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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
____________________________________________ 
FORM 10-Q
(Mark One)
 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 2023
OR
 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             
Commission file number 001-15885
MATERION CORPORATION
(Exact name of Registrant as specified in charter)
Ohio 34-1919973
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
6070 Parkland Blvd., Mayfield Heights, Ohio 44124
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(216)-486-4200

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueMTRNNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ       No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  þ        No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer  ¨
Non-accelerated filer  ¨ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No  þ
Number of Shares of Common Stock, without par value, outstanding at September 29, 2023: 20,642,396.


PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

Materion Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)

 Third Quarter EndedNine Months Ended
(Thousands, except per share amounts)September 29, 2023September 30, 2022September 29, 2023September 30, 2022
Net sales$403,067 $428,191 $1,244,144 $1,322,531 
Cost of sales314,131 345,448 974,817 1,077,070 
Gross margin88,936 82,743 269,327 245,461 
Selling, general, and administrative expense38,806 38,958 118,053 122,666 
Research and development expense6,322 7,430 21,098 22,096 
Restructuring expense (income)1,077 484 3,194 1,560 
Other—net6,211 6,774 18,178 18,575 
Operating profit 36,520 29,097 108,804 80,564 
Other non-operating (income)—net(685)(1,175)(2,141)(3,512)
Interest expense—net7,678 5,888 22,820 14,325 
Income before income taxes29,527 24,384 88,125 69,751 
Income tax expense 2,963 4,432 11,891 12,525 
Net income $26,564 $19,952 $76,234 $57,226 
Basic earnings per share:
Net income per share of common stock$1.29 $0.97 $3.70 $2.79 
Diluted earnings per share:
Net income per share of common stock$1.27 $0.96 $3.65 $2.76 
Weighted-average number of shares of common stock outstanding:
Basic20,640 20,526 20,611 20,502 
Diluted20,905 20,780 20,891 20,756 













See notes to these consolidated financial statements.


2

Materion Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
 
 Third Quarter EndedNine Months Ended
 September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Net income $26,564 $19,952 $76,234 $57,226 
Other comprehensive income (loss):
Foreign currency translation adjustment(3,259)(6,094)(1,313)(14,484)
Derivative and hedging activity, net of tax2,019 4,125 2,860 8,289 
Pension and post-employment benefit adjustment, net of tax(145)8 (466)(216)
Other comprehensive loss(1,385)(1,961)1,081 (6,411)
Comprehensive income$25,179 $17,991 $77,315 $50,815 





































See notes to these consolidated financial statements.


3

Materion Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
September 29,December 31,
(Thousands)20232022
Assets
Current assets
Cash and cash equivalents$16,401 $13,101 
Accounts receivable, net186,177 215,211 
Inventories, net452,042 423,080 
Prepaid and other current assets54,972 39,056 
Total current assets709,592 690,448 
Deferred income taxes3,214 3,265 
Property, plant, and equipment1,252,455 1,209,205 
Less allowances for depreciation, depletion, and amortization(755,626)(760,440)
Property, plant, and equipment, net496,829 448,765 
Operating lease, right-of-use assets57,747 64,249 
Intangible assets, net134,594 143,219 
Other assets27,186 22,535 
Goodwill319,435 319,498 
Total Assets$1,748,597 $1,691,979 
Liabilities and Shareholders’ Equity
Current liabilities
Short-term debt$38,634 $21,105 
Accounts payable93,096 107,899 
Salaries and wages27,971 35,543 
Other liabilities and accrued items40,425 54,993 
Income taxes2,001 3,928 
Unearned revenue15,078 15,496 
Total current liabilities217,205 238,964 
Other long-term liabilities11,558 12,181 
Operating lease liabilities54,111 59,055 
Finance lease liabilities13,279 13,876 
Retirement and post-employment benefits20,089 20,422 
Unearned income109,076 107,736 
Long-term income taxes1,155 665 
Deferred income taxes27,795 28,214 
Long-term debt422,361 410,876 
Shareholders’ equity
Serial preferred stock (no par value; 5,000 authorized shares, none issued)
— — 
Common stock (no par value; 60,000 authorized shares, issued shares of 27,148 at both September 29th and December 31st)
306,593 288,100 
Retained earnings837,598 769,418 
Common stock in treasury(237,259)(220,864)
Accumulated other comprehensive loss(40,828)(41,909)
Other equity 5,864 5,245 
Total shareholders' equity871,968 799,990 
Total Liabilities and Shareholders’ Equity$1,748,597 $1,691,979 




See the notes to these consolidated financial statements.


4

Materion Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended
 September 29,September 30,
(Thousands)20232022
Cash flows from operating activities:
Net income $76,234 $57,226 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization46,524 39,223 
Amortization of deferred financing costs in interest expense1,284 1,310 
Stock-based compensation expense (non-cash)7,578 5,997 
Deferred income tax expense (benefit)(149)1,825 
Changes in assets and liabilities:
Accounts receivable
27,832 (20,964)
Inventory(30,868)(64,832)
Prepaid and other current assets(16,175)(3,019)
Accounts payable and accrued expenses(25,533)(1,785)
Unearned revenue(12,398)(2,191)
Interest and taxes payable
(1,730)(1,741)
Unearned income due to customer prepayments16,676 17,501 
Other-net(4,770)5,654 
Net cash provided by operating activities84,505 34,204 
Cash flows from investing activities:
Payments for purchase of property, plant, and equipment(85,251)(54,236)
Payments for mine development(9,326)— 
Proceeds from sale of property, plant, and equipment417 827 
Payments for acquisition, net of cash acquired— (2,971)
Net cash used in investing activities(94,160)(56,380)
Cash flows from financing activities:
Proceeds from borrowings under credit facilities, net39,649 55,735 
Repayment of long-term debt(11,579)(11,761)
Principal payments under finance lease obligations(1,297)(1,985)
Cash dividends paid(7,937)(7,584)
Payments of withholding taxes for stock-based compensation awards(5,101)(3,056)
Net cash provided by financing activities13,735 31,349 
Effects of exchange rate changes(780)(2,953)
Net change in cash and cash equivalents3,300 6,220 
Cash and cash equivalents at beginning of period13,101 14,462 
Cash and cash equivalents at end of period$16,401 $20,682 

See notes to these consolidated financial statements.


5

Materion Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Unaudited)
Common SharesShareholders' Equity
(Thousands, except per share amounts)Common SharesCommon Shares Held in TreasuryCommon
Stock		Retained
Earnings		Common
Stock in
Treasury		Accumulated Other
Comprehensive
Loss		Other
Equity		Total
Balance at June 30, 202320,637 (6,511)$303,390 $813,793 $(236,423)$(39,443)$5,806 $847,123 
Net income— — — $26,564 — — — 26,564 
Other comprehensive income— — — — — (1,385)— (1,385)
Cash dividends declared ($0.130 per share)
— — — (2,683)— — — (2,683)
Stock-based compensation activity8 8 3,174 (76)(562)— — 2,536 
Payments of withholding taxes for stock-based compensation awards(3)(3)— — (229)— — (229)
Directors’ deferred compensation— — 29 — (45)— 58 42 
Balance at September 29, 202320,642 (6,506)$306,593 $837,598 $(237,259)$(40,828)$5,864 $871,968 
Balance at July 1, 202220,523 (6,625)$281,296 $725,918 $(218,356)$(44,619)$4,915 $749,154 
Net income— — — 19,952 — — — 19,952 
Other comprehensive income— — — — — (1,961)— (1,961)
Cash dividends declared ($0.125 per share)
— — — (2,557)— — — (2,557)
Stock-based compensation activity6 6 2,695 (30)(392)— — 2,273 
Payments of withholding taxes for stock-based compensation awards(2)(2)— — (244)— — (244)
Directors’ deferred compensation1 1 33 — (227)— 254 60 
Balance at September 30, 202220,528 (6,620)$284,024 $743,283 $(219,219)$(46,580)$5,169 $766,677 



6

Common SharesShareholders' Equity
(Thousands, except per share amounts)Common SharesCommon Shares Held in TreasuryCommon
Stock		Retained
Earnings		Common
Stock in
Treasury		Accumulated Other
Comprehensive
Loss		Other
Equity		Total
Balance at December 31, 202220,543 (6,605)$288,100 $769,418 $(220,864)$(41,909)$5,245 $799,990 
Net income— — — 76,234 — — — 76,234 
Other comprehensive loss— — — — — 1,081 — 1,081 
Cash dividends declared ($0.385 per share)
— — — (7,937)— — — (7,937)
Stock-based compensation activity146 146 18,416 (117)(10,721)— — 7,578 
Payments of withholding taxes for stock-based compensation awards(48)(48)— — (5,101)— — (5,101)
Directors’ deferred compensation1 1 77 — (573)— 619 123 
Balance at September 29, 202320,642 (6,506)$306,593 $837,598 $(237,259)$(40,828)$5,864 $871,968 
Balance at December 31, 202120,448 (6,700)$271,978 $693,756 $(209,920)$(40,169)$4,795 $720,440 
Net income— — — 57,226 — — — 57,226 
Other comprehensive loss— — — — — (6,411)— (6,411)
Cash dividends declared ($0.370 per share)
— — — (7,584)— — — (7,584)
Stock-based compensation activity115 115 11,938 (115)(5,941)— — 5,882 
Payments of withholding taxes for stock-based compensation awards(37)(37)— — (3,056)— — (3,056)
Directors’ deferred compensation2 2 108 — (302)— 374 $180 
Balance at September 30, 202220,528 (6,620)$284,024 $743,283 $(219,219)$(46,580)$5,169 $766,677 
















See notes to these consolidated financial statements.


7

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)

Note A — Accounting Policies

Basis of Presentation:
The accompanying consolidated financial statements of Materion Corporation and its subsidiaries (referred to herein as the Company, our, we, or us) contain all of the adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. All adjustments were of a normal and recurring nature.
These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's 2022 Annual Report on Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year.
New Pronouncements Adopted:
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2024. The Company has applied this guidance in accounting for the interest rate swaps discussed in Note N. Any additional reference rate reform impacts will be accounted for in accordance with ASU 2020-04 and ASU 2022-06.
No other recently issued or effective ASUs had, or are expected to have, a material effect on the Company's results of operations, financial condition, or liquidity.

Note B — Segment Reporting
 
The Company has the following reportable segments: Performance Materials, Electronic Materials, Precision Optics, and Other. The Company’s reportable segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, the Company's chief operating decision maker, in determining how to allocate the Company’s resources and evaluate performance.
Performance Materials provides advanced engineered solutions comprised of beryllium and non-beryllium containing alloy systems and custom engineered parts in strip, bulk, rod, plate, bar, tube, and other customized shapes.
Electronic Materials produces advanced chemicals, microelectric packaging, precious metal, non-precious metal, and specialty metal products, including vapor deposition targets, frame lid assemblies, clad and precious metal preforms, high temperature braze materials, and ultra-fine wire.
Precision Optics produces thin film coatings, optical filter materials, sputter-coated, and precision-converted thin film materials.
The Other reportable segment includes unallocated corporate costs and assets.
The primary measurement used by management to measure the financial performance of each segment is earnings before interest, taxes, depreciation and amortization (EBITDA).
The below table presents financial information for each segment and a reconciliation of EBITDA to Net Income (the most directly comparable GAAP financial measure) for the third quarter and first nine months of 2023 and 2022:



8
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
(Thousands)Third Quarter 2023Third Quarter 2022First Nine Months 2023First Nine Months 2022
Net sales:
Performance Materials(1)
$184,642 $169,357 $554,427 $473,876 
Electronic Materials(1)
192,305 230,841 611,855 762,649 
Precision Optics26,120 27,993 77,862 86,006 
Other— — — — 
Net sales403,067 428,191 1,244,144 1,322,531 
Segment EBITDA:
Performance Materials$46,366 $28,866 $134,061 $80,886 
Electronic Materials10,155 16,853 37,504 51,338 
Precision Optics3,261 3,546 7,654 9,281 
Other(7,497)(5,839)(21,750)(18,206)
Total Segment EBITDA52,285 43,426 157,469 123,299 
Income tax expense2,963 4,432 11,891 12,525 
Interest expense - net7,678 5,888 22,820 14,325 
Depreciation, depletion and amortization15,080 13,154 46,524 39,223 
Net income$26,564 $19,952 $76,234 $57,226 

(1) Excludes inter-segment sales of $3.2 million for the third quarter of 2023 and $7.3 million for the first nine months of 2023 for Electronic Materials. There were no material inter-segment sales for Performance Materials in 2023. Excludes inter-segment sales of $0.2 million for the third quarter of 2022 and $0.6 million for the first nine months of 2022 for Performance Materials and $3.8 million for the third quarter of 2022 and $12.1 million for the first nine months of 2022 for Electronic Materials. Inter-segment sales are eliminated in consolidation.










The following table disaggregates revenue for each segment by end market for the third quarter and first nine months of 2023 and 2022:


9
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
 (Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherTotal
Third Quarter 2023
End Market
Semiconductor$2,712 $151,388 $624 $— $154,724 
Industrial32,046 7,958 6,954 — 46,958 
Aerospace and defense30,938 1,102 7,124 — 39,164 
Consumer electronics10,827 144 4,254 — 15,225 
Automotive19,447 1,747 2,606 — 23,800 
Energy13,013 25,179 — — 38,192 
Telecom and data center15,685 10 — — 15,695 
Other59,974 4,777 4,558 — 69,309 
Total$184,642 $192,305 $26,120 $— $403,067 
Third Quarter 2022
End Market
Semiconductor$2,410 $185,223 $1,151 $— $188,784 
Industrial44,550 9,383 7,564 — 61,497 
Aerospace and defense28,262 1,243 3,532 — 33,037 
Consumer electronics9,607 364 6,799 — 16,770 
Automotive24,802 1,863 2,268 — 28,933 
Energy15,971 25,220 — — 41,191 
Telecom and data center15,412 42 — — 15,454 
Other28,343 7,503 6,679 — 42,525 
Total$169,357 $230,841 $27,993 $— $428,191 



10
Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
 (Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherTotal
First Nine Months 2023
End Market
Semiconductor$9,713 $487,361 $2,279 $— $499,353 
Industrial111,436 25,102 22,400 — 158,938 
Aerospace and defense92,734 4,670 17,771 — 115,175 
Consumer electronics30,473 526 11,075 — 42,074 
Automotive66,753 4,966 7,090 — 78,809 
Energy38,597 71,940 — — 110,537 
Telecom and data center49,223 68 — — 49,291 
Other155,498 17,222 17,247 — 189,967 
Total$554,427 $611,855 $77,862 $— $1,244,144 
First Nine Months 2022
End Market
Semiconductor$6,657 $613,887 $4,007 $— $624,551 
Industrial125,588 37,206 23,605 — 186,399 
Aerospace and defense79,561 5,141 12,344 — 97,046 
Consumer electronics38,822 969 17,925 — 57,716 
Automotive71,893 4,985 7,294 — 84,172 
Energy38,231 79,701 — — 117,932 
Telecom and data center47,716 107 — — 47,823 
Other65,408 20,653 20,831 — 106,892 
Total$473,876 $762,649 $86,006 $— $1,322,531 

Note C — Revenue Recognition

Net sales consist primarily of revenue from the sale of precious and non-precious specialty metals, beryllium and copper-based alloys, beryllium composites, and other products into numerous end markets. The Company requires an agreement with a customer that creates enforceable rights and performance obligations. The Company generally recognizes revenue in an amount that reflects the consideration to which it expects to be entitled upon satisfaction of a performance obligation by transferring control over a product to the customer. Control over a product is generally transferred to the customer when the Company has a present right to payment, the customer has legal title, the customer has physical possession, the customer has the significant risks and rewards of ownership, and/or the customer has accepted the product.

Transaction Price Allocated to Future Performance Obligations: Accounting Standards Codification 606, Revenue from Contracts with Customers, requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied at September 29, 2023. Remaining performance obligations include non-cancelable purchase orders and customer contracts. The guidance provides certain practical expedients that limit this requirement. As such, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

After considering the practical expedient at September 29, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $55.9 million.



11

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Contract Balances: The timing of revenue recognition, billings, and cash collections resulted in the following contract assets and contract liabilities:
(Thousands)
September 29, 2023
December 31, 2022
$ change% change
Accounts receivable, trade
$186,937 $215,726 $(28,789)(13)%
Unbilled receivables
16,910 10,765 6,145 57 %
Unearned revenue
15,078 15,496 (418)(3)%
Accounts receivable, trade represents payments due from customers relating to the transfer of the Company’s products and services. The Company believes that its receivables are collectible and appropriate allowances for doubtful accounts have been recorded. Impairment losses (bad debt) incurred related to our receivables were immaterial during the third quarter of 2023.

Unbilled receivables represent expenditures on contracts, plus applicable profit margin, not yet billed. Unbilled receivables are generally billed and collected within one year. Billings made on contracts are recorded as a reduction of unbilled receivables.

Unearned revenue is recorded for consideration received from customers in advance of satisfaction of the related performance obligations. The Company recognized approximately $11.6 million of the December 31, 2022 unearned amounts as revenue during the first nine months of 2023.

As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component because the period between the transfer of a product or service to a customer and when the customer pays for that product or service will be one year or less. The Company does not include extended payment terms in its contracts with customers.

Note D — Restructuring

Over the first nine months of 2023, the Company implemented various restructuring initiatives across the Performance Materials, Electronic Materials and Precision Optics segments to improve operational efficiency. This resulted in severance and related costs of approximately $1.1 million and $3.2 million during the three months and nine months ended September 29, 2023, respectively. Approximately $1.9 million of those severance costs were paid as of September 29, 2023.
In the first nine months of 2022, the Company recorded a combined total of $1.6 million of restructuring charges in our Precision Optics, Electronic Materials and Other segments as a result of cost reduction actions taken in order to reduce our fixed cost structure.

Note E — Other-net

Other-net for the third quarter and first nine months of 2023 and 2022 is summarized as follows: 
 Third Quarter EndedNine Months Ended
 September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Amortization of intangible assets$3,153 $3,088 $9,403 $9,318 
Metal consignment fees2,580 3,111 8,307 8,993 
Foreign currency (gain) loss609 235 571 (70)
Other items(131)340 (103)334 
Total$6,211 $6,774 $18,178 $18,575 


12

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note F — Income Taxes

The Company's effective tax rate for the third quarter of 2023 and 2022 was 10.0% and 18.2%, respectively, and 13.5% and 18.0% in the first nine months of 2023 and 2022, respectively. The effective tax rate for 2023 was lower than the statutory tax rate primarily due to the impact of the foreign derived intangible income deduction, percentage depletion, research and development and production credits. The effective tax rate for 2022 was lower than the statutory tax rate primarily due to the impact of percentage depletion, research and development credits and the foreign-derived intangible income deduction. The effective tax rate for the first nine months of 2023 included a net discrete income tax benefit of $3.4 million, primarily related to an optimization of our foreign-derived intangible income deduction benefit, excess tax benefits from stock-based compensation awards and return to provision adjustments . The effective tax rate for the first nine months of 2022 included a net discrete income tax benefit of $0.9 million, primarily related to excess tax benefits from stock-based compensation awards and return to provision adjustments.
Government Tax Credits
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law. The IRA, among other provisions, includes a new corporate alternative minimum tax on certain large corporations and new or enhanced federal energy and manufacturing tax credits effective for tax years beginning in 2023. The Company is not subject to the minimum tax as our average annual book profits over the prior three-year period were less than $1 billion. The IRA introduced a new advanced manufacturing production credit (production credit), which provides an annual cash benefit for a portion of production costs for the sale of certain minerals produced in the U.S. and sold by a taxpayer during the year.
The IRA affords the Company eligibility to a production credit beginning in 2023, for which the Company expects to recognize cash savings of approximately $10 million for the year ending December 31, 2023. The issuance of guidance and interpretation as to the eligibility for, calculation of, and methods for claiming the production credit remain pending. We will continue to monitor developments related to the production credit from the Internal Revenue Service and U.S. Treasury Department and evaluate the potential impact to the Company’s production credit. The Company will finalize the expected annual production credit impact as further guidance is issued.
The production credit is recorded as a reduction in cost of goods sold as the applicable items are produced and sold. U.S. GAAP does not address the accounting for government grants received by a business entity that are outside the scope of ASC 740; our accounting policy is to analogize to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, under IFRS Accounting Standards. We recognize the benefit of tax credits accounted for by applying IAS 20 in pretax income on a systematic basis in line with its recognition of the expenses that the grant is intended to compensate.


13

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note G — Earnings Per Share (EPS)

The following table sets forth the computation of basic and diluted EPS:
Third Quarter EndedNine Months Ended
September 29,September 30,September 29,September 30,
(Thousands, except per share amounts)2023202220232022
Numerator for basic and diluted EPS:
Net income$26,564 $19,952 $76,234 $57,226 
Denominator:
Denominator for basic EPS:
Weighted-average shares outstanding20,640 20,526 20,611 20,502 
Effect of dilutive securities:
Stock appreciation rights79 85 87 85 
Restricted stock units84 98 89 113 
Performance-based restricted stock units102 71 104 55 
Diluted potential common shares265 254 280 254 
Denominator for diluted EPS:
Adjusted weighted-average shares outstanding20,905 20,780 20,891 20,756 
Basic EPS$1.29 $0.97 $3.70 $2.79 
Diluted EPS$1.27 $0.96 $3.65 $2.76 

Adjusted weighted-average shares outstanding - diluted exclude securities totaling 47,250 and 45,016 for the quarters ended September 29, 2023 and September 30, 2022, respectively, and 36,927 and 54,680 for the nine months ended September 29, 2023 and September 30, 2022, respectively. These securities are primarily related to restricted stock units and stock appreciation rights with fair market values and exercise prices greater than the average market price of the Company's common shares and were excluded from the dilution calculation as the effect would have been anti-dilutive.

Note H — Inventories

Inventories on the Consolidated Balance Sheets are summarized as follows:
September 29,December 31,
(Thousands)20232022
Raw materials and supplies$109,731 $113,694 
Work in process269,508 249,105 
Finished goods72,803 60,281 
Inventories, net$452,042 $423,080 
The Company maintains the majority of the precious metals and copper used in production on a consignment basis in order to reduce its exposure to metal market price movements and to reduce its working capital investment. The notional value of off-balance sheet precious metals and copper was $344.8 million and $373.1 million as of September 29, 2023 and December 31, 2022, respectively.


