Materion Corporation

Good morning, everybody, and welcome to Materion's fourth quarter earnings release call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. Please note this conference is being recorded. I would now turn the conference over to your host, Mr. John Zernak, Chief Accounting Officer. John, over to you.

Good morning, and thank you for joining us on our fourth quarter 2022 earnings conference call. This is John Zaranek, Chief Accounting Officer. 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 through 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 the full year, as well as an update on key strategic initiatives. Following Jugal, Shelley will review the detailed financial results for the quarter and the year, in addition to discussing our expectations for 2023. We will then open 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 the 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-cash 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. It's great to be with you today and share details on another record quarter for Maturion. which closes out a record year. This year, we marked several milestones for our company, crossing $1 billion in value-added sales, delivering over $300 million in quarterly sales, reaching nearly $200 million in EBITDA, and crossing $5 for EPS. Our transformation into a global leader in high-performance advanced materials is delivering, as we're driving a step change in both our sales and earnings. Our strong execution and delivery on strategic growth initiatives are enabling us to consistently outgrow our end markets. An expanding list of customers continue to place their trust in us for the development of next-generation solutions aligned with global megatrends. These strategic partnerships are helping to build a healthy pipeline for future growth and strengthening our position for 2023. We brought this year to a record close with an incredible 11th consecutive quarter of VA sales growth. The new facility for precision clad strip project contributed meaningfully as we fully qualified the facility. In addition, we continue to supply clad strip from our legacy plants. Our acquisition of HCS electronic materials continue to outperform, delivering on robust demand from our customers. In total, The progress we've made on organic and inorganic initiatives grow record top and bottom line growth with EBITDA margins reaching 18% in the quarter, tracking well towards our midterm target of 20%, and contributing to record quarterly earnings of $1.49 per share. For the full year, we delivered year-on-year increases of 30% or more across sales, EBITDA, and EPS. It was an exceptional year in our company's transformation. Organic growth investments and strategic customer partnerships contributed more meaningfully to our results. The integration of HCS electronic materials has gone extremely well as the power of our combined teams generated significant commercial and operational opportunities that are driving growth beyond our already strong synergy expectations. We're investing more than $20 million in the new facility to expand capacity and capabilities to service demand in the semiconductor, industrial, and aerospace and defense markets. Our precision clad strip facility was completed and qualified during the year and is now achieving significant production levels, a noteworthy accomplishment given the size and scale of that project. As we've shared, the customer is investing an additional $40 million with us to increase capacity after their initial investment of $80 million. The construction for Phase 2 capacity remains on track, and we anticipate that capacity coming online in late 2024. The build-out of our new facility in Milwaukee is progressing nicely, as we are installing new equipment over the next few quarters, with production capabilities coming online in the first half of next year. This site will expand our capacity to support production of the most sophisticated semiconductor chips, as well as broaden our advanced chemicals capabilities to produce materials for next-generation batteries for electric vehicles. This year, we also announced a partnership with Kairos Energy to support clean energy development with the establishment of a molten salt purification plant that produces FLI, a reliable, safe, and cost-effective molten salt coolant used in nuclear energy production. Today, I'm happy to announce two additional customer partnerships that further develop our growth pipeline. First, we secured another customer-funded investment of $15 million to expand our capabilities and supply critical materials for clean energy power generation. We expect equipment installation to be completed this year at our facilities and look forward to completing delivery of the materials by end of next year. We also continue to see great interest in our capabilities for critical space applications. We recently signed a three-year agreement to supply materials for space propulsion systems. We have already received an initial $10 million order, which we will start to ship middle of this year. This partnership further establishes Materion as a leading partner for innovative solutions that deliver the level of performance and reliability required for critical space missions. Strategic growth projects are the cornerstone of our strategy, and in 2022, our team demonstrated an ability to execute on our commitments and to continue developing important customer partnerships. There is no better evidence of our global success as an advanced materials leader than the customers who continue to choose Materion and make upfront financial contributions so that we can solve the most pressing challenges. Materian's performance over the past two years has seen sales growth 70 percent, with earnings more than doubled. And as indicated by our growing list of customer partnerships, we are continuing to build for the future, remaining laser focused on outpacing the growth rate of the markets we serve and continuing to align ourselves with megatrends that will open additional growth avenues for years to come. With the success and progress of our outgrowth initiatives, we're heading into 2023 with excellent momentum. We will continue to drive market outgrowth, even as the environment experiences pockets of general softness, particularly in the semiconductor space. Operational excellence, disciplined cost management, combined with our outgrowth, will ensure we continue to advance the earnings power of our company. We will continue to drive our transformation and differentiating material through unparalleled technical expertise innovation and strong performance. As we continue to build our pipeline, we expect to deliver another year of record results at both top and bottom. I'm proud of our global team as they continue to support our customers and help them exceed expectations. Thanks to our team's talent and dedication, we have delivered record results for two consecutive years. Together, we are driving long-term value creation for our customers, our shareholders, and our people. Now, let me turn the call over to Shelley to cover the financials.