Materion Corporation (NYSE: MTRN) has reported strong fourth-quarter and record full-year 2023 financial results, and provided a positive outlook for 2024 despite challenging market conditions. The company's net sales for the fourth quarter were $421.0 million, with value-added sales at $289.7 million. Net income was reported at $19.5 million, or $0.93 per share, diluted, and adjusted earnings of $1.41 per share.
For the full year of 2023, Materion reported net sales of $1.67 billion, with value-added sales at $1.13 billion, representing a record for the company. The net income for the year was $95.7 million, with earnings per share of $4.58, diluted, and record adjusted earnings of $5.64 per share.
Jugal Vijayvargiya, President and CEO of Materion Corporation, expressed pride in the company's performance, highlighting the strength of their diverse portfolio and the focus on driving operational excellence. Vijayvargiya also indicated the company's remarkable progress in expanding margins and emphasized their well-positioned stance to take advantage of market recoveries.
Looking ahead, Materion expects some key end markets to remain challenged due to macroeconomic conditions. However, the company anticipates another year of record results driven by their organic pipeline and close customer partnerships. The outlook includes guidance to the range of $6.10 to $6.50 for full-year 2024 adjusted earnings per share, marking a 12% increase from the prior year at the midpoint.
The company's shares have responded to this news, moving 10.5% and are currently trading at $137.46.
Materion Corporation, a global leader in advanced materials solutions for high-performance industries, continues to demonstrate resilience and strategic positioning amidst market challenges. The full 8-K submission from the company can be accessed here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $1,208 | $1,185 | $1,176 | $1,511 | $1,757 | $1,679 |
| Gross Margins | 21% | 22% | 16% | 19% | 20% | 22% |
| Net Margins | 2% | 5% | 1% | 5% | 5% | 6% |
| Net Income (M) | $21 | $53 | $15 | $72 | $86 | $105 |
| Net Interest Expense (M) | -$2 | -$2 | -$4 | -$5 | -$22 | $4 |
| Depreciation & Amort. (M) | $36 | $41 | $1 | $44 | $53 | $61 |
| Diluted Shares (M) | 40 | 29 | 26 | 27 | 25 | 26 |
| Earnings Per Share | $0.52 | $1.84 | $0.58 | $2.71 | $3.45 | $3.96 |
| EPS Growth | n/a | 253.85% | -68.48% | 367.24% | 27.31% | 14.78% |
| Avg. Price | $52.88 | $57.57 | $52.61 | $73.84 | $81.9 | $136.235 |
| P/E Ratio | 50.85 | 21.97 | 69.22 | 20.8 | 19.55 | 26.71 |
| Free Cash Flow (M) | $49 | $75 | $34 | -$13 | $38 | $41 |
| EV / EBITDA | 10.25 | 9.34 | 120.83 | 16.14 | 12.09 | 15.35 |
| Total Debt (M) | $4 | $3 | $40 | $470 | $432 | $422 |
| Net Debt / EBITDA | -0.69 | -1.09 | 1.61 | 3.76 | 2.42 | 1.94 |
| Current Ratio | 3.14 | 4.39 | 3.66 | 3.07 | 2.89 | 3.27 |
The stock is likely undervalued at a price of $137.46 per share because of its strong growth potential and solid financial position.
In terms of growth, Materion's revenues are rapidly growing at a rate of 7.0%, and its capital expenditures are increasing at a rate of 36.9%. Additionally, the company's earnings per share have grown at an annualized rate of 40.3% over the last 6 years. However, the company's operating margins and gross margins are lower than industry averages, which could impact its competitivity.
Regarding value, Materion is trading above its fair value at its current price, with P/E and P/B ratios indicating overvaluation. However, the firm's free cash flows have been relatively stable, and its current assets are well represented by inventories. The P/E ratio is higher than the industry average, but the forward P/E ratio suggests a significant discount compared to its historical average.
It's important to note that this analysis is not personalized financial advice and should be considered as part of a broader investment strategy.
