Materion Corporation Reports Third Quarter Financial Results

  Materion Corporation Reports Third Quarter Financial Results

                       Declares Fourth Quarter Dividend

Business Wire

MAYFIELD HEIGHTS, Ohio -- October 24, 2013

Materion Corporation (NYSE:MTRN) today reported third quarter 2013 results.

THIRD QUARTER 2013 HIGHLIGHTS

  *Net sales were $275.4 million, which compares to sales of $290.6 million
    in the third quarter of 2012 and sales of $306.1 million in the second
    quarter of 2013. Value-added sales (sales less the cost of pass-through
    metals) were $148.7 million compared to $152.3 million for the prior-year
    quarter and $159.3 million in the second quarter 2013. The decline in both
    comparisons is due primarily to the previously reported delays of
    high-margin shipments. In addition, seasonality is a factor in the
    sequential comparison.
  *Earnings per share was $0.24, which compares to $0.39 per share in the
    prior-year quarter and $0.43 per share in the second quarter of 2013. The
    decline in both comparisons is due to a combination of factors, including
    the aforementioned shipment delays, weaker mix and weaker manufacturing
    performance.
  *Gross margin as a percent of sales was 16.4% in the third quarter of 2013
    compared to 18.0% in the same quarter of 2012. Gross margin as a percent
    of value-added sales was 30.3%, which compares to 34.4% in the third
    quarter of 2012 and 33.1% in the second quarter of 2013.
  *Operating profit as a percent of sales was 2.2% for the third quarter of
    2013, compared to 4.6% in the third quarter of 2012. Operating profit as a
    percent of value-added sales was 4.0% which compares to 8.8% for the third
    quarter of 2012 and 8.4% in the second quarter of 2013.
  *The effective tax rate was a low 2.7% in the third quarter 2013 due to
    revisions to the projections for the full year and net favorable discrete
    items recorded during the period.
  *Production at the beryllium pebble plant was the highest since start-up
    and production levels, at quarter end, were ahead of the rates targeted
    for the fourth quarter of 2013.
  *As previously announced, the Company is planning to take additional
    facility and product rationalization actions during the fourth quarter of
    2013 that are expected to favorably impact 2014 performance by up to $0.30
    per share.
  *Excluding up to $0.15 in fourth quarter 2013 charges related to the
    above-noted facility and product rationalizations, the Company now expects
    earnings for the year to be in the range of $1.40 to $1.45 per share,
    assuming no significant changes to global economic conditions.
  *The Company declared a fourth quarter dividend of $0.08 per share payable
    on December 3, 2013 to shareholders of record on November 15, 2013.

VALUE-ADDED SALES

The cost of gold, silver, platinum, palladium and copper are typically passed
through to customers and, therefore, reported sales, but not necessarily
reported margin dollars, can be affected by movements in metal prices.
Internally, we manage our business on a value-added sales basis. Value-added
sales is a non-GAAP measure that deducts these pass-through metals from sales
and removes the potential distortion in business levels and profit margin
percentages caused by differences in metal values sold. The Company began
reporting value-added sales and margins in the first quarter of 2013. The
Company believes that this is informative to the investor and provides a
better understanding of our business.

For the Company in total, when comparing sequentially to the second quarter of
the year, value-added sales were lower in the majority of the Company’s
markets largely due to seasonal factors and the aforementioned high-margin
shipment delays. The consumer electronics, industrial components and
commercial aerospace, defense and science, automotive electronics, telecom
infrastructure, energy and services markets all saw lower value-added sales in
the third quarter. The medical market, when comparing to the second quarter of
the year, saw higher value-added sales.

A reconciliation of GAAP sales to value-added sales is provided later in this
press release.

DIVIDEND

Today, the Company also announced the declaration of its fourth quarter
dividend of $0.08 per share payable on December 3, 2013 to shareholders of
record on November 15, 2013. The dividend is a reflection of the Company's
continued confidence in the strength of its business, its prospects for
long-term growth and its ability to continue to grow the business organically,
as well as through acquisitions, while returning cash to shareholders.

COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES

As previously announced, the Company is planning to take additional facility
and product line rationalization actions during the fourth quarter that are
expected to further reduce costs and significantly improve margins beginning
in 2014. These actions will result in a charge of up to $0.15 per share in the
fourth quarter, approximately 25% of which is non-cash, and these are expected
to favorably impact 2014 performance by up to $0.30 per share.

THIRD QUARTER 2013 RESULTS

Sales for the third quarter were $275.4 million compared to sales of $290.6
million for the third quarter of 2012. Value-added sales for the third quarter
were $148.7 million, compared to value-added sales of $152.3 million for the
third quarter of 2012.

As reported in a Company press release on October 7, 2013, the decrease in
value-added sales, when comparing to both the prior-year quarter and
sequentially to the second quarter of the year, is primarily due to delayed
high-margin defense and nuclear science shipments. It is anticipated at this
time that these delayed orders will ship in the fourth quarter. Approximately
40% of the sequential decline is related to the shipment delays and the
balance is due to seasonal factors and weaker than expected market conditions.

Net income for the third quarter was $5.1 million, or $0.24 per share,
diluted, compared to net income of $8.1 million, or $0.39 per share, diluted,
for the third quarter of the prior year. Net Income in the second quarter of
2013 was $8.9 million or $0.43 per share, diluted. The decline in income is
due to a number of factors, including weaker market conditions, high-margin
shipment delays, seasonal factors and weaker manufacturing performance in the
quarter.

For the first nine months of 2013, sales were $880.7 million compared to sales
of $969.3 million for the same period last year. Value-added sales for the
first nine months of 2013 were $459.3 million compared to $464.2 million for
the same period of last year. Year-to-date net income was $20.8 million
compared to net income of $22.2 million for the same period of last year.

BUSINESS SEGMENT REPORTING

Advanced Material Technologies

Advanced Material Technologies’ sales for the third quarter of 2013 were
$176.3 million, which compares to sales of $190.5 million in the third quarter
of 2012. Value-added sales were $68.4 million in the third quarter 2013
compared to $73.3 million in the third quarter of 2012. Weaker demand from
consumer electronics, shipment delays in defense and science, and lower
services revenue were offset, in part, by higher volumes in medical, and in
phosphors and other non-precious metal alloys used in LED applications.

Sequentially, value-added sales were down $3.6 million in the third quarter
compared to the second quarter of 2013, primarily due to weaker demand from
consumer electronics, telecom infrastructure, energy and defense offset, in
part, by stronger demand in medical.

Operating profit for the third quarter of 2013 was $4.8 million, compared to
an operating profit of $9.2 million for the second quarter of 2012. Operating
profit was 7.0% of value-added sales in the third quarter of 2013, compared to
12.6% of value-added sales in the third quarter of 2012. Sequentially,
operating profit and operating profit as a percent of value-added sales
improved, respectively, compared to the second quarter of 2013 levels.
Operating profit and operating profit percent of value-added sales were
negatively impacted in the quarter when compared to the prior year by a weaker
product mix and increased pricing pressure on precious metal products and
services. Planned cost reduction and margin improvement initiatives are
expected to restore margins to double-digit levels.

Performance Alloys

Performance Alloys' sales for the third quarter of 2013 were $69.6 million
compared to the third quarter of 2012 sales of $68.7 million. Value-added
sales for the third quarter of 2013 were up approximately 6% to $57.3 million
compared to $54.3 million for the third quarter of 2012. The primary drivers
of the increase in third quarter 2013 value-added sales, when compared to the
prior year, were stronger conditions in automotive electronics, consumer
electronics and energy. Growth in these markets helped offset a decline in
value-added sales to the telecom infrastructure, appliance and industrial
components markets.

Value-added sales for the third quarter of 2013 were down 2% from the second
quarter of 2013 levels primarily due to seasonal factors in the industrial
components and automotive electronics markets.

