Materion Corporation
BRUSH ENGINEERED MATERIALS INC (Form: 8-K, Received: 08/19/2010 08:02:32)
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 19, 2010
Brush Engineered Materials Inc.
 
(Exact name of registrant as specified in its charter)
         
Ohio   001-15885   34-1919973
         
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)
     
6070 Parkland Blvd., Mayfield Heights, Ohio   44124
     
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code 216-486-4200
Not Applicable
 
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


 

Item 7.01 Regulation FD Disclosure
     On August 19, 2010, Brush Engineered Materials Inc. (the “Company”) updated its website with a slide presentation that will be presented by Richard J. Hipple, Chairman, President and Chief Executive Officer and other executives of the Company to analysts on August 19, 2010. The presentation will be recorded and archived for a period of time on our website. A copy of the presentation is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
Exhibits:
     
Exhibit Number   Description of Exhibit
 
   
99.1
  Analyst Presentation
SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  Brush Engineered Materials Inc.
 
 
August 19, 2010  By:   Michael C. Hasychak    
    Michael C. Hasychak   
    Vice President, Treasurer and Secretary    
 

Exhibit 99.1 Analyst Meeting August 19, 2010 ... a leader in creating innovative engineered material solutions and services to make our customers competitive on a global basis ... while enhancing earnings growth, shareholder value, and stability ... by broadening technology, market, and geographic reach Exhibit 99.1


 

Forward-Looking Statements These slides contain (and the accompanying oral discussion will contain) "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by these statements, including health issues, litigation and regulation relating to our business, our ability to achieve and/or maintain profitability, significant cyclical fluctuations in our customers' businesses, competitive substitutes for our products, risks associated with our international operations, including foreign currency rate fluctuations, energy costs and the availability and prices of raw materials and other factors disclosed in periodic reports filed with the Securities and Exchange Commission. Consequently these forward-looking statements should be regarded as the Company's current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 2 Transforming our World and Yours


 

Business Overview and Transformation R.J. Hipple Transforming our World and Yours


 

Why This Meeting - What We Hope to Accomplish Today Company overview Company transformation, what and why Transformation results to date 2010 to date and outlook Review our largest segments Growth drivers, future initiatives, sustainability 4 Transforming our World and Yours Bring you up to date


 

Why Brush Unique, rapidly growing, advanced materials company Enabling, desired high-value technology Serving leading edge, high-growth markets Sustainable long-term growth opportunities Diverse set of high-growth new products and services Expanding margins Strong balance sheet Capable management team Valuation 5 Transforming our World and Yours


 

BEM ... The Transformation From Metals & Mining through Specialty Metals to Advanced Materials From an "Old Industrial" to an "Advanced Materials technology" company Higher, more sustainable growth rates and profitability 6 Transforming our World and Yours


 

Profile A leading manufacturer of high performance advanced engineered materials and services ... an enabling materials technology company Four segments ... with operations, service centers and major office locations in North America, Europe and Asia Serving long-term growth oriented global markets from high-tech consumer electronics to heavy industrial equipment Transforming our World and Yours 7 Unique Advanced Materials Company


 

8 Global Sales and Distribution Network Operations in the U.S. and eleven foreign countries International sales are approximately 29% of the Company (YTD Q2 2010) Act globally ... service locally! ?-------------- Asia / Pacific ------------? ? ---------------- Europe -------------- ? ? - Exports from USA -? Singapore Korea Hong Kong UK Germany Philippines Taiwan Japan China Ireland Czech Republic Transforming our World and Yours


 

9 Core Competency Collaborating with customers worldwide to solve material application challenges ... with a focus on enabling technology and services "Own" a niche orientation ... non-commodity Focus on global growth and service Constantly looking ahead to realign product and service portfolios toward favorable market and technology trends ... targeted to achieve strong profitable growth A Common Approach to Markets and a Common Culture across our Operating Companies Transforming our World and Yours


 

10 Strong customer collaboration ... providing enabling technology solutions and service Materials that meet design challenges requiring - Strength - Reliability - Electrical conductivity - Miniaturization - Weight reduction - Corrosion resistance - Light management - Thermal conductivity - Wave length management - Lubricity Targeting profitable growth applications in growing markets Advancing the World's Technologies Transforming our World and Yours


 

11 Major Segments Transforming our World and Yours Note: %'s are of sales


 

12 Typical End Uses Disk Drives Industrial products for Oil & Gas and Mining Medical Devices Cellular phones, i-Pods(tm), i-Pads(tm) and other wireless communication devices Notebook computers and network servers Electronic components in cars and trucks Commercial Aerospace Defense Transforming our World and Yours Transforming our World and Yours


