Q4 2021 and Full-Year
Highlights
(unless otherwise noted, all financial amounts
in this news release are expressed in U.S. dollars)
- Q4 2021 revenue of $153.4 million
higher by 39.0% YoY; full-year 2021 revenue of $539.3 million was higher by 55.5% YoY.
- Volumes in the fourth quarter of 3,311 tonnes; full-year
volumes expanded by 20.2%.
- Operating income of $12.7 million
in the quarter; $59.9 million for the
year.
- Adjusted Net Income(1) for the quarter of
$16.1 million, or $0.39 per share, with full-year Adjusted Net
Income(1) of $55.0
million, or $1.42 per
share.
- Adjusted EBITDA(1) for the quarter of $19.7 million; 2021 Adjusted EBITDA(1)
of $81.9 million was 183.7% higher
YoY.
- Cash balance of $89.0 million
after raising $38.0 million from
equity offering and distributing $12.8
million in dividends to shareholders.
- A quarterly dividend of Cdn$0.10
per common share was declared on March 9,
2022 for shareholders of record at March 22, 2022, with a payment date of
March 30, 2022.
TORONTO, March 10, 2022 /CNW/ - Neo Performance
Materials Inc. ("Neo", the "Company") (TSX: NEO)
released its 2021 year-end financial results. The financial
statements and management's discussion and analysis
("MD&A") of these results can be viewed on Neo's web
site at www.neomaterials.com/investors/ and on SEDAR at
www.sedar.com.
HIGHLIGHTS OF Q4 2021 AND YEAR-END CONSOLIDATED
PERFORMANCE
Neo reported strong year-over-year ("YoY") gains in
revenue, volumes, operating income, Adjusted EBITDA(1),
and profitability in the year ended December
31, 2021, driven largely by increased demand for products
across all three of its operating divisions, higher selling prices
for rare earth materials, and continuing progress in several of the
Company's strategic initiatives.
Consolidated revenue for the year ended December 31, 2021, was $539.3 million compared to $346.7 million for the year ended December 31, 2020; an increase of $192.6 million or 55.5%. Neo reported a net
income of $36.0 million, or
$0.92 per share, which compared to a
net loss of $60.1 million, or
$1.54 per share, in 2020.
Adjusted Net Income(1) totaled $55.0 million, or $1.42 per share, which compared to $6.2 million, or $0.16 per share, in 2020. Adjusted
EBITDA(1) was $81.9
million, a 183.7% jump over Adjusted EBITDA of $28.9 million in the prior year.
For the three months ended December 31,
2021, consolidated revenue was $153.4
million compared to $110.4
million for the same period in the prior year; an increase
of $43.0 million or 39.0%. Neo
reported a net income of $7.3
million, or $0.17 per share,
which compared to $2.4 million, or
$0.06 per share, in the same period
of 2020. Adjusted Net Income(1) totaled
$16.1 million, or $0.39 per share, which compared to $9.6 million, or $0.25 per share, in the corresponding period of
the prior year. Adjusted EBITDA(1) was $19.7 million, a 59.7% jump over Adjusted EBITDA
of $12.3 million in the fourth
quarter of 2020.
As of December 31, 2021, Neo had
cash and cash equivalents of $89.0
million plus restricted cash of $1.3
million, compared to $72.2
million plus $4.2 million as
at December 31, 2020. In the
year ended December 31, 2021, Neo
received $38.0 million of proceeds
from issuance of common shares from treasury and distributed
$12.8 million in dividends to its
shareholders, Neo also entered into two debt agreements for new
borrowing capacity in order to raise total cash available to pursue
growth opportunities and make investments in working capital. As at
December 31, 2021, Neo had
approximately $41.5 million available
under its credit facilities with $6.5
million drawn, compared to $2.4
million drawn at December 31,
2020.
"The Neo team delivered an outstanding performance in 2021,
despite a challenging global landscape," said Constantine Karayannopoulos, CEO of Neo. "That
landscape is even more challenging today with the recent
developments in Europe. Our
Estonian facility is the only commercial producer of rare earths in
Europe and one of only two
producers of aerospace-grade tantalum and niobium in the EU and it
has not been impacted by the tragic events in Ukraine. We are
working with our advisors to monitor developments closely and we
are in close and frequent contact with Estonian government
officials, who continue to encourage us to maintain – and expand –
our operations there."