Operating profit for the third quarter of 2013 was $4.5 million compared to an
operating profit of $5.4 million in the third quarter of 2012. Operating
profit was 7.9% of value-added sales in the third quarter compared to 10.0%
for the same period last year. Margins in the quarter were unfavorably
impacted by lower manufacturing volumes and a longer than expected maintenance
shutdown at the Elmore, Ohio facility.

Beryllium and Composites

Beryllium and Composites' sales for the third quarter of 2013 were $13.7
million, a 5% decline, compared to sales of $14.4 million in the third quarter
2012. Beryllium and Composites does not directly pass through changes in the
costs of its materials sold, and, therefore, value-added sales for this
segment are the same as sales. Sequentially, sales were down approximately 15%
from the second quarter of 2013 levels. The lower sales volume was due to the
delayed high-margin defense and nuclear science shipments.

The operating loss for the third quarter of 2013 was $3.3 million, compared to
an operating loss of $0.5 million for the third quarter of 2012. The loss was
primarily due to the delayed high-margin shipments and the cost associated
with the use of higher-priced material purchased to supply the production
needs of the business as the new beryllium pebble plant ramps up. This segment
was also affected by a longer than expected maintenance shutdown at the
Elmore, Ohio facility and lower yields in the quarter. At quarter end, the
pebble plant was operating at its highest production level since start up and
is ahead of fourth quarter targeted production levels.

Technical Materials

Technical Materials’ sales for the third quarter of 2013 were $15.9 million,
compared to $17.0 million for the same period of last year. Value-added sales
were $9.3 million in the third quarter 2013, compared to $10.3 million for the
third quarter of 2012. Sequentially, value-added sales were down approximately
24% from the second quarter of 2013 levels due to lower shipments into the
consumer electronics market as an expected phase out of an application for
disk drive arms occurred. This was offset, in part, by increased demand from
the energy and automotive electronics markets.

Operating profit for the third quarter of 2013 was $1.4 million, compared to
an operating profit of $1.1 million for the same period of last year. Most of
the improvement in operating profit is due to improved manufacturing
efficiencies and a favorable product mix offset, in part, by the impact of the
lower sales volume. Operating profit as a percent of value-added sales for the
third quarter of 2013 was 15.3% compared to 11.0% for the same period last
year.

OUTLOOK

The combination of the delayed defense and nuclear science orders, which are
expected to ship in the fourth quarter along with the increased shipment
levels in the balance of our business, should result in the fourth quarter
being well ahead of the third quarter. Excluding costs of up to $0.15 per
share related to the facility and product rationalizations and assuming no
significant changes to global economic conditions, the Company expects
earnings for the year to be in the range of $1.40 to $1.45 per share.

CHAIRMAN’S COMMENTS

Richard J. Hipple, Chairman, President and CEO, stated, “While I am
disappointed with our third quarter performance, I am confident that the cost
reduction and margin improvement initiatives that we are undertaking in the
fourth quarter will position the Company well for a solid start and
significant improvement in profitability for 2014. Our breadth of new products
and technologies is the strongest it has been over the last ten years and
should enhance our ability to grow in the future.”

CONFERENCE CALL

Materion Corporation will host a conference call with analysts at 9:00 a.m.
Eastern Time, October 24, 2013. The conference call will be available via
webcast through the Company’s website at www.materion.com  or through
www.InvestorCalendar.com. By phone, please dial (877) 407-0778, callers
outside the U.S. can dial (201) 689-8565. A replay of the call will be
available until November 8, 2013 by dialing (877) 660-6853 or (201) 612-7415;
please reference Conference ID Number 100466. The call will also be archived
on the Company’s website.

