Materion Corp (MTRN) 2021 Q1 法說會逐字稿

Greetings and welcome to the Materion's First Quarter 2021 Earnings Conference Call. (Operator Instructions) This conference is being recorded. I would now like to turn the conference over to your host, Andrew Vento, Manager, Investor Relations and Corporate Development. You may begin.

歡迎來到 Materion 2021 年第一季度收益電話會議。 （操作員說明）正在錄製此會議。我現在想把會議轉交給你的主持人，投資者關係和企業發展經理 Andrew Vento。你可以開始了。

Good morning and thank you, everyone, for joining us on our first quarter 2021 earnings conference call. This is Andrew Vento, Manager, Investor Relations and Corporate Development for Materion Corporation. Before we begin our remarks this morning, I would like to point out that starting this quarter, we will be utilizing presentation materials alongside our quarterly earnings conference calls. We have posted those materials on the company's website that we will reference as a 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.

早上好，謝謝大家參加我們 2021 年第一季度的收益電話會議。我是 Materion Corporation 的投資者關係和企業發展經理 Andrew Vento。在我們今天上午開始發言之前，我想指出，從本季度開始，我們將在季度收益電話會議的同時使用演示材料。我們已將這些材料發佈在公司網站上，我們將在今天的季度業績審查中參考這些材料。您還可以通過收益電話網絡廣播鏈接上的下載功能訪問這些材料。

With me today is Jugal Vijayvargiya, President and Chief Executive Officer; and Shelly 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 provide an update on key initiatives. Following Jugal, Shelly will review detailed financial results for the quarter and we will 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 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.

今天和我在一起的是總裁兼首席執行官 Jugal Vijayvargiya；和 Shelly Chadwick，副總裁兼首席財務官。我們今天電話會議的形式如下。 Jugal 將提供本季度的開場評論，並提供關鍵舉措的最新情況。在 Jugal 之後，雪莉將審查本季度的詳細財務業績，我們將公開提問。讓我提醒投資者，本演示文稿中的任何前瞻性陳述，包括展望部分和問答部分的陳述，都是基於當前的預期。由於多種因素，公司未來的實際業績可能與前瞻性陳述中預期的業績存在重大差異。這些因素列在我們今天上午發布的收益新聞稿中。

Additionally, comments regarding earnings before interest and taxes, net income, and earnings per share reflect the adjusted GAAP numbers shown in attachment #5 in this morning's press release. The adjustments are made in the prior year period for comparative purposes and removes special items, non-cash charges and certain income tax adjustments.

此外，關於息稅前收益、淨收入和每股收益的評論反映了今天上午新聞稿附件#5 中顯示的調整後的 GAAP 數據。出於比較目的，在上一年度期間進行了調整，並刪除了特殊項目、非現金費用和某些所得稅調整。

And now I'll turn the call over to Jugal for his comments.

現在我將把電話轉給 Jugal 徵求他的意見。

Thanks, Andrew and welcome everyone. I hope that all of you are in good health and have had a good start to the new year. I'm pleased to report that we delivered a very strong first quarter, achieving record quarterly value-added sales and our fourth quarter of sequential top line growth. Many of our markets continue to expand and we believe we outpaced end market growth in several sectors including semiconductor, automotive and industrial. Our Advanced Materials business delivered a quarterly record for value-added sales with strong market demand and new business wins. The supply chain and staffing shortages that are prevalent all around us have not had a meaningful impact on our business.

謝謝，安德魯，歡迎大家。希望大家身體健康，新的一年有個好的開始。我很高興地報告，我們第一季度表現非常強勁，實現了創紀錄的季度增值銷售額和第四季度的環比增長。我們的許多市場繼續擴張，我們相信我們在半導體、汽車和工業等多個領域的終端市場增長速度都超過了。我們的先進材料業務憑藉強勁的市場需求和新業務贏得了增值銷售額的季度記錄。我們周圍普遍存在的供應鍊和人員短缺並未對我們的業務產生重大影響。

Performance was strong across the company as all 3 segments reported double-digit EBIT margins for the third consecutive quarter. I'm very impressed with our team's passion to serve our customers and their drive to return Materion to pre-pandemic levels of performance. We continue to execute well on our key strategic growth initiatives. Let me talk through a few highlights.

整個公司的業績都很強勁，因為所有 3 個部門都連續第三個季度報告了兩位數的息稅前利潤率。我對我們團隊為客戶服務的熱情以及他們將 Materion 恢復到大流行前水平的動力給我留下了深刻的印象。我們繼續很好地執行我們的關鍵戰略增長計劃。讓我通過幾個亮點來談談。

Our customer-funded precision clad engineered strip project remains on track. We completed a second quarter of shipments from our existing facility, and the construction of our new leading-edge manufacturing facility remains on schedule. Our Optics Balzers integration is nearly complete. Our teams continue to work collaboratively on combining the businesses and on identifying customer opportunities in support of our overall growth objectives. We have several synergistic initiatives underway. We continue to build a strong pipeline of organic growth opportunities across all 3 segments. Our increased investment in R&D and our customer-focused initiatives are driving organic projects that will continue to position the company for above-market growth. And finally we're investing in our facility capabilities to support that growth.

