What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-12 compared with 2025-02-19 · 258 added, 198 removed, 1297 unchanged (26% of the section changed)

45 unchanged sentences

At December 31, 2025, the notional value of the Company’s off-balance sheet precious metals was $526.2 million.

As discussed in Note I to the consolidated financial statements, the Company uses estimates to measure the precious metal content within various refinement streams which can vary over time based upon the input materials, yield rates, and other process parameters.

As discussed in Note J to the consolidated financial statements, the Company uses estimates to measure the precious metal content within various refinement streams which can vary over time based upon the input materials, yield rates, and other process parameters.

Auditing the reconciliation of precious metals consignment inventory is complex due to the highly detailed nature of the inventory reconciliation and the amount of information that is obtained from third parties.

The Company performs physical inventory procedures to verify the existence of inventory.

The precious metals inventory reconciliation includes estimates based on assays, assumed recovery percentages developed from actual historical data and other analyses, the total estimated volume of solutions and other materials within the refinery, data from refine vendors, and other factors.

The precious metals inventory reconciliation includes estimates based on assumed recovery percentages developed from actual historical data and other analyses, the total estimated volume of solutions and other materials within the refinery, and other factors.

The reconciliation of precious metals consignment inventory presents the resulting calculated weight of the precious metals generated from these estimates within the Company’s refine operations.

2 unchanged sentences

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s reconciliation of the precious metals consignment inventory process.

This included controls over management's review of the significant inputs into and underlying the reconciliation.

To test the Company’s reconciliation of the precious metals physical consignment inventory, our procedures included, among others, evaluating the significant assumptions and data used to estimate the total value of the precious metal, which was identified through the physical inventory.

This included controls over management's review of certain inputs into and underlying the reconciliation.

To test the Company’s reconciliation of the precious metals physical consignment inventory, our procedures included, among others, evaluating the inputs and data used to determine the total value of the precious metal, which was identified through the physical inventory.

We observed the physical inventory process, tested inventory activity from the date of observation through December 31, 2025, evaluated the underlying data used in the reconciliation, and confirmed certain consigned inventory held with the third parties.

We assessed the historical accuracy of management’s estimates, which are based on assays, assumed recovery percentages developed from actual historical data and other analyses, the total estimated volume of solutions and other materials within the refinery, data from their refine vendors, and other factors and assessed the historical accuracy of management’s analysis to evaluate the assumptions that were most significant to the calculated weight of the precious metal inventory.

We assessed the historical accuracy of management’s estimates, which are based on assumed recovery percentages developed from actual historical data and other analyses, the total estimated volume of solutions and other materials within the refinery, and other factors and assessed the historical accuracy of management’s analysis to evaluate the inputs that were most significant to the calculated weight of the precious metal inventory.

Precision Optics Goodwill Impairment Evaluation

Description of the matter

As discussed in Notes A and M to the consolidated financial statements, during 2024, the Company recorded a $56.1 million impairment charge attributable to its Precision Optics reporting unit.

The Company performed a quantitative impairment assessment of its Precision Optics reporting unit’s goodwill as of October 1, 2024, and concluded that the reporting unit’s carrying value exceeded its estimated fair value and, therefore, goodwill was impaired.

Significant assumptions used in the Company’s fair value estimate included revenue growth rates, EBITDA margins, terminal growth rate and the discount rate.

Auditing the Company’s Precision Optics reporting unit’s goodwill impairment assessment was complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting unit.

In particular, the fair value estimate was sensitive to the significant assumptions named above, which are affected by expectations about future market or economic conditions.

At December 31, 2025, the Company had goodwill of $280.7 million, of which $33.1 million related to the Precision Optics reporting unit.

As discussed in Notes A and N to the consolidated financial statements, goodwill is tested for impairment annually as of the first day of the fourth fiscal quarter, or more frequently, if an event occurs or circumstances change that would more likely than not reduce fair value below carrying value.

The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

If the Company determines the qualitative assessment is not sufficient to conclude on whether it is more likely than not that the fair value is less than the carrying value, a quantitative impairment test is performed.

The Company may also elect to bypass the qualitative assessment and perform a quantitative test for any or all reporting units.

As part of the quantitative assessment, the Company determines the fair value of the reporting units using a discounted cash method as well as a market approach.

Auditing the Company’s quantitative impairment assessment of the Precision Optics reporting unit was complex and judgmental due to the significant estimation required in determining the fair value of the reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions such as changes in the discount rate, revenue growth rates, and EBITDA margin, which are affected by expectations about future market or economic conditions.

How we addressed the matter in our audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s Precision Optics reporting unit goodwill impairment process, including controls over the significant assumptions discussed above.

We also tested management’s controls over the completeness and accuracy of the underlying data used in its analysis.

To test the estimated fair value of the Company’s Precision Optics reporting unit, our audit procedures included, among others, assessing fair value methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

For example, we compared the significant assumptions used by management to current industry and economic trends, recent historical performance, and other relevant factors.

We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in fair value that would result from changes in the assumptions.

In addition, we involved our valuation specialists to assist with our evaluation of the methodology and significant assumptions used by the Company in the determination of the fair value for the Company’s Precision Optics reporting unit.

We compared the revenue growth rates and EBTIDA margin used by management to current industry and economic trends, recent historical performance, and other relevant factors.

We performed sensitivity analyses of significant assumptions described above to evaluate the changes in fair value that would result from changes in the assumptions.

In addition, we involved our valuation specialists to assist with our evaluation of the methodology applied and evaluating the reasonableness of the discount rate used by the Company in the determination of the fair value for the Company’s Precision Optics reporting unit.

/s/ Ernst & Young LLP

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Loss on asset disposal — 6,412 —

Restructuring expense (Note D)

Restructuring expense (Note E)

3,155 6,848 3,824

Other — net (Note E)

Other — net (Note F)

26,677 17,685 23,323

Operating profit 109,796 47,223 136,444

Other non-operating (income) expense — net (Note O)

Other non-operating (income) expense — net (Note P)

( 2,437 ) ( 2,443 ) ( 2,710 )

Interest expense — net (Note F)

Interest expense — net (Note G)

30,692 34,764 31,323

Income before income taxes 81,541 14,902 107,831

Income tax expense (benefit) (Note G)

Income tax expense (Note H)

6,718 9,014 12,129

60 unchanged sentences

Deferred financing costs ( 2,935 ) ( 156 ) —

Repurchase of common stock ( 7,843 ) — —

Payments of withholding taxes for stock-based compensation awards ( 2,642 ) ( 7,610 ) ( 5,234 )

14 unchanged sentences

222,916 193,793

Inventories, net (Notes A and I)

Inventories, net (Notes A and J)

461,231 441,299

1 unchanged sentence

Total current assets 789,520 724,224

Deferred income taxes (Notes A and G)

Property, plant, and equipment (Notes A and J)