"A key business focus now is meeting the rapidly growing demand
for magnetic rare earths in Europe, which are needed by electric vehicles
and high-efficiency electric motors. We are partnering with
industry and government leaders across Europe with an aim toward helping us establish
production in Europe of sintered
neo magnets to help meet this demand using rare earth feedstock
from North America and elsewhere.
Magnetic rare earths and global decarbonization go hand in glove.
Neo is committed to helping Europe, North
America, and other regions respond to rising consumer demand
for these sustainable technologies."
__________________________________
|
(1) Neo
reports non-IFRS measures such as "Adjusted Net Income", "Adjusted
Earnings per Share", "Adjusted EBITDA", "Adjusted EBITDA Margin"
and "EBITDA". Please see information on this and other non-IFRS
measures in the "Non-IFRS Measures" section of this new release and
in the MD&A, available on Neo's website at www.neomaterials.com
and on SEDAR at www.sedar.com.
|
SELECTED FINANCIAL RESULTS
TABLE 1: Selected
Consolidated Results
|
|
Year-over-Year
Comparison
|
Quarter-over-Quarter
Comparison
|
|
2021
|
2020
|
Q4
2021
|
Q4
2020
|
Volume
(tonnes)
|
15,103
|
12,566
|
3,311
|
3,683
|
($000s)
|
|
|
|
|
Revenue
|
539,251
|
346,692
|
153,414
|
110,397
|
Operating income
(loss)
|
59,887
|
(55,659)
|
12,726
|
3,190
|
EBITDA(1)
|
65,431
|
(40,388)
|
12,380
|
4,602
|
Adjusted
EBITDA(1)
|
81,915
|
28,874
|
19,652
|
12,308
|
Adjusted EBITDA
%(1)
|
15.2 %
|
8.3 %
|
12.8 %
|
11.1 %
|
_________________________
|
(1)Neo reports non-IFRS measures
such as "Adjusted Net Income", "Adjusted Earnings per Share",
"Adjusted EBITDA", "Adjusted EBITDA Margin" and "EBITDA". Please
see information on this and other non-IFRS measures in the
"Non-IFRS Measures" section of this news release and in the
MD&A.
|
For the year ended and three months ended December 31, 2021, revenues of $539.3 million and $153.4
million were 55.5% and 39.0% higher, respectively, than the
corresponding periods of 2020. All three segments experienced an
increase in revenues as volumes rose due to the economic recovery
since the initial impact of COVID-19 in 2020 despite being
negatively impacted by the semiconductor chip shortage in the
automotive sector and by continuing global supply chain logistics
challenges. Selling prices for rare earth products (including
Magnequench powders) rose significantly starting from the fourth
quarter of 2020 through the fourth quarter of 2021. Rare earth
prices remain relatively high compared to more recent historical
periods driven primarily by demand for the magnetic elements which
are critical in leading technologies such as the electrification of
automobiles and other environmentally sustaining technologies. Neo
has benefited from these generally higher prices from both a
lead-lag perspective (lower cost inventory on hand) and more dollar
value margin available generally with higher prices.
MAGNEQUENCH SEGMENT RESULTS
TABLE 2: Selected
Magnequench Results
|
|
Year-over-Year
Comparison
|
Quarter-over-Quarter
Comparison
|
|
2021
|
2020
|
Q4
2021
|
Q4
2020
|
Volume
(tonnes)
|
6,090
|
5,016
|
1,482
|
1,626
|
($000s)
|
|
|
|
|
Revenue
|
263,753
|
152,966
|
70,897
|
52,553
|
Operating
income
|
38,413
|
20,027
|
6,608
|
8,102
|
EBITDA(1)
|
49,703
|
29,726
|
10,463
|
10,402
|
Adjusted
EBITDA(1)
|
48,009
|
29,928
|
9,137
|
11,404
|
_________________________
|
(1)Neo reports non-IFRS measures
such as "Adjusted Net Income", "Adjusted Earnings per Share",
"Adjusted EBITDA", "Adjusted EBITDA Margin" and "EBITDA". Please
see information on this and other non-IFRS measures in the
"Non-IFRS Measures" section of this news release and in the
MD&A.
|
For the year ended December 31,
2021, volumes in the Magnequench segment saw a rebound and
strong growth compared to prior periods. The year ended
December 31, 2020 was significantly
impacted by slowdowns and shutdowns in the economy primarily due to
impacts from COVID-19. Volumes began to recover in the fourth
quarter of 2020 and continued throughout 2021. Despite a
tempering of volumes in 2021 due to the pandemic and a slowdown in
automotive production due to the global semiconductor chip shortage
and the global logistic challenges, sales volumes of Magnequench
powders grew by 21% over the prior year and by over 9% compared to
the year ended December 31, 2019
(pre-COVID period). In addition, Magnequench compression molded
magnet volumes more than doubled over the prior year, continuing
the high growth rate achieved since Magnequench began producing and
selling compression molded magnets in late 2019.
