Materion (NYSE:MTRN) today announced plans to consolidate the manufacturing operations of certain of its businesses along with the related cost and expected net income benefit. The Company's facility in the Czech Republic will be shut down and its business consolidated into an existing related facility in Ireland. The Company has also announced plans to close its Buellton, California optical coatings facility and consolidate production with operations at Company locations in Westford, Massachusetts and Shanghai, China. In addition, the Company also plans to consolidate operations in its Albuquerque, New Mexico Advanced Materials business from four facilities to two. The consolidation of these facilities will allow for improved operating efficiency, cost savings and the ability to service the market more effectively. Costs related to these facility consolidations are expected to negatively impact earnings in the fourth quarter of the year by approximately $0.10 per share. An additional $0.10 per share is expected to be incurred in 2013. When combined with the already announced closure and consolidation of its Newburyport, Massachusetts operations and other actions taken at its Shanghai, China facility, the costs and benefits are expected to be neutral to 2013 and favorably impact earnings by approximately $0.20 per share in 2014. The global macroeconomic environment continues to remain uncertain and visibility is short. Order entry continues to be choppy. Taking this, as well as the effect of the above-mentioned charges, into consideration, the Company now expects earnings for 2012 to be in the range of $1.30 to $1.35 per share versus the previously announced range of $1.40 to $1.45 per share. CHAIRMAN’S COMMENTS Richard J. Hipple, Chairman, President and CEO, stated, “Manufacturing improvements, coupled with our more recent acquisitions, have given us the opportunity to consolidate operations, and therefore reduce costs and service our global customer base more effectively. The actions announced today will position the Company to operate more efficiently and generate higher future earnings.”
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.