Q3 2020 Materion Corp Earnings Call
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Greetings welcome to materials third quarter 2020 earnings conference call. At this time, all participants are in a listen only mode. A question and answer that she will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
Please note. This conference is being recorded I will now turn the conference over to see shot she <unk> interim Chief Financial Officer. Thank you you may begin good morning.
Steve Shamrock interim Chief Financial Officer with me today is <unk>, President and Chief Executive Officer, our format for todays conference call is as follows.
Well be chip argue it will provide an update on cobi 19, and key strategic initiatives.
Following <unk> I will review detailed financial results for the quarter and then we will open up the call for questions.
Before we begin let me remind investors that any forward looking statements made in this announcement, including those in the outlook section and during the question and answer portion are based on current expectations the company.
The company's actual future performance may materially differ from that contemplated by the forward looking statements as a result, the pay variety of factors. Those factors are listed in the earnings press release, we issued this morning.
Additionally comments with regard to earnings before interest and taxes net income and earnings per share reflect the adjusted GAAP numbers shown in attachment number five in this mornings press release it.
The adjustments are made in the prior year period for comparative purposes, and remove special items non cash charges and certain income tax adjustments.
And now I'll turn it over to Google for his comments.
Thanks, Steve and welcome everyone.
I hope all of you and your loved ones continue to remain healthy and safe during these unprecedented times.
Today I'll first review the impact of Cold night Pete.
And follow that up with an update on our key strategic initiatives.
Health and safety of our people continue to remain our overriding priority.
We can do to take input from all available sources.
To ensure appropriate measures are taken to protect our people around the world.
In majority of our office employees are working from home and all.
And all of our factories are operating.
As you would expect we continue to experience the impact of coal would 19 in a number of our key end markets.
Particularly in aerospace energy and industrial.
Despite very challenging market conditions we.
We delivered sequential earnings growth for the second consecutive quarter.
In all three of our businesses reported double digit profit margins.
Semiconductor sales continued on a positive trajectory would see.
With sequential and year over year growth led.
Led by commercial performance initiatives related to new products and stronger demand.
We have actively managed our costs in response to the downturn.
Sequentially earnings increased 12% with a sales increased 4%.
I will now transition and review some of our key strategic initiatives.
I'm excited to report consolidated quarterly financial results, which include optics balls or worse for the first time.
The combination with optics balls hers create the worlds, leading thin film optical coatings provider with a highly complementary geographic product and end market portfolio.
Our teams are fully engaged with integration activities, which are going very well and according to plan.
Our commercial teams are starting to work together on identifying synergistic customer opportunities and support our overall growth objectives.
Our engineered Kladstrup project, which I announced earlier this year remains on schedule.
As a reminder, we entered into a business arrangement with a new customer to expand our manufacturing capacity, probably highly engineered kladstrup product, which will be used in next generation model of an existing product.
The total investment of the project is expected to be approximately $85 million.
Well the customer pre funding approximately $70 million.
In September we received an additional $14 million the customer for a total of $45 million since start of the project.
In support of this program, we are actively working to establish a new leading edge manufacturing facility for future product supply.
In addition, we're making good progress on negotiating a long term supply agreement and expect to finalize in the fourth quarter.
We are also on track for shipping product in the fourth quarter from our existing facility.
Lastly, I will provide a quick update on the P.C. facility consolidation project.
This project remains on schedule to complete all activity by year end.
We completed the closure of the Detroit, Michigan Service Center in the second quarter.
In the third quarter, we shut down production at our Fremont, California location.
We expect to complete relocation and installation activity in the fourth quarter.
In closing I want to sincerely, thank our global team, whose persevering through this pandemic Woody determination and focus the drive and turning on forward on our transformation into an advanced materials business.
Now I will turn the call over to Steve to cover the financials.
Thank you Bill and good morning, everyone joining us on the call today.
During my comments I will cover our third quarter 2020 financial highlights review profitability by segment provide brief comments on the balance sheet cash flow and modeling assumptions and five.
And finally cover the earnings outlook for the fourth quarter of 2020.
Following my remarks, we will open the line for questions.
Despite the ongoing COVID-19 pandemic I'm pleased to report third quarter results, which exceeded the second quarter.
Third quarter value added sales, which exclude the impact of pass through a precious metal costs were 167.5 million.
Up 4% compared to second quarter value added sales of 161.6 million and down 11% versus the third quarter of 2019.