Magnequench's focus on key macro growth trend continue to yield
positive sales volume growth in areas such as compression magnets
and electrified-automotive applications, including traction motors
and pumps. Magnequench margins benefited from increased
volumes and better absorption of fixed costs as well as the
lead-lag impact of prices rising in rare earth components of its
powder composition. Although Magnequench has strategically
structured most of its sales contracts to contain pass-through
pricing provisions for rare earth raw materials, in the year ended
and three months ended December 31,
2021, Magnequench benefited significantly from the timing of
implementation of these price increases with having some lower cost
inventory on hand.
CHEMICALS & OXIDES ("C&O") SEGMENT RESULTS
TABLE 3: Selected
C&O Results
|
|
Year-over-Year
Comparison
|
Quarter-over-Quarter
Comparison
|
|
2021
|
2020
|
Q4
2021
|
Q4
2020
|
Volume
(tonnes)
|
8,690
|
7,348
|
1,718
|
2,018
|
($000s)
|
|
|
|
|
Revenue
|
212,711
|
143,322
|
60,389
|
48,433
|
Operating
income
|
37,391
|
(26,505)
|
10,207
|
5,124
|
EBITDA(1)
|
29,747
|
(23,134)
|
7,656
|
5,065
|
Adjusted
EBITDA(1)
|
41,512
|
13,950
|
11,800
|
7,103
|
_________________________
|
(1)Neo reports non-IFRS measures
such as "Adjusted Net Income", "Adjusted Earnings per Share",
"Adjusted EBITDA", "Adjusted EBITDA Margin" and "EBITDA". Please
see information on this and other non-IFRS measures in the
"Non-IFRS Measures" section of this news release and in the
MD&A.
|
The C&O segment continues to see strong demand for various
rare earth products, particularly its magnetic-based products, as
the global economy continues to recover from the economic impacts
of COVID-19. The demand (and price) for these magnetic
elements continues to increase given their use in the
electrification of automobiles and other environmentally
sustainable technologies. The combination of higher prices and
higher demand for magnetic rare earth products resulted in strong
financial performance for the C&O segment compared to the prior
periods. Higher prices supported higher dollar value margins in
C&O's rare earth separations business in addition to the impact
of having lower cost inventory on hand. In C&O's
environmental catalysts business, volumes were reasonably
consistent year over year with some slowing in the last quarter of
2021, due to reduced automotive production driven by the
semiconductor chip shortage and global logistics challenges.
C&O's environmentally protective water treatment solutions
business continues to perform well with higher volume and new
customer adoption, although sales volume growth expectations were
partially impacted by the challenges in global shipping and
logistics availability.
RARE METALS SEGMENT RESULTS
TABLE 4: Selected
Rare Metals Results
|
|
Year-over-Year
Comparison
|
Quarter-over-Quarter
Comparison
|
|
2021
|
2020
|
Q4
2021
|
Q4
2020
|
Volume
(tonnes)
|
549
|
412
|
160
|
89
|
($000s)
|
|
|
|
|
Revenue
|
83,604
|
59,688
|
27,296
|
12,096
|
Operating income
(loss)
|
6,578
|
(30,006)
|
2,410
|
(4,209)
|
EBITDA(1)
|
9,415
|
(28,685)
|
3,401
|
(5,323)
|
Adjusted
EBITDA(1)
|
9,154
|
(2,189)
|
3,074
|
(3,297)
|
_________________________
|
(1)Neo reports non-IFRS measures
such as "Adjusted Net Income", "Adjusted Earnings per Share",
"Adjusted EBITDA", "Adjusted EBITDA Margin" and "EBITDA". Please
see information on this and other non-IFRS measures in the
"Non-IFRS Measures" section of this news release and in the
MD&A.
|
Similar to Magnequench and C&O, the prior-year for the Rare
Metals segment was also impacted by COVID-19. Throughout the
year ended December 31, 2021, the end
markets of Rare Metals products exhibited some recovery. The
three months ended December 31, 2021,
were particularly strong as customers caught up on some historical
orders and prices for certain rare metals increased in the quarter
with Neo benefiting from having some lower-cost inventory on
hand. This benefit offset the losses on other contracts where
prices were set prior to the recent price increases causing some
lower of cost or net realizable value adjustments for some Rare
Metals products.
