MTRN - Earnings call transcript Q1 2024

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Operator

Welcome to the Materion First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Kyle Kelleher, Director, Investor Relations and Corporate FP&A.

You may begin.

Kyle Kelleher

Good morning and thank you for joining us on our first quarter 2024 earnings conference call. Director Relations Kelleher, Corporate Kyle is of and Investor FP&A. This

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

Officer.Our on and and is comments for You President Jugal will format can feature and access Chief Shelly webcast is call Chief Jugal through materials earnings the Officer; Chadwick, on Vijayvargiya, President Vice link.With Financial download Executive call follows. conference the the me quarter. today's the today, as opening provide

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

certain tax period prior income to year items purposes and comments. before income for depreciation, in performance call and charges questions.Let comparative reflect statements interest, the forward-looking and any of regarding and me amortization, remind through We depletion X net then that The the we over his X and Attachments from based will investors may comments the yesterday.Additionally, for press made in those company's in differ made the for are current forward-looking presentation adjusted GAAP issued outlook now, including release section of release. variety discreet in portion a are press question Jugal and as on statements during are the adjustments The earnings open share I'll up per shown answer factors. Those call earnings actual the in special noncash adjustments.And that earnings taxes, the expectations. turn numbers listed remove materially factors the a by contemplated result of the the

Jugal Vijayvargiya

outlook today Thanks, first discuss XXXX. our performance welcome, as It's you with to everyone. nice quarter Kyle, as our for be well current to and

Our of short our results quarter first the expectations. for fell far

demand some 'XX mitigate proud QX of headwinds, Performance led lower delivering in short-term roughly of margins flat earnings. operational expecting some to EBITDA our in to to year-over-year, market $XX of we decline. quick are a not short-term semiconductor number line Materials weakness results, only be were closely profitability and business as and of actions recover.Looking actions despite are half these structural challenges, of will sales While more pockets performance, with team's sales sales the and mainly taken roughly cost our slowing at We've million targeted year-over-year improvements enhance roughly a benefiting but decline. nearly providing markets longer-term key that the that our represented I'm continued

expected construction inventory nickel In addition used impact. nonresidential product the restocking meaningful a beryllium of our had in

shipments by Our were delayed in challenges mainly due further results Performance the operational limited Materials. to

with to critical the other short-term operations in were growing we levels.Operational to excellence team our the automotive than where anticipated these deliveries in temporary a significantly expected and are space aircraft responded electric equipment in to year-over-year first we softer for quarter. in the have deal on declines the down Addressing we saw growth and and vehicles.Airplane Offsetting year. be normal assets and initiatives platforms. yield softness across reduced quickly strong materials defense, as rates challenges space build markets, had issues number providing return market output our impacted to depressed performance sales and due operational to are systems a the headwinds issues we core aerospace and address was some our our been challenges. quarter defense expected While end propulsion Short-term basis demand on for and slowing commercial of and we some further for growth of

moves have growth targeted multiple actions organic for these while deliver These areas strong to continuing structure cost margin overall to taken representing strong flat invest helped that environment.Despite in important drive a a for margin to have was softer XX% roughly a We in year-over-year our our performance our on adjust market the decline EBITDA in QX basis, decremental sales, end business. margin.

our see focus Electronic quarter expansion us strength drive confident earnings We robust EBITDA in that our VA organic Materials space see drive for the on the the by delivered continued for making strong complemented year.We growth Many to to the even some the on as perform points expect continue in markets higher in and we managing efforts improvement performance decline. portfolio organic a initiatives future believe the XXX and cost recover.Our demanding balance fit defense for approximately basis headwinds engineered with in driving materials long-term pipeline through of levels margin remain of environments, even year. strategy laser for as move advanced growth. to our of focus invest in relentless the help will positioned is harshest performance of markets them ideal Our as these This and are sales our improvement business the to we well extremely short-term through XX% leaves to an applications. the of pipeline