14

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note I — Customer Prepayments

In 2020, the Company entered into an investment agreement and a master supply agreement with a customer to procure equipment to manufacture product for the customer. The customer provided prepayments to the Company to fund the necessary infrastructure improvements and procure the equipment necessary to supply the customer with the desired product. The Company owns, operates and maintains the equipment that is being used to manufacture product for the customer.

Revenue will be recognized as the Company fulfills purchase orders and ships the commercial product to the customer, as product delivery is considered the satisfaction of the performance obligation.

Additionally, during the second quarter of 2022, the Company entered into an amendment to the investment agreement with the same customer to procure additional equipment to manufacture product for the customer. During 2023, the Company has received approximately $16.7 million in prepayments under the terms of this amended agreement.

As of September 29, 2023 and December 31, 2022, $90.0 million and $85.9 million, respectively, of prepayments are classified as Unearned income on the Consolidated Balance Sheets. The prepayments will remain in Unearned income until commercial purchase orders are received for product serviced out of the equipment, at which time a portion of the purchase order value related to prepayments will be reclassified to Unearned revenue. As of September 29, 2023 $5.8 million of the prepayments are classified as Unearned revenue.

Note J — Pensions and Other Post-employment Benefits

The following is a summary of the net periodic benefit cost for the third quarter and first nine months ended September 29, 2023 and September 30, 2022, respectively, for the pension plans as shown below. The Pension Benefits column aggregates defined benefit pension plans in the U.S., Germany, Liechtenstein, England, and the U.S. supplemental retirement plans. The Other Benefits column includes the domestic retiree medical and life insurance plan.
 Pension BenefitsOther Benefits
 Third Quarter EndedThird Quarter Ended
September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Components of net periodic benefit (credit) cost
Service cost$209 $281 $13 $21 
Interest cost1,966 1,203 68 39 
Expected return on plan assets(2,421)(2,380)— — 
Amortization of prior service (benefit) cost(21)(19)(139)(374)
Amortization of net loss (gain)(75)410 (95)(68)
Net periodic benefit (credit) cost$(342)$(505)$(153)$(382)
 Pension BenefitsOther Benefits
 Nine Months EndedNine Months Ended
September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Components of net periodic benefit (credit) cost
Service cost$642 $891 $38 $63 
Interest cost5,909 3,639 205 117 
Expected return on plan assets(7,282)(7,158)— — 
Amortization of prior service (benefit) cost(65)(57)(417)(1,122)
Amortization of net loss (gain)(231)1,260 (285)(204)
Net periodic benefit (credit) cost$(1,027)$(1,425)$(459)$(1,146)


15

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)


The Company did not make any contributions to its domestic defined benefit plan in the third quarter or first nine months of 2023 or 2022.
The Company reports the service cost component of net periodic benefit cost in the same line item as other compensation costs in operating expenses and the non-service cost components of net periodic benefit cost in Other non-operating (income) expense.


Note K — Accumulated Other Comprehensive Income (Loss)

Changes in the components of accumulated other comprehensive income, including the amounts reclassified, for the third quarter and first nine months of 2023 and 2022 are as follows:
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyInterest RatePrecious MetalsTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at June 30, 2023
$1,290 $7,069 $(443)$7,916 $(40,549)$(6,810)$(39,443)
Other comprehensive income (loss) before reclassifications766 2,398 515 3,679 — (3,259)420 
Amounts reclassified from accumulated other comprehensive income (loss)— (1,140)83 (1,057)(299)— (1,356)
Net current period other comprehensive (loss) income before tax766 1,258 598 2,622 (299)(3,259)(936)
Deferred taxes176 289 138 603 (154)— 449 
Net current period other comprehensive (loss) income after tax590 969 460 2,019 (145)(3,259)(1,385)
Balance at September 29, 2023
$1,880 $8,038 $17 $9,935 $(40,694)$(10,069)$(40,828)
Balance at July 1, 2022
$3,226 $3,250 $108 $6,584 $(39,926)$(11,277)$(44,619)
Other comprehensive (loss) income before reclassifications837 4,360 441 $5,638 — (6,094)(456)
Amounts reclassified from accumulated other comprehensive income (loss)(41)(115)(126)$(282)(18)— (300)
Net current period other comprehensive (loss) income before tax796 4,245 315 5,356 (18)(6,094)(756)
Deferred taxes183 976 72 1,231 (26)— 1,205 
Net current period other comprehensive (loss) income after tax613 3,269 243 4,125 8 (6,094)(1,961)
Balance at September 30, 2022
$3,839 $6,519 $351 $10,709 $(39,918)$(17,371)$(46,580)



16

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyInterest RatePrecious MetalsTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at December 31, 2022
$1,243 $6,055 $(223)$7,075 $(40,228)$(8,756)$(41,909)
Other comprehensive income (loss) before reclassifications862 5,525 119 6,506 — (1,313)5,193 
Amounts reclassified from accumulated other comprehensive income (loss)(35)(2,950)193 (2,792)(844)— (3,636)
Net current period other comprehensive (loss) income before tax827 2,575 312 3,714 (844)(1,313)1,557 
Deferred taxes190 592 72 854 (378)— 476 
Net current period other comprehensive (loss) income after tax637 1,983 240 2,860 (466)(1,313)1,081 
Balance at September 29, 2023
$1,880 $8,038 $17 $9,935 $(40,694)$(10,069)$(40,828)
Balance at December 31, 2021
$2,348 $— $72 $2,420 $(39,702)$(2,887)$(40,169)
Other comprehensive (loss) income before reclassifications2,107 8,228 388 10,723 — (14,484)(3,761)
Amounts reclassified from accumulated other comprehensive income (loss)(170)238 (27)41 (1,028)— (987)
Net current period other comprehensive (loss) income before tax1,937 8,466 361 10,764 (1,028)(14,484)(4,748)
Deferred taxes446 1,947 82 2,475 (812)— 1,663 
Net current period other comprehensive (loss) income after tax1,491 6,519 279 8,289 (216)(14,484)(6,411)
Balance at September 30, 2022
$3,839 $6,519 $351 $10,709 $(39,918)$(17,371)$(46,580)
Reclassifications from accumulated other comprehensive income (loss) of gains and losses on foreign currency cash flow hedges are recorded in Net sales in the Consolidated Statements of Income. Reclassifications from accumulated other comprehensive income (loss) of gains and losses on precious metal and copper cash flow hedges are recorded in Cost of sales in the Consolidated Statements of Income. Reclassifications from accumulated other comprehensive income (loss) of gains and losses on the interest rate cash flow hedge is recorded in Interest expense in the Consolidated Statements of Income. Refer to Note N for additional details on cash flow hedges.
Reclassifications from accumulated other comprehensive income (loss) for pension and post-employment benefits are included in the computation of the net periodic pension and post-employment benefit expense. Refer to Note J for additional details on pension and post-employment expenses.



17

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note L — Stock-based Compensation Expense

Stock-based compensation expense, which includes awards settled in shares and in cash, was $2.6 million and $7.8 million in the third quarter and first nine months of 2023, respectively, compared to $2.2 million and $6.0 million, respectively, in the same periods of 2022.
The Company granted 47,084 stock appreciation rights (SARs) to certain employees during the first nine months of 2023. The weighted-average exercise price per share and weighted-average fair value per share of the SARs granted during the nine months ended September 29, 2023 were $113.28 and $42.27, respectively. The Company estimated the fair value of the SARs using the following weighted-average assumptions in the Black-Scholes model:
Risk-free interest rate4.27 %
Dividend yield0.44 %
Volatility39.0 %
Expected term (in years)4.5

The Company granted 54,788 stock-settled restricted stock units (RSUs) to certain employees during the first nine months of 2023. The Company measures the fair value of stock-settled RSUs based on the closing market price of a share of Materion common stock on the date of the grant. The weighted-average fair value per share was $112.53 for stock-settled RSUs granted to employees during the nine months ended September 29, 2023. RSUs are generally expensed over the vesting period of three years for employees.
The Company granted stock-settled performance-based restricted stock units (PRSUs) to certain employees in the first nine months of 2023. The weighted-average fair value of the stock-settled PRSUs was $154.97 per share and will be expensed over the vesting period of three years. The final payout to the employees for all PRSUs will be based upon the Company’s return on invested capital and its total return to shareholders over the vesting period relative to a peer group’s performance over the same period.
At September 29, 2023, unrecognized compensation cost related to the unvested portion of all stock-based awards was approximately $17.0 million, and is expected to be recognized over the remaining vesting period of the respective grants.

Note M — Fair Value of Financial Instruments

The Company measures and records financial instruments at fair value. A hierarchy is used for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 — Quoted market prices in active markets for identical assets and liabilities;
Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect

those that a market participant would use.


18

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheets as of September 29, 2023 and December 31, 2022: 
  
(Thousands)Total Carrying Value in the Consolidated Balance SheetsQuoted Prices
in  Active
Markets  for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
20232022202320222023202220232022
Financial Assets
Deferred compensation investments$4,521 $3,001 $4,521 $3,001 $— $— $— $— 
Foreign currency forward contracts1,643 1,291 — — 1,643 1,291 — — 
Interest rate swap10,438 7,863 — — 10,438 7,863 — — 
Precious metal swaps94 118 — — 94 118 — — 
Total$16,696 $12,273 $4,521 $3,001 $12,175 $9,272 $— $— 
Financial Liabilities
Deferred compensation liability$4,521 $3,001 $4,521 $3,001 $— $— $— $— 
Foreign currency forward contracts776 1,757 — — 776 1,757 — — 
Interest Rate Swap— — — — — — 
Precious metal swaps75 411 — — 75 411 — — 
Total$5,372 $5,169 $4,521 $3,001 $851 $2,168 $— $— 
The Company uses a market approach to value the assets and liabilities for financial instruments in the table above. Outstanding contracts are valued through models that utilize market observable inputs, including both spot and forward prices, for the same underlying currencies, metals, and interest rates. The carrying values of the other working capital items and debt in the Consolidated Balance Sheets approximate fair values as of September 29, 2023 and December 31, 2022. The Company's deferred compensation investments and liabilities are based on the fair value of the investments corresponding to the employees’ investment selections, primarily in mutual funds, based on quoted prices in active markets for identical assets. Deferred compensation investments are primarily presented in Other assets. Deferred compensation liabilities are primarily presented in Other long-term liabilities.

Note N — Derivative Instruments and Hedging Activity

The Company uses derivative contracts to hedge exposure to movements in interest rates associated with borrowings, foreign currency exposures, and precious metal and copper exposures. The objectives and strategies for using derivatives in these areas are as follows:
Interest Rate. On March 4, 2022, the Company entered into a $100.0 million interest rate swap to hedge the interest rate risk on the Credit Agreement described in Note P. The swap hedges the change in 1-month LIBOR from March 4, 2022 to November 2, 2026. On March 21, 2023, the Company entered into two $50.0 million interest rate swaps to hedge the interest rate risk on the Credit Agreement described in Note P. The swaps hedge the change in 1-month USD-SOFR. The purpose of this hedge is to manage the risk of changes in the monthly interest payments attributable to changes in the benchmark interest rate.
Foreign Currency.    The Company sells a portion of its products to overseas customers in their local currencies, primarily the euro and yen. The Company secures foreign currency derivatives, mainly forward contracts and options, to hedge these anticipated sales transactions. The purpose of the hedge program is to protect against the reduction in the dollar value of foreign currency sales from adverse exchange rate movements. Should the dollar strengthen significantly, the decrease in the translated value of the foreign currency sales should be partially offset by gains on


19

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
the hedge contracts. Depending upon the methods used, the hedge contracts may limit the benefits from a weakening U.S. dollar.
The use of forward contracts locks in a firm rate and eliminates any downside from an adverse rate movement as well as any benefit from a favorable rate movement. The Company may from time to time choose to hedge with options or a tandem of options, known as a collar. These hedging techniques can limit or eliminate the downside risk but can allow for some or all of the benefit from a favorable rate movement to be realized. Unlike a forward contract, a premium is paid for an option; collars, which are a combination of a put and call option, may have a net premium but can be structured to be cash neutral. The Company will primarily hedge with forward contracts due to the relationship between the cash outlay and the level of risk.
The use of foreign currency derivative contracts is governed by policies approved by the Audit Committee of the Board of Directors. A team consisting of senior financial managers reviews the estimated exposure levels, as defined by budgets, forecasts, and other internal data, and determines the timing, amounts, and nature of instruments to use to hedge exposures. Management analyzes the effective hedged rates and the actual and projected gains and losses on the hedging transactions against the program objectives, targeted rates, and levels of risk assumed. Foreign currency contracts are typically layered in at different times for a specified exposure period in order to minimize the impact of market rate movements.
Precious Metals.    The Company maintains the majority of its precious metal production requirements on consignment in order to reduce its working capital investment and the exposure to metal price movements. When a product containing precious metal is fabricated and delivered to the customer, the metal content is purchased out of consignment based on the current market price. The price paid by the Company for the precious metal forms the basis for the price charged to the customer for the metal content in the product. This methodology allows for changes in either direction in the market prices of the precious metals used by the Company to be passed through to the customer and reduces the impact changes in prices could have on the Company's margins and operating profit. The consigned metal is owned by precious metal consignors that charge the Company consignment fees based upon the value of the metal as it fluctuates while on consignment. Each precious metal consignor retains title to its consigned precious metal until it is purchased by the Company, and it is the Company’s typical practice to purchase metal out of consignment only after a product containing that metal has been purchased by one of our customers.
In certain instances, a customer may want to fix the price for the precious metal at the time the sales order is placed rather than at the time of shipment. Setting the sales price at a different date than when the material would be purchased out of consignment potentially creates an exposure to movements in the market price of the metal. Therefore, in these limited situations, the Company may elect to enter into a forward contract to purchase precious metal. The forward contract allows the Company to purchase metal at a fixed price on a specific future date. The price in the forward contract serves as the basis for the price to be charged to the customer. By doing so, the selling price and purchase price are matched, and the Company's price exposure is reduced.
The Company refines precious metal-containing materials for its customers and typically will purchase the refined metal from the customer at current market prices. In limited circumstances, the customer may want to fix the price to be paid at the time of the order as opposed to when the material is refined. The customer may also want to fix the price for a set period of time. The Company may then elect to enter into a hedge contract, either a forward contract or a swap, to fix the price for the estimated quantity of metal to be refined and purchased, thereby reducing the exposure to adverse movements in the price of the metal. The Company may also enter into hedges to mitigate the risk relating to the prices of the metals that we process or refine.
In certain circumstances, the Company also refines metal from the customer and may retain a portion of the refined metal as payment. The Company may elect to enter into a forward contract to sell precious metal to reduce the Company's price exposure in these instances.
The Company may, from time to time, elect to purchase precious metal and hold in inventory rather than on consignment due to potential credit line limitations or other factors. These purchases are infrequent and, when made are typically held for a short duration. A forward contract will be secured at the time of the purchase to fix the price to be paid when the metal is transferred back to the consignment line, thereby limiting any price exposure during the time when the metal was owned by the Company.


20

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
The Company will only enter into a derivative contract if there is an underlying identified exposure. Contracts are typically held to maturity. The Company does not engage in derivative trading activities and does not use derivatives for speculative purposes. The Company only uses hedge contracts that are denominated in the same currency or metal as the underlying exposure.
All derivatives are recorded on the balance sheet at fair value. If a derivative is designated and effective as a cash flow hedge, changes in the fair value of the derivative are recognized in other comprehensive income (OCI) and reclassified into income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of a derivative's fair value, if any, is recognized in earnings immediately. If a derivative is not a hedge, changes in the fair value are adjusted through income. The fair values of the outstanding derivatives are recorded on the balance sheet as assets (if the derivatives are in a gain position) or liabilities (if the derivatives are in a loss position). The derivative assets and liabilities are classified as short-term or long-term depending upon the contract maturity date.
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives not designated as hedging instruments (on a gross basis) and the balance sheet classification as of September 29, 2023 and December 31, 2022:
 September 29, 2023December 31, 2022
(Thousands)Notional
Amount		Fair
Value		Notional
Amount		Fair
Value
Foreign currency forward contracts
Prepaid and other current assets$25,255 $924 $12,242 $791 
Other liabilities and accrued items16,142 675 17,061 1,048 
These outstanding foreign currency derivatives were related to balance sheet hedges and intercompany loans. Other-net included less than $0.1 million of foreign currency losses in the third quarter and $0.4 million of foreign currency losses related to derivatives in the first nine months of 2023, compared to less than $0.1 million of foreign currency losses and $0.7 million of foreign currency gains in the third quarter and first nine months of 2022, respectively.


21

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives designated as cash flow hedges (on a gross basis) and balance sheet classification as of September 29, 2023 and December 31, 2022:
September 29, 2023
Fair Value
(Thousands)Notional
Amount		Prepaid and other current assetsOther assetsOther liabilities and accrued itemsOther long-term liabilities
Foreign currency forward contracts - yen$1,873 $156 $6 $— $— 
Foreign currency forward contracts - euro19,366 516 41 101 — 
Precious metal swaps4,049 84 10 75 — 
Interest rate swap200,000 5,047 5,391 — — 
Total$225,288 $5,803 $5,448 $176 $— 
December 31, 2022
Fair Value
Notional
Amount		Prepaid and other current assetsOther assetsOther liabilities and accrued itemsOther long-term liabilities
Foreign currency forward contracts - yen$2,985 $145 $— $74 $26 
Foreign currency forward contracts - euro25,712 355 — 472 137 
Precious metal swaps8,758 118 — 411 — 
Interest rate swap100,000 3,114 4,749 — — 
Total$137,455 $3,732 $4,749 $957 $163 

All of the contracts summarized above were designated and effective as cash flow hedges. We expect to reclassify $5.6 million of net gains into earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. At September 29, 2023, the maximum term of derivative instruments that hedge forecasted transactions was approximately four years. Refer to Note K for further details related to OCI.
The following table summarizes the amounts reclassified from accumulated other comprehensive income relating to the Company’s outstanding derivatives designated as cash flow hedges and associated income statement classification as of the third quarter and first nine months of 2023 and 2022: 
Third Quarter Ended
(Thousands)September 29, 2023September 30, 2022
Hedging relationshipLine item
Foreign currency forward contractsNet sales$— $(41)
Precious metal swapsCost of sales83 (126)
Interest rate swapInterest expense - net(1,140)(115)
Total$(1,057)$(282)


22

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Nine Months Ended
(Thousands)September 29, 2023September 30, 2022
Hedging relationshipLine item
Foreign currency forward contractsNet sales$(35)$(171)
Precious metal swapsCost of sales193 (27)
Interest rate swapInterest expense - net(2,950)238 
Total$(2,792)$40 

Note O — Contingencies

Legal Proceedings. For general information regarding legal proceedings relating to Chronic Beryllium Disease Claims, refer to Note S "Contingencies and Commitments" in the Company's 2022 Annual Report on Form 10-K.
There were no pending beryllium cases as of September 29, 2023. One beryllium case that was settled in the second quarter of 2023 was dismissed with prejudice during the third quarter of 2023 after receiving court approval.
Other Litigation. The Company is party to several pending legal proceedings and claims arising in the normal course of business. The Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matters. To the extent there is a reasonable possibility that the losses could exceed any amounts accrued, the Company will adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.
On October 14, 2020, Garett Lucyk, et al. v. Materion Brush Inc., et. al., case number 20CV0234, a wage and hour purported collective and class action, was filed in the Northern District of Ohio against the Company and its subsidiary, Materion Brush Inc. (collectively, the Company). Plaintiff, a former hourly production employee at the Company's Elmore, Ohio facility, alleges, among other things, that he and other similarly situated employees nationwide are not paid for all time they spend donning and doffing personal protective equipment in violation of the Fair Labor Standards Act and Ohio law. Plaintiff filed a motion for conditional certification, which the Company opposed. On August 2, 2022, the Court conditionally certified a class of employees at the Company’s Elmore facility only and rejected certification of a class across the Company’s other facilities. In November 2022, the parties reached a settlement for an immaterial amount. The Court preliminarily approved the settlement on March 30, 2023 and a final approval hearing was held on July 6, 2023. There were no objections to the settlement and the Court entered an order approving the final settlement on July 7, 2023, and the settlement amount was subsequently paid out prior to the end of the third quarter.


Environmental Proceedings. The Company has an active environmental compliance program and records reserves for the probable cost of identified environmental remediation projects. The reserves are established based upon analyses conducted by the Company’s engineers and outside consultants and are adjusted from time to time based upon ongoing studies, the difference between actual and estimated costs, and other factors. The reserves may also be affected by rulings and negotiations with regulatory agencies. The undiscounted reserve balance was $4.4 million and $4.5 million at September 29, 2023 and December 31, 2022, respectively, and is included in Other liabilities and accrued items and Other long-term liabilities on the Consolidated Balance Sheet. Environmental projects tend to be long-term, and the final actual remediation costs may differ from the amounts currently recorded.



23

Materion Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note P — Debt
(Thousands)September 29, 2023December 31, 2022
Borrowings under Credit Agreement$176,750 $143,250 
Borrowings under the Term Loan Facility273,750 285,000 
Overdraft Sweep Facility6,848 — 
Foreign debt6,714 7,541 
Total debt outstanding464,062 435,791 
Current portion of long-term debt(38,634)(21,105)
Gross long-term debt425,428 414,686 
Unamortized deferred financing fees(3,067)(3,810)
Long-term debt$422,361 $410,876 
As of September 29, 2023 and December 31, 2022, the Company had $176.8 million outstanding at an average interest rate of 6.92% and $143.3 million outstanding at an average interest rate of 6.08%, respectively, under its revolving credit facility. The available borrowing capacity under the revolving credit facility as of September 29, 2023 was $151.0 million. The Company has the option to repay or borrow additional funds under the revolving credit facility until the maturity date in 2026. The amended and restated credit agreement governing the revolving credit facility (Credit Agreement) includes covenants subject to a maximum leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with all of our debt covenants as of September 29, 2023.

The balance outstanding on the term loan facility as of September 29, 2023 and December 31, 2022 was $273.8 million and $285.0 million, respectively.

