MATERION Corp
For the period ended Jul 3, 2026. Filed Aug 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 3, 2026 · Filed Aug 5, 2026
MTRN$186.11+4.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-04-03; filed 2026-04-29.
0001104657-26-000029
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-07-03; filed 2026-08-05.
0001104657-26-000044
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 61 previous paragraphs and 78 current paragraphs.
28 unchanged; 27 reworded; 15 added; 5 removed; 1 previous and 8 current paragraphs rearranged.
Tables are not compared: 8 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Value-added salesof $570.0 million in the first six months of 2026 increased $41.7 million, or 8%, compared to the first six months of 2025. Volume increases in the aerospace and defense (26%) and semiconductor (20%) end markets were partially offset by a volume decreases in the consumer electronics (29%) end market. Additionally, there was a $8.8 million year over year increase in the volume of raw material beryllium hydroxide sales compared to the same period in the prior year.
Current report
R&D expense consists primarily of direct personnel costs for product innovation including pre-production development, evaluation, and testing of new products, prototypes, and applications to deliver new high performing advanced materials to our customers. R&D expense accounted for 1% of net sales in the first six months of 2026 and 2% in the first six months of 2025. R&D expense accounted for 2% of value-added sales in both the first six months of 2026 and 2025.
Current report
Interest expense-net was $15.1 million in both the first six months of 2026 and 2025, respectively.
Current report
EBITDA for the Performance Materials segment was $48.3 million in the second quarter of 2026 compared to $41.1 million in the second quarter of 2025. The increase was primarily driven by incremental margin from higher sales volumes and strong price/mix. This was offset by lower margins resulting from reduced sales volumes during the controlled production ramp described above.
Current report
Net sales from the Performance Materials segment of $363.6 million in the first six months of 2026 increased 2% compared to net sales of $356.8 million in the first six months of 2025. The increase in sales was due to higher sales volumes in the aerospace and defense (22%) end market. Additionally, there was a $8.8 million year over year increase in the volume of raw material beryllium hydroxide sales compared to the first six months of 2025. This was partially offset by lower sales volumes in the consumer electronics (31%) end market. The decrease in the consumer electronics end market over the first six months reflects lower volumes resulting from a controlled production ramp during the second quarter of 2026 as part of ongoing operational alignment with a large precision clad strip customer. The Company continues to collaborate closely with this customer to ensure stable and reliable production performance.
Current report
Value-added sales of $329.5 million in the first six months of 2026 were flat year over year.
Current report
Net sales from the Electronic Materials segment of $375.2 million in the second quarter of 2026 increased by 67% compared to net sales of $224.4 million in the second quarter of 2025. The increase in net sales was due to higher pass-through metal pricing and sales volumes in the semiconductor and energy end markets. Higher pass-through metal pricing contributed $94.6 million compared to the second quarter of 2025.
Current report
Value-added sales of $87.4 million in the second quarter of 2026 increased 15% compared to value-added sales of $76.0 million in the second quarter of 2025. The increase in value-added sales was primarily driven by a volume increase in the semiconductor (18%) end market.
Current report
Net sales from the Electronic Materials segment of $738.5 million in the first six months of 2026 increased by 64% compared to net sales of $449.2 million in the first six months of 2025. The increase in net sales was due to higher pass-through metal pricing and sales volumes in the semiconductor and energy end markets. Higher pass-through metal pricing contributed $227.3 million compared to the first six months of 2025.
Current report
EBITDA for the Electronic Materials segment was $53.4 million in the first six months of 2026 compared to $28.7 million in the first six months of 2025. EBITDA in the first six months of 2026 benefited from incremental margin driven by higher sales volumes, strong price/mix, as well as favorable operational and manufacturing efficiencies.
Current report
Net sales from the Precision Optics segment of $61.6 million in the first half of 2026 increased 34% compared to net sales of $46.0 million in the first half of 2025. The increase was primarily due to higher sales volumes in the semiconductor (169%), aerospace and defense (46%), and industrial (29%) end markets.
