover I again, the into result, negative one so dynamics a that quarter. much the a to which with maybe we we on to had that going and it's item specific that and we that a and on. think, memory is for expect what I mix some really, are is correction hearing very The our count customers based issue QX producers. product start as did where that our portfolio, we we item which, and heavy from market-dependent were was mix

be running and we're producers the produce more able get hit think semi up ground to lined So I to the going. start the recovery to well as extremely

David Silver

are going end? again, on comment orders early the made your was book think, your indicated to I opening in I'm way maybe new book of wording. you're of and you is leaves an Materials, rollout tea indicating liquidation you maybe seeing Materials legacy But order Is believe Electronic the that to order your there parse you're it parse you which are leading maybe case, an inventory business, maybe alternatively, remarks. read could the facilities. think newer seeing in ask the which there points ramp-up signs the little that order well, for that And Or applications, is the customer to it's more stabilization, one indicating think, of of Electronic a the in reflective I nearing edge I some seeing, products, And they customer or I you you're is book bit? that when about maybe

Jugal Vijayvargiya

think what a indicated. I you from combination it's just

AI edge, we talk ALD when So X indicated new materials applications advanced leading and for for memory about example, you these the applications. launched we that

having frame. to customers, QX, with As QX then discussions going time they sales put to in into are our to start we're will that orders starting feel we're the that in translate

there's that's to that to uptick. I the sales contribute of the are think on where think a So an I going And at example believe newer legacy products we time, products. same

what our And few we lot customers. -- As metals have we very way. of then nonprecious see, orders been put decline, not weeks, inventory can that closely let's a from with watching last precious have metals business, know, it there's you a the levels the the We're business.

slight fact good in weeks, expect over products. the we we okay, think, next about, feel see maybe I would the for out, uptick order rate those that, the we're few and a legacy So bottoming to

there where a really I other announcements that's calls we right, So QX be slight uptick commentary that that's QX. from, QX, we're hearing or coming a earnings but in as uptick are from really will producers semi in that, think our the other well. also And bigger and where is feel various the making that

David Silver

mention related, materials? anything new please materials are assume don't you you ongoing? the Or did shouldn't is you based I the activities new tell have something and new you're But should the tantalum that that materials, X and me new products development tell new this then ALD me. the material, ALD beyond And tantalum

Jugal Vijayvargiya

H.C. not ALD that that in area. Starck. acquisition our working created that started made to is years. been from is of portfolio on the when started we've something organic that portfolio. a an ALD part we So activity was that invest of to that this is It's an tantalum-based It ALD see for we we a not number we we something have as emerging

X developing, up been last the X, we're materials. to now and over so years, of we've total X a And

category in what that it is the the is advanced And so put really company. chemicals we to internal

advanced applications I tantalum-related. then up will the that, various as materials which up end not memory the much more So AI in said, see. They're in applications, they're next-generation really end would we that

David Silver

say you be just work just to XXXX growth? segment. I'm wondering time But presumes too wanted what you've segment. about if that finally maybe much this I group for your don't the for that if that X have there. sources or done a switch so, And And you an would X would restructuring of optical outlook over of maybe. talk the We organic lot when leading Is turnaround? really

Kyle Kelleher

we'll that business had drive earnings autonomous earnings in of of various X technology despite has then we was QX, job sales the and quarters first line quarters, on cost that think, the top drop orders control that that to that happened on and 'XX. call, improvement in where the space would and throughout managing Today, activities contract I had X QX, business, which vehicles. on at that about did call, if look talking business, LiDAR improvement. you we line, now last the for put the consecutive we've of done an about expectation the bottom in. that EBITDA performance management we really optics It's of say QX, the QX our We've And a we're cost space. continue nice all, Well, the the Defense-related talked time I

areas that are the are those contribute. think going of I so to type And

going well I this going contributor in as is in then, a of contributor, market to term Defense. longer is be the be think, in a to and thing, The 'XX course, automotive to growth here So and 'XX. space 'XX

as couple So a done bottom of be business top as is contributor last this the in our over line well as has going line 'XX it quarters. that expectation contributor continued is to

David Silver

part. but the is me. last this your is don't was opinion, And issue, think there that share your one for biggest just just Not but then authorization And my a your your necessarily into regarding handling options for on share Is you dilution? activity But issuance? overall your authorization there remind and fitting structure is related offset cash me, it typical strategy? anticipate and comment deployment I repurchase just demanding your whatnot. investor repurchase X or How activity of capital to kind do

