MTRN - Earnings call transcript Q2 2024

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Operator

Greetings. Welcome to the Materion Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Kyle Kelleher, Director of Investor Relations and Corporate FP&A. begin. may you Kyle,

Kyle Kelleher

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

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

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

Our is provide for follows: quarter. opening Jugal format will today's call the comments on as

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

We questions. up will for the call open then

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

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

Jugal Vijayvargiya

we cost management our share second proud Top in outlook results the to Materion of record a focus the the is quarterly highest on strong led today well delivering with in our achieving second half and EBITDA to second to I It's start quarter. back company. I'm that everyone. for welcome, with quarter these our Thanks, to mainly partnerships secure now for Kyle, the and business to sustainable be line of on the especially the second for defense to initiatives, will have wins operational challenging year, team pleased seal challenges as the organic you addition new discuss coming and year-over-year, several strong combined line to as record, record largely the gradual the and performance again track, continuing largely am we're performance outperformed improvements our quarter the bottom the of target in year. After margin our growth. Value-added we history results to last improvement from nice while time and targeted our third of customer through X mitigated, driven XX% in initiatives, operational for quarters. The strength up that were the in starting long-term by pipeline faced and books. enhancing first semiconductor as order X% to midterm been seeing our impact quarter a aerospace rebound electronics, consumer our a in sales flow of cost

to defense, most that we're performance and momentum aerospace new these applications support new demand affirmed and growing is developing customer aerospace defense, of across this With approximately for performance. a large drive our solutions the we the seeing of am with including key as our of as partnerships leading in and to are and combined and across some $XX investments secure agreed well to at building capacity challenges. In materials industrial space customer and markets demonstrating Materion business for has these serve new one in management pleased and in cost the defense, wins harshest and needs initiatives rising the we're sites our strong suited operational as applications highest existing drive defense demanding to our and the aerospace invest softer our demand of technologies aerospace are market. for markets, that reliability technical once automotive, to criticality conditions. announce new to materials. like targeted While in continues supply the The I through customers ability customers' million remains level demand. The of again capabilities products their uniquely expanding require our is select of growth of us driving of and opportunities products to other our of commercial products

an support way reliable Space the systems. Telescope for supplier the next to around new visible This Webb we multiyear partner to modernization space opportunities government agreement like James previously past of and as the supply four and announced second announcement position drive critical reputation innovative million generation initiatives propulsion secured orders materials Our market quarter, in to the XX this for key a the paved a customer. Defense months, programs continues have be for highly the world. solidifying our long-term space important applications. In projects advances as for us further follows as technology over for a growing $XXX

defense we've in VA approximately this the recovery the The by upside for of both potential sales, gain of future twice So we programs significant single-digit for is semiconductor year, year. In driven and second applications. million with and in quarter, this in year-over-year pace sequential comparisons $XX drove received roughly pace as traction. years logic growth mostly memory at market increases far last saw in incoming orders new these orders from

pickup rates looking seeing the of the anticipated, is remainder in Although year. as to for the see the than semi expect of be slower we to pace for we're in growth order half recovery a second

serve expansion occurs, or expanding shift products in advancements us the to production to rebound the products. of Atomic of digitization who rapid The semiconductor ALD to is to Deposition and our support we're are most power support customers allowing artificial Layer our capabilities rapidly towards intelligence. the the portfolio As include innovating of sophisticated

supplier ALD overall a from award receive This an quarter, excellent we customer. were pleased to leading

which with growth rapid expansion, the ALD and has of innovate this see the will team most complex AI the demand collaborated for Our customer increasing materials, multiple to chips.

