What changed in this filing

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Item 1. Financial Statements

2025-07-30 compared with 2025-05-01 · 271 added, 128 removed, 481 unchanged (45% of the section changed)

2 unchanged sentences

Consolidated Statements of Income

First Quarter Ended

(Thousands, except per share amounts) March 28, 2025 March 29, 2024

Second Quarter Ended Six Months Ended

(Thousands, except per share amounts) June 27, 2025 June 28, 2024 June 27, 2025 June 28, 2024

Net sales $ 431,658 $ 425,866 $ 851,988 $ 811,153

21 unchanged sentences

Consolidated Statements of Comprehensive Income

First Quarter Ended

March 28, March 29,

Second Quarter Ended Six Months Ended

June 27, June 28, June 27, June 28,

(Thousands) 2025 2024 2025 2024

9 unchanged sentences

Consolidated Balance Sheets

March 28, Dec.

June 27, Dec.

(Thousands) 2025 2024

35 unchanged sentences

Common stock (no par value;

60,000 authorized shares, issued shares of 27,148 at March 28 and December 31)

60,000 authorized shares, issued shares of 27,148 at both June 27 th and December 31 st )

345,666 336,136

8 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

March 28, March 29,

Six Months Ended

June 27, June 28,

(Thousands) 2025 2024

5 unchanged sentences

Stock-based compensation expense (non-cash) 5,437 5,334

Deferred income tax (benefit) expense 22 ( 253 )

Deferred income tax expense (benefit) ( 25 ) 926

Changes in assets and liabilities:

8 unchanged sentences

Other-net ( 8,821 ) 858

Net cash provided by (used in) operating activities 15,502 ( 13,805 )

Net cash provided by operating activities 65,442 6,477

Cash flows from investing activities:

4 unchanged sentences

Cash flows from financing activities:

Proceeds from (repayments of) borrowings under credit facilities, net 16,190 56,779

Repayment of debt ( 7,522 ) ( 7,586 )

Proceeds from borrowings under credit facilities, net ( 2,219 ) 73,649

Repayment of long-term debt ( 15,111 ) ( 15,172 )

Principal payments under finance lease obligations ( 306 ) ( 382 )

Cash dividends paid ( 5,705 ) ( 5,493 )

Deferred financing costs ( 2,856 ) —

Repurchase of common stock ( 7,843 ) —

Payments of withholding taxes for stock-based compensation awards ( 2,337 ) ( 6,402 )

Net cash provided by financing activities 3,478 40,297

Net cash provided by/(used in) financing activities ( 36,377 ) 46,200

Effects of exchange rate changes 1,725 ( 613 )

11 unchanged sentences

Comprehensive

Balance at March 28, 2025 20,814 6,334 $ 342,759 $ 864,002 $ ( 267,756 ) $ ( 57,699 ) $ 6,623 $ 887,929

Net income — — — 25,140 — — — 25,140

Other comprehensive income — — — — — 5,939 — 5,939

Cash dividends declared ($ 0.140 per share)

— — — ( 2,902 ) — — — ( 2,902 )

Stock-based compensation activity 14 ( 14 ) 2,887 7 ( 443 ) — — 2,451

Repurchase of common stock ( 100 ) 100 ( 7,843 ) ( 7,843 )

Payments of withholding taxes for stock-based compensation awards ( 2 ) 2 — — ( 113 ) — — ( 113 )

Directors’ deferred compensation 1 ( 1 ) 20 — ( 292 ) — 316 44

Balance at June 27, 2025 20,727 6,421 $ 345,666 $ 886,247 $ ( 276,447 ) $ ( 51,760 ) $ 6,939 $ 910,645

Balance at March 29, 2024 20,731 6,417 $ 324,492 $ 865,038 $ ( 256,268 ) $ ( 49,321 ) $ 5,982 $ 889,923

Net income — — — 19,036 — — — 19,036

Other comprehensive income — — — — — ( 1,566 ) — ( 1,566 )

Cash dividends declared ($ 0.135 per share)

— — — ( 2,801 ) — — — ( 2,801 )

Stock-based compensation activity 19 ( 19 ) 4,315 11 ( 1,487 ) — — 2,839

Payments of withholding taxes for stock-based compensation awards ( 4 ) 4 — — ( 389 ) — — ( 389 )

Directors’ deferred compensation 1 ( 1 ) 29 — ( 439 ) — 453 43

Balance at June 28, 2024 20,747 6,401 $ 328,836 $ 881,284 $ ( 258,583 ) $ ( 50,887 ) $ 6,435 $ 907,085

Common Shares Shareholders' Equity

(Thousands, except per share amounts) Common Shares Common Shares Held in Treasury Common

Stock Retained

Earnings Common

Treasury Accumulated Other

Comprehensive

Balance at December 31, 2024 20,764 6,384 $ 336,136 $ 849,111 $ ( 261,880 ) $ ( 61,046 ) $ 6,560 $ 868,881

