Materion Corporation

Good day, ladies and gentlemen, and welcome to the Materion First Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on listen-only mode. We open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, John Zaranek, Vice President and Corporate Controller and Investor Relations for Materion Corporation. Sir, the floor is yours.

Good morning, and thank you, everyone, for joining us on our first quarter 2022 earnings conference call. This is John Zaranek, Vice President, Corporate Controller, and Investor Relations for Materion Corporation. Before we begin our remarks this morning, I would like to point out that we have posted materials on the company's website that we will reference as part of today's review of the quarterly results. You can also access the materials throughout the download feature on the earnings call webcast link. With me today is Jugal Vijay Varghia, President and Chief Executive Officer, and Shelley Chadwick, Vice President and Chief Financial Officer. Our format for today's conference call is as follows. Jugal will provide opening comments on the quarter and an update on key strategic initiatives. Following Jugal, Shelley will review the detailed financial results for the quarter in addition to discussing our expectations for the remainder of 2022. Then we will open up the call for questions. Let me remind investors that any forward-looking statements made in this presentation, including those in the outlook section and during the question and answer portion, are based on current expectations. The company's actual 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 regarding earnings before interest, taxes, depreciation, depletion, and amortization Net income and earnings per share reflect the adjusted gap numbers shown in attachments four through seven in this morning's press release. The adjustments are made in the prior year period for comparative purposes and remove special items, non-cast charges, and certain discrete income tax adjustments. And now I'll turn over the call to Jugal for his comments.

Thanks, John, and welcome, everyone. I'm pleased to share details of our record performance in Q1. and cover some significant advancements on our strategic initiatives. We have started the year out strong, and our momentum is building as we're on track to deliver another year of record performance. In Q1, we achieved record sales and earnings, with value-added sales up 34% and EBITDA up almost 50% when compared to an already strong Q1 last year. Our record results were possible thanks to our team's tireless efforts to serve our customers despite challenging supply chain and macroeconomic conditions, along with the impact of the Shanghai lockdown. Our transformation strategy continues to position us for significant sales growth. Robust end market demand, coupled with our organic initiatives, helped to drive double-digit organic growth, with VA up 13% versus last year. We saw strong outgrowth across many of our end markets, such as semiconductor, industrial, aerospace, and energy, as we continue to partner with our customers to develop innovative products and solutions and increase content on our fast-growing applications. Q1 also marked the first full quarter results from the largest acquisition in our company's history, HCS Electronic Materials, which has significantly strengthened our position as a critical supplier to the fast-growing semiconductor market. So far, the integration has been seamless, even better than we expected as our teams have joined together quickly and collaboratively with a shared focus on driving higher levels of performance. We are already investing in this new facility to add capacity, broaden our capabilities, and increase yields to support our customers. The acquisition is contributing to our results ahead of expectations, and we are excited about what the future holds. Our organic and inorganic initiatives are delivering and helping to reshape our company. As we progress along our transformation journey, we are updating the names of two of our operating segments. The new names of electronic materials and performance materials better reflect the strength of our portfolios and the progress we've made in both businesses. In addition to our strong organic growth and the success of our recent acquisition, our precision clad strip project is advancing through the qualification phase. with the project remaining on track to contribute meaningfully in the second half of this year. We continue to receive positive feedback from our customer and strengthen the trust and confidence they have in our company. As a result of the successful relationship, we have been awarded a second increment of business that will allow us to expand our capacity by two-thirds and service even higher levels of expected demand. The total investment for this expansion project is about 60 million dollars. with approximately $40 million being contributed upfront by the customer. We have already received $4.4 million towards the new project and expect to receive another $2.8 million next week. Engineering work has already been started and orders have been placed for long lead time equipment. We expect to have the new capacity available in 2024. This additional commitment is a meaningful win for our company. deepening our relationship with an important customer and ensuring even higher levels of growth for years to come. The confidence placed in Materion further demonstrates our position as a critical partner for our customers in the development of innovative solutions for their most important technical challenges. For this year, we remain on track to exceed a billion dollars in VA sales for the first time in our history as we grow our business and continue to outpace our end markets. Our already strong order book grew again in the first quarter, giving us confidence and optimism for the rest of the year, even with the uncertainty that exists in the broader environment. With that in mind, we are increasing our earnings guidance for the full year. I remain highly confident that we can achieve record value-added sales and earnings as we take another step forward on our transformation journey. In closing, let me reiterate how proud I am of what our team has accomplished to start the year. delivering record performance and setting us on the path for outstanding 2022. Now, let me turn the call over to Shelly to cover the financials.