second that back the QX picking that move adoption for the into across drive in AI through used bottom to New growth year; expected with this energy vital the as various to sales in shift top later to partnerships will a us our us, in memory defense the chips the toward improve high defense downturn part demand broader we in announced previously industry the order government the and power Near-term prepare chips coming market. R&D our funded semi performance coming as and our global the key projects industrial new confidence and for advanced computing rebound as rates Materion a was solidify line the is year.The in supply logic is continue for believe We see giving is for supplier business to addition for a aerospace, position and chain. continuing the of markets.In of materials quarter, cycle. up further wins we

organic our to demand.The increased to and products portfolio increase Precision We we project areas Clad to are broad Strip in continues to that of with advance capacity production to this expansion semiconductor driver a key our late new our The growth support on of be start customer for partnership up facility us, are track continue year. significant to is ensure our investing remains and strong. ready of

levels will As our production rollout teams facility. new we down progresses global begin customer's legacy the our ramp and higher have driven at our performance facility, output to at and now of

adjustment as their while done projections impact job rollout that through the does our remains correlate of a an robust on steering business.Our not global position Our short-term challenges second long-term support product further the for will a Materion company their for year, creation. half focus the weaker inventory and end sustainable longer-term customer's some shipments. maintaining track sales This outlook for growth customers indicated team our will adjustment value an levels the has which and to of to exceptional

financials. expect cover With the with year in a step more the the stronger turn start me of details the additional ups to the and Materion QX performance, recovery third fourth in in to let XXXX.Now semi Shelly call to record another over deliver in operational on resulting and for much we improved quarter,

Shelly Chadwick

Jugal and you good Thank morning everyone.

and exclude night on our slides costs in material. sales Despite in nonresidential website correction precious my electronics by the automotive consumer from X. were construction million quarter impacted of expected for inventory were plus down year. semiconductor XX% strength on During negatively and last $XXX.X In I metal Slide through prior will comments posted impact starting reference sales, declines first aerospace defense value and the the the our pass which added our

challenges operational Performance limited in as Materials. some our Additionally, commented, shipments, temporary Jugal particularly

volume Our earnings in delivered levels teams Slide Adjusted Slide in earnings added output down was driven from per and share, XX% to prior benefit we When XX. from million, down quarter positive the mitigating the meaningful offsetting roughly decline.Moving year.Moving with adjusted of expect in more and $X.XX sales by at improvement have price of XX.X% initiatives second cost significant value first year performance decline, in to Despite these margin the strong the prior quarter. looking partially made was XX. the of progress EBITDA flat of margins. the the quarter the challenges XX% $XX.X our normal sales,

by declines improvement sales, was down volume, from Performance first remains performance aerospace down Let drop in from Value-added automotive, This me nonresidential prior year-over-year X% and demand lower than year. driven quarter spot in the partially XX% a now commercial Starting commercial sales of This XX.X% defense and Materials. strong with contribution outlook. million, within sales targeted year by period. more application $XXX.X by were Space million value-added with from the was special offsetting or segment. the and initiatives.Moving business to demand aerospace.EBITDA, was review significant offset construction excluding $XX.X driven prior by industrial. items, decrease cost lower space emerging the the market defense bright

of of partially decrease and items, Slide of we driven $X.X of were cost improvement Despite rest which expect turning Electronic the This we of space some special special million We in expansion were XX. and down some the second reduced in as excluding defense. the $XX.X $XX.X expect balance sales. a out from the was Optics improvement move volume industrial which year-on-year.As to down to through Materials year challenges this X% saw significant performance approximately in the a of year. to offset XXXX the significantly mix. slowdown, quarter.Next, throughout decline value-added compared the drove points continued compared balance to and excluding million, semiconductor segment also the prior weakness turning million sales defense the basis in million, of challenges, and space result or of as initiatives XX% year.Finally, addition decrease Value-added remain XXX automotive, expect value-added mitigate QX. Precision in to year, Slide unfavorable Optics EBITDA, demand mainly and sequential by in volume, shipments items, quarter. XX.X% product the with market. or to delayed lower the was was operational on driver again, year-on-year of prior was year-over-year operational The X.X% recovery Precision as Value-added EBITDA, we to semiconductor QX to strength out margin sales sales on into improve gradual we XX. operational strong by $XX.X a semiconductor move helped look the

