Greetings and welcome to the Materion Corporation First Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) It is now my pleasure to introduce your host, Michael Hasychak, Vice President, Treasurer, and Secretary for Materion Corporation. Thank you. Mr. Hasychak you may begin.

Good morning. This is Mike Hasychak. With me today is Dick Hipple, President, Chairman and CEO; John Grampa, Senior Vice President, Finance and Chief Financial Officer; and Jim Marrotte, Vice President and Corporate Controller. Our format for today’s conference call is as follows. John Grampa will comment on the first quarter 2013 results and the outlook, and Dick Hipple will give a market update. Thereafter, we will open up the teleconference call for questions. A recorded playback of this call will be available until May 9 by dialing area code 877. The number is 660-6853 or you can dial 201, 612-7415, the conference id number is 411602. The call will also be archived on the Company’s website, materion.com. To access the replay, click on Events and Presentations on the Investor Relations page. Any forward-looking statements made in this announcement, including those in the outlook section, and during the question-and-answer portion are based on current expectations. The company’s actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. Those factors are listed in the earnings press release issued this morning. And now, I’ll turn over the call to John Grampa for comments.

Thank you, Mike. Good morning everyone, and thank you for taking the time to join us this morning. Today’s agenda is similar to that of our past calls. I will review the results for the quarter and then I will review the outlook. Following my comments Dick Hipple will review the current state of our key markets, and provide his perspective on certain specific key new product initiatives and there is a lot of good news to report on these initiatives. Following Dick, we will open the call for your questions. As I normally do I will cover sales, earnings, and margins. I will also review the key changes in business levels by market, comparing the first quarter of 2013 to the first quarter of the prior year, as well as sequentially to the fourth quarter. I will also provide an update on the facility consolidation initiatives and the physical inventory adjustment announced on February 13. I will follow these with the review of margins and brief comments on the balance sheet to cash flow, as well as the outlook for the remainder of the year. Before I began though, I want to call your attention to the non-GAAP value added sales and margins reporting by segment that is now included in the press release along with the usual GAAP reporting. As many of you already know we are providing these additional insights because in our businesses the cost of gold, silver, platinum, palladium and copper are generally pass-through the customers and movements in their prices can influence reported sales and margins expressed as a percent of sales without affecting margin dollars and underlying profitability. We analyze our business on a value added sales and margin basis internally. Value added sales is a non-GAAP measure that deducts the cost of…

Thank you, John. Our first quarter results were in line with our expectations in spite of having some shipments slip into the second quarter in our Beryllium and Composites division and having some higher costs at our Albuquerque plan as a result of our extensive follow-up investigations and study. All-in-all market levels have been modestly improving and most importantly we saw lift in our consumer electronics market after a long slumber. Our medical applications and automotive electronics continue to grow nicely for us as they did throughout 2012. Defense and science continues to be a weak spot for us in the first quarter, in part due to timing of shipments. In the current uncertain macro environment, the most important factor for us is growing through new platforms and applications, which will carry us forward with stronger growth. You have heard me mention some of our pending growth platforms and I am happy to report that in the first quarter we did achieve some milestones. We did receive our first production orders for optics gesture control used in gaming devices. We received our first orders from Audi and Volkswagen for our new aluminum flat pattern to duct tail (ph) connector for hybrid batteries. Out startup in Singapore, where we have expanded our (inaudible) supply manufacturing has won new accounts from LED manufactures in Asia. Our expanded capability to ship BE speaker dome material is supporting dramatically increased demand across the globe in high-end sound systems. These are just a few examples. So, as we move into the second quarter we are certainly cautious given Europe’s slow down, slower growth in China and fairly anemic US conditions, but I’m excited about what the Materion team is doing to find growth opportunities through differentiated technology and finding new solutions for our customers. Also, we expect to continue to produce higher levels of beryllium from our new pebbles plant, which will continue to improve profitability from the BE and composites division as we move through the year. Thank you operator, we are now ready for questions.

Thank you. We will now be conducting a question-and-answer session. (Operator Instruction) Our first question comes from the line of Avinash Kant with D.A. Davidson. Please proceed with your question. Avinash Kant – D.A. Davidson: Good morning, Dick and John.

Good morning. Avinash Kant – D.A. Davidson: First question, you did see meaningful improvement in the margins in the current quarter. Now, you also had highest production at the pebble plant. So could you tie that a little bit and may be give us some idea about how much of the improvement in margins came from higher production at the pebble plant and how much was from other sources?