Shelly Chadwick

where focused Yes, share we a in available one. do more and reason repurchase I'll that have We And on but think invest organic any was really, had authorized, lot the last program capital our that of the activity couple that million growth. that on because about money. We to haven't we a the want $X take allocation on we're years. is

than bringing important deploying dilution very The capital growth share count are to now or organic good. offsetting really us we're we our returns think And down. So to more is our right well. that delivering

So to it's very we we've got it. something that lever But should right choose active there, now, we're on. not use

Operator

KeyBanc The Samuel is from Markets. coming next question McKinney Capital from

Samuel McKinney .

and is had. satellites the Thanks Aerospace space would percentage that includes of I space. for and question about And space commercial & total right that buckets a talking I much think about those and into that How bucket? as market Defense now thinking me leads the

Jugal Vijayvargiya

a it's much becoming part. larger Well,

space to I'd growth is Webb expect component. has component quite small activity government large as that. larger you've maybe But our I than quarter of has about to But to a that X/X looking commercial component. The space continued has such a at Defense we're something become it's business. Phil, to little continue say know, relatively less grow. of continued company to would just grow. the part you our the probably probably in And Aerospace or see our like been more now to a while, projects or and following As type space a related a much was a for business, James

Samuel McKinney .

lot Electronic a little mix your the just when questions absorption Materials, wasn't on it which impacts then under quarter, think business. hoping to about sounds on simplify Obviously, of and but type shipping of the ideal you're it in a you greatly margins And production bit. like rates, that

average line production If ideal if you should margins something mix was, your or just it, your were call rates been? more shipping and in let's have with where

Jugal Vijayvargiya

contributing be need goal Well, the we our XX% look, to we've company. this business said to along margins all positively EBITDA that of for

this to business of able and sales we in even expect to of types QX had challenge when decent do able be it So saw business and deliver We had a in was to though a QX mix, what those this bit QX. I QX margins. little

to XX% able target. our deliver I towards So expect favorably this to EBITDA business be

Samuel McKinney .

was 'XX. Starck late one based. the non And H.C. from the acquisition a last There was in little that for sliver that tantalum business on me

be some those can along of directed to toward going that lines? or Any I you energy. thoughts think was make clean that comments

Jugal Vijayvargiya

well, and Yes, We well non-semi-application, And your the tantalum non-tantalum pursued And of you're where other other side, you grown that, can by as have business memory tell markets. we right. doing have is absolutely markets the did. in correct. I'll as I is say, extremely that both way, business,

team, tell that the with years. that so well and or years I X.X done that, business the over extremely So has growth few you next our business can over I in last expect continued

Operator

from The Storms Stonegate. Dave next from question is coming

David Joseph Storms

year, and the environment looking last start general general the versus Just want year contracting to at this is acquisition look what like? market customer

Jugal Vijayvargiya

in markets, good. has sales contracting the the the been were of we've think 'XX acquisition talked as and Even I in actual about. challenged some environment though

business be of New convert new to business things result, as activity some already seeing we're but would product new And activity to strong. of happen a and that 'XX. into wins, development has during more continued those expect we

what's customers us. therefore, So activities, slow positive I with think working down new not R&D been did new is that really development,

to towards contribute And look window. materialize X- our X-year those we for to would and so sales

David Joseph Storms

take as a some scale like particularly you're to very XX LiDAR, business those XX discussed, a as and Are with there next leap cutting-edge to with see any we've clean months? sticking obviously, the AI, energy. these wins, you well just over potential that really up having And technologies, the technologies strong aligned these of

Jugal Vijayvargiya

say There's would number have that expect of to and things continue. them I a contributed, I

of talking the about mostly we are that I projects. larger of that For example, the a we million able orders indicated $XX look have the on level the at, small being drive. space one market, new about, we talked And space in market, that here to just used you on, activity business 'XX space government, of going to some player the Phil, when ALD be just number in to for things we for year. growth an That's been of example, a them. calendar incredible But semi have of we've example,

