MATERION CORP, 10-Q filed on 4/29/2021
Quarterly Report
v3.21.1
Document and Entity Information
3 Months Ended
Apr. 02, 2021
shares
Cover [Abstract]  
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Apr. 02, 2021
Document Transition Report false
Entity File Number 001-15885
Entity Registrant Name MATERION CORPORATION
Entity Incorporation, State or Country Code OH
Entity Tax Identification Number 34-1919973
Entity Address, Address Line One 6070 Parkland Blvd
Entity Address, City or Town Mayfield Heights
Entity Address, State or Province OH
Entity Address, Postal Zip Code 44124
City Area Code 216
Local Phone Number 486-4200
Title of 12(b) Security Common Stock, no par value
Trading Symbol MTRN
Security Exchange Name NYSE
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Large Accelerated Filer
Entity Small Business false
Entity Emerging Growth Company false
Entity Shell Company false
Entity Common Stock, Shares Outstanding 20,413,705
Entity Central Index Key 0001104657
Current Fiscal Year End Date --12-31
Document Fiscal Year Focus 2021
Document Fiscal Period Focus Q1
Amendment Flag false
v3.21.1
Consolidated Statements of Income - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Apr. 02, 2021
Mar. 27, 2020
Income Statement [Abstract]    
Net sales $ 354,386 $ 277,946
Cost of sales 287,590 233,376
Gross margin 66,796 44,570
Selling, general, and administrative expense 36,776 30,744
Research and development expense 6,206 4,185
Goodwill impairment charges 0 9,053
Asset impairment charges 0 1,713
Restructuring (income) expense (378) 2,164
Other - net 4,474 2,279
Operating profit (loss) 19,718 (5,568)
Other non-operating income—net (1,276) (944)
Interest expense—net 761 246
Income (loss) before income taxes 20,233 (4,870)
Income tax expense (benefit) 3,466 (992)
Net income (loss) $ 16,767 $ (3,878)
Basic earnings per share:    
Net income (loss) per share of common stock (in dollars per share) $ 0.82 $ (0.19)
Diluted earnings per share:    
Net income (loss) per share of common stock (in dollars per share) $ 0.81 $ (0.19)
Weighted-average number of shares of common stock outstanding:    
Basic (in shares) 20,374 20,384
Diluted (in shares) 20,628 20,384
v3.21.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended
Apr. 02, 2021
Mar. 27, 2020
Statement of Comprehensive Income [Abstract]    
Net income (loss) $ 16,767 $ (3,878)
Other comprehensive (loss) income:    
Foreign currency translation adjustment (8,857) (873)
Derivative and hedging activity, net of tax 1,245 (854)
Pension and post-employment benefit adjustment, net of tax 164 16
Other comprehensive loss (7,448) (1,711)
Comprehensive income (loss) $ 9,319 $ (5,589)
v3.21.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Apr. 02, 2021
Dec. 31, 2020
Current assets    
Cash and cash equivalents $ 18,934 $ 25,878
Accounts receivable, net 180,544 166,447
Inventories, net 272,828 250,778
Prepaid and other current assets 22,449 20,896
Total current assets 494,755 463,999
Deferred income taxes 1,932 3,134
Property, plant, and equipment 1,021,174 998,312
Less allowances for depreciation, depletion, and amortization (692,101) (688,626)
Property, plant, and equipment, net 329,073 309,686
Operating lease, right-of-use assets 59,826 62,089
Intangible assets, net 51,503 54,672
Other assets 20,791 19,364
Goodwill 140,392 144,916
Total Assets 1,098,272 1,057,860
Current liabilities    
Short-term debt 1,541 1,937
Accounts payable 72,489 55,640
Salaries and wages 22,803 18,809
Other liabilities and accrued items 36,927 40,887
Income taxes 5,102 1,898
Unearned revenue 8,573 7,713
Total current liabilities 147,435 126,884
Other long-term liabilities 17,777 17,002
Operating lease liabilities 54,593 56,761
Finance lease liabilities 18,937 20,539
Retirement and post-employment benefits 39,662 41,877
Unearned income 92,301 86,761
Deferred income taxes 14,824 15,864
Long-term debt 51,407 36,542
Serial preferred stock (no par value; 5,000 authorized shares, none issued) 0 0
Common stock (no par value; 60,000 authorized shares, issued shares of 27,148 at April 2 and December 31) 264,940 258,642
Retained earnings 645,468 631,058
Common stock in treasury (206,845) (199,187)
Accumulated other comprehensive loss (46,087) (38,639)
Other equity 3,860 3,756
Total shareholders' equity 661,336 655,630
Total Liabilities and Shareholders’ Equity $ 1,098,272 $ 1,057,860
v3.21.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
shares in Thousands, $ / shares in Thousands
Apr. 02, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Serial preferred stock, par value (in dollars per share) $ 0 $ 0
Serial preferred stock, shares authorized 5,000 5,000
Serial preferred stock, shares issued 0 0
Common stock, par value (in dollars per share) $ 0 $ 0
Common stock, shares authorized 60,000 60,000
Common stock, shares, issued 27,148 27,148
v3.21.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
Apr. 02, 2021
Mar. 27, 2020
Cash flows from operating activities:    
Net income (loss) $ 16,767 $ (3,878)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation, depletion, and amortization 8,599 14,274
Amortization of deferred financing costs in interest expense 182 182
Stock-based compensation expense (non-cash) 1,473 1,492
Deferred income tax expense (benefit) 382 (1,457)
Impairment charges 0 10,766
Changes in assets and liabilities:    
Accounts receivable (15,697) 11,049
Inventory (23,219) (15,718)
Prepaid and other current assets (2,107) 1,127
Accounts payable and accrued expenses 19,224 (13,002)
Unearned revenue 932 (938)
Interest and taxes payable 3,164 368
Unearned income due to customer prepayments 5,890 7,113
Other-net (140) (2,248)
Net cash provided by operating activities 15,450 9,130
Cash flows from investing activities:    
Payments for purchase of property, plant, and equipment (31,250) (14,789)
Proceeds from sale of property, plant, and equipment 575 10
Net cash used in investing activities (30,675) (14,779)
Cash flows from financing activities:    
Proceeds from borrowings under revolving credit agreement, net 14,955 0
Repayment of long-term debt (377) (142)
Principal payments under finance lease obligations (675) (233)
Cash dividends paid (2,338) (2,245)
Repurchase of common stock 0 (6,766)
Payments of withholding taxes for stock-based compensation awards (2,838) (2,015)
Net cash provided by (used in) financing activities 8,727 (11,401)
Effects of exchange rate changes (446) (381)
Net change in cash and cash equivalents (6,944) (17,431)
Cash and cash equivalents at beginning of period 25,878 125,007
Cash and cash equivalents at end of period $ 18,934 $ 107,576
v3.21.1
Consolidated Statements of Shareholders' Equity - USD ($)
shares in Thousands, $ in Thousands
Total
Common Shares
Common Shares Held In Treasury
Common Stock
Retained Earnings
Common Stock In Treasury
Accumulated Other Comprehensive Income (Loss)
Other Equity
Beginning balance (in shares) at Dec. 31, 2019   20,404            
Beginning balances (in Treasury shares) at Dec. 31, 2019     (6,744)          
Beginning balances at Dec. 31, 2019 $ 645,743     $ 249,674 $ 624,954 $ (186,845) $ (45,462) $ 3,422
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income (loss) (3,878)     0 (3,878) 0 0 0
Other comprehensive loss (1,711)     0 0 0 (1,711) 0
Cash dividends declared (2,245)     0 (2,245) 0 0 0
Stock-based compensation activity (in shares)   99 99          
Stock-based compensation activity 1,584     4,262 (35) (2,643) 0 0
Payments of withholding taxes for stock-based compensation awards (in shares)   (36) (36)          
Payments of withholding taxes for stock-based compensation awards (2,015)     0 0 (2,015) 0 0
Repurchase of shares (in shares)   (158) (158)          
Repurchase of shares (6,766)     0 0 (6,766) 0 0
Directors' deferred compensation (in shares)   1 1          
Directors' deferred compensation 57     31 0 (42) 0 68
Ending balance (in shares) at Mar. 27, 2020   20,310            
Ending balances (in Treasury shares) at Mar. 27, 2020     (6,838)          
Ending balances at Mar. 27, 2020 630,769     253,967 618,796 (198,311) (47,173) 3,490
Beginning balance (in shares) at Dec. 31, 2020   20,328            
Beginning balances (in Treasury shares) at Dec. 31, 2020     (6,820)          
Beginning balances at Dec. 31, 2020 655,630     258,642 631,058 (199,187) (38,639) 3,756
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income (loss) 16,767     0 16,767 0 0 0
Other comprehensive loss (7,448)     0 0 0 (7,448) 0
Cash dividends declared (2,338)     0 (2,338) 0 0 0
Stock-based compensation activity (in shares)   127 127          
Stock-based compensation activity 1,473     6,259 (19) (4,767) 0 0
Payments of withholding taxes for stock-based compensation awards (in shares)   (43) (43)          
Payments of withholding taxes for stock-based compensation awards (2,838)     0 0 (2,838) 0 0
Directors' deferred compensation (in shares)   2 2          
Directors' deferred compensation 90     39 0 (53) 0 104
Ending balance (in shares) at Apr. 02, 2021   20,414            
Ending balances (in Treasury shares) at Apr. 02, 2021     (6,734)          
Ending balances at Apr. 02, 2021 $ 661,336     $ 264,940 $ 645,468 $ (206,845) $ (46,087) $ 3,860
v3.21.1
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares
3 Months Ended
Apr. 02, 2021
Mar. 27, 2020
Statement of Stockholders' Equity [Abstract]    
Cash dividends declared (per share) $ 0.115 $ 0.110
v3.21.1
Accounting Policies
3 Months Ended
Apr. 02, 2021
Accounting Policies [Abstract]  
Accounting Policies Accounting Policies
Basis of Presentation: The accompanying consolidated financial statements of Materion Corporation and its subsidiaries (referred to herein as the Company, our, we, or us) contain all of the adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. All adjustments were of a normal and recurring nature. Certain amounts in prior periods have been reclassified to conform to the 2021 consolidated financial statement presentation.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's 2020 Annual Report on Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year.

