Materion Corporation

Materion reported second-quarter value-added sales of $308.2 million, up 15% year over year and up 18% sequentially, and adjusted EPS of $1.90, up 39% year over year and up 50% sequentially. Adjusted EBITDA was $71.8 million, or 23.3% of value-added sales, up 29% year over year with 250 basis points of margin expansion. By segment, Performance Materials value-added sales were $190 million, up 13%; Electronic Materials was $87.4 million, up 15%; and Precision Optics was $30.8 million, up 26%. For the full year 2026, management now expects mid-teens sales growth and adjusted EPS of $6.80 to $7.20, versus prior guidance of $6.00 to $6.50. They also expect roughly 75% free cash flow conversion for the full year.

Jugal Vijayvargiya framed Q2 as a milestone quarter, saying the company delivered the highest quarterly sales and earnings in its history and that demand is strengthening across its end markets. He highlighted AI-driven semiconductor demand, record aerospace and defense sales, strong space momentum, and rapid growth in telecom/data center, while emphasizing that the order book is broad-based rather than concentrated in one customer or temporary inventory build. His tone was notably upbeat and confident, especially around defense and space, where he said growth should continue for this year and beyond.

Shelly Chadwick emphasized the operating leverage in the quarter, pointing to $308.2 million of value-added sales, $71.8 million of adjusted EBITDA, and a 23.3% margin. She noted strong segment execution, including 25.4% EBITDA margin in Performance Materials, 32% in Electronic Materials, and 21.4% in Precision Optics, and said Q2 free cash flow was $59 million with about 150% cash conversion. She also said net debt was about $421 million, available credit capacity was $233 million, leverage was 1.8x, and the company is targeting roughly 75% free cash flow conversion for the full year. On guidance, she reiterated mid-teens top-line growth and raised adjusted EPS outlook to $6.80 to $7.20.

Analysts pressed management on defense growth durability, the sustainability of the 32% Electronic Materials margin, and whether backlog reflects real demand versus prebuying. Jugal said defense bookings and RFQs continue to rise, with $90 million of incoming defense orders in the first half and more than $500 million of open RFQs, and he expects defense to remain a strong driver in 2027 and beyond. On Electronic Materials, Shelly said Q2 mix was especially rich and that margins should stay well ahead of last year, but not necessarily at the Q2 peak. On orders overall, Jugal said the book is broad-based and tied to current or near-term consumption in defense, space, aerospace, energy, and semis, not inventory buildup.