product Strip source XXXX. a has from produce the to state-of-the-art that Another Precision started growth the to Together new facility Philip products. Today, built be important support global project from of that we are International. the of Clad customer Morris share is next-generation with the we customer, pleased funding of meaningful volumes to in invested higher us of Materion in we rollout able their who been with

a diversify our to have ILUMA, Strip in portfolio, performance to business otherwise further win that smoke some who a It enabling continue in is created markets heat-not-burn recent the is continue large Our would tobacco unique avenue used to deliver product adult is an Precision gaining of us smoke-free consumables burning popularity smokers Clad instead softness for to for heats that in alternative IQOS PMI's Europe strong and Japan. This as months. experienced has even it.

of ramp create the strategy, We harness are in our materials solutions. to work of production demonstrate the the to is in support grounded breakthrough a team's this proud examples that our application the solutions successfully with customer which facility many Materion advanced expertise power to our of new to to meet up customers' our enable team's ability customers' needs. These ability

the our headwinds the ourselves our Our navigate helping long-term our cost laser we've across improvements building organic focus pipeline of portfolio for we to a diverse the and while to across focus growth the also positioning throughout customers' earnings is some put operational ensure outgrowth. With short-term on excellence end are markets in strong balance on needs maintaining of structural year. place, benefits us

well to While end we are taking positioned market guidance we environment, of down reflect deliver a our are year end Materion. record softer top the for range to another

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

Shelly Chadwick

Thanks, and everyone. good Jugal, morning,

improvement This During earnings the and prior second weakness other markets. today's energy increase at in consumer value-added delivered we which share, costs, Precision impact reference This the looking on per of were electronics X% continued my strength which from in by comments, adjusted of exclude end second $X.XX, was record growth increase by to gradual X% slightly prior driven Strip, record posted announcement. from $XXX.X will When and yesterday on offset now QX and year. given starting million, in our pass-through semiconductor precious the I afternoon, up XX. In Slide a sales, from quarter was slides up defense, in year-over-year aerospace we the industrial, automotive at reclassified have earnings quarter, website metal year. Clad

the $XX.X or Moving was up Adjusted million year in EBITDA prior quarter quarter. a of value-added sales, to X% record for and Slide XX. XX.X% from the any

target As to continued we're commented, of XX%. delivered above once pleased improving These higher driven increase some performance and weaker midterm volumes, price our year-over-year by offset This helped mix. drivers cost was again Jugal management. operational margins have very

to Moving XX. Slide

items, compared decrease was credit, the challenges driven manufacturers' management X% aerospace to compared with Starting sales driven of electronics, the quarter by increase strength up unfavorable benefit largely carry offset sales, largely industrial, in XX.X% by down prior Value-added defense forward Let weakness This partially me prior mix, end period. consumer special the year-over-year QX X% continued million, strong million segment. price or now second were year to energy and and and impact from cost production performance excluding year. by the review by was in of value-added recorded decrease. $XX.X and markets. EBITDA, operational Performance a was the automotive $XXX.X Materials. the This partially offset business lower

Moving to the outlook.

across the balance inventory of and remain with We Clad automotive previously markets slightly half industrial expect aerospace of outlook correction Precision the and to and the for impact throughout XXXX second discussed defense weaker Strip. the strong a end

QX also strong operational We past move impact challenges. we as performance of the the expect operational

since of This year-on-year Value-added The turning both due the in by with and XX.X% million, sales quarter contributors excluding of up the items, Electronic initiatives, delivering glass the of which the $XX.X was driven profile improvement special XXX market expansion sequentially. gradual XX. points higher smart $XX.X cost non-residential X% or suppressed the highest remains value-added margin by million XXX Slide sales the and and was second of of to Materials driven recovery. market impact Next, semiconductor margin sales softness increase year-on-year to the to strong volume in basis quarter, were down on market. EBITDA, energy are basis the XXXX. construction points sequentially,

As recovery expected. at a we look slower but of market to the out we rest than the continue, the semiconductor expect year, pace to previously