Business Combinations: The Company records assets acquired and liabilities assumed at the date of acquisition at their respective fair values. Any intangible assets acquired in a business combination are recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

The amounts reflected in Note B to the Consolidated Financial Statements are the results of a preliminary purchase price allocation and will be updated upon completion of the final valuation. The Company is required to complete the purchase price allocation within 12 months of the acquisition date. If such completion of the allocation results in a change in the preliminary values, the measurement period adjustment will be recognized in the period in which the adjustment amount is determined.

Change in Accounting Principle: During the fourth quarter of 2020, the Company elected to change its method for valuing its inventories at locations that previously used the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. The Company believes that the FIFO method is preferable as it improves comparability with its most similar peers, it more closely resembles the physical flow of its inventory (i.e., it provides better matching of revenues and expenses), and it results in uniformity across a significant majority of the Company’s inventory. The effects of the change in accounting principle from LIFO to FIFO were retrospectively applied. As a result of the retrospective application of the change in accounting principle, certain financial statement line items in the Company’s consolidated balance sheets as of March 27, 2020 and the consolidated statements of income (loss), comprehensive income (loss), shareholders’ equity, and cash flows for the three months ended March 27, 2020 were adjusted as necessary. For further information, refer to the Company's 2020 Annual Report on Form 10-K.
The following tables reflect the impact to the financial statement line items as a result of the change in accounting principle for the prior periods presented in the accompanying financial statements:

Consolidated Statement of Income

(Thousands except per share amounts)
First Quarter Ended
March 27, 2020
Selected ItemsAs ReportedAs AdjustedAdjustment
Cost of sales$232,371 $233,376 $1,005 
Gross margin45,575 44,570 (1,005)
Operating loss(4,563)(5,568)(1,005)
Loss before income taxes(3,865)(4,870)(1,005)
Income tax (benefit) (762)(992)(230)
Net loss(3,103)(3,878)(775)
Basic earnings per share:
Net loss per share of common stock$(0.15)$(0.19)$(0.04)
Diluted earnings per share:
Net loss per share of common stock$(0.15)$(0.19)$(0.04)

Consolidated Statement of Comprehensive Income (Loss)
(Thousands)
First Quarter Ended
March 27, 2020
Selected ItemsAs ReportedAs AdjustedAdjustment
Net loss$(3,103)$(3,878)$(775)
Comprehensive loss(4,814)(5,589)(775)

Consolidated Statement of Cash Flow
(Thousands)
Three Months Ended
March 27, 2020
Selected ItemsAs ReportedAs AdjustedAdjustment
Net loss$(3,103)$(3,878)$(775)
Deferred income tax benefit(1,227)(1,457)(230)
Decrease (increase) in inventory(16,723)(15,718)1,005 

New Pronouncements Adopted: In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing various exceptions, such as the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items. The amendments in this update also simplify the accounting for income taxes related to income-based franchise taxes and require that an entity reflect enacted tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company adopted the standard on January 1, 2021. The adoption did not materially impact the Company's financial statements or disclosures.

New Accounting Guidance Issued and Not Yet Adopted: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance is intended
to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022. The Company is currently assessing which of its various contracts will require an update for a new reference rate, and will determine the timing for implementation of this guidance at the completion of that analysis.No other recently issued or effective ASUs had, or are expected to have, a material effect on the Company's results of operations, financial condition, or liquidity.
v3.21.1
Acquisition
3 Months Ended
Apr. 02, 2021
Business Combinations [Abstract]  
Business Combination Disclosure AcquisitionBusiness acquisitions have been accounted for using the acquisition method, with acquired assets and assumed liabilities recognized at their respective fair values as of the acquisition date. The cost in excess of the net assets of the business acquired is included in goodwill. On July 17, 2020, the Company completed the acquisition of Optics Balzers AG (Optics Balzers), an industry leader in thin film optical coatings. The purchase price for Optics Balzers was $136.1 million, including the assumption of $22.5 million of debt. The transaction was funded with cash on hand. Based on the fair value of assets acquired and liabilities assumed, goodwill of $70.8 million and identifiable intangible assets of $49.3 million were recorded. Goodwill associated with this acquisition is not tax deductible. This acquisition is being reported in our Precision Optics segment and the results of Optics Balzers are not material to our Consolidated Financial Statements. No material measurement period adjustments have been recorded during the first quarter of 2021. As of April 2, 2021, the purchase price allocation remains preliminary as the Company completes its assessments of income taxes.
v3.21.1
Segment Reporting
3 Months Ended
Apr. 02, 2021
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
 
The Company has the following reportable segments: Performance Alloys and Composites, Advanced Materials, Precision Optics, and Other. The Company’s reportable segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, the Company's chief operating decision maker, in determining how to allocate the Company’s resources and evaluate performance.
Performance Alloys and Composites produces strip and bulk form alloy products, strip metal products with clad inlay and overlay metals, beryllium-based metals, beryllium, and aluminum metal matrix composites, in rod, sheet, foil, and a variety of customized forms, beryllia ceramics, and bulk metallic glass materials.
Advanced Materials produces advanced chemicals, microelectric packaging, precious metal, non-precious metal, and specialty metal products, including vapor deposition targets, frame lid assemblies, clad and precious metal preforms, high temperature braze materials, and ultra-fine wire.
Precision Optics produces thin film coatings, optical filter materials, sputter-coated, and precision-converted thin film materials.
The Other reportable segment includes unallocated corporate costs and assets.
(Thousands)Performance
Alloys and
Composites
Advanced MaterialsPrecision OpticsOtherTotal
First Quarter 2021
Net sales$114,143 $204,644 $35,599 $ $354,386 
Intersegment sales
5 2,687   2,692 
Operating profit (loss)13,491 8,933 4,558 (7,264)19,718 
First Quarter 2020
Net sales$99,067 $160,165 $18,714 $ $277,946 
Intersegment sales215 9,191 9,406 
Operating profit (loss)3,523 5,050 (9,592)(4,549)(5,568)
The following table disaggregates revenue for each segment by end market for the first quarter of 2021 and 2020:
 (Thousands)Performance Alloys and CompositesAdvanced MaterialsPrecision OpticsOtherTotal
First Quarter 2021
End Market
Semiconductor$997 $155,061 $471 $— $156,529 
Industrial24,030 12,590 7,375 — 43,995 
Aerospace and defense21,842 1,398 6,576 — 29,816 
Consumer electronics10,044 165 9,460 — 19,669 
Automotive23,507 1,669 2,193 — 27,369 
Energy4,137 27,190 — — 31,327 
Telecom and data center11,343 70 — — 11,413 
Other18,243 6,501 9,524 — 34,268 
Total$114,143 $204,644 $35,599 $— $354,386 
First Quarter 2020
End Market
Semiconductor$906 $120,819 $11 $— $121,736 
Industrial23,340 8,362 3,097 — 34,799 
Aerospace and defense14,206 1,426 5,109 — 20,741 
Consumer electronics14,695 118 3,541 — 18,354 
Automotive18,163 2,080 17 — 20,260 
Energy5,429 23,468 — — 28,897 
Telecom and data center9,989 871 — — 10,860 
Other12,339 3,021 6,939 — 22,299 
Total$99,067 $160,165 $18,714 $— $277,946 
Intersegment sales are eliminated in consolidation.
v3.21.1
Revenue Recognition
3 Months Ended
Apr. 02, 2021
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer [Text Block] Revenue Recognition
Net sales consist primarily of revenue from the sale of precious and non-precious specialty metals, beryllium and copper-based alloys, beryllium composites, and other products into numerous end markets. The Company requires an agreement with a customer that creates enforceable rights and performance obligations. The Company generally recognizes revenue, in an amount that reflects the consideration to which it expects to be entitled, upon satisfaction of a performance obligation, by transferring control over a product to the customer. Control over the 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 April 2, 2021. Remaining performance obligations include non-cancelable purchase orders and customer contracts. The guidance provides certain practical expedients that limit this requirement. As such, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