4 unchanged sentences

Stock-based compensation activity 89 ( 89 ) 9,484 3 ( 4,050 ) — — 5,437

Repurchase of common stock ( 100 ) 100 ( 7,843 ) ( 7,843 )

Payments of withholding taxes for stock-based compensation awards ( 27 ) 27 — — ( 2,337 ) — — ( 2,337 )

Directors’ deferred compensation 1 ( 1 ) 46 — ( 337 ) — 379 88

Balance at March 28, 2025 20,814 6,334 $ 342,759 $ 864,002 $ ( 267,756 ) $ ( 57,699 ) $ 6,623 $ 887,929

Balance at June 27, 2025 20,727 6,421 $ 345,666 $ 886,247 $ ( 276,447 ) $ ( 51,760 ) $ 6,939 $ 910,645

Balance at December 31, 2023 20,646 6,502 $ 309,492 $ 854,334 $ ( 237,746 ) $ ( 46,948 ) $ 5,921 $ 885,053

6 unchanged sentences

Directors’ deferred compensation 1 ( 1 ) 60 — ( 487 ) — 514 87

Balance at March 29, 2024 20,731 6,417 $ 324,492 $ 865,038 $ ( 256,268 ) $ ( 49,321 ) $ 5,982 $ 889,923

Balance at June 28, 2024 20,747 6,401 $ 328,836 $ 881,284 $ ( 258,583 ) $ ( 50,887 ) $ 6,435 $ 907,085

See notes to these consolidated financial statements.

13 unchanged sentences

Adoption of this ASU will result in additional disclosure, but it will not impact the Company’s consolidated financial position, results of operations or cash flows.

In November 2024, the FASB issued amended guidance related to disclosure of disaggregated expenses (“ASU 2024-03”).

This amendment requires public business entities to provide detailed disclosures in the notes to financial statements disaggregating specific expense categories, including employee compensation, depreciation, and intangible asset amortization, as well as certain other disclosures to provide enhanced transparency into the nature and function of expenses.

This new guidance is effective for annual periods beginning in the Company’s fiscal year 2027 and interim periods following annual adoption, with early adoption permitted.

In November 2024, the FASB issued a final ASU to require disaggregated disclosure of income statement expenses.

This new standard requires public business entities to provide detailed disclosures in the notes to financial statements disaggregating specific expense categories, including employee compensation, depreciation, and intangible asset amortization, as well as certain other disclosures to provide enhanced transparency into the nature and function of expenses.

This guidance is effective for annual periods beginning in the Company’s fiscal year 2027 and interim periods following annual adoption, with early adoption permitted.

This guidance will be applied on a prospective basis with retrospective application permitted.

5 unchanged sentences

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 and high temperature braze materials.

Precision Optics produces thin film coatings, optical filter materials, sputter-coated, and precision-converted thin film materials.

1 unchanged sentence

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 first quarter of 2025 and 2024:

First quarter ended March 28, 2025

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 second quarter and first six months of 2025 and 2024:

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Second quarter ended June 27, 2025

Performance Materials Electronic Materials Precision Optics Other Consolidated

11 unchanged sentences

Net Income $ 25,140

First quarter ended March 29, 2024

Second quarter ended June 28, 2024

Performance Materials Electronic Materials Precision Optics Other Consolidated

11 unchanged sentences

Net Income $ 19,036

(1) Excludes inter-segment sales of $ 2.6 million for the first quarter of 2025 and $ 1.5 million for the first quarter of 2024 for Electronic Materials.

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

First six months ended June 27, 2025

Performance Materials Electronic Materials Precision Optics Other Consolidated

Net sales (1)

$ 356,765 $ 449,222 $ 46,001 $ — $ 851,988

Cost of sales 259,526 398,223 35,319 83 693,151

Selling, general and administrative expense 28,223 19,744 8,702 13,815 70,484

Other segment items (2)

6,871 11,104 6,278 ( 1,147 ) 23,106

Segment depreciation, depletion and amortization 19,622 8,528 4,915 982 34,047

Segment EBITDA $ 81,767 $ 28,679 $ 617 $ ( 11,769 ) $ 99,294

Income tax expense 7,262

Interest expense - net 15,147

Depreciation, depletion and amortization 34,047

Net Income $ 42,838

First six months ended June 28, 2024

Performance Materials Electronic Materials Precision Optics Other Consolidated

Net sales (1)

$ 356,158 $ 404,658 $ 50,337 $ — $ 811,153

Cost of sales 267,348 354,507 37,208 19 659,082

Selling, general and administrative expense 27,298 19,715 10,519 11,913 69,445

Other segment items (2)

7,283 11,741 7,001 1,007 27,032

Segment depreciation, depletion and amortization 16,862 9,114 5,727 995 32,698

Segment EBITDA $ 71,091 $ 27,809 $ 1,336 $ ( 11,944 ) $ 88,292

Income tax expense 6,068

Interest expense - net 17,081

Depreciation, depletion and amortization 32,698

Net Income $ 32,445

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(1) Excludes inter-segment sales of $ 2.0 million and $ 1.7 million for the second quarter of 2025 and 2024, respectively, and $ 4.6 million and $ 3.2 million for the first six months of 2025 and 2024, respectively, for Electronic Materials.