At September 29, 2023 and December 31, 2022, there was $47.3 million and $46.5 million, respectively, outstanding against the letters of credit sub-facility.
















Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
We are an integrated producer of high-performance advanced engineered materials used in a variety of electronic, thermal, and structural applications. Our products are sold into numerous end markets, including semiconductor, industrial, aerospace and defense, automotive, consumer electronics, energy, and telecom and data center.



24

RESULTS OF OPERATIONS

Third Quarter
 Third Quarter Ended
September 29,September 30,$%
(Thousands, except per share data)20232022ChangeChange
Net sales$403,067 $428,191 $(25,124)(6)%
Value-added sales270,532 283,497 (12,965)(5)%
Gross margin88,936 82,743 6,193 7 %
Gross margin as a % of value-added sales33 %29 %
Selling, general, and administrative (SG&A) expense38,806 38,958 (152)— %
SG&A expense as a % of value-added sales14 %14 %
Research and development (R&D) expense6,322 7,430 (1,108)(15)%
R&D expense as a % of value-added sales2 %3 %
Restructuring expense 1,077 484 593 123 %
Other—net6,211 6,774 (563)(8)%
Operating profit36,520 29,097 7,423 26 %
Other non-operating (income)—net(685)(1,175)490 (42)%
Interest expense—net7,678 5,888 1,790 30 %
Income before income taxes29,527 24,384 5,143 21 %
Income tax expense2,963 4,432 (1,469)(33)%
Net income$26,564 $19,952 $6,612 33 %
Diluted earnings per share$1.27 $0.96 $0.31 32 %

Net sales of $403.1 million in the third quarter of 2023 decreased $25.1 million from $428.2 million in the third quarter of 2022. A decrease in net sales in the Electronic Materials and Precision Optics segments were partially offset by increased net sales in the Performance Materials segment. Volume decreases in the semiconductor (18%), industrial (19%), automotive (18%) and medical (37%) end markets were partially offset by an increase the aerospace and defense (19%) end market, as well as incremental sales from the clad strip project of $28.2 million. See Note B to the Consolidated Financial Statements for additional details on the year over year changes in our net sales by segment and market.

The change in precious metal and copper prices favorably impacted net sales by $3.1 million during the third quarter of 2023 compared to prior year quarter.

Value-added sales is a non-GAAP financial measure that removes the impact of pass-through metal costs and allows for analysis without the distortion of the movement or volatility in precious metal market prices and changes in mix due to customer-supplied material. Internally, we manage our business on this basis, and a reconciliation of net sales, the most directly comparable GAAP financial measure, to value-added sales is included herein. Value-added sales of $270.5 million in the third quarter of 2023 decreased $13.0 million, or 5%, compared to the third quarter of 2022. Volume decreases in the semiconductor (33%) and industrial (19%) end markets were partially offset by an increase in the aerospace and defense end market (27%) and incremental sales from the clad strip project of $28.2 million.

Gross margin in the third quarter of 2023 was $88.9 million, which was up 7% compared to the third quarter of 2022. Gross margin expressed as a percentage of value-added sales increased to 33% in the third quarter of 2023 from 29% in the third quarter of 2022. The production tax credit recorded in the third quarter of 2023 favorably impacted gross margin. See Note F to the Consolidated Financial Statements for further discussion.

SG&A expense was $38.8 million in the third quarter of 2023, compared to $39.0 million in the third quarter of 2022. SG&A expense remained relatively flat and expressed as a percentage of value-added sales was 14% for both the third quarter of 2023 and 2022.

R&D expense consists primarily of direct personnel costs for product innovation including pre-production development, evaluation, and testing of new products, prototypes, and applications to deliver new high performing advanced materials to our


25

customers. R&D expense as a percent of value-added sales decreased slightly from 3% in the third quarter of 2022 to 2% in the third quarter of 2023.

Restructuring expense consists primarily of cost reduction actions taken in order to reduce our fixed cost structure. In the third quarter of 2023, we recorded $1.1 million of restructuring charges primarily in our Electronic Materials segment. In the third quarter of 2022, we recorded $0.5 million of restructuring charges primarily in our Precision Optics segment. See Note D to the Consolidated Financial Statements for further discussion.

Other-net was $6.2 million of expense in the third quarter of 2023, or a $0.6 million decrease from the third quarter of 2022. Refer to Note E to the Consolidated Financial Statements for details of the major components within Other-net.

Other non-operating (income)-net includes components of pension and post-retirement expense other than service costs. Refer to Note J to the Consolidated Financial Statements for details of the components.

Interest expense-net was $7.7 million and $5.9 million in the third quarter of 2023 and 2022, respectively. The increase in interest expense is primarily due to an increase in interest rates compared to the prior year period.

Income tax expense for the third quarter of 2023 was $3.0 million, compared to $4.4 million in the third quarter of 2022. The effective tax rate for the third quarter of 2023 and 2022 was 10.0% and 18.2%, respectively. The effective tax rate for 2023 was lower than the statutory tax rate primarily due to the impact of the foreign derived intangible income deduction, percentage depletion, research and development and production credits. The effective tax rate for 2022 was lower than the statutory tax rate primarily due to the impact of percentage depletion, research and development credits and the foreign-derived intangible income deduction. See Note F to the Consolidated Financial Statements for additional discussion.

Nine Months
 Nine Months Ended
September 29,September 30,$%
(Thousands, except per share data)20232022ChangeChange
Net sales$1,244,144 $1,322,531 $(78,387)(6)%
Value-added sales837,351 811,417 25,934 3 %
Gross margin269,327 245,461 23,866 10 %
Gross margin as a % of value-added sales32 %30 %
SG&A expense118,053 122,666 (4,613)(4)%
SG&A expense as a % of value-added sales14 %15 %
R&D expense21,098 22,096 (998)(5)%
R&D expense as a % of value-added sales3 %3 %
Restructuring (income) expense 3,194 1,560 1,634 105 %
Other—net18,178 18,575 (397)(2)%
Operating profit108,804 80,564 28,240 35 %
Other non-operating (income)—net(2,141)(3,512)1,371 (39)%
Interest expense—net22,820 14,325 8,495 59 %
Income before income taxes88,125 69,751 18,374 26 %
Income tax expense11,891 12,525 (634)(5)%
Net income$76,234 $57,226 $19,008 33 %
Diluted earnings per share$3.65 $2.76 $0.89 32 %

Net sales of $1,244.1 million in the first nine months of 2023 decreased $78.4 million from $1,322.5 million in the first nine months of 2022. Decreases in net sales in the Electronic Materials and Precision Optics segments were partially offset by increased net sales in the Performance Materials segment. Volume decreases in the semiconductor (20%), industrial (13%) and consumer electronics (27%) end markets were partially offset by an increase in the aerospace and defense end market (19%) and incremental sales from the clad strip project of $91.4 million when compared to the first nine months of 2022. Additionally, there was a $2.4 million year over year decrease in raw material beryllium hydroxide sales compared to the first nine months of 2022. See Note B to the Consolidated Financial Statements for additional details on the year over year changes in our net sales by segment and market.


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The change in precious metal and copper market prices unfavorably impacted net sales by $2.9 million during the first nine months of 2023 compared to the same period in the prior year.

Value-added sales of $837.4 million in the first nine months of 2023 increased $25.9 million, or 3%, compared to the first nine months of 2022. Despite the decrease in net sales, value-added sales increased due to a shift in mix to higher non-precious metal sales versus precious metal sales commensurate with an increase in value-added sales into the aerospace and defense (23%) end market as well as $91.4 million of incremental sales from the clad strip project. These increases were slightly offset by a $2.4 million decrease in the volume of raw material beryllium hydroxide sales in the first nine months of 2023 when compared to the first nine months of 2022 as well as lower value-added sales into the semiconductor (20%), industrial (7%) and consumer electronics (27%) end markets.

Gross margin in the first nine months of 2023 was $269.3 million, an increase of 10% compared to the first nine months of 2022. Gross margin expressed as a percentage of value-added sales increased to 32% in the first nine months of 2023 from 30% in the first nine months of 2022. Gross margin increased from the prior year period primarily due to $7.5 million of inventory step up amortization from the HCS-Electronic Material acquisition that was recorded during the first quarter of 2022 that did not recur in 2023. In addition, the production tax credit recorded in the first nine months of 2023 favorably impacted gross margin. See Note F to the Consolidated Financial Statements for further discussion.

SG&A expense was $118.1 million in the first nine months of 2023, compared to $122.7 million in the first nine months of 2022. The decrease in SG&A expense for the first nine months of 2023 was primarily driven by $4 million of merger and acquisition costs related to the acquisition of HCS-Electronic Materials incurred in the first nine months of 2022 that did not recur in 2023 as well as lower selling related expenses associated with the decrease in value-added sales. Expressed as a percentage of value-added sales, SG&A expense was 14% and 15% in the first nine months of 2023 and 2022, respectively.

R&D expense consists primarily of direct personnel costs for product innovation including pre-production development, evaluation, and testing of new products, prototypes, and applications to deliver new high performing advanced materials to our customers. R&D expense accounted for 3% of value-added sales in the first nine months of both 2023 and 2022.

Restructuring (income) expense consists primarily of cost reduction actions taken in order to reduce our fixed cost structure. In the first nine months of 2023, we recorded a combined total of $3.2 million of restructuring charges in our Electronic Materials, Precision Optics, Performance Materials and Other segments. In the first nine months of 2022, we recorded a combined total of $1.6 million of restructuring charges in our Precision Optics, Electronic Materials and Other segments. Refer to Note D to the Consolidated Financial Statements for details.

Other-net was $18.2 million of expense in the first nine months of 2023, or a $0.4 million decrease from the first nine months of 2022. Refer to Note E to the Consolidated Financial Statements for details of the major components within Other-net.

Other non-operating (income)-net includes components of pension and post-retirement expense other than service costs. Refer to Note J to the Consolidated Financial Statements for details of the components.

Interest expense-net was $22.8 million and $14.3 million in the first nine months of 2023 and 2022, respectively. The increase in interest expense is primarily due to an increase in interest rates compared to the prior year period.

Income tax expense for the first nine months of 2023 was $11.9 million, compared to $12.5 million in the nine months of 2022. The Company's effective tax rate for the first nine months of 2023 and 2022 was 13.5% and 18.0%, respectively. The effective tax rate for 2023 was lower than the statutory tax rate primarily due to the impact of percentage depletion, research and development and production credits and the foreign derived intangible income deduction. The effective tax rate for 2022 was lower than the statutory tax rate primarily due to the impact of percentage depletion, research and development credits and the foreign-derived intangible income deduction. The effective tax rate for the first nine months of 2023 included a net discrete income tax benefit of $3.4 million, primarily related to excess tax benefits from stock-based compensation awards, return to provision adjustments and an optimization of our foreign-derived intangible income deduction benefit. The effective tax rate for the first nine months of 2022 included a net discrete income tax benefit of $0.9 million, primarily related to excess tax benefits from stock-based compensation awards and return to provision adjustments.







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Value-Added Sales - Reconciliation of Non-GAAP Financial Measure
A reconciliation of net sales to value-added sales, a non-GAAP financial measure, for each reportable segment and for the total Company for the third quarter and first nine months of 2023 and 2022 is as follows:
 Third Quarter EndedNine Months Ended
September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Net sales
Performance Materials$184,642 $169,357 $554,427 $473,876 
Electronic Materials192,305 230,841 611,855 762,649 
Precision Optics26,120 27,993 77,862 86,006 
Other— — — — 
Total$403,067 $428,191 $1,244,144 $1,322,531 
Less: pass-through metal costs
Performance Materials$15,748 $20,525 $51,906 $61,959 
Electronic Materials116,772 123,905 354,829 447,719 
Precision Optics15 16 58 83 
Other— 248 — 1,353 
Total$132,535 $144,694 $406,793 $511,114 
Value-added sales
Performance Materials$168,894 $148,832 $502,521 $411,917 
Electronic Materials75,533 106,936 257,026 314,930 
Precision Optics26,105 27,977 77,804 85,923 
Other— (248)— (1,353)
Total$270,532 $283,497 $837,351 $811,417 
Internally, management 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 precious metal market costs from net sales. Value-added sales allow management to assess the impact of differences in net sales between periods, segments, or markets, and analyze the resulting margins and profitability without the distortion of movements in pass-through market metal costs. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. We sell other metals and materials that are not considered direct pass-throughs, and these costs are not deducted from net sales when calculating value-added sales. Non-GAAP financial measures, such as value-added sales, have inherent limitations and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.

The cost of gold, silver, platinum, palladium, copper, ruthenium, iridium, rhodium, rhenium, and osmium can be quite volatile. Our pricing policy is to directly pass the market cost of these metals on to the customer in order to mitigate the impact of metal price volatility on our results from operations. Trends and comparisons of net sales are affected by movements in the market prices of these metals, but changes in net sales due to metal price movements may not have a proportionate impact on our profitability.

Our net sales are also affected by changes in the use of customer-supplied metal. When we manufacture a precious metal product, the customer may purchase metal from us or may elect to provide its own metal, in which case we process the metal on a toll basis and the metal value does not flow through net sales or cost of sales. In either case, we generally earn our margin based upon our fabrication efforts. The relationship of this margin to net sales can change depending upon whether or not the


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product was made from our metal or the customer’s metal. The use of value-added sales removes the potential distortion in the comparison of net sales caused by changes in the level of customer-supplied metal.

By presenting information on net sales and value-added sales, it is our intention to allow users of our financial statements to review our net sales with and without the impact of the pass-through metals.


Segment Results
The Company consists of four reportable segments: Performance Materials, Electronic Materials, Precision Optics, and Other. The Other reportable segment includes unallocated corporate costs.

Performance Materials
Third Quarter
 Third Quarter Ended
September 29,September 30,$%
(Thousands)20232022ChangeChange
Net sales$184,642 $169,357 $15,285 9 %
Value-added sales168,894 148,832 20,062 13 %
EBITDA46,366 28,866 17,500 61 %
Net sales from the Performance Materials segment of $184.6 million in the third quarter of 2023 increased 9% compared to net sales of $169.4 million in the third quarter of 2022. The increase in sales was due to incremental sales from the clad strip project of $28.2 million and increased volumes in the aerospace and defense end market (9%). This increase was partially offset by decreased volumes in the automotive (22%) and industrial (28%) end markets.
Value-added sales of $168.9 million in the third quarter of 2023 were 13% higher than value-added sales of $148.8 million in the third quarter of 2022. The increase in value-added sales was due to the same factors driving the increase in net sales.
EBITDA for the Performance Materials segment was $46.4 million in the third quarter of 2023, compared to $28.9 million in the third quarter of 2022. The increase in EBITDA in the third quarter of 2023 was primarily due to the same factors driving increases in net sales, manufacturing efficiencies and the $1.6 million of startup costs and $4.1 million of additional resource cost and scrap for the new wide area precision strip clad facility incurred in the third quarter of the prior year that did not recur in the third quarter of 2023. In addition, we recorded a portion of the expected $10 million annual benefit from the production credit in the third quarter of 2023, which favorably impacted EBITDA. See Note F to the Consolidated Financial Statements for further discussion.
Nine Months
 Nine Months Ended
September 29,September 30,$%
(Thousands)20232022ChangeChange
Net sales$554,427 $473,876 $80,551 17 %
Value-added sales502,521 411,917 90,604 22 %
EBITDA134,061 80,886 53,175 66 %
Net sales from the Performance Materials segment of $554.4 million in the first nine months of 2023 increased 17% compared to net sales of $473.9 million in the first nine months of 2022. The increase in sales was primarily due to incremental sales from the clad strip project of $91.4 million as well an increase in the aerospace and defense (17%) end market, partially offset by decreases in the industrial (8%) and consumer electronics (22%) end markets when compared to the first nine months of 2022. Additionally, there was a $2.4 million year over year decrease in raw material beryllium hydroxide sales compared to the first nine months of 2022.
Value-added sales of $502.5 million in the first nine months of 2023 were 22% higher than value-added sales of $411.9 million in the first nine months of 2022. The increase in value-added sales was due to the same factors driving the increase in net sales.
EBITDA for the Performance Materials segment was $134.1 million in the first nine months of 2023 compared to $80.9 million in the first nine months of 2022. The increase in EBITDA was primarily due to the same factors driving increases in net sales, manufacturing efficiencies and due to the $9.8 million of startup costs and $4.1 million of additional resource cost


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and scrap for the new wide area precision strip clad facility incurred in the prior year period and $2.7 million of merger and acquisition costs incurred in the prior year period that did not recur in 2023. In addition, we recorded a portion of the expected $10 million annual benefit from the production credit in the first nine months of 2023, which favorably impacted EBITDA. See Note F to the Consolidated Financial Statements for further discussion.

Electronic Materials
Third Quarter
 Third Quarter Ended
September 29,September 30,$%
(Thousands)20232022ChangeChange
Net sales$192,305 $230,841 $(38,536)(17)%
Value-added sales75,533 106,936 (31,403)(29)%
EBITDA10,155 16,853 (6,698)(40)%
Net sales from the Electronic Materials segment of $192.3 million in the third quarter of 2023 were 17% lower than net sales of $230.8 million in the third quarter of 2022. The decrease in net sales was primarily due to lower sales volumes in the semiconductor (18%) end market.
Value-added sales of $75.5 million in the third quarter of 2023 decreased 29% compared to value-added sales of $106.9 million in the third quarter of 2022. The decrease in value-added sales was due to the same factors driving the decrease in net sales.
EBITDA for the Electronic Materials segment was $10.2 million in the third quarter of 2023 compared to $16.9 million in the third quarter of 2022. The decrease in EBITDA was due to decreased sales volumes, partially offset by decreases in manufacturing and SG&A expenses as a result of various targeted cost control initiatives implemented in the second quarter of 2023.

Nine Months
 Nine Months Ended
September 29,September 30,$%
(Thousands)20232022ChangeChange
Net sales$611,855 $762,649 $(150,794)(20)%
Value-added sales257,026 314,930 (57,904)(18)%
EBITDA37,504 51,338 (13,834)(27)%
Net sales from the Electronic Materials segment of $611.9 million in the first nine months of 2023 were 20% lower than net sales of $762.6 million in the first nine months of 2022. The decrease in net sales was primarily due to lower sales volumes in the semiconductor (21%) end market. Additionally, pass-through metal price fluctuations reduced net sales by $3.5 million compared to the first nine months of 2022.
Value-added sales of $257.0 million in the first nine months of 2023 decreased 18% compared to value-added sales of $314.9 million in the first nine months of 2022. The decrease in value-added sales was due to the same factors driving the decrease in net sales.
EBITDA for the Electronic Materials segment was $37.5 million in the first nine months of 2023 compared to $51.3 million in the first nine months of 2022. The decrease in EBITDA was due to decreased sales volumes, partially offset by decreases in manufacturing and SG&A expenses as a result of various targeted cost control initiatives implemented in 2023 as well as lower merger and acquisition costs of $6.8 million incurred in the prior year period that did not recur in 2023.



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Precision Optics
Third Quarter
(Thousands)Third Quarter Ended
September 29,September 30,$%
20232022ChangeChange
Net sales$26,120 $27,993 $(1,873)(7)%
Value-added sales26,105 27,977 (1,872)(7)%
EBITDA3,261 3,546 (285)(8)%
Net sales from the Precision Optics segment of $26.1 million in the third quarter of 2023 decreased 7% compared to net sales of $28.0 million in the third quarter of 2022. The decrease was primarily due to lower sales volumes as a result of a reduction in sales related to COVID-19 PCR testing programs as well as decreased sales in the consumer electronics end market (37%), which was primarily due to the discontinuation of a consumer electronic application. These decreases were partially offset by an increase in sales volumes in the aerospace and defense (102%) end market.
Value-added sales of $26.1 million in the third quarter of 2023 decreased 7% compared to value-added sales of $28.0 million in the third quarter of 2022. The decrease in value-added sales was due to the same factors driving the decrease in net sales.
EBITDA for the Precision Optics segment was $3.3 million in the third quarter of 2023 compared to $3.5 million in the third quarter of 2022. The decrease in EBITDA was driven by decreased volumes, partially offset by targeted cost control initiatives implemented in 2023.

Nine Months
(Thousands)Nine Months Ended
September 29,September 30,$%
20232022ChangeChange
Net sales$77,862 $86,006 $(8,144)(9)%
Value-added sales77,804 85,923 (8,119)(9)%
EBITDA7,654 9,281 (1,627)(18)%
Net sales from the Precision Optics segment of $77.9 million in the first nine months of 2023 decreased 9% compared to net sales of $86.0 million in the first nine months of 2022. The decrease was primarily due to lower sales volumes as a result of a reduction in sales related to COVID-19 PCR testing programs as well as decreased sales in the consumer electronics end market (38%), which was primarily due to the discontinuation of a consumer electronic application. These decreases were partially offset by an increase in sales volumes in the aerospace and defense (44%) end market.
Value-added sales of $77.8 million in the first nine months of 2023 decreased 9% compared to value-added sales of $85.9 million in the first nine months of 2022. The decrease in value-added sales was due to the same factors driving the decrease in net sales.
EBITDA for the Precision Optics segment was $7.7 million in the first nine months of 2023 compared to $9.3 million in the first nine months of 2022. The decrease in EBITDA was driven by decreased volumes partially offset by targeted cost control initiatives implemented in 2023.

Other
Third Quarter
(Thousands)Third Quarter Ended
September 29,September 30,$%
20232022ChangeChange
Net sales$— $— $— — %
Value-added sales— (248)248 (100)%
EBITDA(7,497)(5,839)(1,658)28 %
The Other reportable segment in total includes unallocated corporate costs.


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Corporate costs were $7.5 million in the third quarter of 2023 compared to $5.8 million in the third quarter of 2022. Corporate costs increased from 2% of Company-wide value-added sales in the third quarter of 2022 to 3% in the third quarter of 2023. The increase in corporate costs in the third quarter of 2023 compared to the third quarter of 2022 is primarily driven by changes in variable-based compensation and incentives.