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, in particular,
the outlook provided above. 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:

  *Actual sales, operating rates and margins for 2013 and 2014;
  *Uncertainties relating to the fourth quarter 2012 physical inventory and
    possible theft at our Albuquerque facility, including (i) the costs and
    outcome of our investigations and (ii) the timing and amount, if any, of
    any insurance proceeds that we might receive;
  *The global economy;
  *The impact of the Federal Government shutdowns and sequestrations;
  *The condition of the markets which we serve, whether defined
    geographically or by segment, with the major market segments being:
    consumer electronics, industrial components and commercial aerospace,
    defense and science, automotive electronics, medical, energy and
    telecommunications infrastructure;
  *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 integrating acquired businesses;
  *Our success in moving the microelectronics packaging operations to
    Singapore;
  *Our success in completing the announced facility consolidations and the
    product line rationalizations and achieving the expected benefits;
  *Our success in implementing our strategic plans and the timely and
    successful completion and start-up of any capital projects, including the
    primary beryllium facility in Elmore, Ohio;
  *The availability of adequate lines of credit and the associated interest
    rates;
  *The impact of the results of acquisitions on our ability to achieve fully
    the strategic and financial objectives related to these acquisitions;
  *Other financial factors, including the cost and availability of raw
    materials (both base and precious metals), physical inventory valuations,
    metal financing fees, tax rates, exchange rates, pension costs and
    required cash contributions and other employee benefit costs, energy
    costs, regulatory compliance costs, the cost and availability of
    insurance, 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 timing and ability to achieve further efficiencies and synergies
    resulting from our name change and product line alignment under the
    Materion name and Materion brand; and
  *The risk factors set forth in Part 1, Item 1A of our Annual Report on Form
    10-K for the year ended December 31, 2012.

Materion Corporation is headquartered in Mayfield Heights, Ohio. The Company,
through its wholly owned subsidiaries, supplies highly engineered advanced
enabling materials to global markets. Products include precious and
non-precious specialty metals, inorganic chemicals and powders, specialty
coatings, specialty engineered beryllium alloys, beryllium and beryllium
composites, and engineered clad and plated metal systems.

                                                           
                                                                        
Materion Corporation
Value-Added Sales Ratios
Third Quarter 2013
                                                                        
                       Third         Third       Second      First      First
                                                             Nine       Nine
                       Quarter       Quarter     Quarter     Months     Months
                       2013          2012        2013        of         of
                                                             2013       2012
                                                                        
Gross Margin
as a Percent
of Value-Added
Sales
Advanced
Material               37.3   %      41.1  %     36.3  %     36.6 %     39.7 %
Technologies
Performance            27.1   %      29.5  %     30.3  %     28.9 %     29.9 %
Alloys
Beryllium and          5.1    %      23.4  %     27.8  %     18.9 %     16.9 %
Composites
Technical              37.3   %      31.7  %     37.4  %     36.0 %     34.5 %
Materials
All Other              -            -          -          -         -    
Total                  30.3   %      34.4  %     33.1  %     31.9 %     33.3 %
                                                                        
                                                                        
                                                                        
Operating
Profit as a
Percent of
Value-Added
Sales
Advanced
Material               7.0    %      12.6  %     6.3   %     6.1  %     10.2 %
Technologies
Performance            7.9    %      10.0  %     11.7  %     10.6 %     10.8 %
Alloys
Beryllium and          -24.2  %      -3.6  %     4.9   %     -9.0 %     -8.9 %
Composites
Technical              15.3   %      11.0  %     19.5  %     16.1 %     14.6 %
Materials
All Other              -            -          -          -         -    
Total                  4.0    %      8.8   %     8.4   %     6.3  %     7.7  %
                                                                        
                                                                        
Value-added sales is a non-GAAP measure. See attached reconciliation.


                                                                
                                                                             
Materion Corporation
Value-Added Sales - Reconciliation of Non-GAAP Measure
Third Quarter 2013
Dollars in Millions
                                                                             
                     Third         Third         Second        First         First
                                                               Nine          Nine
                     Quarter       Quarter       Quarter       Months of     Months of
                     2013          2012          2013          2013          2012
Sales
Advanced
Material             $ 176.3       $ 190.5       $ 196.0       $ 566.2       $ 654.2
Technologies
Performance            69.5          68.7          74.3          218.4         216.4
Alloys
Beryllium
and                    13.7          14.4          16.2          42.2          43.1
Composites
Technical              15.9          17.0          19.6          53.9          55.5
Materials
All Other             -           -           -           -           0.1   
Total                  275.4         290.6         306.1         880.7         969.3
                                                                             