There were no material inter-segment sales for Performance Materials or Precision Optics in 2025 or 2024.

Inter-segment sales are eliminated in consolidation.

4 unchanged sentences

• Non-operating expenses primarily related to pension costs

The following table disaggregates revenue for each segment by end market for the first quarter of 2025 and 2024:

The following table disaggregates revenue for each segment by end market for the second quarter and first six months of 2025 and 2024:

(Thousands) Performance Materials Electronic Materials Precision Optics Other Total

First Quarter 2025

Second Quarter 2025

Semiconductor $ 1,758 $ 189,494 $ 795 $ — $ 192,047

7 unchanged sentences

Total $ 182,778 $ 224,427 $ 24,453 $ — $ 431,658

First Quarter 2024

Second Quarter 2024

Semiconductor $ 1,300 $ 178,099 $ 754 $ — $ 180,153

7 unchanged sentences

Total $ 187,513 $ 212,687 $ 25,666 $ — $ 425,866

The CODM does not regularly review segment assets to make decisions regarding the allocation of resources, and as such the Company has not included assets for each reportable segment.

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Thousands) Performance Materials Electronic Materials Precision Optics Other Total

First Six Months 2025

Semiconductor $ 5,385 $ 373,243 $ 1,570 $ — $ 380,198

Industrial 62,283 18,759 12,022 — 93,064

Aerospace and defense 86,056 3,780 13,514 — 103,350

Consumer electronics 101,707 1,266 6,316 — 109,289

Automotive 33,037 2,542 3,146 — 38,725

Energy 28,940 33,383 — — 62,323

Life sciences 4,858 12,389 8,945 — 26,192

Other 34,499 3,860 488 — 38,847

Total $ 356,765 $ 449,222 $ 46,001 $ — $ 851,988

First Six Months 2024

Semiconductor $ 3,962 $ 334,522 $ 1,079 $ — $ 339,563

Industrial 58,272 18,114 13,144 — 89,530

Aerospace and defense 84,071 3,286 11,854 — 99,211

Consumer electronics 117,666 137 7,266 — 125,069

Automotive 36,067 3,643 3,679 — 43,389

Energy 17,372 32,670 — — 50,042

Life sciences 5,563 8,291 13,025 — 26,879

Other 33,185 3,995 290 — 37,470

Total $ 356,158 $ 404,658 $ 50,337 $ — $ 811,153

Note C — Revenue Recognition

2 unchanged sentences

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

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

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.

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 March 28, 2025.

Remaining performance obligations include non-cancelable purchase orders and customer contracts.

1 unchanged sentence

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 March 28, 2025 and December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 33.8 million and $ 39.3 million, respectively.

After considering the practical expedient at June 27, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 27.9 million.

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Contract Balances :

The timing of revenue recognition, billings, and cash collections resulted in the following contract assets and contract liabilities:

(Thousands) March 28, 2025 December 31, 2024 $ change % change

(Thousands) June 27, 2025

December 31, 2024

$ change % change

Accounts receivable, trade

6 unchanged sentences

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 first three months of 2025 and 2024.

Impairment losses (bad debt) incurred related to our receivables were immaterial during the second quarter and first six months of 2025.

In the fourth quarter of 2024, the Company entered into a factoring agreement to sell certain receivables to a third-party financial institution.

The transfer of the receivables constitute purchases and sales of receivables resulting in a reduction of trade receivables on the consolidated balance sheets and the proceeds are included in the cash flows from operating activities in the consolidated statements of cash flows.

The Company sold $ 16.0 million of receivables in the first quarter of 2025 and recorded a loss on sale of $ 0.2 million.

The Company sold $ 48.9 million of receivables in the fourth quarter of 2024.

The Company sold $ 22.9 million of receivables in the second quarter of 2025 and a total of $ 38.9 million of receivables in the first six months of 2025.

The Company recorded a loss on sale of $ 0.2 million and $ 0.4 million for the second quarter and first sixth months of 2025, respectively.

The Company sold $ 48.9 million of receivables in the fourth quarter of 2024 and recorded a loss on sale of $ 0.7 million.

Total receivables sold under this program amount to $ 87.8 million

Unbilled receivables represent expenditures on contracts, plus applicable profit margin, not yet billed.

1 unchanged sentence

Billings made on contracts are recorded as a reduction of unbilled receivables.