The improvement in the Rare Metals business in the year ended
December 31, 2021 was also attributed
to progress made in several key strategic initiatives in the
segment, including selling more products outside of the aerospace
industry, expanding its customer base, and diversifying its total
end-market exposure. Key progress continues to be made in
expanding the capacity of key products (with minimal capital
investment) and refocusing the sales pipeline and manufacturing
capacity toward more profitable end products. Sales prices in a
number of end markets have recovered and gallium-based products are
exhibiting improved market demand.
CONFERENCE CALL ON THURSDAY MARCH 10,
2022 AT 10 AM EASTERN
Management will host a teleconference call on Thursday, March 10, 2022 at 10:00 a.m. (Eastern Time) to discuss the fourth
quarter 2021 results. Interested parties may access the
teleconference by calling (647) 794-4605 (local) or (866)
575-6539 (toll-free long distance) or by visiting
http://cnw.en.mediaroom.com/events. A recording of the
teleconference may be accessed by calling (416) 436-0148 (local) or
(888) 203-1112 (toll-free long distance), and entering pass code
8108280# until April 10, 2022 or by
visiting http://cnw.en.mediaroom.com/events.
NON-IFRS MEASURES
This news release refers to certain non-IFRS financial measures
and ratios such as "Adjusted Net Income", "EBITDA", "Adjusted
EBITDA", and "Adjusted EBITDA Margin". These measures and ratios
are not recognized measures under IFRS, do not have a standardized
meaning prescribed by IFRS, and may not be comparable to similar
measures presented by other companies. Rather, these measures and
ratios are provided as additional information to complement IFRS
financial measures by providing further understanding of Neo's
results of operations from management's perspective. Neo's
definitions of non-IFRS measures used in this news release may not
be the same as the definitions for such measures used by other
companies in their reporting. Non-IFRS measures and ratios
have limitations as analytical tools and should not be considered
in isolation nor as a substitute for analysis of Neo's financial
information reported under IFRS. Neo uses non-IFRS financial
measures and ratios to provide investors with supplemental measures
of its base-line operating performance and to eliminate items that
have less bearing on operating performance or operating conditions
and thus highlight trends in its core business that may not
otherwise be apparent when relying solely on IFRS financial
measures. Neo believes that securities analysts, investors and
other interested parties frequently use non-IFRS financial measures
and ratios in the evaluation of issuers. Neo's management also
uses non-IFRS financial measures in order to facilitate operating
performance comparisons from period to period. For definitions of
how Neo defines such financial measures and ratios, please see the
"Non-IFRS Financial Measures" section of Neo's management's
discussion and analysis filing for the year ended December 31, 2021, available on Neo's web site at
www.neomaterials.com and on SEDAR at www.sedar.com.
