Materion Corporation (NYSE:MTRN) today reported first quarter 2025 financial results and provided an update to the full year outlook.

Financial Summary

Net sales were $420.3 million; value-added sales¹were $259.3 million

Net income of $17.7 million, or $0.85 per share, diluted, versus net income of $13.4 million, or $0.64 per share, in the prior year quarter; adjusted earnings of $1.13 per share versus $0.96 in the prior year quarter

Operating profit of $27.2 million versus operating profit of $22.2 million in the prior year quarter; adjusted EBITDA²of $48.7 million versus $45.2 million in the prior year quarter

Business Highlights

Delivered 130 basis points of margin improvement year over year with record first quarter adjusted EBITDA margins

$35 million free cash flow³improvement year over year on reduced working capital

Secured a multi-year agreement with Idaho National Lab to supply materials in support of nuclear energy research and development

"I am pleased with our strong start to the year, despite the volatile macro environment. Our teams executed well to deliver strong operational performance and record first quarter margins on modest top line growth," said Jugal Vijayvargiya, President & CEO of Materion. "We also drove significantly improved cash flow in the quarter, with a focus on reducing inventory and thoughtfully pacing investments.

"While there is increased uncertainty around the eventual impact of tariffs on our results and the broader economy, we continue to expect our business to perform well for the balance of the year. We are actively managing our supply chains and making adjustments where necessary to minimize the disruption that tariffs may cause."

FIRST QUARTER 2025 RESULTS

Net sales for the quarter were $420.3 million, compared to $385.3 million in the prior year period. Value-added sales were $259.3 million for the quarter, up 1% from the prior year period driven by growth in the space and energy end markets and improving demand in semiconductor, partially offset by lower PMI shipments.

Operating profit for the quarter was $27.2 million and net income was $17.7 million, or $0.85 per diluted share, compared to operating profit of $22.2 million and net income of $13.4 million, or $0.64 per share, in the prior year period.

Excluding special items⁴, adjusted EBITDA was $48.7 million, a first quarter record of 18.8% of value-added sales, compared to $45.2 million or 17.5% of value-added sales in the prior year period. This record adjusted EBITDA margin was driven primarily by strong operational performance and structural cost improvements.

Adjusted net income was $23.7 million excluding acquisition amortization, or $1.13 per diluted share, compared to $0.96 per share in the prior year period.

OUTLOOK

Our performance expectations for 2025 are largely unchanged from our initial guide of $5.30 to $5.70 adjusted earnings per share for the full year, before a potential impact from the unresolved global tariff situation. Currently, we are expecting the second quarter to be slightly better than the first quarter, including a $0.10 to $0.15 earnings per share headwind relating to the current China tariffs which have customers electing to freeze orders as they await further clarity. Looking out to the second half of the year, if these conditions persist, we could expect an additional impact of $0.40 to $0.50 earnings per share. We are currently taking measures to adjust supply chains where possible while reducing costs and pacing investments to minimize the impact on our results.

ADJUSTED EARNINGS GUIDANCE

It is not possible for the Company to identify the amount or significance of future adjustments associated with potential insurance and litigation claims, legacy environmental costs, acquisition and integration costs, certain income tax items, or other non-routine costs that the Company adjusts in the presentation of adjusted earnings guidance. These items are dependent on future events that are not reasonably estimable at this time. Accordingly, the Company is unable to reconcile without unreasonable effort the forecasted range of adjusted earnings guidance for the full year to a comparable GAAP range. However, items excluded from the Company's adjusted earnings guidance include the historical adjustments noted in Attachments 4 through 9 to this press release.

CONFERENCE CALL

Materion Corporation will host an investor conference call with analysts at 10:00 a.m. Eastern Time, May 1, 2025. The conference call will be available via webcast through the Company's website at www.materion.com. By phone, please dial (888) 506-0062. Calls outside the U.S. can dial (973) 528-0011; please reference participant access code of 241119. A replay of the call will be available until May 15, 2025 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 51693. The call will also be archived on the Company's website.

FOOTNOTES

¹Value-added sales deducts the impact of pass-through metals from net sales

²EBITDA represents earnings before interest, taxes, depreciation, depletion and amortization

³See reconciliation of operating cash flow to free cash flow in Attachment 9

⁴Detailsof the special items can be found in Attachments 4 through 9

ABOUT MATERION

Materion Corporation is a global leader in advanced materials solutions for high-performance industries including semiconductor, industrial, aerospace & defense, energy and automotive. With nearly 100 years of expertise in specialty engineered alloy systems, inorganic chemicals and powders, precious and non-precious metals, beryllium and beryllium composites, and precision filters and optical coatings, Materion partners with customers to enable breakthrough solutions that move the world forward. Headquartered in Mayfield Heights, Ohio, the Company employs more than 3,000 talented people worldwide, serving customers in more than 60 countries.