Current report
Value-added sales of $61.5 million in the first half of 2026 increased 34% compared to value-added sales of $45.9 million in the first half of 2025. The increase in value-added sales was due to the same factors driving the increase in net sales.
Current report
EBITDA for the Precision Optics segment was $11.3 million in the first six months of 2026 compared to $0.6 million in the first six months of 2025. The increase in EBITDA was primarily driven by favorable of higher volume, strong price/mix and manufacturing efficiencies, partially offset by an increase in incentive compensation expense due to year to date performance.
Current report
Net cash provided by operating activities totaled $70.5 million in the first six months of 2026 versus $65.4 million in the prior-year period. The $5.1 million increase was primarily driven by an increase in accounts payable and accrued expenses of $41.4 million, due to continued working capital management and timing of payments. These cash inflows were offset by an increase in inventory of $22.0 million to support sales growth, in addition to an increase in accounts receivable of $38.2 million, due to timing of cash collections and higher sales when compared to prior year.
Current report
Net cash used in financing activities totaled $32.1 million in the first six months of 2026 and compared to $36.4 million in the comparable prior-year period. The net financing cash outflow in the first six months of 2026 was primarily driven by debt repayments, made possible by increased cash levels resulting from the Company's ongoing working capital initiatives.
Removed paragraphs (5)
Previous report
NM = Not Meaningful
Previous report
The primary measurement used by management to measure the financial performance of each segment is EBITDA. Refer to Note C to the Consolidated Financial Statements for the reconciliation of EBITDA by segment to consolidated net income.
Previous report
Net sales from the Electronic Materials segment of $363.4 million in the first quarter of 2026 increased 62% from net sales of $224.8 million in the first quarter of 2025. The increase in net sales was due to higher pass-through metal pricing, accounting for an increase of $132.6 million compared to the first quarter of 2025. These increases were partially offset by a decrease in sales volumes in the life sciences end market (246%) due to the exit of low margin business.
Previous report
Net cash (used in) provided by operating activitieswas a usage of $4.3 million in the first three months of 2026 compared to net cash provided by operating activities of $15.3 million in the prior-year period. The unfavorable change in cash use in operating activities was primarily driven by an increase in accounts receivables and accounts payables due to timing and the increase in the price of precious metal, resulting in a net use of cash of $8.7 million in the first quarter of 2026 compared a net use of cash of $5.7 million in the same period in the prior year. Increases in inventory to support business growth resulted in a use of cash of $28.9 million in the first quarter of 2026 compared to cash provided by the sale of inventory of $0.4 million in the same period in the prior year.
Previous report
Net cash provided by financing activities totaled $22.4 million in the first three months of 2026 compared to net cash provided by financing activities of $3.5 million in the prior-year period. The increase in borrowings in the first three months of 2026 from the same period in the prior year was a result of an increase in accounts receivables and accounts payables due to a significant increase in the price of precious metals and an increase in inventory to support business growth.
Reworded paragraphs (27)
Previous wording
We are an integrated producer of high-performance advanced engineered materials used in a variety of electrical, electronic, thermal, and structural applications. Our products are sold into numerous end markets, including semiconductor, industrial, aerospace and defense, automotive, consumer electronics, energy, and telecom and data center.
Current wording
We are an integrated producer of high-performance advanced engineered materials used in a variety of electronic, thermal, and structural applications. Our products are sold into numerous end markets, including semiconductor, industrial, aerospace and defense, automotive, consumer electronics, energy, and telecom and data center.
Previous wording
Net sales of $549.8 million in the first quarter of 2026 increased $129.5 million from $420.3 million in the first quarter of 2025. An increase in net sales in the Electronic Materials and Precision Optics segments were partially offset by decreased net sales in the Performance Materials segment. The increase in the Electronic Materials segment was primarily due to higher precious metal pass through costs, increasing net sales by approximately $132.6 million when compared to the prior year period. At the Company level, increases in the semiconductor (69%) and energy (27%) end markets were partially offset by a decrease in the consumer electronics (37%) and life sciences (113%) end markets, primarily driven by the increases in precious metal pricing. Additionally, there was a $2.9 million year over year increase in the volume of raw material beryllium hydroxide sales compared to the first quarter of 2025. See Note C to the Consolidated Financial Statements for additional details on the year over year changes in our net sales by segment and market.
