10-Q

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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	MTRN	New 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 Ended				Nine Months Ended
(Thousands, except per share amounts)	September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
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	$	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:
Basic	20,640		20,526		20,611		20,502
Diluted	20,905		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 Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
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

See notes to these consolidated financial statements.

3

Materion Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	September 29,		December 31,
(Thousands)	2023		2022
Assets
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
Liabilities and Shareholders’ Equity
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)	—		—
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

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)	2023		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)		—
Proceeds from sale of property, plant, and equipment	417		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, 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

See notes to these consolidated financial statements.

5

Materion Corporation and Subsidiaries

Consolidated Statements of Shareholders' Equity

(Unaudited)

	Common Shares		Shareholders' Equity
(Thousands, except per share amounts)	Common Shares	Common Shares Held in Treasury	Common Stock		Retained Earnings		Common Stock in Treasury		Accumulated Other Comprehensive Loss		Other Equity		Total
Balance at June 30, 2023	20,637	(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 activity	8	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, 2023	20,642	(6,506)	$	306,593	$	837,598	$	(237,259)	$	(40,828)	$	5,864	$	871,968
Balance at July 1, 2022	20,523	(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 activity	6	6	2,695		(30)		(392)		—		—		2,273
Payments of withholding taxes for stock-based compensation awards	(2)	(2)	—		—		(244)		—		—		(244)
Directors’ deferred compensation	1	1	33		—		(227)		—		254		60
Balance at September 30, 2022	20,528	(6,620)	$	284,024	$	743,283	$	(219,219)	$	(46,580)	$	5,169	$	766,677

6

	Common Shares		Shareholders' Equity
(Thousands, except per share amounts)	Common Shares	Common Shares Held in Treasury	Common Stock		Retained Earnings		Common Stock in Treasury		Accumulated Other Comprehensive Loss		Other Equity		Total
Balance at December 31, 2022	20,543	(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 activity	146	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 compensation	1	1	77		—		(573)		—		619		123
Balance at September 29, 2023	20,642	(6,506)	$	306,593	$	837,598	$	(237,259)	$	(40,828)	$	5,864	$	871,968
Balance at December 31, 2021	20,448	(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 activity	115	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 compensation	2	2	108		—		(302)		—		374		$	180
Balance at September 30, 2022	20,528	(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 2023		Third Quarter 2022		First Nine Months 2023		First 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 Optics	26,120		27,993		77,862		86,006
Other	—		—		—		—
Net sales	403,067		428,191		1,244,144		1,322,531
Segment EBITDA:
Performance Materials	$	46,366	$	28,866	$	134,061	$	80,886
Electronic Materials	10,155		16,853		37,504		51,338
Precision Optics	3,261		3,546		7,654		9,281
Other	(7,497)		(5,839)		(21,750)		(18,206)
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

(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 Materials		Electronic Materials		Precision Optics		Other		Total
Third Quarter 2023
End Market
Semiconductor	$	2,712	$	151,388	$	624	$	—	$	154,724
Industrial	32,046		7,958		6,954		—		46,958
Aerospace and defense	30,938		1,102		7,124		—		39,164
Consumer electronics	10,827		144		4,254		—		15,225
Automotive	19,447		1,747		2,606		—		23,800
Energy	13,013		25,179		—		—		38,192
Telecom and data center	15,685		10		—		—		15,695
Other	59,974		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
Industrial	44,550		9,383		7,564		—		61,497
Aerospace and defense	28,262		1,243		3,532		—		33,037
Consumer electronics	9,607		364		6,799		—		16,770
Automotive	24,802		1,863		2,268		—		28,933
Energy	15,971		25,220		—		—		41,191
Telecom and data center	15,412		42		—		—		15,454
Other	28,343		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 Materials		Electronic Materials		Precision Optics		Other		Total
First Nine Months 2023
End Market
Semiconductor	$	9,713	$	487,361	$	2,279	$	—	$	499,353
Industrial	111,436		25,102		22,400		—		158,938
Aerospace and defense	92,734		4,670		17,771		—		115,175
Consumer electronics	30,473		526		11,075		—		42,074
Automotive	66,753		4,966		7,090		—		78,809
Energy	38,597		71,940		—		—		110,537
Telecom and data center	49,223		68		—		—		49,291
Other	155,498		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
Industrial	125,588		37,206		23,605		—		186,399
Aerospace and defense	79,561		5,141		12,344		—		97,046
Consumer electronics	38,822		969		17,925		—		57,716
Automotive	71,893		4,985		7,294		—		84,172
Energy	38,231		79,701		—		—		117,932
Telecom and data center	47,716		107		—		—		47,823
Other	65,408		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 Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
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