TABLE 5: CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
($000s)
|
|
December 31,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
89,037
|
|
$
|
72,224
|
Restricted
cash
|
|
1,283
|
|
4,219
|
Accounts
receivable
|
|
65,209
|
|
51,851
|
Inventories
|
|
200,954
|
|
130,867
|
Income taxes
receivable
|
|
1,667
|
|
2,186
|
Assets held for
sale
|
|
—
|
|
415
|
Other current
assets
|
|
19,211
|
|
13,889
|
Total current
assets
|
|
377,361
|
|
275,651
|
Property, plant and
equipment
|
|
73,378
|
|
74,322
|
Intangible
assets
|
|
49,961
|
|
53,653
|
Goodwill
|
|
70,082
|
|
68,967
|
Investments
|
|
13,759
|
|
10,045
|
Deferred tax
assets
|
|
6,638
|
|
3,040
|
Other non-current
assets
|
|
2,903
|
|
864
|
Total non-current
assets
|
|
216,721
|
|
210,891
|
Total
assets
|
|
$
|
594,082
|
|
$
|
486,542
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
|
|
|
|
|
Bank advances and other
short-term debt
|
|
$
|
6,502
|
|
$
|
2,428
|
Accounts payable and
other accrued charges
|
|
94,201
|
|
79,106
|
Income taxes
payable
|
|
7,059
|
|
2,945
|
Provisions
|
|
5,560
|
|
2,628
|
Lease
obligations
|
|
1,589
|
|
1,297
|
Derivative
liability
|
|
14,704
|
|
9,428
|
Other current
liabilities
|
|
1,455
|
|
940
|
Total current
liabilities
|
|
131,070
|
|
98,772
|
Employee
benefits
|
|
1,210
|
|
2,358
|
Provisions
|
|
15,127
|
|
4,201
|
Deferred tax
liabilities
|
|
13,366
|
|
13,970
|
Lease
obligations
|
|
1,388
|
|
2,243
|
Other non-current
liabilities
|
|
1,405
|
|
1,513
|
Total non-current
liabilities
|
|
32,496
|
|
24,285
|
Total
liabilities
|
|
163,566
|
|
123,057
|
Non-controlling
interest
|
|
2,891
|
|
1,490
|
Equity attributable to
equity holders of Neo Performance Materials Inc
|
|
427,625
|
|
361,995
|
Total
equity
|
|
430,516
|
|
363,485
|
Total liabilities
and equity
|
|
$
|
594,082
|
|
$
|
486,542
|
____________________________
|
See accompanying
notes to this table in Neo's Consolidated Financial Statements for
the Year Ended December 31, 2021, available on Neo's website at
www.neomaterials.com and on SEDAR at www.sedar.com.
|
TABLE 6: CONSOLIDATED RESULTS OF OPERATIONS
Comparison of the year ended and three months ended
December 31, 2021 to the year ended
and three months ended December 31,
2020:
($000s)
|
|
Year Ended
December
31,
|
|
Three Months
Ended
December 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue
|
|
$
|
539,251
|
|
$
|
346,692
|
|
$
|
153,414
|
|
$
|
110,397
|
Costs of
sales
|
|
|
|
|
|
|
|
|
Costs excluding
depreciation and amortization
|
|
380,548
|
|
256,928
|
|
111,718
|
|
82,104
|
Depreciation and
amortization
|
|
8,176
|
|
9,430
|
|
2,405
|
|
1,999
|
Gross
profit
|
|
150,527
|
|
80,334
|
|
39,291
|
|
26,294
|
Expenses
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
58,445
|
|
53,702
|
|
17,421
|
|
16,113
|
Share-based
compensation
|
|
4,526
|
|
1,733
|
|
1,765
|
|
817
|
Depreciation and
amortization
|
|
7,689
|
|
7,750
|
|
1,891
|
|
1,899
|
Research and
development
|
|
19,859
|
|
13,724
|
|
5,367
|
|
4,275
|
Impairment of
assets
|
|
121
|
|
59,084
|
|
121
|
|
—
|
|
|
90,640
|
|
135,993
|
|
26,565
|
|
23,104
|
Operating income
(loss)
|
|
59,887
|
|
(55,659)
|
|
12,726
|
|
3,190
|
Other
expense
|
|
(9,750)
|
|
(2,318)
|
|
(4,351)
|
|
(2,253)
|
Finance (cost) income,
net
|
|
(3,943)
|
|
(878)
|
|
(1,523)
|
|
2,484
|
Foreign exchange
loss
|
|
(4,388)
|
|
(651)
|
|
(2,544)
|
|
(211)
|
Income (loss) from
operations before income taxes
and equity income of associates
|
|
41,806
|
|
(59,506)
|
|
4,308
|
|
3,210
|
Income tax (expense)
benefit
|
|
(9,580)
|
|
(1,643)
|
|
702
|
|
(832)
|
Income (loss) from
operations before equity income
of associates
|
|
32,226
|
|
(61,149)
|
|
5,010
|
|
2,378
|
Equity income (loss) of
associates (net of income tax)
|
|
3,817
|
|
1,060
|
|
2,253
|
|
(22)
|
Net income
(loss)
|
|
$
|
36,043
|
|
$
|
(60,089)
|
|
$
|
7,263
|
|
$
|
2,356
|
Attributable
to:
|
|
|
|
|
|
|
|
|
Equity holders of
Neo
|
|
$
|
35,177
|
|
$
|
(57,931)
|
|
$
|
6,735
|
|
$
|
2,219
|
Non-controlling
interest
|
|
866
|
|
(2,158)
|
|
528
|
|
137
|
|
|
$
|
36,043
|
|
$
|
(60,089)
|
|
$
|
7,263
|
|
$
|
2,356
|
Earnings (Loss) per
share attributable to equity
holders of Neo:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.92
|
|
$
|
(1.54)
|
|
$
|
0.17
|
|
$
|
0.06
|
Diluted
|
|
$
|
0.91
|
|
$
|
(1.54)
|
|
$
|
0.17
|
|
$
|
0.06
|
____________________________
|
See Management's
Discussion and Analysis for the Year Ended December 31, 2021,
available on Neo's website at www.neomaterials.com and on SEDAR at
www.sedar.com.