Avinash, this is Jim Marrotte. If you look at the one summary state that we provided to you was the press release that shows that we had the sales ratios. And if you look at the Beryllium and Composites Group, we had a margin of about 22% here in the first quarter versus 14% last year that margin growth there is primarily the impact of the increased efficiencies and output that we saw in the pebble plant. Avinash Kant – D.A. Davidson: Okay. If we are going to look at overall margin growth in corporate-wide that seems like that was biggest contributor.

Yes.

That was in the single margins contributor, correct.

Yes. Avinash Kant – D.A. Davidson: Right. And more than 50% of the contribution in growth may be from there?

There is lot to put into stake, but it was a significant portion of our improvement. Avinash Kant – D.A. Davidson: Okay. And on the new product side, Dick gave a few examples about some of the new orders that you are getting. Could you give us some idea about how big these opportunities are and where do you expect to be in a year or two or three year’s time frame? For example, talking about the automotive opportunity or some of the LED opportunities, how far could they go?

Typically, these kinds of opportunities for us should they gain attraction, could be in the range of $10 million to $20 million type opportunity. Avinash Kant – D.A. Davidson: Okay. And I may have missed a few numbers when you talked about sequential growth in different end markets. I think you talked about medical being up 12%, with automotive up 8%.

Which area are you representing? Avinash Kant – D.A. Davidson: Sequentially in Q1 compared to Q4, medical, automotive, I think you gave commercial aerospace and consumer.

Sequentially to fourth quarter, medical was up 12%, automotive was up 8%, consumer electronics was up 7%, industrial components and commercial aerospace was up 3%. Avinash Kant – D.A. Davidson: 3%, right?

Yes. Avinash Kant – D.A. Davidson: Okay. So in terms of linearity of revenues also, John, how should we think of like Q2, Q3 up sequentially and Q4, how do you see that seasonally?

I think Q2 is going to be up from Q1. So, sequentially we still anticipate increases in the second quarter, compared to first and that is what you are asking? Avinash Kant – D.A. Davidson: Yes, I know was talking about but you have the full year guidance, right, on EPS. So, I was thinking how do you see the year tracking on a quarterly basis.

Well, each quarter will be at this point will be stronger than the prior quarters, the second, third and fourth quarters sequentially stronger and there are two or three factors that you have to recall and all that, not only do we see some improvements in the market in general, but we have the beryllium facility continuing to ramp as the year progresses. And secondly, as the year progresses, we also expect the facility consolidation cost to decline and by the time we get to the fourth quarter we are going to benefit from the facility consolidations as well. So, those two factors will allow the growth in earnings sequentially. Also, in the fourth quarter, we will have an event, the shipment of the hydroxide, which happens only twice a year that will also help boost the fourth quarter a little bit. Avinash Kant – D.A. Davidson: And that shipment is about roughly $7million to $8 million, roughly how big is that?

No, no. Those shipments are typically $4 million to $5 million of sales value and maybe $0.05 to $0.06 a share of earnings impact. Avinash Kant – D.A. Davidson: Perfect. Thank you so much.

Our next question comes from line of Martin Engler with Jefferies. Please proceed with your question. Martin Engler – Jefferies: Hi. Good morning everyone.

Good morning. Martin Engler – Jefferies: I had some questions on the special charges during the quarters. May be you could review them again. There was charges associated with the consolidation of the facilities. I think that was $0.02 to $0.03 per share impact for 1Q and expected to be a similar impact on the 2Q. And then, there was another charge for another inventory adjustment of $2.3 million and that would be pre-tax.

That’s correct pre-tax. Martin Engler – Jefferies: And that was not previously anticipated, is that correct?

That’s correct. Martin Engler – Jefferies: Okay. And then, I know in the release you noted outside or within Performance Alloys you have been successful in implementing some price increases. Can you talk about any of the other segments and what is going on with the pricing fundamentals there if you had any other successes for increasing prices in 2013?

Yes, we have taken the same program that we’ve had in alloy and we are executing that in our other divisions and along with the alloy we’ve had a pretty aggressive pricing strategy in our high beryllium business, also given the uniqueness of that product. So, yes, we’ve certainly recognized the benefits, so the new pricing program that we’ve initiated in the last couple of years in alloy and it’s taking roots in the other divisions at this point. So it’s very beneficial for the company. Martin Engler – Jefferies: In the past that’s been a pretty good for helping out the Performance Alloys and would you expect a similar traction within the other segments in the coming years and kind of the similar impact of the margins?