Deferred income taxes (Notes A and H)

Property, plant, and equipment (Notes A and K)

1,376,703 1,315,586

1 unchanged sentence

Property, plant, and equipment — net 535,458 510,805

Operating lease, right-of-use asset (Note L)

Operating lease, right-of-use asset (Note M)

62,036 64,449

1 unchanged sentence

105,874 109,312

Other assets (Note O)

Other assets (Note P)

21,529 22,140

Goodwill (Notes A and M)

Goodwill (Notes A and N)

280,657 263,738

2 unchanged sentences

Current liabilities

Short-term debt (Note N)

Short-term debt (Note O)

$ 22,445 $ 34,274

2 unchanged sentences

Other liabilities and accrued items 45,445 47,523

Income taxes (Notes A and G)

Unearned revenue (Note C)

Income taxes (Notes A and H)

Unearned revenue (Note D)

12,685 13,191

1 unchanged sentence

Other long-term liabilities 12,556 12,013

Operating lease liabilities (Note L)

Operating lease liabilities (Note M)

60,568 62,626

Finance lease liabilities (Note L)

Finance lease liabilities (Note M)

13,384 12,404

Retirement and post-employment benefits (Note O)

Retirement and post-employment benefits (Note P)

23,931 26,411

Unearned income (Notes A and K)

Unearned income (Notes A and L)

55,862 75,769

Long-term income taxes (Notes A and G)

Deferred income taxes (Notes A and G)

Long-term debt (Note N)

Long-term income taxes (Notes A and H)

Deferred income taxes (Notes A and H)

Long-term debt (Note O)

436,348 407,734

8 unchanged sentences

( 277,473 ) ( 261,880 )

Accumulated other comprehensive loss (Note P)

Accumulated other comprehensive loss (Note Q)

( 50,581 ) ( 61,046 )

35 unchanged sentences

Stock-based compensation activity 99 ( 99 ) 15,665 ( 63 ) ( 4,677 ) — — 10,925

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

Payments for withholding taxes for stock-based compensation awards ( 29 ) 29 — — ( 2,642 ) — — ( 2,642 )

11 unchanged sentences

Other includes unallocated corporate costs.

Refer to Note B for additional segment details.

Refer to Note C for additional segment details.

The Company distributes its products through a combination of company-owned facilities and independent distributors and agents.

12 unchanged sentences

Cash Equivalents:

All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.

All highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents.

Accounts Receivable:

2 unchanged sentences

Additionally, the allowance is based upon identified delinquent accounts, customer payment patterns, and other analyses of historical data and trends.

Accounts receivable were net of an allowance for credit losses of $ 0.8 million and $ 0.6 million at December 31, 2024 and December 31, 2023, respectively.

The change in the allowance for credit losses includes expense and net write-offs, neither of which were material.

Accounts receivable were net of an allowance for credit losses of $ 0.8 million at December 31, 2025 and December 31, 2024.

The change in the allowance for credit losses includes expense and net write-offs, neither of which were material in 2025 or 2024.

The Company extends credit to customers based upon their financial condition, and collateral is not generally required.

1 unchanged sentence

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 a total of $ 59.4 million of receivables in 2025.

The Company recorded a loss on sale of $ 0.6 million for 2025.

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

Total receivables sold under this program amount to $ 108.3 million.

Inventories are stated at net realizable value.

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The transaction subsequently closed on October 25, 2024.

In addition, the Company began the wind down of its refinery operations at the Albuquerque facility.

In addition, the Company completed the wind down of its refinery operations at the Albuquerque facility.

This resulted in a loss on asset disposal of $ 6.4 million, which was recorded in the fourth quarter of 2024.

These assets were a part of the Electronic Materials segment.

The target assets were a part of the Electronic Materials segment.

Mineral Resources and Mine Development:

2 unchanged sentences

Mine development costs at our open pit surface mines include drilling, infrastructure, other related costs to delineate an ore body and the removal of overburden to initially expose an ore body.

Costs incurred before mineralization is classified as proven and probable reserves are expensed and classified as Exploration expense.

When costs are incurred before mineralization is classified as proven and probable reserves are expensed.

Capitalization of mine development project costs, that meet the definition of an asset, begins once mineralization is classified as proven and probable reserves.

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These changes combined with current operating results resulted in adjustments to the forecast for the Precision Optics reporting unit based on more conservative views of business with key strategic partners.

There were no goodwill impairments recorded during fiscal 2025.

Long-Lived Asset Impairment:

8 unchanged sentences

These long-lived asset impairments are presented within the " Long-lived Asset Impairment " line item within the accompanying Consolidated Statements of Income in the Precision Optics segment.

There were no long-lived asset impairments recorded during fiscal 2025.

The Company recognizes all derivatives on the balance sheet at fair value.

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The liability is recorded for the present value of the ultimate obligation by discounting the estimated future cash flows using a credit-adjusted risk-free interest rate.

The liability is accreted over time, with the accretion charged to expense.

The liability is accreted over time, with the accretion charged to expense within Other-net.

An asset equal to the fair value of the liability is recorded concurrent with the liability and depreciated over the life of the underlying asset.

3 unchanged sentences

Also included in Unearned Income as of December 31, 2025 and 2024, are $ 47.5 million and $ 60.9 million, respectively, of customer prepayments.

See Note K for additional discussion.

Advertising Costs:

The Company expenses all advertising costs as incurred.

Advertising costs were $ 0.1 million in 2024 and $ 0.3 million in 2023 and 2022, respectively.

See Note L for additional discussion.

Unearned revenue:

The Company records cash consideration from customers in advance of the shipment of the goods, which is a liability on our Consolidated Balance Sheets.

This contract liability is subsequently reversed and the revenue, cost of sales, and gross margin are recorded when the Company has transferred control of the product to the customer.

The related inventory also remains on our balance sheet until these revenue recognition criteria are met.

Advanced billings are typically made in association with products with long manufacturing times and/or products paid relating to contracts with the government.

Billings in advance of the shipments allow us to collect cash earlier than billing at the time of the shipment and, therefore, the collected cash can be used to reduce our investment in working capital.

Stock-based Compensation:

4 unchanged sentences

The fair value of SARs is determined using a Black-Scholes option-pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate, and the expected dividend yield.

The portion of the PRSU awards that are valued based on the Company's total shareholder return as compared to peers is valued using Monte Carlo simulations, which

incorporates assumptions regarding the expected volatility, the expected correlation, and the risk-free interest rate.

See Note Q for additional information about stock-based compensation.

The portion of the PRSU awards that are valued based on the Company's total shareholder return as compared to peers is valued using Monte Carlo simulations, which incorporates assumptions regarding the expected volatility, the expected correlation, and the risk-free interest rate.

See Note R for additional information about stock-based compensation.

Capitalized Interest:

Interest expense associated with active capital asset construction and mine development projects is capitalized and amortized over the future useful lives of the related assets.