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 Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands, except per share amounts)	2023		2022		2023		2022
Numerator for basic and diluted EPS:
Net income	$	26,564	$	19,952	$	76,234	$	57,226
Denominator:
Denominator for basic EPS:
Weighted-average shares outstanding	20,640		20,526		20,611		20,502
Effect of dilutive securities:
Stock appreciation rights	79		85		87		85
Restricted stock units	84		98		89		113
Performance-based restricted stock units	102		71		104		55
Diluted potential common shares	265		254		280		254
Denominator for diluted EPS:
Adjusted weighted-average shares outstanding	20,905		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)	2023		2022
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

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 Benefits				Other Benefits
	Third Quarter Ended				Third Quarter Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
Components of net periodic benefit (credit) cost
Service cost	$	209	$	281	$	13	$	21
Interest cost	1,966		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 Benefits				Other Benefits
	Nine Months Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
Components of net periodic benefit (credit) cost
Service cost	$	642	$	891	$	38	$	63
Interest cost	5,909		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 Currency		Interest Rate		Precious Metals		Total		Pension and Post-Employment Benefits		Foreign Currency Translation		Total
Balance at June 30, 2023	$	1,290	$	7,069	$	(443)	$	7,916	$	(40,549)	$	(6,810)	$	(39,443)
Other comprehensive income (loss) before reclassifications	766		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 tax	766		1,258		598		2,622		(299)		(3,259)		(936)
Deferred taxes	176		289		138		603		(154)		—		449
Net current period other comprehensive (loss) income after tax	590		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 reclassifications	837		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 tax	796		4,245		315		5,356		(18)		(6,094)		(756)
Deferred taxes	183		976		72		1,231		(26)		—		1,205
Net current period other comprehensive (loss) income after tax	613		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 Currency		Interest Rate		Precious Metals		Total		Pension and Post-Employment Benefits		Foreign Currency Translation		Total
Balance at December 31, 2022	$	1,243	$	6,055	$	(223)	$	7,075	$	(40,228)	$	(8,756)	$	(41,909)
Other comprehensive income (loss) before reclassifications	862		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 tax	827		2,575		312		3,714		(844)		(1,313)		1,557
Deferred taxes	190		592		72		854		(378)		—		476
Net current period other comprehensive (loss) income after tax	637		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 reclassifications	2,107		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 tax	1,937		8,466		361		10,764		(1,028)		(14,484)		(4,748)
Deferred taxes	446		1,947		82		2,475		(812)		—		1,663
Net current period other comprehensive (loss) income after tax	1,491		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 rate	4.27	%
Dividend yield	0.44	%
Volatility	39.0	%
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 Sheets				Quoted Prices in  Active Markets  for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	2023		2022		2023		2022		2023		2022		2023		2022
Financial Assets
Deferred compensation investments	$	4,521	$	3,001	$	4,521	$	3,001	$	—	$	—	$	—	$	—
Foreign currency forward contracts	1,643		1,291		—		—		1,643		1,291		—		—
Interest rate swap	10,438		7,863		—		—		10,438		7,863		—		—
Precious metal swaps	94		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 contracts	776		1,757		—		—		776		1,757		—		—
Interest Rate Swap	—		—				—		—		—				—
Precious metal swaps	75		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, 2023				December 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 items	16,142		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 assets		Other assets		Other liabilities and accrued items		Other long-term liabilities
Foreign currency forward contracts - yen	$	1,873	$	156	$	6	$	—	$	—
Foreign currency forward contracts - euro	19,366		516		41		101		—
Precious metal swaps	4,049		84		10		75		—
Interest rate swap	200,000		5,047		5,391		—		—
Total	$	225,288	$	5,803	$	5,448	$	176	$	—
	December 31, 2022
			Fair Value
	Notional Amount		Prepaid and other current assets		Other assets		Other liabilities and accrued items		Other long-term liabilities
Foreign currency forward contracts - yen	$	2,985	$	145	$	—	$	74	$	26
Foreign currency forward contracts - euro	25,712		355		—		472		137
Precious metal swaps	8,758		118		—		411		—
Interest rate swap	100,000		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, 2023		September 30, 2022
Hedging relationship	Line item
Foreign currency forward contracts	Net sales	$	—	$	(41)
Precious metal swaps	Cost of sales	83		(126)
Interest rate swap	Interest 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, 2023		September 30, 2022
Hedging relationship	Line item
Foreign currency forward contracts	Net sales	$	(35)	$	(171)
Precious metal swaps	Cost of sales	193		(27)
Interest rate swap	Interest 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, 2023		December 31, 2022
Borrowings under Credit Agreement	$	176,750	$	143,250
Borrowings under the Term Loan Facility	273,750		285,000
Overdraft Sweep Facility	6,848		—
Foreign debt	6,714		7,541
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