我們由客戶資助的精密複合工程帶鋼項目仍在進行中。我們完成了現有工廠第二季度的發貨，我們新的領先製造工廠的建設仍在按計劃進行。我們的 Optics Balzers 集成即將完成。我們的團隊繼續協同工作，合併業務並確定客戶機會，以支持我們的整體增長目標。我們正在進行多項協同舉措。我們繼續在所有 3 個細分市場建立強大的有機增長機會管道。我們增加的研發投資和以客戶為中心的舉措正在推動有機項目，這些項目將繼續使公司實現高於市場的增長。最後，我們投資於我們的設施能力以支持這種增長。

As you know, our capital spending this year is expected to be around $100 million, which is significantly higher than our average run rate. We have a strong portfolio of projects lined up that will deliver new capacity, enhanced capabilities and improved yields to support our growth objectives. These important strategic initiatives, along with many others, are positioning us as a high-performing advanced materials company that enables next-generation applications.

如您所知，我們今年的資本支出預計約為 1 億美元，這大大高於我們的平均運行率。我們擁有一系列強大的項目組合，這些項目將提供新的產能、增強的能力和更高的收益，以支持我們的增長目標。這些重要的戰略舉措以及許多其他舉措將我們定位為一家支持下一代應用的高性能先進材料公司。

For the past few quarters we have talked a lot about our pipeline of organic growth opportunities. This quarter, we're highlighting some recent wins and advancements that are helping to enable next-generation capabilities for our customers.

在過去的幾個季度裡，我們談了很多關於有機增長機會的渠道。本季度，我們將重點介紹最近的一些勝利和進步，這些勝利和進步有助於為我們的客戶啟用下一代功能。

On Slide 7 of our materials, you will see 4 examples that I'm really excited about. First, we have been awarded a contract from Visteon to supply thin-film coated plastic lenses in next-generation automobiles. These lenses are a key component of an optical module enabling a 3D digital cockpit instrument cluster. Next, we continue to support space observation, exploration and aerospace missions with advanced solutions across all 3 of our businesses.

在我們材料的幻燈片 7 上，您將看到 4 個我非常感興趣的示例。首先，我們獲得了偉世通的合同，為下一代汽車提供薄膜塗層塑料鏡片。這些鏡頭是支持 3D 數字駕駛艙儀錶盤的光學模塊的關鍵組件。接下來，我們將繼續通過我們所有 3 項業務的先進解決方案支持太空觀測、探索和航空航天任務。

We recently announced that we outfitted NASA's Perseverance Rover with an array of advanced technologies from our broad portfolio including AlBeMet, a highly engineered alloy made of aluminum and beryllium which provides a superior combination of high stiffness and low density; Combo-Lid hermetic packaging solutions used in Perseverance's power, communication and sensing systems; and high-performing optical filters that enable spectral imaging in addition to dust characterization and daily weather reporting.

我們最近宣布，我們為 NASA 的毅力號漫遊車配備了一系列來自我們廣泛產品組合的先進技術，包括 AlBeMet，一種由鋁和鈹製成的高度工程化合金，可提供高剛度和低密度的卓越組合；用於 Perseverance 的電源、通信和傳感系統的 Combo-Lid 密封封裝解決方案；和高性能濾光片，除了塵埃特徵和日常天氣報告外，還可以進行光譜成像。

On the bottom left, you will see our aluminum scandium targets. These highly engineered targets are being used by the semiconductor industry to support increased bandwidth and higher frequencies required for the global rollout of 5G and accelerating growth of IoT.

在左下角，您會看到我們的鋁鈧靶。半導體行業正在使用這些高度設計的目標來支持全球推出 5G 和加速物聯網增長所需的更高帶寬和更高頻率。

Finally, our alloy strip products continue to enable evolving smartphone technologies. Our materials form spring solutions to support smartphone camera lens movement and enable faster autofocus features.

最後，我們的合金條帶產品繼續支持不斷發展的智能手機技術。我們的材料形成彈簧解決方案，以支持智能手機相機鏡頭移動並實現更快的自動對焦功能。

Looking ahead, I'm excited about what I'm seeing for the next few quarters. While economic uncertainty still exist, we see increasing opportunities in our organic pipeline, good demand across many of our end markets, and well-positioned businesses ready to respond to what lies ahead.

展望未來，我對接下來幾個季度所看到的情況感到興奮。雖然經濟不確定性仍然存在，但我們看到我們的有機管道中有越來越多的機會，我們許多終端市場的需求良好，並且處於有利地位的企業已準備好應對未來的挑戰。

Overall, I'm extremely proud of what the team has delivered thus far. Our first quarter performance provides significant momentum for the rest of the year. I would like to thank our employees for their hard work, dedication and commitment. Our strong results our thanks to them. Now let me turn the call over to Shelly to cover the financial details.

總的來說，我為團隊迄今為止所交付的成果感到非常自豪。我們第一季度的業績為今年剩餘時間提供了巨大的動力。我要感謝我們的員工的辛勤工作、奉獻精神和承諾。我們要感謝他們取得了優異的成績。現在讓我將電話轉給 Shelly 以討論財務細節。

Thanks, Jugal and welcome to everyone joining us on the call today. During my comments, I will reference the slides posted on our website this morning, and I'll start on Slide 11. As Jugal noted, we delivered very strong first quarter 2021 results. Value-added sales, which exclude the impact of passthrough precious metal cost, reached a record $198.6 million, up 29% versus the first quarter last year. The increase was driven by strong demand across several end markets including semiconductor, automotive and industrial, which more than offset weakness in the energy end market and reduced sales related to the closure of our LAC business.