 

13 Typical End Uses Heavy Equipment Space/Science LED's Telecom Infrastructure Optics Alternative Energy Transforming our World and Yours LCD


 

Diverse Set of High Growth Markets Consumer Electronics 27% Telecom Infrastructure 7% *Value-added revenue, excludes high value metals YTD Q2 2010 Revenue* Automotive Electronics 8% Appliance 7% Other 6% Services 4% Energy 6% Medical 6% Defense and Science 15% Industrial and Commercial Aerospace 14% Transforming our World and Yours 14


 

Well Recognized Key Customers & Demand Generators Consumer Electronics Western Digital RFMD Skyworks Seagate Apple Motorola Cree TriQuint HTC Defense & Science Northrup Grumman DRS Lockheed Martin Raytheon BAE Goodrich General Dynamics 15 Transforming our World and Yours Industrial & Commercial Aerospace Boeing Goodrich Caterpillar Joy Airbus Bucyrus Telecom Infrastructure Cisco NXP Tyco JDSU NEC


 

Well Recognized Key Customers & Demand Generators Medical Roche Medtronic Varian Medical Siemens Agilant Applied Biosciences Nipro Diagnostics Automotive Electronics Delphi Kostal Johnson Electric Yasaki TRW Visteon 16 Transforming our World and Yours Energy First Solar MiaSole AMAT Primestar Nanosolar Adhesives Research Appliance Honeywell Bosch Siemens Hotpoint Schlumberger Baker Hughes Halliburton Weatherford


 

Major Product Forms 17 YTD Q2 2010 Revenue Transforming our World and Yours Strip Metal 20% Bulk Metal 11% Powders 2% PVD Targets 38% Coatings 8% Semi-Finished Components 5% Other Precious Metals 13% Other 3%


 

The Transformation ... Overview From Metals & Mining through Specialty Metals to Advanced Materials Beryllium Businesses.........Metals and Mining Expansion of WAM............Specialty Metals Acquisitions..................... Advanced Materials From single digit to long-term sustainable double digit growth To trading multiples of 9-11x from historic 6-8x EBITDA 18 Transforming our World and Yours


 

The Transformation ... Strategy Create sustainable market advantage and value to customers through unique technological capabilities and innovation Decrease dependency on the Integrated Metals businesses while improving their performance and reducing their cyclicality Create the corporate critical mass to perform better in significant downturns should they arise While building and maintaining a strong balance sheet through a higher cash generating business model 19 Transforming our World and Yours Fundamental Principles Driving Our Transformation


 

The Transformation ... Tactics Create a broader, more diversified base ... focused on greater than GDP opportunities New Technologies New Markets Target fastest growing segments of fast growing markets Grow faster than the markets Achieve double digit growth over time First Priority.....organic growth Second Priority...."manageable" acquisitions 20 Transforming our World and Yours - New Products - Expanded Geography


 

The Transformation ... Tactics Investments...prioritizing a targeted business model Faster cash to cash cycle Low capital intensity...both working capital and reinvestment capital High IP....technology driven business Non-commodity products...high margins Good growth potential in >> GDP opportunities Acquisitions....accretive within 12 months Augmentation of technology, markets and opportunities $50 million invested per year from cash flow Use debt and equity when appropriate while maintaining quality of balance sheet and financial flexibility 21 Transforming our World and Yours


 

The Transformation ... Acquisitions 2005 OMC Shield kit cleaning services (technology service buy) 2005 TFT Thin film vacuum sputtered coatings 2006 CERAC Inorganic chemicals ... powders and evaporative targets (optics, security, solar, semiconductor) 2008 Techni-Met Thin film roll to roll flexible substrate vacuum sputtered coatings (medical) 2009 2010 Barr Academy Thin film vacuum sputtered coatings Precious metal (Ag/Au) products and refining 22 Approximately $175 M invested at EBITDA multiples of 5-7 Transforming our World and Yours


 

The Transformation ... Key Results Revenue % Revenue % Revenue % 2002 2010 Consumer Electronics, Telecom Infrastructure and Data Storage 44% 45% Industrial, Commercial Aerospace, Defense and Science 24% 21% Automotive Electronics and Appliance 22% 9% Energy --- 6% Medical --- 5% Services 2% Other 10% 12% 23 Transforming our World and Yours Focused on double digit growth opportunities Broader, More Diversified Base


 