Unbilled receivables are included within the prepaid and other current assets line item on the Consolidated Balance Sheet.

Unearned revenue is recorded for consideration received from customers in advance of satisfaction of the related performance obligations.

The Company recognized approximately $ 9.2 million of the December 31, 2024 unearned amounts as revenue during the first three months of 2025.

The Company recognized approximately $ 0.7 million and $ 9.9 million of the December 31, 2024 unearned amounts as revenue during the second quarter and first six months of 2025, respectively.

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 — Other-net

Other-net for the second quarter and first six months of 2025 and 2024 is summarized as follows:

Second Quarter Ended Six Months Ended

June 27, June 28, June 27, June 28,

(Thousands) 2025 2024 2025 2024

Amortization of intangible assets $ 2,806 $ 3,163 $ 5,695 $ 6,010

Metal consignment fees 2,460 1,895 4,675 3,918

Foreign currency (gain) loss ( 800 ) 101 ( 952 ) 534

Other items ( 558 ) ( 713 ) ( 514 ) ( 1,659 )

Total $ 3,908 $ 4,446 $ 8,904 $ 8,803

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Note D — Restructuring

In fiscal years 2024 and 2023, we announced restructuring plans that were both designed to reduce costs and expenses in response to macroeconomic conditions and current operating performance.

Note E — Restructuring

In fiscal year 2024, we announced restructuring plans that were both designed to reduce costs and expenses in response to macroeconomic conditions and current operating performance.

These actions impact all three of our business segments as well as Corporate.

1 unchanged sentence

In 2025, the Company continued to implement restructuring actions, primarily in our Precision Optics segment.

In connection with these actions, we recorded restructuring expenses of $ 2.0 million and $ 1.6 million in the three months ended March 28, 2025 and March 29, 2024, respectively, all of which were associated with workforce reduction, including severance and other personnel-related costs.

We expect to substantially complete the remaining restructuring activities by the end of the second quarter of fiscal year 2025.

The activity in the accrued balances incurred in relation to restructuring during the three months ended March 28, 2025, and March 29, 2024, were as follows:

In connection with these actions, we recorded restructuring expenses of $ 0.5 million and $ 2.5 million in the three and six months ended June 27, 2025, respectively, and $ 3.0 million and $ 4.7 million in the three and six months ended June 28, 2024, respectively, all of which were associated with workforce reduction, including severance and other personnel-related costs.

We expect to substantially complete the remaining restructuring activities by the end of fiscal year 2025.

The activity in the accrued balances incurred in relation to restructuring during the six months ended June 27, 2025, and June 28, 2024, were as follows:

Reduction in Force

4 unchanged sentences

Cash Payments ( 433 ) ( 859 ) ( 1,305 ) ( 234 ) ( 2,831 )

Balance at March 28, 2025 $ 186 $ 98 $ 403 $ 310 $ 997

Balance at June 27, 2025

$ 104 $ 11 $ 183 $ 205 $ 503

Reduction in Force

3 unchanged sentences

Cash Payments ( 996 ) ( 1,632 ) ( 533 ) ( 842 ) ( 4,003 )

Balance at March 29, 2024 $ 280 $ 49 $ 95 $ 88 $ 512

Note E — Other-net

Other-net for the first quarter of 2025 and 2024 is summarized as follows:

First Quarter Ended

March 28, March 29,

(Thousands) 2025 2024

Amortization of intangible assets $ 2,889 $ 2,847

Metal consignment fees 2,215 2,023

Foreign currency loss (gain) ( 153 ) 433

Other items, net 45 ( 946 )

Total $ 4,996 $ 4,357

Balance at June 28, 2024

$ 313 $ 145 $ 180 $ 417 $ 1,055

Note F — Income Taxes

The Company's effective tax rate for the first quarter of 2025 and 2024 was 15.5 % and 8.2 %, respectively.

The effective tax rate for the first quarter of 2025 is lower than the statutory tax rate primarily due to the impact of percentage depletion, foreign derived intangible income deduction and production credit.

The effective tax rate for the first quarter of 2024 was lower than the statutory tax rate primarily due to the impact of percentage depletion, the foreign derived intangible income

The Company's effective tax rate for the second quarter of 2025 and 2024 was 13.8 % and 20.4 %, respectively, and 14.5 % and 15.8 % for the first six months of 2025 and 2024, respectively.

The effective tax rate for 2025 is lower than the statutory tax rate primarily due to the impact of percentage depletion and the advanced manufacturing production credit.

The effective tax rate for the 2024 periods was lower than the statutory tax rate primarily due to the impact of percentage depletion and the foreign derived intangible income deduction.

The effective tax rate for the first six months of 2025 includes net discrete income tax expense of $ 0.6 million, primarily consisting of $ 0.2 million expense for stock-based compensation awards and $ 0.4 million expense for unrecognized tax benefits recorded.