Interest expense associated with active capital asset construction is capitalized and amortized over the future useful lives of the related assets.

Income Taxes:

6 unchanged sentences

New Pronouncements Adopted:

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No.

2023-07 “ Improvements to Reportable Segment Disclosures (Topic 280) ”.

This ASU updates current reportable segment disclosure requirements to require disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and included within each reported measure of a segment's profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The Company adopted the new guidance and has included the additional required disclosures in Note B.

The adoption of this ASU did not impact the Company’s consolidated financial position, results of operations or cash flows.

New Accounting Guidance Issued and Not Yet Adopted:

In December 2023, the FASB issued ASU No.

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU No.

2023-09, Improvements to Income Tax Disclosures (Topic 740) .

This ASU updates current income tax disclosure requirements to require disclosures of specific categories of information within the effective tax rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

This ASU will be effective for the annual period ending December 31, 2025.

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 2027 and interim periods following annual adoption, with early adoption permitted.

The Company adopted the new guidance on a prospective basis and has included the additional required disclosures in Note H.

New Accounting Guidance Issued and Not Yet Adopted:

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.

Management is currently evaluating this ASU to determine its impact on the Company’s disclosures.

Reclassifications:

Certain prior year amounts have been reclassified to conform with the current year presentation.

These reclassifications had no effect on the reported results of operations, cash flows or financial position.

Specifically, the net sales related to the previously disclosed precision clad strip project have been reclassified from the other end market to the consumer electronics end market within Note B.

Additionally, net sales related to the life sciences end market have been reclassified out of the other line item within Note B.

Note B — Segment Reporting and Geographic Information

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-internal-use software (Subtopic 350-40):

Targeted Improvements to the Accounting for internal-use software .

The amendments in the ASU make targeted improvements to Subtopic 350-40, Intangibles-Goodwill and Other-internal-use software to increase the operability of the recognition guidance considering different methods of software development.

The ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of this ASU will have on its condensed consolidated financial statements and related disclosures.

In December 2025, the FASB issued 2025‑10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities .

The ASU establishes comprehensive U.S.

GAAP guidance for the recognition, measurement, and presentation of government grants received by business entities.

The amendments incorporate principles similar to those in IAS 20 and are intended to reduce diversity in practice by providing a consistent framework for accounting for monetary and tangible nonmonetary government grants.

The ASU is effective for fiscal years beginning after December 15, 2028, and interim periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of the ASU will have on its condensed consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-scope improvements.

The amendments clarify the scope, form, and content of interim financial statement disclosures and improve the navigability of Topic 270 without changing existing interim reporting requirements.

The Company is currently evaluating the impact that the adoption of the ASU will have on its condensed consolidated financial statements and related disclosures.

The ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of this ASU will have on its interim financial reporting and related disclosures.

Note B — Acquisition

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

This strategic investment expands the Company’s global footprint with a facility in Asia to better serve semiconductor customers in that region.

The total purchase price was approximately $ 19.5 million, which was paid in cash on the date of acquisition.

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

Acquisition-related transaction and integration costs totaled $ 1.8 million in 2025.

These costs are included in selling, general, and administrative expenses in the Consolidated Statements of Income.

The Company accounted for the transaction as a business combination using the acquisition method of accounting and a third-party valuation appraisal, and included the results of operations of the acquisition in its consolidated financial statements from the effective date of the acquisition.

The operating results are included within Materion’s Electronic Materials segment.

Pro forma financial information has not been presented, as revenue and expenses related to the acquisition do not have a material impact on the Company’s consolidated financial statements.

The total purchase price was allocated to identifiable assets and liabilities based upon the preliminary estimates of fair value at the date of the acquisition, which primarily included property, plant and equipment, and a developed technology intangible asset of $ 2.1 million.

To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired, such excess was allocated to goodwill and approximated $ 14.9 million.

The goodwill is deductible for Korean tax purposes.

The fair value of the acquired intangible asset is determined based on an income approach, using estimates and assumptions that are deemed reasonable by the Company.

These assumptions are subject to revision as additional information is obtained about the facts and circumstances that existed as of the acquisition date, primarily related to intangible assets, which may result in adjustments to the preliminary values discussed above as valuations are finalized.

We expect to finalize these amounts as soon as possible, but no later than the end of the third quarter of 2026.

Note C — Segment Reporting and Geographic Information

The Company has the following operating segments:

7 unchanged sentences

The primary measure used by the CODM in evaluating segment performance is 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 2024, 2023 and 2022:

The table below presents financial information for each segment and a reconciliation of EBITDA to Net Income (the most directly comparable GAAP financial measure) for 2025, 2024 and 2023:

Year Ended December 31, 2025

4 unchanged sentences

Selling, general and administrative expense 54,551 42,083 18,998 27,425 143,057

Goodwill impairment — — 56,067 — 56,067

Long-lived asset impairment — — 17,134 — 17,134

Loss on asset disposal — 6,412 — — 6,412

Other segment items (2)

12 unchanged sentences

Selling, general and administrative expense 57,368 40,623 20,662 26,935 145,588

Goodwill impairment — — 56,067 — 56,067

Long-lived asset impairment — — 17,134 — 17,134

Loss on asset disposal — 6,412 — — 6,412

Other segment items (2)

28 unchanged sentences

Inter-segment sales for Performance Materials were less than $ 0.1 million in 2025, 2024 and 2023.

Excludes inter-segment sales of $ 0.7 million for Performance Materials for 2022.

Inter-segment sales are eliminated in consolidation.

2 unchanged sentences

• Restructuring expense

• Other operating expense - primarily comprised of metal consignment fees, intangible amortization and foreign currency (gains)/losses as further detailed in Note E

• Other operating expense - primarily comprised of metal consignment fees, intangible amortization and foreign currency (gains)/losses as further detailed in Note F

• Non-operating expenses primarily related to pension costs

12 unchanged sentences

No individual country, other than the United States, accounted for 10% or more of the Company’s net sales for the years presented.

In fiscal year 2024 and 2023, one customer in our Performance Materials segment accounted for approximately ten percent of our net sales.

Prior to this, no single customer accounted for ten percent or more of our net sales.

In fiscal 2025, no customers accounted for more than 10 percent of our net sales.

In fiscal 2024 and 2023, one customer in our Performance Materials segment accounted for approximately ten percent of our net sales.

No individual country other than the United States accounted for 10% or more of the Company's net property, plant and equipment as of December 31, 2025 or December 31, 2024.

29 unchanged sentences

Total $ 755,547 $ 805,751 $ 103,889 $ — $ 1,665,187

Note C — Revenue Recognition

Note D — 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.

16 unchanged sentences

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 December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was approximate l y $ 39.3 million.

After considering the practical expedient, at December 31, 2025, 2024 and 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximate l y $ 21.9 million, $ 39.3 million and $ 54.2 million, respectively.