Current wording
Net sales of $613.9 million in the second quarter of 2026 increased $182.2 million from $431.7 million in the second quarter of 2025. The increase in net sales was primarily attributable to the Electronic Materials segment. The increase in net sales in the Electronic Materials segment was primarily due to higher precious metal pass through costs, increasing net sales by approximately $94.6 million when compared to the prior year period. At the Company level, this was driven by volume increases in the energy (106%), semiconductor (59%), and aerospace and defense (40%) end markets. Additionally, there was a $5.9 million year over year increase in the volume of raw material beryllium hydroxide sales compared to the second quarter of 2025. See Note C to the Consolidated Financial Statements for additional details on the year over year changes in our net sales by segment and market.
Previous wording
Value-added salesis a non-GAAP financial measure that removes the impact of pass-through metal costs and allows for analysis without the distortion of the movement or volatility in metal prices and changes in mix due to customer-supplied material. Internally, we manage our business on this basis, and a reconciliation of net sales, the most directly comparable GAAP financial measure, to value-added sales is included herein. Value-added sales of $261.8 million in the first quarter of 2026 increased $2.4 million, or 1%, compared to the first quarter of 2025. The increase was driven by volume increase in the aerospace and defense (12%) and semiconductor (7%) end markets partially offset by a sales volume decrease in the consumer electronics (44%) end market. Additionally, there was a $2.9 million year over year increase in the volume of raw material beryllium hydroxide sales compared to the first quarter of 2025.
Current wording
Value-added salesis a non-GAAP financial measure that removes the impact of pass-through precious metal market costs and allows for analysis without the distortion of the movement or volatility in precious metal market prices and changes in mix due to customer-supplied material. Internally, we manage our business on this basis, and a reconciliation of net sales, the most directly comparable GAAP financial measure, to value-added sales is included herein. Value-added sales of $308.2 million in the second quarter of 2026 increased $39.2 million, or 15%, compared to the second quarter of 2025. Volume increases in the aerospace and defense (39%) and semiconductor (23%) end markets were partially offset by decreases in the consumer electronics (17%) end market. Additionally, there was a $5.9 million year over year increase in the volume of raw material beryllium hydroxide sales compared to the second quarter of 2025.
Previous wording
Gross marginin the first quarter of 2026 was $81.8 million, an increase of 7% compared to the first quarter of 2025. Gross margin expressed as a percentage of net sales was 15% in the first quarter of 2026 and 18% in the first quarter of 2025. Gross margin expressed as a percentage of value-added sales increased to 31% in the first quarter of 2026 from 29% in the first quarter of 2025. Gross margin as a percentage of value-added sales increased due to product mix, manufacturing efficiencies and the increase in hydroxide sales, which favorably impacted margins in the first quarter of 2026 compared to the same period in 2025.
Current wording
Gross marginin the second quarter of 2026 was $104.3 million, an increase of 26% compared to the second quarter of 2025. Gross margin expressed as a percentage of net sales was 17% in the second quarter of 2026 and 19% in the second quarter of 2025. Gross margin expressed as a percentage of value-added sales was 34% in second quarter of 2026, compared to 31% in the second quarter of 2025. Gross margin as a percentage of value-added sales increased due to product mix, manufacturing efficiencies and the increase in hydroxide sales, which favorably impacted margins in the second quarter of 2026 compared to the same period in 2025.
Previous wording
SG&A expense was $36.2 million in the first quarter of 2026, compared to $35.4 million in the first quarter of 2025. The increase in SG&A expense was primarily due to higher stock compensation expense and the timing of incentive compensation accruals due to year to date performance. Expressed as a percentage of net sales, SG&A expense decreased from 8% in the first quarter of 2025 to 7% in the first quarter of 2026, primarily due to the impact of precious metal pricing on net sales. Expressed as a percentage of value-added sales, SG&A expense was 14% in both the first quarter of 2026 and 2025.