Compared to the second quarter, the incremental sales related to the optic falters acquisition and growth in the semiconductor end market.
This was partially offset by softer demand in markets impacted by that called in 19 pandemic.
Including aerospace and industrial.
Telecom and data center end market sales were also lower due to lower demand related to the continued impacts of tariffs and COVID-19.
Gross margin was 46.6 million in the third quarter compared to 48.1 million in the second quarter.
Third quarter gross margin included 7.3 million of mine development costs.
As you May recall, we have historically accounted for these investments as capital expenditures.
However, in the third quarter, we returned to expand an existing pit in production for the first time based on the cost to extract the or and or purity.
Despite the fact that these costs are the exact nature and type as previous mine development activities technical.
Technical accounting rules require us to treat these costs period cost.
We incurred 7.3 million of expense in the third quarter and expect to incur an additional approximately $6 million in the fourth quarter.
Once these mine development activities are completed.
We expect to extract or from this pit into 2023.
We also do not expect to incur additional mine development costs until sometime later in 2022.
Based on these factors in a historical treatment we identify these costs the special.
Excluding mine development and other special items related to COVID-19, and the optics Ball's acquisition adjusted.
Adjusted gross margin was 55.1 million or 33% of value added sales.
A 200 basis point improvement compared to the second quarter adjusted gross margin of 31%.
Our manufacturing team has continued to drive significant operational improvements despite lower sales.
Selling general and administrative expense totaled 35.7 million up versus the second quarter of 32.9 million.
Excluding special items related to the acquisition and integration of optics falters.
COVID-19, and the forfeiture of noncash stock based compensation adjusted EPS DNA expense totaled 32.2 million.
As a percentage of value added sales adjusted EPS Teeny expense was 19% in the quarter concern.
Consistent with the second quarter we.
We continue to aggressively manage our testing expenses in response to current demand trends.
Research and development expense was approximately 3% of value added sales in the third quarter concern.
Consistent with the second quarter as we continue to make investments to drive long term profitable growth through development of new products and applications.
In the third quarter, we recorded restructuring expense of 2.6 million related primarily to the previously announced closure of our Detroit and freemont facilities relocation cost and severance.
As you May recall, we recognized a 2.2 million unrealized foreign exchange gain in the second quarter related to the purchase of optics falls ours, which was denominated in Swiss francs, we all.
We also reported an additional 1.1 million foreign exchange gain in the third quarter related to the same item, which we also classified as special.
We reported third quarter earnings before interest and taxes of 1.8 million.
Excluding special items I mentioned previously adjusted EBIT was $15.4 million or 9% of value added sales.
Looking at income taxes, we recorded an income tax benefit of 6 million in the third quarter of 2020.
Excluding the tax impact of special items, and special tax expense items of 5.8 million.
Our adjusted tax expense was 2.8 million or an effective rate of 19.8%.
In line with our previous guidance.
The tax special items, primarily relate to the acquisition of optics falters and federal tax law changes enacted in the quarter.
Finally, net income in the third quarter totaled 6.5 million.
On an adjusted basis, we reported net income of $11.3 million or 55 cents per diluted share compared to 49 cents per share in the second quarter.
The increase compared to the second quarter was due primarily to manufacturing performance improvement.
Aggressive cost management and the addition of optics falters.
Now, let me review 2023rd quarter performance by business segment.
Looking now at our performance alloys and composites business.
Value added sales were 81.9 million, a decrease of $7.9 million compared to the second quarter.
The sequential decrease is due to a continuation of soft demand in select end markets impacted by COVID-19.
Particularly aerospace and industrial.
In addition, raw material hydroxide sales were down $3 million compared to the second quarter.
EBIT, excluding special items was $10.4 million or 13% of value added sales compared to 12.3 million or 14% of value added sales in the second quarter.
The sequential decrease in EBIT is due to lower sales volumes, partially offset by manufacturing performance improvement.
This business has been impacted the most by the ongoing global pandemic, given the exposure to the aerospace energy industrial and automotive end markets.
Although we are focused on making further improvements to EBIT margins, we've made tremendous progress in this business.
PNC reported double digit EBIT margins for the 11th consecutive quarter.
I also remind investors that had a comparable sales levels in 2016, this business reported EBIT margins, which averaged in the low single digits.
Moving to advanced materials.
Value added sales in the third quarter of 2020 were $57.6 million up five.
Up 5% versus the second quarter, and 4% versus the prior year driven by growth in the semiconductor end market as.
As commercial performance initiatives and increased end market demand drove the growth.