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.

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RESULTS OF OPERATIONS

Third Quarter

	Third Quarter Ended
	September 29,			September 30,			$		%
(Thousands, except per share data)	2023			2022			Change		Change
Net sales	$	403,067		$	428,191		$	(25,124)	(6)	%
Value-added sales	270,532			283,497			(12,965)		(5)	%
Gross margin	88,936			82,743			6,193		7	%
Gross margin as a % of value-added sales	33		%	29		%
Selling, general, and administrative (SG&A) expense	38,806			38,958			(152)		—	%
SG&A expense as a % of value-added sales	14		%	14		%
Research and development (R&D) expense	6,322			7,430			(1,108)		(15)	%
R&D expense as a % of value-added sales	2		%	3		%
Restructuring expense	1,077			484			593		123	%
Other—net	6,211			6,774			(563)		(8)	%
Operating profit	36,520			29,097			7,423		26	%
Other non-operating (income)—net	(685)			(1,175)			490		(42)	%
Interest expense—net	7,678			5,888			1,790		30	%
Income before income taxes	29,527			24,384			5,143		21	%
Income tax expense	2,963			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)	2023			2022			Change		Change
Net sales	$	1,244,144		$	1,322,531		$	(78,387)	(6)	%
Value-added sales	837,351			811,417			25,934		3	%
Gross margin	269,327			245,461			23,866		10	%
Gross margin as a % of value-added sales	32		%	30		%
SG&A expense	118,053			122,666			(4,613)		(4)	%
SG&A expense as a % of value-added sales	14		%	15		%
R&D expense	21,098			22,096			(998)		(5)	%
R&D expense as a % of value-added sales	3		%	3		%
Restructuring (income) expense	3,194			1,560			1,634		105	%
Other—net	18,178			18,575			(397)		(2)	%
Operating profit	108,804			80,564			28,240		35	%
Other non-operating (income)—net	(2,141)			(3,512)			1,371		(39)	%
Interest expense—net	22,820			14,325			8,495		59	%
Income before income taxes	88,125			69,751			18,374		26	%
Income tax expense	11,891			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.