meaningful Slide the we a now on continued company's $XXX Looking ended cost capacity $XXX liquidity available the few on expect initiatives.Moving approximately million focus performance demand net stronger out QX over in with of position and cash, in margin million a to We with of debt facility. approximately existing debt improvement next and the XX. and on step-up quarters, credit quarter

Despite XXXX, outlook. below the the slow remains our transition XX range.Lastly, initiatives midpoint slightly another in the our address operational our the of more Since expecting Precision initial commercial market vehicles deliver year. Our customer electric than full X.Xx And Clad just Slide of as organic from me to and some half target the to expect and for leverage offsetting are Jugal year for year correction aerospace we Strip the to and outlook we have of start record with mentioned, at inventory guide year, back the let our results softened. some softness.

higher the expense slightly expect rate current also We outlook. on based interest

year While our to guide prior to record X% $X.XX are the range mitigate Materion from share, prepared year.Despite to versus midpoint strong concludes full-year another XXXX.This per wider headwinds, to mixed poised adjusting much of market will in remains we a and we results adjusted deliver environment, the of execution work earnings the remarks. our increase of $X.XX these a

We questions. now line for open will the

Operator

first Our Instructions] question [Operator Gibbs from KeyBanc. Phil from is coming

Philip Gibbs

being contributor reductions ramping little changed and please inventory demand and the long-term a plan Can in future. here legacy you the I about you're message down customer bit? meaningful you at Phase facility, saying on X nothing you but the still hear of up also the on talking a

you can seems the land us? just maybe for in So directions? better out little to moving help lay It different bit have here a things some

Jugal Vijayvargiya

our a yield operational know, team as facility. has driving our continue improvements this the improvement, really a us just new deliver been to Phil, has great done I for job we legacy of of over mean, couple fantastic years. in you facility, Well, while last from success program Yes. our

about phase, got do they've the talking gone really if their short-term that look to sure where launch inventory the make customer we're has levels of issue, to right what they've think at rollout. I a support global how the through is they continued

it. of part one that's So

very, our that I has think is the second part just has frankly, of new great the a rate facility think customer. team is made the allowed to that to it deliver on very satisfactory our I us at that improvement

I the to in they're demand year some continue would robust, we support make that, sure from will we adjustments in then at of the combination positioned. properly to expect mean they're looking continue half a of a just year will So back And that the to XXXX their looking making at meaningful new and and be way. them because that

okay, 'XX, And really into Phase same nothing XXXX actually meaningful we've yield I facility. stop end from years think things are questions contribute the think looking been along that considering continue I have say is performance is the year we late I think, at is of in I of It's all substance that about, And think but these we year, over there of the going really new I. of the tie the the our XXXX. half and or time, of for the some together, from the at adjustments sure the on because here that's course, improvements going at and support, of making you about course, customer to We've X.X deliveries contributing So into all back to the doing that, can the been that Phase right legacy and the be -- facility. last talked, that and to track. when it X why of would to support of year, to able the at saying then producing the the be start time the

of here a a at program success where couple evolution on a quarters, just it's for the is of corrections think I some continued sort with basis. long-term but So natural of

Philip Gibbs

a the at but seen you least on only side, we've on program, well builds the commercial know knowledge to as and side then talked some the slowing been builds and commercial exposure I maintenance aerospace our And I have of I mean, place you about MAX think is also has down. where maintenance down, strong. the lot meaningful

Jugal Vijayvargiya

Yes.