Contract Costs :

12 unchanged sentences

The Company believes that its receivables are collectible and appropriate allowances for doubtful accounts have been recorded.

Impairment losses (bad debt) incurred relating to our receivables were immaterial during 2024.

Impairment losses (bad debt) incurred relating to our receivables were immaterial during 2025 and 2024.

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

6 unchanged sentences

The Company does not include extended payment terms in its contracts with customers.

Note D — Restructuring

Note E — Restructuring

Summary of Restructuring Plans .

In fiscal years 2025, 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.

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

When completed, the restructuring programs are expected to result in the reduction in annual cost of sales and operating expenses.

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

The restructuring programs are expected to result in the reduction in annual cost of sales and operating expenses.

Fiscal Year 2025 Plan

In 2024, we initiated a new restructuring plan designed to further reduce costs and expenses in response to current macroeconomic conditions and to right size the cost structure within our business segments as well as eliminate excess corporate costs.

In connection with the 2024 Plan, we have recorded restructuring expenses of $ 6.8 million in fiscal year 2024.

In 2025, the Company continued to implement restructuring actions, primarily in our Precision Optics, Electronic Materials, Performance Materials and Other segments.

In connection with these actions, we recorded restructuring expenses of $ 3.2 million, all of which were associated with workforce reduction, including severance and other personnel-related costs.

These actions were substantially completed as of December 31, 2025.

Fiscal Year 2024 Plan

The 2024 Plan was designed to further reduce costs and expenses in response to current macroeconomic conditions and to right size the cost structure within our business segments as well as eliminate excess corporate costs.

In connection with this Plan, the Company recorded restructuring expenses of $ 6.8 million in fiscal year 2024.

Of these charges, $ 6.7 million were associated with workforce reduction, including severance and other personnel-related costs.

While the majority of the workforce reduction was completed in fiscal year 2024, we expect to substantially complete the remaining restructuring activities by the end of the second quarter of fiscal year 2025.

While the majority of the workforce reduction was completed in fiscal year 2024, the Company completed the remaining restructuring activities in fiscal year 2025.

Fiscal Year 2023 Plan

In the fourth quarter of fiscal year 2023, we initiated the restructuring plan designed to reduce costs and expenses in response to the macroeconomic conditions.

In the fourth quarter of fiscal year 2023, the Company initiated a restructuring plan designed to reduce costs and expenses in response to macroeconomic conditions.

The plan primarily related to a reduction in force across the three business segments.

Of the $ 3.8 million in charges, $ 3.4 million related to workforce reduction actions.

The activity in the accrued balances incurred in relation to restructuring during the years ended December 31, 2023, and December 31, 2024, were as follows:

The activity in the accrued balances incurred in relation to restructuring during the years ended December 31, 2023, December 31, 2024, and December 31, 2025 were as follows:

Reduction in Force

10 unchanged sentences

$ 56 $ 293 $ 60 $ 408 $ 817

Note E — Other-net

Additional Charges 481 1,067 1,576 31 3,155

Cash Payments ( 537 ) ( 1,277 ) ( 1,577 ) ( 430 ) ( 3,821 )

Balance at December 31, 2025

$ — $ 83 $ 59 $ 9 $ 151

Note F — Other-net

Other-net is summarized for 2025, 2024, and 2023 as follows:

6 unchanged sentences

Total other-net $ 26,677 $ 17,685 $ 23,323

Note F — Interest Expense-net

Note G — Interest Expense-net

The following chart summarizes the interest incurred, capitalized, and paid in 2025, 2024, and 2023:

4 unchanged sentences

Interest paid $ 29,552 $ 35,922 $ 32,044

The increase in interest expense in 2024 versus 2023 was primarily driven by increased borrowings.

Amortization of deferred financing costs within interest expense was $ 1.7 million in 2024, 2023, and 2022, respectively.

Note G — Income Taxes

Amortization of deferred financing costs within interest expense was $ 1.9 million in 2025 and $ 1.7 million in 2024, and 2023.

Note H — Income Taxes

Income (loss) before income taxes and income tax expense (benefit) are comprised of the following:

14 unchanged sentences

Total income tax expense (benefit) $ 6,718 $ 9,014 $ 12,129

A reconciliation of the U.S.

federal statutory income tax rate to the Company's effective income tax rate is as follows:

2024 2023 2022

We adopted ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, on a prospective basis beginning with the year ended December 31, 2025.

The following table presents required disclosures pursuant to ASU 2023-09 and reconciles the U.S.

federal statutory income tax amount and rate to our actual global effective income tax amount and rate for the year ended December 31, 2025:

Amount Percent

federal statutory rate $ 17,124 21.0 %

State and local income taxes, net of federal tax effect 1

Foreign tax effects

Changes in valuation allowance ( 1,009 ) ( 1.2 )

Other ( 256 ) ( 0.3 )

Trade tax 1,081 1.3

Other ( 285 ) ( 0.3 )

Other foreign jurisdictions ( 225 ) ( 0.3 )

Effect of changes in tax laws or rates enacted in the current period — —

Effect of cross-border tax laws

Foreign derived intangible income deduction ( 1,938 ) ( 2.4 )

Other 736 0.9

Research and development tax credits ( 1,337 ) ( 1.6 )

Other credits ( 17 ) —

Changes in valuation allowances — —

Nontaxable or nondeductible items

Depletion ( 3,870 ) ( 4.8 )

Impact of nonrefundable credits ( 3,055 ) ( 3.7 )

Other 1,380 1.7

Changes in unrecognized tax benefits ( 1,133 ) ( 1.4 )

Other adjustment

Other ( 718 ) ( 1.0 )

Effective tax rate 6,718 8.2 %

1 The state that contributes to the majority of the tax effect in this category is California.

The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the U.S.

federal statutory income tax rate to the actual global effective income tax rate for the years ended December 31, 2024 and December 31, 2023.

federal statutory rate 21.0 % 21.0 %

State and local income taxes, net of federal tax effect 6.3 0.7

Effect of excess of percentage depletion over cost depletion ( 26.6 ) ( 3.4 )

10 unchanged sentences

Effective tax rate 60.5 % 11.3 %

The Company’s income tax expense was $ 9.0 million, $ 12.1 million and $ 17.1 million and the Company’s effective tax rate was 60.5 %, 11.3 % and 16.6 % for the years ended December 31, 2024, December 31, 2023 and December 31, 2022,

respectively.

The Company’s income tax expense was $ 6.7 million, $ 9.0 million and $ 12.1 million and the Company’s effective tax rate was 8.2 %, 60.5 % and 11.3 % for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively.

In 2025, the effective tax rate is lower than the U.S.

statutory tax rate primarily due to percentage depletion, nontaxable credits and the foreign-derived intangible income deduction.

In 2024, the effective tax rate is higher than the U.S.

