Materion Corporation

Greetings and welcome to the Materion Corporation Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Shamrock, Intern, Chief Financial Officer, Thank you. You may begin.

Good morning. This is Steve Shamrock, Interim Chief Financial Officer. With me today is Jugal Vijayvargiya, President and Chief Executive Officer. Our format for today's conference call is as follows. Jugal Vijayvargiya will provide an update on COVID-19 and key strategic initiatives. Following Jugal, I will review detailed financial results for the quarter, and then we will open up the call for questions. Before we begin, let me remind investors that any forward-looking statements made in this announcement, including those in the outlook section and during the question and answer portion, are based on current expectations. The company's actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. Those factors are listed in the earnings press release we issued this morning. Additionally, comments with regard to earnings before interest and taxes Net income and earnings per share reflect the adjusted gap numbers shown in attachment number five in this morning's press release. The adjustments are made in the prior year period for comparative purposes and remove special items, non-cash charges and certain income tax adjustments. And now I'll turn it over to Jugal for his comments.

Thanks, Steve, and welcome everyone. I hope all of you and your loved ones remain healthy and safe as we continue to manage through these challenging times. Today, I'll provide a COVID-19 status followed by an update on our key strategic initiatives. Health and safety of our people continues to remain our overriding priority. Throughout this very difficult time, we've taken input from all available sources and implemented protective measures for our people. To date, 11 of our employees have tested positive for the virus and I'm happy to report that they're all doing well at this time. Nine people have returned to work while two are quarantined at their home. A majority of our office employees continue to work from home while all of our factories continue to operate. As you would expect, we felt the full impact of COVID-19 and a number of our key end markets in the second quarter, including consumer electronics, energy, industrial, automotive and aerospace. Despite these very challenging market conditions, we delivered sequential value added sales and earnings growth. Defense end market sales rebounded in the second quarter and we continue to see strong demand going forward. Sales in the medical market particularly healthcare equipment used in the fight against COVID-19 contributed to sequential growth. We expect this to continue into the third quarter. In response to reduced demand, we actively managed our costs which you can see in our financial results. Sequentially, our sales increased 2% while earnings increased 14%. Let me now transition to providing an update on our one maternion Multi-Pillar Profitable Growth Initiatives. Once again, I have some exciting news to share. You will recall we held a special call announcing the signing of OpticsBallsers acquisition. Our teams have worked diligently to close the acquisition in just six weeks. This week, I'm excited to officially welcome OpticsBallsers to the Materion family. The combination of our two companies creates the world's leading thin-film optical coatings provider with a highly complementary geographic, product, and end-market portfolio. With this acquisition, Materion significantly expands its geographic reach, extending beyond its core of North America to include Europe and Asia. OpticsBalsers maintains a very strong European presence with two R&D and manufacturing locations and Liechtenstein in Germany. In addition, OpticsBalsers recently launched a state-of-the-art manufacturing facility in Malaysia, which has been a key enabler for growth in Asia. Complementary technologies across the electromagnetic spectrum boost the capabilities of the combined thin-film optical coatings portfolio and position material to capitalize on key megatrends in the areas of life science, We're excited to get started on the value creation opportunities. Our engineered Cladstrip project, which I announced in the last call, remains on schedule. As a reminder, we entered into a business arrangement with a new customer to expand our manufacturing capacity for a highly engineered Cladstrip product, which will be used in a next-generation model of an existing product. The total investment of the project is expected to be approximately $85 million. You'll recall we had received $12 million of the approximately $70 million the customer will fund. Now I can report to you that the customer has paid us $31 million with additional payments scheduled to be made over the next year. In support of this customer program, we are actively working to establish a new leading-edge manufacturing facility for future product supply. We're making progress on negotiating a long-term supply agreement and still expect to finalize later this year. Lastly, a quick update on PAC facility consolidation project to improve our cost structure. We completed the closure of the Detroit Michigan Service Center in the second quarter and remain on schedule to exit the Fremont, California location by the end of this year. In closing, We remain committed to take all necessary precautions to protect our people. I'm extremely proud of the dedication to our company during these difficult times. Despite all of the macroeconomic challenges we're facing, we are continuing the course to follow her one materion, multi-pillar profitable growth strategy. Now, I'll turn the call over to Steve to cover the financials.