26

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 Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
Net sales
Performance Materials	$	184,642	$	169,357	$	554,427	$	473,876
Electronic Materials	192,305		230,841		611,855		762,649
Precision Optics	26,120		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 Materials	116,772		123,905		354,829		447,719
Precision Optics	15		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 Materials	75,533		106,936		257,026		314,930
Precision Optics	26,105		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

28

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)	2023		2022		Change		Change
Net sales	$	184,642	$	169,357	$	15,285	9	%
Value-added sales	168,894		148,832		20,062		13	%
EBITDA	46,366		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)	2023		2022		Change		Change
Net sales	$	554,427	$	473,876	$	80,551	17	%
Value-added sales	502,521		411,917		90,604		22	%
EBITDA	134,061		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

29

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)	2023		2022		Change		Change
Net sales	$	192,305	$	230,841	$	(38,536)	(17)	%
Value-added sales	75,533		106,936		(31,403)		(29)	%
EBITDA	10,155		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)	2023		2022		Change		Change
Net sales	$	611,855	$	762,649	$	(150,794)	(20)	%
Value-added sales	257,026		314,930		(57,904)		(18)	%
EBITDA	37,504		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,		$		%
	2023		2022		Change		Change
Net sales	$	26,120	$	27,993	$	(1,873)	(7)	%
Value-added sales	26,105		27,977		(1,872)		(7)	%
EBITDA	3,261		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,		$		%
	2023		2022		Change		Change
Net sales	$	77,862	$	86,006	$	(8,144)	(9)	%
Value-added sales	77,804		85,923		(8,119)		(9)	%
EBITDA	7,654		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,		$		%
	2023		2022		Change		Change
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.

31

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,		$		%
	2023		2022		Change		Change
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.

32

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)	2023		2022		Change
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 activities	13,735		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)	2023		2022
Cash and cash equivalents	$	16,401	$	13,101
Total outstanding debt	460,995		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.

33

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.

34

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.

35

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.

36

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.

Period	Total 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, 2023	905	$	120.67	—	$	8,316,239
August 5 through September 1, 2023	791	107.02		—	8,316,239
September 2 through September 29, 2023	342	101.98		—	8,316,239
Total	2,038	$	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	Certifications of Chief Executive Officer and Chief Financial Officer required by 18 U.S.C. Section 1350*
95	Mine Safety Disclosure Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act for the period ended September 29, 2023*
101.INS	XBRL 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.SCH	Inline XBRL Taxonomy Extension Schema Document*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104	Cover 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

EX-31.1

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

EX-31.2

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

EX-32

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

EX-95

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 MSHA	0
(B)	Total number of orders issued under Section 104(b) of the Mine Act	0
(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 Act	0
(D)	Total number of alleged flagrant violations under Section 110(b)(2) of the Mine Act	0
(E)	Total number of imminent danger orders issued under Section 107(a) of the Mine Act	0
(F)	Total dollar value of proposed assessments from MSHA under the Mine Act	$0
(G)	Total number of mining-related fatalities	0
(H)	Received notice from MSHA of a pattern of violations under Section 104(e) of the Mine Act	No
(I)	Received notice from MSHA of the potential to have a pattern of violations under Section 104(e) of the Mine Act	No
(J)	Total number of Legal Actions pending as of the last day of the Reporting Period	0
(K)	Total number of Legal Actions instituted during the Reporting Period	0
(L)	Total number of Legal Actions resolved during the Reporting Period	0

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	Sep. 29, 2023 shares
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Document Type	10-Q
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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
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Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

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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

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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

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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

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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

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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

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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

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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

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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.