$X.X decrease higher largely compared was offset XX. to volume million, This combined driven an mix. and some and saw business items prior challenges unfavorable EBITDA, This X% million improvement X.X% by Turning by Despite $XX.X to consumer sequential order by this special the sales. sciences year. operational was slightly of decline, management. driven excluding cost the Value-added aerospace, in the year-over-year by timing. increase with life value-added or were Slide driven strong market electronics, Optics defense year-over-year up strength Precision sales was on segment

we XXXX, margin business. performance continue performance a of to half second the and the across improvement expect step-up targeted to improve out operational Looking drive as cost we in initiatives

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

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

strong generate leverage bringing to half expect of year, Xx year-end. the in We below the cash our by flow back

deliver market by improvements first demand, and XX continuing throughout and lower for address on transition we let delivering another in end Lastly, and the company. initiatives to execute the our softened. to operational results outlook Despite end semiconductor, and the organic earnings quarter record cost and year remain drive market of to year our the me has full the Slide industrial automotive confident outlook. call, Since ability

increase we prior softer lowering earnings for revising remarks. the $X.XX full market from our our the concludes per from X% mind, year top our end guide, year demand the of are adjusted of to at an midpoint. This the $X.XX With in share, end range prepared

line will open We the for now questions.

Operator

today this Daniel we'll from [Operator At Instructions] from Daniel, your Securities. Moore a question the is first line is CJS live. question-and-answer conducting you. be Thank session. And coming time,

Dan Moore

semi slightly of what year, the the I talk where for of appreciate color the in outlook we've just in bit? out on at to in the on to But the change balance expected, elaborate you're a surprise given recovery more marketplace, the you any meaningful not seen color. slower give any than versus logic seeing there. memory the what about maybe just a right recovery the that opportunity looking Maybe kind of and seeing kind you're push

Jugal Vijayvargiya

of are then it's we a the indicated you well Yes. say rates. think, talked the in there, would last step-up muted expected recovery little that devices, memory one Dan, our more with quarter. by would as we order about bit low QX point is semi choppy, know. marketplace. been all bit a we're the it and logic general But our bit the the Clearly, And in spoke into with and about trend and have and we recovery as, some markets QX the I incremental in and of a QX from led be business a little from and we more say hearing call, semi then we certainly in that to the I as still the is pace what seeing customers, time that's probably the QX. I just

challenged, look be we housing still into of to other guide thinking just the expect end you how top the at industrial that's we've markets, change a QX starts, So, from think, And sort the I revised continues going and continues construction less, that recovery challenged. QX. and bit be made. When non-res our and we to the

is recovery been the revised. had Automotive production what than bit we industrial, a say, So slower would has I anticipated. on

expected In X% the indicates of expected be-- year. Europe at the continues latest the to think was it it lot and business at about from down with the data, challenged. to a The to year-over-year count is X% versus European the the down look you IHS fact, of of be if we that now year. X% rig beginning have automakers I a beginning be

offset, It XXX think, exciting you less rig initiatives even the that continues been initiatives offset number help have continue in I that going would we on defense large QX really our the as able that initiatives do, we count. able is, done than on our QX then then number tough the team expect year-over-year teams for in I today, space, the some and X% you order initiatives continued to on of work of be to company a And QX. think growth has of many of number a combined has to new help the fact, there. What's the our mean, the other is challenged markets. been In drive organic The there. And would a for number with into growth When number for to the us I say, conditions delivering that. the organic here opportunities in I it know, drive opportunities side have basis. of I at conditions, markets, and and look of will to these team choppy the announced to to they've

think, So choppy is pleased on in and offset. the with doing situation but certainly, organically a of fronts market, the very number I now, help right effort level team to results of our a

Dan Moore

mistaken. sounds new the needed facility, of missed set I I wonder you Clad but could scale any, the opportunity facility. the not a that size, prepared on be be to may up couple if I sort bit I'm additional opportunities, a the a It might apologize, more and Helpful. CapEx give project be of what, dedicated little could up if like set if to lead setting you'd of minutes Precision more detail Strip first customer remarks, so

color interesting helpful. would opportunity really and that on any be So

Jugal Vijayvargiya

Yes.