Current wording
SG&A expense was $42.3 million in the second quarter of 2026, compared to $35.0 million in the second quarter of 2025. The increase in SG&A expense was primarily due to timing of the incentive compensation accruals due to year to date performance. Expressed as a percentage of net sales, SG&A expense was 7% of net sales in the second quarter of 2026 and 8% in the second quarter of 2025. Expressed as a percentage of value-added sales, SG&A expense was 14% and 13% in the second quarter of 2026 and 2025, respectively.
Previous wording
R&D expense consists primarily of direct personnel costs for pre-production evaluation and testing of new products, prototypes, and applications. R&D spend was 1% and 2% of net sales in the first quarter of 2026 and 2025, respectively. R&D spend was 2% and 3% of value-added sales in the first quarter of 2026 and 2025, respectively.
Current wording
R&D expense consists primarily of direct personnel costs for product innovation including pre-production development, evaluation, and testing of new products, prototypes, and applications to deliver new high performing advanced materials to our customers. R&D expense accounted for 1% of net sales in both the second quarter of 2026 and 2025. R&D expense accounted for 2% of value-added sales in both the second quarter of 2026 and 2025.
Previous wording
Other non-operating (income) expense-netincludes components of pension and post-retirement expense other than service costs. Refer to Note K to the Consolidated Financial Statements for details of the components.
Current wording
Other non-operating (income)-netincludes components of pension and post-retirement expense other than service costs. Refer to Note K to the Consolidated Financial Statements for details of the components.
Previous wording
Interest expense-net was $7.6 million and $6.9 million in the first quarter of 2026 and 2025, respectively. The increase in interest expense is primarily due to an increase in borrowings compared to the prior year period.
Current wording
Interest expense-net was $7.5 million and $8.2 million in the second quarter of 2026 and 2025, respectively. The decrease in interest expense was primarily due to a decrease in interest rates compared to the prior year period.
Previous wording
Income tax expense for the first quarter of 2026 was expense of $1.5 million, compared to $3.2 million in the first quarter of 2025. The effective tax rate for the first quarter of 2026 and 2025 was 7.3% and 15.5%, respectively. The effective tax rate for the first quarter of 2026 is lower than the statutory tax rate primarily due to the impact of the foreign-derived deduction eligible income, excess tax benefits from stock-based compensation awards and percentage depletion. The effective tax rate for the first quarter of 2025 was lower than the statutory tax rate primarily due to the impact of percentage depletion, the foreign-derived intangible income deduction, and the advanced manufacturing production credit. The effective tax rate for the first three months of 2026 included a net discrete income tax benefit of $1.6 million primarily from stock-based compensation awards. The effective tax rate for the first three months of 2025 included a net discrete income tax expense of $0.1 million. See Note G to the Consolidated Financial Statements for additional discussion.
Current wording
Income tax expense for the second quarter of 2026 was $5.7 million, compared to $4.0 million in the second quarter of 2025. The Company's effective tax rate for the second quarter of 2026 and 2025 was 12.9% and 13.8%, respectively. The effective tax rate for the second quarter of 2026 is lower than the statutory tax rate primarily due to the impact of the foreign-derived deduction eligible income, and excess tax benefits from stock-based compensation awards. The effective tax rate for the second quarter of 2025 is lower than the statutory tax rate primarily due to the impact of percentage depletion and the advanced manufacturing production credit. See Note G to the Consolidated Financial Statements for additional discussion.
Previous wording
Restructuring expense consists primarily of cost reduction actions taken in order to reduce our fixed cost structure. In the first quarter of 2026, we recorded a combined total of $2.3 million of restructuring charges across all segments, compared to $2.0 million of restructuring charges across all segments in the first quarter of 2025.
Current wording
Restructuring expense consists primarily of cost reduction actions taken in order to reduce our fixed cost structure. In the first six months of 2026, we recorded a combined total of $2.6 million of restructuring charges across all segments, compared to $2.5 million of restructuring charges across all segments in the first six months of 2025. Refer to Note F to the Consolidated Financial Statements for details.