Nine Months
(Thousands)Nine Months Ended
September 29,September 30,$%
20232022ChangeChange
Net sales$— $— $— — %
Value-added sales— (1,353)1,353 (100)%
EBITDA(21,750)(18,206)(3,544)19 %
Corporate costs were $21.8 million in the first nine months of 2023 compared to $18.2 million in the first nine months of 2022. Corporate costs increased from 2% of Company-wide value-added sales in the first nine months of 2022 to 3% in the first nine months of 2023. The increase in corporate costs in the first nine months of 2023 compared to the first nine months of 2022 is primarily driven by changes in variable-based compensation and incentives.



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FINANCIAL POSITION
Cash Flow
A summary of cash flows provided by (used in) operating, investing, and financing activities is as follows: 
 Nine Months Ended
September 29,September 30,$
(Thousands)20232022Change
Net cash provided by operating activities$84,505 $34,204 $50,301 
Net cash used in investing activities(94,160)(56,380)(37,780)
Net cash provided by financing activities13,735 31,349 (17,614)
Effects of exchange rate changes(780)(2,953)2,173 
Net change in cash and cash equivalents$3,300 $6,220 $(2,920)
Net cash provided by operating activities totaled $84.5 million in the first nine months of 2023 versus $34.2 million in the prior-year period. The period over period increase in cash provided by operating activities from the prior year period was primarily due to increased net earnings as well as favorable changes in working capital, primarily inventory and accounts receivable, primarily due to working capital initiatives during 2023.
Net cash used in investing activities was $94.2 million in the first nine months of 2023 compared to $56.4 million in the prior-year period. The increase in cash used in investing activities is due to increased capital expenditures and mine development, as expected, to support continued business growth.
Capital expenditures are made primarily for new product development, replacing and upgrading equipment, infrastructure investments, and implementing information technology initiatives. For the full year 2023, the Company expects payments for property, plant, and equipment to be approximately $105 million.
Net cash provided by financing activities totaled $13.7 million in the first nine months of 2023 and $31.3 million in the comparable prior-year period. The decrease is primarily due to a decrease in borrowings under our revolving credit facilities in the first nine months of 2023 of $39.6 million, compared to net borrowings of $55.7 million in the same period in the prior year.
Liquidity
We believe cash flow from operations plus the available borrowing capacity and our current cash balance are adequate to support operating requirements, capital expenditures, projected pension plan contributions, the current dividend program, environmental remediation projects, and strategic acquisitions for at least the next twelve months and for the foreseeable future thereafter. At September 29, 2023, cash and cash equivalents held by our foreign operations totaled $15.8 million. We do not expect restrictions on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition, or results of operations for the foreseeable future.
A summary of key data relative to our liquidity, including outstanding debt, cash, and available borrowing capacity, as of September 29, 2023 and December 31, 2022 is as follows:
 September 29,December 31,
(Thousands)20232022
Cash and cash equivalents$16,401 $13,101 
Total outstanding debt460,995 431,981 
Net debt$(444,594)$(418,880)
Available borrowing capacity$150,996 $185,294 

Net debt is a non-GAAP financial measure. We are providing this information because we believe it is more indicative of our overall financial position. It is also a measure our management uses to assess financing and other decisions. We believe that based on our typical cash flow generated from operations, we can support a higher leverage ratio in future periods.


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The available borrowing capacity in the table above represents the additional amounts that could be borrowed under our revolving credit facility and other secured lines existing as of the end of each period depicted. The applicable debt covenants have been taken into account when determining the available borrowing capacity, including the covenant that restricts the borrowing capacity to a multiple of the twelve-month trailing earnings before interest, income taxes, depreciation, depletion and amortization, and other adjustments.
In January 2023, we amended the agreement governing our $375.0 million revolving credit facility and term loan facility (Credit Agreement).
Pursuant to the amendment, we transitioned U.S. dollar denominated borrowings from LIBOR to SOFR for both the revolving credit agreement and the term loan and increased the cap on precious metals consignment line from $600 million to $615 million.
The Company had previously amended and restated the Credit Agreement in connection with the HCS-Electronic Materials acquisition in November 2021. A $300 million delayed draw term loan facility was added to the Credit Agreement and the maturity date of the Credit Agreement was extended from 2024 to 2026. Moreover, the Credit Agreement also provides for an uncommitted incremental facility whereby, under certain conditions, the Company may be able to borrow additional term loans in an aggregate amount not to exceed $150.0 million. The Credit Agreement provides the Company and its subsidiaries with additional capacity to enter into facilities for the consignment of precious metals and copper, and provides enhanced flexibility to finance acquisitions and other strategic initiatives. Borrowings under the Credit Agreement are secured by substantially all of the assets of the Company and its direct subsidiaries, with the exception of non-mining real property, precious metal, copper and certain other assets.
The Credit Agreement allows the Company to borrow money at a premium over SOFR, following the January 2023 amendment or prime rate and at varying maturities. The premium resets quarterly according to the terms and conditions stipulated in the agreement. The Credit Agreement includes restrictive covenants relating to restrictions on additional indebtedness, acquisitions, dividends, and stock repurchases. In addition, the Credit Agreement includes covenants that limit the Company to a maximum leverage ratio and a minimum interest coverage ratio. We were in compliance with all of our debt covenants as of September 29, 2023 and December 31, 2022. Cash on hand up to $25.0 million can benefit the covenants and may benefit the borrowing capacity under the Credit Agreement.
In November 2021, we completed the acquisition of HCS-Electronic Materials. The Company financed the purchase price for the HCS-Electronic Materials acquisition with a new $300.0 million five-year term loan pursuant to its delayed draw term loan facility under the Credit Agreement and $103.0 million of borrowings under its amended revolving credit facility. The interest rate for the term loan is based on SOFR, following the January 2023 amendment, plus a tiered rate determined by the Company's quarterly leverage ratio.
Portions of our business utilize off-balance sheet consignment arrangements allowing us to use metal owned by precious metal consignors as we manufacture product for our customers. Metal is purchased from the precious metal consignor and sold to our customer at the time of product shipment. Expansion of business volumes and/or higher metal prices can put pressure on the consignment line limitations from time to time. In August 2022, we entered into a precious metals consignment agreement, maturing on August 31, 2025, which replaced the consignment agreements that would have matured on August 27, 2022. The available and unused capacity under the metal consignment agreements expiring in August 2025 totaled approximately $270.2 million as of September 29, 2023, compared to $241.9 million as of December 31, 2022. The availability is determined by Board approved levels and actual capacity.
In January 2014, our Board of Directors approved a plan to repurchase up to $50.0 million of our common stock. The timing of the share repurchases will depend on several factors, including market and business conditions, our cash flow, debt levels, and other investment opportunities. There is no minimum quantity requirement to repurchase our common stock for a given year, and the repurchases may be discontinued at any time. We did not repurchase any shares under this program in the third quarter or first nine months of 2023. Since the approval of the repurchase plan, we have purchased 1,254,264 shares at a total cost of $41.7 million.
We paid cash dividends of $2.7 million and $7.9 million on our common stock in the third quarter and first nine months of 2023, respectively. We intend to pay a quarterly dividend on an ongoing basis, subject to a determination that the dividend remains in the best interest of our shareholders.



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OFF-BALANCE SHEET ARRANGEMENTS AND CASH OBLIGATIONS
We maintain the majority of the precious metals and portions of the copper we use in production on a consignment basis in order to reduce our exposure to metal price movements and to reduce our working capital investment. The notional value of off-balance sheet precious metals and copper was $344.8 million and $373.1 million as of September 29, 2023 and December 31, 2022, respectively. We were in compliance with all of the covenants contained in the consignment agreements as of September 29, 2023. For additional information on our material cash obligations, refer to our 2022 Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the inherent use of estimates and management’s judgment in establishing those estimates. For additional information regarding critical accounting policies, please refer to our 2022 Annual Report on Form 10-K.

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: the global economy, including inflationary pressures, potential future recessionary conditions and the impact of tariffs and trade agreements; the impact of any U.S. Federal Government shutdowns or sequestrations; 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 in identifying acquisition candidates and in acquiring and integrating such businesses; the impact of the results of acquisitions on our ability to fully achieve the strategic and financial objectives related to these acquisitions; our success in implementing our strategic plans and the timely and successful start-up and completion 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 consignment 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 Company’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 in operations from, and other effects of, catastrophic and other extraordinary events including outbreaks of infectious diseases and the conflict between Russia and Ukraine and other hostilities; realization of expected financial benefits expected from the Inflation Reduction Act of 2022; and the risk factors set forth in Part 1, Item 1A of the Company's 2022 Annual Report on Form 10-K.

Item 3.Quantitative and Qualitative Disclosures about Market Risk
For information regarding market risks, refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2022 Annual Report on Form 10-K. There have been no material changes in our market risks since the inclusion of this discussion in our 2022 Annual Report on Form 10-K.


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Item 4.Controls and Procedures
a)Evaluation of Disclosure Controls and Procedures
The Company carried out an evaluation under the supervision and with participation of the Company's management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of disclosure controls and procedures as of September 29, 2023 pursuant to Rule 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (Exchange Act). Based on that evaluation, management, including the chief executive officer and chief financial officer, concluded that disclosure controls and procedures are effective as of September 29, 2023.
b)Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended September 29, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.


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PART II OTHER INFORMATION
Item 1.Legal Proceedings
Our subsidiaries and our holding company are subject, from time to time, to a variety of civil and administrative proceedings arising out of our normal operations, including, without limitation, product liability claims, health, safety, and environmental claims, and employment-related actions. Among such proceedings are cases alleging that plaintiffs have contracted, or have been placed at risk of contracting, beryllium sensitization or chronic beryllium disease or other lung conditions as a result of exposure to beryllium (beryllium cases). The plaintiffs in beryllium cases seek recovery under negligence and various other legal theories and demand compensatory and often punitive damages, in many cases of an unspecified sum. Spouses of some plaintiffs claim loss of consortium.

Beryllium Claims
As of September 29, 2023, there were no pending beryllium cases. During the quarter ended September 29, 2023, one beryllium case was dismissed. In Richard Miller v. Dolphin, Inc. et al., case number CV2020-005163, filed in the Superior Court of Arizona, Maricopa County, the Company was one of six named defendants and 100 Doe defendants. The plaintiff alleged that he contracted beryllium disease from exposures to beryllium-containing products supplied to his employer, Karsten Manufacturing Corporation, where he was a production worker, and asserted claims for negligence, strict liability – failure to warn, strict liability – design defect, and fraudulent concealment. The plaintiff sought general damages, medical expenses, loss of earnings, consequential damages, and punitive damages, and his wife claimed loss of consortium. A co-defendant, Dolphin, Inc., filed a cross-claim against the Company for indemnification. On August 12, 2020, the Company moved to dismiss the cross-claim for failure to state a claim upon which relief can be granted. The court denied the motion on October 23, 2020. On December 7, 2020, the Company filed a Petition for Special Action in the Court of Appeals seeking to appeal the denial of the motion to dismiss the cross-claim. The Court of Appeals declined to accept jurisdiction on December 30, 2020. On March 30, 2023, the court dismissed all claims against four of the Company’s codefendants, as well as the cross-claim by those codefendants against the Company, pursuant to a confidential settlement agreement between those codefendants and the plaintiffs. Following a court-ordered mediation on June 20, 2023, the Company and the other remaining defendant entered into a confidential settlement agreement with plaintiffs, pursuant to which all remaining claims in the case were to be dismissed with prejudice. On August 2, 2023, an order granting stipulation for dismissal with prejudice was filed by the court.

No beryllium cases were filed in the third quarter of 2023.

The Company has insurance coverage, which may respond, subject to an annual deductible.

Other Claims
On October 14, 2020, Garett Lucyk, et al. v. Materion Brush Inc., et. al., case number 20CV0234, a wage and hour purported collective and class action, was filed in the Northern District of Ohio against the Company and its subsidiary, Materion Brush Inc. (collectively, the Company). Plaintiff, a former hourly production employee at the Company's Elmore, Ohio facility, alleges, among other things, that he and other similarly situated employees nationwide are not paid for all time they spend donning and doffing personal protective equipment in violation of the Fair Labor Standards Act and Ohio law. Plaintiff filed a motion for conditional certification, which the Company opposed. On August 2, 2022, the Court conditionally certified a class of employees at the Company’s Elmore facility only and rejected certification of a class across the Company’s other facilities. In November 2022, the parties reached a settlement for an immaterial amount. The Court preliminarily approved the settlement on March 30, 2023 and a final approval hearing was held on July 6, 2023. There were no objections to the settlement and the Court entered an order approving the final settlement on July 7, 2023, and the settlement amount was subsequently paid out prior to the end of the third quarter.






37

Item 2.Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
The following table presents information with respect to repurchases of common stock made by the Company during the three months ended September 29, 2023.
PeriodTotal Number of Shares Purchased (1)Average Price Paid per Share (1)Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
July 1 through August 4, 2023905 $120.67 — $8,316,239 
August 5 through September 1, 2023791 107.02 — 8,316,239 
September 2 through September 29, 2023342 101.98 — 8,316,239 
Total2,038 $112.23 — $8,316,239 
(1)Represents shares surrendered to the Company by employees to satisfy tax withholding obligations on equity awards issued under the Company's stock incentive plan.


(2)
On January 14, 2014, the Company announced that its Board of Directors had authorized the repurchase of up to $50.0 million of its common stock. During the three months ended September 29, 2023, the Company did not repurchase any shares under this program. As of September 29, 2023, $8.3 million may still be purchased under the program.
Item 4.Mine Safety Disclosures
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this quarterly report on Form 10-Q.


38

Item 5.Other Information

During the quarter ended September 29, 2023, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K).



Item 6.Exhibits
All documents referenced below were filed pursuant to the Exchange Act by Materion Corporation, file number 001-15885, unless otherwise noted.
31.1
Certification of Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a)*
31.2
Certification of Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a)*
32
95
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*
101.SCHInline XBRL Taxonomy Extension Schema Document*
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Exhibit 101 attachments)
*Submitted electronically herewith.


39

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  MATERION CORPORATION
Dated: November 1, 2023  
  
/s/ Shelly M. Chadwick
  Shelly M. Chadwick
  Vice President, Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)


40

Exhibit 31.1
CERTIFICATIONS
I, Jugal K. Vijayvargiya, certify that:
1)I have reviewed this quarterly report on Form 10-Q of Materion Corporation (the “registrant”);
2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
  
/s/ Jugal K. Vijayvargiya
Dated: November 1, 2023  Jugal K. Vijayvargiya
  President and Chief Executive Officer


Exhibit 31.2
CERTIFICATIONS
I, Shelly M. Chadwick, certify that:
1)I have reviewed this quarterly report on Form 10-Q of Materion Corporation (the “registrant”);
2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
  
/s/ Shelly M. Chadwick
Dated: November 1, 2023  Shelly M. Chadwick
  Vice President, Finance and Chief Financial Officer


Exhibit 32
Certification Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Quarterly Report on Form 10-Q of Materion Corporation (the “Company”) for the quarter ended September 29, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies that, to such officer’s knowledge:
 
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), and
 
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
Dated: November 1, 2023
/s/ Jugal K. Vijayvargiya
Jugal K. Vijayvargiya
President and Chief Executive Officer
 
/s/ Shelly M. Chadwick
Shelly M. Chadwick
Vice President, Finance and Chief Financial Officer


Exhibit 95
Materion Corporation
Mine Safety Disclosure Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act for the Fiscal Quarter Ended September 29, 2023
Materion Natural Resources Inc., a wholly owned subsidiary, operates a beryllium mining complex in the State of Utah which is regulated by both the U.S. Mine Safety and Health Administration (“MSHA”) and state regulatory agencies. We endeavor to conduct our mining and other operations in compliance with all applicable federal, state and local laws and regulations. We present information below regarding certain mining safety and health citations which MSHA has levied with respect to our mining operations.
Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Section 1503(a)”) requires the Company to present certain information regarding mining safety in its periodic reports filed with the Securities and Exchange Commission.
The following table reflects citations, orders and notices issued to Materion Natural Resources Inc. by MSHA during the fiscal quarter ended September 29, 2023 (the “Reporting Period”) and contains certain additional information as required by Section 1503(a) and Item 104 of Regulation S-K, including information regarding mining-related fatalities, proposed assessments from MSHA and legal actions (“Legal Actions”) before the Federal Mine Safety and Health Review Commission, an independent adjudicative agency that provides administrative trial and appellate review of legal disputes arising under the Mine Act.
Included below is the information required by Section 1503(a) with respect to the beryllium mining complex (MSHA Identification Number 4200706) for the Reporting Period:
(A)Total number of alleged violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under Section 104 of the Mine Act for which Materion Natural Resources Inc. received a citation from MSHA0
(B)Total number of orders issued under Section 104(b) of the Mine Act0
(C)Total number of citations and orders for alleged unwarrantable failure by Materion Natural Resources Inc. to comply with mandatory health or safety standards under Section 104(d) of the Mine Act0
(D)Total number of alleged flagrant violations under Section 110(b)(2) of the Mine Act0
(E)Total number of imminent danger orders issued under Section 107(a) of the Mine Act0
(F)Total dollar value of proposed assessments from MSHA under the Mine Act$0
(G)Total number of mining-related fatalities0
(H)Received notice from MSHA of a pattern of violations under Section 104(e) of the Mine ActNo
(I)Received notice from MSHA of the potential to have a pattern of violations under Section 104(e) of the Mine ActNo
(J)Total number of Legal Actions pending as of the last day of the Reporting Period0
(K)Total number of Legal Actions instituted during the Reporting Period0
(L)Total number of Legal Actions resolved during the Reporting Period0