Philip Gibbs

us does have this that at this seeing should or to to more suggest -- Is you adjustments? this are Boeing Or this exposure program you just point? other

Jugal Vijayvargiya

commercial and for at look mean customers, mean, of some track at you challenge that look build really both both build rates. there we we a the Boeing. as aerospace, data, of we for I major Phil, I if see example, -- across Airbus the

QX, around you If XXX it back rate XXX, of year, combined QX last planes. around to go was was the XXX. build This

was build look on you If rate QX at XXX. QX, basis a combined over

for number So build is probably around I rate. think, the XXX,

as in not build the at taking think they Airbus facing really So production more chain of And here that side. forefront think, their really know that I and of QX only in the their general, chain to substantial really, talked quality course, is necessary. across decrease would are on about at Airbus steps, actually There's ensure I adjust is supply both. MAX, processes looked XXX openly but of they schedule I that in to Boeing have say a the number supply facing, so issues the that has we challenges a that, very are issue frankly,

to are for down commercial about year what the significant would say to were But think the get build that anticipated. -- or is we to recovery not the are than they would which expect rates get over for the least we QX levels build that So the I then at certainly, they're the year, that improve. going of going aerospace, And going those rates the rest in we think that last don't had I to as more to so.

This in issue general, not do share expect absolutely be I aerospace all. challenged. at is to So a commercial

content both and have single-aisle planes. that products -- As we across materials both on multiple you we widebody have and gaining been know,

content there. growth our is So

there. to as X share need We just is Our mega increase go their companies build rates these we forward.

a So monitor caution year. situation, but full -- as the the we'll do we we'll just for see this

Philip Gibbs

maybe today. then occur, pinpoint challenges Can they're cited And confidence about that weeks you the me, gives you little issues talked they to lastly then that what bit operational when a you? major started you for some behind and several ago

Shelly Chadwick

I'll take that one.

reevaluated going being out Materials. we we addressed. books, what see be So weren't that the was in bit downstream really better. saw many issues production some all lines the the of the The really of with had yield that started are is mentioned, if our early orders you started to out of is a the and majority to there getting came And of impacts Performance process we of as that product all coming to we issue able challenges in Performance Materials. early-ish we in an And that when we the That which caution. That quarter, was of service early would. demand, then on

think those partner the able full delays got We Optics. order we quickly together the small yields to There get were an some yield sure of were tolling back team at book. a that items. challenges Precision that and I be impact could to couple then some to outside an service in up make other had

So under few we've we operational a kind But they of of just challenges had were think fell talk addressed. we about. got that bucket that things enough big the to

Jugal Vijayvargiya

we've running those been the run to I a the here expect at of as made significant operational that to as of marked a look to us challenges step-up challenges. QX in is we've April behind we and indicated, QX. expect our operational Getting step-up rest have from we -- that. I would how add those would be -- QX quarter, And we how on the improvement expect in a month based and core that we we're

Operator

next Moore Securities. Daniel from is from coming CJS question Your

Dan Moore

Maybe with continue semi. to beyond quarters? conversations, next in In confidence the that elaborate sequentially of dialogues prepared the the for improve in your few start mentioned should QX customers, just remarks the demand recovery you on

Jugal Vijayvargiya

has improvements stops the only improvements the QX for conversations see a challenging you well market when on well. do been but of quarter there we as is few And see couple and as, We our for what QX. some the thinking for I on been know, here Well, low orders think, bottom. this market, very the for of Yes. point months into and We based as have industry, us, us. see as the entire in the not customers We with that was going first in starts based believe, next weeks right?

well as and externally those discussions as starting it the on continue challenges particular, lead we I the in Our customers recovery that think EV. of the side, to QX. EV, power in recovery, will is memory, the think slowing to with and indicate logic I some continues hear QX challenges frankly, the There the are what being, growth to the lead and

recovery. that's over a time little to think our of more we business, semi improvement half it and logic I backlog I going When I'm year. a But -- of where QX, about of X to the see for order for for to gives making backlog the has order to more are months. months to I our approximately, are the power which confidence side. bit from look gives couple double-digit think, starting last memory, only think continued take are but for ago order back backlog, the going at I make probably say, confidence the We us today, not improve us

confidence point that the gives us recovery quarters, in look QX I QX, bit can first being to the start I continuing and more would a sense in for happen data QX low if then the it's few that the at QX. last and So I to time say, with here little