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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 2023		Third Quarter 2022		First Nine Months 2023		First 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 Optics	26,120		27,993		77,862		86,006
Other	—		—		—		—
Net sales	403,067		428,191		1,244,144		1,322,531
Segment EBITDA:
Performance Materials	$	46,366	$	28,866	$	134,061	$	80,886
Electronic Materials	10,155		16,853		37,504		51,338
Precision Optics	3,261		3,546		7,654		9,281
Other	(7,497)		(5,839)		(21,750)		(18,206)
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

(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 Materials		Electronic Materials		Precision Optics		Other		Total
Third Quarter 2023
End Market
Semiconductor	$	2,712	$	151,388	$	624	$	—	$	154,724
Industrial	32,046		7,958		6,954		—		46,958
Aerospace and defense	30,938		1,102		7,124		—		39,164
Consumer electronics	10,827		144		4,254		—		15,225
Automotive	19,447		1,747		2,606		—		23,800
Energy	13,013		25,179		—		—		38,192
Telecom and data center	15,685		10		—		—		15,695
Other	59,974		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
Industrial	44,550		9,383		7,564		—		61,497
Aerospace and defense	28,262		1,243		3,532		—		33,037
Consumer electronics	9,607		364		6,799		—		16,770
Automotive	24,802		1,863		2,268		—		28,933
Energy	15,971		25,220		—		—		41,191
Telecom and data center	15,412		42		—		—		15,454
Other	28,343		7,503		6,679		—		42,525
Total	$	169,357	$	230,841	$	27,993	$	—	$	428,191

(Thousands)	Performance Materials		Electronic Materials		Precision Optics		Other		Total
First Nine Months 2023
End Market
Semiconductor	$	9,713	$	487,361	$	2,279	$	—	$	499,353
Industrial	111,436		25,102		22,400		—		158,938
Aerospace and defense	92,734		4,670		17,771		—		115,175
Consumer electronics	30,473		526		11,075		—		42,074
Automotive	66,753		4,966		7,090		—		78,809
Energy	38,597		71,940		—		—		110,537
Telecom and data center	49,223		68		—		—		49,291
Other	155,498		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
Industrial	125,588		37,206		23,605		—		186,399
Aerospace and defense	79,561		5,141		12,344		—		97,046
Consumer electronics	38,822		969		17,925		—		57,716
Automotive	71,893		4,985		7,294		—		84,172
Energy	38,231		79,701		—		—		117,932
Telecom and data center	47,716		107		—		—		47,823
Other	65,408		20,653		20,831		—		106,892
Total	$	473,876	$	762,649	$	86,006	$	—	$	1,322,531

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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.

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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.

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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 Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
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

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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.

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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 Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands, except per share amounts)	2023		2022		2023		2022
Numerator for basic and diluted EPS:
Net income	$	26,564	$	19,952	$	76,234	$	57,226
Denominator:
Denominator for basic EPS:
Weighted-average shares outstanding	20,640		20,526		20,611		20,502
Effect of dilutive securities:
Stock appreciation rights	79		85		87		85
Restricted stock units	84		98		89		113
Performance-based restricted stock units	102		71		104		55
Diluted potential common shares	265		254		280		254
Denominator for diluted EPS:
Adjusted weighted-average shares outstanding	20,905		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.

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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)	2023		2022
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

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.

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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.

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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 Benefits				Other Benefits
	Third Quarter Ended				Third Quarter Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
Components of net periodic benefit (credit) cost
Service cost	$	209	$	281	$	13	$	21
Interest cost	1,966		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 Benefits				Other Benefits
	Nine Months Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
Components of net periodic benefit (credit) cost
Service cost	$	642	$	891	$	38	$	63
Interest cost	5,909		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.