The effective tax rate for the first six months of 2024 included a net discrete income tax benefit of $ 0.2 million, which primarily consisted of $ 1.0 million of excess tax benefits from stock-based compensation awards offset by a $ 1.1 million valuation allowance recorded against deferred tax assets that were not likely to be realized for one of the Company’s foreign subsidiaries.

Government Tax Credits

Pursuant to The Inflation Reduction Act of 2022 (IRA), the Company is eligible for the Advanced Manufacturing Production Credit (production credit).

The production credit provides an annual cash benefit for a portion of the production costs for the sale of certain critical minerals produced in the U.S.

and sold during the year.

The Company records the production credit as a reduction in cost of goods sold as the applicable items are produced and sold.

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

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

deduction and excess tax benefits from stock-based compensation awards.

The effective tax rate for the first three months of 2025 and 2024 included a net discrete income tax effect from stock-based compensation awards of $ 0.1 million expense and $ 1.2 million benefit, respectively.

We recognize the benefit of the production credit 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.

The Organization for Economic Co-operation and Development (OECD) introduced rules to establish a global minimum corporate tax rate, commonly referred to as Pillar Two.

4 unchanged sentences

The following table sets forth the computation of basic and diluted EPS:

First Quarter Ended

March 28, March 29,

Second Quarter Ended Six Months Ended

June 27, June 28, June 27, June 28,

(Thousands, except per share amounts) 2025 2024 2025 2024

12 unchanged sentences

Diluted EPS $ 1.21 $ 0.91 $ 2.05 $ 1.55

Adjusted weighted-average shares outstanding - diluted exclude securities totaling 141,249 and 71,285 for the quarters ended March 28, 2025 and March 29, 2024, respectively.

These securities are primarily related to restricted stock units (RSUs) and stock appreciation rights (SARs) 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.

Adjusted weighted-average shares outstanding - diluted exclude securities totaling 320,477 and 137,252 for the quarters ended June 27, 2025 and June 28, 2024, respectively, and securities totaling 146,804 and 95,392 for the six months ended June 27, 2025 and June 28, 2024, respectively.

These securities are primarily related to restricted stock units (RSUs) and stock appreciation rights (SARs) with fair market values and exercise prices greater than the average market price of the Company's common stock and were excluded from the dilution calculation as the effect would have been anti-dilutive.

Materion Corporation and Subsidiaries

2 unchanged sentences

Inventories on the Consolidated Balance Sheets are summarized as follows:

March 28, December 31,

June 27, December 31,

(Thousands) 2025 2024

3 unchanged sentences

Inventories, net $ 444,637 $ 441,299

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 price movements and to reduce its working capital investment.

The notional value of off-balance sheet precious metals and copper was $ 416.8 million and $ 381.6 million as of March 28, 2025 and December 31, 2024, respectively.

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 $ 379.3 million and $ 381.6 million as of June 27, 2025 and December 31, 2024, respectively.

Note I — Customer Prepayments

4 unchanged sentences

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.

In 2023, the Company received the remaining prepayment related to this amendment, the total of which approximated $ 38.6 million.

As of March 28, 2025 and December 31, 2024, $ 56.2 million and $ 60.9 million, respectively, of prepayments are classified as Unearned income on the Consolidated Balance Sheets.

In 2023, the Company received the remaining prepayments related to this amendment, the total of which approximated $ 38.6 million.

As of June 27, 2025 and December 31, 2024, $ 49.8 million and $ 60.9 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 March 28, 2025 and December 31, 2024, $ 4.4 million and $ 4.3 million, respectively, of the prepayments are classified as Unearned revenue.

As of June 27, 2025 and December 31, 2024, $ 4.8 million and $ 4.3 million of the prepayments are classified as Unearned revenue.

Materion Corporation and Subsidiaries

1 unchanged sentence

Note J — Pensions and Other Post-employment Benefits

The following is a summary of the net periodic benefit (income)/cost for the first quarter of 2025 and 2024 for the pension plans as shown below.

The Pension Benefits columns aggregate defined benefit pension plans in the U.S., Germany, Liechtenstein, England, and the U.S.

The following is a summary of the net periodic benefit cost for the second quarter and first six months ended June 27, 2025 and June 28, 2024, 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 columns include the domestic retiree medical and life insurance plan.

The Other Benefits column includes the domestic retiree medical and life insurance plan.

Pension Benefits Other Benefits

First Quarter Ended First Quarter Ended

March 28, March 29, March 28, March 29,

Second Quarter Ended Second Quarter Ended

June 27, June 28, June 27, June 28,

(Thousands) 2025 2024 2025 2024

Components of net periodic benefit (income) cost

Components of net periodic benefit (credit) cost

Service cost $ 308 $ 266 $ 11 $ 12

1 unchanged sentence

Expected return on plan assets ( 2,532 ) ( 2,529 ) — —

Amortization of prior service cost (benefit) ( 21 ) ( 21 ) — —

Amortization of prior service (benefit) cost ( 23 ) ( 21 ) — —

Amortization of net loss (gain) 90 32 ( 88 ) ( 87 )

Total net benefit (income) cost $ ( 240 ) $ ( 344 ) $ ( 18 ) $ ( 17 )

The Company did not make any contributions to its defined benefit plan in the first quarter of 2025 or 2024.

