Materion Corporation (NYSE:MTRN) today revised its earnings estimates for the full year 2011. While the Company, at this time, expects a profitable fourth quarter, the final results for the full year will likely be well below the low end of its previously announced range of $2.10 to $2.20 per share. The reduction is due to significantly lower than expected sales in the fourth quarter, higher than anticipated costs in the Company’s Beryllium and Composites Segment and an inventory valuation adjustment. 2011 EXPECTATIONS In the fourth quarter of 2011, the Company did not experience the increase in sales normally associated with the consumer electronics holiday period. Instead, the Company believes that its customers were driving inventories down to very low levels, which, in turn, resulted in sales for the quarter being well below what the Company expected. It is now anticipated that 2011 sales, when reported, will be approximately $1.525 billion, or $35.0 million to $55.0 million below the Company’s previous range of $1.56 billion to $1.58 billion. Approximately $25.0 million of the reduction is related to pass through metal price declines, while the balance of $10.0 million to $30.0 million is due to the decline in sales volume. As previously reported, the start-up and ramp-up of the Company’s new beryllium pebble plant has been slower than expected. The Company is pleased to report that the most significant issues that had delayed the start-up and ramp-up have been resolved. It is anticipated that the beryllium pebble plant production ramp-up will continue to progress and the Company currently expects to reach capacity levels in excess of the 2012 demand levels. The Company did, however, incur higher than expected costs in the Beryllium and Composites Segment during the fourth quarter and lower yields and other manufacturing issues unrelated to the start-up and ramp-up of the new plant.
Looking at the universe of stocks we cover at Dividend Channel, on 2/17/15, Materion Corp will trade ex-dividend, for its quarterly dividend of $0.085, payable on 3/3/15. As a percentage of MTRN's recent stock price of $37.16, this dividend works out to approximately 0.23%.
Shareholders of Materion Corp looking to boost their income beyond the stock's 0.9% annualized dividend yield can sell the June 2015 covered call at the $40 strike and collect the premium based on the $1.40 bid, which annualizes to an additional 8.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.3% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but MTRN shares would have to climb 11.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 15.1% return from this trading level, in addition to any dividends collected before the stock was called.
In trading on Friday, shares of Materion Corp crossed below their 200 day moving average of $34.17, changing hands as low as $34.10 per share. Materion Corp shares are currently trading off about 1.6% on the day.