Dan Moore

as on it's about to build And guess online. that fabs for I 'XX, the we into a expected come just and of the think probably that lot rates more are expected string and 'XX pulling but beyond

do end inflection confidence, your about expect uptick growth. talk when far you market a meaningful the core high as longer-term that sort as might in single-digit Just see more when type to of we

Jugal Vijayvargiya

Yes.

XX, of started challenged. we the made, are and fabs the to some being over of rates at when last the become as saw commentary in terms the think investment look investments the months, some of more I XX build the certainly slowdown market So overall you that

seeing we government around U.S., in large what the to However, have the more for think, are some some now, example, play, is of some of some the investments the starting at discussions investments recent coming positive seeing investments. into companies. announcements I We're

starting With the activity see of to the, back I up as kind starting a) governments almost well. of in providing, think, Asia investment we're

about the what ago. if maybe investments -- a slight right, they from delay, but are we years talking So happening, perhaps X were

So in I play -- but X-year really the that probably 'XX. front the that had those of a be 'XX delay, those X- levels peak the at was now back perhaps the the 'XX. semi I the to come are we of probably now getting into will mean time levels The look frame, clearly When investments on track. to that of back half side. start maybe was thought in peaks the would half Perhaps a

So the other couple XX a overall a delay logic again, and semi some see But the but steady followed market, recovery the in as next then by to over I well. to of the led by XX happened. and improvement a that's months, from recovery of think do areas memory, slight delay, I continue quarter

Dan Moore

shifting the and be Or you that is production shuttered? from actively think customers? The facility to then for alternative something it back. is potential to more selling the from me, you about that last would new have incremental to And strip can capacity facility, legacy jump likely I'll that clad

Jugal Vijayvargiya

Yes.

looking certainly slow be to production. as starting at indicated, would So stopping we we not down,

starting So I is absolutely we to think program. using, it's prior that capacity were something the because this incremental capacity is usable that right, very

sector. automotive will or we shift sector commercial or that And in capacity so other to sector the consumer activities the simply

capacity reason, the make If sure for we'll with utilized being appropriately. we that, structure. action to cost some that, issues have So appropriate adjust we is will that take

Operator

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

Michael Harrison

was the so the out level sales. particularly I talk you hoping side. better sales but performance the interesting first what wondering detail was all nice year-on-year to called that more similar? on was on in though outlook, that than focus be value-added provided essentially the sequentially value-added what you in appreciate was level about I the but it improvement, think pretty was quarter, QX the was margin maybe much could QX margin the -- know improvement on I Can I of the you just on the in we same even led semi

Jugal Vijayvargiya

Yes.

me Let certainly, and to start that, with then add that. Shelly can

been As you has XX% know, focus EM We for for improvement, businesses or EBITDA is have of margins so how area talked us we our company all able to contribute right? to to a need about better. margin that the overall get

the in going and go kind year, of As to semi to quarter happen, was a back started us of almost decline I'm peak to QX QX probably sales. right, for last

margins a operational Our the they get in to but more and you're year. say, sometimes in those improvements the impacted. starting cost get the you improvement make time second into significant take I to importantly, as back quarter, improvements, making started to half We of play. bit little started plant frankly as initiatives of would And know,

And starting that. so benefits of we're to see the

able would that I'm going I do to off to of so that. of, these can that continue. been proud assure really, to I has going and to we're And what you, improvements team are the not And drive think, expect some improvement really on back I

we're and enhancement as are market to drive going Some going recovery margin able be the hopefully continue, of happens. to to improvements these

