Highlights of Full Year 2023
(unless
otherwise noted, all financial amounts in this news release are
expressed in United States
dollars)
For the year ended December 31,
2023:
- Neo's revenue was $571.5 million,
a decrease of 10.7% YoY.
- Operating income was $11.2
million.
- Adjusted Net Loss(1) was $1.0
million, or $0.02 per
share.
- Adjusted EBITDA(1) was $37.2
million, lower by 52.9% YoY.
- Cash balance of $86.9 million,
after funding acquisition and investments of $16.4 million, spending of $41.7 million in capital projects, distributing
$13.4 million in dividends to Neo's
shareholders, and repurchasing $19.9
million of shares under the normal course issuer bid.
- A quarterly dividend of Cdn$0.10
per common share was declared on March 13,
2024 for shareholders of record on March 18, 2024, with a payment date of
March 27, 2024.
TORONTO, March 15,
2024 /CNW/ - Neo Performance Materials Inc.
("Neo") (TSX: NEO) released its 2023 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.sedarplus.ca.
"Neo continues to lay the groundwork for our long-term ambitions
in the critical material and electric vehicle space," said
Rahim Suleman, President and CEO of
Neo. "Our rare earth magnet plant construction in
Estonia remains on track, and we
have recently started the commissioning process for our relocated
environmental catalyst plant. Our teams have implemented new
cost-savings measures and are continuing to optimize our production
infrastructure to meet our customers where they are located."
"Our results for the year 2023 were negatively impacted by
declining rare earth prices and lower volumes in China due to the slowing economic
activity. In Q4, our results were particularly negatively
impacted by our Rare Metals segment due to specific factors
affecting 2023. The full year results for Rare Metals were at
a record setting level and we expect that 2024 will also be a
strong year."
HIGHLIGHTS OF YEAR-END 2023
CONSOLIDATED PERFORMANCE
Neo's consolidated revenue for the year ended December 31,
2023 was $571.5 million compared to
$640.3 million for the same period in
the prior year. Neo reported a net loss of $8.4 million, or $0.19 per share, compared to net income of
$26.4 million, or $0.62 per share, for the same period in the prior
year. Adjusted Net Loss(1) totaled $1.0 million, or $0.02 per share, compared to Adjusted Net
Income(1) of $31.8 million or $0.75 per share, for the same period in the prior
year. Adjusted EBITDA(1) was $37.2 million, compared to Adjusted
EBITDA(1) of $79.0 million
for the same period in the prior year.
As of December 31, 2023, Neo had
cash and cash equivalents of $86.9
million plus restricted cash of $3.3
million, compared to $147.5
million plus $1.2 million as
at December 31, 2022.
SELECTED FINANCIAL
RESULTS
|
TABLE 1: Selected
Consolidated Results
|
|
Year-over-Year
Comparison
|
Quarter-over-Quarter
Comparison
|
|
($000s)
|
FY
2023
|
FY
2022
|
Q4
2023
|
Q4
2022
|
|
Revenue
|
571,545
|
640,298
|
128,668
|
159,168
|
|
Operating income
(loss)
|
11,167
|
58,614
|
(5,470)
|
6,727
|
|
EBITDA(1)
|
26,812
|
76,189
|
2,319
|
10,121
|
|
Adjusted
EBITDA(1)
|
37,219
|
79,027
|
3,097
|
12,420
|
|
Adjusted EBITDA
%(1)
|
6.5 %
|
12.3 %
|
2.4 %
|
7.8 %
|
|
_____________________________________________________________________________________________
|
|
(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.
|
MAGNEQUENCH SEGMENT
RESULTS
|
TABLE 2: Selected
Magnequench Results
|
|
Year-over-Year
Comparison
|
Quarter-over-Quarter
Comparison
|
|
FY
2023
|
FY
2022
|
Q4
2023
|
Q4
2022
|
|
Volume
(tonnes)
|
4,694
|
4,808
|
1,281
|
1,188
|
|
($000s)
|
|
|
|
|
|
Revenue
|
213,735
|
277,412
|
54,827
|
57,584
|
|
Operating
income
|
7,618
|
30,538
|
2,675
|
2,543
|
|
EBITDA(1)
|
18,548
|
42,178
|
9,432
|
6,364
|
|
Adjusted
EBITDA(1)
|
21,149
|
40,172
|
5,950
|
4,788
|
|
_____________________________________________________________________________________________
|
|
(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.
|
Magnequench revenue in the quarter and year ended December 31, 2023 declined by 4.8% and 23.0%,
respectively as compared to the comparable prior year periods,
primarily due to declining volumes in the legacy magnetic powder
business which was negatively impacted by economic slowdown and
demand softness across the industry. In spite of market
headwinds, Magnequench delivered growth in its high-margin magnet
business through increasing business with new customers,
in-sourcing magnet production, as well as the acquisition of a 90%
equity interest in UK magnet producer SG Technologies Group Limited
("SGTec") in April 2023. The
business continues to make progress on phase 1 construction of its
new Rare Earth Magnet Plant in Europe which remains on budget and on
schedule.