Previous wording
Other-netwas $9.0 million of expense in the first quarter of 2026, or a $4.0 million increase from the first quarter of 2025, impacted by a $3.9 million increase in metal consignment fees due to the increase in precious metal prices. Refer to Note F to the Consolidated Financial Statements for details of the major components within Other-net.
Current wording
Other-netwas $12.4 million of expense in the first six months of 2026, or a $3.5 million increase from the first six months of 2025. Refer to Note E to the Consolidated Financial Statements for details of the major components within Other-net.
Previous wording
A reconciliation of net sales to value-added sales, a non-GAAP financial measure, for each reportable segment and for the total Company for the first quarter of 2026 and 2025 is as follows:
Current wording
A reconciliation of net sales to value-added sales, a non-GAAP financial measure, for each reportable segment and for the total Company for the second quarter and first six months of 2026 and 2025 is as follows:
Previous wording
Net sales from the Performance Materials segment of $155.7 million in the first quarter of 2026 decreased 11% compared to net sales of $174.0 million in the first quarter of 2025. The decrease in sales was due to lower sales volumes in the consumer electronics (48%) end market. This decrease was partially offset by a year over year increase in the volume of raw material beryllium hydroxide sales totaling $2.9 million. The decrease in the consumer electronics end market reflects lower volumes due to a controlled ramp of production during the first quarter of 2026 from the quality issue that occurred in the fourth quarter of 2025 with a large precision clad strip customer within the Performance Materials segment. The Company continues to work closely with our customer, ensuring processes and procedures implemented in the fourth quarter of 2025 reduce the risk of future occurrences.
Current wording
Net sales from the Performance Materials segment of $207.9 million in the second quarter of 2026 increased 14% compared to net sales of $182.8 million in the second quarter of 2025. The increase in sales was due to higher sales volumes in the aerospace and defense (40%) end market. Additionally, there was a year over year increase in the volume of raw material beryllium hydroxide sales totaling $5.9 million. This was partially offset by lower sales volumes in the consumer electronics (18%) end market. The decrease in the consumer electronics end market reflects lower volumes resulting from a controlled production ramp during the second quarter of 2026 as part of ongoing operational alignment with a large precision clad strip customer. The Company continues to collaborate closely with this customer to ensure stable and reliable production performance.
Previous wording
Value-added sales of $139.5 million in the first quarter of 2026 were 13% lower than value-added sales of $160.0 million in the first quarter of 2025. The decrease in value-added sales was due to the same factors driving the decrease in net sales.
Current wording
Value-added sales of $190.0 million in the second quarter of 2026 were 13% higher than value-added sales of $168.5 million in the second quarter of 2025. The increase in value-added sales was due to the same factors driving the increase in net sales.
Previous wording
EBITDA for the Performance Materials segment was $23.8 million in the first quarter of 2026 compared to $40.7 million in the first quarter of 2025. The decrease was primarily driven by lower sales volumes and an incremental $3.5 million of additional net costs related to the quality issue described above. These costs included capacity-related charges and expenses incurred to reimburse customers for incremental shipping and related tariff costs associated with procuring substitute materials necessary to meet their demand requirements. Partially offsetting these impacts were the reversal of previously reserved material costs, and lower SG&A expenses in the first quarter of 2026 compared to the same period in 2025. In addition, the increase in hydroxide sales favorably impacted margins.
Current wording
EBITDA for the Performance Materials segment was $72.1 million in the first six months of 2026 compared to $81.8 million in the first six months of 2025. The decrease was driven by lower sales volumes to our large precision clad customer and an incremental $3.5 million of additional net costs related to the controlled production ramp described above. These incremental costs included capacity-related charges and expenses incurred to reimburse customers for incremental shipping and related tariff costs associated with procuring substitute materials necessary to meet their demand requirements. Additionally, there were higher raw material costs and manufacturing inefficiencies that further increased cost in the period. Partially offsetting these impacts were the increases in hydroxide sales that favorably impacted margins.