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statutory tax rate primarily due to a foreign-derived intangible income deduction optimization project completed, percentage depletion and excess tax benefits for stock compensation.

In 2022, the effective tax rate is below the U.S.

statutory tax rate primarily due to percentage depletion, the research and development tax credit and the foreign-derived intangible income deduction.

Deferred tax assets and (liabilities) are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities.

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Unrealized gains ( 249 ) ( 1,437 )

( 1,437 ) ( 1,063 )

Total deferred tax liabilities ( 75,999 ) ( 82,924 )

Net deferred tax (liabilities)/assets $ ( 278 ) $ ( 15,200 )

The Company had deferred income tax assets offset with a valuation allowance for certain foreign net operating losses, a domestic capital loss carryforward, state investment and research and development tax credit carryforwards, and deferred tax assets that are not likely to be realized for certain of the Company's controlled foreign corporations.

Net deferred tax assets/(liabilities) $ 4,967 $ ( 278 )

The Company had deferred income tax assets offset with a valuation allowance for certain foreign and state net operating losses, state investment and research and development tax credit carryforwards, and deferred tax assets that are not likely to be realized for certain of the Company's controlled foreign corporations.

The Company intends to maintain a valuation allowance on these deferred tax assets until a realization event occurs to support reversal of all or a portion of the allowance.

In evaluating the realizability of deferred tax assets, management considers all available positive and negative evidence each reporting period.

During the fourth quarter of 2025, a China entity achieved three-year cumulative profitability.

Management concluded that this objective evidence supports the future realization of the related deferred tax assets and released a $ 1.0 million valuation allowance, resulting in a corresponding income tax benefit.

Additionally, during the fourth quarter of 2025, $ 1.6 million of U.S.

capital loss carryforwards expired.

The Company reversed the associated deferred tax asset and offsetting valuation allowance, resulting in no impact to the effective tax rate or income tax expense.

At December 31, 2025, for income tax purposes, the Company had foreign net operating loss carryforwards of $ 39.4 million that do not expire, and $ 20.2 million that expire in calendar years 2027 through 2040.

The Company had state net operating loss carryforwards of $ 14.0 million that expire in calendar years 2026 through 2041 and state tax credits of $ 4.5 million that expire in calendar years 2026 through 2040.

The Company also has capital loss carryforwards of $ 7.6 million that expire in calendar years 2026 through 2028.

A valuation allowance of $ 8.6 million has been provided against certain foreign net operating loss carryforwards, a U.S.

capital loss carryforward, and state tax credits due to uncertainty of their realization.

A valuation allowance of $ 7.2 million has been provided against certain foreign net operating loss carryforwards, state net operating losses, and state tax credits due to uncertainty of their realization.

The Company files income tax returns in the U.S.

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Included in the balance of unrecognized tax benefits, including interest and penalties, as of December 31, 2025 and December 31, 2024 are $ 3.5 million and $ 4.3 million, respectively, of tax benefits that would affect the Company’s effective tax rate if recognized.

It is reasonably possible that the amount of unrecognized tax benefits will change in the next twelve months;

however, we do not expect the change to have a material impact on the Consolidated Statements of Income or the Consolidated Balance Sheets.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying Consolidated Statements of Income.

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As of December 31, 2025 and 2024, accrued interest and penalties, net of the related tax benefit, were immaterial.

Income taxes paid during 2024, 2023, and 2022, were approximately $ 11.5 million, $ 7.5 million, and $ 14.5 million, respectively.

No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations as of December 31, 2024.

The amount of such unrepatriated earnings totaled $ 91.6 million as of December 31, 2024.

It is not practicable to estimate the additional income taxes and applicable withholding taxes that would be payable on the remittance of such undistributed earnings.

We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025:

Year Ended (In Millions) 2025

Federal Taxes $ 1,400

California 520

Minnesota 386

Other state jurisdictions 427

Foreign Taxes:

Germany 1,704

Singapore 828

Netherlands 361

Other foreign jurisdictions 204

Total cash taxes paid $ 6,998

Income taxes paid during the years ended December 31, 2024 and December 31, 2023 were approximately $ 11.5 million and $ 7.5 million, respectively.

As of December 31, 2025, the Company has not provided for deferred taxes on undistributed earnings from non-U.S.

subsidiaries because such earnings are intended to be indefinitely reinvested.

It is not practicable to estimate the amount of income and withholding taxes that might be payable if these earnings were remitted.

One Big Beautiful Bill

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law in the U.S.

The OBBBA includes a broad range of tax provisions affecting businesses including extending permanently, with modification, certain business and international tax provisions enacted as part of the Tax Cuts and Jobs Act of 2017 and accelerating the phase-out of certain Inflation Reduction Act tax incentives.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented in future years.

The Company recognized the income tax effects of the OBBBA in 2025.

The most significant impact in 2025 is the Company’s ability to utilize additional interest expense carryforward under the new interest limitation provisions of the OBBBA.

Government Tax Credits

Pursuant to The Inflation Reduction Act of 2022 (IRA), the Company is eligible for the Advanced Manufacturing Production Credit (production credit) beginning in 2023.

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.

On October 24, 2024, the U.S.

Treasury Department published final regulations on the production credit that provided clarifying guidance that the definition of production costs for purposes of computing the production credit includes material costs and extraction costs.

The production credit recognized in 2024 was based on the Company’s analysis of the eligible production costs that qualify for the production credit under the final regulations.

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

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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.

Numerous foreign countries have enacted legislation to implement the Pillar Two rules, effective beginning in 2024, or are expected to enact similar legislation.

Pillar Two legislation enacted in jurisdictions the Company operates in did not have an impact on its effective tax rate or consolidated results of operations, financial position, or cash flows in 2024.

Numerous foreign countries have enacted legislation to implement the Pillar Two rules or are expected to enact similar legislation.

Pillar Two legislation enacted in jurisdictions the Company operates in did not have a material impact on its effective tax rate or consolidated results of operations, financial position, or cash flows in 2025.

We will continue to evaluate the impact of Pillar Two legislation on future reporting periods.

Note H — Earnings Per Share

Note I — Earnings Per Share

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

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Equity awards covering shares of common stock totaling 148,174 in 2025, 107,370 in 2024, and 39,473 in 2023 were excluded from the diluted EPS calculation as their effect would have been anti-dilutive.

Note I — Inventories, net

Note J — Inventories, net

Inventories in the Consolidated Balance Sheets are summarized as follows:

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The precious metal content within these various refine streams may be in solutions, sludges, and other non-homogeneous forms and can vary over time based upon the input materials, yield rates, and other process parameters.

The determination of the weight of the precious metal content within the refine streams as part of a physical inventory count requires the use of estimates and calculations based upon assays, assumed recovery percentages developed from actual historical data and other analyses, the total estimated volumes of solutions and other materials within the refinery, data from the Company's refine vendors, and other factors.