v3.23.3
Cover Page
 9 Months Ended
Sep. 29, 2023
shares
Cover [Abstract]  
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Sep. 29, 2023
Document Transition Report false
Entity File Number 001-15885
Entity Registrant Name MATERION CORPORATION
Entity Incorporation, State or Country Code OH
Entity Tax Identification Number 34-1919973
Entity Address, Address Line One 6070 Parkland Blvd
Entity Address, City or Town Mayfield Heights
Entity Address, State or Province OH
Entity Address, Postal Zip Code 44124
City Area Code 216
Local Phone Number 486-4200
Title of 12(b) Security Common Stock, no par value
Trading Symbol MTRN
Security Exchange Name NYSE
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Large Accelerated Filer
Entity Small Business false
Entity Emerging Growth Company false
Entity Shell Company false
Entity Common Stock, Shares Outstanding 20,642,396
Entity Central Index Key 0001104657
Current Fiscal Year End Date --12-31
Document Fiscal Year Focus 2023
Document Fiscal Period Focus Q3
Amendment Flag false
v3.23.3
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Income Statement [Abstract]        
Net sales $ 403,067 $ 428,191 $ 1,244,144 $ 1,322,531
Cost of sales 314,131 345,448 974,817 1,077,070
Gross margin 88,936 82,743 269,327 245,461
Selling, general, and administrative expense 38,806 38,958 118,053 122,666
Research and development expense 6,322 7,430 21,098 22,096
Restructuring expense (income) 1,077 484 3,194 1,560
Other—net 6,211 6,774 18,178 18,575
Operating profit 36,520 29,097 108,804 80,564
Other non-operating (income)—net (685) (1,175) (2,141) (3,512)
Interest expense—net 7,678 5,888 22,820 14,325
Income before income taxes 29,527 24,384 88,125 69,751
Income tax expense 2,963 4,432 11,891 12,525
Net income $ 26,564 $ 19,952 $ 76,234 $ 57,226
Basic earnings per share:        
Net income per share of common stock (in dollars per share) $ 1.29 $ 0.97 $ 3.70 $ 2.79
Diluted earnings per share:        
Net income per share of common stock (in dollars per share) $ 1.27 $ 0.96 $ 3.65 $ 2.76
Weighted-average number of shares of common stock outstanding:        
Basic (in shares) 20,640 20,526 20,611 20,502
Diluted (in shares) 20,905 20,780 20,891 20,756
v3.23.3
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Statement of Comprehensive Income [Abstract]        
Net income $ 26,564 $ 19,952 $ 76,234 $ 57,226
Other comprehensive income (loss):        
Foreign currency translation adjustment (3,259) (6,094) (1,313) (14,484)
Derivative and hedging activity, net of tax 2,019 4,125 2,860 8,289
Pension and post-employment benefit adjustment, net of tax (145) 8 (466) (216)
Other comprehensive loss (1,385) (1,961) 1,081 (6,411)
Comprehensive income $ 25,179 $ 17,991 $ 77,315 $ 50,815
v3.23.3
Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 31, 2022
Current assets    
Cash and cash equivalents $ 16,401 $ 13,101
Accounts receivable, net 186,177 215,211
Inventories, net 452,042 423,080
Prepaid and other current assets 54,972 39,056
Total current assets 709,592 690,448
Deferred income taxes 3,214 3,265
Property, plant, and equipment 1,252,455 1,209,205
Less allowances for depreciation, depletion, and amortization (755,626) (760,440)
Property, plant, and equipment, net 496,829 448,765
Operating lease, right-of-use assets 57,747 64,249
Intangible assets, net 134,594 143,219
Other assets 27,186 22,535
Goodwill 319,435 319,498
Total Assets 1,748,597 1,691,979
Current liabilities    
Short-term debt 38,634 21,105
Accounts payable 93,096 107,899
Salaries and wages 27,971 35,543
Other liabilities and accrued items 40,425 54,993
Income taxes 2,001 3,928
Unearned revenue 15,078 15,496
Total current liabilities 217,205 238,964
Other long-term liabilities 11,558 12,181
Operating lease liabilities 54,111 59,055
Finance lease liabilities 13,279 13,876
Retirement and post-employment benefits 20,089 20,422
Unearned income 109,076 107,736
Long-term income taxes 1,155 665
Deferred income taxes 27,795 28,214
Long-term debt 422,361 410,876
Shareholders’ equity    
Serial preferred stock (no par value; 5,000 authorized shares, none issued) 0 0
Common stock (no par value; 60,000 authorized shares, issued shares of 27,148 at both September 29th and December 31st) 306,593 288,100
Retained earnings 837,598 769,418
Common stock in treasury (237,259) (220,864)
Accumulated other comprehensive loss (40,828) (41,909)
Other equity 5,864 5,245
Total shareholders' equity 871,968 799,990
Total Liabilities and Shareholders’ Equity $ 1,748,597 $ 1,691,979
v3.23.3
Consolidated Balance Sheets (Parenthetical) - shares
Sep. 29, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Serial preferred stock, shares authorized (in shares) 5,000,000 5,000,000
Serial preferred stock, shares issued (in shares) 0 0
Common stock, shares authorized (in shares) 60,000,000 60,000,000
Common stock, shares, issued (in shares) 27,148,000 27,148,000
v3.23.3
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Cash flows from operating activities:    
Net income $ 76,234 $ 57,226
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation, depletion, and amortization 46,524 39,223
Amortization of deferred financing costs in interest expense 1,284 1,310
Stock-based compensation expense (non-cash) 7,578 5,997
Deferred income tax expense (benefit) (149) 1,825
Changes in assets and liabilities:    
Accounts receivable 27,832 (20,964)
Inventory (30,868) (64,832)
Prepaid and other current assets (16,175) (3,019)
Accounts payable and accrued expenses (25,533) (1,785)
Unearned revenue (12,398) (2,191)
Interest and taxes payable (1,730) (1,741)
Unearned income due to customer prepayments 16,676 17,501
Other-net (4,770) 5,654
Net cash provided by operating activities 84,505 34,204
Cash flows from investing activities:    
Payments for purchase of property, plant, and equipment (85,251) (54,236)
Payments for mine development (9,326) 0
Proceeds from sale of property, plant, and equipment 417 827
Payments for acquisition, net of cash acquired 0 (2,971)
Net cash used in investing activities (94,160) (56,380)
Cash flows from financing activities:    
Proceeds from borrowings under credit facilities, net 39,649 55,735
Repayment of long-term debt (11,579) (11,761)
Principal payments under finance lease obligations (1,297) (1,985)
Cash dividends paid (7,937) (7,584)
Payments of withholding taxes for stock-based compensation awards (5,101) (3,056)
Net cash provided by financing activities 13,735 31,349
Effects of exchange rate changes (780) (2,953)
Net change in cash and cash equivalents 3,300 6,220
Cash and cash equivalents at beginning of period 13,101 14,462
Cash and cash equivalents at end of period $ 16,401 $ 20,682
v3.23.3
Consolidated Statements of Shareholders' Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Shares
Common Shares Held in Treasury
Retained Earnings
Accumulated Other Comprehensive Loss
Other Equity
Common stock, beginning balance (in shares) at Dec. 31, 2021   20,448        
Treasury stock, beginning balance (in shares) at Dec. 31, 2021     (6,700)      
Beginning balances at Dec. 31, 2021 $ 720,440 $ 271,978 $ (209,920) $ 693,756 $ (40,169) $ 4,795
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income 57,226     57,226    
Net current period other comprehensive (loss) income after tax (6,411)       (6,411)  
Cash dividends declared (7,584)     (7,584)    
Stock-based compensation activity (in shares)   115 115      
Stock-based compensation activity 5,882 $ 11,938 $ (5,941) (115)    
Payments of withholding taxes for stock-based compensation awards (in shares)   (37) (37)      
Payments of withholding taxes for stock-based compensation awards (3,056)   $ (3,056)      
Directors' deferred compensation (in shares)   2 2      
Directors’ deferred compensation 180 $ 108 $ (302)     374
Common stock, ending balance (in shares) at Sep. 30, 2022   20,528        
Treasury stock, ending balance (in shares) at Sep. 30, 2022     (6,620)      
Ending balances at Sep. 30, 2022 766,677 $ 284,024 $ (219,219) 743,283 (46,580) 5,169
Common stock, beginning balance (in shares) at Jul. 01, 2022   20,523        
Treasury stock, beginning balance (in shares) at Jul. 01, 2022     (6,625)      
Beginning balances at Jul. 01, 2022 749,154 $ 281,296 $ (218,356) 725,918 (44,619) 4,915
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income 19,952     19,952    
Net current period other comprehensive (loss) income after tax (1,961)       (1,961)  
Cash dividends declared (2,557)     (2,557)    
Stock-based compensation activity (in shares)   6 6      
Stock-based compensation activity 2,273 $ 2,695 $ (392) (30)    
Payments of withholding taxes for stock-based compensation awards (in shares)   (2) (2)      
Payments of withholding taxes for stock-based compensation awards (244)   $ (244)      
Directors' deferred compensation (in shares)   1 1      
Directors’ deferred compensation 60 $ 33 $ (227)     254
Common stock, ending balance (in shares) at Sep. 30, 2022   20,528        
Treasury stock, ending balance (in shares) at Sep. 30, 2022     (6,620)      
Ending balances at Sep. 30, 2022 766,677 $ 284,024 $ (219,219) 743,283 (46,580) 5,169
Common stock, beginning balance (in shares) at Dec. 31, 2022   20,543        
Treasury stock, beginning balance (in shares) at Dec. 31, 2022     (6,605)      
Beginning balances at Dec. 31, 2022 799,990 $ 288,100 $ (220,864) 769,418 (41,909) 5,245
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income 76,234     76,234    
Net current period other comprehensive (loss) income after tax 1,081       1,081  
Cash dividends declared (7,937)     (7,937)    
Stock-based compensation activity (in shares)   146 146      
Stock-based compensation activity 7,578 $ 18,416 $ (10,721) (117)    
Payments of withholding taxes for stock-based compensation awards (in shares)   (48) (48)      
Payments of withholding taxes for stock-based compensation awards (5,101)   $ (5,101)      
Directors' deferred compensation (in shares)   1 1      
Directors’ deferred compensation 123 $ 77 $ (573)     619
Common stock, ending balance (in shares) at Sep. 29, 2023   20,642        
Treasury stock, ending balance (in shares) at Sep. 29, 2023     (6,506)      
Ending balances at Sep. 29, 2023 871,968 $ 306,593 $ (237,259) 837,598 (40,828) 5,864
Common stock, beginning balance (in shares) at Jun. 30, 2023   20,637        
Treasury stock, beginning balance (in shares) at Jun. 30, 2023     (6,511)      
Beginning balances at Jun. 30, 2023 847,123 $ 303,390 $ (236,423) 813,793 (39,443) 5,806
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income 26,564     26,564    
Net current period other comprehensive (loss) income after tax (1,385)       (1,385)  
Cash dividends declared (2,683)     (2,683)    
Stock-based compensation activity (in shares)   8 8      
Stock-based compensation activity 2,536 $ 3,174 $ (562) (76)    
Payments of withholding taxes for stock-based compensation awards (in shares)   (3) (3)      
Payments of withholding taxes for stock-based compensation awards (229)   $ (229)      
Directors' deferred compensation (in shares)   0 0      
Directors’ deferred compensation 42 $ 29 $ (45)     58
Common stock, ending balance (in shares) at Sep. 29, 2023   20,642        
Treasury stock, ending balance (in shares) at Sep. 29, 2023     (6,506)      
Ending balances at Sep. 29, 2023 $ 871,968 $ 306,593 $ (237,259) $ 837,598 $ (40,828) $ 5,864
v3.23.3
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Statement of Stockholders' Equity [Abstract]        
Cash dividends declared (in dollars per share) $ 0.130 $ 0.125 $ 0.385 $ 0.370
v3.23.3
Accounting Policies
 9 Months Ended
Sep. 29, 2023
Accounting Policies [Abstract]  
Accounting Policies Accounting Policies
Basis of Presentation:
The accompanying consolidated financial statements of Materion Corporation and its subsidiaries (referred to herein as the Company, our, we, or us) contain all of the adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. All adjustments were of a normal and recurring nature.
These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's 2022 Annual Report on Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year.
New Pronouncements Adopted:
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2024. The Company has applied this guidance in accounting for the interest rate swaps discussed in Note N. Any additional reference rate reform impacts will be accounted for in accordance with ASU 2020-04 and ASU 2022-06.
No other recently issued or effective ASUs had, or are expected to have, a material effect on the Company's results of operations, financial condition, or liquidity.
v3.23.3
Segment Reporting
 9 Months Ended
Sep. 29, 2023
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
 
The Company has the following reportable segments: Performance Materials, Electronic Materials, Precision Optics, and Other. The Company’s reportable segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, the Company's chief operating decision maker, in determining how to allocate the Company’s resources and evaluate performance.
Performance Materials provides advanced engineered solutions comprised of beryllium and non-beryllium containing alloy systems and custom engineered parts in strip, bulk, rod, plate, bar, tube, and other customized shapes.
Electronic Materials produces advanced chemicals, microelectric packaging, precious metal, non-precious metal, and specialty metal products, including vapor deposition targets, frame lid assemblies, clad and precious metal preforms, high temperature braze materials, and ultra-fine wire.
Precision Optics produces thin film coatings, optical filter materials, sputter-coated, and precision-converted thin film materials.
The Other reportable segment includes unallocated corporate costs and assets.
The primary measurement used by management to measure the financial performance of each segment is earnings before interest, taxes, depreciation and amortization (EBITDA).
The below table presents financial information for each segment and a reconciliation of EBITDA to Net Income (the most directly comparable GAAP financial measure) for the third quarter and first nine months of 2023 and 2022:
(Thousands)Third Quarter 2023Third Quarter 2022First Nine Months 2023First Nine Months 2022
Net sales:
Performance Materials(1)
$184,642 $169,357 $554,427 $473,876 
Electronic Materials(1)
192,305 230,841 611,855 762,649 
Precision Optics26,120 27,993 77,862 86,006 
Other— — — — 
Net sales403,067 428,191 1,244,144 1,322,531 
Segment EBITDA:
Performance Materials$46,366 $28,866 $134,061 $80,886 
Electronic Materials10,155 16,853 37,504 51,338 
Precision Optics3,261 3,546 7,654 9,281 
Other(7,497)(5,839)(21,750)(18,206)
Total Segment EBITDA52,285 43,426 157,469 123,299 
Income tax expense2,963 4,432 11,891 12,525 
Interest expense - net7,678 5,888 22,820 14,325 
Depreciation, depletion and amortization15,080 13,154 46,524 39,223 
Net income$26,564 $19,952 $76,234 $57,226 

(1) Excludes inter-segment sales of $3.2 million for the third quarter of 2023 and $7.3 million for the first nine months of 2023 for Electronic Materials. There were no material inter-segment sales for Performance Materials in 2023. Excludes inter-segment sales of $0.2 million for the third quarter of 2022 and $0.6 million for the first nine months of 2022 for Performance Materials and $3.8 million for the third quarter of 2022 and $12.1 million for the first nine months of 2022 for Electronic Materials. Inter-segment sales are eliminated in consolidation.










The following table disaggregates revenue for each segment by end market for the third quarter and first nine months of 2023 and 2022:
 (Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherTotal
Third Quarter 2023
End Market
Semiconductor$2,712 $151,388 $624 $— $154,724 
Industrial32,046 7,958 6,954 — 46,958 
Aerospace and defense30,938 1,102 7,124 — 39,164 
Consumer electronics10,827 144 4,254 — 15,225 
Automotive19,447 1,747 2,606 — 23,800 
Energy13,013 25,179 — — 38,192 
Telecom and data center15,685 10 — — 15,695 
Other59,974 4,777 4,558 — 69,309 
Total$184,642 $192,305 $26,120 $— $403,067 
Third Quarter 2022
End Market
Semiconductor$2,410 $185,223 $1,151 $— $188,784 
Industrial44,550 9,383 7,564 — 61,497 
Aerospace and defense28,262 1,243 3,532 — 33,037 
Consumer electronics9,607 364 6,799 — 16,770 
Automotive24,802 1,863 2,268 — 28,933 
Energy15,971 25,220 — — 41,191 
Telecom and data center15,412 42 — — 15,454 
Other28,343 7,503 6,679 — 42,525 
Total$169,357 $230,841 $27,993 $— $428,191 
 (Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherTotal
First Nine Months 2023
End Market
Semiconductor$9,713 $487,361 $2,279 $— $499,353 
Industrial111,436 25,102 22,400 — 158,938 
Aerospace and defense92,734 4,670 17,771 — 115,175 
Consumer electronics30,473 526 11,075 — 42,074 
Automotive66,753 4,966 7,090 — 78,809 
Energy38,597 71,940 — — 110,537 
Telecom and data center49,223 68 — — 49,291 
Other155,498 17,222 17,247 — 189,967 
Total$554,427 $611,855 $77,862 $— $1,244,144 
First Nine Months 2022
End Market
Semiconductor$6,657 $613,887 $4,007 $— $624,551 
Industrial125,588 37,206 23,605 — 186,399 
Aerospace and defense79,561 5,141 12,344 — 97,046 
Consumer electronics38,822 969 17,925 — 57,716 
Automotive71,893 4,985 7,294 — 84,172 
Energy38,231 79,701 — — 117,932 
Telecom and data center47,716 107 — — 47,823 
Other65,408 20,653 20,831 — 106,892 
Total$473,876 $762,649 $86,006 $— $1,322,531 
v3.23.3
Revenue Recognition
 9 Months Ended
Sep. 29, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Net sales consist primarily of revenue from the sale of precious and non-precious specialty metals, beryllium and copper-based alloys, beryllium composites, and other products into numerous end markets. The Company requires an agreement with a customer that creates enforceable rights and performance obligations. The Company generally recognizes revenue in an amount that reflects the consideration to which it expects to be entitled upon satisfaction of a performance obligation by transferring control over a product to the customer. Control over a product is generally transferred to the customer when the Company has a present right to payment, the customer has legal title, the customer has physical possession, the customer has the significant risks and rewards of ownership, and/or the customer has accepted the product.

Transaction Price Allocated to Future Performance Obligations: Accounting Standards Codification 606, Revenue from Contracts with Customers, requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied at September 29, 2023. Remaining performance obligations include non-cancelable purchase orders and customer contracts. The guidance provides certain practical expedients that limit this requirement. As such, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

After considering the practical expedient at September 29, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $55.9 million.
Contract Balances: The timing of revenue recognition, billings, and cash collections resulted in the following contract assets and contract liabilities:
(Thousands)
September 29, 2023
December 31, 2022
$ change% change
Accounts receivable, trade
$186,937 $215,726 $(28,789)(13)%
Unbilled receivables
16,910 10,765 6,145 57 %
Unearned revenue
15,078 15,496 (418)(3)%
Accounts receivable, trade represents payments due from customers relating to the transfer of the Company’s products and services. The Company believes that its receivables are collectible and appropriate allowances for doubtful accounts have been recorded. Impairment losses (bad debt) incurred related to our receivables were immaterial during the third quarter of 2023.

Unbilled receivables represent expenditures on contracts, plus applicable profit margin, not yet billed. Unbilled receivables are generally billed and collected within one year. Billings made on contracts are recorded as a reduction of unbilled receivables.

Unearned revenue is recorded for consideration received from customers in advance of satisfaction of the related performance obligations. The Company recognized approximately $11.6 million of the December 31, 2022 unearned amounts as revenue during the first nine months of 2023.

As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component because the period between the transfer of a product or service to a customer and when the customer pays for that product or service will be one year or less. The Company does not include extended payment terms in its contracts with customers.
v3.23.3
Restructuring
 9 Months Ended
Sep. 29, 2023
Restructuring and Related Activities [Abstract]  
Restructuring Restructuring
Over the first nine months of 2023, the Company implemented various restructuring initiatives across the Performance Materials, Electronic Materials and Precision Optics segments to improve operational efficiency. This resulted in severance and related costs of approximately $1.1 million and $3.2 million during the three months and nine months ended September 29, 2023, respectively. Approximately $1.9 million of those severance costs were paid as of September 29, 2023.
In the first nine months of 2022, the Company recorded a combined total of $1.6 million of restructuring charges in our Precision Optics, Electronic Materials and Other segments as a result of cost reduction actions taken in order to reduce our fixed cost structure.
v3.23.3
Other-net
 9 Months Ended
Sep. 29, 2023
Other Income and Expenses [Abstract]  
Other-net Other-net
Other-net for the third quarter and first nine months of 2023 and 2022 is summarized as follows: 
 Third Quarter EndedNine Months Ended
 September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Amortization of intangible assets$3,153 $3,088 $9,403 $9,318 
Metal consignment fees2,580 3,111 8,307 8,993 
Foreign currency (gain) loss609 235 571 (70)
Other items(131)340 (103)334 
Total$6,211 $6,774 $18,178 $18,575 
v3.23.3
Income Taxes
 9 Months Ended
Sep. 29, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company's effective tax rate for the third quarter of 2023 and 2022 was 10.0% and 18.2%, respectively, and 13.5% and 18.0% in the first nine months of 2023 and 2022, respectively. The effective tax rate for 2023 was lower than the statutory tax rate primarily due to the impact of the foreign derived intangible income deduction, percentage depletion, research and development and production credits. The effective tax rate for 2022 was lower than the statutory tax rate primarily due to the impact of percentage depletion, research and development credits and the foreign-derived intangible income deduction. The effective tax rate for the first nine months of 2023 included a net discrete income tax benefit of $3.4 million, primarily related to an optimization of our foreign-derived intangible income deduction benefit, excess tax benefits from stock-based compensation awards and return to provision adjustments . The effective tax rate for the first nine months of 2022 included a net discrete income tax benefit of $0.9 million, primarily related to excess tax benefits from stock-based compensation awards and return to provision adjustments.
Government Tax Credits
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law. The IRA, among other provisions, includes a new corporate alternative minimum tax on certain large corporations and new or enhanced federal energy and manufacturing tax credits effective for tax years beginning in 2023. The Company is not subject to the minimum tax as our average annual book profits over the prior three-year period were less than $1 billion. The IRA introduced a new advanced manufacturing production credit (production credit), which provides an annual cash benefit for a portion of production costs for the sale of certain minerals produced in the U.S. and sold by a taxpayer during the year.
The IRA affords the Company eligibility to a production credit beginning in 2023, for which the Company expects to recognize cash savings of approximately $10 million for the year ending December 31, 2023. The issuance of guidance and interpretation as to the eligibility for, calculation of, and methods for claiming the production credit remain pending. We will continue to monitor developments related to the production credit from the Internal Revenue Service and U.S. Treasury Department and evaluate the potential impact to the Company’s production credit. The Company will finalize the expected annual production credit impact as further guidance is issued.
The production credit is recorded as a reduction in cost of goods sold as the applicable items are produced and sold. U.S. GAAP does not address the accounting for government grants received by a business entity that are outside the scope of ASC 740; our accounting policy is to analogize to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, under IFRS Accounting Standards. We recognize the benefit of tax credits accounted for by applying IAS 20 in pretax income on a systematic basis in line with its recognition of the expenses that the grant is intended to compensate.
v3.23.3
Earnings Per Share
 9 Months Ended
Sep. 29, 2023
Earnings Per Share [Abstract]  
Earnings Per Share Earnings Per Share (EPS)
The following table sets forth the computation of basic and diluted EPS:
Third Quarter EndedNine Months Ended
September 29,September 30,September 29,September 30,
(Thousands, except per share amounts)2023202220232022
Numerator for basic and diluted EPS:
Net income$26,564 $19,952 $76,234 $57,226 
Denominator:
Denominator for basic EPS:
Weighted-average shares outstanding20,640 20,526 20,611 20,502 
Effect of dilutive securities:
Stock appreciation rights79 85 87 85 
Restricted stock units84 98 89 113 
Performance-based restricted stock units102 71 104 55 
Diluted potential common shares265 254 280 254 
Denominator for diluted EPS:
Adjusted weighted-average shares outstanding20,905 20,780 20,891 20,756 
Basic EPS$1.29 $0.97 $3.70 $2.79 
Diluted EPS$1.27 $0.96 $3.65 $2.76 

Adjusted weighted-average shares outstanding - diluted exclude securities totaling 47,250 and 45,016 for the quarters ended September 29, 2023 and September 30, 2022, respectively, and 36,927 and 54,680 for the nine months ended September 29, 2023 and September 30, 2022, respectively. These securities are primarily related to restricted stock units and stock appreciation rights with fair market values and exercise prices greater than the average market price of the Company's common shares and were excluded from the dilution calculation as the effect would have been anti-dilutive.
v3.23.3
Inventories
 9 Months Ended
Sep. 29, 2023
Inventory Disclosure [Abstract]  
Inventories Inventories
Inventories on the Consolidated Balance Sheets are summarized as follows:
September 29,December 31,
(Thousands)20232022
Raw materials and supplies$109,731 $113,694 
Work in process269,508 249,105 
Finished goods72,803 60,281 
Inventories, net$452,042 $423,080 
The Company maintains the majority of the precious metals and copper used in production on a consignment basis in order to reduce its exposure to metal market price movements and to reduce its working capital investment. The notional value of off-balance sheet precious metals and copper was $344.8 million and $373.1 million as of September 29, 2023 and December 31, 2022, respectively.
v3.23.3
Customer Prepayments
 9 Months Ended
Sep. 29, 2023
Customer Prepayments [Abstract]  
Customer Prepayments Customer Prepayments
In 2020, the Company entered into an investment agreement and a master supply agreement with a customer to procure equipment to manufacture product for the customer. The customer provided prepayments to the Company to fund the necessary infrastructure improvements and procure the equipment necessary to supply the customer with the desired product. The Company owns, operates and maintains the equipment that is being used to manufacture product for the customer.

Revenue will be recognized as the Company fulfills purchase orders and ships the commercial product to the customer, as product delivery is considered the satisfaction of the performance obligation.

Additionally, during the second quarter of 2022, the Company entered into an amendment to the investment agreement with the same customer to procure additional equipment to manufacture product for the customer. During 2023, the Company has received approximately $16.7 million in prepayments under the terms of this amended agreement.