I would think that – my view that I don’t know expect a similar impact because we have some very much higher margins in some of the other division. So I think we had a lot more low hanging fruit if you will in the Performance Alloys division than some of the other divisions. So we do expect because you can always get better, we do expect improvement in the other divisions but not to the degree that we got in the Performance Alloys division. Martin Engler – Jefferies: Okay, it’s helpful. And if I could one ask question on order entry you noted decent improvement there versus for a second half levels of last year from several different end markets. Do you anticipate further improvement for the remainder of the year to be coming from growth from these end markets which are currently doing well in growing or do you expect some turnaround from the weaker end markets?

The weaker end markets of energy and industrial components I wouldn’t expect robust turnaround in those markets. I will expect worse either.

I think the best way to think about energy with pretty darn soft second half of the last year and I think they’ve gone through some inventory adjustments. So we’re seeing some growth there, but it’s not going to be a big strong lift. I think a good way to think through it is, for example, I think Schlumberger, they just had their earnings call and what you find there is that US is quite has been soft, picking up a little bit and they’ve seen the growth on the international drilling and US has been soft. So it’s kind of balanced out. It’s tempered down the growth of the oil and gas market driven by the natural gas pricing down, but you should note that natural gas pricing now has started to come back up again. So we do expect to see the oil and gas sector have modest growth this year, so we’ll pick up growth versus the decline that we saw on the second half of last year. Martin Engler – Jefferies: Okay. And then you already noted just to have some visibility on the defense side where you expect some improved orders there as well?

Yes, we do have visibility there. Martin Engler – Jefferies: Okay, excellent. Thanks very much.

Thank you. Our next question comes from the line of Edward Marshall with Sidoti & Company. Please proceed with your question. Edward Marshall – Sidoti & Company: Good morning. I have some questions on the charges in the quarter. Did you say it was $2.3 million and I know you just reviewed them a few times, but I want to be perfectly clear, $2.3 million for the inventory correction, correct?

That’s correct. Edward Marshall – Sidoti & Company: And how much was it for the consolidation of the facilities?

About impact of $0.02 to $0.03 a share, (inaudible). Edward Marshall – Sidoti & Company: And was there any other charges in the quarter?

No. Edward Marshall – Sidoti & Company: Okay. So if I look through the segment review it looks like the advanced materials, the margin jumps up obviously Beryllium and Composites and then we’ll get to the third, but the 2.3 plus the 6 to 8, does that all run through AMT or is that run through other segments as well?

It all runs through AMT. Edward Marshall – Sidoti & Company: Okay, so that kind of levels up the margin there. The Beryllium and Composites, I guess that the shortfall there I guess in the margin maybe close to the breakeven last quarter. That’s been the shipments. Can I quantify the shipments, is it about $4 million, they’ll get pushed into Q2?

It’s approximately $3 million and little over $3 million it gets pushed up. Edward Marshall – Sidoti & Company: Okay. And so that will get pushed up.

(Inaudible) in that business those margins are pretty high, so that’s north of 50% variable margin business, so it’s quite impactful. Edward Marshall – Sidoti & Company: So it almost looks like $16 million, $17 million as the 4Q run rate is probably to breakeven point in that business. I think you’ve improved the gross margin a little bit or so it appears. So maybe that number is dropping, but is that a fair assessment of that business and how we should kind of review that going forward?

Sure. Edward Marshall – Sidoti & Company: Okay, great. And then what happened in the corporate segment. It looks like that dropped pretty significantly in the quarter, our material in the quarter. Can you tell me what maybe didn’t occur there, just happened in prior quarters and is that the run rate we should expect for the whole year at $1.2 million, the all other segment?

That might be a little wider than what you would see going forward, but we shouldn’t see anything lose dramatically different.

First quarter prior year was a little higher than that, but it’s not going to move around a whole lot. Edward Marshall – Sidoti & Company: Was there a benefit in the quarter or something that might have hit that line or?

Nothing extraordinary or one-time benefit or anything like that, no. Edward Marshall – Sidoti & Company: Okay. And the tax rate was unusually low, did you mention. I know you talked about the tax rate a little bit but?