謝謝 Jugal，歡迎大家今天加入我們的電話會議。在發表評論時，我將參考今天早上發佈在我們網站上的幻燈片，我將從幻燈片 11 開始。正如 Jugal 指出的那樣，我們在 2021 年第一季度取得了非常強勁的業績。剔除轉嫁貴金屬成本影響的增值銷售額達到創紀錄的 1.986 億美元，比去年第一季度增長 29%。這一增長是由包括半導體、汽車和工業在內的多個終端市場的強勁需求推動的，這大大抵消了能源終端市場的疲軟以及與我們關閉 LAC 業務相關的銷售額減少。

In addition, sales were aided by a large defense order late in the quarter, which would typically come later in the year. One item I'd like to point out is that we have updated the calculation of our passthrough metal cost to include additional precious metals, namely ruthenium, iridium, rhodium, rhenium and osmium, to be more inclusive with our definition of value-added sales. Our business related to these materials has increased to more meaningful levels over recent periods. The costs related to these metals follow the same passthrough process as the previously included metals of gold, silver, platinum, palladium and copper. Prior period passthrough costs and value-added sales amounts have been revised to reflect this change and those details are included in the appendix of the Slide deck issued today.

此外，本季度末的大型國防訂單也促進了銷售，該訂單通常會在今年晚些時候到來。我想指出的一項是，我們已經更新了直通金屬成本的計算，以包括額外的貴金屬，即釕、銥、銠、錸和鋨，以便在我們對增值銷售額的定義中更具包容性.最近一段時間，我們與這些材料相關的業務已增加到更有意義的水平。與這些金屬相關的成本遵循與之前包含的金、銀、鉑、鈀和銅等金屬相同的轉嫁過程。前期轉嫁成本和增值銷售額已進行修訂以反映這一變化，這些細節包含在今天發布的幻燈片的附錄中。

We delivered an adjusted EBIT margin of 10.8% and adjusted earnings per share of $0.82, both significant improvements over Q1 of last year.

我們實現了 10.8% 的調整後息稅前利潤率和 0.82 美元的調整後每股收益，均比去年第一季度有了顯著改善。

Looking at Slide 12, our improved profitability was impacted by several key factors. Adjusted EBIT in the quarter was $21.4 million, up from $9.9 million last year. Adjusted EBIT margin of 10.8% represents a 430 basis point increase from a year ago. The increase in EBIT was largely driven by higher volumes, favorable price mix and improved operating performance, offset partially by higher SG&A and R&D expenses. We benefited from favorable operating performance as our manufacturing team responded well to the increased customer demand. And the SG&A and R&D increase in the quarter represents an increase in variable compensation and continued investment in R&D to drive profitable growth. Even with the increased investments, SG&A expense improved 150 basis points year-on-year as a percentage of VA sales.

查看幻燈片 12，我們提高的盈利能力受到幾個關鍵因素的影響。本季度調整後的息稅前利潤為 2140 萬美元，高於去年的 990 萬美元。調整後的息稅前利潤率為 10.8%，比一年前增加了 430 個基點。息稅前利潤的增長主要是由於銷量增加、價格組合有利和經營業績改善，部分被更高的銷售、管理和行政費用和研發費用所抵消。我們受益於良好的經營業績，因為我們的製造團隊對不斷增加的客戶需求反應良好。本季度 SG&A 和研發的增加代表了可變薪酬的增加和對研發的持續投資，以推動利潤增長。即使增加了投資，SG&A 費用佔 VA 銷售額的百分比也同比提高了 150 個基點。

Now, let me review our first quarter performance by business segment. Starting with our Performance Alloys and Composites business on Slide 13. Value-added sales were $100.8 million, an increase of 20% compared to last year. The year-over-year increase was due primarily to strong performance in the industrial and automotive end markets, as well as sales to the new precision-clad engineered strip customer. In addition, sales were aided by the large order in the defense market that I mentioned earlier. EBIT, excluding special items, was $13.4 million or 13.2% of value-added sales compared to $6.9 million or 8.4% of value-added sales in the prior year. The increase was due mainly to higher sales volumes, favorable mix and strong operating performance. PAC reported double-digit adjusted EBIT margins for the fourth consecutive quarter, up 480 basis points from the prior year.

現在，讓我按業務部門回顧一下我們第一季度的業績。從幻燈片 13 的高性能合金和復合材料業務開始。增值銷售額為 1.008 億美元，比去年增長 20%。同比增長主要是由於工業和汽車終端市場的強勁表現，以及對新的精密複合工程帶材客戶的銷售。此外，我之前提到的國防市場的大訂單也促進了銷售。不包括特殊項目的息稅前收益為 1340 萬美元，佔增值銷售額的 13.2%，上年同期為 690 萬美元，佔增值銷售額的 8.4%。增長的主要原因是銷量增加、產品組合有利以及經營業績強勁。 PAC 報告連續第四個季度實現兩位數的調整後息稅前利潤率，比去年同期增長 480 個基點。

Now let's turn to Advanced Materials on Slide 14. Value-added sales in the first quarter of 2021 were a quarterly record of $63 million, up 16% versus the prior year. The increase was driven by higher sales to the semiconductor end market led by commercial performance initiatives and increased market demand. Growth in the Asia-Pacific region and strong demand for targets serving the data storage and mobile phone markets were significant factors that drove the top line to new highs. EBIT, excluding special items, was $8.9 million in the quarter compared to $5.1 million in the first quarter last year. Adjusted EBIT margins improved year-over-year by 500 basis points to a strong 14.3%. The improvement in adjusted EBIT margins was due to higher volume, favorable product mix and strong operating performance. We are excited about the progress made and remain focused on Advanced Materials' margins as we go forward.