As of September 29, 2023 and December 31, 2022, $90.0 million and $85.9 million, respectively, of prepayments are classified as Unearned income on the Consolidated Balance Sheets. The prepayments will remain in Unearned income until commercial purchase orders are received for product serviced out of the equipment, at which time a portion of the purchase order value related to prepayments will be reclassified to Unearned revenue. As of September 29, 2023 $5.8 million of the prepayments are classified as Unearned revenue.
v3.23.3
Pensions and Other Post-employment Benefits
 9 Months Ended
Sep. 29, 2023
Retirement Benefits [Abstract]  
Pensions and Other Post-employment Benefits Pensions and Other Post-employment Benefits
The following is a summary of the net periodic benefit cost for the third quarter and first nine months ended September 29, 2023 and September 30, 2022, respectively, for the pension plans as shown below. The Pension Benefits column aggregates defined benefit pension plans in the U.S., Germany, Liechtenstein, England, and the U.S. supplemental retirement plans. The Other Benefits column includes the domestic retiree medical and life insurance plan.
 Pension BenefitsOther Benefits
 Third Quarter EndedThird Quarter Ended
September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Components of net periodic benefit (credit) cost
Service cost$209 $281 $13 $21 
Interest cost1,966 1,203 68 39 
Expected return on plan assets(2,421)(2,380)— — 
Amortization of prior service (benefit) cost(21)(19)(139)(374)
Amortization of net loss (gain)(75)410 (95)(68)
Net periodic benefit (credit) cost$(342)$(505)$(153)$(382)
 Pension BenefitsOther Benefits
 Nine Months EndedNine Months Ended
September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Components of net periodic benefit (credit) cost
Service cost$642 $891 $38 $63 
Interest cost5,909 3,639 205 117 
Expected return on plan assets(7,282)(7,158)— — 
Amortization of prior service (benefit) cost(65)(57)(417)(1,122)
Amortization of net loss (gain)(231)1,260 (285)(204)
Net periodic benefit (credit) cost$(1,027)$(1,425)$(459)$(1,146)
The Company did not make any contributions to its domestic defined benefit plan in the third quarter or first nine months of 2023 or 2022.The Company reports the service cost component of net periodic benefit cost in the same line item as other compensation costs in operating expenses and the non-service cost components of net periodic benefit cost in Other non-operating (income) expense.
v3.23.3
Accumulated Other Comprehensive Income (Loss)
 9 Months Ended
Sep. 29, 2023
Equity [Abstract]  
Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss)
Changes in the components of accumulated other comprehensive income, including the amounts reclassified, for the third quarter and first nine months of 2023 and 2022 are as follows:
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyInterest RatePrecious MetalsTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at June 30, 2023
$1,290 $7,069 $(443)$7,916 $(40,549)$(6,810)$(39,443)
Other comprehensive income (loss) before reclassifications766 2,398 515 3,679 — (3,259)420 
Amounts reclassified from accumulated other comprehensive income (loss)— (1,140)83 (1,057)(299)— (1,356)
Net current period other comprehensive (loss) income before tax766 1,258 598 2,622 (299)(3,259)(936)
Deferred taxes176 289 138 603 (154)— 449 
Net current period other comprehensive (loss) income after tax590 969 460 2,019 (145)(3,259)(1,385)
Balance at September 29, 2023
$1,880 $8,038 $17 $9,935 $(40,694)$(10,069)$(40,828)
Balance at July 1, 2022
$3,226 $3,250 $108 $6,584 $(39,926)$(11,277)$(44,619)
Other comprehensive (loss) income before reclassifications837 4,360 441 $5,638 — (6,094)(456)
Amounts reclassified from accumulated other comprehensive income (loss)(41)(115)(126)$(282)(18)— (300)
Net current period other comprehensive (loss) income before tax796 4,245 315 5,356 (18)(6,094)(756)
Deferred taxes183 976 72 1,231 (26)— 1,205 
Net current period other comprehensive (loss) income after tax613 3,269 243 4,125 8 (6,094)(1,961)
Balance at September 30, 2022
$3,839 $6,519 $351 $10,709 $(39,918)$(17,371)$(46,580)
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyInterest RatePrecious MetalsTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at December 31, 2022
$1,243 $6,055 $(223)$7,075 $(40,228)$(8,756)$(41,909)
Other comprehensive income (loss) before reclassifications862 5,525 119 6,506 — (1,313)5,193 
Amounts reclassified from accumulated other comprehensive income (loss)(35)(2,950)193 (2,792)(844)— (3,636)
Net current period other comprehensive (loss) income before tax827 2,575 312 3,714 (844)(1,313)1,557 
Deferred taxes190 592 72 854 (378)— 476 
Net current period other comprehensive (loss) income after tax637 1,983 240 2,860 (466)(1,313)1,081 
Balance at September 29, 2023
$1,880 $8,038 $17 $9,935 $(40,694)$(10,069)$(40,828)
Balance at December 31, 2021
$2,348 $— $72 $2,420 $(39,702)$(2,887)$(40,169)
Other comprehensive (loss) income before reclassifications2,107 8,228 388 10,723 — (14,484)(3,761)
Amounts reclassified from accumulated other comprehensive income (loss)(170)238 (27)41 (1,028)— (987)
Net current period other comprehensive (loss) income before tax1,937 8,466 361 10,764 (1,028)(14,484)(4,748)
Deferred taxes446 1,947 82 2,475 (812)— 1,663 
Net current period other comprehensive (loss) income after tax1,491 6,519 279 8,289 (216)(14,484)(6,411)
Balance at September 30, 2022
$3,839 $6,519 $351 $10,709 $(39,918)$(17,371)$(46,580)
Reclassifications from accumulated other comprehensive income (loss) of gains and losses on foreign currency cash flow hedges are recorded in Net sales in the Consolidated Statements of Income. Reclassifications from accumulated other comprehensive income (loss) of gains and losses on precious metal and copper cash flow hedges are recorded in Cost of sales in the Consolidated Statements of Income. Reclassifications from accumulated other comprehensive income (loss) of gains and losses on the interest rate cash flow hedge is recorded in Interest expense in the Consolidated Statements of Income. Refer to Note N for additional details on cash flow hedges.
Reclassifications from accumulated other comprehensive income (loss) for pension and post-employment benefits are included in the computation of the net periodic pension and post-employment benefit expense. Refer to Note J for additional details on pension and post-employment expenses.
v3.23.3
Stock-based Compensation Expense
 9 Months Ended
Sep. 29, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation Expense Stock-based Compensation Expense
Stock-based compensation expense, which includes awards settled in shares and in cash, was $2.6 million and $7.8 million in the third quarter and first nine months of 2023, respectively, compared to $2.2 million and $6.0 million, respectively, in the same periods of 2022.
The Company granted 47,084 stock appreciation rights (SARs) to certain employees during the first nine months of 2023. The weighted-average exercise price per share and weighted-average fair value per share of the SARs granted during the nine months ended September 29, 2023 were $113.28 and $42.27, respectively. The Company estimated the fair value of the SARs using the following weighted-average assumptions in the Black-Scholes model:
Risk-free interest rate4.27 %
Dividend yield0.44 %
Volatility39.0 %
Expected term (in years)4.5

The Company granted 54,788 stock-settled restricted stock units (RSUs) to certain employees during the first nine months of 2023. The Company measures the fair value of stock-settled RSUs based on the closing market price of a share of Materion common stock on the date of the grant. The weighted-average fair value per share was $112.53 for stock-settled RSUs granted to employees during the nine months ended September 29, 2023. RSUs are generally expensed over the vesting period of three years for employees.
The Company granted stock-settled performance-based restricted stock units (PRSUs) to certain employees in the first nine months of 2023. The weighted-average fair value of the stock-settled PRSUs was $154.97 per share and will be expensed over the vesting period of three years. The final payout to the employees for all PRSUs will be based upon the Company’s return on invested capital and its total return to shareholders over the vesting period relative to a peer group’s performance over the same period.
At September 29, 2023, unrecognized compensation cost related to the unvested portion of all stock-based awards was approximately $17.0 million, and is expected to be recognized over the remaining vesting period of the respective grants.
v3.23.3
Fair Value of Financial Instruments
 9 Months Ended
Sep. 29, 2023
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
The Company measures and records financial instruments at fair value. A hierarchy is used for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 — Quoted market prices in active markets for identical assets and liabilities;
Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect

those that a market participant would use.
The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheets as of September 29, 2023 and December 31, 2022: 
  
(Thousands)Total Carrying Value in the Consolidated Balance SheetsQuoted Prices
in  Active
Markets  for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
20232022202320222023202220232022
Financial Assets
Deferred compensation investments$4,521 $3,001 $4,521 $3,001 $— $— $— $— 
Foreign currency forward contracts1,643 1,291 — — 1,643 1,291 — — 
Interest rate swap10,438 7,863 — — 10,438 7,863 — — 
Precious metal swaps94 118 — — 94 118 — — 
Total$16,696 $12,273 $4,521 $3,001 $12,175 $9,272 $— $— 
Financial Liabilities
Deferred compensation liability$4,521 $3,001 $4,521 $3,001 $— $— $— $— 
Foreign currency forward contracts776 1,757 — — 776 1,757 — — 
Interest Rate Swap— — — — — — 
Precious metal swaps75 411 — — 75 411 — — 
Total$5,372 $5,169 $4,521 $3,001 $851 $2,168 $— $— 
The Company uses a market approach to value the assets and liabilities for financial instruments in the table above. Outstanding contracts are valued through models that utilize market observable inputs, including both spot and forward prices, for the same underlying currencies, metals, and interest rates. The carrying values of the other working capital items and debt in the Consolidated Balance Sheets approximate fair values as of September 29, 2023 and December 31, 2022. The Company's deferred compensation investments and liabilities are based on the fair value of the investments corresponding to the employees’ investment selections, primarily in mutual funds, based on quoted prices in active markets for identical assets. Deferred compensation investments are primarily presented in Other assets. Deferred compensation liabilities are primarily presented in Other long-term liabilities.
v3.23.3
Derivative Instruments and Hedging Activity
 9 Months Ended
Sep. 29, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activity Derivative Instruments and Hedging Activity
The Company uses derivative contracts to hedge exposure to movements in interest rates associated with borrowings, foreign currency exposures, and precious metal and copper exposures. The objectives and strategies for using derivatives in these areas are as follows:
Interest Rate. On March 4, 2022, the Company entered into a $100.0 million interest rate swap to hedge the interest rate risk on the Credit Agreement described in Note P. The swap hedges the change in 1-month LIBOR from March 4, 2022 to November 2, 2026. On March 21, 2023, the Company entered into two $50.0 million interest rate swaps to hedge the interest rate risk on the Credit Agreement described in Note P. The swaps hedge the change in 1-month USD-SOFR. The purpose of this hedge is to manage the risk of changes in the monthly interest payments attributable to changes in the benchmark interest rate.
Foreign Currency.    The Company sells a portion of its products to overseas customers in their local currencies, primarily the euro and yen. The Company secures foreign currency derivatives, mainly forward contracts and options, to hedge these anticipated sales transactions. The purpose of the hedge program is to protect against the reduction in the dollar value of foreign currency sales from adverse exchange rate movements. Should the dollar strengthen significantly, the decrease in the translated value of the foreign currency sales should be partially offset by gains on
the hedge contracts. Depending upon the methods used, the hedge contracts may limit the benefits from a weakening U.S. dollar.
The use of forward contracts locks in a firm rate and eliminates any downside from an adverse rate movement as well as any benefit from a favorable rate movement. The Company may from time to time choose to hedge with options or a tandem of options, known as a collar. These hedging techniques can limit or eliminate the downside risk but can allow for some or all of the benefit from a favorable rate movement to be realized. Unlike a forward contract, a premium is paid for an option; collars, which are a combination of a put and call option, may have a net premium but can be structured to be cash neutral. The Company will primarily hedge with forward contracts due to the relationship between the cash outlay and the level of risk.
The use of foreign currency derivative contracts is governed by policies approved by the Audit Committee of the Board of Directors. A team consisting of senior financial managers reviews the estimated exposure levels, as defined by budgets, forecasts, and other internal data, and determines the timing, amounts, and nature of instruments to use to hedge exposures. Management analyzes the effective hedged rates and the actual and projected gains and losses on the hedging transactions against the program objectives, targeted rates, and levels of risk assumed. Foreign currency contracts are typically layered in at different times for a specified exposure period in order to minimize the impact of market rate movements.
Precious Metals.    The Company maintains the majority of its precious metal production requirements on consignment in order to reduce its working capital investment and the exposure to metal price movements. When a product containing precious metal is fabricated and delivered to the customer, the metal content is purchased out of consignment based on the current market price. The price paid by the Company for the precious metal forms the basis for the price charged to the customer for the metal content in the product. This methodology allows for changes in either direction in the market prices of the precious metals used by the Company to be passed through to the customer and reduces the impact changes in prices could have on the Company's margins and operating profit. The consigned metal is owned by precious metal consignors that charge the Company consignment fees based upon the value of the metal as it fluctuates while on consignment. Each precious metal consignor retains title to its consigned precious metal until it is purchased by the Company, and it is the Company’s typical practice to purchase metal out of consignment only after a product containing that metal has been purchased by one of our customers.
In certain instances, a customer may want to fix the price for the precious metal at the time the sales order is placed rather than at the time of shipment. Setting the sales price at a different date than when the material would be purchased out of consignment potentially creates an exposure to movements in the market price of the metal. Therefore, in these limited situations, the Company may elect to enter into a forward contract to purchase precious metal. The forward contract allows the Company to purchase metal at a fixed price on a specific future date. The price in the forward contract serves as the basis for the price to be charged to the customer. By doing so, the selling price and purchase price are matched, and the Company's price exposure is reduced.
The Company refines precious metal-containing materials for its customers and typically will purchase the refined metal from the customer at current market prices. In limited circumstances, the customer may want to fix the price to be paid at the time of the order as opposed to when the material is refined. The customer may also want to fix the price for a set period of time. The Company may then elect to enter into a hedge contract, either a forward contract or a swap, to fix the price for the estimated quantity of metal to be refined and purchased, thereby reducing the exposure to adverse movements in the price of the metal. The Company may also enter into hedges to mitigate the risk relating to the prices of the metals that we process or refine.
In certain circumstances, the Company also refines metal from the customer and may retain a portion of the refined metal as payment. The Company may elect to enter into a forward contract to sell precious metal to reduce the Company's price exposure in these instances.
The Company may, from time to time, elect to purchase precious metal and hold in inventory rather than on consignment due to potential credit line limitations or other factors. These purchases are infrequent and, when made are typically held for a short duration. A forward contract will be secured at the time of the purchase to fix the price to be paid when the metal is transferred back to the consignment line, thereby limiting any price exposure during the time when the metal was owned by the Company.
The Company will only enter into a derivative contract if there is an underlying identified exposure. Contracts are typically held to maturity. The Company does not engage in derivative trading activities and does not use derivatives for speculative purposes. The Company only uses hedge contracts that are denominated in the same currency or metal as the underlying exposure.
All derivatives are recorded on the balance sheet at fair value. If a derivative is designated and effective as a cash flow hedge, changes in the fair value of the derivative are recognized in other comprehensive income (OCI) and reclassified into income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of a derivative's fair value, if any, is recognized in earnings immediately. If a derivative is not a hedge, changes in the fair value are adjusted through income. The fair values of the outstanding derivatives are recorded on the balance sheet as assets (if the derivatives are in a gain position) or liabilities (if the derivatives are in a loss position). The derivative assets and liabilities are classified as short-term or long-term depending upon the contract maturity date.
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives not designated as hedging instruments (on a gross basis) and the balance sheet classification as of September 29, 2023 and December 31, 2022:
 September 29, 2023December 31, 2022
(Thousands)Notional
Amount		Fair
Value		Notional
Amount		Fair
Value
Foreign currency forward contracts
Prepaid and other current assets$25,255 $924 $12,242 $791 
Other liabilities and accrued items16,142 675 17,061 1,048 
These outstanding foreign currency derivatives were related to balance sheet hedges and intercompany loans. Other-net included less than $0.1 million of foreign currency losses in the third quarter and $0.4 million of foreign currency losses related to derivatives in the first nine months of 2023, compared to less than $0.1 million of foreign currency losses and $0.7 million of foreign currency gains in the third quarter and first nine months of 2022, respectively.
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives designated as cash flow hedges (on a gross basis) and balance sheet classification as of September 29, 2023 and December 31, 2022:
September 29, 2023
Fair Value
(Thousands)Notional
Amount		Prepaid and other current assetsOther assetsOther liabilities and accrued itemsOther long-term liabilities
Foreign currency forward contracts - yen$1,873 $156 $6 $— $— 
Foreign currency forward contracts - euro19,366 516 41 101 — 
Precious metal swaps4,049 84 10 75 — 
Interest rate swap200,000 5,047 5,391 — — 
Total$225,288 $5,803 $5,448 $176 $— 
December 31, 2022
Fair Value
Notional
Amount		Prepaid and other current assetsOther assetsOther liabilities and accrued itemsOther long-term liabilities
Foreign currency forward contracts - yen$2,985 $145 $— $74 $26 
Foreign currency forward contracts - euro25,712 355 — 472 137 
Precious metal swaps8,758 118 — 411 — 
Interest rate swap100,000 3,114 4,749 — — 
Total$137,455 $3,732 $4,749 $957 $163 

All of the contracts summarized above were designated and effective as cash flow hedges. We expect to reclassify $5.6 million of net gains into earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. At September 29, 2023, the maximum term of derivative instruments that hedge forecasted transactions was approximately four years. Refer to Note K for further details related to OCI.
The following table summarizes the amounts reclassified from accumulated other comprehensive income relating to the Company’s outstanding derivatives designated as cash flow hedges and associated income statement classification as of the third quarter and first nine months of 2023 and 2022: 
Third Quarter Ended
(Thousands)September 29, 2023September 30, 2022
Hedging relationshipLine item
Foreign currency forward contractsNet sales$— $(41)
Precious metal swapsCost of sales83 (126)
Interest rate swapInterest expense - net(1,140)(115)
Total$(1,057)$(282)
Nine Months Ended
(Thousands)September 29, 2023September 30, 2022
Hedging relationshipLine item
Foreign currency forward contractsNet sales$(35)$(171)
Precious metal swapsCost of sales193 (27)
Interest rate swapInterest expense - net(2,950)238 
Total$(2,792)$40 
v3.23.3
Contingencies
 9 Months Ended
Sep. 29, 2023
Loss Contingency [Abstract]  
Contingencies Contingencies
Legal Proceedings. For general information regarding legal proceedings relating to Chronic Beryllium Disease Claims, refer to Note S "Contingencies and Commitments" in the Company's 2022 Annual Report on Form 10-K.
There were no pending beryllium cases as of September 29, 2023. One beryllium case that was settled in the second quarter of 2023 was dismissed with prejudice during the third quarter of 2023 after receiving court approval.
Other Litigation. The Company is party to several pending legal proceedings and claims arising in the normal course of business. The Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matters. To the extent there is a reasonable possibility that the losses could exceed any amounts accrued, the Company will adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.
On October 14, 2020, Garett Lucyk, et al. v. Materion Brush Inc., et. al., case number 20CV0234, a wage and hour purported collective and class action, was filed in the Northern District of Ohio against the Company and its subsidiary, Materion Brush Inc. (collectively, the Company). Plaintiff, a former hourly production employee at the Company's Elmore, Ohio facility, alleges, among other things, that he and other similarly situated employees nationwide are not paid for all time they spend donning and doffing personal protective equipment in violation of the Fair Labor Standards Act and Ohio law. Plaintiff filed a motion for conditional certification, which the Company opposed. On August 2, 2022, the Court conditionally certified a class of employees at the Company’s Elmore facility only and rejected certification of a class across the Company’s other facilities. In November 2022, the parties reached a settlement for an immaterial amount. The Court preliminarily approved the settlement on March 30, 2023 and a final approval hearing was held on July 6, 2023. There were no objections to the settlement and the Court entered an order approving the final settlement on July 7, 2023, and the settlement amount was subsequently paid out prior to the end of the third quarter.


Environmental Proceedings. The Company has an active environmental compliance program and records reserves for the probable cost of identified environmental remediation projects. The reserves are established based upon analyses conducted by the Company’s engineers and outside consultants and are adjusted from time to time based upon ongoing studies, the difference between actual and estimated costs, and other factors. The reserves may also be affected by rulings and negotiations with regulatory agencies. The undiscounted reserve balance was $4.4 million and $4.5 million at September 29, 2023 and December 31, 2022, respectively, and is included in Other liabilities and accrued items and Other long-term liabilities on the Consolidated Balance Sheet. Environmental projects tend to be long-term, and the final actual remediation costs may differ from the amounts currently recorded.
v3.23.3
Debt
 9 Months Ended
Sep. 29, 2023
Debt Disclosure [Abstract]  
Debt Debt
(Thousands)September 29, 2023December 31, 2022
Borrowings under Credit Agreement$176,750 $143,250 
Borrowings under the Term Loan Facility273,750 285,000 
Overdraft Sweep Facility6,848 — 
Foreign debt6,714 7,541 
Total debt outstanding464,062 435,791 
Current portion of long-term debt(38,634)(21,105)
Gross long-term debt425,428 414,686 
Unamortized deferred financing fees(3,067)(3,810)
Long-term debt$422,361 $410,876 
As of September 29, 2023 and December 31, 2022, the Company had $176.8 million outstanding at an average interest rate of 6.92% and $143.3 million outstanding at an average interest rate of 6.08%, respectively, under its revolving credit facility. The available borrowing capacity under the revolving credit facility as of September 29, 2023 was $151.0 million. The Company has the option to repay or borrow additional funds under the revolving credit facility until the maturity date in 2026. The amended and restated credit agreement governing the revolving credit facility (Credit Agreement) includes covenants subject to a maximum leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with all of our debt covenants as of September 29, 2023.

The balance outstanding on the term loan facility as of September 29, 2023 and December 31, 2022 was $273.8 million and $285.0 million, respectively.

At September 29, 2023 and December 31, 2022, there was $47.3 million and $46.5 million, respectively, outstanding against the letters of credit sub-facility.
v3.23.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Pay vs Performance Disclosure        
Net income $ 26,564 $ 19,952 $ 76,234 $ 57,226
v3.23.3
Insider Trading Arrangements
 3 Months Ended
Sep. 29, 2023
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.23.3
Accounting Policies (Policies)
 9 Months Ended
Sep. 29, 2023
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation:
The accompanying consolidated financial statements of Materion Corporation and its subsidiaries (referred to herein as the Company, our, we, or us) contain all of the adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. All adjustments were of a normal and recurring nature.
These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's 2022 Annual Report on Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year.
New Pronouncements Adopted and New Accounting Guidance Issued and Not Yet Adopted
New Pronouncements Adopted:
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2024. The Company has applied this guidance in accounting for the interest rate swaps discussed in Note N. Any additional reference rate reform impacts will be accounted for in accordance with ASU 2020-04 and ASU 2022-06.
No other recently issued or effective ASUs had, or are expected to have, a material effect on the Company's results of operations, financial condition, or liquidity.
Revenue Recognition
Net sales consist primarily of revenue from the sale of precious and non-precious specialty metals, beryllium and copper-based alloys, beryllium composites, and other products into numerous end markets. The Company requires an agreement with a customer that creates enforceable rights and performance obligations. The Company generally recognizes revenue in an amount that reflects the consideration to which it expects to be entitled upon satisfaction of a performance obligation by transferring control over a product to the customer. Control over a product is generally transferred to the customer when the Company has a present right to payment, the customer has legal title, the customer has physical possession, the customer has the significant risks and rewards of ownership, and/or the customer has accepted the product.