The Transformation ... Key Results Last Recession Last Recession Last Recession This Recession This Recession This Recession This Recession This Recession 2002 2003 2009 2010 (F) Range 2010 (F) Range 2010 (F) Range EPS $ (.91) $(.25) $(.38) $1.75 - $2.00 EPS (2 yr cum) $(1.16) $1.37 - $1.62 Advanced Materials growth, market diversification, and Specialty Engineered Alloys improvements 24 Transforming our World and Yours Note: Excludes non-operating charges A Faster Recovery in a Much Tougher Environment (see GAAP reconciliation in Exhibit A)


 

Brush Engineered Materials ... Transformed ! A Leaner, Faster Growing, More Diversified & Resilient Company More diversified, market and product basket Broader market reach, geography Growing faster, growth more sustainable Growth and higher margin contributions from acquisitions Less cyclical Lower infrastructure costs, lower capital costs Expanding margins Stronger cash flow 25 Transforming our World and Yours


 

Valuations are Behind 26 Transforming our World and Yours Valuations Yet to Recognize Transformation, Turnaround, and Growth Potential


 

Financial Review of Transformation and Outlook J. D. Grampa Transforming our World and Yours


 

Valuations are Behind Target pricing multiples reduced as guidance increased Brush price down more than peer group, last 90 days Brush -16% Specialty Metals peers - 9% Advanced Materials peers - 5% Target multiples are below the Advanced Materials peer group ... at 16 vs over 20 Brush history is 17-24 on EPS, is at 12 today Brush pre-transformation history is 6-8x EV/EBITDA, at 5 today Advanced Materials peer EV/EBITDA target multiples are 12-15 today, Brush at 5 28 Transforming our World and Yours Valuation Yet to Recognize Transformation, Turnaround, and Growth Potential


 

The Transformation ... Measuring Progress and Outlook Growth Advanced Materials, Integrated Metals balance Impact of the acquisitions Higher Value Model Margins, margin progress Cash to cash cycle Balance sheet Goals Outlook 29 Transforming our World and Yours


 

2002-2010 (F) Sales 13% CAGR w/o acquisitions Acquisitions add 4% 30 The Transformation... Accelerated Growth Transforming our World and Yours $ in millions


 

Advanced Materials, a Higher Share of Total Sales Integrated Metals Advanced Materials Transforming our World and Yours 31


 

Sales per Employee (in thousands) 32 The Transformation... Accelerated Growth Transforming our World and Yours EBIT per Employee (in thousands)


 

Acquisitions ... Contributing to Growth and Profits Approximately $175 million invested over the past 5 years ... 6 transactions ... 4 from relationships, 2 from auctions Each have added to our technology, products and markets Paid 5-7x trailing EBITDA Rapidly accretive Sales in 2010 approaching $300 million Represent about 25% of the Company's profit in 2010 33 Transforming our World and Yours


 

100% 76% 24% Traditional Businesses 13% CAGR Acquired Businesses adds 4% CAGR Opportunities for New Avenues of Growth Greatly Expanded through Acquisitions 34 Transforming our World and Yours $ in millions


 

The Transformation ... Shifting the Business Model to Higher Margins and Higher Value OP% OP%/VA* Integrated Metals 10.0% - 10.5% 14.0% - 16.0% Advanced Materials 5.5% - 6.0% 21.0% - 23.0% Company 5.5% - 6.5% 13.0% - 15.0% 35 Transforming our World and Yours Measuring Value Add * % of value added revenue which excludes high value metals


 

The Transformation ... Faster Cash to Cash Cycle 36 Transforming our World and Yours *Net income + Depr & Amort - change in working capital - Capex Free Cash Flow* A/R, Inventory & A/P %/Sales 41% 25% $'s in millions


 

Net Cash Provided from Operating Activities* (in millions) 37 The Transformation ... Faster Cash to Cash Cycle Debt to Total Capital Transforming our World and Yours The Balance Sheet *Change in cash, excluding the effect of investing and financing activities


 

The Transformation ... Financial Goals/Objectives Organic growth ... double digit over time Value add margins in mid to high teens (OP% of VA) Acquisitions/augmentations at $50.0 to $75.0 million/yr Drive A/R, inventory and A/P % of sales below 20% Capital spending below depreciation Keep debt to total cap below 30% at peaks ROIC to mid teens 38 Transforming our World and Yours Goals, next 3-5 years


 

Outlook ... 1st half Summary Markets have responded and business is growing to significantly higher sales and profit levels Initial growth led by electronics, followed in late Q-1, early Q-2 by industrial and commercial aerospace markets Sales now at record levels Margins are up significantly Recent acquisitions are on track Cost controls are working well 39 Transforming our World and Yours


 

