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Materion Corporation Reports Record Fourth Quarter and Full-Year 2021 Financial Results and Provides 2022 Guidance

Materion Corporation (NYSE: MTRN) today reported fourth quarter and full-year 2021 financial results, provided 2022 earnings guidance, and shared an update on key strategic initiatives.

Fourth Quarter 2021 Highlights

  • Net sales were $397.2 million; value-added sales increased 27% year over year to a record $237.4 million
  • Operating profit was $15.5 million; adjusted earnings before interest and taxes (EBIT) was a record at $28.1 million, or 11.8% of value-added sales, a 180-basis point margin expansion year over year
  • Net income of $0.95 per share, diluted; adjusted earnings per share of $1.03, up 47% year over year

Full Year 2021 Highlights

  • Net sales were $1.5 billion; value-added sales were a record $859.7 million, up 29% from the prior year
  • Operating profit was $77.1 million; record adjusted EBIT of $99.4 million, an increase of 79% over prior year
  • Net income of $3.50 per share, diluted; record adjusted earnings per share of $3.81, up 88% from prior year
  • Completed transformational acquisition of HCS-Electronic Materials, largest in company’s history
  • Completed construction of customer funded Precision Clad Strip facility positioning for step-change growth in 2022

“Our team continues to raise the bar for outstanding performance, meeting continued strong end market demand from our customers while also delivering the substantial benefits of our organic and inorganic growth initiatives,” Jugal Vijayvargiya, Materion President and Chief Executive Officer said. “The achievement of another record quarter caps off a record year where our strategic transformation and related initiatives aimed at delivering above market growth combined with improved pricing and operational excellence contributed to significantly higher earnings and enhanced margins.”

“We expect to deliver another record year in 2022, as the integrations of both HCS-Electronic Materials and Optics Balzers and the completion of our customer-funded precision clad strip project expand our access to high-growth, high value markets and applications,” Vijayvargiya added. “These initiatives, combined with the progress we’re making on numerous megatrend-aligned growth projects have us well-positioned for long-term sustainable growth.”

FOURTH QUARTER 2021 RESULTS

Net sales for the fourth quarter of 2021 were $397.2 million, compared to $339.7 million in the prior year fourth quarter. Value-added sales of $237.4 million were a record for any quarter, up 27% from the prior year quarter, driven by strong performance across several major end markets including semiconductor, industrial and automotive, as well as the benefit of the HCS-Electronic Materials acquisition.

Operating profit for the fourth quarter was $15.5 million and net income was $19.7 million, or $0.95 per diluted share, compared to an operating profit of $6.8 million and net income of $8.1 million, or $0.39 per diluted share in the prior year period. Excluding special items, detailed in the attached tables, adjusted EBIT was $28.1 million in the fourth quarter, another quarterly record and an increase of 50% versus the prior year period.

Adjusted net income was $21.4 million, or $1.03 per diluted share, an increase of 47% compared to $0.70 per share in the prior year period.

FULL-YEAR 2021 RESULTS

Net sales were $1.5 billion, an increase of 28% as compared to the prior year. Value-added sales of $859.7 million were up 29% from the prior year. Double-digit organic value-added sales growth across all major end markets, as well as incremental sales related to the acquisition of HCS-Electronic Materials drove the increase.

Operating profit for the full year was $77.1 million and net income was $72.5 million, or $3.50 per diluted share. Excluding special items (detailed in the attached tables), adjusted EBIT was $99.4 million, up 79% from the prior year of $55.4 million. The year-over-year increase in earnings was primarily driven by higher demand, improved pricing, and strong operating performance.

Adjusted net income was $78.8 million, or $3.81 per diluted share, as compared to $2.03 per diluted share in 2020, an increase of 88%.

