Materion Raises Q4 Outlook, Offers FY13 Guidance; Says Aware of Potential Theft at Refinery
Materion Corporation (NYSE: MTRN) said business conditions and margins in the fourth quarter were better than initially anticipated and, as a result, fourth quarter earnings are now expected to be significantly higher, subject to the discussion below regarding a possible charge.
Raises Q4 EPS outlook from $0.33-0.38 to $0.37-0.40 vs $0.26 estimate. Expecting FY12 EPS of $1.30-1.35 vs 1.31 estimate. Sees FY13 EPS $1.75-2 vs $1.85 estimate.
In January 2013, as the year-end physical inventory was being taken, the Company became aware of a potential theft of precious metal from its Albuquerque, New Mexico refinery. An internal investigation ensued, an arrest was made and a minor amount of stolen material was recovered.
The Company began further investigations, including an investigation of the physical inventory results and engaged an outside team of forensic experts and criminal investigators. While the results of these investigations are not yet complete, preliminary indications are that some, or all, of a year-end inventory short may be due to theft. The initial results of the physical inventory suggest that the impact on the fourth quarter of 2012 may be a charge of up to $0.25 per share. Recent inventories taken at other Company facilities were all within the normal, tight tolerances. The results of the physical inventory and the potential theft remain under investigation.
The Company has a specific theft insurance policy that covers theft of the suspected nature. The policy provides up to $10.0 million of coverage with a $100,000 deductible. The underwriters of the policy have been notified. The amount of insurance recovery is uncertain at this time, therefore, the recovery of any insurance proceeds cannot be recorded in the fourth quarter of 2012, but instead would be recorded in a future period.
Throughout the Company's long history, a material theft has not been discovered at this location or any of the Company's other locations and the Company has never made a material claim under its theft insurance.
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