After considering the practical expedient at April 2, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $81.9 million.
Contract Balances: The timing of revenue recognition, billings, and cash collections resulted in the following contract assets and contract liabilities:
(Thousands)April 2, 2021December 31, 2020$ change% change
Accounts receivable, trade
$166,411 $156,821 $9,590 %
Unbilled receivables
13,895 8,832 5,063 57 %
Unearned revenue
8,573 7,713 860 11 %
Accounts receivable, trade represents payments due from customers relating to the transfer of the Company’s products and services. The Company believes that its receivables are collectible and appropriate allowances for doubtful accounts have been recorded. Impairment losses (bad debt) incurred relating to our receivables were immaterial during the first quarter of 2021.

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

Unearned revenue is recorded for consideration received from customers in advance of satisfaction of the related performance obligations. The Company recognized approximately $2.4 million of the December 31, 2020 unearned amounts as revenue during the first three months of 2021.

As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component because the period between the transfer of a product or service to a customer and when the customer pays for that product or service will be one year or less. The Company does not include extended payment terms in its contracts with customers.
v3.21.1
Other-net
3 Months Ended
Apr. 02, 2021
Other Income and Expenses [Abstract]  
Other-net Other-net
Other-net for the first quarter of 2021 and 2020 is summarized as follows: 
 First Quarter Ended
 April 2,March 27
(Thousands)20212020
Metal consignment fees$2,150 $2,229 
Amortization of intangible assets1,173 188 
Foreign currency loss (gain)1,249 (62)
Net (gain) loss on disposal of fixed assets(388)46 
Other items290 (122)
Total$4,474 $2,279 
v3.21.1
Restructuring
3 Months Ended
Apr. 02, 2021
Restructuring and Related Activities [Abstract]  
Restructuring and Related Activities Disclosure [Text Block] Restructuring
During 2020, the Company determined it would close its Large Area Coatings (LAC) business (a reporting unit in the Precision Optics segment). The closure was substantially completed by the end of the first quarter of 2021. Income of $0.4 million was recorded in 2021 primarily related to lower than previously estimated facility closure costs that were recorded in 2020.
Remaining severance payments of $0.2 million are reflected in Salaries and wages in the Consolidated Balance Sheet as of April 2, 2021 and are expected to be substantially paid by the end of 2021. Any additional costs related to the closure of this business are expected to be immaterial.
In addition, during 2020, the Company initiated a restructuring plan in its Performance Alloys and Composites segment to close its Warren, Michigan and Fremont, California locations. Costs associated with the plan totaled $2.2 million in the first quarter of 2020 and included $0.5 million of severance associated with approximately 63 employees and $1.3 million of facility and other related costs. This plan was substantially complete by the end of 2020.Remaining severance payments of $0.2 million and facility costs of $0.5 million related to these initiatives are reflected within Salaries and wages and Other liabilities and accrued items, respectively, in the Consolidated Balance Sheets and are expected to be substantially paid by the end of the second quarter of 2021.
v3.21.1
Income Taxes
3 Months Ended
Apr. 02, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company's effective tax rate for the first quarter of 2021 and 2020 was 17.1% and 20.4%, respectively. The effective tax rate for the first quarter of 2021 was lower than the statutory tax rate primarily due to the impact of percentage depletion and research and development credits. The effective tax rate for the first three months of 2021 included a net discrete income tax benefit of $0.3 million, primarily related to excess tax benefits from stock-based compensation awards. The effective tax rate for the first quarter of 2020 included a net discrete income tax expense of $0.2 million, primarily related to an impairment of goodwill and excess tax benefits from stock-based compensation awards.