So big it. that's a of part

I back there's improvements think core are deliver X go or bear last We that that little continue forth of need issues. starting over that. that improvements really a the sometimes things towards there and of starting XX% and bit that and expect operational a on in it's to fundamentally, to every -- here mix our bit quarter. deliver objective to sometimes little QX, of and have. Those have certainly, and business fruit issues But we we the are driving to EBITDA contribute teams margins been EM the keep the focus months X, would our there's I onetime always Now

Michael Harrison

These can seen understand, on if mean, something pockets us up out or wondering of to that I of on that's remainder industrial help just then destocking inventory be lay lot And Can are you And I of was of nickel you correction we I like systems. weak in commercial for it's year? where really springs, in for business. seems curious that's this later. also the believe, a sprinkler of the but in we've kind the going going improving you cropped the feel this one if economy, be different if things kind just to are were

Jugal Vijayvargiya

index some is unique industrial this of This Yes. and to it kind hard one unique it's a product that of the right, to and type a sector, in kind correlate construction. fairly for an product, that's a is PMI or nonresidential other of index used

flushed with think inventory. for growth the frankly, a obviously the are got the provider There a I of We coming was little these market. the And significant that happened out channel, COVID. of

some As of occupancy. and I think, commercial just the all overall and know and we some downturn, construction that's -- the inflation of rates in happening interest general the the activities the that

pick to in in through a more in expect be through. the of happen maybe to as meaningful business, that year up started would half this 'XX and back expect meaningful QX, is but say, up As in let's worked to half expect would that year, first year, be, inventory to but but to a then result inventory that's of correction up slight the of going the picking that, we are pick say, back this we I start going the going let's would happen so that late I last correction. just inventory is It

of loss And in in issue. 'XX. This we simply small specific would more what So expect correction in just again, I turnaround turnaround want sector. a the inventory but industrial half, this back is meaningful element to the not emphasize, a that is I an on a then think we consider a share

Michael Harrison

about you for in marketplace on question you're range. potential the sheet, can your me the give what your pipeline, midpoint later of talk last with acquisition seeing target you mentioned your an just balance below the the in and then activity update And just some acquisition year. M&A us is maybe for leverage Curious if

Shelly Chadwick

that Yes. So one. I'll take

our As now X.Xx, you which between leverage right about our is sits mentioned, Xx targeted half to range. X.X

feel we comfortable we So are. where

which As a lot doing on growth. the did not of Materials, but you kind acquisition focused after we've know, Electronic paydown, what's is we investing, debt keeping HCS really that rather on of organic organic we're propped of up

we've or acquisition, product out capacity, there still certainly, -- options we always our that be an But we're desirable our build something targets kind it's I say out must portfolio, that today add that's would geographically would wouldn't of not and got do Given either to might looking that do. seeing a to it's footprint. evaluating can that where build and

say acquisition certainly wouldn't want that and done saying could got to be I there we're we So to there if along. this the we've do an comes year, thing right but out that opportunistic get

Operator

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

David Silver

of that a statement questions it's true So been have top my asked. all

However, I you several on. a that's I I never me touch this stopped have little a do giving warning just issues mean to But before. might wanted be scattershot,

maybe back with I half XXXX. Phase guess, of a First the Jugal's clarification of some Phase beginning and do has to earlier Precision Clad from Strip comments, just be to would to X transition, XXXX X in early the

of is a believe I of facility. half talked production So at the Precision customer in you Strip there new and ramp-up then Clad back relatively this legacy, other were the would need inventory kind you're structurally why if Can you or levels the just unit. qualitatively drawdowns later adjust In would customer, the of year the I guess, about inventory from different products Jugal, year. the from that clarify, new why this similar, words, supplying -- product to the

if you could missing something, you that just maybe maybe transition as Just I'm but discussed discuss earlier. --

Jugal Vijayvargiya

The product. had was that. I'm technology. next-generation It introduced going when back started at a the this time, were involved product almost years about, talking to about ago, a next-generation our they the that that had, not We what marketplace. David, product not in X actually to ours. customer When going that then they technology that say, program, used has indicated probably in the a Yes. we is customer we've introduced

is provide that we is Clad what So with used customer. our Precision

they the the rolling phasing older been, and out newer generation, say, So generation let's and in that out have right, world. phasing around the