Note: Q-1 2010 included $.12 per share of charges, $1.3 million in EBIT. OP%/VA excludes high value metals 1st half Summary ... Reported Results Transforming our World and Yours 40


 

Outlook Demand has increased across the Company's key markets including consumer electronics, telecom infrastructure, automotive electronics, industrial and commercial aerospace, defense and energy The strength has continued thus far in the third quarter End markets do not appear to be weakening at this time, normal seasonality is expected 2010 sales are expected to be approximately $1.22 to $1.26 billion 2010 expected profit in the range of $1.75 to $2.00 per share, diluted Solid balance sheet is expected to be even more attractive by year end 2010 Transforming our World and Yours 41


 

Outlook ... Other Considerations, 2nd half and Beyond Electronic markets are not pausing; high end more sophisticated electronics are expanding Metal prices, raw material prices are a pass through and thus not a risk to performance Application base in Specialty Engineered Alloys business continues to grow Specialty Engineered Alloys are less cyclical and margins are higher due to actions taken Acquisitions and Advanced Materials segment markets offer additional near term upside Transforming our World and Yours 42


 

Outlook ... Other Considerations Suspected supply chain inventory rebuilding does not appear to be a significant factor at this time New equipment for the medical market is installed and operating Cost management initiatives are working well and we expect the benefits to continue well into the future Investments in purchasing, marketing and pricing initiatives should add to margins going forward Acquisitions/augmentation opportunities continue to present themselves Transforming our World and Yours 43


 

Specialty Engineered Alloys W. G. Maxwell Transforming our World and Yours


 

Specialty Engineered Alloys - Overview World's Leader in Copper Beryllium North America's only Bertrandite Ore Mine Only Fully Integrated Copper Beryllium Business (mine - manufacture - sales - distribution - technical support) 848 Employees at 8 Locations Growing Non-Beryllium Product Family of High Performance Alloys (Toughmet, Cupro-Nickel, Leaded CuNi wire, Moldmax V) Third Party Distribution is above 40% and Growing Sales are 55% outside North America and Growing Transforming our World and Yours 45


 

Operations and Distribution Operation Location Products Mine Delta, UT Bertrandite Ore Chemical Mill Be Hydroxide Primary Operations Elmore, OH Cast Billets Strip Mill Strip Coils Bulk Mill Rod, Bar, Tube and Plate Finishing Operations Reading, PA Finished Strip and R&W Non-Be Casting Lorain, OH Cast Billets and Shapes Distribution Chicago, IL Finished Strip Detroit, MI Finished Bulk Stuttgart, Germany Finished Strip Fukaya, Japan Finished Strip Transforming our World and Yours 46


 

Independent Distributors Transforming our World and Yours 47 Americas Europe - Admiral Metals - Bohler Uddeholm - Bohler Uddeholm - Busby Metals - Busby Metals - Laminaries Matthey - EJ Brooks - Stainless - Farmers - Thyssen Krupp - Mead Metals Asia Pacific - Schmoltz & Bickenback - ASSAB Pacific - Southern Copper & Supply - ATP - Thyssen Krupp - James Coppel Lee - Trident - Oristar - Tai Mao - Yamato Miyoshi - Yee Chong


 

Why use Copper Beryllium and our other Alloys? High Strength and Hardness High Thermal Conductivity High Thermal Stability High Electrical Conductivity Miniaturization Anti-Microbial Non-Biofouling Non-Magnetic Non-Sparking Anti-Galling Corrosion Resistant Good Machinability Good Castability Good Formability Good Tribology Age Hardening Stress Relaxation Resistant Transforming our World and Yours 48


 

Major Product Forms Strip Rod Wire Plate Bar Tube Billet Casting Alloys Transforming our World and Yours 49


 

Specialty Engineered Alloys - Annual Sales $ millions Transforming our World and Yours 50


 

Specialty Engineered Alloys - Transformation Lower Breakeven Reduce Overhead Improve Margins Attack Costs Increase Prices Lower Breakeven to Reduce the Impact of Business Cycles and Grow the Top Line Faster Growth Establish Growth Teams New Alloys New Applications New Geographies Higher Margin Products Transforming our World and Yours 51


 

Transformation - Lower Overhead 2009 OH Reduction (23%) $25 M Headcount Reduction Transition to 3rd Party Distribution More to Come (2010 to 2013) $6-8 M Depreciation Reduction Operating Efficiencies Lean Sigma Initiatives Transforming our World and Yours 52


 

Transformation - Attack Costs 2009 Variable Cost Reductions $5-7 M Labor Cost and Utilization Purchasing Initiatives Lean Sigma Savings More to Come 2010 - 2013 $2-4 M Transforming our World and Yours 53