Previous wording
EBITDA for the Electronic Materials segment was $25.5 million in the first quarter of 2026 compared to $11.1 million in the first quarter of 2025. EBITDA in the first quarter of 2026 was favorably impacted by $9.7 million of incremental margin from higher sales volumes, as well as the favorable impact of operational and manufacturing efficiencies. This was partially offset by $3.1 million of higher consignment fees due to the increases in the price of precious metals.
Current wording
EBITDA for the Electronic Materials segment was $27.8 million in the second quarter of 2026 compared to $17.6 million in the second quarter of 2025. EBITDA in the second quarter of 2026 benefited from incremental margin driven by higher sales volumes, strong price/mix, as well as favorable operational and manufacturing efficiencies.
Previous wording
Value-added sales of $91.6 million in the first quarter of 2026 were 18% higher than value-added sales of $77.8 million in the first quarter of 2025. The increase in value-added sales was primarily driven by volume increases in the semiconductor end market noted above.
Current wording
Value-added sales of $179.0 million in the first half of 2026 increased 16% compared to value-added sales of $153.9 million in the first half of 2025. The increase in value-added sales was primarily driven by volume increases in the semiconductor (18%) end market.
Previous wording
Net sales from the Precision Optics segment of $30.8 million in the first quarter of 2026 increased 43% compared to net sales of $21.5 million in the first quarter of 2025. The increase was primarily due to higher sales volumes in the aerospace and defense (61%), life sciences (41%) and industrial (22%) end markets.
Current wording
Net sales from the Precision Optics segment of $30.8 million in the second quarter of 2026 increased 26% compared to net sales of $24.5 million in the second quarter of 2025. The increase was primarily due to higher sales volumes in the semiconductor (206%), industrial (37%) and aerospace and defense (34%) end markets.
Previous wording
Value-added sales of $30.7 million in the first quarter of 2026 increased 43% compared to value-added sales of $21.5 million in the first quarter of 2025. The increase in value-added sales was due to the same factors driving the increase in net sales.
Current wording
Value-added sales of $30.7 million in the second quarter of 2026 increased 26% compared to value-added sales of $24.4 million in the second quarter of 2025. The increase in value-added sales was due to the same factors driving the increase in net sales.
Previous wording
EBITDA for the Precision Optics segment was $4.7 million in the first quarter of 2026, compared to a loss of $1.5 million in the first quarter of 2025. The increase in EBITDA was primarily driven by favorable impacts of volume/mix of $5.4 million and manufacturing efficiencies, partially offset by an increase in incentive compensation expense due to year to date performance.
Current wording
EBITDA for the Precision Optics segment was $6.6 million in the second quarter of 2026 compared to $2.1 million in the second quarter of 2025. The increase in EBITDA was primarily driven by favorable impacts of higher volume, strong price/mix and manufacturing efficiencies, partially offset by an increase in incentive compensation expense due to year to date performance.
Previous wording
Corporate costs were $7.1 million in the first quarter of 2026 compared to $5.9 million in the first quarter of 2025. Corporate costs were 1% of Company-wide net sales in the first quarter of 2026 and 2025. Corporate costs were 3% and 2% of Company-wide value-added sales in the first quarter of 2026 and 2025, respectively. The increase in corporate costs were due to $0.4 million of higher stock compensation expense and $0.4 million of higher restructuring costs in the first quarter of 2026 compared to the same period in 2025.
Current wording
Corporate costs were $11.5 million in the second quarter of 2026 compared to $5.9 million in the second quarter of 2025. Corporate costs were 2% and 1% of Company-wide net sales in the second quarter of 2026 and 2025, respectively. Corporate costs were 4% of Company-wide value-added sales in both the second quarter of 2026 and 2025. The increase in corporate costs were primarily due to higher stock compensation and incentive compensation expense due to increased Company performance.
Previous wording
Net cash used in investing activities was $15.3 million in the first quarter of 2026 compared to $20.7 million in the prior-year period. The decrease in cash used in investing activities is due to lower mine development costs offset by higher capital expenditures in the first quarter of 2026 compared to the first quarter of 2025.