現在讓我們轉到幻燈片 14 上的先進材料。2021 年第一季度的增值銷售額創下了 6300 萬美元的季度記錄，比去年同期增長 16%。這一增長是由商業績效計劃和市場需求增加導致的半導體終端市場銷售額增加所推動的。亞太地區的增長以及對服務於數據存儲和移動電話市場的目標的強勁需求是推動收入創下新高的重要因素。本季度扣除特殊項目的息稅前利潤為 890 萬美元，而去年第一季度為 510 萬美元。調整後的息稅前利潤率同比提高 500 個基點，達到 14.3% 的強勁勢頭。調整後息稅前利潤率的提高是由於銷量增加、產品組合有利以及經營業績強勁。我們對取得的進展感到興奮，並在我們前進的過程中繼續關注 Advanced Materials 的利潤率。

Turning finally to the Precision Optics segment on Slide 15. First quarter value-added sales were $35.6 million, up 109% compared to the first quarter last year. The business saw increases in every key end market with both our legacy optics business and new Optics Balzers acquisition performing well. EBIT, excluding special items, was $5.1 million or 14% of value-added sales, up 720 basis points from prior year. Strong demand and product mix drove the margin performance.

最後轉到幻燈片 15 上的精密光學部門。第一季度增值銷售額為 3560 萬美元，與去年第一季度相比增長 109%。由於我們的傳統光學業務和新收購的 Optics Balzers 表現良好，該業務在每個關鍵終端市場都有所增長。不包括特殊項目的息稅前利潤為 510 萬美元，佔增值銷售額的 14%，比上年增長 720 個基點。強勁的需求和產品組合推動了利潤率表現。

Moving now to cash debt and liquidity on Slide 16. We ended the first quarter of 2021 with a net debt position of $34 million and approximately $250 million available on the company's credit facility. The year-on-year increase in net debt was primarily related to the Optics Balzers acquisition; however, we remain well below our target leverage range of 1.5 to 3x net debt to EBITDA. We continue to have significant available liquidity and a strong balance sheet.

現在轉到幻燈片 16 上的現金債務和流動性。截至 2021 年第一季度，我們的淨債務頭寸為 3400 萬美元，公司的信貸額度約為 2.5 億美元。淨負債同比增長主要與收購Optics Balzers有關；然而，我們仍遠低於我們的目標槓桿率範圍，即 1.5 至 3 倍淨債務與 EBITDA 的比率。我們繼續擁有大量可用流動資金和強大的資產負債表。

Regarding capital allocation, we maintain a disciplined and balanced approach to capital deployment, focusing on organic growth opportunities, returning capital to shareholders through our dividend and looking for strategic inorganic opportunities. Consistent with our comments in Q4, we expect to complete the year with capital spending of around $100 million in 2021.

在資本配置方面，我們保持有紀律和平衡的資本配置方式，專注於有機增長機會，通過股息向股東返還資本，並尋找戰略性無機機會。與我們在第四季度的評論一致，我們預計 2021 年的資本支出將達到 1 億美元左右。

The higher amount is attributed to our strong pipeline of organic growth opportunities, particularly the new engineered strip project, as well as promising opportunities in each of our segments. We also continue to evaluate acquisition candidates that fit with our strategy and long-term objectives.

較高的金額歸因於我們強大的有機增長機會管道，特別是新的工程地帶項目，以及我們每個部門的有前途的機會。我們還繼續評估符合我們戰略和長期目標的收購候選人。

Now let's turn to the guidance summary on Slide 17. While economic uncertainty remains, we see strength in our organic pipeline and good underlying demand in several key end markets including semiconductor, automotive and industrial while other end markets are also seeing steady or improving demand from 2020 lows. With that, we feel comfortable resuming full year guidance at this time in an effort to provide some further insights into our expectations.

現在讓我們轉到幻燈片 17 上的指導摘要。雖然經濟不確定性依然存在，但我們看到我們的有機產品線強勁，以及包括半導體、汽車和工業在內的幾個關鍵終端市場的良好潛在需求，而其他終端市場也看到需求穩定或改善來自2020年的低點。因此，我們很樂意在此時恢復全年指導，以進一步了解我們的期望。

Looking first at the second quarter, we expect adjusted earnings per share in the range of $0.72 to $0.76 per share, which is up about 68% from last year at the midpoint. As I previously mentioned, we had a large onetime defense order in the first quarter, which was expected later in the year. This is driving modest sequential decrease in Q2.

首先看第二季度，我們預計調整後每股收益在 0.72 美元至 0.76 美元之間，按中點計算比去年同期增長約 68%。正如我之前提到的，我們在第一季度收到了一個很大的一次性防禦訂單，預計會在今年晚些時候完成。這推動了第二季度的適度環比下降。

For our full year 2021 guidance, we expect adjusted earnings per share in the range of $3 to $3.30, which is an increase of over 55% from last year at the midpoint. This guidance includes an estimated $0.20 to $0.25 per share impact resulting from startup costs related to the construction of our new precision-clad engineered strip facility. On this slide, we have also noted a few modeling assumptions for you.