EBIT, excluding special items was $6 million in the quarter compared to $5 million in the second quarter.
EBIT margins also improved sequentially from 9% in the second quarter, 10% in the third quarter.
The improvement in EBIT margins was due to favorable sales mix and manufacturing performance improvement and.
And we remain focused on continuing to improve this metric going forward.
Turning finally now to the precision coatings segment.
Third quarter value added sales were $28.3 million up 59% compared to the second quarter due to the acquisition of optics falters and strengthen our legacy precision optics business partially.
Partially offset by lower sales of blood glucose test strip products in our large area coatings business and reduced demand for projection display products.
As you May recall, we announced our intention to sell our large area coatings business in the first quarter.
After going through the sales process, we have made the determination to wind down the operations of the business and sell individual assets.
We expect to substantially complete these actions by the end of the year.
EBIT, excluding special items was $3.5 million or 12% of value added sales compared to $2.4 million in the second quarter.
The increase in EBIT was due primarily to higher optical filter product sales.
Moving now to the balance sheet and cash flow.
The company ended the third quarter of 2020 with a net debt position of only $10.9 million and approximately 234 million available on the company's credit facility.
We continue to have more than adequate liquidity to manage in this challenging environment.
Our capital spending increase in the first nine months to $46 million.
The increase versus the prior year is related to the customer funded engineered strip growth opportunity Google mentioned.
For financial modeling purposes in 2020.
Capital spending should run approximately $25 million net of customer prepayments related to the new engineered strip project.
Annual depreciation and amortization should run approximately 42 million.
And assume an 18% to 20% effective tax rate excluding special items.
And finally now the earnings outlook for the fourth quarter.
The impact of the COVID-19 pandemic continues to create heightened levels of uncertainty making it.
Making it very difficult to predict the extent to which our business results of operations financial condition or cash flows will ultimately be impacted.
We will continue to aggressively manage our cost structure in the current environment.
At this time based on current order entry levels, we expect fourth quarter adjusted earnings to be slightly better than the third quarter.
This concludes our prepared remarks, we will now open the line for questions.
They give if he would like to ask a question. Please press star one on your telephone keypad a confirmation until indicate your line is that the question again.
You May press star two if he would like to remove your question from the Q.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star. He is our first question is from Marco Rodriguez.
Stonegate capital markets. Please proceed.
Good morning. Thank you guys for taking my questions. Good morning, what Demarco.
I was wondering if maybe you could spend a little bit of time on not on Optik Folgers here first it perhaps you can provide what sort of a revenue benefit. It had in Q3 and then from a bigger picture standpoint, just wondering if you can talk a little bit about the sales teams efforts there.
D B, how that integration is going and what that structure is going to sort of look like to drive the top.
Topline synergies you're looking for and then just maybe you could touch on any sort of incentive structures that might be somewhat different to try and drive that line item there for the acquisition.
Yes Marco.
Let me just first give a.
Quick update on the integration activity itself is we've had a day one for this business and then since then weve.
Really excited to have the integration.
Led by teams from both the upticks balls or side as well as the teams from the material side.
I can tell you the integration has gone extremely well.
We have a couple of outside firms that have been working with US we have a seasoned integration leader that we've put in place who is helping lead this activity.
So I'm I'm pleased to tell you and everybody else that that all the things that we expected from this so far and of course as early stage, but so far everything is progressing.
Per plan.
With regard to the the revenue for this business I mean keep in mind that we had about 10 weeks into the quarter. When we are 10 weeks of the quarter I should say when we.
The goal of this business, so not a full quarter.
But we we don't specifically call out what the what the revenue is but I'm sure that if you look at some of the historical information that we provided in and tried to look at it from that perspective, you may be able to you may be able to understand at a high level keeping in mind that the historical information of course did not have coded.
Impact so that would have to be factored in this business really gets integrated into our precision coatings business, it's roughly about half the half the size of the overall overall business of precision coatings and so we'll continue to manage this at a business unit level with precision coatings in total and that continue to report all the information.
At that level beyond the sales structure I can tell you that thats, a really exciting phase right now we actually have a affirmed that opt exposures. In fact has worked with in the past to help drive some of the sales activities on their side we've been in.
We've been employing that that firm to work with us and integrate the two sales organizations it.
It's a it's going very well developing a global organization that can have a global customer accounts at the same time can provide the regional service, but that is needed and that team is it I would say at a phase where the structure has been outlined we're starting to put some names in place now would that would that structure.