The determination of the weight of the precious metal content within the refine streams as part of a physical inventory count requires the use of estimates and calculations based upon assumed recovery percentages developed from actual historical data and other analyses, the total estimated volumes of solutions and other materials within the refinery, and other factors.

The resulting calculated weight of the precious metals in the Company's refine operations may differ, in either direction, from what its records indicate that the Company should have on hand, which would then result in an adjustment to its pre-tax income in the period when the physical inventory was taken, and the related estimates were made.

Note J — Property, Plant, and Equipment

Note K — Property, Plant, and Equipment

Property, plant, and equipment on the Consolidated Balance Sheets is summarized as follows:

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Department of Defense (DoD), in previous periods, for reimbursement of the DoD's share of the cost of equipment.

This amount was recorded in property, plant, and equipment and the reimbursements are reflected in Unearned income on the Consolidated Balance Sheets.

This amount was recorded in property, plant, and equipment and the reimbursements

are reflected in Unearned income on the Consolidated Balance Sheets.

The equipment was placed in service during 2012, and its full cost is being depreciated in accordance with Company policy.

The unearned income liability is being reduced ratably with the depreciation expense recorded over the life of the equipment.

Unearned income was reduced by $ 4.4 million in 2024, 2023 and 2022 and credited to cost of sales in the Consolidated Statements of Income, offsetting the impact of the depreciation expense on the associated equipment on the Company's cost of sales and gross margin.

Unearned income was redu ced by $ 4.5 million in 2025, and $ 4.4 million in both 2024 and 2023 , and credited to cost of sales in the Consolidated Statements of Incom e, offsetting the impact of the depreciation expense on the associated equipment on the Company's cost of sales and gross margin.

The unamortized unearned income balance was $ 1.8 million and $ 6.3 million at December 31, 2025 and December 31, 2024, respectively.

1 unchanged sentence

Depreciation, depletion, and amortization as shown on the Consolidated Statement of Cash Flows is net of the reduction in the unearned income liability in 2025, 2024, and 2023.

The net c arrying value of capitalize d software was $ 2.8 million and $ 4.0 million at December 31, 2024 and December 31, 2023, respectively.

Depreciation expense related to software was $ 1.6 million in 2024, $ 1.8 million in 2023 and 2022, respectively.

As of December 31, 2025 and December 31, 2024, capital expenditures in accounts payable were $ 5.4 million and $ 3.0 million, respectively.

Note K — Customer Prepayments

Note L — 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.

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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.

As of December 31, 2024, the Company has received approximately $ 38.6 million in prepayments under the terms of this amended agreement.

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

As of December 31, 2025 and 2024, $ 47.5 million and $ 60.9 million, respectively, of prepayments are classified as Unearned income on the Consolidated Balance Sheet.

1 unchanged sentence

As of December 31, 2025 and 2024, $ 2.4 million and $ 4.3 million, respectively, of prepayments are classified as Unearned revenue.

Note L — Leasing Arrangements

Note M — Leasing Arrangements

The Company leases warehouse and manufacturing real estate, and manufacturing and computer equipment under operating leases with lease terms ranging up to 25 years.

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Finance leases — —

Note M — Intangible Assets and Goodwill

Note N — Intangible Assets and Goodwill

Intangible Assets

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Total $ 181,126 $ ( 78,852 ) $ 102,274 $ 177,250 $ ( 69,557 ) $ 107,693

As noted in Note A, the Company performed a recoverability analysis which indicated the Malaysia asset group was not recoverable.

The Company estimated the fair value of the asset group utilizing using the discounted cash flow method (income approach) and compared the estimated fair value to the current carrying value.

As a result of this analysis, the Company fully impaired $ 10.1 million of intangible assets.

This long-lived asset impairment is presented within the "Long-lived Asset Impairment" line item within the accompanying Consolidated Statements of Income.

Amortization expense f or 2025, 2024, and 2023 was $ 11.0 million, $ 12.1 million, and $ 12.9 million , respectively.

Intangible assets also includes deferred costs relating to the Company's revolving credit and consignments lines of $ 3.6 million and $ 1.6 million at December 31, 2025 and 2024, respectively.

Estimated amortization e xpense for each of the five succeeding years is as follows:

(Thousands) Expense

Intangible assets also includes deferred costs relating to the Company's revolving credit and consignments lines of $ 1.6 million and $ 2.6 million at December 31, 2024 and 2023, respectively.

The balance of goodwill at December 31, 2025 and 2024 was $ 280.7 million and $ 263.7 million, respectively.

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Impairment charge — — ( 56,067 ) ( 56,067 )

Other — 3 1,372 1,375

Currency translation and other — ( 373 ) ( 695 ) ( 1,068 )

Balance at December 31, 2024 $ 26,157 $ 206,300 $ 31,281 $ 263,738

1 unchanged sentence

Impairment charge — — — —

Other — ( 373 ) ( 695 ) ( 1,068 )

Currency translation and other — 237 1,789 2,026

Balance at December 31, 2025 $ 26,157 $ 221,430 $ 33,070 $ 280,657

Due to the slower than expected semi-conductor market recovery impacting the Electronic Materials reporting unit and recent results for the Precision Optics reporting unit, the Company elected to perform a quantitative annual impairment assessment for the Electronic Materials and Precision Optics reporting units' goodwill as of October 1, 2024 and a qualitative impairment test for the Performance Materials reporting unit.

Due to historical results combined with the partial impairment charge recognized in 2024 within the Precision Optics reporting unit, the Company elected to perform a quantitative annual impairment assessment for the Precision Optics reporting unit's goodwill as of October 1, 2025 and a qualitative impairment test for the Performance Materials and Electronic Materials reporting units.

As discussed in Note A, the Company's annual goodwill impairment test indicated the carrying value of the Precision Optics reporting unit exceeded its estimated fair value as of the measurement date of October 1, 2024.

As a result, the Company recognized a goodwill impairment charge in the fourth quarter of fiscal 2024 of $ 56.1 million which was recorded in "Goodwill Impairment" in the accompanying Consolidated Statements of Income in the Precision Optics segment.

Based on the testing performed for the Electronic Materials reporting unit, the Company determined that the estimated fair value exceeded its carrying value;

Based on the testing performed for the Precision Optics reporting unit as of October 1, 2025, the Company determined that the estimated fair value exceeded its carrying value;

therefore no impairment charge was necessary.

Management believes the future sales growth and EBITDA margins in the long range plan, terminal growth rate and the discount rate used in the valuations requires significant use of judgment.

Management believes the future sales growth and EBITDA margins in the long range plan, and the discount rate used in the valuations requires significant use of judgment.

If any of our reporting units do not meet our long range plan estimates or our discount rate increase significantly, we could be required to perform an interim goodwill impairment analysis or recognize charges in future periods.