Net periodic benefit (credit) cost $ ( 230 ) $ ( 347 ) $ ( 19 ) $ ( 17 )

Pension Benefits Other Benefits

Six Months Ended Six Months Ended

June 27, June 28, June 27, June 28,

(Thousands) 2025 2024 2025 2024

Components of net periodic benefit (credit) cost

Service cost $ 594 $ 534 $ 22 $ 25

Interest cost 3,837 3,812 116 117

Expected return on plan assets ( 5,036 ) ( 5,059 ) — —

Amortization of prior service (benefit) cost ( 44 ) ( 42 ) — —

Amortization of net loss (gain) 179 64 ( 175 ) ( 174 )

Net periodic benefit (credit) cost $ ( 470 ) $ ( 691 ) $ ( 37 ) $ ( 32 )

The Company did no t make any contributions to its domestic defined benefit plan in the second quarter or first six months of 2025 or 2024.

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 second quarter and first six months of 2025 and 2024 are as follows:

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Note K — Accumulated Other Comprehensive Income (Loss)

Changes in the components of accumulated other comprehensive income, including the amounts reclassified, for the first quarter of 2025 and 2024 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 December 31, 2024 $ 1,638 $ 3,545 $ 2 $ 5,185 $ ( 54,702 ) $ ( 11,529 ) $ ( 61,046 )

Balance at March 28, 2025

$ 1,397 $ 2,430 $ 2 $ 3,829 $ ( 53,627 ) $ ( 7,901 ) $ ( 57,699 )

Other comprehensive income (loss) before reclassifications ( 45 ) 91 — 46 — 6,583 6,629

3 unchanged sentences

Net current period other comprehensive (loss) income after tax ( 81 ) ( 542 ) — ( 623 ) ( 21 ) 6,583 5,939

Balance at June 27, 2025

$ 1,316 $ 1,888 $ 2 $ 3,206 $ ( 53,648 ) $ ( 1,318 ) $ ( 51,760 )

Balance at March 29, 2024 $ 1,713 $ 6,141 $ ( 336 ) $ 7,518 $ ( 48,831 ) $ ( 8,008 ) $ ( 49,321 )

Other comprehensive (loss) income before reclassifications 207 739 ( 227 ) 719 — ( 1,089 ) ( 370 )

Amounts reclassified from accumulated other comprehensive income (loss) ( 200 ) ( 1,300 ) 243 ( 1,257 ) ( 78 ) — ( 1,335 )

Net current period other comprehensive (loss) income before tax 7 ( 561 ) 16 ( 538 ) ( 78 ) ( 1,089 ) ( 1,705 )

Deferred taxes 2 ( 129 ) 3 ( 124 ) ( 15 ) — ( 139 )

Net current period other comprehensive (loss) income after tax 5 ( 432 ) 13 ( 414 ) ( 63 ) ( 1,089 ) ( 1,566 )

Balance at June 28, 2024

$ 1,718 $ 5,709 $ ( 323 ) $ 7,104 $ ( 48,894 ) $ ( 9,097 ) $ ( 50,887 )

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

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, 2024

$ 1,638 $ 3,545 $ 2 $ 5,185 $ ( 54,702 ) $ ( 11,529 ) $ ( 61,046 )

Other comprehensive income (loss) before reclassifications ( 324 ) ( 595 ) — ( 919 ) 1,553 10,211 10,845

Amounts reclassified from accumulated other comprehensive income (loss) ( 94 ) ( 1,557 ) — ( 1,651 ) ( 126 ) — ( 1,777 )

Net current period other comprehensive (loss) income before tax ( 418 ) ( 2,152 ) — ( 2,570 ) 1,427 10,211 9,068

Deferred taxes ( 96 ) ( 495 ) — ( 591 ) 373 — ( 218 )

Net current period other comprehensive (loss) income after tax ( 322 ) ( 1,657 ) — ( 1,979 ) 1,054 10,211 9,286

Balance at June 27, 2025

$ 1,316 $ 1,888 $ 2 $ 3,206 $ ( 53,648 ) $ ( 1,318 ) $ ( 51,760 )

Balance at December 31, 2023

$ 1,201 $ 4,156 $ ( 99 ) $ 5,258 $ ( 48,658 ) $ ( 3,548 ) $ ( 46,948 )

Other comprehensive (loss) income before reclassifications 872 4,579 ( 560 ) 4,891 — ( 5,549 ) ( 658 )

3 unchanged sentences

Net current period other comprehensive (loss) income after tax 517 1,553 ( 224 ) 1,846 ( 236 ) ( 5,549 ) ( 3,939 )

Balance at March 29, 2024 $ 1,713 $ 6,141 $ ( 336 ) $ 7,518 $ ( 48,831 ) $ ( 8,008 ) $ ( 49,321 )

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 (Loss).