And and were starting to identify some initial.
Projects that we can we can start to work on but as you can imagine you know first and foremost we have to make sure that we get the proper structure in place the names in place and then start driving the sales synergies, which we are so.
Hungry for in this in this in this acquisition.
Acquisition that we did.
Incentive structure I mean that clearly is going to be an important element of what we go forward I mean, we have a very good disciplined on incentive structure that I believe we've created for the maturity on side in the last couple of years and so that's one of the things that are each organization and our sales organization is looking at is I'm studying the incentive structure that.
Upticks Mozer's employees have and then and then what the Metro employees, a pad and we will be looking at opportunities to merge those.
If it makes sense.
To to drive it, but clearly that will be an important part of helping drive our growth initiatives.
Forward, so in general going well quite excited about it and look forward to reporting a few through a progress in future calls.
Understood and then in terms of the merging of the sales teams with material on an uptick falls or is.
In in the PC segment can you.
Can you describe a little bit about the training efforts to cross training efforts is it is that something that's very difficult or is it something that's pretty easy when it comes to the the cross selling there.
Yes, no I think it's going to be a fairly easy task in terms of the cross selling because you know both of these organizations. These businesses are are are experts at optical filters and optical filter technology, you know a lot of the customers that we actually worked with are similar or same customers and.
And I think the regions that were working in.
You know, we're going to leverage the actual local expertise for the region. So we don't have as much cleaning lets say necessarily that that's needed from a regional perspective. So I think it's a I think it's a it's a it's a good start with the team that we have I don't expect that to be a lengthy process I expect these people to build a pick up that technologies.
From from each other quite rapidly and then move forward and I think from a customer standpoint, I expect the teams to be able to operate fairly quickly.
Got it and then just go in your prepared remarks, I didn't quite catch all of it but you had made a mention about one of the pose your strategy on commercial excellence and.
Specifically brought out excuse me some new products in some strong demand I guess kind of helping out the quarter can you maybe provide a little more color around that statement there.
Yeah, I mean, when we look at the quarter you know a couple of areas that I think we're good I'm good a positive move.
Movements for US one included the semiconductor side continues to be a strong market in general both from a oh.
General market pull standpoint, as well as the products that we're introducing so we've talked about a lumens gagnon product a couple of times actually on the calls and we continue to be quite excited about that product that's a one that.
Can be used for fiveg and for other semiconductor applications and so we continue to see robust demand on that and that's I think help in some of the some of the the down offsetting some of the downturn that we've had with the other markets.
When you look at some of our pickup in the consumer consumer.
Consumer application because it will a chronic side some of the mobile handset devices and applications that we have some pickups there with some of our somewhere new products now there is some softness that's also happened in the consumer electronic side.
Electronic side with a similar production display business so the.
So the net isn't necessarily as strong as the semiconductor side, but we have a segment of the consumer side that is doing are doing well on a sequential basis.
Understood and then you know in the past you guys have talked about you know the R&D pipeline new products, it's just as far as a percentage of overall revenue whether that's you know trailing three months are trailing three years do you have any other data in terms of that that kind of points to your movement there on.
The R&D side.
Well I think the main data point I would I would talk about is the actual R&D spending you know one of the things that we really focused on in the last three quarters is to ensure that we do not sacrifice R&D spending in this very very challenging times, we have maintained a and in.
And in fact, even increased R&D spending where necessary. So that we can continue to fuel our development, that's going on and the new product news.
New product area, we do and we have talked about that which is a new product sales sort of metric that matters.
That metric I mean that for this year I mean, you know one of our biggest areas for that was clearly a tough match and all the new product activity that we had on Toughmet. As you know the Toughmet is a very very high growth area for oil and gas and for aerospace segments, both of which have been significantly hit this year and so.
That metric. Unfortunately of course is lower compared to our prior years, but its specifically driven by the market demand in a in oil and gas and aerospace and not related to new products and new product introductions in general that we're making across the company. So we're continuing to fuel our new product pipeline.
Making sure that the that our R&D spending stays intact and it's our intent to every dollar that we can find we're going to continue to to spend towards R&D.
Got it and just lastly, a quick I'm kind of a housekeeping item here I believe I caught up I was wondering confirm here. The the gross margin impact that you guys saw in the P.A.C. side at least on a reported basis.
You had the mine development costs, which is a one time item that was a particular impact that caused the decrease sequential and year over year on the gross margin side of the PSC side, just kind of wanted to confirm that and then also if I heard correctly that there was going to be another roughly 6 million dollar same sort of impact in Q4.