Current wording
Net cash used in investing activities was $31.5 million in the first six months of 2026 compared to $34.9 million in the prior-year period. The decrease in cash used in investing activities is due to a decrease in mine development costs offset by higher capital expenditures. Capital expenditures are made primarily for new product development, replacing and upgrading equipment, infrastructure investments, and implementing information technology initiatives. For the full year 2026, the Company expects payments for property, plant, and equipment to be approximately $100 million.
Previous wording
We believe cash flow from operations plus the available borrowing capacity and our current cash balance are adequate to support operating requirements, capital expenditures, projected pension plan contributions, the current dividend program, environmental remediation projects, and strategic acquisitions for at least the next twelve months and for the foreseeable future thereafter. At April 3, 2026, cash and cash equivalents held by our foreign operations totaled $15.4 million. We do not expect restrictions on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition, or results of operations for the foreseeable future.
Current wording
We believe cash flow from operations plus the available borrowing capacity and our current cash balance are adequate to support operating requirements, capital expenditures, projected pension plan contributions, the current dividend program, environmental remediation projects, and strategic acquisitions for at least the next twelve months and for the foreseeable future thereafter. At July 3, 2026, cash and cash equivalents held by our foreign operations totaled $19.0 million. We do not expect restrictions on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition, or results of operations for the foreseeable future.
Previous wording
Portions of our business utilize off-balance sheet consignment arrangements allowing us to use metal owned by precious metal consignors as we manufacture product for our customers. Metal is purchased from the precious metal consignor and sold to our customer at the time of product shipment. Expansion of business volumes and/or higher metal prices can put pressure on the consignment line limitations from time to time. In August 2025, we entered into a precious metals consignment agreement, maturing on August 31, 2028, which replaced the consignment agreements that would have matured on August 31, 2025. The available and unused capacity under the metal consignment agreements expiring in August 2028 totaled approximately $270.3 million as of April 3, 2026, compared to $173.8 million as of December 31, 2025.
Current wording
Portions of our business utilize off-balance sheet consignment arrangements allowing us to use metal owned by precious metal consignors as we manufacture product for our customers. Metal is purchased from the precious metal consignor and sold to our customer at the time of product shipment. Expansion of business volumes and/or higher metal prices can put pressure on the consignment line limitations from time to time. In August 2025, we entered into a precious metals consignment agreement, maturing on August 31, 2028, which replaced the consignment agreements that would have matured on August 31, 2025. The available and unused capacity under the metal consignment agreements expiring in August 2028 totaled approximately $344.4 million as of July 3, 2026, compared to $173.8 million as of December 31, 2025.
Previous wording
We paid cash dividends of $2.9 million on our common stock in the first quarter of 2026. We intend to pay a quarterly dividend on an ongoing basis, subject to a determination that the dividend remains in the best interest of our shareholders.
Current wording
We paid cash dividends of $3.0 million and $5.9 million on our common stock in the second quarter and first six months of 2026, respectively. We intend to pay a quarterly dividend on an ongoing basis, subject to a determination that the dividend remains in the best interest of our shareholders.
Previous wording
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
Current wording
OFF-BALANCE SHEET ARRANGEMENTS AND CASH OBLIGATIONS
Previous wording
We maintain the majority of the precious metals and portions of the copper and nickel we use in production on a consignment basis in order to reduce our exposure to metal price movements and to reduce our working capital investment. The notional value of off-balance sheet precious metals, copper and nickel was $579.7 million and $526.2 million as of April 3, 2026 and December 31, 2025, respectively. We were in compliance with all of the covenants contained in the consignment agreements as of April 3, 2026. For additional information on our contractual and other obligations, refer to our 2025 Annual Report on Form 10-K.