 

Transformation - Pricing Actions 2009 - Hired Pricing Consultant 2009 Theme - "Capture the Value of Brush" Freight Charge Expedite Fees Fabrication Increases Price Setting Transforming our World and Yours 54


 

Breakeven Reduction - Complete Transforming our World and Yours 55


 

Key Customers and Demand Generators by Market Transforming our World and Yours 56


 

Growth - Alloys/Processes Recently Developed for: Strip Backplane Connectors, Processor Sockets, BITS and Modular Jacks Non-Be for micro motors and voice coil motors Bulk Non-Be Aerospace Bearings and Rub Strips Non-Be Oil &Gas Housings and Drilling Tools Non-Be Fittings for the Marine Market Non-Be Larger Diam. Bearings for Heavy Equipment Rod and Wire Electrical Connectors for Transportation Market Transforming our World and Yours 57


 

Smart Phone Shipments (millions of units) Source: Frost and Sullivan Board to Board Contacts SIM Card Contacts Vibrator Motor Contacts Battery Contacts Applications - Smart Phones OEMs are seeing the value of using high performance alloys to make more reliable connectors Audio Jack Contact 2008 2009 2010 2011 2012 2013 Total 139 190 251 321 398 479 Typical Contact Applications Battery Contacts Audio Jacks SIM Card Contact Board to Board Contacts Vibrator Motor Contacts Transforming our World and Yours 58


 

Applications - Infrastructure (Local Area Networks) Shielding Modular Jacks PCB Sockets Processor Sockets Transforming our World and Yours 59


 

Applications - Voice Coil Motors Applications: Cell Phones Computers Digital Cameras BF158 was developed and launched in 2009 and is currently used to make VCM spring plates. During 2010, 93.4% of U.S. mobile phone sales will be camera phones. Transforming our World and Yours 60


 

Applications - Micromotors Applications: Automotive Home Electronics Appliance Power tools Toys Optical & Precision Instruments HVAC Brush springs are made using Alloy 25. Two new products have been developed for commutator applications and are currently being evaluated by potential new customers. Commutator Brush Transforming our World and Yours 61


 

Bulk Products - Revenue Growth 2000 2010 Oil & Gas Exploration and Production 14% 27% Aerospace 14% 24% Automotive 37% 23% Consumer 6% 16% Ag & Mining Equip 2% 7% Undersea Telecom 19% 2% Electric Power 2% 1% $Sales $50M $100M(F) Transforming our World and Yours 62


 

63 Applications - Oil & Gas Under Water Wellhead Equipment ROV's, blow out preventers, hydraulic actuators, control fluid couplings Directional Drilling Equipment MWD, LWD, MPT systems Drill Bits Structural Rig Components Wellhead Control Equipment Artificial Lift Equipment ToughMet bearings in Electric Submersible Pumps Transforming our World and Yours


 

Energy Growth (Oil & Gas) Transforming our World and Yours 64


 

65 Applications - Aerospace Avionics/Electrical Systems Airframe Landing Gear Attachments Engine and Pylon Attachments Flight Control Mechanisms Horizontal Stabilizer & Rudder Attachments Hydraulic Systems Fuel Systems Wing Attachments ( Doors & Hatches Landing Gear Components Flight Attendant Jumpseat Spring Safety Slide Mechanism Transforming our World and Yours


 

Annual Growth of Brush Bulk Products Oil and Gas Sales versus Annual Growth of the Underlying Market Aerospace Growth - (JPMorgan Forecast) Index Aerospace Growth - (JPMorgan Forecast) Numbers (2002=1.00) Aerospace Growth - (JPMorgan Forecast) 2002 2004 2006 2008 2010 -R ate2012 -F 2014 -F 5.00 6.00 3.00 4.00 1.00 2.00 Brush Revenue Rig Count Transforming our World and Yours 66


 

Applications - Mining Equipment Non-galling: dynamic bushings on 16 high- stress positions in all models. ToughMet 3 Replaces carburized 8620. • Corrosion resistance: all salt and potash miners specified with 100% ToughMet 3 bushings. ToughMet 3 Bushings Bearing life improved 6X Transforming our World and Yours 67


 

Applications - Injection Mold Tooling (Consumer) MoldMAX mold core and cavity tooling inserts at all the hot spots Cycle time reduced 30%. Scrap rate reduced to zero. One less molding machine required to meet demand growth. Transforming our World and Yours 68


 

New Geographies Focus on Brazil, Russia, India and China Expanding Footprint in China New Distributors Growing Plastics Business in Asia Added Sales, Distribution and Slitting in India Developing Oil &Gas Business in Russia Increased Market Share in UK with Distribution Partner Transforming our World and Yours 69


 

Breakeven Reduction - Goal Transforming our World and Yours 70


 

What are the key points today? Overhead has Dropped and Margins have Improved Breakeven has Significantly Improved Better Positioned for Business Cycles Breakeven will Further Improve Robust New Product Development Growing Internationally Markets being Served are Robust (> GDP) Gaining Share in Growing Markets Transforming our World and Yours 71


 

Advanced Material Technologies and Services R. W. Sager Transforming our World and Yours "Our Customers' First Choice!"