On March 11, 2021, President Biden signed the American Rescue Plan (the Plan) into law. The Plan, among other things, extends and enhances a number of current-law tax incentives for businesses. While the Company continues to examine the impacts the Plan may have on its business, it does not expect it will have a material impact to its consolidated financial statements.
v3.21.1
Earnings Per Share
3 Months Ended
Apr. 02, 2021
Earnings Per Share [Abstract]  
Earnings Per Share Earnings Per Share (EPS)
The following table sets forth the computation of basic and diluted EPS:
First Quarter Ended
April 2,March 27
(Thousands, except per share amounts)20212020
Numerator for basic and diluted EPS:
Net income (loss)$16,767 $(3,878)
Denominator:
Denominator for basic EPS:
Weighted-average shares outstanding20,374 20,384 
Effect of dilutive securities:
Stock appreciation rights72 — 
Restricted stock units108 — 
Performance-based restricted stock units74 — 
Diluted potential common shares254 — 
Denominator for diluted EPS:
Adjusted weighted-average shares outstanding20,628 20,384 
Basic EPS$0.82 $(0.19)
Diluted EPS$0.81 $(0.19)
Adjusted weighted-average shares outstanding - diluted exclude securities totaling 63,627 and 302,573 for the quarters ended April 2, 2021 and March 27, 2020, respectively. These securities are primarily related to restricted stock units and stock appreciation rights with fair market values and exercise prices greater than the average market price of the Company's common shares and were excluded from the dilution calculation as the effect would have been anti-dilutive.
Additionally, adjusted weighted-average shares outstanding - diluted for the three months ended March 27, 2020 exclude the dilutive effect of approximately 239,000 shares, primarily related to restricted stock units and stock appreciation rights, as their inclusion would have been anti-dilutive due to the Company's net loss.
v3.21.1
Inventories
3 Months Ended
Apr. 02, 2021
Inventory Disclosure [Abstract]  
Inventories Inventories
Inventories on the Consolidated Balance Sheets are summarized as follows:
April 2,December 31,
(Thousands)20212020
Raw materials and supplies$59,384 $42,905 
Work in process164,497 156,093 
Finished goods48,947 51,780 
Inventories, net$272,828 $250,778 
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 $411.9 million and $400.0 million as of April 2, 2021 and December 31, 2020, respectively. Amounts for the year ended December 31, 2020 have been revised to reflect a $44.6 million reclassification out of work in process and into finished goods inventory.
v3.21.1
Customer Prepayments
3 Months Ended
Apr. 02, 2021
Customer Prepayments [Abstract]  
Customer Prepayments Investment Agreement [Text Block] Customer PrepaymentsThe Company entered into investment and master supply agreements with a customer to procure equipment to manufacture product for the customer. The customer is providing prepayments to the Company in the amount of approximately $70 million in the aggregate to enable the Company to purchase and install certain equipment and make necessary infrastructure improvements to supply product to the customer. The Company will own the equipment and be responsible for operating and maintenance costs. The prepayment from the customer will be applied when commercial production of the product is sold and delivered to the customer in connection with a master supply agreement. Accordingly, as of April 2, 2021 and December 31, 2020, $64.7 million and $58.8 million, respectively, of prepayments are classified as Unearned Income in the Consolidated Balance Sheet, of which $5.9 million was received during the first quarter of 2021.
v3.21.1
Pensions and Other Post-employment Benefits
3 Months Ended
Apr. 02, 2021
Retirement Benefits [Abstract]  
Pensions and Other Post-employment Benefits Pensions and Other Post-employment Benefits
The following is a summary of the net periodic benefit cost for the first quarter of 2021 and 2020 for the domestic pension plans (which include the defined benefit pension plan and the supplemental retirement plans) and the domestic retiree medical plan.
 Pension BenefitsOther Benefits
 First Quarter EndedFirst Quarter Ended
April 2,March 27April 2,March 27
(Thousands)2021202020212020
Components of net periodic benefit (income) cost
Service cost$ $— $20 $15 
Interest cost986 1,215 29 53 
Expected return on plan assets(2,234)(2,205) — 
Amortization of prior service cost (benefit) — (374)(374)
Amortization of net loss (gain)418 284 (69)(83)
Total net benefit (income) cost$(830)$(706)$(394)$(389)
The Company did not make any contributions to its domestic defined benefit plan in the first quarter of 2021 or 2020.
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. In May 2019, the Company's Board of Directors approved changes to the U.S. defined benefit pension plan. The Company froze the pay and service amounts used to calculate pension benefits for active participants in the pension plan as of January 1, 2020.
v3.21.1
Accumulated Other Comprehensive Income
3 Months Ended
Apr. 02, 2021
Equity [Abstract]  
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Loss)
Changes in the components of accumulated other comprehensive income, including the amounts reclassified, for the first quarter of 2021 and 2020 are as follows:
Gains and Losses on Cash Flow Hedges
(Thousands)Foreign CurrencyPrecious MetalsCopperTotalPension and Post-Employment BenefitsForeign Currency TranslationTotal
Balance at December 31, 2020$519 $(170)$468 $817 $(43,473)$4,017 $(38,639)
Other comprehensive income (loss) before reclassifications1,085 741 1,291 3,117 — (8,857)(5,740)
Amounts reclassified from accumulated other comprehensive income (loss)140 (104)(1,534)(1,498)157 — (1,341)
Net current period other comprehensive (loss) income before tax1,225 637 (243)1,619 157 (8,857)(7,081)
Deferred taxes282 147 (55)374 (7)— 367 
Net current period other comprehensive (loss) income after tax943 490 (188)1,245 164 (8,857)(7,448)
Balance at April 2, 2021$1,462 $320 $280 $2,062 $(43,309)$(4,840)$(46,087)
Balance at December 31, 2019$1,324 $(452)$25 $897 $(41,346)$(5,013)$(45,462)
Other comprehensive (loss) income before reclassifications(142)(823)(778)(1,743)— (873)(2,616)
Amounts reclassified from accumulated other comprehensive income (loss)(1)318 321 638 (24)— 614 
Net current period other comprehensive (loss) income before tax(143)(505)(457)(1,105)(24)(873)(2,002)
Deferred taxes(33)(116)(102)(251)(40)— (291)
Net current period other comprehensive (loss) income after tax(110)(389)(355)(854)16 (873)(1,711)
Balance at March 27, 2020$1,214 $(841)$(330)$43 $(41,330)$(5,886)$(47,173)

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). 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. Refer to Note O for additional details on cash flow hedges.
Reclassifications from accumulated other comprehensive income (loss) for pension and post-employment benefits are included in the computation of the net periodic pension and post-employment benefit expense. Refer to Note K for additional details on pension and post-employment expenses.
v3.21.1
Stock-based Compensation Expense
3 Months Ended
Apr. 02, 2021
Share-based Payment Arrangement [Abstract]  
Stock-based Compensation Expense Stock-based Compensation Expense
Stock-based compensation expense, which includes awards settled in shares and in cash, was $1.6 million and $1.0 million in the first quarter of 2021 and 2020, respectively.
The Company granted 52,709 stock appreciation rights (SARs) to certain employees during the first quarter of 2021. The weighted-average exercise price per share and weighted-average fair value per share of the SARs granted during the three months ended April 2, 2021 were $68.82 and $20.66, respectively. The Company estimated the fair value of the SARs using the following weighted-average assumptions in the Black-Scholes model:
Risk-free interest rate0.57 %
Dividend yield0.7 %
Volatility37.6 %
Expected term (in years)4.6
The Company granted 53,199 stock-settled restricted stock units (RSUs) to certain employees during the first quarter of 2021. 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 $68.49 for stock-settled RSUs granted to employees during the three months ended April 2, 2021. 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 2021. The weighted-average fair value of the stock-settled PRSUs was $83.78 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 April 2, 2021, unamortized compensation cost related to the unvested portion of all stock-based awards was approximately $13.8 million, and is expected to be recognized over the remaining vesting period of the respective grants.
v3.21.1
Fair Value of Financial Instruments
3 Months Ended
Apr. 02, 2021
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
The Company measures and records financial instruments at fair value. A hierarchy is used for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 — Quoted market prices in active markets for identical assets and liabilities;
Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable; and
Level 3 — Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect
those that a market participant would use.
The following table summarizes the financial instruments measured at fair value in the Consolidated Balance Sheets as of April 2, 2021 and December 31, 2020: 
  