Transaction Price Allocated to Future Performance Obligations: Accounting Standards Codification 606, Revenue from Contracts with Customers, requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied at September 29, 2023. Remaining performance obligations include non-cancelable purchase orders and customer contracts. The guidance provides certain practical expedients that limit this requirement. As such, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

After considering the practical expedient at September 29, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $55.9 million.
v3.23.3
Segment Reporting (Tables)
 9 Months Ended
Sep. 29, 2023
Segment Reporting [Abstract]  
Segment Reporting The below table presents financial information for each segment and a reconciliation of EBITDA to Net Income (the most directly comparable GAAP financial measure) for the third quarter and first nine months of 2023 and 2022:
(Thousands)Third Quarter 2023Third Quarter 2022First Nine Months 2023First Nine Months 2022
Net sales:
Performance Materials(1)
$184,642 $169,357 $554,427 $473,876 
Electronic Materials(1)
192,305 230,841 611,855 762,649 
Precision Optics26,120 27,993 77,862 86,006 
Other— — — — 
Net sales403,067 428,191 1,244,144 1,322,531 
Segment EBITDA:
Performance Materials$46,366 $28,866 $134,061 $80,886 
Electronic Materials10,155 16,853 37,504 51,338 
Precision Optics3,261 3,546 7,654 9,281 
Other(7,497)(5,839)(21,750)(18,206)
Total Segment EBITDA52,285 43,426 157,469 123,299 
Income tax expense2,963 4,432 11,891 12,525 
Interest expense - net7,678 5,888 22,820 14,325 
Depreciation, depletion and amortization15,080 13,154 46,524 39,223 
Net income$26,564 $19,952 $76,234 $57,226 

(1) Excludes inter-segment sales of $3.2 million for the third quarter of 2023 and $7.3 million for the first nine months of 2023 for Electronic Materials. There were no material inter-segment sales for Performance Materials in 2023. Excludes inter-segment sales of $0.2 million for the third quarter of 2022 and $0.6 million for the first nine months of 2022 for Performance Materials and $3.8 million for the third quarter of 2022 and $12.1 million for the first nine months of 2022 for Electronic Materials. Inter-segment sales are eliminated in consolidation.
Disaggregation of Revenue The following table disaggregates revenue for each segment by end market for the third quarter and first nine months of 2023 and 2022:
 (Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherTotal
Third Quarter 2023
End Market
Semiconductor$2,712 $151,388 $624 $— $154,724 
Industrial32,046 7,958 6,954 — 46,958 
Aerospace and defense30,938 1,102 7,124 — 39,164 
Consumer electronics10,827 144 4,254 — 15,225 
Automotive19,447 1,747 2,606 — 23,800 
Energy13,013 25,179 — — 38,192 
Telecom and data center15,685 10 — — 15,695 
Other59,974 4,777 4,558 — 69,309 
Total$184,642 $192,305 $26,120 $— $403,067 
Third Quarter 2022
End Market
Semiconductor$2,410 $185,223 $1,151 $— $188,784 
Industrial44,550 9,383 7,564 — 61,497 
Aerospace and defense28,262 1,243 3,532 — 33,037 
Consumer electronics9,607 364 6,799 — 16,770 
Automotive24,802 1,863 2,268 — 28,933 
Energy15,971 25,220 — — 41,191 
Telecom and data center15,412 42 — — 15,454 
Other28,343 7,503 6,679 — 42,525 
Total$169,357 $230,841 $27,993 $— $428,191 
 (Thousands)Performance MaterialsElectronic MaterialsPrecision OpticsOtherTotal
First Nine Months 2023
End Market
Semiconductor$9,713 $487,361 $2,279 $— $499,353 
Industrial111,436 25,102 22,400 — 158,938 
Aerospace and defense92,734 4,670 17,771 — 115,175 
Consumer electronics30,473 526 11,075 — 42,074 
Automotive66,753 4,966 7,090 — 78,809 
Energy38,597 71,940 — — 110,537 
Telecom and data center49,223 68 — — 49,291 
Other155,498 17,222 17,247 — 189,967 
Total$554,427 $611,855 $77,862 $— $1,244,144 
First Nine Months 2022
End Market
Semiconductor$6,657 $613,887 $4,007 $— $624,551 
Industrial125,588 37,206 23,605 — 186,399 
Aerospace and defense79,561 5,141 12,344 — 97,046 
Consumer electronics38,822 969 17,925 — 57,716 
Automotive71,893 4,985 7,294 — 84,172 
Energy38,231 79,701 — — 117,932 
Telecom and data center47,716 107 — — 47,823 
Other65,408 20,653 20,831 — 106,892 
Total$473,876 $762,649 $86,006 $— $1,322,531 
v3.23.3
Revenue Recognition (Tables)
 9 Months Ended
Sep. 29, 2023
Revenue from Contract with Customer [Abstract]  
Contract with Customer, Asset and Liability
Contract Balances: The timing of revenue recognition, billings, and cash collections resulted in the following contract assets and contract liabilities:
(Thousands)
September 29, 2023
December 31, 2022
$ change% change
Accounts receivable, trade
$186,937 $215,726 $(28,789)(13)%
Unbilled receivables
16,910 10,765 6,145 57 %
Unearned revenue
15,078 15,496 (418)(3)%
v3.23.3
Other-net (Tables)
 9 Months Ended
Sep. 29, 2023
Other Income and Expenses [Abstract]  
Summary of Other-Net Expense
Other-net for the third quarter and first nine months of 2023 and 2022 is summarized as follows: 
 Third Quarter EndedNine Months Ended
 September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Amortization of intangible assets$3,153 $3,088 $9,403 $9,318 
Metal consignment fees2,580 3,111 8,307 8,993 
Foreign currency (gain) loss609 235 571 (70)
Other items(131)340 (103)334 
Total$6,211 $6,774 $18,178 $18,575 
v3.23.3
Earnings Per Share (Tables)
 9 Months Ended
Sep. 29, 2023
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The following table sets forth the computation of basic and diluted EPS:
Third Quarter EndedNine Months Ended
September 29,September 30,September 29,September 30,
(Thousands, except per share amounts)2023202220232022
Numerator for basic and diluted EPS:
Net income$26,564 $19,952 $76,234 $57,226 
Denominator:
Denominator for basic EPS:
Weighted-average shares outstanding20,640 20,526 20,611 20,502 
Effect of dilutive securities:
Stock appreciation rights79 85 87 85 
Restricted stock units84 98 89 113 
Performance-based restricted stock units102 71 104 55 
Diluted potential common shares265 254 280 254 
Denominator for diluted EPS:
Adjusted weighted-average shares outstanding20,905 20,780 20,891 20,756 
Basic EPS$1.29 $0.97 $3.70 $2.79 
Diluted EPS$1.27 $0.96 $3.65 $2.76 
v3.23.3
Inventories (Tables)
 9 Months Ended
Sep. 29, 2023
Inventory Disclosure [Abstract]  
Summary of Inventories
Inventories on the Consolidated Balance Sheets are summarized as follows:
September 29,December 31,
(Thousands)20232022
Raw materials and supplies$109,731 $113,694 
Work in process269,508 249,105 
Finished goods72,803 60,281 
Inventories, net$452,042 $423,080 
v3.23.3
Pensions and Other Post-employment Benefits (Tables)
 9 Months Ended
Sep. 29, 2023
Retirement Benefits [Abstract]  
Components of Net Periodic Benefit Cost
The following is a summary of the net periodic benefit cost for the third quarter and first nine months ended September 29, 2023 and September 30, 2022, respectively, for the pension plans as shown below. The Pension Benefits column aggregates defined benefit pension plans in the U.S., Germany, Liechtenstein, England, and the U.S. supplemental retirement plans. The Other Benefits column includes the domestic retiree medical and life insurance plan.
 Pension BenefitsOther Benefits
 Third Quarter EndedThird Quarter Ended
September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Components of net periodic benefit (credit) cost
Service cost$209 $281 $13 $21 
Interest cost1,966 1,203 68 39 
Expected return on plan assets(2,421)(2,380)— — 
Amortization of prior service (benefit) cost(21)(19)(139)(374)
Amortization of net loss (gain)(75)410 (95)(68)
Net periodic benefit (credit) cost$(342)$(505)$(153)$(382)
 Pension BenefitsOther Benefits
 Nine Months EndedNine Months Ended
September 29,September 30,September 29,September 30,
(Thousands)2023202220232022
Components of net periodic benefit (credit) cost
Service cost$642 $891 $38 $63 
Interest cost5,909 3,639 205 117 
Expected return on plan assets(7,282)(7,158)— — 
Amortization of prior service (benefit) cost(65)(57)(417)(1,122)
Amortization of net loss (gain)(231)1,260 (285)(204)
Net periodic benefit (credit) cost$(1,027)$(1,425)$(459)$(1,146)
v3.23.3
Accumulated Other Comprehensive Income (Loss) (Tables)
 9 Months Ended
Sep. 29, 2023
Equity [Abstract]  
Schedule of Accumulated Other Comprehensive Income (Loss)
Changes in the components of accumulated other comprehensive income, including the amounts reclassified, for the third quarter and first nine months of 2023 and 2022 are as follows:
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyInterest RatePrecious MetalsTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at June 30, 2023
$1,290 $7,069 $(443)$7,916 $(40,549)$(6,810)$(39,443)
Other comprehensive income (loss) before reclassifications766 2,398 515 3,679 — (3,259)420 
Amounts reclassified from accumulated other comprehensive income (loss)— (1,140)83 (1,057)(299)— (1,356)
Net current period other comprehensive (loss) income before tax766 1,258 598 2,622 (299)(3,259)(936)
Deferred taxes176 289 138 603 (154)— 449 
Net current period other comprehensive (loss) income after tax590 969 460 2,019 (145)(3,259)(1,385)
Balance at September 29, 2023
$1,880 $8,038 $17 $9,935 $(40,694)$(10,069)$(40,828)
Balance at July 1, 2022
$3,226 $3,250 $108 $6,584 $(39,926)$(11,277)$(44,619)
Other comprehensive (loss) income before reclassifications837 4,360 441 $5,638 — (6,094)(456)
Amounts reclassified from accumulated other comprehensive income (loss)(41)(115)(126)$(282)(18)— (300)
Net current period other comprehensive (loss) income before tax796 4,245 315 5,356 (18)(6,094)(756)
Deferred taxes183 976 72 1,231 (26)— 1,205 
Net current period other comprehensive (loss) income after tax613 3,269 243 4,125 8 (6,094)(1,961)
Balance at September 30, 2022
$3,839 $6,519 $351 $10,709 $(39,918)$(17,371)$(46,580)
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyInterest RatePrecious MetalsTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at December 31, 2022
$1,243 $6,055 $(223)$7,075 $(40,228)$(8,756)$(41,909)
Other comprehensive income (loss) before reclassifications862 5,525 119 6,506 — (1,313)5,193 
Amounts reclassified from accumulated other comprehensive income (loss)(35)(2,950)193 (2,792)(844)— (3,636)
Net current period other comprehensive (loss) income before tax827 2,575 312 3,714 (844)(1,313)1,557 
Deferred taxes190 592 72 854 (378)— 476 
Net current period other comprehensive (loss) income after tax637 1,983 240 2,860 (466)(1,313)1,081 
Balance at September 29, 2023
$1,880 $8,038 $17 $9,935 $(40,694)$(10,069)$(40,828)
Balance at December 31, 2021
$2,348 $— $72 $2,420 $(39,702)$(2,887)$(40,169)
Other comprehensive (loss) income before reclassifications2,107 8,228 388 10,723 — (14,484)(3,761)
Amounts reclassified from accumulated other comprehensive income (loss)(170)238 (27)41 (1,028)— (987)
Net current period other comprehensive (loss) income before tax1,937 8,466 361 10,764 (1,028)(14,484)(4,748)
Deferred taxes446 1,947 82 2,475 (812)— 1,663 
Net current period other comprehensive (loss) income after tax1,491 6,519 279 8,289 (216)(14,484)(6,411)
Balance at September 30, 2022
$3,839 $6,519 $351 $10,709 $(39,918)$(17,371)$(46,580)
v3.23.3
Stock-based Compensation Expense (Tables)
 9 Months Ended
Sep. 29, 2023
Share-Based Payment Arrangement [Abstract]  
Schedule Of Share Based Payment Award SARs Valuation Assumptions The Company estimated the fair value of the SARs using the following weighted-average assumptions in the Black-Scholes model:
Risk-free interest rate4.27 %
Dividend yield0.44 %
Volatility39.0 %
Expected term (in years)4.5
v3.23.3
Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 29, 2023
Fair Value Disclosures [Abstract]  
Summary of Fair Value Information and Derivative Financial Instruments
The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheets as of September 29, 2023 and December 31, 2022: 
  