FORWARD-LOOKING STATEMENTS

Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein: the global economy, including inflationary pressures, potential future recessionary conditions and the impact of tariffs and trade agreements; the impact of any U.S. Federal Government shutdowns or sequestrations; the condition of the markets which we serve, whether defined geographically or by segment; changes in product mix and the financial condition of customers; our success in developing and introducing new products and new product ramp-up rates; our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values; our success in identifying acquisition candidates and in acquiring and integrating such businesses; the impact of the results of acquisitions on our ability to fully achieve the strategic and financial objectives related to these acquisitions; our success in implementing our strategic plans and the timely and successful start-up and completion of any capital projects; other financial and economic factors, including the cost and availability of raw materials (both base and precious metals), physical inventory valuations, metal consignment fees, tax rates, exchange rates, interest rates, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, credit availability, and the impact of the Company's stock price on the cost of incentive compensation plans; the uncertainties related to the impact of war, terrorist activities, and acts of God; changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; the conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; the disruptions in operations from, and other effects of, catastrophic and other extraordinary events including outbreaks from infectious diseases and the conflict between Russia and Ukraine and other hostilities; realization of expected financial benefits expected from the Inflation Reduction Act of 2022; and the risk factors set forth in Part 1, Item 1A of the Company's 2024 Annual Report on Form 10-K and in other reports that we file with the SEC.

Attachment 1

Materion Corporation and Subsidiaries

Consolidated Statements of Income
(Unaudited)

	First Quarter Ended
(Thousands, except per share amounts)	March 28, 2025			March 29, 2024
Net sales	$	420,330		$	385,287
Cost of sales		344,151			314,075
Gross margin		76,179			71,212
Selling, general, and administrative expense		35,445			35,844
Research and development expense		6,505			7,142
Restructuring expense		2,038			1,620
Other — net		4,996			4,357
Operating profit		27,195			22,249
Other non-operating income—net		(666	)		(643	)
Interest expense — net		6,917			8,279
Income before income taxes		20,944			14,613
Income tax expense		3,246			1,204
Net income	$	17,698		$	13,409
Basic earnings per share:
Net income per share of common stock	$	0.85		$	0.65
Diluted earnings per share:
Net income per share of common stock	$	0.85		$	0.64
Weighted-average number of shares of common stock outstanding:
Basic		20,780			20,679
Diluted		20,913			20,973

Attachment 2

Materion Corporation and Subsidiaries

Consolidated Balance Sheets

	(Unaudited)
(Thousands)	March 28, 2025			December 31, 2024
Assets
Current assets
Cash and cash equivalents	$	15,634		$	16,713
Accounts receivable, net		219,320			193,793
Inventories, net		439,763			441,299
Prepaid and other current assets		84,325			72,419
Total current assets		759,042			724,224
Deferred income taxes		2,970			2,964
Property, plant, and equipment		1,339,968			1,315,586
Less allowances for depreciation, depletion, and amortization		(817,843	)		(804,781	)
Property, plant, and equipment, net		522,125			510,805
Operating lease, right-of-use assets		75,788			64,449
Intangible assets, net		106,932			109,312
Other assets		21,245			22,140
Goodwill		264,255			263,738
Total Assets	$	1,752,357		$	1,697,632
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt	$	52,573		$	34,274
Accounts payable		136,860			105,901
Salaries and wages		16,773			20,939
Other liabilities and accrued items		43,664			47,523
Income taxes		4,100			4,906
Unearned revenue		13,082			13,191
Total current liabilities		267,052			226,734
Other long-term liabilities		12,333			12,013
Operating lease liabilities		72,731			62,626
Finance lease liabilities		12,707			12,404
Retirement and post-employment benefits		25,341			26,411
Unearned income		70,225			75,769
Long-term income taxes		1,998			1,818
Deferred income taxes		3,297			3,242
Long-term debt		398,744			407,734
Shareholders' equity		887,929			868,881
Total Liabilities and Shareholders' Equity	$	1,752,357		$	1,697,632

Attachment 3

Materion Corporation and Subsidiaries

Consolidated Statements of Cash Flows
(Unaudited)