Balance at June 28, 2024

$ 1,718 $ 5,709 $ ( 323 ) $ 7,104 $ ( 48,894 ) $ ( 9,097 ) $ ( 50,887 )

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.

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Note L — Stock-based Compensation Expense

Stock-based compensation expense, which includes awards settled in shares was $ 3.0 million and $ 2.6 million in the first quarter of 2025 and 2024, respectively.

The Company granted 54,302 SARs to certain employees during the first quarter of 2025.

The weighted-average exercise price per share and weighted-average fair value per share of the SARs granted during the three months ended March 28, 2025 were $ 87.36 and $ 26.33 , respectively.

Stock-based compensation expense, which includes awards settled in shares and in cash, was $ 2.6 million and $ 5.6 million in the second quarter and first six months of 2025, respectively, compared to $ 2.7 million and $ 5.3 million, respectively, in the same periods of 2024.

The Company granted 55,546 SARs to certain employees during the first six months of 2025.

The weighted-average exercise price per share and weighted-average fair value per share of the SARs granted during the six months ended June 27, 2025 were $ 87.36 and $ 26.33 , respectively.

The Company estimated the fair value of the SARs using the following weighted-average assumptions in the Black-Scholes model:

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Expected term (in years) 4.7

The Company granted 102,678 stock-settled RSUs to certain employees during the first quarter of 2025.

The Company granted 104,873 stock-settled RSUs to certain employees during the first six months of 2025.

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 $ 87.79 for stock-settled RSUs granted to employees during the three months ended March 28, 2025.

The weighted-average fair value per share was $ 87.74 for stock-settled RSUs granted to employees during the six months ended June 27, 2025.

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 quarter of 2025.

The Company granted stock-settled performance-based restricted stock units (PRSUs) to certain employees in the first six months of 2025.

The weighted-average fair value of the stock-settled PRSUs was $ 106.34 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 March 28, 2025, unrecognized compensation cost related to the unvested portion of all stock-based awards was approximately $ 26.9 million, and is expected to be recognized over the remaining vesting period of the respective grants.

At June 27, 2025, unrecognized compensation cost related to the unvested portion of all stock-based awards was approximately $ 22.6 million, and is expected to be recognized over the remaining vesting period of the respective grants.

Note M — Fair Value of Financial Instruments

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Notes to Consolidated Financial Statements

The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheets as of March 28, 2025 and December 31, 2024:

The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheets as of June 27, 2025 and December 31, 2024:

(Thousands) Total Carrying Value in the Consolidated Balance Sheets Quoted Prices

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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 March 28, 2025 and December 31, 2024.

The carrying values of the other working capital items and debt in the Consolidated Balance Sheets approximate fair values as of June 27, 2025 and December 31, 2024.

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.

33 unchanged sentences

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 that changes in prices could have on the Company's margins and operating profit.

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.

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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 consignment line limitations or other factors.

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

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.

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

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.

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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 March 28, 2025 and December 31, 2024:

March 28, 2025

December 31, 2024

June 27, 2025 December 31, 2024

(Thousands) Notional

4 unchanged sentences

These outstanding foreign currency derivatives were related to balance sheet hedges and intercompany loans.

Other-net included $ 0.5 million of foreign currency losses and $ 0.4 million of foreign currency gains related to derivatives in the first quarter of 2025 and 2024, respectively.

Other-net included $ 1.5 million and $ 2.0 million of foreign currency losses in the second quarter and first six months of 2025, respectively, compared to $ 0.1 million of foreign currency losses and $ 0.4 million of foreign currency gains in the second quarter and first six months of 2024, respectively.

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

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 the balance sheet classification as of March 28, 2025 and December 31, 2024:

March 28, 2025

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 June 27, 2025 and December 31, 2024:

June 27, 2025

(Thousands) Notional

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All of the contracts summarized above were designated and effective as cash flow hedges.

We expect to reclassify $ 2.2 million of gains into earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions.

At March 28, 2025, the maximum term of derivative instruments that hedge forecasted transactions was approximately four years .

Refer to Note K for additional OCI details.

The following table summarizes the amounts reclassified from accumulated other comprehensive income related to the Company’s outstanding derivatives designated as cash flow hedges and associated income statement classification as of the first quarter of 2025 and 2024:

First Quarter Ended

(Thousands) March 28, 2025

March 29, 2024

We expect to reclassify $ 2.0 million of net gains into earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions.