(Thousands)Total Carrying Value in the Consolidated Balance SheetsQuoted Prices
in  Active
Markets  for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
20232022202320222023202220232022
Financial Assets
Deferred compensation investments$4,521 $3,001 $4,521 $3,001 $— $— $— $— 
Foreign currency forward contracts1,643 1,291 — — 1,643 1,291 — — 
Interest rate swap10,438 7,863 — — 10,438 7,863 — — 
Precious metal swaps94 118 — — 94 118 — — 
Total$16,696 $12,273 $4,521 $3,001 $12,175 $9,272 $— $— 
Financial Liabilities
Deferred compensation liability$4,521 $3,001 $4,521 $3,001 $— $— $— $— 
Foreign currency forward contracts776 1,757 — — 776 1,757 — — 
Interest Rate Swap— — — — — — 
Precious metal swaps75 411 — — 75 411 — — 
Total$5,372 $5,169 $4,521 $3,001 $851 $2,168 $— $— 
v3.23.3
Derivative Instruments and Hedging Activity (Tables)
 9 Months Ended
Sep. 29, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments NonHedging
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives not designated as hedging instruments (on a gross basis) and the balance sheet classification as of September 29, 2023 and December 31, 2022:
 September 29, 2023December 31, 2022
(Thousands)Notional
Amount		Fair
Value		Notional
Amount		Fair
Value
Foreign currency forward contracts
Prepaid and other current assets$25,255 $924 $12,242 $791 
Other liabilities and accrued items16,142 675 17,061 1,048 
Fair Value Measurements, Recurring and Nonrecurring
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives designated as cash flow hedges (on a gross basis) and balance sheet classification as of September 29, 2023 and December 31, 2022:
September 29, 2023
Fair Value
(Thousands)Notional
Amount		Prepaid and other current assetsOther assetsOther liabilities and accrued itemsOther long-term liabilities
Foreign currency forward contracts - yen$1,873 $156 $6 $— $— 
Foreign currency forward contracts - euro19,366 516 41 101 — 
Precious metal swaps4,049 84 10 75 — 
Interest rate swap200,000 5,047 5,391 — — 
Total$225,288 $5,803 $5,448 $176 $— 
December 31, 2022
Fair Value
Notional
Amount		Prepaid and other current assetsOther assetsOther liabilities and accrued itemsOther long-term liabilities
Foreign currency forward contracts - yen$2,985 $145 $— $74 $26 
Foreign currency forward contracts - euro25,712 355 — 472 137 
Precious metal swaps8,758 118 — 411 — 
Interest rate swap100,000 3,114 4,749 — — 
Total$137,455 $3,732 $4,749 $957 $163 
Derivative Instruments, Gain (Loss)
The following table summarizes the amounts reclassified from accumulated other comprehensive income relating to the Company’s outstanding derivatives designated as cash flow hedges and associated income statement classification as of the third quarter and first nine months of 2023 and 2022: 
Third Quarter Ended
(Thousands)September 29, 2023September 30, 2022
Hedging relationshipLine item
Foreign currency forward contractsNet sales$— $(41)
Precious metal swapsCost of sales83 (126)
Interest rate swapInterest expense - net(1,140)(115)
Total$(1,057)$(282)
Nine Months Ended
(Thousands)September 29, 2023September 30, 2022
Hedging relationshipLine item
Foreign currency forward contractsNet sales$(35)$(171)
Precious metal swapsCost of sales193 (27)
Interest rate swapInterest expense - net(2,950)238 
Total$(2,792)$40 
v3.23.3
Debt (Tables)
 9 Months Ended
Sep. 29, 2023
Debt Disclosure [Abstract]  
Schedule of Long-term Debt Instruments
(Thousands)September 29, 2023December 31, 2022
Borrowings under Credit Agreement$176,750 $143,250 
Borrowings under the Term Loan Facility273,750 285,000 
Overdraft Sweep Facility6,848 — 
Foreign debt6,714 7,541 
Total debt outstanding464,062 435,791 
Current portion of long-term debt(38,634)(21,105)
Gross long-term debt425,428 414,686 
Unamortized deferred financing fees(3,067)(3,810)
Long-term debt$422,361 $410,876 
v3.23.3
Segment Reporting - Segment Reporting (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Segment Reporting Information [Line Items]        
Net sales $ 403,067 $ 428,191 $ 1,244,144 $ 1,322,531
Total Segment EBITDA 52,285 43,426 157,469 123,299
Income tax expense 2,963 4,432 11,891 12,525
Interest expense—net 7,678 5,888 22,820 14,325
Depreciation, depletion, and amortization 15,080 13,154 46,524 39,223
Net income 26,564 19,952 76,234 57,226
Performance Materials        
Segment Reporting Information [Line Items]        
Net sales 184,642 169,357 554,427 473,876
Total Segment EBITDA 46,366 28,866 134,061 80,886
Performance Materials | Intersegment Eliminations        
Segment Reporting Information [Line Items]        
Net sales   200   600
Electronic Materials        
Segment Reporting Information [Line Items]        
Net sales 192,305 230,841 611,855 762,649
Total Segment EBITDA 10,155 16,853 37,504 51,338
Electronic Materials | Intersegment Eliminations        
Segment Reporting Information [Line Items]        
Net sales 3,200 3,800 7,300 12,100
Precision Optics        
Segment Reporting Information [Line Items]        
Net sales 26,120 27,993 77,862 86,006
Total Segment EBITDA 3,261 3,546 7,654 9,281
Other        
Segment Reporting Information [Line Items]        
Net sales 0 0 0 0
Total Segment EBITDA $ (7,497) $ (5,839) $ (21,750) $ (18,206)
v3.23.3
Segment Reporting - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Disaggregation of Revenue [Line Items]        
Net sales $ 403,067 $ 428,191 $ 1,244,144 $ 1,322,531
Semiconductor        
Disaggregation of Revenue [Line Items]        
Net sales 154,724 188,784 499,353 624,551
Industrial        
Disaggregation of Revenue [Line Items]        
Net sales 46,958 61,497 158,938 186,399
Aerospace and defense        
Disaggregation of Revenue [Line Items]        
Net sales 39,164 33,037 115,175 97,046
Consumer electronics        
Disaggregation of Revenue [Line Items]        
Net sales 15,225 16,770 42,074 57,716
Automotive        
Disaggregation of Revenue [Line Items]        
Net sales 23,800 28,933 78,809 84,172
Energy        
Disaggregation of Revenue [Line Items]        
Net sales 38,192 41,191 110,537 117,932
Telecom and data center        
Disaggregation of Revenue [Line Items]        
Net sales 15,695 15,454 49,291 47,823
Other        
Disaggregation of Revenue [Line Items]        
Net sales 69,309 42,525 189,967 106,892
Performance Materials        
Disaggregation of Revenue [Line Items]        
Net sales 184,642 169,357 554,427 473,876
Performance Materials | Semiconductor        
Disaggregation of Revenue [Line Items]        
Net sales 2,712 2,410 9,713 6,657
Performance Materials | Industrial        
Disaggregation of Revenue [Line Items]        
Net sales 32,046 44,550 111,436 125,588
Performance Materials | Aerospace and defense        
Disaggregation of Revenue [Line Items]        
Net sales 30,938 28,262 92,734 79,561
Performance Materials | Consumer electronics        
Disaggregation of Revenue [Line Items]        
Net sales 10,827 9,607 30,473 38,822
Performance Materials | Automotive        
Disaggregation of Revenue [Line Items]        
Net sales 19,447 24,802 66,753 71,893
Performance Materials | Energy        
Disaggregation of Revenue [Line Items]        
Net sales 13,013 15,971 38,597 38,231
Performance Materials | Telecom and data center        
Disaggregation of Revenue [Line Items]        
Net sales 15,685 15,412 49,223 47,716
Performance Materials | Other        
Disaggregation of Revenue [Line Items]        
Net sales 59,974 28,343 155,498 65,408
Electronic Materials        
Disaggregation of Revenue [Line Items]        
Net sales 192,305 230,841 611,855 762,649
Electronic Materials | Semiconductor        
Disaggregation of Revenue [Line Items]        
Net sales 151,388 185,223 487,361 613,887
Electronic Materials | Industrial        
Disaggregation of Revenue [Line Items]        
Net sales 7,958 9,383 25,102 37,206
Electronic Materials | Aerospace and defense        
Disaggregation of Revenue [Line Items]        
Net sales 1,102 1,243 4,670 5,141
Electronic Materials | Consumer electronics        
Disaggregation of Revenue [Line Items]        
Net sales 144 364 526 969
Electronic Materials | Automotive        
Disaggregation of Revenue [Line Items]        
Net sales 1,747 1,863 4,966 4,985
Electronic Materials | Energy        
Disaggregation of Revenue [Line Items]        
Net sales 25,179 25,220 71,940 79,701
Electronic Materials | Telecom and data center        
Disaggregation of Revenue [Line Items]        
Net sales 10 42 68 107
Electronic Materials | Other        
Disaggregation of Revenue [Line Items]        
Net sales 4,777 7,503 17,222 20,653
Precision Optics        
Disaggregation of Revenue [Line Items]        
Net sales 26,120 27,993 77,862 86,006
Precision Optics | Semiconductor        
Disaggregation of Revenue [Line Items]        
Net sales 624 1,151 2,279 4,007
Precision Optics | Industrial        
Disaggregation of Revenue [Line Items]        
Net sales 6,954 7,564 22,400 23,605
Precision Optics | Aerospace and defense        
Disaggregation of Revenue [Line Items]        
Net sales 7,124 3,532 17,771 12,344
Precision Optics | Consumer electronics        
Disaggregation of Revenue [Line Items]        
Net sales 4,254 6,799 11,075 17,925
Precision Optics | Automotive        
Disaggregation of Revenue [Line Items]        
Net sales 2,606 2,268 7,090 7,294
Precision Optics | Energy        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Precision Optics | Telecom and data center        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Precision Optics | Other        
Disaggregation of Revenue [Line Items]        
Net sales 4,558 6,679 17,247 20,831
Other        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Other | Semiconductor        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Other | Industrial        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Other | Aerospace and defense        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Other | Consumer electronics        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Other | Automotive        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Other | Energy        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Other | Telecom and data center        
Disaggregation of Revenue [Line Items]        
Net sales 0 0 0 0
Other | Other        
Disaggregation of Revenue [Line Items]        
Net sales $ 0 $ 0 $ 0 $ 0
v3.23.3
Revenue Recognition - Additional Information (Details)
$ in Millions
 9 Months Ended
Sep. 29, 2023
USD ($)
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 55.9
Contract with customer, liability, revenue recognized $ 11.6
v3.23.3
Revenue Recognition - Schedule of Contract Balances (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Dec. 31, 2022
Capitalized Contract Cost [Line Items]      
Unearned revenue $ 5,800    
Change in unearned revenue (12,398) $ (2,191)  
Accounts receivable, trade      
Capitalized Contract Cost [Line Items]      
Accounts receivable, trade 186,937   $ 215,726
Change in accounts receivable, trade $ (28,789)    
Contract asset percent change (13.00%)    
Unbilled receivables      
Capitalized Contract Cost [Line Items]      
Unbilled receivables $ 16,910   10,765
Change in unbilled receivables $ 6,145    
Contract asset percent change 57.00%    
Unearned revenue      
Capitalized Contract Cost [Line Items]      
Unearned revenue $ 15,078   $ 15,496
Change in unearned revenue $ (418)    
Contract liability percent change (3.00%)    
v3.23.3
Restructuring - Narrative (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Restructuring Cost and Reserve [Line Items]        
Payments for restructuring     $ 1,900  
Restructuring expense (income) $ 1,077 $ 484 3,194 $ 1,560
Various Restructuring Initiatives        
Restructuring Cost and Reserve [Line Items]        
Severance costs $ 1,100   $ 3,200  
Restructuring expense (income)       $ 1,600
v3.23.3
Other-net (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Other Income and Expenses [Abstract]        
Amortization of intangible assets $ 3,153 $ 3,088 $ 9,403 $ 9,318
Metal consignment fees 2,580 3,111 8,307 8,993
Foreign currency (gain) loss 609 235 571 (70)
Other items (131) 340 (103) 334
Total $ 6,211 $ 6,774 $ 18,178 $ 18,575
v3.23.3
Income Taxes (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Dec. 31, 2023
Income Tax Contingency [Line Items]          
Effective income tax rate, percent 10.00% 18.20% 13.50% 18.00%  
Discrete income tax benefit from stock-based compensation awards     $ 3.4 $ 0.9  
Forecast          
Income Tax Contingency [Line Items]          
Cash savings         $ 10.0
v3.23.3
Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Numerator for basic and diluted EPS:        
Net income $ 26,564 $ 19,952 $ 76,234 $ 57,226
Denominator for basic EPS:        
Weighted-average shares outstanding (in shares) 20,640 20,526 20,611 20,502
Effect of dilutive securities:        
Diluted potential common shares (in shares) 265 254 280 254
Denominator for diluted EPS:        
Adjusted weighted-average shares outstanding (in shares) 20,905 20,780 20,891 20,756
Basic EPS (in USD per share) $ 1.29 $ 0.97 $ 3.70 $ 2.79
Diluted EPS (in USD per share) $ 1.27 $ 0.96 $ 3.65 $ 2.76
Stock appreciation rights        
Effect of dilutive securities:        
Dilutive effect of share-based compensation (in shares) 79 85 87 85
Restricted stock units        
Effect of dilutive securities:        
Dilutive effect of share-based compensation (in shares) 84 98 89 113
Performance-based restricted stock units        
Effect of dilutive securities:        
Dilutive effect of share-based compensation (in shares) 102 71 104 55
v3.23.3
Earnings Per Share - Additional Information (Details) - shares
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Out-of-The-Money        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Securities excluded from diluted EPS calculation (in shares) 47,250 45,016 36,927 54,680
v3.23.3
Inventories - Summary of Inventories (Detail) - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]    
Raw materials and supplies $ 109,731 $ 113,694
Work in process 269,508 249,105
Finished goods 72,803 60,281
Inventories, net $ 452,042 $ 423,080
v3.23.3
Inventories - Additional Information (Details) - USD ($)
$ in Millions
 9 Months Ended 12 Months Ended
Sep. 29, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]    
Notional amount of nonderivative instruments $ 344.8 $ 373.1
v3.23.3
Customer Prepayments (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 29, 2023
Dec. 31, 2022
Customer Prepayments [Abstract]    
Prepayments from customers $ 16.7  
Deferred income 90.0 $ 85.9
Unearned revenue $ 5.8  
v3.23.3
Pensions and Other Post-employment Benefits (Detail) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Components of net periodic benefit (credit) cost        
Contributions by employer $ 0 $ 0 $ 0 $ 0
Pension Benefits        
Components of net periodic benefit (credit) cost        
Service cost 209,000 281,000 642,000 891,000
Interest cost 1,966,000 1,203,000 5,909,000 3,639,000
Expected return on plan assets (2,421,000) (2,380,000) (7,282,000) (7,158,000)
Amortization of prior service (benefit) cost (21,000) (19,000) (65,000) (57,000)
Amortization of net loss (gain) (75,000) 410,000 (231,000) 1,260,000
Net periodic benefit (credit) cost (342,000) (505,000) (1,027,000) (1,425,000)
Other Benefits        
Components of net periodic benefit (credit) cost        
Service cost 13,000 21,000 38,000 63,000
Interest cost 68,000 39,000 205,000 117,000
Expected return on plan assets 0 0 0 0
Amortization of prior service (benefit) cost (139,000) (374,000) (417,000) (1,122,000)
Amortization of net loss (gain) (95,000) (68,000) (285,000) (204,000)
Net periodic benefit (credit) cost $ (153,000) $ (382,000) $ (459,000) $ (1,146,000)
v3.23.3
Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Beginning balances $ 847,123 $ 749,154 $ 799,990 $ 720,440
Other comprehensive income (loss) before reclassifications 420 (456) 5,193 (3,761)
Amounts reclassified from accumulated other comprehensive income (loss) (1,356) (300) (3,636) (987)
Net current period other comprehensive (loss) income before tax (936) (756) 1,557 (4,748)
Deferred taxes 449 1,205 476 1,663
Net current period other comprehensive (loss) income after tax (1,385) (1,961) 1,081 (6,411)
Ending balances 871,968 766,677 871,968 766,677
Accumulated Other Comprehensive Loss        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Beginning balances (39,443) (44,619) (41,909) (40,169)
Net current period other comprehensive (loss) income after tax (1,385) (1,961) 1,081 (6,411)
Ending balances (40,828) (46,580) (40,828) (46,580)
Gains and Losses on Cash Flow Hedges        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Beginning balances 7,916 6,584 7,075 2,420
Other comprehensive income (loss) before reclassifications 3,679 5,638 6,506 10,723
Amounts reclassified from accumulated other comprehensive income (loss) (1,057) (282) (2,792) 41
Net current period other comprehensive (loss) income before tax 2,622 5,356 3,714 10,764
Deferred taxes 603 1,231 854 2,475
Net current period other comprehensive (loss) income after tax 2,019 4,125 2,860 8,289
Ending balances 9,935 10,709 9,935 10,709
Pension and Post-Employment Benefits        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Beginning balances (40,549) (39,926) (40,228) (39,702)
Other comprehensive income (loss) before reclassifications 0 0 0 0
Amounts reclassified from accumulated other comprehensive income (loss) (299) (18) (844) (1,028)
Net current period other comprehensive (loss) income before tax (299) (18) (844) (1,028)
Deferred taxes (154) (26) (378) (812)
Net current period other comprehensive (loss) income after tax (145) 8 (466) (216)
Ending balances (40,694) (39,918) (40,694) (39,918)
Foreign Currency Translation        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Beginning balances (6,810) (11,277) (8,756) (2,887)
Other comprehensive income (loss) before reclassifications (3,259) (6,094) (1,313) (14,484)
Amounts reclassified from accumulated other comprehensive income (loss) 0 0 0 0
Net current period other comprehensive (loss) income before tax (3,259) (6,094) (1,313) (14,484)
Deferred taxes 0 0 0 0
Net current period other comprehensive (loss) income after tax (3,259) (6,094) (1,313) (14,484)
Ending balances (10,069) (17,371) (10,069) (17,371)
Foreign Currency | Gains and Losses on Cash Flow Hedges        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Beginning balances 1,290 3,226 1,243 2,348
Other comprehensive income (loss) before reclassifications 766 837 862 2,107
Amounts reclassified from accumulated other comprehensive income (loss) 0 (41) (35) (170)
Net current period other comprehensive (loss) income before tax 766 796 827 1,937
Deferred taxes 176 183 190 446
Net current period other comprehensive (loss) income after tax 590 613 637 1,491
Ending balances 1,880 3,839 1,880 3,839
Interest rate swap | Gains and Losses on Cash Flow Hedges        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Beginning balances 7,069 3,250 6,055 0
Other comprehensive income (loss) before reclassifications 2,398 4,360 5,525 8,228
Amounts reclassified from accumulated other comprehensive income (loss) (1,140) (115) (2,950) 238
Net current period other comprehensive (loss) income before tax 1,258 4,245 2,575 8,466
Deferred taxes 289 976 592 1,947
Net current period other comprehensive (loss) income after tax 969 3,269 1,983 6,519
Ending balances 8,038 6,519 8,038 6,519
Precious Metals | Gains and Losses on Cash Flow Hedges        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Beginning balances (443) 108 (223) 72
Other comprehensive income (loss) before reclassifications 515 441 119 388
Amounts reclassified from accumulated other comprehensive income (loss) 83 (126) 193 (27)
Net current period other comprehensive (loss) income before tax 598 315 312 361
Deferred taxes 138 72 72 82
Net current period other comprehensive (loss) income after tax 460 243 240 279
Ending balances $ 17 $ 351 $ 17 $ 351
v3.23.3
Stock-based Compensation Expense - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Stock-based compensation expense $ 2.6 $ 2.2 $ 7.8 $ 6.0
Unamortized compensation cost $ 17.0   $ 17.0  
Stock appreciation rights        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of shares granted in period (in shares)     47,084  
Weighted average exercise price on SARs granted in period (in usd per share)     $ 113.28  
Grant date fair value per unit (in usd per share)     $ 42.27  
Restricted stock units        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Number of shares granted in period (in shares)     54,788  
Grant date fair value per unit (in usd per share)     $ 112.53  
Vesting period     3 years  
Performance-based restricted stock units        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Grant date fair value per unit (in usd per share)     $ 154.97  
Vesting period     3 years  
v3.23.3
Stock-based Compensation Expense - Schedule Of Share Based Payment Award SARs Valuation Assumptions (Detail) - Stock appreciation rights
 9 Months Ended
Sep. 29, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Risk-free interest rate 4.27%
Dividend yield 0.44%
Volatility 39.00%
Expected term (in years) 4 years 6 months
v3.23.3
Fair Value of Financial Instruments (Detail) - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 31, 2022
Financial Assets    
Deferred compensation investments $ 4,521 $ 3,001
Foreign currency forward contracts 1,643 1,291
Total 16,696 12,273
Financial Liabilities    
Deferred compensation liability 4,521 3,001
Foreign currency forward contracts 776 1,757
Total 5,372 5,169
Interest rate swap    
Financial Assets    
Interest rate swap 10,438 7,863
Financial Liabilities    
Precious metal swaps 0 0
Precious metal swaps    
Financial Assets    
Interest rate swap 94 118
Financial Liabilities    
Precious metal swaps 75 411
Quoted Prices in  Active Markets  for Identical Assets (Level 1)    
Financial Assets    
Deferred compensation investments 4,521 3,001
Foreign currency forward contracts 0 0
Total 4,521 3,001
Financial Liabilities    
Deferred compensation liability 4,521 3,001
Foreign currency forward contracts 0 0
Total 4,521 3,001
Quoted Prices in  Active Markets  for Identical Assets (Level 1) | Interest rate swap    
Financial Assets    
Interest rate swap 0 0
Financial Liabilities    
Precious metal swaps 0
Quoted Prices in  Active Markets  for Identical Assets (Level 1) | Precious metal swaps    
Financial Assets    
Interest rate swap 0 0
Financial Liabilities    
Precious metal swaps 0 0
Significant Other Observable Inputs (Level 2)    
Financial Assets    
Deferred compensation investments 0 0
Foreign currency forward contracts 1,643 1,291
Total 12,175 9,272
Financial Liabilities    
Deferred compensation liability 0 0
Foreign currency forward contracts 776 1,757
Total 851 2,168
Significant Other Observable Inputs (Level 2) | Interest rate swap    
Financial Assets    
Interest rate swap 10,438 7,863
Financial Liabilities    
Precious metal swaps 0 0
Significant Other Observable Inputs (Level 2) | Precious metal swaps    
Financial Assets    
Interest rate swap 94 118
Financial Liabilities    
Precious metal swaps 75 411
Significant Unobservable Inputs (Level 3)    
Financial Assets    
Deferred compensation investments 0 0
Foreign currency forward contracts 0 0
Total 0 0
Financial Liabilities    
Deferred compensation liability 0 0
Foreign currency forward contracts 0 0
Total 0 0
Significant Unobservable Inputs (Level 3) | Interest rate swap    
Financial Assets    
Interest rate swap 0 0
Financial Liabilities    
Precious metal swaps 0
Significant Unobservable Inputs (Level 3) | Precious metal swaps    
Financial Assets    
Interest rate swap 0 0
Financial Liabilities    
Precious metal swaps $ 0 $ 0
v3.23.3
Derivative Instruments and Hedging Activity - Additional Information (Details)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 29, 2023
USD ($)
Sep. 30, 2022
USD ($)
Sep. 29, 2023
USD ($)
Sep. 30, 2022
USD ($)
Mar. 21, 2023
USD ($)
derivative
Mar. 04, 2022
USD ($)
Derivatives, Fair Value [Line Items]            
Foreign currency gain (loss) related to derivatives $ (0.1) $ (0.1) $ (0.4) $ 0.7    
Cash flow hedge gain (loss) to be reclassified within twelve months     $ 5.6      
Derivative, term (maximum)     4 years      
Letter of Credit | Interest rate swap | Designated as hedging instrument            
Derivatives, Fair Value [Line Items]            
Notional amount total         $ 50.0 $ 100.0
Number of interest rate swaps entered in to | derivative         2  
v3.23.3
Derivative Instruments and Hedging Activity - Derivative Instruments NonHedging (Details) - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 31, 2022
Designated as hedging instrument    
Derivative [Line Items]    
Notional amount, asset $ 225,288 $ 137,455
Foreign currency forward contracts | Designated as hedging instrument | Yen    
Derivative [Line Items]    
Notional amount, asset 1,873 2,985
Foreign currency forward contracts | Designated as hedging instrument | Euro    
Derivative [Line Items]    
Notional amount, asset 19,366 25,712
Prepaid and other current assets | Designated as hedging instrument    
Derivative [Line Items]    
Fair value, asset 5,803 3,732
Prepaid and other current assets | Foreign currency forward contracts | Not designated as hedging instrument    
Derivative [Line Items]    
Notional amount, asset 25,255 12,242
Fair value, asset 924 791
Prepaid and other current assets | Foreign currency forward contracts | Designated as hedging instrument | Yen    
Derivative [Line Items]    
Fair value, asset 156 145
Prepaid and other current assets | Foreign currency forward contracts | Designated as hedging instrument | Euro    
Derivative [Line Items]    
Fair value, asset 516 355
Other liabilities and accrued items | Designated as hedging instrument    
Derivative [Line Items]    
Fair value, liability 176 957
Other liabilities and accrued items | Foreign currency forward contracts | Not designated as hedging instrument    
Derivative [Line Items]    
Notional amount, liability 16,142 17,061
Fair value, liability 675 1,048
Other liabilities and accrued items | Foreign currency forward contracts | Designated as hedging instrument | Yen    
Derivative [Line Items]    
Fair value, liability 0 74
Other liabilities and accrued items | Foreign currency forward contracts | Designated as hedging instrument | Euro    
Derivative [Line Items]    
Fair value, liability $ 101 $ 472
v3.23.3
Derivative Instruments and Hedging Activity - Fair Value Measurements, Recurring and Nonrecurring (Details) - Designated as hedging instrument - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 31, 2022
Derivative Instruments, Gain (Loss) [Line Items]    
Notional amount, asset $ 225,288 $ 137,455
Precious metal swaps    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional amount, asset 4,049 8,758
Interest rate swap    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional amount, asset 200,000 100,000
Prepaid and other current assets    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 5,803 3,732
Prepaid and other current assets | Precious metal swaps    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 84 118
Prepaid and other current assets | Interest rate swap    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 5,047 3,114
Other assets    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 5,448 4,749
Other assets | Precious metal swaps    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 10 0
Other assets | Interest rate swap    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 5,391 4,749
Other liabilities and accrued items    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 176 957
Other liabilities and accrued items | Precious metal swaps    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 75 411
Other liabilities and accrued items | Interest rate swap    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 0 0
Other long-term liabilities    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 0 163
Other long-term liabilities | Precious metal swaps    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 0 0
Other long-term liabilities | Interest rate swap    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 0 0
Yen | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional amount, asset 1,873 2,985
Yen | Prepaid and other current assets | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 156 145
Yen | Other assets | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 6 0
Yen | Other liabilities and accrued items | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 0 74
Yen | Other long-term liabilities | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 0 26
Euro | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Notional amount, asset 19,366 25,712
Euro | Prepaid and other current assets | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 516 355
Euro | Other assets | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, asset 41 0
Euro | Other liabilities and accrued items | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability 101 472
Euro | Other long-term liabilities | Foreign Currency    
Derivative Instruments, Gain (Loss) [Line Items]    
Fair value, liability $ 0 $ 137
v3.23.3
Derivative Instruments and Hedging Activity - Derivative Instruments, Gain (Loss) (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 29, 2023
Sep. 30, 2022
Sep. 29, 2023
Sep. 30, 2022
Foreign currency forward contracts        
Derivative Instruments, Gain (Loss) [Line Items]        
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] Revenue from Contract with Customer, Excluding Assessed Tax Revenue from Contract with Customer, Excluding Assessed Tax Revenue from Contract with Customer, Excluding Assessed Tax Revenue from Contract with Customer, Excluding Assessed Tax
Precious metal swaps        
Derivative Instruments, Gain (Loss) [Line Items]        
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] Cost of sales Cost of sales Cost of sales Cost of sales
Interest rate swap        
Derivative Instruments, Gain (Loss) [Line Items]        
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] Interest expense—net Interest expense—net Interest expense—net Interest expense—net
Designated as hedging instrument        
Derivative Instruments, Gain (Loss) [Line Items]        
Derivative, gain (loss) on derivative, net $ (1,057) $ (282) $ (2,792) $ 40
Designated as hedging instrument | Foreign currency forward contracts        
Derivative Instruments, Gain (Loss) [Line Items]        
Derivative, gain (loss) on derivative, net 0 (41) (35) (171)
Designated as hedging instrument | Precious metal swaps        
Derivative Instruments, Gain (Loss) [Line Items]        
Derivative, gain (loss) on derivative, net 83 (126) 193 (27)
Designated as hedging instrument | Interest rate swap        
Derivative Instruments, Gain (Loss) [Line Items]        
Derivative, gain (loss) on derivative, net $ (1,140) $ (115) $ (2,950) $ 238
v3.23.3
Contingencies (Detail)
$ in Millions
 3 Months Ended
Sep. 29, 2023
USD ($)
claim
Dec. 31, 2022
USD ($)
Loss Contingency [Abstract]    
Cases settled and dismissed | claim 1  
Undiscounted reserve balance | $ $ 4.4 $ 4.5
v3.23.3
Debt - Schedule of Long-term Debt Instruments (Details) - USD ($)
$ in Thousands
Sep. 29, 2023
Dec. 31, 2022
Line of Credit Facility [Line Items]    
Total debt outstanding $ 464,062 $ 435,791
Current portion of long-term debt (38,634) (21,105)
Gross long-term debt 425,428 414,686
Unamortized deferred financing fees (3,067) (3,810)
Long-term debt 422,361 410,876
Foreign Line of Credit    
Line of Credit Facility [Line Items]    
Total debt outstanding 6,714 7,541
Borrowings Under Credit Agreement | Revolving Credit Facility    
Line of Credit Facility [Line Items]    
Total debt outstanding 176,750 143,250
Term Loan Facility | Line of Credit    
Line of Credit Facility [Line Items]    
Total debt outstanding 273,750 285,000
Overdraft Sweep Facility    
Line of Credit Facility [Line Items]    
Total debt outstanding $ 6,848 $ 0
v3.23.3
Debt - Additional Information (Details) - USD ($)
$ in Millions
Sep. 29, 2023
Dec. 31, 2022
Line of Credit Facility [Line Items]    
Borrowings under Credit Agreement $ 176.8 $ 143.3
Line of credit facility, interest rate at period end 6.92% 6.08%
Line of credit facility, remaining borrowing capacity $ 151.0  
Long-term line of credit, noncurrent 273.8 $ 285.0
Letter of Credit    
Line of Credit Facility [Line Items]    
Letters of credit outstanding, amount $ 47.3 $ 46.5
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