Current wording
We maintain the majority of the precious metals and portions of the copper and nickel we use in production on a consignment basis in order to reduce our exposure to metal price movements and to reduce our working capital investment. The notional value of off-balance sheet precious metals, copper and nickel was $505.6 million and $526.2 million as of July 3, 2026 and December 31, 2025, respectively. We were in compliance with all of the covenants contained in the consignment agreements as of July 3, 2026. For additional information on our contractual and other obligations, refer to our 2025 Annual Report on Form 10-K.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
Restructuring expense consists primarily of cost reduction actions taken in order to reduce our fixed cost structure. We recorded a combined total of $0.3 million and $0.5 million of restructuring charges across all segments in the second quarter of 2026 and 2025, respectively. Refer to Note F to the Consolidated Financial Statements for details.
Current report — wording carried from elsewhere
Other-netwas $3.4 million of expense in the second quarter of 2026, or a decrease of $0.5 million from the second quarter of 2025. Refer to Note E to the Consolidated Financial Statements for details of the major components within Other-net.
Current report — wording carried from elsewhere
Net sales of $1,163.7 million in the first six months of 2026 increased $311.7 million from $852.0 million in the first six months of 2025. The increase in net sales was primarily attributable to the Electronic Materials segment. The increase in the Electronic Materials segment was primarily due to higher precious metal pass through costs, increasing net sales by approximately $227.3 million when compared to the prior year period. At the Company level, a volume increase in the semiconductor (64%), energy (60%) and aerospace and defense (29%) end markets were partially offset by a volume decrease in the consumer electronics (17%) end market. Additionally, there was a $8.8 million year over year increase in the volume of raw material beryllium hydroxide sales compared to the same period in the prior year. See Note C to the Consolidated Financial Statements for additional details on the year over year changes in our net sales by segment and market.
Current report — wording carried from elsewhere
Gross marginin the first six months of 2026 was $186.2 million, an increase of 17% compared to the first six months of 2025. Gross margin expressed as a percentage of net sales was 16% in the first six months of 2026 and 19% in the first six months of 2025. Gross margin expressed as a percentage of value-added sales increased to 33% in the first six months of 2026 from 30% in the first six months of 2025. Gross margin as a percentage of value-added sales increased due to product mix, manufacturing efficiencies and the increase in hydroxide sales, which favorably impacted margins in the first six months of 2026 compared to the same period in 2025.
Current report — wording carried from elsewhere
SG&A expense was $78.5 million in the first six months of 2026, compared to $70.5 million in the first six months of 2025. The increase in SG&A expense was primarily due to timing of incentive compensation accruals due to year to date performance. Expressed as a percentage of net sales, SG&A expense was 7% and 8% in the first six months of 2026 and 2025, respectively. Expressed as a percentage of value-added sales, SG&A expense was 14% in the first six months of 2026 and 13% in the first six months of 2025.
Current report — wording carried from elsewhere
Other non-operating (income)-netincludes components of pension and post-retirement expense other than service costs. Refer to Note K to the Consolidated Financial Statements for details of the components.
Current report — wording carried from elsewhere
Income tax expensewas $7.3 million for both the first half of 2025 and 2026. The Company's effective tax rate for the first six months of 2026 and 2025 was 11.1% and 14.5%, respectively. The effective tax rate for the first six months of 2026 is lower than the statutory tax rate primarily due to the impact of the foreign-derived deduction eligible income and excess tax benefits from stock-based compensation awards. The effective tax rate for the first six months of 2025 is lower than the statutory tax rate primarily due to the impact of percentage depletion and the advanced manufacturing production credit. See Note G to the Consolidated Financial Statements for additional discussion.
Current report — wording carried from elsewhere
Corporate costs were $18.6 million in the first half of 2026 compared to $11.8 million in the first half of 2025. Corporate costs were 2% and 1% of Company-wide net sales in the first six months of 2026 and 2025, respectively. Corporate costs were 3% and 2% of Company-wide value-added sales in the first six months of 2026 and 2025, respectively. The increase in corporate costs were primarily due to higher stock compensation and incentive compensation expense due to increased Company performance.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Capital expenditures are made primarily for new product development, replacing and upgrading equipment, infrastructure investments, and implementing information technology initiatives. For the full year 2026, the Company expects payments for property, plant, and equipment to be approximately $100 million.