 

Strategic Augmentation Williams Precious Metals Acquired 1987 Advanced Materials Technology 1989 Hydrostatics Inc. 1994 Pure Tech Inc. 1998 Wheatfield (Greenfield) 1998 Semi Alloys Inc. 2001 Honeywell FLA (Technology) 2003 OMC Scientific Ireland 2005 Thin Film Technology 2005 CERAC inc. 2006 Suzhou, China (Greenfield) 2007 Louny, Czech Republic (Greenfield) 2007 Techni-Met 2008 Barr Associates 2009 Academy Corporation 2010 "Our Customers' First Choice!" Transforming our World and Yours 73


 

Sales History 74 "Our Customers' First Choice!" Transforming our World and Yours $'s in millions


 

Transformation Elements Customer Centricity Sustain the "Base" Quality as the Differentiator Leading Edge Technologies Niche Markets / Applications Focus on Innovation The "Right" Organization / People Global Manufacturing Capabilities "Our Customers' First Choice!" Transforming our World and Yours 75


 

Markets PRECISION THIN FILM OPTICS MICROELECTRONICS SERVICES LARGE AREA SPECIALTY THIN FILM ADVANCED CHEMICALS BUFFALO BUELLTO N BARR BUFFALO WHEATFIEL D NBPT SINGAPORE EUROPE BREWSTER MILWAUKEE BUELLTON ACADEMY BUFFALO HARTFORD MILWAUKEE BUELLTON ACADEMY CHEMICAL / COMPOUNDS ALTERNATIVE ENERGY BEM BUFFALO SINGAPORE BREWSTER MILWAUKEE HARTFORD ACADEMY BARR BREWSTER SINGAPORE BUELLTON MILWAUKEE BARR SBU's / BUSINESS SEGMENTS "Our Customers' First Choice!" Transforming our World and Yours 76 ^ Recent acquisitions


 

Overview Global Presence: Advanced Materials Technologies 1,100 Employees 15 Asset Locations Strategic Business Units - Organization Support Functions Sales Administration Technology / new product development Virtual new product development i-Flow Stage-Gate Technology Experts "Our Customers' First Choice!" Transforming our World and Yours 77


 

Distinctive Competencies Precious Metal Refining and Management - Au, Ag Pd PVD Materials and Services Melt and Powder Metallurgy, Shield Cleaning and Bonding Large and Small Area Thin Film Deposition and Design Hazardous Chemical Processing Electronic Packing Materials, Fabrication and Assembly Global Presence Marketing and Sales Depth Track Record of Success - Strong Long - Term Growth Customer Relationships Williams Brand Recognition Barr - Recognized Leader Precision Thin Film Optical Coatings Academy - Leader in Ag PVD for Architectural Glass Industry "Our Customers' First Choice!" Transforming our World and Yours 78


 

Core Technologies PM Casting / Rolling Non PM Casting Investment Casting High Volume Casting PM Refining (Au/Pd) Component Machining Assembly Welding Wire Fabrication Rod / Turks Head Hot Pressing (Induction) Hot Pressing (Resistive) Au/Ni Plating Component Design Brazing High Temp Component Assembly Chemical / Synthesis Bonding Enhanced Target Design Magnetron Sputtering IBS Evaporation LA Thin Film Coating Photo Lithography Reel-to-Reel PVD Thermal Arc Spray Selective Plating Thick Film Printing GDMS / ICP / Wet Chem Powder Metallurgy Powder Sizing Large Area Machine Grinding / Polishing Shield Kit Chemistry Backing Plate Design Direct Bond Copper Plastic Component Process "Our Customers' First Choice!" Transforming our World and Yours 79


 