OUTLOOK

With strong end market demand, organic outgrowth resulting from our customer initiatives, and the full year impact of our HCS-Electronic Materials acquisition, 2022 adjusted earnings per share is expected to be in the range of $4.80 to $5.20. Excluding acquisition related amortization, adjusted earnings per share is expected to be in the range of $5.30 to $5.70, an increase of 35% at the midpoint versus the comparable prior year metric.

ADJUSTED EARNINGS GUIDANCE

It is not possible for the Company to identify the amount or significance of future adjustments associated with potential insurance and litigation claims, legacy environmental costs, acquisition and integration costs, certain income tax items, or other non-routine costs that the Company adjusts in the presentation of adjusted earnings guidance. These items are dependent on future events that are not reasonably estimable at this time. Accordingly, the Company is unable to reconcile without unreasonable effort the forecasted range of adjusted earnings guidance for the full year to a comparable GAAP range. However, items excluded from the Company's adjusted earnings guidance include the historical adjustments noted in Attachments 4 and 5 to this press release.

CONFERENCE CALL

Materion Corporation will host an investor conference call with analysts at 9:00 a.m. Eastern Time, February 17, 2022. The conference call will be available via webcast through the Company’s website at www.materion.com or through www.InvestorCalendar.com. By phone, please dial (888) 506-0062. Calls outside the U.S. can dial (973) 528-0011; please reference participant access code of 651701 if dialing in. A replay of the call will be available until March 3, 2022 by dialing (877) 481-4010 or (919) 882-2331 if international; please reference replay ID number 44225. The call will also be archived on the Company’s website.

FORWARD-LOOKING STATEMENTS

Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein: our ability to achieve the strategic and other objectives related to the acquisition of HCS-Electronic Materials, including any expected synergies; our ability to successfully integrate the HCS-Electronic Materials business and other such acquisitions and achieve the expected results of the acquisition, the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition, and liquidity; the global economy, including the impact of tariffs and trade agreements; the condition of the markets which we serve, whether defined geographically or by segment; changes in product mix and the financial condition of customers; our success in developing and introducing new products and new product ramp-up rates; our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values; our success implementing our strategic plans and the timely and successful completion and start-up of any capital projects; other financial and economic factors, including the cost and availability of raw materials (both base and precious metals), physical inventory valuations, metal financing fees, tax rates, exchange rates, interest rates, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, credit availability, and the impact of the Materion’s stock price on the cost of incentive compensation plans; the uncertainties related to the impact of war, terrorist activities, and acts of God; changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; the conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; the disruptions on operations from, and other effects of, catastrophic and other extraordinary events; and the risk factors set forth in Part 1, Item 1A of our 2020 Annual Report on Form 10-K.

Materion Corporation is headquartered in Mayfield Heights, Ohio. The Company, through its wholly owned subsidiaries, supplies highly engineered advanced enabling materials to global markets. Products include precious and non-precious specialty metals, inorganic chemicals and powders, specialty coatings, specialty engineered beryllium alloys, beryllium and beryllium composites, and engineered clad and plated metal systems.

Attachment 1

 

Materion Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

 

Fourth Quarter Ended

 

Year Ended

(In thousands except per share amounts)

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Net sales

$

397,231

 

 

$

339,689

 

 

$

1,510,644

 

 

$

1,176,274

 

Cost of sales

 

324,159

 

 

 

283,892

 

 

 

1,226,882

 

 

 

983,641

 

Gross margin

 

73,072

 

 

 

55,797

 

 

 

283,762

 

 

 

192,633

 

Selling, general, and administrative expense

 

45,746

 

 

 

34,671

 

 

 

163,777

 

 

 

133,963

 

Research and development expense

 

7,411

 

 

 

6,179

 

 

 

26,575

 

 

 

20,283

 

Goodwill impairment charges

 

 

 

 

 

 

 

 

 

 

9,053

 

Asset impairment charges

 

 

 

 

(294

)

 

 

 

 

 

1,419

 

Restructuring expense

 

(60

)

 

 

4,093

 

 

 

(438

)

 

 

11,237

 

Other — net

 

4,465

 

 