(Thousands)Total Carrying Value in the Consolidated Balance SheetsQuoted Prices
in  Active
Markets  for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
20212020202120202021202020212020
Financial Assets
Deferred compensation investments$3,802 $3,802 $3,802 $3,802 $ $— $ $— 
Foreign currency forward contracts299 107  — 299 107  — 
Precious metal swaps418 127  — 418 127  — 
Copper swaps550 632  — 550 632  — 
Total$5,069 $4,668 $3,802 $3,802 $1,267 $866 $ $— 
Financial Liabilities
Deferred compensation liability$3,802 $3,802 $3,802 $3,802 $ $— $ $— 
Foreign currency forward contracts685 1,203  — 685 1,203  — 
Precious metal swaps3 349  — 3 349  — 
Copper swaps188 27  — 188 27  — 
Total$4,678 $5,381 $3,802 $3,802 $876 $1,579 $ $— 
The Company uses a market approach to value the assets and liabilities for financial instruments in the table above. Outstanding contracts are valued through models that utilize market observable inputs, including both spot and forward prices, for the same underlying currencies and metals. The carrying values of the other working capital items and debt in the Consolidated Balance Sheets approximate fair values as of April 2, 2021 and December 31, 2020. The Company's deferred compensation investments and liabilities are based on the fair value of the investments corresponding to the employees’ investment selections, primarily in mutual funds, based on quoted prices in active markets for identical assets. Deferred compensation investments are primarily presented in Other assets. Deferred compensation liabilities are primarily presented in Other long-term liabilities.
v3.21.1
Derivative Instruments and Hedging Activity
3 Months Ended
Apr. 02, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activity Derivative Instruments and Hedging Activity
The Company uses derivative contracts to hedge portions of its foreign currency exposures and uses derivatives to hedge a portion of its precious metal and copper exposures. The objectives and strategies for using derivatives in these areas are as follows:
Foreign Currency.    The Company sells a portion of its products to overseas customers in their local currencies, primarily the euro and yen. The Company secures foreign currency derivatives, mainly forward contracts and options, to hedge these anticipated sales transactions. The purpose of the hedge program is to protect against the reduction in the dollar value of foreign currency sales from adverse exchange rate movements. Should the dollar strengthen significantly, the decrease in the translated value of the foreign currency sales should be partially offset by gains on the hedge contracts. Depending upon the methods used, the hedge contracts may limit the benefits from a weakening U.S. dollar.
The use of forward contracts locks in a firm rate and eliminates any downside from an adverse rate movement as well as any benefit from a favorable rate movement. The Company may from time to time choose to hedge with options or a tandem of options, known as a collar. These hedging techniques can limit or eliminate the downside risk but can allow for some or all of the benefit from a favorable rate movement to be realized. Unlike a forward contract, a premium is paid for an option; collars, which are a combination of a put and call option, may have a net premium but
can be structured to be cash neutral. The Company will primarily hedge with forward contracts due to the relationship between the cash outlay and the level of risk.
The use of foreign currency derivative contracts is governed by policies approved by the Audit Committee of the Board of Directors. A team consisting of senior financial managers reviews the estimated exposure levels, as defined by budgets, forecasts, and other internal data, and determines the timing, amounts, and instruments to use to hedge exposures. Management analyzes the effective hedged rates and the actual and projected gains and losses on the hedging transactions against the program objectives, targeted rates, and levels of risk assumed. Foreign currency contracts are typically layered in at different times for a specified exposure period in order to minimize the impact of market rate movements.
Precious Metals.    The Company maintains the majority of its precious metal production requirements on consignment in order to reduce its working capital investment and the exposure to metal price movements. When a precious metal product is fabricated and ready for shipment to the customer, the metal is purchased out of consignment at the current market price. The price paid by the Company forms the basis for the price charged to the customer. 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 financial institutions that charge the Company a financing fee based upon the current value of the metal on hand.
In certain instances, a customer may want to establish the price for the precious metal at the time the sales order is placed rather than at the time of shipment. Setting the sales price at a different date than when the material would be purchased potentially creates an exposure to movements in the market price of the metal. Therefore, in these limited situations, the Company may elect to enter into a forward contract to purchase precious metal. The forward contract allows the Company to purchase metal at a fixed price on a specific future date. The price in the forward contract serves as the basis for the price to be charged to the customer. By doing so, the selling price and purchase price are matched, and the Company's price exposure is reduced.
The Company refines precious metal-containing materials for its customers and typically will purchase the refined metal from the customer at current market prices. In limited circumstances, the customer may want to fix the price to be paid at the time of the order as opposed to when the material is refined. The customer may also want to fix the price for a set period of time. The Company may then elect to enter into a hedge contract, either a forward contract or a swap, to fix the price for the estimated quantity of metal to be purchased, thereby reducing the exposure to adverse movements in the price of the metal. The Company may also enter into hedges to mitigate the risk relating to the prices of the metals which we process or refine.
In certain circumstances, the Company also refines metal from the customer and may retain a portion of the refined metal as payment. The Company may elect to enter into a forward contract to sell precious metal to reduce the Company's price exposure.
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 typically held for a short duration. A forward contract will be secured at the time of the purchase to fix the price to be used when the metal is transferred back to the consignment line, thereby limiting any price exposure during the time when the metal was owned.