Microelectronics & Services Key Markets Photonic & Optical Applications (LED) Semiconductor Defense Medical Products Semi PVD Targets Precious Metal Targets Evaporation Materials Architectural Glass Targets Vacuum Grade Joining Materials High Reliability Microelectronic Materials Hermetic Covers Precious Metal Stamped Products Precious Metal Fine Wire High Power RF Packages Vacuum Grade Joining Materials Precious Metal Management Precision Parts Cleaning Precious Metal Refining Services Precious Metal Grain Dental Alloys Core Technology Vacuum Melting Metal Rolling, Annealing, Forging, & Extrusion Precious Metal Management Sputtering Target Bonding High Volume Stamping Precision Machining Refining Tooling Design Powder Metallurgy Refining Brazing Precious Metal Wire Fabrication High Temp Braze Twin Wire Arc Spray Atomization Precision Cleaning & Chemical Removal Selective Precious Metal Plating Target Enhancements Purity Control Joining Technology Solder Material Fabrication Thermal Management Design Thick Film Printing Cladding Wire EDM Direct Bond Copper Turks Head Coatings Stamping Assembly Wireless Application Transforming our World and Yours 80 "Our Customers' First Choice!"


 

Products Precision Optics Core Technology Key Markets Defense Applications Commercial Application Space, Science & Astronomy Thermal Imaging Flex Sensors Visi-Lids(r) Filter Sets Linear Variable Filters High Value Coatings Non-optical Coatings Hybrid Circuits Magnetron Sputter Ion Beam Sputter Thermal Evaporation Sub Assembly/Potting Solder Assembly Optical Design Ion Assisted Deposition Precision Patterning Singulation Transforming our World and Yours 81 "Our Customers' First Choice!"


 

Advanced Chemicals Key Markets HI B LED's Applications Security Application Alternative Energy Specialty Inorganic Chemicals Products Optic Materials LED Phosphor Additives Specialty Chemicals Thermal Management Specialty Battery GaAs Precursors Solar PVD Targets Thin Film PV (CdTe,CIGS) Thermal Reflector, Mirrors High Purity Chemicals Evaporants (CdTe,CdS) Links Core Technology Hot Pressing (Induction) Hot Pressing (Resistive) Powder Sizing High Purity Chemicals Low Oxygen/Moisture Chemical Synthesis Solid State Precipitation reactions E-beam Materials EH&S Safety - Haz Matrerials Customizable, Flexible Niche Producer Transforming our World and Yours 82 "Our Customers' First Choice!"


 

Key Markets Medical Applications Alternative Energy Display Technologies Products Core Technology Engineered Thin Film New Product Development Services Sputtering Converting Large Area Specialty Coatings Thin Film Stack with Custom Optical and/or Electrical Properties Precision Slit Base film and Coated Webs Au and Pd Coated Flexible Substrates Non Precious Metal Coated Flexible Substrates Transforming our World and Yours 83 "Our Customers' First Choice!"


 

End Use Markets Market Growth Wireless 12-20% LED's 20-30% Precision Optics 12% Photovoltaic 30% Medical 8-12% Market Growth Defense Flat Semiconductor 6% Data Storage 10-12% PM Services 10+% "Our Customers' First Choice!" Transforming our World and Yours 84


 

Wireless/Photonics Wireless/Photonics Technology: Specialty Inorganic Compounds, and High Purity NPM/PM (Au) TFT LCD backlights, Monitor lighting, signage displays, billboards, traffic lights conventional lighting Technology: Gallium Arsenide devices (GaAs) Cellphones, PDA's, wireless devices requiring pre -amplifiers' , power amplifiers, oscillators, surface acoustical wave devices, Technology: Infrastructure Components High power thermal materials and products serving wireless communications, high power transmission "Our Customers' First Choice!" Transforming our World and Yours 85


 

Precision Optics Precision Optics Technology: Filter Arrays Satellite imaging filters, Medical /DNA sensors, filters Color matching food processing ,Gas analysis ,Laser , communications Technology: NIR and IR Lenses Thin Film (PVD) Deposition Process Multi -layer filters for Thermal weapon sites, laser protection, automotive pedestrian protection, security camera, commercial thermal meters, UAV applications Technology: High Value Coatings Identified as the "Go to" Precision coater of sophicatied high value components including mirrors and lenses used in a number of government /commercial space ,science and astronomy applications through the world -US, Europe and Asia "Our Customers' First Choice!" Transforming our World and Yours 86


 