對於我們的 2021 年全年指引，我們預計調整後的每股收益在 3 美元至 3.30 美元之間，按中點計算比去年增長 55% 以上。該指導包括與我們新的精密複合工程帶鋼設施建設相關的啟動成本所產生的估計每股 0.20 至 0.25 美元的影響。在這張幻燈片上，我們還為您記錄了一些建模假設。

Overall, we feel very optimistic about 2021. Our markets are showing strength, our organic pipeline is building and we're investing in our business while executing on our key strategic initiatives. We believe that these factors have us well positioned for 2021 and beyond. And we're excited about the opportunities that lie ahead.

總體而言，我們對 2021 年感到非常樂觀。我們的市場正在顯示實力，我們的有機管道正在建設中，我們在執行關鍵戰略計劃的同時投資於我們的業務。我們相信，這些因素使我們在 2021 年及以後處於有利地位。我們對未來的機遇感到興奮。

This concludes our prepared remarks. We will now open the line for questions.

我們準備好的發言到此結束。我們現在將打開問題熱線。

(Operator Instructions) Our first question is from Marco Rodriguez with Stonegate Capital Markets.

（操作員說明）我們的第一個問題來自 Stonegate Capital Markets 的 Marco Rodriguez。

I was wondering if we can spend a little bit more time on the gross margin. It was very good showing here across the aggregate as well as obviously some of the segments. In your presentation, it seems like -- it looks like the volume price mix played the biggest role, but I was wondering if you maybe can provide a little more color surrounding that. Was this just more of a fixed cost absorption due to the volumes or were there any other sort of onetime drivers that kind of helped accelerate that performance in the quarter?

我想知道我們是否可以在毛利率上多花一點時間。在這裡展示的整體效果非常好，顯然也展示了一些細分市場。在您的演示中，似乎 - 量價組合發揮了最大的作用，但我想知道您是否可以提供更多關於它的顏色。這僅僅是由於數量而導致的固定成本吸收，還是有任何其他類型的一次性驅動因素有助於加速本季度的業績？

Yes, Marco. Let me start with this and then Shelly can jump in and add more color to it. As we noted in our remarks, although Q1 was a very strong quarter for us, there's a number of factors that drove that. The end markets have really been recovering, and in particular, I would say semiconductor and automotive were really good strong end markets for us. The defense order that was referenced is one that helped us as well. Certainly our performance in our plants. I think as the volumes came in, our plants just did a fantastic job of taking on the additional volumes, taking into account, I think, all the challenges that we hear about and being able to deliver those products. So I think it's a number of factors that have contributed to the gross margin improvement. The points that I think that are highlighted on the slide speak to that, but I'll have Shelly comment in more detail on that.

是的，馬可。讓我從這個開始，然後 Shelly 可以加入並為其添加更多顏色。正如我們在評論中指出的那樣，儘管第一季度對我們來說是一個非常強勁的季度，但有許多因素推動了這一點。終端市場確實在復蘇，特別是，我想說半導體和汽車對我們來說真的是非常強大的終端市場。參考的防禦令也對我們有所幫助。當然是我們工廠的表現。我認為隨著產量的增加，我們的工廠在增加產量方面做得非常出色，我認為，考慮到我們聽到的所有挑戰以及能夠交付這些產品。所以我認為有很多因素促成了毛利率的提高。我認為幻燈片上突出顯示的要點說明了這一點，但我會讓 Shelly 對此進行更詳細的評論。

Yes, sure, happy to. So I think you've hit the high points and certainly we're very pleased with the margin performance for this quarter. I think we also saw good cost management as we're growing and continuing to keep our focus on managing our cost structure. And particularly in our advanced materials business, we had really good operational performance, good yields getting out of that. So we were able to move a lot of products that would certainly help our margin.

是的，當然，很高興。所以我認為你已經達到了最高點，當然我們對本季度的利潤率表現非常滿意。我認為隨著我們的成長並繼續將重點放在管理成本結構上，我們也看到了良好的成本管理。特別是在我們的先進材料業務方面，我們的運營表現非常好，從中獲得了不錯的收益。所以我們能夠轉移很多肯定會幫助我們提高利潤的產品。

Understood. And is there any way you can perhaps quantify the defense order's impact on the quarter from a margin and an EPS perspective.

明白了。有什麼方法可以從利潤率和每股收益的角度量化國防令對本季度的影響。

Well, as you know, we don't talk about specific customer contracts, the size of the customer contracts or the margin impact of customer contracts. But I think in general, we've talked about in the past, is that we really like sort of the longer cycle, more sticky type of businesses and markets because they tend to contribute perhaps more to a favorable mix. We think we provide a lot of value to those types of end markets and certainly defense falls into that category. So it is a good end market for us and one that we continue to put a lot of focus on. But it's a sizable order. We did indicate, I think, on our guide slide, there's a little bit of sort of an indication of the type of impact that it had on more of an EPS perspective, but it's a good market for us and it's a good order for us.

嗯，如你所知，我們不談論具體的客戶合同、客戶合同的規模或客戶合同的利潤影響。但我認為，總的來說，我們過去曾談到過，我們真的很喜歡週期更長、粘性更強的業務和市場，因為它們往往可能對有利的組合做出更多貢獻。我們認為我們為這些類型的終端市場提供了很多價值，當然國防也屬於這一類。因此，這對我們來說是一個很好的終端市場，我們將繼續非常關注這一市場。但這是一個相當大的訂單。我認為，我們確實在我們的指南幻燈片上指出了它對更多 EPS 觀點的影響類型，但這對我們來說是一個很好的市場，對我們來說是一個很好的訂單.