Less:
Pass-through
Metal Cost
Advanced
Material               107.9         117.2         124.0         357.1         437.9
Technologies
Performance            12.2          14.4          15.5          43.0          46.1
Alloys
Beryllium
and                    -             -             -             -             -
Composites
Technical              6.6           6.7           7.3           21.3          21.1
Materials
All Other             -           -           -           -           -     
Total                  126.7         138.3         146.8         421.4         505.1
                                                                             
Value-Added
Sales
(non-GAAP)
Advanced
Material               68.4          73.3          72.0          209.1         216.3
Technologies
Performance            57.3          54.3          58.8          175.4         170.3
Alloys
Beryllium
and                    13.7          14.4          16.2          42.2          43.1
Composites
Technical              9.3           10.3          12.3          32.6          34.4
Materials
All Other             -           -           -           -           0.1   
Total                  148.7         152.3         159.3         459.3         464.2
                                                                             
Gross Margin
Advanced
Material               25.5          30.1          26.1          76.5          85.9
Technologies
Performance            15.5          16.0          17.8          50.7          50.9
Alloys
Beryllium
and                    0.7           3.4           4.5           7.9           7.3
Composites
Technical              3.5           3.3           4.6           11.8          11.8
Materials
All Other             (0.1  )      (0.4  )      (0.2  )      (0.6  )      (1.1  )
Total                  45.1          52.4          52.8          146.3         154.8
                                                                             
Operating
Profit
Advanced
Material               4.8           9.2           4.5           12.7          22.0
Technologies
Performance            4.5           5.4           6.9           18.7          18.3
Alloys
Beryllium
and                    (3.3  )       (0.5  )       0.8           (3.8  )       (3.8  )
Composites
Technical              1.4           1.1           2.4           5.2           5.0
Materials
All Other             (1.4  )      (1.8  )      (1.2  )      (3.9  )      (5.8  )
Total                  6.0           13.4          13.4          28.9          35.7
                                                                                     

The cost of gold, silver, platinum, palladium and copper is passed through to
customers and therefore the trends and comparisons of sales are affected by
movements in the market price of these metals. Internally, management reviews
sales on value added basis. Value-added sales is a non-GAAP measure that
deducts the value of the pass-through metals sold from sales. Value-added
sales allows management to assess the impact of differences in sales between
periods or segments and analyze the resulting margins and profitability
without the distortion of the movements in pass-through 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 their costs are not deducted
from 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 and value-added information is being presented since
changed 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.


                                           
                                                  
Materion Corporation
                                                  
Digest of Earnings
                                                  
September 27, 2013
                                                  
                                                  
                                 2013             2012
                                                  
Third Quarter
                                                  
Net Sales                        $275,434,000     $290,601,000
                                                  
Net Income                       $5,123,000       $8,114,000
                                                  
Share Earnings - Basic           $0.25            $0.40
                                                  
Average Shares - Basic           20,604,000       20,432,000
                                                  
Share Earnings - Diluted         $0.24            $0.39
                                                  
Average Shares - Diluted         20,931,000       20,697,000
                                                  
                                                  
Year-to-date
                                                  
Net Sales                        $880,744,000     $969,319,000
                                                  
Net Income                       $20,817,000      $22,161,000
                                                  
Share Earnings - Basic           $1.01            $1.08
                                                  
Average Shares - Basic           20,551,000       20,434,000
                                                  
Share Earnings - Diluted         $1.00            $1.07
                                                  
Average Shares - Diluted         20,874,000       20,639,000
                                                  

                                                            
                                                                     
Materion Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
                                                                     
                               Third Quarter Ended       Nine Months Ended
                               Sept. 27,   Sept. 28,     Sept. 27,   Sept. 28,
(Thousands, except per         2013       2012        2013       2012
share amounts)
                                                                     