Applications - Photovoltaic Technology: Amorphous Silicon (a-Si, tandem and multi-junction) Thin Film (PVD) Materials Silicon based photovoltaic cells Front and back contact layers TCO (Transparent Conductive Oxide) layers Technology: Cadmium Telluride (CdTe) Thin Film (PVD) Materials Cadmium based solar cell architecture. N and P type Cadmium Semiconductor materials TCO Transparent Conductive Oxide layers Front and Back-contact layers Technology: Copper Indium Gallium Selenide (CIGS) Thin Film (PVD) Materials as well as Powders for Printing CIGS Applications Copper Indium Gallium Selenide thin film and screen printing applications for flexible and rigid solar cells. Technology: Concentrator Photovoltaic (CPV) Thin Film (PVD) Materials Solar technology based on concentrating Solar rays into a semiconductor device via large lens. Anti-Reflection Coating Materials Precious metal contact materials Micro Electronic Packaging Products Bonding Ribbon - Au & Ag Lead-free Solders Metalized Ceramic Substrates Technology: Flexible Solar Cells Building Integrated Photovoltaic Thin Film Services Solar cells built in flexible substrates applications such as roofing tiles or defense. "Our Customers' First Choice!" Transforming our World and Yours 87


 

Other Segments Key Initiatives R. J. Hipple Transforming our World and Yours


 

89 Beryllium and Beryllium Composites - Applications (lightweight, strength, dimensional, stability...typically 40% to 100% Beryllium) - Infrared sensors for fighter jet and UAV optical targeting, radar and navigation/guidance systems and special ops (FLIR) -Structural and electronic components for satellites -X-ray windows in medical, security and commercial imaging systems -Optical mirrors for NASA space-based telescopes -Diaphragms for commercial and concert quality speaker systems Transforming our World and Yours


 

Beryllium and Beryllium Composites - Applications (lightweight, strength, dimensional, stability...typically 40% to 100% Beryllium) Optical data collection and targeting systems - vision and sensors Fabricated parts up x3 since 2009 Energy ITER (International Fusion Reactor) Nuclear fission reactors (test, small scale, fuel additive) Commercial "Truextent" speaker diaphragms Semi-conductor equipment - wafer fab and test structural components Investment casting to expand AlBe application base Expanding materials technology beyond Be - using our manufacturing base Solar Defense 90 Transforming our World and Yours Platforms for Sustainable Growth


 

91 Engineered Material Systems - solving customers' problems with engineered strip metals Mill Products Specialty cladding and inlay Electron beam welding of dissimilar materials Profiling shapes by milling and/or grinding Close tolerance rolling Electroplating Precious and non-precious metals Overall and selective stripe capabilities Combination with current TMI technologies Automotive, Telecom/Computer, Medical, Energy Disk Drive Arms Automotive Control Components Specialty Electronic Connectors Transforming our World and Yours


 

Engineered Material Systems - solving customers' problems with engineered strip metals Platforms for Sustainable Growth Li-ion battery power interconnect solutions Solar power interconnect clad foil solutions Medical - reroll and specialty applications High power specialty electronics products - global automotive Continue to expand international footprint Increase value add with "total" component supply 92 Transforming our World and Yours


 

Summary Growth and Strategic Priorities R. J. Hipple Transforming our World and Yours


 

94 Our ongoing value creation initiatives are focused in three key areas Growth Expanding and diversifying the revenue base Targeting profitable niche growth applications in growing markets New product innovation and service Ongoing global expansion Strategic acquisitions, fast accretion Margin Improvement Lean Sigma-driven operating efficiency improvement New higher value added products Cost reductions Fixed and Working Capital Utilization Inventory turn improvement Lean Sigma-driven factory utilization gains Transforming our World and Yours


 

Annual Revenue Growth % +24% -16% -21% +8% +24% +9% +41% +25% -5% -21% +75% Telecom Crash Global Economic Recession Transforming our World and Yours 95 $'s in millions Our diversification and value creation initiatives are leading to strong growth in revenue and profitability


 

Why Brush Unique, rapidly growing advanced materials company Entering a period of accelerated growth driven by secular trends from market and product positioning Smart Mobile devices, 3G/4G, Commercial Aero, O&G, Alternative Energy, Optics, LED/LCD Sustainable long-term growth opportunities Ongoing operating improvements with Lean Sigma Expanding margins Strong balance sheet Valuation 96 Transforming our World and Yours


 

Analyst Meeting August 19, 2010 ... a leader in creating innovative engineered material solutions and services to make our customers competitive on a global basis ... while enhancing earnings growth, shareholder value, and stability ... by broadening technology, market, and geographic reach Transforming our World and Yours


 

Reconciliation of Non-GAAP Financial Measures Transforming our World and Yours 98 *Reconciliation of 2010 Forecast information: expected earnings per diluted share for the 2010 full year excludes special items. It is not possible at this time to identify the potential amount or significance of these special items. Accordingly, a detailed reconciliation of earnings per diluted share for 2010 is impracticable. Exhibit A