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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 Currency		Interest Rate		Precious Metals		Total		Pension and Post-Employment Benefits		Foreign Currency Translation		Total
Balance at June 30, 2023	$	1,290	$	7,069	$	(443)	$	7,916	$	(40,549)	$	(6,810)	$	(39,443)
Other comprehensive income (loss) before reclassifications	766		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 tax	766		1,258		598		2,622		(299)		(3,259)		(936)
Deferred taxes	176		289		138		603		(154)		—		449
Net current period other comprehensive (loss) income after tax	590		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 reclassifications	837		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 tax	796		4,245		315		5,356		(18)		(6,094)		(756)
Deferred taxes	183		976		72		1,231		(26)		—		1,205
Net current period other comprehensive (loss) income after tax	613		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 Currency		Interest Rate		Precious Metals		Total		Pension and Post-Employment Benefits		Foreign Currency Translation		Total
Balance at December 31, 2022	$	1,243	$	6,055	$	(223)	$	7,075	$	(40,228)	$	(8,756)	$	(41,909)
Other comprehensive income (loss) before reclassifications	862		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 tax	827		2,575		312		3,714		(844)		(1,313)		1,557
Deferred taxes	190		592		72		854		(378)		—		476
Net current period other comprehensive (loss) income after tax	637		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 reclassifications	2,107		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 tax	1,937		8,466		361		10,764		(1,028)		(14,484)		(4,748)
Deferred taxes	446		1,947		82		2,475		(812)		—		1,663
Net current period other comprehensive (loss) income after tax	1,491		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.

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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 rate	4.27	%
Dividend yield	0.44	%
Volatility	39.0	%
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.

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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 Sheets				Quoted Prices in  Active Markets  for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	2023		2022		2023		2022		2023		2022		2023		2022
Financial Assets
Deferred compensation investments	$	4,521	$	3,001	$	4,521	$	3,001	$	—	$	—	$	—	$	—
Foreign currency forward contracts	1,643		1,291		—		—		1,643		1,291		—		—
Interest rate swap	10,438		7,863		—		—		10,438		7,863		—		—
Precious metal swaps	94		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 contracts	776		1,757		—		—		776		1,757		—		—
Interest Rate Swap	—		—				—		—		—				—
Precious metal swaps	75		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.

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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, 2023				December 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 items	16,142		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 assets		Other assets		Other liabilities and accrued items		Other long-term liabilities
Foreign currency forward contracts - yen	$	1,873	$	156	$	6	$	—	$	—
Foreign currency forward contracts - euro	19,366		516		41		101		—
Precious metal swaps	4,049		84		10		75		—
Interest rate swap	200,000		5,047		5,391		—		—
Total	$	225,288	$	5,803	$	5,448	$	176	$	—
	December 31, 2022
			Fair Value
	Notional Amount		Prepaid and other current assets		Other assets		Other liabilities and accrued items		Other long-term liabilities
Foreign currency forward contracts - yen	$	2,985	$	145	$	—	$	74	$	26
Foreign currency forward contracts - euro	25,712		355		—		472		137
Precious metal swaps	8,758		118		—		411		—
Interest rate swap	100,000		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, 2023		September 30, 2022
Hedging relationship	Line item
Foreign currency forward contracts	Net sales	$	—	$	(41)
Precious metal swaps	Cost of sales	83		(126)
Interest rate swap	Interest expense - net	(1,140)		(115)
Total		$	(1,057)	$	(282)

		Nine Months Ended
(Thousands)		September 29, 2023		September 30, 2022
Hedging relationship	Line item
Foreign currency forward contracts	Net sales	$	(35)	$	(171)
Precious metal swaps	Cost of sales	193		(27)
Interest rate swap	Interest expense - net	(2,950)		238
Total		$	(2,792)	$	40

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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.

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Debt

9 Months Ended

Sep. 29, 2023

Debt Disclosure [Abstract]

Debt

Debt

(Thousands)	September 29, 2023		December 31, 2022
Borrowings under Credit Agreement	$	176,750	$	143,250
Borrowings under the Term Loan Facility	273,750		285,000
Overdraft Sweep Facility	6,848		—
Foreign debt	6,714		7,541
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

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.

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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

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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

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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.