 

4,320

 

 

 

16,737

 

 

 

8,463

 

Operating profit

 

15,510

 

 

 

6,828

 

 

 

77,111

 

 

 

8,215

 

Other non-operating (income) expense—net

 

(1,283

)

 

 

(1,068

)

 

 

(5,115

)

 

 

(3,939

)

Interest expense — net

 

2,421

 

 

 

1,040

 

 

 

4,901

 

 

 

3,879

 

Income before income taxes

 

14,372

 

 

 

6,856

 

 

 

77,325

 

 

 

8,275

 

Income tax (benefit) expense

 

(5,311

)

 

 

(1,210

)

 

 

4,851

 

 

 

(7,187

)

Net income

$

19,683

 

 

$

8,066

 

 

$

72,474

 

 

$

15,462

 

Basic earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

0.96

 

 

$

0.40

 

 

$

3.55

 

 

$

0.76

 

Diluted earnings per share:

 

 

 

 

 

 

 

Net income per share of common stock

$

0.95

 

 

$

0.39

 

 

$

3.50

 

 

$

0.75

 

Weighted-average number of shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

 

20,445

 

 

 

20,328

 

 

 

20,422

 

 

 

20,338

 

Diluted

 

20,732

 

 

 

20,606

 

 

 

20,689

 

 

 

20,603

 

Attachment 2

 

Materion Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

(Thousands)

 

December 31, 2021

 

December 31, 2020

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

14,462

 

 

$

25,878

 

Accounts receivable, net

 

 

223,553

 

 

 

166,447

 

Inventories, net

 

 

361,115

 

 

 

250,778

 

Prepaid and other current assets

 

 

28,122

 

 

 

20,896

 

Total current assets

 

 

627,252

 

 

 

463,999

 

Deferred income taxes

 

 

5,431

 

 

 

3,134

 

Property, plant, and equipment

 

 

1,132,223

 

 

 

998,312

 

Less allowances for depreciation, depletion, and amortization

 

 

(723,248

)

 

 

(688,626

)

Property, plant, and equipment—net

 

 

408,975

 

 

 

309,686

 

Operating lease, right-of-use assets

 

 

63,096

 

 

 

62,089

 

Intangible assets

 

 

156,736

 

 

 

54,672

 

Other assets

 

 

27,369

 

 

 

19,364

 

Goodwill

 

 

318,620

 

 

 

144,916

 

Total Assets

 

$

1,607,479

 

 

$

1,057,860

 

Liabilities and Shareholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Short-term debt

 

$

15,359

 

 

$

1,937

 

Accounts payable

 

 

86,243

 

 

 

55,640

 

Salaries and wages

 

 

37,544

 

 

 

18,809

 

Other liabilities and accrued items

 

 

53,388

 

 

 

40,887

 

Income taxes

 

 

4,205

 

 

 

1,898

 

Unearned revenue

 

 

7,770

 

 

 

7,713

 

Total current liabilities

 

 

204,509

 

 

 

126,884

 

Other long-term liabilities

 

 

14,954

 

 

 

14,313

 

Operating lease liabilities

 

 

57,099

 

 

 

56,761

 

Finance lease liabilities

 

 

16,327

 

 

 

20,539

 

Retirement and post-employment benefits

 

 

33,394

 

 

 

41,877

 

Unearned income

 

 

97,962

 

 

 

86,761

 

Long-term income taxes

 

 

1,190

 

 

 

2,689

 

Deferred income taxes

 

 

27,216

 

 

 

15,864

 

Long-term debt

 

 

434,388

 

 

 

36,542

 

Shareholders’ equity

 

 

720,440

 

 

 

655,630

 

Total Liabilities and Shareholders’ Equity

 

$

1,607,479

 

 

$

1,057,860

 

Attachment 3

 

Materion Corporation and Subsidiaries

Consolidated Statements of Cash Flows

 

 

 

(Unaudited)

 

 

(Thousands)