	Three Months Ended
(Thousands)	March 28, 2025			March 29, 2024
Cash flows from operating activities:
Net income	$	17,698		$	13,409
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization		16,538			16,185
Amortization of deferred financing costs in interest expense		450			429
Stock-based compensation expense (non-cash)		2,986			2,495
Deferred income tax (benefit) expense		22			(253	)
Changes in assets and liabilities:
Accounts receivable		(24,912	)		2,729
Inventory		421			(26,539	)
Prepaid and other current assets		(10,428	)		(10,274	)
Accounts payable and accrued expenses		19,191			(5,194	)
Unearned revenue		(4,616	)		(5,860	)
Interest and taxes payable		(404	)		(3,294	)
Other-net		(1,444	)		2,362
Net cash provided by (used in) operating activities		15,502			(13,805	)
Cash flows from investing activities:
Payments for purchase of property, plant, and equipment		(12,321	)		(21,314	)
Payments for mine development		(8,683	)		(5,333	)
Proceeds from sale of property, plant, and equipment		266			348
Net cash used in investing activities		(20,738	)		(26,299	)
Cash flows from financing activities:
Proceeds from (repayments of) borrowings under credit facilities, net		16,190			56,779
Repayment of debt		(7,522	)		(7,586	)
Principal payments under finance lease obligations		(163	)		(191	)
Cash dividends paid		(2,803	)		(2,692	)
Payments of withholding taxes for stock-based compensation awards		(2,224	)		(6,013	)
Net cash provided by financing activities		3,478			40,297
Effects of exchange rate changes		679			(383	)
Net change in cash and cash equivalents		(1,079	)		(190	)
Cash and cash equivalents at beginning of period		16,713			13,294
Cash and cash equivalents at end of period	$	15,634		$	13,104

Attachment 4

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBITDA
(Unaudited)

	First Quarter Ended
(Millions)	March 28, 2025		March 29, 2024
Net Sales
Performance Materials	$	174.0	$	168.6
Electronic Materials		224.8		192.0
Precision Optics		21.5		24.7
Other		—		—
Total	$	420.3	$	385.3

Less: Pass-through Metal Cost
Performance Materials	$	14.0	$	13.0
Electronic Materials		147.0		114.4
Precision Optics		—		0.1
Other		—		—
Total	$	161.0	$	127.5

Value-added Sales (non-GAAP)
Performance Materials	$	160.0	$	155.6
Electronic Materials		77.8		77.6
Precision Optics		21.5		24.6
Other		—		—
Total	$	259.3	$	257.8

Gross Margin
Performance Materials⁽¹⁾	$	48.2	$	40.1
Electronic Materials⁽¹⁾		23.8		25.0
Precision Optics⁽¹⁾		4.2		6.1
Other		—		—
Total ⁽¹⁾	$	76.2	$	71.2
⁽¹⁾See reconciliation of gross margin to adjusted gross margin in Attachment 8

	First Quarter Ended
(Millions)	March 28, 2025			March 29, 2024
Operating Profit
Performance Materials	$	31.3		$	22.6
Electronic Materials		6.8			9.8
Precision Optics		(4.1	)		(3.3	)
Other		(6.8	)		(6.9	)
Total	$	27.2		$	22.2

Non-Operating (Income)/Expense
Performance Materials	$	—		$	0.1
Electronic Materials		—			—
Precision Optics		(0.3	)		(0.1	)
Other		(0.4	)		(0.7	)
Total	$	(0.7	)	$	(0.7	)

Depreciation, Depletion, and Amortization
Performance Materials	$	9.4		$	8.2
Electronic Materials		4.3			4.6
Precision Optics		2.3			2.9
Other		0.5			0.5
Total	$	16.5		$	16.2

Segment EBITDA
Performance Materials	$	40.7		$	30.7
Electronic Materials		11.1			14.4
Precision Optics		(1.5	)		(0.3	)
Other		(5.9	)		(5.7	)
Total	$	44.4		$	39.1

Special Items⁽²⁾
Performance Materials	$	0.2		$	5.0
Electronic Materials		2.2			0.1
Precision Optics		1.4			0.7
Other		0.5			0.3
Total	$	4.3		$	6.1

Adjusted EBITDA Excluding Special Items
Performance Materials	$	40.9		$	35.7
Electronic Materials		13.3			14.5
Precision Optics		(0.1	)		0.4
Other		(5.4	)		(5.4	)
Total	$	48.7		$	45.2
The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium is passed through to customers and, therefore, the trends and comparisons of net sales are affected by movements in the market price of these metals. Internally, management also reviews net sales on a value-added basis. Value-added sales is a non-GAAP financial measure that deducts the value of the pass-through metals sold from net sales. Value-added sales allows management to assess the impact of differences in net sales between periods or segments and analyze the resulting margins and profitability without the distortion of the movements in pass-through market metal prices. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. The Company sells other metals and materials that are not considered direct pass throughs, and these costs are not deducted from net sales to calculate value-added sales.
The Company's pricing policy is to pass the cost of these metals on to customers in order to mitigate the impact of price volatility on the Company's results from operations. Value-added information is being presented since changes in metal prices may not directly impact profitability. It is the Company's intent to allow users of the financial statements to review sales with and without the impact of the pass-through metals.
⁽²⁾ See additional details of special items in Attachment 5.