Copper. The Company also uses copper in its production processes. When possible, fluctuations in the purchase price of copper are passed on to customers in the form of price adders or reductions. While over time the Company's price exposure to copper is generally in balance, there can be a lag between the change in the Company's cost and the pass-through to its customers, resulting in higher or lower margins in a given period. To mitigate this impact, the Company hedges a portion of this pricing risk.
The Company will only enter into a derivative contract if there is an underlying identified exposure. Contracts are typically held to maturity. The Company does not engage in derivative trading activities and does not use derivatives for speculative purposes. The Company only uses hedge contracts that are denominated in the same currency or metal as the underlying exposure.
All derivatives are recorded on the balance sheet at fair value. If the derivative is designated and effective as a cash flow hedge, changes in the fair value of the derivative are recognized in other comprehensive income (OCI) until the hedged item is recognized in earnings. The ineffective portion of a derivative's fair value, if any, is recognized in earnings immediately. If a derivative is not a hedge, changes in the fair value are adjusted through income. The fair values of the outstanding derivatives are recorded on the balance sheet as assets (if the derivatives are in a gain position) or liabilities (if the derivatives are in a loss position). The fair values will also be classified as short-term or long-term depending upon their maturity dates.
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 balance sheet classification as of April 2, 2021 and December 31, 2020:
 April 2, 2021December 31, 2020
(Thousands)Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Foreign currency forward contracts
Prepaid expenses$4,261 $45 $62,012 $107 
Other liabilities and accrued items63,062 509 7,695 55 
These outstanding foreign currency derivatives were related to balance sheet hedges and intercompany loans. Other-net included $1.6 million and $0.6 million of foreign currency gains related to derivatives in the first quarter of 2021 and 2020, respectively.
The following table summarizes the notional amount and the fair value of the Company’s outstanding derivatives designated as cash flow hedges (on a gross basis) and balance sheet classification as of April 2, 2021 and December 31, 2020:
 April 2, 2021December 31, 2020
(Thousands)Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Prepaid expenses
Foreign currency forward contracts - yen$2,887 $108 $— $— 
Foreign currency forward contracts - euro12,818 129 — — 
Precious metal swaps4,568 418 2,155 127 
Copper swaps6,533 550 6,225 632 
Total26,806 1,205 8,380 759 
Other assets
Foreign currency forward contracts - yen111 2 — — 
Foreign currency forward contracts - euro1,202 15 — — 
Total1,313 17 — — 
Other liabilities and accrued items
Foreign currency forward contracts - yen  2,668 59 
Foreign currency forward contracts - euro2,179 176 17,611 1,089 
Precious metal swaps515 3 4,964 349 
Copper swaps4,254 188 2,445 27 
Total6,948 367 27,688 1,524 
Total$35,067 $855 $36,068 $765 
All of these contracts were designated and effective as cash flow hedges. The Company expects to relieve substantially the entire balance in OCI as of April 2, 2021 to the Consolidated Statements of Income within the next 15-month period. Refer to Note L for additional OCI details.
The following table summarizes the amounts reclassified from accumulated other comprehensive income relating to the hedging relationship of the Company’s outstanding derivatives designated as cash flow hedges and income statement classification as of the first quarter of 2021 and 2020: 
 First Quarter Ended
(Thousands)April 2, 2021March 27, 2020
Hedging relationshipLine item
Foreign currency forward contractsNet sales$140 $(1)
Precious metal swapsCost of sales(104)318 
Copper swapsCost of sales(1,534)321 
Total$(1,498)$638 
v3.21.1
Contingencies
3 Months Ended
Apr. 02, 2021
Loss Contingency [Abstract]  
Commitments and Contingencies Disclosure [Text Block] Contingencies
Legal Proceedings. For general information regarding legal proceedings relating to Chronic Beryllium Disease Claims, refer to Note T ("Contingencies and Commitments") in the Company's 2020 Annual Report on Form 10-K.
Two beryllium cases were outstanding as of April 2, 2021. The Company does not expect the resolution of these matters to have a material impact on the consolidated financial statements.
Other Litigation. The Company is party to several pending legal proceedings and claims arising in the normal course of business. The Company records a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosure related to such matters. To the extent there is a reasonable possibility that the losses could exceed any amounts accrued, the Company will adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.
On October 14, 2020, Garett Lucyk, et al. v. Materion Brush Inc., et. al., case number 20CV0234, a wage and hour purported collective and class action, was filed in the Northern District of Ohio against the Company and its subsidiary, Materion Brush Inc. (collectively, the Company). Plaintiff, a former hourly production employee at the Company's Elmore, Ohio facility, alleges that he and other similarly situated employees nationwide are not paid for all time they spend donning and doffing personal protective equipment in violation of the Fair Labor Standards Act and Ohio law. Plaintiff also alleges the Company failed to include all remuneration he and others received for premium and bonus pay when computing overtime pay. The case is currently in the preliminary stages. The Company believes that it has substantive defenses and intends to vigorously defend this suit.
Environmental Proceedings. The Company has an active environmental compliance program and records reserves for the probable cost of identified environmental remediation projects. The reserves are established based upon analyses conducted by the Company’s engineers and outside consultants and are adjusted from time to time based upon ongoing studies, the difference between actual and estimated costs, and other factors. The reserves may also be affected by rulings and negotiations with regulatory agencies. The undiscounted reserve balance was $5.4 million and $5.5 million at April 2, 2021 and December 31, 2020, respectively. Environmental projects tend to be long-term, and the final actual remediation costs may differ from the amounts currently recorded.
v3.21.1
Debt
3 Months Ended
Apr. 02, 2021
Debt Disclosure [Abstract]  
Debt Disclosure Debt
(Thousands)April 2, 2021December 31, 2020
Borrowings under Credit Agreement $48,955 $34,000 
Foreign debt2,880 3,157 
Fixed rate industrial development revenue bonds1,113 1,322 
Total debt outstanding52,948 38,479 
Current portion of long-term debt(1,541)(1,937)
Long-term debt$51,407 $36,542 