And so build to a continued have put happened supplied to in the marketplace, inventory to ramp-up continued they and product and them. as that we has as have

the to and legacy I supplied I them the of facility, the from think the that. to rollout that supplied facility has they've team new we've able new do. improvements, support them facility. have improvements, driving has the in to been output think mean, customer's done work great for -- launch proud I And our We I and our a that yield really been team the for to particular, from and fantastic driving our on I'm think,

it, global is, think how that managing of inventory got really they rollout. rollout, of that are that's now just to all levels right where the are they've support it they And combined the making David. I kind with really sure of their

that, because as successful is so this the of program frequent term, concern to and this very upcoming the a as of a to quarter a years. we one program we from nothing see know successful They us the couple will basis. that a customer far for and very customer continue on with as be And short type meet of but adjustments,

David Silver

reduced upon participation, would you treasury later earlier believe, in details did I be But I on Shelly further in kind production guess, determination for kind give hoping calculated. the you're your or of here. I just how from couple as credit, make of believe, Materion's a critical line I the us could in that from you credit a you final manufacturing of with receive particular to credit that the the year of materials. judgment part But the XXXX on was perspective clarification, Maybe tax

you are credit? set there, at So but And though, just you a ballpark a could that there kind what where annual now talk add kind point the us basis? of confidently final, for estimate that for can I guess, expectations level an of is on about

Shelly Chadwick

good of Yes. kind Thanks for there. that question, to update give David. It's an

from the really costs. raw a about credit gives our high-purity definition production products. last late as first take it and excited a to defined -- Treasury came that bit but cost we're costs that include Department announced, of of did would year different material know, materials raw the update costs broad the The less that beryllium overall more in act definition us reduction used maybe out. As you When was production was a material produce

and items discussed there were then hearings and recall, given. other of might you comment As being that period guidance is was a a number before final

don't We that it, gotten on until but at of have these said at we expect year. look not what We final later were hearings and any written guidance papers was updates different this since kind then. the did

item for rate. our more So really accruing adjusted we approach at material have and conservative are a that

you more than still just think we a look getting and a based In we year, have the more taken million as $X QX, to approach middle-of-the-road we've last progresses. about methodology. a would clarity pretty on what this recorded year we if year conservative believe recorded But fact, about forward of credit more

David Silver

sorry, are mine? the this a capacity just production? side, $XX And transition that development-new at maybe require other I'm I normal amount but the moderate XXXX that in Or mine the that prepare really designed wondering, the you opening, But full the is your in words, In a then on the the growth? was replacement? this year mine maybe to expand for There's just more mineral of your of beryllium opening Or portion XX. right-hand part to played-out investing And -- pit smaller in for million. a Slide the pit is one looking -- column, a new the beryllium column. always guidance from anticipated you is new on to been particular, the for is

Shelly Chadwick

that. Yes. one. start I'll that on Thanks for

at know, our Utah you pits got various a to really out we So as have in that material. mine raw we've obtain dug

explain have that dig before. dirt we you've treatment. beryllium of We from have heard open So we Jugal basically really pit. process the ground. an it that, do to the It's accounting we this get to capitalize an When products out process and

really the are over material amortized raw that the like development costs as think of to So raw I material. mine use period in we which

cost is investment, different uptick be really, may certainly more and -- is the wouldn't We it or of a and the processing that, of our and opportunities. this a related capital it's amount sales as the which higher beryllium period the a quantity. So -- over amortized our an and it but I beryllium in size dig do of think see different

So really, demand. we're with making balance sure that we're sheet support digging production. see that on enough and is But there off to you to something what just have the the amortizes goes that products