At June 27, 2025, 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 second quarter and first six months of 2025 and 2024:

Second Quarter Ended

(Thousands) June 27, 2025 June 28, 2024

Hedging relationship Line item

3 unchanged sentences

Total $ ( 854 ) $ ( 1,257 )

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

Six Months Ended

(Thousands) June 27, 2025 June 28, 2024

Hedging relationship Line item

Foreign currency forward contracts Net sales $ ( 94 ) $ ( 200 )

Precious metal swaps Cost of sales — 269

Interest rate swap Interest expense - net ( 1,557 ) ( 2,562 )

Total $ ( 1,651 ) $ ( 2,493 )

Note O — Contingencies

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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.

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

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.

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.

Environmental Proceedings.

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The reserves may also be affected by rulings and negotiations with regulatory agencies.

The undiscounted reserve balance was $ 4.5 million and $ 4.6 million at March 28, 2025 and December 31, 2024, respectively, and is included in Other liabilities and accrued items and Other long-term liabilities on the Consolidated Balance Sheet.

The undiscounted reserve balance was $ 4.4 million and $ 4.6 million at June 27, 2025 and December 31, 2024, 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.

Note P — Debt

(Thousands) March 28, 2025

December 31, 2024

(Thousands) June 27, 2025 December 31, 2024

Borrowings under Credit Agreement $ 187,625 $ 198,875

7 unchanged sentences

Long-term debt $ 405,697 $ 407,734

As of March 28, 2025 and December 31, 2024, the Company had $ 197.1 million outstanding at an average interest rate of 5.92 % and $ 198.9 million outstanding at an average interest rate of 6.27 %, respectively, under its revolving credit facility.

The available borrowing capacity under the revolving credit facility as of March 28, 2025 was $ 172.2 million.

In June 2025, the Company entered into a Fifth Amended and Restated Credit Agreement (Credit Agreement).

The Credit Agreement refinances the revolving credit facility and term loan facility provided under Materion's previous Fourth Amended and Restated Credit Agreement, dated October 27, 2021 (as amended).

Among other things, the Credit Agreement provides for a $ 450 million senior secured revolving credit facility (the "Revolving Credit Facility") and a $ 225 million senior secured term loan facility (the "Term Loan Facility" and, together with the Revolving Credit Facility, the "Credit Facilities").

The Term Loan Facility was fully drawn on June 26, 2025.

The Credit Facilities mature on June 26, 2030.

As of June 27, 2025 and December 31, 2024, the Company had $ 187.6 million outstanding at an average interest rate of 5.82 % and $ 198.9 million outstanding at an average interest rate of 6.27 %, respectively, under its revolving credit facility.

Materion Corporation and Subsidiaries

Notes to Consolidated Financial Statements

The available borrowing capacity under the revolving credit facility as of June 27, 2025 was $ 256.7 million.

The Company has the option to repay or borrow additional funds under the revolving credit facility until the maturity date in 2030.

In connection with the revolving credit facility, the administrative agent provides the Company with an overdraft sweep facility that the Company uses on a daily basis for short-term cash needs.

As of March 28, 2025 the overdraft sweep facility had a balance of $ 13.7 million.

The facility allows for an additional $ 30.0 million of liquidity.

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 March 28, 2025.

Other sources of liquidity include uncommitted short-term lines of credit for certain of the Company's foreign subsidiaries, which currently provide for borrowings up to $ 20.9 million.

At March 28, 2025 the Company had borrowings outstanding of $ 8.5 million which reduced under these facilities to $ 12.4 million.

The balance outstanding on the term loan facility as of March 28, 2025 and December 31, 2024 was $ 232.5 million and $ 240.0 million, respectively.

At both March 28, 2025 and December 31, 2024, there was $ 5.6 million and $ 7.1 million, respectively, outstanding against the letters of credit sub-facility .

As of June 27, 2025, there was $ 11.9 million outstanding on the overdraft sweep facility.

The amended and restated credit agreement governing the revolving credit facility and the term loan facility (Credit Agreement) includes covenants subject to a maximum leverage ratio and a minimum interest coverage ratio.

We were in compliance with all of our debt covenants as of June 27, 2025.

The balance outstanding on the term loan facility as of June 27, 2025 and December 31, 2024 wa s $ 225 million and $ 240 million, respectively.

At June 27, 2025 and December 31, 2024, there was $ 5.7 million and $ 7.1 million, respectively, outstanding against the letters of credit sub-facility.

Note Q — Subsequent Events

On July 9, 2025 the Company completed the acquisition of certain manufacturing assets for tantalum solutions in Dangjin City, South Korea, from Konasol, a Korean manufacturer serving the semiconductor and adjacent markets.

The total purchase price was approximately $ 19 million.

The acquisition and related fees and expenses were funded through available cash and drawings on the Company's revolving credit facility.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements