Materion Corporation

Good day, everyone. Welcome to the Materian First Quarter 2025 Earnings Conference 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 telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to your host, Kyle Kelleher, Director, Investor Relations, and Corporate FP&A. You may begin.

Good morning, and thank you for joining us on our first quarter 2025 earnings conference call. This is Kyle Kelleher, Director, Investor Relations, and Corporate FP&A. 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 for 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. Following Jugal, Shelley will review the detailed financial results for the quarter in addition to discussing expectations for the remainder of 2025. We will then open up the call for questions. Let me remind investors that any forward-looking statements made in the 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 nine 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 the call over to Jugal for his comments.

Thank you, Kyle, and welcome, everyone. It's a pleasure to be with you today to discuss our first quarter results and provide an update on our outlook for the remainder of 2025. I am very pleased with our first quarter results. We delivered record first quarter margins led by strong operational performance. Year-over-year EBITDA margins improved by 130 basis points. Sales developed in line with our expectations, up about 4% from prior year excluding the PMI inventory correction. In total, we're up about 1%, with stronger demand from semiconductor, energy, industrial, and aerospace, more than offsetting continued softness in automotive and consumer electronics, including the precision clad strip inventory correction. Semiconductor market continues to show signs of gradual improvement, led by demand from data storage and advanced logic and memory applications. However, power semiconductor shipments remain sluggish, impacted by slow demand in automotive and industrial applications. Aerospace continues to be a strong growth market for us, up more than 30% in the quarter, led by both commercial aerospace and space applications. Airplane bills were up almost 20% in the quarter, and we outpaced that rate with our sales up 25% year-over-year. As we mentioned last quarter, orders have started to come back for our beryllium nickel spring material, which drove above market growth of 8% in industrial for Q1. In the energy market, we delivered materials for a new multi-year agreement with Idaho National Labs to support nuclear energy research and development. We are excited about this partnership and our continued growth in the nuclear energy space. The remainder of our energy business also saw year-over-year growth. Automotive market continued to pull back as lower customer build rates and inventory destocking led to sales being down 13% year-over-year. For the quarter, we benefited from structural cost reductions implemented throughout last year and strong plant performance resulting in record EBITDA margin for the first quarter. Cash flow was a highlight for the quarter. With $35 million improvement year over year, we are keenly focused on improving cash flow in 25 by structurally driving down working capital and pacing capital investments as the business grows. Our performance in the first quarter would put us on track to achieve our earnings guidance for the full year. However, we acknowledge that the noise and volatility around tariffs has inserted a level of uncertainty that makes the rest of the year difficult to pinpoint. While we are taking all necessary actions to minimize the impact, we do expect to see an impact in the second quarter, which could continue in the second half if tariff conditions persist. From a sourcing perspective, we have some exposure, but in most cases, we are dual sourced and can shift demand to a non-tariff country. We have a handful of materials that are sourced from China, and we have a healthy quantity of those materials on hand. Where we do incur import tariffs, we expect to recover those costs through surcharges and pricing adjustments. We executed this very well during COVID times, and I would expect us to do the same in this situation. On the sales front, we ship approximately $100 million of product to China from the U.S. annually. And that business is one we're watching very closely. In many cases, our customers are pausing order activity, waiting to see what the outcome will be While I don't expect all of that business to be at risk, if tariff conditions persist, we would expect to see an impact. On a more positive note, our substantial US footprint positions us favorably compared to our international competitors. We are actively working with customers to identify opportunities that could provide sales upside in the US. As we move through the rest of 2025, we are committed to minimizing tariff impacts driving operational excellence, staying focused on structural cost improvements, all leading to a 20% plus EBITDA margin for the year. We will continue working capital improvements and pace capital investments, leading to strong cash generation for the year. I would like to thank our global team for their unwavering commitment to improving our company for all of our stakeholders. Now, let me turn the call over to Shelley to cover more details on the financials.