That's correct Margo you understand correctly.
Got it great. Thanks, a lot guys I appreciate the time.
Thanks Marco.
Our next question is from Phil Gibbs with Keybanc capital markets. Please proceed.
Hey, good morning.
Good morning, Phil Phil.
For advanced materials. It was good to see the margin.
Margin progress that you're making intra year.
Is your goal.
Google to still try to get that business back to mid teens operating profit and what do you think it's going to take to get there, particularly given the fact that some of the demand has been really strong.
Yeah.
Well I think first of all from a goal standpoint, absolutely I mean, our our objective really at a company level, we've talked about it at the company level that we would like to continue our journey towards an advanced materials company and we believe in advanced materials company is one that is in more of a mid teens type of a margin to the company. So you know all of our businesses have to deliver.
Good strong margins for us to be able to then have mid teens type of margins at the company level. So yeah, absolutely our goal is to do that.
And of course as you know we're on the on the road to the progress and then and then due to some of the challenges that we face two recently, we had a setback, but we have continued to make progress just reported to you know 10% double digit margins, which was I think a great sort of milestone for this business.
And we will continue to work that where I see you know a couple of things happening one of I think we we got to continue to drive our manufacturing improvement our yield improvement our new product launch improvements I mean, one of the reasons that we're seeing the demand the where are the sales I should say that we're seeing in this business is because of the number of new products.
That the team has been working on and launching those new products all front from from Aluminums cambium to L.D. products.
Two products that go into the memory market. So there's a number of new products and and so as those continue to launch it as we continue to ramp those products up we expect better yields and therefore better price.
Performance I think the other is you know continue to make sure our portfolio is strong so any any any area that we feel needs to be approved.
Prune so it could be a customer for example, it could be a specific product or something I mean, if there is something that we have to make any adjustments on we're going to continue to do that so that we have the right type of mix in the end the portfolio you know as we as we go forward and and then we're paying a lot of attention to two.
Through our customer portfolio as well and ensuring that we have the right type of customers that we can work with where we know that that they value.
The sort of the skills and capabilities that we bring we bring to the table. So I think all those things will be important factors as we move forward in a in driving this business too.
To the mid teens margins.
So in terms of <unk> in terms of a time on July one when do you think that you can start to see more I guess.
I got sustainable improvement getting to getting.
Getting to a love and getting the time that that sort of thing just in terms of the timeline. So.
No we don't get we don't get ahead of ourselves yeah.
Yes. So you know if that if the pandemic wasn't wasn't here I believe and I think I would tell you that that that I would be able to give maybe a more specific timeline, but the uncertainties around what's going to happen in Q4, and Q1 and was there a second wave or not I mean, I think those kind of bring some uncertainties into the picture, but our goal is to continue to have good.
Sequential improvement in this business.
And so into 21 I mean, we we want to we want to continue to drive sequential improvement into and get to those mid teens mid teens margin. So I don't have a specific date. It was sort of day or quarter. I can give you a feel that that that were prepare to communicate at this time, but I can tell you. It is a very very important part of our focus.
[noise] kind of.
Kind of a macro question, but it but on the side of foreign exchange. The dollar has been.
Dollar's been weak the last several.
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The last several weeks.
Weeks, how do you how.
How does that how does that impact you guys, one way or the other.
Phil from that perspective, I would tell you that.
Really it's you know we manage that exposure quite well I mean, if you look even at our year to date results right. They really haven't had much of an FX impact there as you know you know weve got hedging programs in place.
In terms of our euro denominated receivables in our euro denominated sales I should say in Europe, and then our yen denominated sales in Asia. So we really try to balance that that out from a risk perspective, So don't don't see any major impacts from that going forward. So.
[music].
And.
The next question is just on telecom infrastructure, and obviously, we see a lot of headlines backing before thing Anwar way, but.
How should we think about the telecom infrastructure business over the next couple of.
Couple of years.
Yeah, I mean, we would we would expect I think over the next couple of years, you know as a as Fiveg continues.
Continues to take hold and we would expect that market to sequentially increase.
Similar to what would have happened I think when we went through the last time.
Take which was done on Fourg, So I think thats a market that in general we expect to continue to have improvement sequentially over the next couple of years.
So do you think this is a low point in that business are saying right now.