As of April 2, 2021 and December 31, 2020, the Company had $49.0 million and $34.0 million, respectively, outstanding against its revolving credit facility with average interest rates of 1.88% and 1.65% at April 2, 2021 and December 31, 2020, respectively. The remaining borrowing capacity under the revolving credit facility as of April 2, 2021 and December 31, 2020 was $250.4 million and $245.8 million, respectively. The Company has the option to repay or borrow additional funds under the revolving credit facility until the maturity date in 2024. The 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 April 2, 2021.

At both April 2, 2021 and December 31, 2020, there was $48.1 million outstanding against the letters of credit sub-facility.
v3.21.1
Significant Accounting Policies (Policies)
3 Months Ended
Apr. 02, 2021
Accounting Policies [Abstract]  
Basis of Accounting Basis of Presentation: The accompanying consolidated financial statements of Materion Corporation and its subsidiaries (referred to herein as the Company, our, we, or us) contain all of the adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods reported. All adjustments were of a normal and recurring nature. Certain amounts in prior periods have been reclassified to conform to the 2021 consolidated financial statement presentation.These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's 2020 Annual Report on Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year.
Business Combinations Policy
Business Combinations: The Company records assets acquired and liabilities assumed at the date of acquisition at their respective fair values. Any intangible assets acquired in a business combination are recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

The amounts reflected in Note B to the Consolidated Financial Statements are the results of a preliminary purchase price allocation and will be updated upon completion of the final valuation. The Company is required to complete the purchase price allocation within 12 months of the acquisition date. If such completion of the allocation results in a change in the preliminary values, the measurement period adjustment will be recognized in the period in which the adjustment amount is determined.
New Accounting Pronouncements
New Pronouncements Adopted: In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing various exceptions, such as the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income or a gain from other items. The amendments in this update also simplify the accounting for income taxes related to income-based franchise taxes and require that an entity reflect enacted tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company adopted the standard on January 1, 2021. The adoption did not materially impact the Company's financial statements or disclosures.

New Accounting Guidance Issued and Not Yet Adopted: In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance is intended
to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is available immediately and may be implemented in any period prior to the guidance expiration on December 31, 2022. The Company is currently assessing which of its various contracts will require an update for a new reference rate, and will determine the timing for implementation of this guidance at the completion of that analysis.No other recently issued or effective ASUs had, or are expected to have, a material effect on the Company's results of operations, financial condition, or liquidity.
v3.21.1
Revenue Recognition Accounting Policy (Policies)
3 Months Ended
Apr. 02, 2021
Accounting Policies [Abstract]  
Revenue [Policy Text Block] Net sales consist primarily of revenue from the sale of precious and non-precious specialty metals, beryllium and copper-based alloys, beryllium composites, and other products into numerous end markets. The Company requires an agreement with a customer that creates enforceable rights and performance obligations. The Company generally recognizes revenue, in an amount that reflects the consideration to which it expects to be entitled, upon satisfaction of a performance obligation, by transferring control over a product to the customer. Control over the 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 April 2, 2021. Remaining performance obligations include non-cancelable purchase orders and customer contracts. The guidance provides certain practical expedients that limit this requirement. As such, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
v3.21.1
Accounting Policies (Tables)
3 Months Ended
Apr. 02, 2021
Accounting Policies [Abstract]  
Accounting Standards Update and Change in Accounting Principle
The following tables reflect the impact to the financial statement line items as a result of the change in accounting principle for the prior periods presented in the accompanying financial statements:

Consolidated Statement of Income

(Thousands except per share amounts)
First Quarter Ended
March 27, 2020
Selected ItemsAs ReportedAs AdjustedAdjustment
Cost of sales$232,371 $233,376 $1,005 
Gross margin45,575 44,570 (1,005)
Operating loss(4,563)(5,568)(1,005)
Loss before income taxes(3,865)(4,870)(1,005)
Income tax (benefit) (762)(992)(230)
Net loss(3,103)(3,878)(775)
Basic earnings per share:
Net loss per share of common stock$(0.15)$(0.19)$(0.04)
Diluted earnings per share:
Net loss per share of common stock$(0.15)$(0.19)$(0.04)

Consolidated Statement of Comprehensive Income (Loss)
(Thousands)
First Quarter Ended
March 27, 2020
Selected ItemsAs ReportedAs AdjustedAdjustment
Net loss$(3,103)$(3,878)$(775)
Comprehensive loss(4,814)(5,589)(775)

Consolidated Statement of Cash Flow
(Thousands)
Three Months Ended
March 27, 2020
Selected ItemsAs ReportedAs AdjustedAdjustment
Net loss$(3,103)$(3,878)$(775)
Deferred income tax benefit(1,227)(1,457)(230)
Decrease (increase) in inventory(16,723)(15,718)1,005 
v3.21.1
Segment Reporting (Tables)
3 Months Ended
Apr. 02, 2021
Segment Reporting [Abstract]  
Segment Reporting
(Thousands)Performance
Alloys and
Composites
Advanced MaterialsPrecision OpticsOtherTotal
First Quarter 2021
Net sales$114,143 $204,644 $35,599 $ $354,386 
Intersegment sales
5 2,687   2,692 
Operating profit (loss)13,491 8,933 4,558 (7,264)19,718 
First Quarter 2020
Net sales$99,067 $160,165 $18,714 $ $277,946 
Intersegment sales215 9,191 9,406 
Operating profit (loss)3,523 5,050 (9,592)(4,549)(5,568)
Disaggregation of Revenue
The following table disaggregates revenue for each segment by end market for the first quarter of 2021 and 2020:
 (Thousands)Performance Alloys and CompositesAdvanced MaterialsPrecision OpticsOtherTotal
First Quarter 2021
End Market
Semiconductor$997 $155,061 $471 $— $156,529 
Industrial24,030 12,590 7,375 — 43,995 
Aerospace and defense21,842 1,398 6,576 — 29,816 
Consumer electronics10,044 165 9,460 — 19,669 
Automotive23,507 1,669 2,193 — 27,369 
Energy4,137 27,190 — — 31,327 
Telecom and data center11,343 70 — — 11,413 
Other18,243 6,501 9,524 — 34,268 
Total$114,143 $204,644 $35,599 $— $354,386 
First Quarter 2020
End Market
Semiconductor$906 $120,819 $11 $— $121,736 
Industrial23,340 8,362 3,097 — 34,799 
Aerospace and defense14,206 1,426