Any impairment charges that the Company may take in the future could be material to its consolidated results of operations and financial condition.

The Company's accumulated goodwill impairment losses were $ 76.7 million as of December 31, 2024, and $ 20.6 million as of December 31, 2023.

The Company's accumulated goodwill impairment losses were $ 76.7 million as of December 31, 2025 and 2024.

Accumulated impairment losses were from the closure of the LAC reporting unit which was closed as of December 31, 2020 and the Precision Optics charge taken in the fourth quarter of 2024.

Note N — Debt

Note O — Debt

Long-term debt in the Consolidated Balance Sheets is summarized as follows:

13 unchanged sentences

Total $ 460,642

In 2021, the Company amended and restated our $ 375.0 million revolving credit facility (Credit Agreement) in connection with the HCS-Electronic Materials acquisition.

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.

On November 1, 2021, Materion borrowed the full $ 300 million available under the delayed draw term loan facility and used the proceeds to pay a portion of the purchase price of the HCS-Electronic Materials acquisition.

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

The Credit Agreement refinanced 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 (Revolving Credit Facility) and a $ 225 million senior secured term loan facility (Term Loan Facility and, together with the Revolving Credit Facility, Credit Facilities).

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

The Credit Facilities mature on June 26, 2030.

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 metals, copper and certain other assets.

In January 2023, we amended the Credit Agreement to transition U.S.

dollar denominated borrowings from LIBOR to the Secured Overnight Financial Rate (SOFR) for both the revolving credit agreement and the term loan and to increase the cap on precious metals facilities from $ 550 million to $ 615 million.

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.

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We were in compliance with all of our debt covenants as of December 31, 2025 and December 31, 2024.

Cash on hand up to $ 25 million can benefit the covenants and may benefit the

borrowing capacity under the Credit Agreement.

Cash on hand up to $ 35 million can benefit the covenants and may benefit the borrowing capacity under the Credit Agreement.

At December 31, 2025 and 2024, there was $ 443.3 million and $ 438.9 million outstanding under the Credit Agreement, respectively.

At December 31, 2024 and 2023, there was $ 7.1 million and $ 47.0 million letters of credit outstanding against the credit sub-facility, respectively.

At December 31, 2025 and December 31, 2024, there was $ 5.2 million and $ 7.1 million letters of credit outstanding against the credit sub-facility, respectively.

The Company pays a variable commitment fee that may reset quarterly ( 0.200 % as of December 31, 2025) on the available and unborrowed amounts under the revolving credit line.

The available borrowings under the individual existing credit lines totaled $ 223.7 million as of December 31, 2025.

Note O — Pensions and Other Post-Employment Benefits

Note P — Pensions and Other Post-Employment Benefits

The obligation and funded status of the Company’s pension and other post-employment benefit plans are shown below.

11 unchanged sentences

Benefit payments ( 7,365 ) ( 6,678 ) ( 337 ) ( 405 )

Plan amendments — — ( 1,555 ) —

Foreign currency exchange rate changes and other 7,054 ( 2,924 ) — —

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Net amount recognized $ ( 13,895 ) $ ( 14,910 ) $ ( 2,992 ) $ ( 4,666 )

The benefit obligation decreased in 2024 due to actuarial gains that were driven by decreases in the discount rate.

The following amounts are included within accumulated other comprehensive loss at December 31, 2024 :

The following amounts are included within accumulated other comprehensive loss at December 31, 2025 and 2024 :

Pension Benefits Other Benefits

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1.75 % - 3.00 %

3.50 % 3.50 % 3.50 %

N/A 3.50 % 3.50 %

Assumptions used to determine net cost for the fiscal year

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The Company has some investments that are valued using net asset value (NAV) as the practical expedient and have not been classified in the fair value hierarchy.

Refer to Note R for definitions of the fair value hierarchy.

Refer to Note S for definitions of the fair value hierarchy.

December 31, 2025

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(f) Includes a fund that invests in a broad portfolio of hedge funds.

The Company’s domestic defined benefit pension plan investment strategy, as approved by the Governance and Organization Committee of the Board of Directors, is to employ an allocation of investments that will generate returns equal to or better than the projected long-term growth of pension liabilities so that the plan will be self-funding.

The Company’s domestic defined benefit pension plan investment strategy, as approved by the Nominating, Governance and Corporate Responsibility Committee of the Board of Directors, is to employ an allocation of investments that will generate returns equal to or better than the projected long-term growth of pension liabilities so that the plan will be self-funding.

The return objective is to maximize investment return to achieve and maintain a 100 % funded status over time, taking into consideration required cash contributions.

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The Company’s annual defined contribution expense, including the expense for the enhanced defined contribution plan, was $ 12.3 million in 2025, $ 13.2 million in 2024, and $ 13.6 million in 2023.

Note P — Accumulated Other Comprehensive (Loss) Income

Note Q — Accumulated Other Comprehensive (Loss) Income

Changes in the components of accumulated other comprehensive (loss) income, including amounts reclassified out, for 2025, 2024, and 2023, and the balances in accumulated other comprehensive (loss) income as of December 31, 2025, 2024, and 2023 are as follows:

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Reclassifications of gains and losses on foreign currency cash flow hedges from accumulated other comprehensive income are recorded in Net sales in the Consolidated Statements of Income while gains and losses on precious metal cash flow hedges are recorded in Cost of sales in the Consolidated Statements of Income.

Refer to Note R for additional details on cash flow hedges.

Refer to Note S for additional details on cash flow hedges.

Reclassifications from accumulated other comprehensive income for interest rate swaps are recorded in interest expense.

Refer to Note F for additional details on interest expense.

Refer to Note G for additional details on interest expense.

Reclassifications from accumulated other comprehensive income for pension and post-employment benefits are included in the computation of the net periodic pension and post-employment benefit expense.

Refer to Note O for additional details on pension and other post-employment expenses.

Note Q — Stock-based Compensation

The Company maintains two stock incentive plans (the 2006 Stock Incentive Plan and the 2006 Non-employee Director Equity Plan) that have been approved by its shareholders.

These plans authorize the granting of option rights, stock appreciation rights (SARs), performance-restricted shares, performance shares, performance units, restricted shares, and restricted stock units (RSUs).

Refer to Note P for additional details on pension and other post-employment expenses.

Note R — Stock-based Compensation

The Company operates a single equity incentive plan known as the Materion 2025 Equity and Incentive Compensation Plan (“2025 Plan”).

This plan was established to replace two prior stock incentive plans:

the 2006 Stock Incentive Plan and the 2006 Non-Employee Director Equity Plan.

Approved by shareholders, the 2025 Plan became effective in May 2025, at which point any remaining common shares available for issuance under the previous plans were transferred to the 2025 plan.

The 2025 Plan authorizes the granting of various equity awards, including option rights, stock appreciation rights (SARs), performance-restricted shares, performance shares, performance units, restricted shares, and restricted stock units (RSUs).