Understood. And then just kind of keeping here with the gross margins, the Precision Optics segment. Obviously there has been a little bit of -- some movement there, some noise with the acquisition and divestitures. This 39% gross margin there, is that what we should be expecting going forward given the folding in here of Optics Balzers.

明白了。然後只是保持毛利率，精密光學部門。顯然有一些 - 那裡有一些動靜，收購和資產剝離有一些噪音。考慮到 Optics Balzers 的倒閉，這 39% 的毛利率是我們應該期待的。

Well, I think on the Precision Optics business what we have to keep in mind is that that business, we tend to have a lot of lumpy orders, a lot of large orders in and out. Mix plays a big factor, just based on that. I mean if you just go back and look at the last couple of years, you will see just even on an EBIT perspective, for example, quarters where we delivered 7% on the low side and quarters where we delivered 17% on the high side. So it tends to move around more so than perhaps some of our other businesses. So I wouldn't say that's a run rate number that I think that business can deliver. I think we really have to look at more of an overall full year type of an impact in that. And we've taken that into account as we provided the guide, which is obviously a very, very strong guide that we provided. But I wouldn't necessarily take that as a run rate just based on some of the factors that I just mentioned.

好吧，我認為在精密光學業務中，我們必須牢記的是，我們往往會有很多塊狀訂單，大量進出的大訂單。基於此，混合起著重要作用。我的意思是，如果你回過頭來看看過去幾年，你會看到甚至從息稅前利潤的角度來看，例如，我們在低端交付了 7% 的季度，在高端交付了 17% 的季度.因此，它可能比我們的其他一些業務更容易移動。所以我不會說這是我認為企業可以提供的運行率數字。我認為我們真的必須更多地關注全年的整體影響。我們在提供指南時已經考慮到這一點，這顯然是我們提供的非常非常強大的指南。但我不一定會僅僅根據我剛才提到的一些因素將其視為運行率。

Yes, and Jugal, those are great points and you were mentioning the 7 to 17, which would be the EBIT margin, your gross margins in line were also very strong and with the lumpy orders you expect that's going to bounce around a little bit. We do still see our way to a path of expanded gross margins for that business this year.

是的，Jugal，這些都是很好的觀點，你提到了 7 到 17，這將是息稅前利潤率，你的毛利率也非常強勁，而且你預計會有一些反彈。我們確實仍然看到了今年該業務毛利率擴大的道路。

Got it. And last one for me here, Jugal maybe this is more for you, perhaps. But just kind of regarding long-term goals here of becoming or being a more advanced materials company with that low to mid-teen operating margins, you obviously have made a lot of positive changes that are helping Materion kind of march up that ladder there, if you will. But maybe if you can update us on where you kind of stand versus your initial expectations and maybe how you're thinking has perhaps evolved over this time.

知道了。最後一個給我，Jugal 也許這更適合你，也許。但就長期目標而言，成為或成為一家運營利潤率較低至中等水平的更先進的材料公司，顯然你們已經做出了很多積極的改變，這些改變正在幫助 Materion 在某種程度上提升那裡的階梯，如果你願意的話。但也許如果你能告訴我們你的立場與你最初的期望相比，也許你的想法可能在這段時間裡發生了變化。

Yes. As you know, I mean, we've made significant progress in the '17, '18 and '19 timeframe towards those objectives that we've highlighted as our sort of the long-term objective of mid-teens type of margin, clearly a very advanced materials, high-tech company. And even during '20 when we had the very tough times, I think that not only we had but around the world had due to the pandemic, we were able to perform well and maintain really the strategic focus for our business,. We were able to do an acquisition, we were able to secure a very large organic growth order, we were able to continue strengthening our business with closures of a couple of facilities, exiting one of our businesses, to really position the company for exactly what you started with, which is this long-term objective that we have.

是的。如你所知，我的意思是，我們在 17 年、18 年和 19 年的時間框架內取得了重大進展，朝著我們強調的那些目標邁進了我們的長期目標，很明顯一個非常先進的材料，高科技公司。即使在 20 世紀我們經歷了非常艱難的時期，我認為不僅我們經歷過，而且全世界都經歷過這種流行病，我們能夠表現良好並真正保持我們業務的戰略重點。我們能夠進行收購，我們能夠獲得非常大的有機增長訂單，我們能夠通過關閉幾個設施來繼續加強我們的業務，退出我們的一項業務，從而真正為公司定位你開始了，這是我們的長期目標。

So I think we're very well on track of that. And our goal and objective is to return as quickly as possible to the pre-pandemic levels that we delivered in '19 and then continue to move beyond that. And I think we've had a really good start to that here in Q1 as outlined by the results that we've indicated. I think the guide and the indication that we've given you for the full year speaks volumes, when you -- especially when you consider the fact that we probably will have about a 20% to 25% impact based on the new facility that we're putting in place. It's a 55% year-over-year increase. I think it really starts to put us back on the pre-pandemic level and then continue the journey. So I'm very excited about it. I think we've got a lot going on, particularly on the organic growth side as we also talk about, of course. our investments. As you know, we're increasing and accelerating sort of our capital deployment towards all of that. So I'm feeling good about that.