So different more as there happen, applications would we continue adopted autonomous materials to would levels as we have that vehicles, look expect out, out autonomous more ALD technology, are expect come see When more as that we are chips look business of that to grow. to then I come we AI grow. and those and do advanced more and as for more at autonomous LiDAR, more vehicles more LiDAR more vehicles. and But

you we think think and I as we alignment the out about venues. portfolio. that to about So are our that our in there, love talking megatrends these know, And excited I megatrends those calls other with and are

David Joseph Storms

on know you just one mentioned for just more then organic very focused And I could. that if I Shelly, growth. you're me,

you to in as see that relation this on curious how about any to Just M&A you think horizon? your activity

Shelly Chadwick

the you Jugal did end focus, of to main has tantalum last we organic been just since referred our which 'XX, business. So acquisition know, the as at on our

that We open we are to up you have if geographic and for have business, certain portfolio, the looking near to are opportunities been term but at be our will, that expand expand always coming our footprint, more organic. opportunities

to But thing projects. the love to on returns there. M&A We're idea continuing along. not we're should off focus we So come closed right the organic of the

David Joseph Storms

the strong XXXX. on Congrats

Operator

And the King. Silver next coming David C.L. a follow-up is from question from

David Silver

view of more one economy. your industrial question. question maybe about Just a I But had the

might U.K. last well. which announced XXXX. economy electronics then meaningful this say, contracted morning, quarter over hours their fourth than So other Japan, market quarter. as XX it a proxy fourth the the their the And end related a Asia, the just was the And contracted Japan, both it economy like for and weakest I'll in be in is in markets, end

So end year change kind And the industrial fiscal some year customers there? for what demand are Or things then declining there hearing improvement signs of full your end sign from in of your are your or in maybe are what you terms more of stabilization? to the and kind maybe markets a guidance, in built But you in still is from Europe. serve what continued in weakness of XXXX market industrial perspective, there? point,

Jugal Vijayvargiya

for David, very market and on. us we're is large that, as you a focused imagine, that one can

for If of look general just September look 'XX. example, was that you we industrial PMI. North at time market The last at, is the and XX% metric was one of PMI

indicated it's X%. time what below XX, frame. So long industrial in our you the which ago market a since challenged time that contraction. we And continue will Slide and to less market for XX than then, industrial be market, that our have we and believe look implies there's When it's at that's the 'XX we a indicate why

our which we to as in company great item, with construction that's our also earlier, product related challenged specific setting is really aside, I well case, that eye that a impacted, is nonresidential Now onetime we product. markets about nickel throughout to have specific 'XX. and to expect diversified. industrial continue is What's very a we're But be beryllium our indicated

look Defense space, if clearly, as markets the that's would we by and have able Industrial, and say I to semi, things a on Commercial showing Chart well. that we we've led of of mid-single-digit at XX, have about you to, be think, we got our that year-over-year market, by but a and going we're that expect why challenged led growth other positive Aerospace, some automotive And all So industrial. except

the consider growth to highlighted areas a them market So a these industrial being we're continue and headwinds above Slide not in. we're on that staying again. time, I'm and turn headed, where have playing cross of excited despite The for XX make the X, XX% for going to to that we fact organic drive, projects index that we that long sure we our PMI we're we're I in number below all we'll think and when that's about sure

David Silver

to finish going I'm an with just And observation.

slide think, your this deck. with was I earnings a for So record quarterly want in Kyle, the the this I say, pages quarter to company. year set most record a

a but element there's through a another send information maybe So good lot record-setting little a But earlier. here, quarter. to here, the out it to lot anyway, go of

Jugal Vijayvargiya

know a row a that comment, third EBITDA, I in add Well, was record 'XX, 'XX. I'll margin and record is our and just record sales, EPS, This that. 'XX to of record but

team XX both during has us. extremely and that experienced think 'XX top just line we have fantastic positioned for into on record continue delivering done to a be I 'XX, well Our which even another and year line, challenged we're the and the job times, bottom of in

Operator

And to remarks. Kelleher question-and-answer like would hand for today's this I to the closing over does now conclude Kyle session. call

Kyle Kelleher

thank is A quarter call be on Thank call participating you. on your in be materion.com. of you available XXXX interest available any XXX. I the will playback This number concludes our earnings (XXX) this for will call. fourth Materion. company's again. to for I'd XXX website, my this like and follow-up recorded questions, you Thank

Operator

conclude Thank you. This does today's conference.

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

Materion (MTRN) 15 Feb 242023 Q4 Earnings call transcript