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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 2023		Third Quarter 2022		First Nine Months 2023		First 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 Optics	26,120		27,993		77,862		86,006
Other	—		—		—		—
Net sales	403,067		428,191		1,244,144		1,322,531
Segment EBITDA:
Performance Materials	$	46,366	$	28,866	$	134,061	$	80,886
Electronic Materials	10,155		16,853		37,504		51,338
Precision Optics	3,261		3,546		7,654		9,281
Other	(7,497)		(5,839)		(21,750)		(18,206)
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

(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 Materials		Electronic Materials		Precision Optics		Other		Total
Third Quarter 2023
End Market
Semiconductor	$	2,712	$	151,388	$	624	$	—	$	154,724
Industrial	32,046		7,958		6,954		—		46,958
Aerospace and defense	30,938		1,102		7,124		—		39,164
Consumer electronics	10,827		144		4,254		—		15,225
Automotive	19,447		1,747		2,606		—		23,800
Energy	13,013		25,179		—		—		38,192
Telecom and data center	15,685		10		—		—		15,695
Other	59,974		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
Industrial	44,550		9,383		7,564		—		61,497
Aerospace and defense	28,262		1,243		3,532		—		33,037
Consumer electronics	9,607		364		6,799		—		16,770
Automotive	24,802		1,863		2,268		—		28,933
Energy	15,971		25,220		—		—		41,191
Telecom and data center	15,412		42		—		—		15,454
Other	28,343		7,503		6,679		—		42,525
Total	$	169,357	$	230,841	$	27,993	$	—	$	428,191

(Thousands)	Performance Materials		Electronic Materials		Precision Optics		Other		Total
First Nine Months 2023
End Market
Semiconductor	$	9,713	$	487,361	$	2,279	$	—	$	499,353
Industrial	111,436		25,102		22,400		—		158,938
Aerospace and defense	92,734		4,670		17,771		—		115,175
Consumer electronics	30,473		526		11,075		—		42,074
Automotive	66,753		4,966		7,090		—		78,809
Energy	38,597		71,940		—		—		110,537
Telecom and data center	49,223		68		—		—		49,291
Other	155,498		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
Industrial	125,588		37,206		23,605		—		186,399
Aerospace and defense	79,561		5,141		12,344		—		97,046
Consumer electronics	38,822		969		17,925		—		57,716
Automotive	71,893		4,985		7,294		—		84,172
Energy	38,231		79,701		—		—		117,932
Telecom and data center	47,716		107		—		—		47,823
Other	65,408		20,653		20,831		—		106,892
Total	$	473,876	$	762,649	$	86,006	$	—	$	1,322,531

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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)	%

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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 Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
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

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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 Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands, except per share amounts)	2023		2022		2023		2022
Numerator for basic and diluted EPS:
Net income	$	26,564	$	19,952	$	76,234	$	57,226
Denominator:
Denominator for basic EPS:
Weighted-average shares outstanding	20,640		20,526		20,611		20,502
Effect of dilutive securities:
Stock appreciation rights	79		85		87		85
Restricted stock units	84		98		89		113
Performance-based restricted stock units	102		71		104		55
Diluted potential common shares	265		254		280		254
Denominator for diluted EPS:
Adjusted weighted-average shares outstanding	20,905		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

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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)	2023		2022
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

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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 Benefits				Other Benefits
	Third Quarter Ended				Third Quarter Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
Components of net periodic benefit (credit) cost
Service cost	$	209	$	281	$	13	$	21
Interest cost	1,966		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 Benefits				Other Benefits
	Nine Months Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
(Thousands)	2023		2022		2023		2022
Components of net periodic benefit (credit) cost
Service cost	$	642	$	891	$	38	$	63
Interest cost	5,909		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)