Net sales                      $ 275,434   $ 290,601     $ 880,744   $ 969,319
Cost of sales                   230,297    238,232      734,447    814,507
Gross margin                     45,137      52,369        146,297     154,812
Selling, general and             31,804      32,832        97,910      98,938
administrative expense
Research and                     3,190       3,019         9,901       9,310
development expense
Other - net                     4,161      3,129        9,592      10,846
Operating profit                 5,982       13,389        28,894      35,718
Interest expense-net            715        779          2,356      2,297
Income before income             5,267       12,610        26,538      33,421
taxes
Income tax expense              144        4,496        5,721      11,260
Net income                     $ 5,123     $ 8,114       $ 20,817    $ 22,161
                                                                     
Basic earnings per
share:
Net income per share           $ 0.25      $ 0.40        $ 1.01      $ 1.08
of common stock
                                                                     
Diluted earnings per
share:
Net income per share           $ 0.24      $ 0.39        $ 1.00      $ 1.07
of common stock
                                                                     
Cash dividends per             $ 0.080     $ 0.075       $ 0.235     $ 0.150
share
                                                                     
                                                                     
Weighted-average
number of shares of
common stock
outstanding
Basic                            20,604      20,432        20,551      20,434
Diluted                          20,931      20,697        20,874      20,639
                                                                     
                                                                     
See Notes to Consolidated Financial Statements.


                                                           
                                                                    
Materion Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
                                                                    
                             Third Quarter Ended       Nine Months Ended
                             Sept. 27,   Sept. 28,     Sept. 27,    Sept. 28,
(Thousands)                  2013       2012          2013        2012
                                                                    
Net income                   $ 5,123    $ 8,114      $ 20,817    $ 22,161 
Other comprehensive
income:
Foreign currency
translation                    478         1,271         (2,902 )     449
adjustment
Derivative and
hedging activity,              (428  )     (521  )       (273   )     (858   )
net of tax
Pension and post
employment benefit            1,232     835         3,671      2,504  
adjustment, net of
tax
Net change in
accumulated other             1,282     1,585       496        2,095  
comprehensive income
Comprehensive income         $ 6,405    $ 9,699      $ 21,313    $ 24,256 
                                                                    
                                                                    
See Notes to Consolidated Financial Statements.
                                                       

                                                           
                                                                  
Materion Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
                                                                  
                                                 Sept. 27,        Dec. 31,
(Thousands)                                      2013             2012
Assets
Current assets
Cash and cash equivalents                        $ 20,157         $ 16,056
Accounts receivable                                121,987          126,482
Other receivables                                  384              405
Inventories                                        212,784          206,125
Prepaid expenses                                   36,995           41,685
Deferred income taxes                             9,195          10,236   
Total current assets                               401,502          400,989
                                                                  
Related-party notes receivable                     11               51
Long-term deferred income taxes                    20,749           19,946
Property, plant and equipment - cost               779,870          779,785
Less allowances for depreciation,                 (514,562 )      (507,243 )
depletion and amortization
Property, plant and equipment - net                265,308          272,542
Intangible assets                                  25,908           28,869
Other assets                                       3,767            3,767
Goodwill                                          88,753         88,753   
Total assets                                     $ 805,998       $ 814,917  
                                                                  
                                                                  
Liabilities and shareholders' equity
Current liabilities
Short-term debt                                  $ 36,013         $ 49,432
Accounts payable                                   30,972           42,281
Other liabilities and accrued items                50,778           55,811
Unearned revenue                                  461            1,543    
Total current liabilities                          118,224          149,067
                                                                  
Other long-term liabilities                        16,515           16,173
Retirement and post-employment benefits            122,000          125,978
Unearned income                                    57,664           61,184
Long-term income taxes                             1,510            1,510
Deferred income taxes                              384              1,130
Long-term debt                                     52,423           44,880
Shareholders' equity                              437,278        414,995  
Total liabilities and shareholders'              $ 805,998       $ 814,917  
equity
                                                                  
                                                                  
See Notes to Consolidated Financial Statements.