as today, help customer that invested Pennsylvania, in $XXX we're Reading, today, facility capacities mentioning were over that as area, what a customer many So that And work place IQOS Precision it's on lot we announced using pleased roughly Precision Clad, think that in their spoken with a a Leesport, Clad us go very to announced that, relationship. the to number our markets. about fund supported I been we put worked with is Clad with XXXX-time a various years. than who customer we wanted they to in we've million Philip facility. We're business when We I put And fantastic of and to quarters we We've the to that mean, Pennsylvania we we International, facility them. place ILUMA that is been a customer now, in with Precision more Morris to product. I a of and have back for to buy had the is facility combination frame work do. product the in

a at others do information. global that's and to look So and gaining and I Japan, they It's a that to ask in popularity continue Europe course, you, of would product rollout.

on electronics said, in more working consumer segment are we particular always product with energy Now gain customers automotive others. trying segment to and this and that and and clean

capable have number we I work of a Precision world. Strip in Clad. continue we're Precision say, So I the that suppliers to one few, new of would really initiatives a we on. On mean very Clad

continue we we do to that, So will. and

We will the facility existing have in this for if facility, is come capacity new doing years which Precision we facility, or we'll Clad that's additional additional many project needed, in been continue capacity customers. to board. on where the to new is either put pursue Leesport other our And prior

Dan Moore

And guide. Look remaining, the just forward Is shaping is profitability cadence more. with two lastly, your Any you maybe up guidance. the to of how that appreciate see I as year Excellent. quarters strongest quarter? historically Shelly, on QX hearing update this of revised well? sense

Shelly Chadwick

it. That we see Yes. how is

We expect like some seen going probably a think some an that in last mentioned We year. perspective, to orders markets some QX, from back. of we've lot start to is QX. a we've look will seen of inventory do the QX where construction. Automotive, the to expect see business there to correction non-res We that Jugal start overcorrection sprinkler there. come maybe profitability

business half. in that start to back expect back to come the We

volumes even move saw QX. in we So of starting the impact expect in past And do we QX. challenges to up the higher we'll QX, the in operational be

performance higher the quarter with see sometimes the being by combination normal step So meaningful operational really and of will a seasonality then defense. like that we strongest sort the volume, the see of markets the year of QX and you of better kind with

Operator

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

Michael Harrison

could we about that impacted and Optics maybe issues a that still like Precision and just in guess lingering we it in there quantifying two Performance in impact Or issues the both completely QX, bit little impact Any this be some of quarter. talk half? help QX second operational And I as be further the hoping was segments on can point? the Materials do guys I more want segments would there at provide was sounds you second both I operational some you are headwinds in into then resolved those those like look understand could appreciated. feel to the

Shelly Chadwick

Yes, Mike. with one, I'll start that

Materials you know, operational the vertically in part big is where as a main that issues. So is we And integrated. saw Performance of business

see challenges And a so, that takes operational to bit time. work little through system of

We marked improvement are seeing there.

So I of in some don't variances. QX Performance is through concerns Where think over operations that coming see normal Materials. we impact amortization still have you of the in really

the side, we year. in optics the they back in really challenge performance half and of operational some figured better thinks But On and QX. continued that for team got QX the did out expect see the

Michael Harrison

a All Morris plans second and Phase right. the sense half? you And going did the Performance Philip to impact PMI of half the also year? trying last Materials further earnings management we application, to better start-up their to the of then how second Just II volumes comparing get update volume the just in about and is we're on any the in from should in as terms rollout how their and headwind inventory what segment think the guys

Jugal Vijayvargiya

Yes.