Yes, we talked about that also in the last call, the research and experimentation tax credit went into law after the beginning of the year and under the accounting if you know the prior year benefits ended up getting recorded in the first quarter of this year. So that’s about $0.03 in that tax benefit. Edward Marshall – Sidoti & Company: And all that $0.03 from last year, and then the lower tax?

We aren’t lowering the impact is in the estimated forecast of tax rate. Edward Marshall – Sidoti & Company: Okay. And we talked about cost to bill and we talked about the order patterns and you mentioned kind of second half of the 1Q and the last year’s 1Q. Is it not a fair assessment to look at it from 4Q in sequentially? Is that not a fair assessment, because I think fourth quarters were up pretty significantly?

It’s quiet. That’s why we presented sequentially versus comparing to prior year only because we think that sequential is really more important to investors. Edward Marshall – Sidoti & Company: Right. So you gave a kind of second half ‘13, but did you provide kind of the fourth quarter look in comparison on the order book?

It’s about the same to look it up all. I think right.

It’s in the 5% to 6% range.

It’s within that same range, 5% to 6%, yes. Edward Marshall – Sidoti & Company: Excellent. And so we talked about and this is kind of the beryllium facility and working towards profitability and it looks like if you didn’t have the push out, if you are drawing close if not profitable. As we kind of go through the year I think the original outlook for that business was in somewhere around 3Q. You had been about $6 million to $8 million of run rate starting in 3Q. Are you still on track for that or is that changed?

Your assessment that we may have been a little profitable in the first quarter based on that push out is correct, so we should become profitable in the second quarter. I don’t recall that run rate of saying that run rate would be achieved in the third quarter, but we could be close to that.

I think we have got a good shot. Edward Marshall – Sidoti & Company: Okay. And then finally as we look kind of for the balance of the year and we always talk about Christmas builds and so forth or let’s call Holiday builds. Is there any assessment at this point as to what we should assume for 2013? I know the inventory is (inaudible)?

Yes, two things. The Holiday build have a tendency to also begin predictably in our advanced material segment. In the late August timeframe we began to see the order actually in the order patterns and that guarantee point for the last month of the third quarter and into the first month of the fourth quarter, so that’s sort of the timeframe and kind of effecting both quarters a bit. I think it’s really kind of early to really predict what has happened in there, because our build time or our lead times on those orders because a lot of its precious metal a quick turnaround and the customer base knows that you get the orders a week or two before you ship. So it’s a little premature to be able to predict what that’s going to be. I probably rely more on asking you that question and you asking me. Edward Marshall – Sidoti & Company: Okay. Fair enough. Thanks guys.

Thank you. Our next question comes from the line of Marco Rodriguez with Stonegate Securities. Please proceed with your question. Marco Rodriguez – Stonegate Securities: Good morning guys. Thank you for taking my questions. Most of my questions have actually been asked and answered but just have a couple real quick follow-ups here. I was thinking about the beryllium segments, can you kind of help me understand once you hit a normalized run rate what would be a normalized operating margin there?

Marco Rodriguez – Stonegate Securities: Yes.

As a profit line? Marco Rodriguez – Stonegate Securities: As the operating margin line, yes?

At a segment level, 10% to 12% double-digits. Marco Rodriguez – Stonegate Securities: Okay that’s helpful. And then, following up with regard to your guidance if I heard you correctly, you kind of sounded like you’ve took up the higher end EBITDA from like in the 90 to 102. I believe you are up to your debt reduction plans. Can you talk a little bit about that what’s driving those?

Actually I did not. We lowered the upper-end of the EBITDA from $105 million to $102 million. Marco Rodriguez – Stonegate Securities: Okay.

And then the debt number is the same. I guess I called as from first quarter levels, the number that I provided previously was $30 million to $40 million from year-end levels and with first quarter debt climbing 15, I just added that too. So from first quarter levels it’s 45 to 55 from year-end ‘12 levels of 30 to 40. It’s the same. Marco Rodriguez – Stonegate Securities: Got it. Well, thanks a lot guys.

Hi. Good morning.

Good morning.

Couple of question. One, on the EBITDA guidance, why would you not actually increase the guidance, why you went from (inaudible). What’s the rationale behind it?

Well, in the first quarter we were light on the EBITDA from the guidance and estimates that we have provided. The year’s forecast is giving us the lower tax rate, so the offset to that in our total guidance comes from a lower tax rate and offsetting slightly lower EBITDA.

Is there a chance you given the fact that the markets seem to be improving. Your end markets are that you could actually do better than the guidance?

Sure. There is always that chance. It’s a question of how strong the end markets really get.

Right. And the other question I have is on use of cash. From a strategic perspective are there other things you might be looking at maybe small deals or maybe buying back shares or other things?

They are all on the table.

The assumption is that will not happen, but they are always on the table and as we are close and opportunities will come to us.

Thanks a lot.

(Operator Instructions). Our next question comes from the line of Mark Parr with KeyBanc Capital Markets. Please proceed with your question. Mark Parr – KeyBanc Capital Markets: Thank you. Good morning.

Good morning Mark, how are you? Mark Parr – KeyBanc Capital Markets: Doing good, sunshine. Yes, I appreciate all the color. I just wanted first of all just to congratulate you for sharing the detail on the value-added revenues. I think that’s extremely helpful. I had a couple of questions. I think you indicated that overall orders were up at 6% year-on-year, is that right?

That’s correct. That was over the second half of the last year.

Over the second half. Mark Parr – KeyBanc Capital Markets: Okay, over the second half of the last year. Can you give some sense of how the orders trended, compared to the first quarter of 2012?

No, we have to look that up. I don’t have at the tip of my tongue. I think it is up or maybe about flat. Mark Parr – KeyBanc Capital Markets: Alright. And then, I guess what I am trying to go with this is and I understand the delay and the deferred shipments and the consolidation cost running off and the continuing improvement with the pebbles facility, but just trying to get a better sense of the base business. I mean, Dick, do you any sense of how April’s unfolding say compared to the first quarter run rate or compared to the last year or any sense there is as far as order momentum?

I don’t have the data in front of me Mark, but relative to the first quarter sequentially it’s about the same and I shouldn’t use the word majority, the second quarter May timeframes when you generally start to see some lift and in our seasonal patterns and then also the growth for the year we’re not tampering from where we had anticipated it to be will be put our initial guidance output. Now, there are winds of caution coming from the variety of markets at the same time we know that our programs in places like defense, for example, on the Beryllium and Composites side are funded as an example, which gives us some tailwind light vis-à-vis anything that might happen on the market side. So we got that plus launching of some programs plus the lowering of the cost associated with facility consolidations sort of its tailwinds in the end numbers and we are not assuming aggressive and robust growth in markets. Mark Parr – KeyBanc Capital Markets: Okay, alright. But is it fair to say though that you will expect the markets to be at least stable to a modestly overall?

Yes, that is correct. And sales level or order entry level in the first quarter that was above sales level. Mark Parr – KeyBanc Capital Markets: Yes, so that’s certainly encouraging. And do you think about the first month of the quarter is not unusual for order input rates to fall-off a bit. Isn’t that sir?

I’ll tell you what the order pattern for the last two years is so unpredictable I wouldn’t say anything normal anymore. We’re encouraged right now. Let’s see. We don’t see it going south and as you point out we see it stable to up modestly. Mark Parr – KeyBanc Capital Markets: Okay. I get, point taken. Alright, guys good luck on the second quarter and congratulations on the 1Q outcome.

Yes. Thank you.

Thank you. Our next question is a follow-up from Edward Marshall with Sidoti & Company. Please proceed with your question. Edward Marshall – Sidoti & Company: Final question from me just a follow-up on the all the charges and the benefits in the quarter. What is the look if we strip out all these charges and normalize the tax rate and what is the quarter look for you just out of curiosity? What would you have recorded if these extra costs and benefits weren’t in there? It looks like there is roughly $0.07 from?

$0.38 to $0.40. Edward Marshall – Sidoti & Company: $0.38 to $0.40, right. Okay. And the tax rate…

And that’s also the tax benefit, correct? Edward Marshall – Sidoti & Company: Right. And the tax benefit you said was $0.03 for the full year 2012, correct, so about $600,000?

Yes. Edward Marshall – Sidoti & Company: And then, there was the facility consolidation of about 700,000 and the inventory charge of 2.3?

Yes.

That’s correct. Edward Marshall – Sidoti & Company: Okay. Perfect. Thanks guys.

Thank you. Mr. Hasychak, there are no further questions at this time. I would like to turn the floor back over to you for closing comments.

Thank you. This is Mike Hasychak. Thank you very much for participating on the call this morning. I’ll be around the remainder of the afternoon to answer any further questions. My direct line is 216-383-6823. Thank you very much.

Thank you. This concludes today’s teleconference. You may disconnect your line. Thank you for your participation.