CHEMICALS & OXIDES ("C&O")
SEGMENT RESULTS
|
TABLE 3: Selected
C&O Results
|
|
|
|
|
|
Year-over-Year
Comparison
|
Quarter-over-Quarter
Comparison
|
|
($000s)
|
FY
2023
|
FY
2022
|
Q4
2023
|
Q4
2022
|
|
Revenue
|
235,929
|
248,011
|
55,552
|
58,767
|
|
Operating
income
|
4,088
|
22,176
|
2,622
|
852
|
|
EBITDA(1)
|
6,714
|
27,952
|
2,661
|
1,462
|
|
Adjusted
EBITDA(1)
|
9,306
|
28,324
|
3,218
|
2,614
|
|
_____________________________________________________________________________________________
|
|
(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.
|
In the quarter and year ended December
31, 2023, C&O revenue declined by 5.5% and 4.9%,
respectively, as compared to comparable prior year periods,
primarily due to mixed end market dynamics and rare earth pricing
headwinds. High purity dysprosium used in multi-layer ceramic
capacitors continued to deliver stable volumes and margins. The
environmental protective water treatment solutions business
delivered increased volumes and expanding margins throughout
2023. However, rapid declines in rare earth prices continued
to drive headwinds for the business negatively impacting C&O
rare earth separation margins. C&O is nearing completion on the
relocation of its Neo Jia Hua Advanced Materials (Zibo) Co., Ltd.
facility in China, which will have
additional capacity for environmental emissions catalysts including
capacity for new products under development.
RARE METALS SEGMENT
RESULTS
|
TABLE 4: Selected
Rare Metals Results
|
|
Year-over-Year
Comparison
|
Quarter-over-Quarter
Comparison
|
|
($000s)
|
FY
2023
|
FY
2022
|
Q4
2023
|
Q4
2022
|
|
Revenue
|
124,601
|
130,386
|
19,724
|
43,865
|
|
Operating income
(loss)
|
19,670
|
20,978
|
(5,597)
|
7,792
|
|
EBITDA(1)
|
20,367
|
22,119
|
(6,298)
|
5,662
|
|
Adjusted
EBITDA(1)
|
24,207
|
24,307
|
(2,200)
|
8,995
|
|
_____________________________________________________________________________________________
|
|
(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.
|
Rare Metals revenue declined by 55.0% and 4.4%, respectively, in
the quarter and year ended December 31,
2023, as compared to the same periods of the prior
year. The segment delivered solid full-year earnings driven
by strength in hafnium pricing and demand, which has been driven by
demand for memory chips and superalloys. The segment has a healthy
hafnium order book for 2024 with contracted volumes at strong
pricing and sufficient inventory on hand. Rare Metals reached
a significant milestone in its manufacturing strategy with its
plant in Sillamӓe, Estonia,
shifting focus on downstream, value-add operations, by halting the
energy-intensive hydrometallurgical processing of niobium and
tantalum bearing ores. Going forward, future products will be
derived from oxides and recycled materials which will increase
sourcing optionality and reduce working capital, simplify the
manufacturing process, and improve the environmental footprint of
the plant. In executing this operational transformation, the
Rare Metals business incurred one-time charges in the fourth
quarter of 2023 related to impairment of assets and employee
restructuring costs.
CONFERENCE CALL ON FRIDAY MARCH 15, 2024 AT 10 AM EASTERN
Management will host a teleconference call on Friday, March 15, 2024 at 10:00 a.m. (Eastern Time) to discuss the fourth
quarter 2023 results. Interested parties may access the
teleconference by calling (416) 764-8650 (local) or (888) 664-6383
(toll free long distance) or by visiting
https://app.webinar.net/Gv4A7qgJzyE. A recording of the
teleconference may be accessed by calling (416) 764-8677 (local) or
(888) 390-0541 (toll free long distance), and entering pass code
612419# until April 15, 2024.
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 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 three and
twelve months ended December 31,
2023, available on Neo's web site at www.neomaterials.com
and on SEDAR+ at www.sedarplus.ca.