Attachment 5

Materion Corporation and Subsidiaries

Reconciliation of Net sales to Value-added sales, Net Income to EBITDA and Adjusted EBITDA
(Unaudited)

	First Quarter Ended			First Quarter Ended
(Millions)	March 28, 2025			March 29, 2024
Net sales	$	420.3		$	385.3
Pass-through metal cost		161.0			127.5
Value-added sales	$	259.3		$	257.8

Net income	$	17.7		$	13.4
Income tax expense		3.3			1.2
Interest expense - net		6.9			8.3
Depreciation, depletion and amortization		16.5			16.2
Consolidated EBITDA	$	44.4		$	39.1
Net Income as a % of Net sales		4.2	%		3.5	%
Net Income as a % of Value-added sales		6.8	%		5.2	%
EBITDA as a % of Net sales		10.6	%		10.1	%
EBITDA as a % of Value-added sales		17.1	%		15.2	%

Special items
Restructuring and cost reduction	$	2.1		$	2.4
Additional start up resources and scrap		—			3.7
Merger, acquisition and divestiture related costs		2.1			—
Business transformation costs		0.1			—
Total special items		4.3			6.1
Adjusted EBITDA	$	48.7		$	45.2
Adjusted EBITDA as a % of Net sales		11.6	%		11.7	%
Adjusted EBITDA as a % of Value-added sales		18.8	%		17.5	%

In addition to presenting financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains financial measures, including operating profit, segment operating profit, earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), net income, and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation and Attachment 6, we have adjusted the results for certain special items, including the following:
Restructuring and cost reduction – Costs include restructuring charges, costs associated with temporarily idled facilities as a result of decreased demand and costs associated with disposal of assets associated with obsolete products. Additional start up resources and scrap – Represents incremental resource, consulting and specialists costs incurred related to the ramp of the precision clad strip facility and scrap related to product qualifications. Merger, acquisition and divestiture related costs – Includes due diligence costs associated with potential merger, acquisition and divestitures as well as loss on asset disposals. Business transformation costs – Represents project management and implementation expenses related to the Company's automation and transformation initiatives.
Internally, management reviews the results of operations without the impact of these costs in order to assess the profitability from ongoing activities. We are providing this information because we believe it will assist investors in analyzing our financial results and, when viewed in conjunction with the GAAP results, provide a more comprehensive understanding of the factors and trends affecting our operations.

Attachment 6

Materion Corporation and Subsidiaries

Reconciliation of Net Income to Adjusted Net Income and Diluted Earnings per Share to Adjusted Diluted Earnings per Share
(Unaudited)

	First Quarter Ended			Diluted		First Quarter Ended			Diluted
(Millions)	March 28, 2025			EPS		March 29, 2024			EPS
Net income and EPS	$	17.7		$	0.85	$	13.4		$	0.64

Special items
Restructuring and cost reduction		2.1					2.4
Additional start up resources and scrap		—					3.7
Merger, acquisition and divestiture related costs		2.1					—
Business transformation costs		0.1					—
Provision for income taxes⁽¹⁾		(0.5	)				(1.9	)
Total special items		3.8			0.18		4.2			0.20
Adjusted net income and adjusted EPS	$	21.5		$	1.03	$	17.6		$	0.84
Acquisition amortization (net of tax)		2.2			0.10		2.5			0.12
Adjusted net income and adjusted EPS excl. amortization	$	23.7		$	1.13	$	20.1		$	0.96

⁽¹⁾ Provision for income taxes includes the net tax impact on pre-tax adjustments (listed above), the impact of discrete tax items recorded during the respective periods as well as other adjustments to reflect the use of one overall effective tax rate on adjusted pre-tax income in interim periods.