things of second reviewed in line customer would think, the we as half is through. in we the inventory that what time. we based I that expected it's last I correction the call with Mike, last say the going management indicated, And on inventory year, So

that ago. half the correction the Yes, I commentary, think our from really back our a inventory change from on quarter and year. as So in of management same assumptions no

of we getting the make team on done start into We've and 'XX at that equipment ready it to to been would be the that on our our time a would of progress we've job qualified. equipment start Phase indicated tremendous the that, working course, we and to ramp -- beginning of continuing the As Phase has and really at II, look II expect using frame. year, getting

on the will we the they volumes with level work that course, customer of expect. Of

they course, deliveries, with we of they then new we So or place, it's do the do continue correction Phase just and have that of one would and to inventory orders expect orders work through thing and continue time. to in want capacity Phase to to of that place, to that they actual level and continue for X, those will then orders the work it's what ramped level what X important to that. customer new And to on get terms want I that want the over can to, of

be they follow the of of we as the positioned we're we I rollout. requirements to on mean, And support global as to lead end on for understanding to think they a able the and better year continue the order like I year. closer we'll So just well move very have, forward customer that patterns next requirements and have the this have get to the

Michael Harrison

gross All moved Electronic to right. around on factors margin about gross over overall on higher as or maybe maybe any little of Or number kind be in Materials or kind level should for that think in XX.X%. segment. Do a we to time. Electronic you noted, from recover? that for quarters, bit of the some mid-XXs Materials, anywhere watermark you the bit that EBITDA And you gross was a see little maybe the could margin a can XX% has QX past margin level And build mix softer then lead mid-XXs other as at a volumes that margin several sustainable the factors XX%

Shelly Chadwick

chance volumes their up we're really question. up downturn, we've the be right sure operations forward. make bottom-line great And rightsize and think setup margins given the work slightly. Materials do we've seen has based that product helped pick they've of kind gross to for the structure, as softer kind should while There No, really progress in to had there. That whatnot. the we through starting impact team But on within the them move that mix the prop we got EM things Electronic margins be on done volumes, a some is great that come that mix going of and of has cost focus now sustainable Yes. it's organizational and as back really their and that, back will start we're to see a to our proud

Operator

David [Operator from King. CL from Instructions] The next Silver question is coming

David Silver

by preface jumping to been remarks three I've my around amongst stipulating. going I'm calls.

my making repeat apologies So if I'm you yourself.

The first place a start would for Materials I'd of $XXX the be your for few million I piece for to propulsion. been with like a company scale. years, new and contract space following Critical I've that recall of new really business don't

me I'm there how an if whatnot. of has you've was that been or size long correct So disclosed? it wrong since But order that

Jugal Vijayvargiya

Yes.

get $XXX team the I $XXX would announcing program. with you we the orders announced order could other course, here program, the we orders, and say a how pleased work I'm say, of customer, obviously, chunks very the multiyear X And we you the in you of around us, a addition What as done. With Precision been we're orders that stream very, that. When for about is of orders the this announced of we're business This and in large, think I neighborhood an is more revenue a like has kind course, way, put between one us. meaningful have we program that that, turned with then, our been go-forward Clad pleased actually is long-term with for almost But of announced I fifth sustainable is This out. or has customer. of of work very us, the with the with a months pleased with had that contract space million X done. all, contract the and very meaningful I think, very business in multiyear we today. the gives along orders. that We've today, supply. quarters, know that the to first contract for almost think, smaller team certainly, PMI spot order regard very announced with the one a XX customer we where Very with last now. that this the two and is This of, David, that, International million which pleased has with this our it's of very, to size one, order

types So more doing sustainable us, contracts. think to type sure for of we're can I businesses, make these of getting larger, that we we're everything

little have more in we can and So can that that. our revenue we continue to hope stream, I do surety a

David Silver

current Okay. follow-up And know, that. other this X should is willing the cross-selling I essentially some the smaller bundling assume to longer then commit or -- technology But a really period. or Or additional, that I other or much? a either compared where ones, this maybe the to, I hasn't just or represent included. don't for encompasses maybe said does But material asking same? your the quick words, they're role role order it is contract on In don't you company's changed this think large they're maybe, for more I know, evolution an

should kind of is previous an as I of version to larger there? think evolution order first a the there So fifth -- the orders? a order. it it in Or just your of role development Is X or

