Materion Corporation (NYSE:MTRN) Q3 2018 Earnings Conference Call Transcript
Oct 25, 2018 • 09:00 am ET
Greetings, and welcome to the Materion Corporation Third Quarter 2018 Earnings Conference Call.
At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Steve Shamrock, Vice President, Corporate Controller and Investor Relations. Thank you, sir. You may begin.
This is Steve Shamrock, Vice President, Corporate Controller and Investor Relations. With me today is Jugal Vijayvargiya, President and Chief Executive Officer; and Joe Kelley, Vice President and Chief Financial Officer.
Our format for today's conference call is as follows. Jugal Vijayvargiya will provide opening comments on the quarter and an update on key initiatives. Following Jugal, Joe Kelley will review detailed financial results for the quarter and then we will open up the call for questions.
(Forward-Looking Cautionary Statements)
Additionally, comments with regard to operating profit, 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 both the current year and prior year periods for comparative purposes and remove certain nonrecurring legacy, legal and environmental matters, certain income tax adjustments, CEO transition costs, cost reduction actions and merger and acquisition costs.
And now, I'll turn it over to Jugal for his comments.
Jugal K. Vijayvargiya
Thanks, Steve, and welcome, everyone. I'm pleased to report that for the seventh consecutive quarter, we have delivered both top and bottom line growth. Let me share some highlights from the quarter.
Value-added sales were up 6% year-over-year. Adjusted operating profit was $18.7 million or 10% of value-added sales, up 40% year-over-year and 23% sequentially. This is the highest level of adjusted operating profit the company has ever delivered, and it is the first time the company has achieved double-digit profit margin.
PAC segment delivered 16% operating profit margin. This is the third consecutive quarter of double-digit profit. This business is poised to deliver double-digit profit for the full year, which has never been accomplished before. All three business segments delivered double-digit profit margin, a first for the company.
Adjusted net income was $14 million or $0.68 per share, up 36% year-over-year. Through the first three quarters, the company has delivered more income than all of last year. The business continues to set records each quarter.
Based on the performance year-to-date and our outlook for the fourth quarter, we are raising the full year guidance to $2.20 to $2.30. This is the second time this year we've raised the guidance.
Our multi-pillar strategy and one Materion focus is working. Our new leadership team is in place and is focused on consistently delivering profitable growth. Our differentiated portfolio along with disciplined execution gives us confidence as we look to finish the year strong and enter 2019. Let me shift gears and talk about some of the initiatives underway to support organic growth.
In our PAC business, we're making multimillion-dollar investments in process and equipment upgrades that will increase capacity