Stock-based compensation expense, which includes awards settled in shares and in cash and is recognized as a component of selling, general, and administrative (SG&A) expenses, was $ 11.2 million, $ 10.6 million, and $ 10.5 million in 2025, 2024, and 2023, respectively.

The Company derives a tax deduction measured by the excess of the market value over the grant price at the date stock-based awards vest or are exercised.

The Company recognized $ 2.0 million, $ 2.0 million, and $ 1.0 million of tax benefits in 2024, 2023, and 2022, respectively, relating to the issuance of common stock for the exercise/vesting of equity awards.

The Company recognized less than $ 0.1 million of tax benefits in 2025, compared to $ 2.0 million in 2024 and 2023, relating to the issuance of common stock for the exercise/vesting of equity awards.

The following sections provide information on awards settled in shares.

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The fair value will be amortized to compensation cost on a straight-line basis over the vesting period of three years , or earlier if the employee is retirement eligible and continued vesting is approved by the Board of Directors as defined in the Plan.

Stock-based compensation expense relating to SARs was $ 1.5 million in 2024, $ 1.3 million in 2023 and $ 0.9 million in 2022.

Stock-based compensation expense relating to SARs was $ 1.5 million in 2025 and 2024 and $ 1.3 million in 2023.

The total intrinsic value of stock options exercised during 2025, 2024, and 2023 was $ 0.9 million, $ 3.2 million and $ 3.6 million, respectively.

10 unchanged sentences

In addition to considering the vesting period and contractual term of the award for the expected life assumption, the Company analyzes actual historical exercise experience for previously granted awards.

Restricted Stock Units (RSUs) - Employees.

RSUs - Employees.

The Company may grant RSUs to employees of the Company.

1 unchanged sentence

The fair market value of the RSUs is determined on the date of the grant and is amortized over the vesting period.

For the 2021 annual employee grant, the vesting period is three years unless the recipient is retirement eligible and continued vesting is approved by the Board of Directors.

The 2024, 2023 and 2022 annual employee grants vests in three equal annual installments on the anniversary of the grant date.

The annual employee grants vest in three equal annual installments on the anniversary of the grant date.

The fair value of RSUs settled in stock is based on the closing stock price on the date of grant.

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RSUs - Non-Employee Directors.

In 2024, 2023, and 2022, 9,200 , 9,184 , and 11,120 RSUs, with a one year vesting period, were granted to certain non-employee members of the Board of Directors.

In 2025, 2024, and 2023, 15,968 , 9,200 , and 9,184 RSUs, respectively, with a one-year vesting period, were granted to certain non-employee members of the Board of Directors.

The weighted-average grant date fair value of these RSUs was $ 75.66 , $ 115.72 , and $ 105.54 in 2025, 2024, and 2023, respectively.

The Company recognized $ 1.1 million of expense related to these awards in 2024, compared to $ 0.9 million of expense in 2023 and 2022.

The Company recognized $ 1.2 million of expense related to these awards in 2025, compared to $ 1.1 million of expense in 2024 and $ 0.9 million of expense in 2023.

At December 31, 2025, $ 0.4 million of expense with respect to non-vested RSU awards granted to the Board of Directors has yet to be recognized and will be amortized into expense over a weighted-average period of approximately four months .

2 unchanged sentences

Total units earned for grants made in 2025, 2024, and 2023 may vary between 0 % and 200 % of the units granted based on the attainment of performance targets during the related three-year period.

All grants will be settled in Materion common shares and are equity classified.

All grants will be settled in Materion common

shares and are equity classified.

Vesting of performance-based awards is contingent upon the attainment of threshold performance objectives.

13 unchanged sentences

At December 31, 2025, shareholders’ equity included 0.1 million shares related to this plan.

Note R — Fair Value Information and Derivative Financial Instruments

Note S — Fair Value Information and Derivative Financial Instruments

The Company measures and records financial instruments at fair value.

48 unchanged sentences

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 N.

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 O.

The swap hedges the change in 1-month SOFR 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 N.

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 O.

The swaps hedge the change in 1-month USD-SOFR.

57 unchanged sentences

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

Other-net included foreign currency gains related to these derivatives of $ 0.4 million in 2024, compared to $ 1.1 million of foreign currency losses in 2023.

Other-net included foreign currency losses related to these derivatives of $ 2.5 million in 2025, compared to $ 0.4 million of foreign currency gains in 2024.

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 at December 31, 2025 and 2024:

26 unchanged sentences

The derivative activity in the table above is reflected in cash flows from operating activities.

Note S — Contingencies and Commitments

Beryllium Cases

The Company is a defendant from time to time in proceedings in various state and federal courts brought by plaintiffs alleging that they have contracted, or have been placed at risk of contracting, beryllium sensitization or Chronic Beryllium Disease (CBD) or related ailments as a result of exposure to beryllium.

Plaintiffs in beryllium cases seek recovery under theories of negligence and various other legal theories and seek compensatory and punitive damages, in many cases of an unspecified sum.

Spouses, if any, often claim loss of consortium.

Employee cases, in which plaintiffs have a high burden of proof, have historically involved relatively small losses to the Company.

Third-party plaintiffs (typically employees of customers) face a lower burden of proof than do the Company’s employees, but these cases have generally been covered by varying levels of insurance.

Management has vigorously contested the beryllium cases brought against the Company.

Non-employee beryllium cases are covered by insurance, subject to certain limitations.

The insurance covers defense costs and indemnity payments (resulting from settlements or court verdicts) and is subject to various levels of deductibles.

Defense and indemnity costs were less than or equal to the deductible in both 2024 and 2023.

Although it is not possible to predict the outcome of any pending litigation, the Company provides for costs related to litigation matters when a loss is probable, and the amount is reasonably estimable.

Litigation is subject to many uncertainties, and it is possible that some of the actions could be decided unfavorably in amounts exceeding the Company’s reserves.

An unfavorable outcome or settlement of a beryllium case or adverse media coverage could encourage the commencement of additional similar litigation.

The Company is unable to estimate its potential exposure to unasserted claims.

Based upon currently known facts and assuming collectability of insurance, the Company does not believe that resolution of any potential future beryllium proceedings will have a material adverse effect on the financial condition or cash flow of the Company.

However, the Company’s results of operations could be materially affected by unfavorable results in one or more cases.

Note T — Contingencies and Commitments

Environmental Proceedings

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Reserve accruals are based upon their analyses and are established based on the reasonably estimable loss or range of loss.

The accruals are revised for the results of ongoing studies, changes in strategies,

inflation, and for differences between actual and projected costs.

The accruals are revised for the results of ongoing studies, changes in strategies, inflation, and for differences between actual and projected costs.

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

21 unchanged sentences

Accretion expense 199 198

Change in liability — $ 34

Asset retirement obligation at end of period $ 3,045 $ 2,846

5 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data