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

Net income

 

$

72,474

 

 

$

15,462

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation, depletion, and amortization

 

 

44,137

 

 

 

42,384

 

Amortization of deferred financing costs in interest expense

 

 

967

 

 

 

790

 

Stock-based compensation expense (non-cash)

 

 

6,517

 

 

 

5,528

 

Amortization of pension and post-retirement costs

 

 

437

 

 

 

(151

)

(Gain) loss on sale of property, plant, and equipment

 

 

(282

)

 

 

466

 

Deferred income tax (benefit) expense

 

 

(12,957

)

 

 

(9,850

)

Impairment charges

 

 

 

 

 

10,472

 

Net pension curtailments and settlements

 

 

 

 

 

94

 

Changes in assets and liabilities, net of acquired assets and liabilities:

 

 

 

 

Decrease (increase) in accounts receivable

 

 

(30,490

)

 

 

(707

)

Decrease (increase) in inventory

 

 

(43,458

)

 

 

(1,288

)

Decrease (increase) in prepaid and other current assets

 

 

(3,855

)

 

 

2,475

 

Increase (decrease) in accounts payable and accrued expenses

 

 

40,219

 

 

 

(21,877

)

Increase (decrease) in unearned revenue

 

 

106

 

 

 

2,935

 

Increase (decrease) in interest and taxes payable

 

 

(220

)

 

 

(157

)

Increase (decrease) in unearned income due to customer prepayments

 

 

13,752

 

 

 

54,103

 

Domestic pension plan contributions

 

 

 

 

 

 

Other-net

 

 

2,894

 

 

 

378

 

Net cash provided by operating activities

 

 

90,241

 

 

 

101,057

 

Cash flows from investing activities:

 

 

 

 

Payments for acquisition, net of cash acquired

 

 

(392,240

)

 

 

(130,715

)

Payments for purchase of property, plant, and equipment

 

 

(102,910

)

 

 

(67,274

)

Payments for mine development

 

 

 

 

 

 

Proceeds from settlement of currency exchange contract

 

 

 

 

 

3,249

 

Proceeds from sale of property, plant, and equipment

 

 

881

 

 

 

33

 

Net cash used in investing activities

 

 

(494,269

)

 

 

(194,707

)

Cash flows from financing activities:

 

 

 

 

Proceeds from borrowings under revolving credit agreement, net

 

 

118,297

 

 

 

34,000

 

Proceeds from term loan

 

 

300,000

 

 

 

 

Repayment of long-term debt

 

 

(2,054

)

 

 

(20,634

)

Principal payments under finance lease obligations

 

 

(2,819

)

 

 

(2,213

)

Cash dividends paid

 

 

(9,697

)

 

 

(9,257

)

Deferred financing costs

 

 

(7,403

)

 

 

 

Repurchase of common stock

 

 

 

 

 

(6,766

)

Payments of withholding taxes for stock-based compensation awards

 

 

(3,318

)

 

 

(2,221

)

Net cash used in financing activities

 

 

393,006

 

 

 

(7,091

)

Effects of exchange rate changes

 

 

(394

)

 

 

1,612

 

Net change in cash and cash equivalents

 

 

(11,416

)

 

 

(99,129

)

Cash and cash equivalents at beginning of period

 

 

25,878

 

 

 

125,007

 

Cash and cash equivalents at end of period

 

$

14,462

 

 

$

25,878

 

 

Attachment 4

 

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measure - Value-added Sales, Operating Profit, and EBIT

(Unaudited)

 

 

Fourth Quarter Ended

 

Year Ended

(Millions)

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Net Sales

 

 

 

 

 

 

 

Performance Alloys and Composites

$

136.4

 

 

$

102.3

 

 

$

511.9

 

 

$

394.2

 

Advanced Materials

$

228.3

 

 

 

195.0

 

 

 

866.8

 

 

 

670.9

 

Precision Optics

$

32.5

 

 

 

42.4

 