David Silver

paraphrasing, misquote a customer the or you and you whatnot. rebound I'll talked you asked are for I shift But would today on the timing you topic In thinking Jugal this. the thought completion. if But startup side timing and advance planned And comments in Milwaukee. in Electronic jive X could accelerate me, quarters I'm well, or about very desired that it of with thinking? demand? in would a Materials upgrades be about your on at you your then the Materials expansion more apologize and How that And one or the drawn believe pace. expansions. the Has it I I I recovery Jugal, on last about Any expansions Electronic wouldn't portfolio. Newton at core changed ago, of -- happening Based anything, complete you in about expansions nicely to Materials was other that, said, the maybe Electronic words, slowdown believe, completing but with the your you again, that demand X out or have and

Jugal Vijayvargiya

whole, say our is No, thinking shift on that. I in no in would there

We And expansions. as to and make we're are I from market being think on them recovery fully and David, just positioned that, want we'll those being segments the various progress to is happens qualified that as We recovery we're of properly that the to make standpoint is a the happens. capacity work continuing our continue with sure prepared support various to customers the types market. installed, all the semi of then in of sure our equipment

-- down track I say and we path. would on that continuing we're So

Operator

Dave question next Your Stonegate Capital Storms from Markets. is from coming

David Joseph Storms

that Just and a Last step-up in roughly added second QX split it maintain hoping adjust XX-XX ratio? Does estimated we that first should your was be between pacing. to those Or for would anticipated half. sales half the call, feel get expectations?

Shelly Chadwick

earnings be first a about than do QX QX at spend of our affect little XX% QX, than do we're we'll lot of the step-up better guess a we'll time Yes. And our of a the did earnings. significant see of but talk soft like. of really of it meaningful good that the going and more think a up last QX, last see That's probably about might half. QX the the QX, look little we about cadence year, we that time really think probably balance in at question. hit I look in We thinking kind will split but a XX:XX our we where we With bit as better what being kind to that to of guide. of move and the course, of year. through to look in step had another We the kind When take midpoint

at that like So thinking kind XX:XX, it. right we're in if we're of how zip something now, least that, you think XX:XX, code maybe about

David Joseph Storms

compete excuse to to shares upside there mentioned Jugal, down because had to not been environment price any with volumes? you're about coming how losses. on with gains? Has softer just compete down, the really -- are thinking me, seeing Is get some share that you Basically, coming And you've volumes pricing maybe given you on your share price?

Jugal Vijayvargiya

think about right? an a making share different just understands destocking is when not number Well, this for that everyone the we sure Yes. beryllium a that things. spoke case that I a share issue, inventory different one and number of for about, programs situation, it's nickel the there's And them, simply of that's I issue, talk is of and example,

It operational of door. out due It wasn't product in Some we able the -- was the rates. sales have to weren't was just launches. simply to we the declines in that to order get due QX

between think things a I of So combination items. those it's various

things pressure. benefits you when to and efficiently certainly, that there's general, Customers look always ways pricing at for right? there's on those then Now mean pass I are we in more them. pricing no looking always can doubt, do

work to that. continue we So

But that last the so look type price tell that general, to is positive. in at side our tend give on initiatives to we're any we you excellence offsetting with cost will operational drive of those you customers, down years, business several we have if be our I to what over continue our outs. to We price

more, is to price I the that what would up say, I on than be the on we price board. mean by tend the So across downs

And -- focus we'll continue keep so on a to and that.

various in work they sales cost we're properly our teams product appropriate and our what know that at value-based making we have and that Our with as structure on very pricing. the to is businesses sure teams well product the looking how price

enabler that been we're between to us. a what we expect to important is important And enabler how both I we're managing balancing and make as for the key continue always, sure be those for a us. of the said, items. and key it has share pricing what pricing is properly can So I

Operator

to We I Kyle for remarks. have will Kelleher and session, the reached the end the question-and-answer of over turn call now closing

Kyle Kelleher

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

Operator

you Thank you. time. this today's may disconnect Thank participation. This at for concludes conference, you and your your lines

Materion (MTRN) 2 May 242024 Q1 Earnings call transcript