Jugal Vijayvargiya

of better allows that at on It a not a and mean, us with of really situation. It's sure more we're all, us and of basis multiyear longer-term them that's the them think, planning, have workforce we've provide looking order-by-order efficiency on make with the over a you first reaching a prior are I I same hope program. It supplying improvements more our and and why product and spot operational that a matter the able X out been in value, to cementing improvements, better they work with said, right essentially, type much relationship orders. frankly, I I just Well, us, improvements, drive capability, confidence great, this so Yes. has think, with of to the partner, course, customer customer, continue we so and on to now then like a we're we've product in to time. order, that capacity, been do, wanting is better

So I to have testament teams customer. think great a our that is with relationship developed the just, the again, this

David Silver

that Has that and about completed of that Or envisioned with your that thinking of recovery had the change up? that it. But in see the in be it despite I for revenues Got anticipated I'd of like than a happy grew Electronic that over Materials switch pace was be guess, should the Are major those changed to lined the that end one the The start-up. to contribution slower or or investments as to you two. put said. new recovery bit takers timing we customers area. to it, the push sequentially lot to where -- those year-over-year case and as someone been in the a area? of projects the when there's in you over well. I'm further and did off and margin about enter your little that at are as start-up the operating both else a for would as timing underway the from is Has back Or income, Newton expansion I of the market Milwaukee. they thinking improvement time maybe the pace projects capacity? right,

Jugal Vijayvargiya

more earlier in of market on in a in as bit think I opportunity fact, as in are an semiconductor to projects efficient us talked mean, in I discussions, think, those meaningful quarters, projects, have in in about the slowdown track. way. and earlier place indicated more put I those No, we general, give And the a actually we've

mean, at things time hardly a know, peak, done. market other get you to I was had we As the when its

put to and I are projects So in large, track. I those place. projects allowed think say, I it's would mean, by the us on

recovery highlighted, I today, which call having. is leading mentioned projects. In that, positioned you facility new Milwaukee, recovers, and kind a be mean, bit take but ALD in it award, of market those we'll that from recognition of I the pleased we advantage in of the a as QX supplier we've the the into the a think earlier capacity think customer, more which then of to I'm perhaps with 'XX, little type is indicated very exactly I as well

team you our do award, to has as again positioned the that. of think developed ALD a a able grow be this when receive fact relationship think, the great is And I to are So that continues work. And well look I to testament facility to our there, that on for and going one is the semiconductor market logic additional that the market is the that area the serves has we And side. that really started the memory recovery. projects serves that the at main Newton area and we have

would that the we so projects to So will expect that the 'XX that would continue we adding then value and be have into ramp-up. recovery

David Silver

and guess, But I'm question at just Great. I it fiddling capital looked the deck in I here, sorry, Maybe relevant the for Okay. a slide Shelly, here. I'm with when on expenditures.

the so? so, was I the in maybe Electronic changed, feeds there, shift I the might or timing sorry. just if I bit bit mean, be a what has little what been days think of programs. if was XX, the last that guess little a CapEx in asking has current wondering, I CapEx it And moved projections But the guess, the emphasis I XX spend your Materials about there's year? a down in for total Jugal, in And I to or

Shelly Chadwick

Yes. Good question.

but little that factors. paydown the say focused cash different generation I two with sure our of prudent probably debt would growth. CFO, as making investing down is it it's while course, a and we're on I we're mean, very being for I'm bit, So one,

So projects. not have we growth-related delayed any

while That's that which a quarter this in more that. on engineering working we're is piece a used you Materials, for out side that of two other been we're Performance to specific just on page, extrusion see to ready pushed doing or The get press.

