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Materion Corporation Reports Third Quarter 2015 Financial Results AND DECLARES FOURTH QUARTER DIVIDEND

The following excerpt is from the company's SEC filing.

MAYFIELD HEIGHTS, Ohio - October 29, 2015 - Materion Corporation (NYSE:MTRN) today reported third quarter 2015 financial results.

Third quarter 2015 GAAP earnings were $0.34 per share, diluted. Adjusted third quarter earnings were $0.40 per share, diluted, in line with Company’s expectations.

First nine months of 2015 GAAP earnings were $1.24 per share, diluted. Adjusted earnings for the first nine months of 2015 were $1.24 per share, diluted, 7% above prior-year adjusted earnings of $1.16 per share, diluted.

Net sales for the third quarter of 2015 were $244.4 million. Value-added sales wer e $148.8 million, 10% below third quarter 2014 value-added sales.

Cost reduction actions were taken in the quarter to reduce operating costs primarily in China, as well as a structural reorganization to eliminate several executive level positions.

The Company declared a fourth quarter dividend of $0.09 per share.

THIRD QUARTER 2015 RESULTS

Net sales for the third quarter were $244.4 million, compared to net sales of $291.6 million for the third quarter of 2014. Value-added sales were $148.8 million compared to value-added sales of $165.6 million for the third quarter of 2014.

The decrease in value-added sales in the third quarter of 2015 compared to the same period of last year was due primarily to weaker demand from Asian markets, customers tied to oil and gas exploration and the negative impacts from foreign exchange rates. Partially offsetting these headwinds was sales growth in the defense and industrial component markets both year over year and sequentially. New product value-added sales grew 8% over the prior-year comparable period and represented 12% of total third quarter 2015 value-added sales.

Operating profit in the third quarter of 2015 was $10.2 million, which includes $1.8 million in one-time cost reduction initiatives associated with headcount reductions primarily in our China operations and the elimination of several senior-level positions. Excluding these non-recurring costs, adjusted operating profit for the third quarter of 2015 was $12.0 million, 20% below the prior-year third quarter adjusted operating profit of $15.0 million. The decreased profits resulted primarily from the lower value-added sales levels. Adjusted operating profit margin expressed as a percent of value-added sales was 8.1% in the third quarter of 2015, below the prior-year period of 9.1%.

Net income for the third quarter of 2015 was $6.9 million, or $0.34 per share, diluted. This compares to net income of $12.6 million, or $0.61 per share, diluted, for the third quarter of the prior year. Excluding special items in both periods, adjusted earnings for the third quarter of

2015 were in line with Company expectations at $0.40 per share compared to $0.52 per share for the third quarter of 2014.

For the first nine months of 2015, net sales were $811.2 million compared to net sales of $838.5 million for the same period of last year. Value-added sales for the first nine months of 2015 were $473.8 million, up 1% compared to $470.1 million for the same period last year and up 3% exchange rate adjusted. Year-to-date net income was $25.4 million or $1.24 per share, diluted, as compared to $29.9 million in the comparable period of the prior year. Excluding special items in both periods, adjusted earnings grew 7% year over year, from $1.16 per share, diluted, in the first nine months of 2014, to $1.24 per share, diluted, in the first nine months of 2015.

CHAIRMAN’S COMMENTS

Richard J. Hipple, Chairman, President and Chief Executive Officer, stated, “Through the first nine months of 2015 we have increased value-added sales and adjusted earnings over 2014, along with doubling our cash flow from operations. I am satisfied with our year-to-date performance in the challenging environment that we find ourselves. The Materion team has responded very well in taking the necessary actions to counter some of the headwinds. The economic slowdown in China continues, along with the ongoing drop off in oil and gas exploration and the strength of the U.S. dollar; these negative factors reach across several of our end markets and geographies. We do expect to see a recovery in our Asian sales as customer inventories are adjusted in response to the lower growth conditions in Asia.”

“Our long-term strategy of driving sustainable organic growth through new product development and expanding applications of our differentiated product portfolio remains intact. We made meaningful progress in the quarter with several of our strategic growth platforms. For example, optical coating products are being qualified with multiple tier one consumer electronics manufacturers. We are advancing negotiations of long-term beryllium contracts and continue to have design wins with several of our customers regarding newly developed products. While we execute on our long-term growth initiatives we are responding to current demand levels and reducing our cost structure where appropriate.”

BUSINESS SEGMENT REPORTING

Performance Alloys and Composites

Net sales for Performance Alloys and Composites in the third quarter of 2015 were $93.6 million compared to net sales of $114.2 million in the third quarter of 2014. Value-added sales were $79.6 million in the third quarter of 2015, down 16% compared to $94.7 million in the third quarter of 2014. The decline in value-added sales was due to a combination of weaker demand in the oil and gas market, unfavorable foreign exchange rates and slower growth in the consumer electronics and telecommunications infrastructure primarily in Asia, offset in part by stronger demand from the defense and industrial components end markets.

During the third quarter of 2015, Performance Alloys and Composites, in response to the lower business levels, reduced headcount by 4% and reorganized the management structure to reduce senior level positions.

Operating profit for the third quarter of 2015 was $4.5 million compared to prior-year operating profit of $10.8 million. The decline in operating profit is a result of the reduction in value-added sales and unfavorable product mix. Operating profit as a percent of value-added sales for the third quarter of 2015 was 5.7%.

Advanced Materials

Advanced Materials’ net sales for the third quarter of 2015 were $113.6 million, compared to third quarter of 2014 net sales of $137.6 million. After a...


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