|
TABLE 7: RECONCILIATION OF NET INCOME (LOSS) TO EBITDA,
ADJUSTED EBITDA AND FREE CASH FLOW
($000s)
|
|
Year Ended December
31,
|
|
Three Months
Ended
December 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income
(loss)
|
|
$
|
36,043
|
|
$
|
(60,089)
|
|
$
|
7,263
|
|
$
|
2,356
|
Add back
(deduct):
|
|
|
|
|
|
|
|
|
Finance cost (income),
net
|
|
3,943
|
|
878
|
|
1,523
|
|
(2,484)
|
Income tax expense
(benefit)
|
|
9,580
|
|
1,643
|
|
(702)
|
|
832
|
Depreciation and
amortization included in costs of sales
|
|
8,176
|
|
9,430
|
|
2,405
|
|
1,999
|
Depreciation and
amortization included in operating expenses
|
|
7,689
|
|
7,750
|
|
1,891
|
|
1,899
|
EBITDA
|
|
65,431
|
|
(40,388)
|
|
12,380
|
|
4,602
|
Adjustments to
EBITDA:
|
|
|
|
|
|
|
|
|
Other expense
(1)
|
|
9,750
|
|
2,318
|
|
4,351
|
|
2,253
|
Foreign exchange loss
(2)
|
|
4,388
|
|
651
|
|
2,544
|
|
211
|
Equity income of
associates
|
|
(3,817)
|
|
(1,060)
|
|
(2,253)
|
|
22
|
Share and value-based
compensation (3)
|
|
4,526
|
|
4,244
|
|
1,765
|
|
3,584
|
Impairment of assets
(4)
|
|
121
|
|
59,084
|
|
121
|
|
—
|
Other costs
(5)
|
|
1,516
|
|
4,025
|
|
744
|
|
1,636
|
Adjusted EBITDA
(6)
|
|
$
|
81,915
|
|
$
|
28,874
|
|
$
|
19,652
|
|
$
|
12,308
|
Adjusted EBITDA
Margins (6)
|
|
15.2%
|
|
8.3%
|
|
12.8%
|
|
11.1%
|
Less:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
$
|
9,464
|
|
$
|
7,614
|
|
2,833
|
|
1,178
|
Free Cash Flow
(6)
|
|
$
|
72,451
|
|
$
|
21,260
|
|
16,819
|
|
11,130
|
Free Cash Flow
Conversion (6)
|
|
88.4%
|
|
73.6%
|
|
85.6%
|
|
90.4%
|
Notes:
|
|
(1)
|
Represents other
expenses resulting from non-operational related activities,
including provisions for estimated damages for outstanding legal
claims related to historic volumes, costs for disposal of
historically generated NORM and fair value remeasurement of equity
securities. These costs and recoveries are not indicative of Neo's
ongoing activities.
|
(2)
|
Represents unrealized
and realized foreign exchange losses (gains) that include non-cash
adjustments in translating foreign denominated monetary assets and
liabilities.
|
(3)
|
Represents share and
value-based compensation expense in respect of the Plan, the Legacy
Plan, the LTIP and the long-term value bonus plan. The long-term
value bonus plan is included in selling and administration expense
and has similar vesting criteria to the share-based plan and is
settled in cash for non-executives and non-North Americans where
implementation of a share settlement plan would have been
prohibitively expensive in terms of administration and
compliance. For the year ended and three months ended December
31, 2021, value-based compensation expense was nil, as the
financial statement impact of the liquidity event was recorded in
the year ended December 31, 2020. For the year ended and three
months ended December 31, 2020, value-based compensation recovery
was $2,511 and $2,767, respectively. Neo has removed both the
share and value-based compensation expense from EBITDA to provide
comparability with historic periods and to treat it consistently
with the share-based awards that they are intended to
replace.