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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 Currency		Interest Rate		Precious Metals		Total		Pension and Post-Employment Benefits		Foreign Currency Translation		Total
Balance at June 30, 2023	$	1,290	$	7,069	$	(443)	$	7,916	$	(40,549)	$	(6,810)	$	(39,443)
Other comprehensive income (loss) before reclassifications	766		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 tax	766		1,258		598		2,622		(299)		(3,259)		(936)
Deferred taxes	176		289		138		603		(154)		—		449
Net current period other comprehensive (loss) income after tax	590		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 reclassifications	837		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 tax	796		4,245		315		5,356		(18)		(6,094)		(756)
Deferred taxes	183		976		72		1,231		(26)		—		1,205
Net current period other comprehensive (loss) income after tax	613		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 Currency		Interest Rate		Precious Metals		Total		Pension and Post-Employment Benefits		Foreign Currency Translation		Total
Balance at December 31, 2022	$	1,243	$	6,055	$	(223)	$	7,075	$	(40,228)	$	(8,756)	$	(41,909)
Other comprehensive income (loss) before reclassifications	862		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 tax	827		2,575		312		3,714		(844)		(1,313)		1,557
Deferred taxes	190		592		72		854		(378)		—		476
Net current period other comprehensive (loss) income after tax	637		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 reclassifications	2,107		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 tax	1,937		8,466		361		10,764		(1,028)		(14,484)		(4,748)
Deferred taxes	446		1,947		82		2,475		(812)		—		1,663
Net current period other comprehensive (loss) income after tax	1,491		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)

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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 rate	4.27	%
Dividend yield	0.44	%
Volatility	39.0	%
Expected term (in years)	4.5

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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 Sheets				Quoted Prices in  Active Markets  for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	2023		2022		2023		2022		2023		2022		2023		2022
Financial Assets
Deferred compensation investments	$	4,521	$	3,001	$	4,521	$	3,001	$	—	$	—	$	—	$	—
Foreign currency forward contracts	1,643		1,291		—		—		1,643		1,291		—		—
Interest rate swap	10,438		7,863		—		—		10,438		7,863		—		—
Precious metal swaps	94		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 contracts	776		1,757		—		—		776		1,757		—		—
Interest Rate Swap	—		—				—		—		—				—
Precious metal swaps	75		411		—		—		75		411		—		—
Total	$	5,372	$	5,169	$	4,521	$	3,001	$	851	$	2,168	$	—	$	—

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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, 2023				December 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 items	16,142		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 assets		Other assets		Other liabilities and accrued items		Other long-term liabilities
Foreign currency forward contracts - yen	$	1,873	$	156	$	6	$	—	$	—
Foreign currency forward contracts - euro	19,366		516		41		101		—
Precious metal swaps	4,049		84		10		75		—
Interest rate swap	200,000		5,047		5,391		—		—
Total	$	225,288	$	5,803	$	5,448	$	176	$	—
	December 31, 2022
			Fair Value
	Notional Amount		Prepaid and other current assets		Other assets		Other liabilities and accrued items		Other long-term liabilities
Foreign currency forward contracts - yen	$	2,985	$	145	$	—	$	74	$	26
Foreign currency forward contracts - euro	25,712		355		—		472		137
Precious metal swaps	8,758		118		—		411		—
Interest rate swap	100,000		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, 2023		September 30, 2022
Hedging relationship	Line item
Foreign currency forward contracts	Net sales	$	—	$	(41)
Precious metal swaps	Cost of sales	83		(126)
Interest rate swap	Interest expense - net	(1,140)		(115)
Total		$	(1,057)	$	(282)

		Nine Months Ended
(Thousands)		September 29, 2023		September 30, 2022
Hedging relationship	Line item
Foreign currency forward contracts	Net sales	$	(35)	$	(171)
Precious metal swaps	Cost of sales	193		(27)
Interest rate swap	Interest expense - net	(2,950)		238
Total		$	(2,792)	$	40

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Debt (Tables)

9 Months Ended

Sep. 29, 2023

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

(Thousands)	September 29, 2023		December 31, 2022
Borrowings under Credit Agreement	$	176,750	$	143,250
Borrowings under the Term Loan Facility	273,750		285,000
Overdraft Sweep Facility	6,848		—
Foreign debt	6,714		7,541
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

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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)

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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

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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

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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%)

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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

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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

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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

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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

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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

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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

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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

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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

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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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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