Materion's sales jump 28%. How much comes from metal costs?
Chipmakers are buying more advanced materials, helping Materion raise its earnings target. Our comparison separates that growth from metal costs passed through to customers.
Materion raised its annual profit forecast again as demand from chipmakers lifted its third-quarter sales. Its specialty materials are benefiting from a broader recovery too, with aerospace and defense adding to the gains.
The headline sales increase is larger than the operating expansion. Net sales rose about 28% to $567.3 million in the quarter ended October 2. Value-added sales, which remove metal costs passed through to customers, increased about 19% to $313.7 million.
Research by Ticker Byline shows that higher pass-through metal costs account for roughly 59% of the dollar increase in reported sales.
Even after that adjustment, the demand improvement is substantial. Materion reported 40% growth in semiconductor sales volumes on its value-added basis and 42% in aerospace and defense. Incoming orders for the first nine months were about 25% higher than a year earlier, with backlog up about 35%.
A higher earnings target
Materion now expects full-year adjusted earnings of $7.10 to $7.40 a share, up from the $6.80 to $7.20 range announced in August. The midpoint has risen about 3.6%. This earnings measure removes specified costs and acquisition-related amortization.
| Measure | 2026 | 2025 |
|---|---|---|
| Net sales | $567.3 | $444.8 |
| Value-added sales | $313.7 | $263.9 |
| Operating profit | $50.4 | $34.9 |
| Adjusted EBITDA | $70.7 | $55.5 |
Adjusted EBITDA, earnings before interest, taxes, depreciation, depletion and amortization with specified costs removed, reached 22.5% of value-added sales, compared with 21.0% a year earlier. Higher volume and pricing and product mix helped. Reported net income rose to $38.3 million from $25.4 million.
The latest quarter was stronger than a year ago, but its adjusted EBITDA and margin were below the second quarter's $71.8 million and 23.3%. Materion said that earlier quarter included favorable one-time items.
More cash, with some help from payment timing
Third-quarter free cash flow reached $45.8 million, compared with a $5.2 million outflow a year earlier. Materion calculates that measure after both equipment spending and mine development.
Over the first nine months, operating cash flow rose to $142.7 million from $83.7 million. Materion attributed $38.4 million of the improvement to quarter-end payment timing for payables and accruals. The company also sold fewer customer receivables to financiers.
The cash helped reduce debt. At October 2, debt carrying value excluding leases was $397.0 million, down from $458.8 million at year-end. The Materion company profile follows its borrowing capacity, customer-funded equipment and the next earnings target to test.