Yeah, I don't know if I would never say so it's a low point because there certainly customers that are still you know still ordering but just not at the level that I think we expected I mean, some of the covidien issues of certainly slowed that down but I think we expect it to continue to improve over the next couple of years.
Okay and.
And then lastly, and I apologize if you.
I apologize if you mentioned this already but the the club.
The cloud investment appears like it's like it's on track, we don't have a site yet and we havent disclosed the customer and I wouldn't expect you to do that if you haven't done it already but.
But on your.
On your existing business on your existing capacity are you still anticipating.
Or some sort of pull.
From the from a cloud customer in be okay.
Call it for Q or the first quarter next year.
Yeah, Yeah, we expect that we will have a up shipments it here in the in the fourth quarter and then into the end of the first quarter. So we're quite excited about it I mean, our teams are working I can tell you I just had a review yesterday and I mean, the working around the clock to ensure that we have a good product that we can build and and supplied to the customer during the fourth quarter.
Good and then into the first quarter.
Thanks, guys I appreciate it.
Thanks, very much bill.
As a reminder, this star one on your telephone keypad, if he would like to ask a question. Our next question is from Christopher Hillary with Roubaix capital. Please proceed.
Hi, good morning.
Good morning, Chris.
Hi, Thanks for taking the question, obviously, an exciting time for the company with the Quad stripped investments could you take a minute or two and just give us.
Some of the qualities that that product will have and maybe what some of the applications might look like and I. Appreciate you can't be too specific but maybe in generalities and then either with side or after that if you wouldn't mind, then maybe sharing some thoughts on some of the longer longer term demand drivers with both this product and then your broader.
Specialty portfolio you know other certain.
Industry trends, you see kind of.
Being the growth drivers over the over the medium term for the company.
Yeah, Chris were certainly excited about this this this product and even I just want to remind everybody that we do this we do this today you know and we do it quite well we supplied the number of different markets today.
We we supplied the consumer electronics market that was flat to down to more of a market. We supplied to you know a number of different markets and we're going to continue to do that the issue that I think we've talked about is that it is as we had basically demand you know from from a customer we were not able to fulfill that.
Demand with our existing capacity.
Capacity and capability and so we're putting in new capacity and capability to be able to do provide that that demand you know that the customer has asked so I think in terms of the applications. I mean, there is applications that go across a number of different markets. We are I mean, our sales team is not stopping here because one of the things I think that you have.
At any time, you make any time, you make investments and anytime you make new facilities that you put in place is it gives you greater flexibility greater opportunity to go to market. You know this this product in this technology to to to customers around the world. So we're challenging our sales teams to go out and and talk to the customers around the world and see.
What other opportunities we can pick up over the next you know.
Over the next one to three years and hopefully to putting the additional capacity in place will will give us some more credibility impacted in the marketplace and and so that's what we that's what we plan on doing that and so we were quite excited about it. It's it's a as I said, it's the applications in a in a number of different a number of different areas.
And ER and on our sales teams are working those.
And is there anything specific you might flag look around electric efficiency or the internet of things applications or certain parts of the semiconductor market, but you did give us some.
I guess, a kind of a pivot point to think about where some of the.
Extra growth is going to be coming from.
Yeah. I mean, you know look I think I think couple of the areas that are really good.
Good areas for us to to look at our clearly consumer area and automotive I mean, those I think too I think those are two important areas for us to a point that I mean, when you look at when you look at for example, a lot of the devices that that I'm in the consumer side that the people are using I mean these types of clad strip type of product is an important.
Enabler in that in those devices. When you look at the automotive side, especially on some of the hybrid TV side. You know this is an important.
Product segment that you know that we can that we can go after so you know consumer and auto are two very very good.
Markets for Us and I think as we go forward I mean, some of the other areas that we can also look at our energy and industrial markets markets as well, but I think I think in our primary focus.
He has been on consumer and auto and it will certainly continue to be in those two in those two markets, but we'll continue to look for other markets because they say you know like energy and industrial that we can go after as well.
Thank you and great job managing through a difficult period okay.
Okay. Thanks, very much Chris Thanks, Chris.
Yeah, we'd send never a question and answer session I would like to turn the call back over to management for closing remarks.
Thank you. This is Steve Shamrock and this concludes our third quarter 2020 earnings call. A recorded playback of this call will be available on the company's website Materion dotcom, we would like to thank all of you for participating on the call. This morning, and your interest in Materion I will be available to answer any follow up questions. My direct number is 2163.
Three 401 zero, thank you very much.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.