Attachment 7

Reconciliation of Segment Net sales to Segment Value-added sales and Segment EBITDA to Adjusted Segment EBITDA
(Unaudited)
Performance Materials
	First Quarter Ended			First Quarter Ended
(Millions)	March 28, 2025			March 29, 2024
Net sales	$	174.0		$	168.6
Pass-through metal cost		14.0			13.0
Value-added sales	$	160.0		$	155.6

EBITDA	$	40.7		$	30.7
Restructuring and cost reduction		0.2			1.3
Additional start up resources and scrap		—			3.7
Adjusted EBITDA	$	40.9		$	35.7
EBITDA as a % of Net sales		23.4	%		18.2	%
EBITDA as a % of Value-added sales		25.4	%		19.7	%
Adjusted EBITDA as a % of Net sales		23.5	%		21.2	%
Adjusted EBITDA as a % of Value-added sales		25.6	%		22.9	%

Electronic Materials
	First Quarter Ended			First Quarter Ended
(Millions)	March 28, 2025			March 29, 2024
Net sales	$	224.8		$	192.0
Pass-through metal cost		147.0			114.4
Value-added sales	$	77.8		$	77.6

EBITDA	$	11.1		$	14.4
Restructuring and cost reduction		0.5			0.1
Merger, acquisition and divestiture related costs		1.7			—
Adjusted EBITDA	$	13.3		$	14.5
EBITDA as a % of Net sales		4.9	%		7.5	%
EBITDA as a % of Value-added sales		14.3	%		18.6	%
Adjusted EBITDA as a % of Net sales		5.9	%		7.6	%
Adjusted EBITDA as a % of Value-added sales		17.1	%		18.7	%

Precision Optics
	First Quarter Ended			First Quarter Ended
(Millions)	March 28, 2025			March 29, 2024
Net sales	$	21.5		$	24.7
Pass-through metal cost		—			0.1
Value-added sales	$	21.5		$	24.6

EBITDA	$	(1.5	)	$	(0.3	)
Restructuring and cost reduction		1.4			0.7
Adjusted EBITDA	$	(0.1	)	$	0.4
EBITDA as a % of Net sales		(7.0	)%		(1.2	)%
EBITDA as a % of Value-added sales		(7.0	)%		(1.0	)%
Adjusted EBITDA as a % of Net sales		(0.5	)%		1.6	%
Adjusted EBITDA as a % of Value-added sales		(0.5	)%		1.8	%


Other
	First Quarter Ended			First Quarter Ended
(Millions)	March 28, 2025			March 29, 2024
EBITDA	$	(5.9	)	$	(5.7	)
Restructuring and cost reduction		—			0.3
Merger, acquisition and divestiture related costs		0.4			—
Business transformation costs		0.1			—
Adjusted EBITDA	$	(5.4	)	$	(5.4	)

Attachment 8

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measure - Gross Margin to Adjusted Gross Margin
(Unaudited)

	First Quarter Ended		First Quarter Ended
(Millions)	March 28, 2025		March 29, 2024
Gross Margin
Performance Materials	$	48.2	$	40.1
Electronic Materials		23.8		25.0
Precision Optics		4.2		6.1
Other		—		—
Total	$	76.2	$	71.2

Special Items ⁽¹⁾
Performance Materials	$	—	$	4.2
Electronic Materials		—		—
Precision Optics		—		0.1
Other		—		—
Total	$	—	$	4.3

Adjusted Gross Margin
Performance Materials	$	48.2	$	44.3
Electronic Materials		23.8		25.0
Precision Optics		4.2		6.2
Other		—		—
Total	$	76.2	$	75.5

⁽¹⁾ Special items impacting gross margin represent restructuring and cost reduction and additional start up resources and scrap in 2024.

Attachment 9

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measure - Operating Cash Flow to Free Cash Flow
(Unaudited)

	Three Months Ended			Three Months Ended
(Millions)	March 28, 2025			March 29, 2024
Net cash provided by (used in) operating activities	$	15.5		$	(13.8	)
Payments for purchase of property, plant and equipment		(12.3	)		(21.3	)
Payments for mine development		(8.7	)		(5.3	)
Free cash flow	$	(5.5	)	$	(40.4	)

Free cash flow (FCF) represents operating cash flow adjusted for capital expenditures. Management believes FCF is an important performance measure of the business. FCF is not a measure calculated in accordance with GAAP, and it should not be considered a substitute for operating cash flow or any other measure of financial performance presented in accordance with GAAP.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250430529149/en/

Investor Contact:

Kyle Kelleher

(216) 383-4931

kyle.kelleher@materion.com

Media Contact:

Jason Saragian

(216) 383-6893

jason.saragian@materion.com

https://materion.com

Mayfield Hts-g