                                                             
                                                                   
Materion Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

                                                     Nine Months Ended
                                                     Sept. 27,     Sept. 28,
(Thousands)                                          2013          2012
                                                                   
Cash flows from operating activities:
Net income                                           $ 20,817      $ 22,161
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation, depletion and amortization               30,842        28,923
Amortization of deferred financing costs in            501           487
interest expense
Stock-based compensation expense                       4,103         4,343
Changes in assets and liabilities net of
acquired assets and liabilities:
Decrease (increase) in accounts receivable             3,122         (20,451 )
Decrease (increase) in other receivables               21            4,393
Decrease (increase) in inventory                       (7,496  )     (23,795 )
Decrease (increase) in prepaid and other               4,653         (4,852  )
current assets
Decrease (increase) in deferred income taxes           249           (812    )
Increase (decrease) in accounts payable and            (21,216 )     (12,805 )
accrued expenses
Increase (decrease) in unearned revenue                (1,082  )     (1,316  )
Increase (decrease) in interest and taxes              108           (577    )
payable
Increase (decrease) in long-term liabilities           1,152         (3,618  )
Other-net                                             2,741       545     
Net cash used in operating activities                  38,515        (7,374  )
                                                                   
Cash flows from investing activities:
Payments for purchase of property, plant and           (19,830 )     (25,335 )
equipment
Payments for mine development                          (4,407  )     (4,992  )
Reimbursements for capital equipment under             -             991
government contracts
Payments for purchase of business net of               -             (3,894  )
cash received
Proceeds from sale of property, plant and              23            -
equipment
Other investments-net                                 20          1,742   
Net cash used in investing activities                  (24,194 )     (31,488 )
                                                                   
Cash flows from financing activities:
Proceeds from issuance (repayments) of                 (13,263 )     16,505
short-term debt
Proceeds from issuance of long-term debt               70,333        32,305
Repayment of long-term debt                            (62,789 )     (7,740  )
Debt issuance costs                                    (1,554  )     -
Principal payments under capital lease                 (491    )     (580    )
obligations
Repurchase of common stock                             -             (119    )
Cash dividends paid                                    (4,847  )     (3,083  )
Issuance of common stock under stock option            1,075         144
plans
Tax benefit from stock compensation                   1,664       77      
realization
Net cash provided from financing activities            (9,872  )     37,509
Effects of exchange rate changes                      (348    )    (8      )
Net change in cash and cash equivalents                4,101         (1,361  )
Cash and cash equivalents at beginning of             16,056      12,255  
period
Cash and cash equivalents at end of period           $ 20,157     $ 10,894  
                                                                   
                                                                   
See Notes to Consolidated Financial Statements.




Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)


Note A - Accounting Policies

In management's opinion, the accompanying consolidated financial statements
contain all adjustments necessary to present fairly the financial position as
of September 27, 2013 and December 31, 2012 and the results of operations for
the third quarter and nine months ended September 27, 2013 and September 28,
2012. All adjustments were of a normal and recurring nature.


                                                              
                                                                     
Note B - Inventories
                                                                     
Inventories on the Consolidated Balance Sheets are summarized as follows:
                                                                     
                                                       Sept. 27,     Dec. 31,
(Thousands)                                        2013        2012
                                                                     
Principally average cost:
Raw materials and supplies                             $ 43,645      $ 42,751
Work in process                                        199,254       203,179
Finished goods                                         53,386        51,094
Gross inventories                                      296,285       297,024
                                                                     
Excess of average cost over LIFO inventory             83,501        90,899
value
Net inventories                                        $ 212,784     $ 206,125
                                                                     



Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Note C - Pensions and Other Post-employment Benefits

The following is a summary of the third quarter and first nine months 2013 and
2012 net periodic benefit cost for the domestic defined benefit pension plans
and supplemental retirement plans and the domestic retiree medical plan.