|
(4)
|
The negative economic
impacts of COVID-19 were determined to be an impairment indicator
as of June 30, 2020 for all Neo's CGUs. In accordance with IAS
36 Impairment of Assets, the recoverable amount of Neo's CGUs was
determined based on fair value less cost of disposal for the
Magnequench segment and value in use for the C&O and the Rare
Metals segments. As a result of the impairment test, Neo recognized
an impairment charge of $59.1 million as of June 30, 2020, with
$35.1 million attributable to the C&O segment and $24.0 million
attributable to the Rare Metals segment. No impairment was recorded
against the Magnequench segment.
|
(5)
|
These represent
primarily legal, professional advisory fees and other transaction
costs incurred with respect to non-operating capital structure
related transactions and restructuring costs related to management
team changes. Neo has removed these charges to provide
comparability with historic periods.
|
(6)
|
Neo reports non-IFRS
measures such as "Adjusted Net Income", "Adjusted Earnings per
Share", "Adjusted EBITDA", "Adjusted EBITDA Margin", "Free Cash
Flow" and "Free Cash Flow Conversion". Please see information on
this and other non-IFRS measures in the "Non-IFRS Measures" section
of this new release and in the MD&A, available on Neo's website
www.neomaterials.com and on SEDAR at
www.sedar.com.
|
TABLE 8: RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET
INCOME (LOSS)
($000s)
|
|
Year Ended
December
31,
|
|
Three Months
Ended
December 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income
(loss)
|
|
$
|
36,043
|
|
$
|
(60,089)
|
|
$
|
7,263
|
|
$
|
2,356
|
Adjustments to net
income (loss):
|
|
|
|
|
|
|
|
|
Foreign exchange loss
(1)
|
|
4,388
|
|
651
|
|
2,544
|
|
211
|
Impairment of assets
(2)
|
|
121
|
|
59,084
|
|
121
|
|
—
|
Share and value-based
compensation (3)
|
|
4,526
|
|
4,244
|
|
1,765
|
|
3,584
|
Other costs
(4)
|
|
1,516
|
|
4,025
|
|
744
|
|
1,636
|
Other items included in
other expense (5)
|
|
10,681
|
|
2,136
|
|
4,519
|
|
2,136
|
Tax impact of the above
items
|
|
(2,235)
|
|
(3,886)
|
|
(894)
|
|
(340)
|
Adjusted net income
(6)
|
|
$
|
55,040
|
|
$
|
6,165
|
|
$
|
16,062
|
|
$
|
9,583
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
Equity holders of
Neo
|
|
$
|
54,174
|
|
$
|
6,056
|
|
$
|
15,534
|
|
$
|
9,446
|
Non-controlling
interest
|
|
$
|
866
|
|
$
|
109
|
|
$
|
528
|
|
$
|
137
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
Basic
|
|
38,140,110
|
|
37,629,963
|
|
39,332,282
|
|
37,505,596
|
Diluted
|
|
38,543,348
|
|
37,629,963
|
|
39,841,690
|
|
38,211,305
|
Adjusted earnings
(loss) per share (6) attributable to equity holders of
Neo:
|
|
|
|
|
Basic
|
|
$
|
1.42
|
|
$
|
0.16
|
|
$
|
0.39
|
|
$
|
0.25
|
Diluted
|
|
$
|
1.41
|
|
$
|
0.16
|
|
$
|
0.39
|
|
$
|
0.25
|
Notes:
|
|
(1)
|
Represents unrealized
and realized foreign exchange losses (gains) that include non-cash
adjustments in translating foreign denominated monetary assets and
liabilities.
|
(2)
|
The negative economic
impacts of COVID-19 were determined to be an impairment indicator
as of June 30, 2020 for all Neo's CGUs. In accordance with IAS 36
Impairment of Assets, the recoverable amount of Neo's CGUs was
determined based on fair value less cost of disposal for the
Magnequench segment and value in use for the C&O and the Rare
Metals segments. As a result of the impairment test, Neo recognized
an impairment charge of $59.1 million as of June 30, 2020, with
$35.1 million attributable to the C&O segment and $24.0 million
attributable to the Rare Metals segment. No impairment was recorded
against the Magnequench segment.