 

 

131.9

 

 

 

111.2

 

Other

 

 

 

 

 

 

 

 

 

 

 

Total

$

397.2

 

 

$

339.7

 

 

$

1,510.6

 

 

$

1,176.3

 

 

 

 

 

 

 

 

 

Less: Pass-through Metal Cost

 

 

 

 

 

 

 

Performance Alloys and Composites

$

20.6

 

 

$

12.3

 

 

$

71.5

 

 

$

48.9

 

Advanced Materials

 

138.8

 

 

 

136.1

 

 

 

577.7

 

 

 

450.3

 

Precision Optics

 

0.1

 

 

 

3.6

 

 

 

0.1

 

 

 

9.3

 

Other

 

0.3

 

 

 

0.5

 

 

 

1.6

 

 

 

2.6

 

Total

$

159.8

 

 

$

152.5

 

 

$

650.9

 

 

$

511.1

 

 

 

 

 

 

 

 

 

Value-added Sales (non-GAAP)

 

 

 

 

 

 

 

Performance Alloys and Composites

$

115.8

 

 

$

90.0

 

 

$

440.4

 

 

$

345.3

 

Advanced Materials

 

89.5

 

 

 

58.9

 

 

 

289.1

 

 

 

220.6

 

Precision Optics

 

32.4

 

 

 

38.8

 

 

 

131.8

 

 

 

101.9

 

Other

 

(0.3

)

 

 

(0.5

)

 

 

(1.6

)

 

 

(2.6

)

Total

$

237.4

 

 

$

187.2

 

 

$

859.7

 

 

$

665.2

 

 

 

 

 

 

 

 

 

Gross Margin

 

 

 

 

 

 

 

Performance Alloys and Composites

$

33.0

 

 

$

20.9

 

 

$

132.4

 

 

$

82.0

 

Advanced Materials

 

27.3

 

 

 

20.9

 

 

 

100.8

 

 

 

73.8

 

Precision Optics

 

12.5

 

 

 

13.8

 

 

 

51.0

 

 

 

37.2

 

Other

 

0.3

 

 

 

0.2

 

 

 

(0.4

)

 

 

(0.4

)

Total

$

73.1

 

 

$

55.8

 

 

$

283.8

 

 

$

192.6

 

 

 

 

 

 

 

 

 

Operating Profit (Loss)

 

 

 

 

 

 

 

Performance Alloys and Composites

$

16.2

 

 

$

3.7

 

 

$

67.9

 

 

$

13.6

 

Advanced Materials

 

8.8

 

 

 

6.7

 

 

 

35.3

 

 

 

22.1

 

Precision Optics

 

3.7

 

 

 

1.7

 

 

 

14.2

 

 

 

(4.4

)

Other

 

(13.2

)

 

 

(5.3

)

 

 

(40.3

)

 

 

(23.1

)

Total

$

15.5

 

 

$

6.8

 

 

$

77.1

 

 

$

8.2

 

 

Fourth Quarter Ended

 

Year Ended

(Millions)

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Special Items

 

 

 

 

 

 

 

Performance Alloys and Composites

$

1.6

 

 

$

8.1

 

 

$

1.6

 

 

$

25.8

 

Advanced Materials

 

3.7

 

 

 

0.5

 

 

 

3.7

 

 

 

1.3

 

Precision Optics

 

 

 

 

2.5

 

 

 

0.4

 

 

 

15.5

 

Other

 

6.0

 

 

 

(0.3

)

 

 

11.5

 

 

 

0.7

 

Total

$

11.3

 

 

$

10.8

 

 

$

17.2

 

 

$

43.3

 

 

 

 

 

 

 

 

 

Operating Profit (Loss) Excluding Special Items

 

 

 

 

 

 

 

Performance Alloys and Composites

$

17.8

 

 

$

11.8

 

 

$

69.5

 

 

$

39.4

 

Advanced Materials

 

12.5

 

 

 

7.2

 