of So another that's of down. tick the piece kind

David Silver

good. be about, to to of in me, that one your And if eye-catching the was more guess, I'm quarterly quarter. Very And the question addressing the mean, margin would QX guess, the the in wondering release. I first progression. developments, that QX the I Okay. one inefficiencies I issues led to I last in guess just

upside mean, of a seem to thinking guess, I kind of going we was addressing First of be that exceeded XX%, I some level, be intermediate times quickly. I'm wondering, But that to you have all, to target few that the you've so about that your that for to reached thoughts your midterm target I congratulations mean, schedule? just now. should there's level, have ahead

Jugal Vijayvargiya

great get that results, and all, of and work then that that, quarter EBITDA first the in the highest thanks quarter the the definitely recover on pass the that we'll track they of second recognizing record I for team us Well, think, any back had. for, to here help to kind quarter of on with did in first level we've

But our of north to So obviously this more, be remarks about is highlighted this We've yes, EBITDA we'll last of we third year. to margins. in the certainly, XX% where where that 'XX, And the same. that we'll on David, go, we make back sustainable our X been and then goal sure in think expect early then XX% the do about want north deliver a XX% we'll EBITDA that half can also year the is we of of be that. EBITDA on. This year margins. definitely in we I we that margins. basis, can, into definitely pass talking next talking We north be later quarter have And

David Silver

I And Great. this articulated. robust to than environment me. Okay. demand forgot in you've that's it that as accomplishing less a you're And add for

Operator

The next Markets. Capital Phil from be from KeyBanc question Gibbs will

Philip Gibbs

ship half? cater then you'd in about within wouldn't had nice Are I propulsion to X also some I those defense. of expected months? generally we think all deck, to how you to business the wins And able in noticed be the to incremental just back orders your think XX over and those next that? slide should

Jugal Vijayvargiya

on we back Yes. defense. half, start the So let right? with $XX No, are million have orders had clearly of not they in roughly that all me

just of orders. way, in or outside what have the wonderful by these securing defense has I job highlight want starting are couple U.S. our of of think more is done team A important. One to global. First we're a of all, that from things orders that the to terms our and I more

that that's part think important our been the been has a of work team I doing. very

$XX portion outside. million is So a of sizable that actually

for $XX that of first quarters this is the is, million X second The the year.

All new orders. defense of last year, we had $XX of million

So year what to secured defense we're the last Xx pace value be roughly of this we than on year. about orders

expect know, team bit into those the would a Phil, of X-year half do year, nice done back but it to the job to a the tend And X this of We ship certainly to So in that. defense 'XX. be in then with very really typically, you here as orders has time frame.

space customer. So we propulsion indicated a this also to regard order that expect fifth that the would to from and we orders, this the is happen. With

have. this multiyear a that the So now orders, were spot is we contract X the first but

X-year So type of a this X, type X, a is of multiyear a contract.

into on this And so we delivering -- finishing effect to now we right would -- I'm finished the go say, And that the effect basis. up. up, those expect this to already. that we a will award last going new orders still we the once that, had into finish We're finishing go will once will and delivering had multiyear contracts delivering X then last we

Philip Gibbs

of you. Thank an so backlog your end how to your got an then that the first relative us or looks quarter, visibility give you end on just backlog, right now idea the of And generically, may of about can have? we've idea overall you 'XX

Jugal Vijayvargiya

Yes.

where defense. I on is because imagine, our are semi, certain I backlog the bag, can there you bit right? can are semi, the indicated, mean, a is pattern a example, of see on mixed it's on kind as space of to as mean backlog markets we and I order improving more we imagine, for look, mean improving. So starting backlog you an

improving. couple are and certainly challenged. area, areas bit challenged our a backlog certain a Our and But like backlog automotive very there more is industrial is

mixed on level backlog where direction. the and it's the basis, at in improving overall right it's moving where now. fortunately, is would for I -- some we've So a is other backlog bag quite bit, material the then areas a got areas an say, a

to into QX the of and backlog much can moves and in in for as semi the step we then a the continue and industrial is would pickup So from I expect we a et move that QX of fourth in a quarter that that incremental beryllium-nickel cetera, market, more hope quarter. the on quarter, particularly market more larger