所以我認為我們在這方面做得很好。我們的目標是盡快恢復到我們在 19 年交付的大流行前水平，然後繼續超越這一水平。正如我們所指出的結果所概述的那樣，我認為我們在第一季度的開端非常好。我認為我們為您提供的全年指南和指示說明了很多問題，特別是當您考慮到我們可能會根據我們的新設施產生大約 20% 到 25% 的影響時到位。同比增長 55%。我認為它真的開始讓我們回到大流行前的水平，然後繼續旅程。所以我對此感到非常興奮。我認為我們正在做很多事情，特別是在我們也談到的有機增長方面。我們的投資。如您所知，我們正在增加和加速我們對所有這些的資本部署。所以我對此感覺很好。

(Operator Instructions). Our next question is with Michael Leshock with KeyBanc Capital Markets.

（操作員說明）。我們的下一個問題是來自 KeyBanc Capital Markets 的 Michael Leshock。

I just wanted to start with maybe a longer-term question on the clad strip project, just given the unique pre-payment structure of that project, I wanted to get a sense. So once the facility is up and running, will the customer have the full supply that they need, or do you see opportunities for further expansion with either that customer in the coming years there with potential new customers in a similar type of structured project?

我只是想從一個關於復合帶項目的長期問題開始，考慮到該項目獨特的預付款結構，我想了解一下。因此，一旦設施啟動並運行，客戶是否會獲得他們所需的全部供應，或者您是否看到未來幾年與該客戶進一步擴展的機會以及類似結構化項目中的潛在新客戶？

Yes, Michael. As you know, we're supporting the customer today from our existing facility and I think the customer is very pleased with what we're doing and we've been able to get good progress on that. We are making extremely good progress on being able to set up the facility and get that up and running. Next year, we'll go through a launch process. As you can imagine as we go through the launch process, it will be a ramp that will go through during the year. So we're quite excited about it and we believe that we'll be able to support the customer in the volumes that they are looking for. We have been working on setting up the facility though that not only can we support this customer, but also be able to grow our general clad strip business globally.

是的，邁克爾。如您所知，我們今天通過現有設施為客戶提供支持，我認為客戶對我們正在做的事情非常滿意，我們已經能夠在這方面取得良好進展。我們在建立設施並使其啟動和運行方面取得了非常好的進展。明年，我們將完成啟動過程。正如您可以想像的那樣，在我們完成啟動過程時，這將是一個將在這一年中經歷的斜坡。所以我們對此感到非常興奮，我們相信我們將能夠為客戶提供他們正在尋找的數量的支持。我們一直致力於建立該設施，這不僅可以支持該客戶，還可以在全球範圍內發展我們的綜合複合帶材業務。

Yes, we've made actually really, really good progress on that, in fact even, yet here from our existing facility. I mean, when you look at the applications for this clad strip type of business, one of the key applications in the -- is in the EV market and we made significant progress on -- in fact, I would say on a year-over-year basis, doubling our business in that space for the EV side. And so, I see this as more of a placeholder that we're doing to support the customer that we're working with, but a fantastic opportunity for us to leverage. I think the need of this type of -- needs of this type of a product as the markets grow around the world.

是的，我們已經在這方面取得了非常非常好的進展，事實上什至是在我們現有的設施中。我的意思是，當您查看這種複合條帶業務的應用程序時，其中一個關鍵應用程序是在電動汽車市場，我們在這方面取得了重大進展 - 事實上，我想說一年多了年的基礎上，將我們在電動汽車領域的業務翻了一番。因此，我認為這更像是我們為支持與我們合作的客戶而做的佔位符，但這是我們利用的絕佳機會。我認為隨著全球市場的增長，需要這種類型的產品。

And maybe just to add on to that, there will be additional capacity and capabilities, out of that facility to service other customers in the same product line.

也許只是為了增加這一點，從該設施中將會有額外的容量和能力來為同一產品線中的其他客戶提供服務。

That's helpful. And then, just wanted to get the impact of the Chip shortage within Materion's supply chain and what you might expect at least directionally for 2Q?

這很有幫助。然後，只想了解芯片短缺對 Materion 供應鏈的影響，以及您至少對第二季度的方向性預期是什麼？

Yes, well, as you know, the semiconductor market in general has been really well, not just in Q1, but certainly last year as well and it is continued to do well in Q1. Our representation in that and our year-over-year sales reflect that. We have great participation in the 5G area, IOT. So our aluminum scandium targets, our lithium targets, our gold targets, our packaging products that we provide for hermetic seal packaging, all of those are experiencing, I think, great growth both with the market growth as well as, I think with the new products that we're launching. So we're very excited about the overall semiconductor market and what it's doing for Q1 and I think what it has the potential to do up for Q2, Q3 and sort of beyond.

是的，正如你所知，半導體市場總體上非常好，不僅在第一季度，而且去年肯定也是如此，並且在第一季度繼續表現良好。我們在這方面的代表和我們的同比銷售額反映了這一點。我們在 5G 領域，物聯網領域有很大的參與。因此，我們的鋁鈧靶材、我們的鋰靶材、我們的金靶材、我們為氣密密封包裝提供的包裝產品，我認為所有這些都在經歷巨大的增長，無論是隨著市場的增長，還是隨著新的我們推出的產品。因此，我們對整個半導體市場及其為第一季度所做的事情感到非常興奮，我認為它有可能為第二季度、第三季度及以後做些什麼。

The chip shortage issue that you highlight, which obviously is there. As you know, we're a component supplier for chip manufacturing. So we are supporting the customers in every way that we can and we'll continue to do that and I would expect that some of the shortages that the -- that's being experienced right now will be made up over the next few quarters and if so, then our business should continue to do well. So we are fully aligned with our customers on this and actually quite excited about, I think where the semiconductor market is and perhaps where it will go here in the near future.