 

 

39.0

 

 

 

23.4

 

Precision Optics

 

3.7

 

 

 

4.2

 

 

 

14.6

 

 

 

11.1

 

Other

 

(7.2

)

 

 

(5.6

)

 

 

(28.8

)

 

 

(22.4

)

Total

$

26.8

 

 

$

17.6

 

 

$

94.3

 

 

$

51.5

 

 

 

 

 

 

 

 

 

Non-Operating (Income) Expense

 

 

 

 

 

 

 

Performance Alloys and Composites

$

0.2

 

 

$

0.1

 

 

$

0.6

 

 

$

0.6

 

Advanced Materials

 

 

 

 

 

 

 

0.1

 

 

 

0.1

 

Precision Optics

 

(0.2

)

 

 

(0.1

)

 

 

(0.8

)

 

 

(0.3

)

Other

 

(1.3

)

 

 

(1.1

)

 

 

(5.0

)

 

 

(4.3

)

Total

$

(1.3

)

 

$

(1.1

)

 

$

(5.1

)

 

$

(3.9

)

 

 

 

 

 

 

 

 

EBIT Excluding Special Items

 

 

 

 

 

 

 

Performance Alloys and Composites

$

17.6

 

 

$

11.7

 

 

$

68.9

 

 

$

38.8

 

Advanced Materials

 

12.5

 

 

 

7.2

 

 

 

38.9

 

 

 

23.3

 

Precision Optics

 

3.9

 

 

 

4.3

 

 

 

15.4

 

 

 

11.4

 

Other

 

(5.9

)

 

 

(4.5

)

 

 

(23.8

)

 

 

(18.1

)

Total

$

28.1

 

 

$

18.7

 

 

$

99.4

 

 

$

55.4

 

The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium is passed through to customers and, therefore, the trends and comparisons of net sales are affected by movements in the market price of these metals. Internally, management also reviews net sales on a value-added basis. Value-added sales is a non-GAAP financial measure that deducts the value of the pass-through metals sold from net sales. Value-added sales allows management to assess the impact of differences in net sales between periods or segments and analyze the resulting margins and profitability without the distortion of the movements in pass-through metal prices. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. During the first quarter of 2021, the Company added ruthenium, iridium, rhodium, rhenium, and osmium to its definition of value-added sales as the costs of these materials are treated as pass-through. Prior period value-added sales amounts have been recast to reflect this change. The Company sells other metals and materials that are not considered direct pass throughs, and these costs are not deducted from net sales to calculate value-added sales.

The Company’s pricing policy is to pass the cost of these metals on to customers in order to mitigate the impact of price volatility on the Company’s results from operations. Value-added information is being presented since changes in metal prices may not directly impact profitability. It is the Company’s intent to allow users of the financial statements to review sales with and without the impact of the pass-through metals.

Attachment 5

 

Materion Corporation and Subsidiaries

Reconciliation of Non-GAAP Measures - Profitability

(Unaudited)

 

 

Fourth Quarter Ended

 

Year Ended

(Millions except per share amounts)

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

GAAP as Reported

 

 

 

 

 

 

 

Net sales

$

397.2

 

 

$

339.7

 

 

$

1,510.6

 

 

$

1,176.3

 

Operating profit (loss)

 

15.5

 

 

 

6.8

 

 

 

77.1

 

 

 

8.2

 

Non-operating (income) expense

 

(1.3

)

 

 

(1.1

)

 

 

(5.1

)

 

 

(3.9

)

Net income

 

19.7

 

 

 

8.1

 

 

 

72.5

 

 

 

15.5

 

Shares outstanding - Diluted

 

20,732

 

 

 

20,606

 

 

 

20,689

 

 

 

20,603

 

EPS - Diluted

$

0.95

 

 

$

0.39

 

 

$

3.50

 

 

$

0.75

 

 

 

 

 

 

 

 

 

Operating Profit Special Items

 

 

 

 

 