Philip Gibbs

slide And lastly cash also on the year. talked the I generation a think the in about then me, deck for back half of focus

half? X-X more be cash -- bit net a what gets half as say next, And capital the kind there? know let's thinking carried a working ship inventory than what on capital. of we case months still we of generation got thought say, some should as bleed And or I you're that Is net projects. about going some down The just of you to to let a right cash these normalize how now? first ago, bit back and the whatever you've you And focus working in for

Shelly Chadwick

Sure.

didn't also well some that timing. lot for. we it of we by space that for were generation was business have to cash some So looking offset the plans bit the end being but clad. reduce QX and We that we a build with they're And a both underway, are do little inventory have

timing accounts that with we're So a perspective. Same payable. managing from

our about If good to bringing it's that AP know, you way, a is in costs inventory guy. bringing costs think and which, controlling down you and trying as as a manage little well, bit

certainly to the those but back help, stronger in the working look half well. we of at year, get a expect we line as as out numbers So is earnings capital

it the think to debt down we to able be where at Xx, this bring be point. to under So should

Operator

will The from be Stonegate. from next Dave question Storms

David Joseph Storms

been call the slides, has management On driver or in of cost margin you growth. a the mentioned the how highlighted

Just more having curious levers to expansion? here, have many as see headroom be you to how much you margin more continue beneficial management to cost how

Shelly Chadwick

semiconductors with waiting Yes, very anything I business. think structure targeted this about improve markets in bit the saying, more where would sort can where I little electronic cost been, do and if I'll we start, actions opportunities in. specifically, in we really, think out to started we've in of that to some cost has pipe think internal Jugal the we what do to you we a add, got EM, see have holistic But if

on I growing takes But focused we as a level. don't investment. say selective more to That that I we're become bit work certainly And actions. mentioned would now optics, that more will they targeted those we're so, kind back I were business, would fulsome say of the -- think in There's going we on as right? And well.

be say from coming as also would there selective be done I is we've here, It lion's but the what's share of there'll investments look do. towards future. So to in would we the what

David Joseph Storms

I Has if clarity missed there been any tax Apologies And production more the helpful. credit? this. Very on

Shelly Chadwick

No, great really. Not question.

year, be might still there not We and what are there this here will final might or expect included. there whispers and guidance that be

in on a first As we've we've bit the final than what would guide upside, what that in very approach accruing we lands. before, amounts benefit. But we said half were say It's based equal year. taken downside are where recruiting I a for a there's middle-of-the-road little we think last less of

we that sometime in half. forward to So hearing back the look

David Joseph Storms

anything flow And helpful. part in you values one increase your more then just are along very are know mentioned think that you seeing them cash I'm market you expected for in me. debt of of cash flows. anything that I Also, for one as just put the line? your the peaks interest? just of paydown M&A uses Where expected just curious, do

Jugal Vijayvargiya

the the I way mean open. We at very, right were indicated significant do we critical and we very to we're Clearly, got that always with culture things. right Yes. it's that want to always really we sort value can drive mega just But we've our trends, of opportunities, our fit. to want make our portfolio for sure sake We the as look M&A. we aligns the don't it's mean, of as at that we're before, right? fit. I is doing M&A that doing We It make door want looking have in sure that.

opportunities. opportunity continuously So at to if we we And and move forward, evaluating an for would. us looking that certainly, are there's then

to mean our organic we're we the certainly, for even improve do have But driving to M&A, but that be continue only to investments. position, continue highlighted, make not we're going to we levels, have able cash at to we've sure We it. capacity want as to I today's

So we'll keep that. doing

Operator

would are closing There to remarks. at you. like Kelleher the this Thank time. I to other no for call back questions now Kyle hand

Kyle Kelleher

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

Operator

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

Materion (MTRN) 6 Aug 242024 Q2 Earnings call transcript