你強調的芯片短缺問題，這顯然是存在的。如您所知，我們是芯片製造的組件供應商。因此，我們正在盡我們所能為客戶提供支持，我們將繼續這樣做，我希望現在正在經歷的一些短缺將在未來幾個季度得到彌補，如果是這樣的話，那麼我們的生意應該會繼續做的很好。因此，我們在這方面與我們的客戶完全一致，並且實際上非常興奮，我認為半導體市場在哪裡，也許在不久的將來它會走向何方。

And then lastly for me, just wanted to get a broad update on the M&A environment, what are you seeing there and would you be looking more for smaller bolt-ons versus larger acquisitions and what primary end markets would you be targeting?

最後對我來說，只是想獲得有關併購環境的廣泛更新，你在那裡看到了什麼，你會更多地尋找較小的補強而不是較大的收購，你會瞄準哪些主要終端市場？

Yes. So as you know, Michael, I mean we've been talking about this for the last few years. We are focused on M&A, but we are focused on M&A bring significant synergistic value and we took some time to be able to do our Optics Balzers M&A and I'm really glad we did because it gave us a great opportunity to get to know the company, get to know the management team, understand what the possibilities are from a technology, from a regional, from a market, from a customer, all those types of things and I think it's been a good acquisition for us. And so we have the same level of focus and due diligence as we are continuing to look at M&A as we move forward, but I think what I want to highlight though is we are equally as focused on organic growth opportunities, because we think we have a tremendous opportunity here to take advantage of growing markets as well as I think our portfolio of products that we have. So if M&A is able to help us and support that in our quest to become this Advanced Materials business delivering mid-teens type of margins, then we are very much focused and are looking at M&A opportunities. So we're engaged as always on multiple conversations, in some cases it's just maybe initial looks, in some cases it'd mainly be management meetings, in some cases it may be due diligences and we're going to continue to evaluate.

是的。如你所知，邁克爾，我的意思是過去幾年我們一直在談論這個問題。我們專注於併購，但我們專注於併購帶來顯著的協同價值，我們花了一些時間才能夠進行 Optics Balzers 併購，我真的很高興我們這樣做了，因為它給了我們一個很好的機會來了解公司，了解管理團隊，了解技術、區域、市場、客戶等所有類型的可能性，我認為這對我們來說是一次很好的收購。因此，隨著我們在前進的過程中繼續關注併購，我們擁有同樣的關注度和盡職調查，但我想我想強調的是，我們同樣關注有機增長機會，因為我們認為我們有這是一個巨大的機會，可以利用不斷增長的市場以及我認為我們擁有的產品組合。因此，如果併購能夠幫助我們並支持我們成為提供十幾歲中期利潤率的先進材料業務，那麼我們將非常專注並尋找併購機會。因此，我們一如既往地參與多次對話，在某些情況下可能只是初步了解，在某些情況下主要是管理會議，在某些情況下可能是盡職調查，我們將繼續評估。

Our general feel that we've talked about before is bolt-ons are obviously something that we feel really good about, because we believe that with the strengthening of the business that we've done, we can take on the bolt-ons, we can understand them, we can deliver value out of them, the larger transformative opportunities, I mean those really have to be really well thought out because if we do something that perhaps goes wrong way, well, we can really significantly negatively impact the company. So we're very much focused on the M&A side. We're -- that can help augment our strategy and equally is focused on the organic side because of the, I think the pipeline that we have and sort of the excitement that we have around the world in customers and products and technologies.

我們總的感覺，我們之前談到的是補強顯然是我們感覺非常好的事情，因為我們相信隨著我們所做的業務的加強，我們可以接受補強，我們可以理解他們，我們可以從中創造價值，更大的變革機會，我的意思是這些真的必須經過深思熟慮，因為如果我們做一些可能出錯的事情，那麼，我們真的會對公司產生重大的負面影響。所以我們非常關注併購方面。我們 - 這可以幫助增強我們的戰略，同樣專注於有機方面，因為我認為我們擁有的管道以及我們在全球範圍內對客戶、產品和技術的興奮。

It appears that there are no further questions at this time, I would like to turn the floor back over to Andrew Vento for closing remarks.

看來此時沒有其他問題了，我想將發言權轉回給 Andrew Vento 作結束語。

This is Andrew Vento. And this concludes our First Quarter 2021 Earnings Call. A recorded playback of this call will be available on the company's website, materion.com. We would like to thank all of you for participating on the call this morning and your interest in Materion. I will be available to answer any follow-up questions. My direct number is (216) 383-4098. Thank you very much.

這是安德魯文托。我們的 2021 年第一季度收益電話會議到此結束。該公司網站 materion.com 上將提供此次通話的錄音回放。我們要感謝大家參加今天上午的電話會議以及您對 Materion 的關注。我將可以回答任何後續問題。我的直撥電話是 (216) 383-4098。非常感謝。

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束。此時您可以斷開線路。感謝您的參與。