 

 

Impairment charges

$

 

 

$

(0.3

)

 

$

 

 

$

10.5

 

Mine development costs

 

 

 

 

5.6

 

 

 

 

 

 

12.9

 

Forfeiture of non-cash stock-based compensation

 

 

 

 

(0.6

)

 

 

 

 

(2.1

)

Non-cash inventory adjustment

 

 

 

 

 

 

 

 

 

 

1.3

 

Cost reduction initiatives

 

 

 

 

4.5

 

 

 

0.4

 

 

 

11.7

 

COVID-19 related costs

 

 

 

 

0.4

 

 

 

 

 

 

4.1

 

Merger and acquisition costs

 

11.3

 

 

 

1.0

 

 

 

16.8

 

 

 

8.0

 

Foreign currency hedge gain

 

 

 

 

 

 

 

 

 

 

(3.3

)

Legacy legal & environmental costs

 

 

 

 

0.2

 

 

 

 

 

 

0.2

 

Total Operating Profit Special Items

$

11.3

 

 

$

10.8

 

 

$

17.2

 

 

$

43.3

 

Operating Profit Special Items - net of tax

$

8.7

 

 

$

8.3

 

 

$

13.2

 

 

$

33.4

 

Tax Special Items(1)

$

(7.0

)

 

$

(2.0

)

 

$

(6.9

)

 

$

(7.1

)

Special items per diluted share

$

0.08

 

 

$

0.31

 

 

$

0.31

 

 

$

1.28

 

 

 

 

 

 

 

 

 

Non-GAAP Measures - Adjusted Profitability

 

 

 

 

 

 

 

Value-added (VA) sales

$

237.4

 

 

$

187.2

 

 

$

859.7

 

 

$

665.2

 

Operating profit

 

26.8

 

 

 

17.6

 

 

 

94.3

 

 

 

51.5

 

Operating profit % of VA

 

11.3

%

 

 

9.4

%

 

 

11.0

%

 

 

7.7

%

EBIT

 

28.1

 

 

 

18.7

 

 

 

99.4

 

 

 

55.4

 

EBIT % of VA

 

11.8

%

 

 

10.0

%

 

 

11.6

%

 

 

8.3

%

Net income

 

21.4

 

 

 

14.4

 

 

 

78.8

 

 

 

41.8

 

EPS - Diluted

$

1.03

 

 

$

0.70

 

 

$

3.81

 

 

$

2.03

 

EPS impact of acquisition amortization(2)

 

0.10

 

 

 

0.05

 

 

 

0.25

 

 

 

0.10

 

EPS excluding acquisition amortization - Diluted

$

1.13

 

 

$

0.75

 

 

$

4.06

 

 

$

2.13

 

(1) Q4 2021 Tax Special Items include a $6.9 million valuation allowance reversal.

 

(2)Acquisition amortization was $2.5 million ($2.0 million net of tax) and $1.1 million ($1.1 million net of tax) in the fourth quarter of 2021 and 2020, respectively. Acquisition amortization was $5.8 million ($5.2 million net of tax) and $2.2 million ($2.1 million net of tax) for the full year of 2021 and 2020, respectively.

 

In addition to presenting financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains financial measures, including operating profit, segment operating profit, earnings before interest and taxes (EBIT), net income, and earnings per share, on a non-GAAP basis. As detailed in the above reconciliation and Attachment 4, we have adjusted the results for certain special items such as non-cash impairment charges, non-cash inventory adjustments, cost reduction initiatives (i.e., severance), COVID-19 related costs, merger and acquisition costs, certain foreign currency hedge gains, and certain discrete income tax items from the applicable GAAP financial measure. Internally, management reviews the results of operations without the impact of these costs in order to assess the profitability from ongoing activities. We are providing this information because we believe it will assist investors in analyzing our financial results and, when viewed in conjunction with the GAAP results, provide a more comprehensive understanding of the factors and trends affecting our operations.

 

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