|
(3)
|
Represents share and
value-based compensation expense in respect of the Plan, the Legacy
Plan, the LTIP and the long-term value bonus plan. The long-term
value bonus plan is included in selling and administration expense
and has similar vesting criteria to the share-based plan and is
settled in cash for non-executives and non-North Americans where
implementation of a share settlement plan would have been
prohibitively expensive in terms of administration and
compliance. For the year ended and three months ended December
31, 2021, value-based compensation expense was nil, as the
financial statement impact of the liquidity event was recorded in
the year ended December 31, 2020. For the year ended and three
months ended December 31, 2020, value-based compensation recovery
was $2,511 and $2,767, respectively. Neo has removed both the share
and value-based compensation expense from net income to provide
comparability with historic periods and to treat it consistently
with the share-based awards that they are intended to
replace.
|
(4)
|
These represent
primarily legal, professional advisory fees and other transaction
costs incurred with respect to non-operating capital structure
related transactions and restructuring costs related to management
team changes. Neo has removed these charges to provide
comparability with historic periods.
|
(5)
|
Represents other
expenses resulting from non-operational related activities,
including provisions for estimated damages for outstanding legal
claims related to historic volumes, and costs for disposal of
historically generated NORM. These costs and recoveries are not
indicative of Neo's ongoing activities.
|
(6)
|
Neo reports non-IFRS
measures such as "Adjusted Net Income", "Adjusted Earnings per
Share", "Adjusted EBITDA", "Adjusted EBITDA Margin", "Free Cash
Flow" and "Free Cash Flow Conversion". Please see information on
this and other non-IFRS measures in the "Non-IFRS Measures" section
of this new release and in the MD&A, available on Neo's website
www.neomaterials.com and on SEDAR at www.sedar.com.
|
About Neo Performance Materials
Neo manufactures the building blocks of many modern technologies
that enhance efficiency and sustainability. Neo's advanced
industrial materials - magnetic powders and magnets, specialty
chemicals, metals, and alloys - are critical to the performance of
many everyday products and emerging technologies. Neo's products
help to deliver the technologies of tomorrow to consumers
today. The business of Neo is organized along three segments:
Magnequench, Chemicals & Oxides and Rare Metals. Neo is
headquartered in Toronto, Ontario,
Canada; with corporate offices in Greenwood Village, Colorado, US; Singapore; and Beijing, China. Neo operates globally with
sales and production across 10 countries, being Japan, China,
Thailand, Estonia, Singapore, Germany, United
Kingdom, Canada,
United States, and South Korea. For more information, please
visit www.neomaterials.com.
Cautionary Statements Regarding Forward Looking
Statements
This news release contains "forward-looking information" within
the meaning of applicable securities laws in Canada. Forward-looking information may relate
to future events or future performance of Neo. All statements in
this release, other than statements of historical facts, with
respect to Neo's objectives and goals, as well as statements with
respect to its beliefs, plans, objectives, expectations,
anticipations, estimates, and intentions, are forward-looking
information. Specific forward-looking statements in this discussion
include, but are not limited to, the following: expectations
regarding certain of Neo's future results and information,
including, among other things, revenue, expenses, sales growth,
capital expenditures, and operations; statements with respect to
current and future market trends that may directly or indirectly
impact sales and revenue of Neo; expected use of cash balances;
continuation of prudent management of working capital; source of
funds for ongoing business requirements and capital investments;
expectations regarding sufficiency of the allowance for
uncollectible accounts and inventory provisions; analysis regarding
sensitivity of the business to changes in exchange rates; impact of
recently adopted accounting pronouncements; risk factors relating
to intellectual property protection and intellectual property
litigation; risk factors relating to national or international
economies (including the impact of COVID-19), and other risks
present in the jurisdictions in which Neo, its customers, its
suppliers, and/or its logistics partners operate, and; expectations
concerning any remediation efforts to Neo's design of its internal
controls over financial reporting and disclosure controls and
procedures. Often, but not always, forward-looking information can
be identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "continues",
"forecasts", "projects", "predicts", "intends", "anticipates" or
"believes", or variations of, or the negatives of, such words and
phrases, or state that certain actions, events or results "may",
"could", "would", "should", "might" or "will" be taken, occur or be
achieved. This information involves known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking information. Neo believes the expectations
reflected in such forward-looking information are reasonable, but
no assurance can be given that these expectations will prove to be
correct and such forward-looking information included in this
discussion and analysis should not be unduly relied upon. For more
information on Neo, investors should review Neo's continuous
disclosure filings that are available under Neo's profile at
www.sedar.com.
SOURCE Neo Performance Materials, Inc.