                                                      
                          Pension Benefits                   Other Benefits
                          Third Quarter Ended                Third Quarter
                                                             Ended
                          Sept. 27,       Sept. 28,         Sept.    Sept.
                                                             27,       28,
(Thousands)           2013            2012              2013     2012
                                                                       
Components of
net periodic
benefit cost
                                                                       
Service cost              $  2,356         $  1,966          $ 76      $ 93
Interest cost                2,353            2,341            311       360
Expected
return on                    (2,996  )        (2,926  )        -         -
plan assets
Amortization
of prior                     (85     )        (118    )        29        -
service cost
(benefit)
Amortization                1,951          1,402          -        -
of net loss
Net periodic              $  3,579        $  2,665         $ 416     $ 453
benefit cost
                                                                       
                                                                       
                          Pension Benefits                   Other Benefits
                          Nine Months Ended                  Nine Months Ended
                          Sept. 27,        Sept. 28,         Sept.     Sept.
                                                             27,       28,
(Thousands)           2013            2012              2013     2012
                                                                       
Components of
net periodic
benefit cost
                                                                       
Service cost              $  7,066         $  5,900          $ 229     $ 279
Interest cost                7,060            7,013            932       1,080
Expected
return on                    (8,989  )        (8,778  )        -         -
plan assets
Amortization
of prior                     (255    )        (354    )        86        -
service cost
(benefit)
Amortization                5,816          4,206          -        -
of net loss
Net periodic              $  10,698       $  7,987         $ 1,247   $ 1,359
benefit cost
                                                                       
                                                                       
The Company made contributions to the domestic defined benefit pension plan of
$9.2 million in the first nine months of 2013.


                                                                                                  
                                                                                                                 
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
                                   
Note D - Segment Reporting
                                                                                                                 
                                                                                                                 
                     Advanced
                     Material         Performance     Beryllium       Technical                   All
                                                      and
(Thousands)          Technologies   Alloys        Composites    Materials   Subtotal    Other        Total
Third
Quarter 2013
Sales to
external             $   176,294      $  69,578       $ 13,685        $  15,877     $ 275,434     $ -            $ 275,434
customers
                                                                                                                 
Intersegment             523             443            67               156          1,189         -              1,189
sales
                                                                                                                 
Operating
profit                   4,800           4,520          (3,306  )        1,421        7,435         (1,453 )       5,982
(loss)
                                                                                                                 
                                                                                                                 
Third
Quarter 2012
Sales to
external             $   190,508      $  68,700       $ 14,418        $  16,975     $ 290,601     $ -            $ 290,601
customers
                                                                                                                 
Intersegment             520             599            245              119          1,483         -              1,483
sales
                                                                                                                 
Operating
profit                   9,212           5,404          (515    )        1,135        15,236        (1,847 )       13,389
(loss)
                                                                                                                 
                                                                                                                 
First Nine
Months 2013
Sales to
external             $   566,158      $  218,435      $ 42,194        $  53,957     $ 880,744     $ -            $ 880,744
customers
                                                                                                                 
Intersegment             2,048           1,484          200              600          4,332         -              4,332
sales
                                                                                                                 
Operating
profit                   12,694          18,654         (3,780  )        5,246        32,814        (3,920 )       28,894
(loss)
                                                                                                                 
Assets                   319,593         267,232        142,183          23,734       752,742       53,256         805,998
                                                                                                                 
                                                                                                                 
First Nine
Months 2012
Sales to
external             $   654,245      $  216,434      $ 43,102        $  55,459     $ 969,240     $ 79           $ 969,319
customers
                                                                                                                 
Intersegment             1,691           1,968          574              590          4,823         -              4,823
sales
                                                                                                                 
Operating
profit                   22,011          18,349         (3,823  )        4,995        41,532        (5,814 )       35,718
(loss)
                                                                                                                 
Assets                   366,190         257,825        134,787          23,094       781,896       36,463         818,359
                                                                                                                 

Contact:

Materion Corporation
Investor Contact:
Michael C. Hasychak, 216-383-6823
mike.hasychak@materion.com
or
Media Contact:
Patrick S. Carpenter, 216-383-6835
patrick.carpenter@materion.com
or
http://www.materion.com
Mayfield Hts-g
 
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