TABLE 5: CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
|
($000s)
|
|
December 31,
2023
|
|
December 31,
2022
|
|
ASSETS
|
|
|
|
|
|
Current
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
86,895
|
|
$
147,491
|
|
Restricted
cash
|
|
3,357
|
|
1,179
|
|
Accounts
receivable
|
|
67,643
|
|
81,409
|
|
Inventories
|
|
197,453
|
|
212,702
|
|
Income taxes
receivable
|
|
744
|
|
355
|
|
Other current
assets
|
|
22,542
|
|
23,279
|
|
Total current
assets
|
|
378,634
|
|
466,415
|
|
Property, plant and
equipment
|
|
118,918
|
|
75,767
|
|
Intangible
assets
|
|
38,511
|
|
42,984
|
|
Goodwill
|
|
65,160
|
|
66,042
|
|
Investments
|
|
17,955
|
|
16,363
|
|
Deferred tax
assets
|
|
6,760
|
|
6,956
|
|
Other non-current
assets
|
|
1,066
|
|
1,933
|
|
Total non-current
assets
|
|
248,370
|
|
210,045
|
|
Total
assets
|
|
$
627,004
|
|
$
676,460
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
|
|
|
|
|
|
Bank advances and other
short-term debt
|
|
$
—
|
|
$
17,288
|
|
Accounts payable and
other accrued charges
|
|
71,984
|
|
69,093
|
|
Income taxes
payable
|
|
9,207
|
|
10,033
|
|
Provisions
|
|
823
|
|
1,369
|
|
Lease
obligations
|
|
1,664
|
|
1,264
|
|
Derivative
liability
|
|
36,294
|
|
28,570
|
|
Current portion of
long-term debt
|
|
2,230
|
|
747
|
|
Other current
liabilities
|
|
692
|
|
278
|
|
Total current
liabilities
|
|
122,894
|
|
128,642
|
|
Long term
debt
|
|
23,101
|
|
29,885
|
|
Employee
benefits
|
|
108
|
|
489
|
|
Derivative
liability
|
|
1,082
|
|
—
|
|
Provisions
|
|
26,197
|
|
23,604
|
|
Deferred tax
liabilities
|
|
14,294
|
|
13,942
|
|
Lease
obligations
|
|
2,425
|
|
813
|
|
Other non-current
liabilities
|
|
1,592
|
|
1,442
|
|
Total non-current
liabilities
|
|
68,799
|
|
70,175
|
|
Total
liabilities
|
|
191,693
|
|
198,817
|
|
Non-controlling
interest
|
|
3,164
|
|
3,193
|
|
Equity attributable to
equity holders of Neo Performance Materials Inc
|
|
432,147
|
|
474,450
|
|
Total
equity
|
|
435,311
|
|
477,643
|
|
Total liabilities
and equity
|
|
$
627,004
|
|
$
676,460
|
|
See accompanying
notes to this table in Neo's Consolidated Financial Statements for
the year ended December 31, 2023, available on Neo's
website at www.neomaterials.com and on SEDAR+ at
www.sedarplus.ca..
|
TABLE 6: CONSOLIDATED RESULTS OF OPERATIONS
Comparison of the year and three months ended December 31, 2023 to the year and three months
ended December 31, 2022:
|
($000s)
|
|
Year Ended
December 31,
|
|
Three Months
Ended
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Revenue
|
|
$ 571,545
|
|
$ 640,298
|
|
$
128,668
|
|
$
159,168
|
|
Cost of
sales
|
|
|
|
|
|
|
|
|
|
Cost excluding
depreciation and amortization
|
|
462,815
|
|
481,524
|
|
107,350
|
|
125,275
|
|
Depreciation and
amortization
|
|
9,626
|
|
9,406
|
|
2,416
|
|
2,361
|
|
Gross
profit
|
|
99,104
|
|
149,368
|
|
18,902
|
|
31,532
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
59,155
|
|
58,915
|
|
14,485
|
|
16,619
|
|
Share-based
compensation
|
|
3,738
|
|
2,483
|
|
1,946
|
|
610
|
|
Depreciation and
amortization
|
|
7,187
|
|
7,313
|
|
1,813
|
|
1,784
|
|
Research and
development
|
|
16,144
|
|
20,810
|
|
4,415
|
|
4,854
|
|
Impairment of
assets
|
|
1,713
|
|
1,233
|
|
1,713
|
|
938
|
|
|
87,937
|
|
90,754
|
|
24,372
|
|
24,805
|
|
Operating income
(loss)
|
|
11,167
|
|
58,614
|
|
(5,470)
|
|
6,727
|
|
Other income
(expense)
|
|
3,138
|
|
(2,228)
|
|
2,776
|
|
(492)
|
|
Finance (cost) income,
net
|
|
(6,707)
|
|
(15,259)
|
|
742
|
|
(11,116)
|
|
Foreign exchange
(loss) gain
|
|
(1,428)
|
|
301
|
|
4
|
|
476
|
|
Income (loss) from
operations before income taxes and equity income of
associates
|
|
6,170
|
|
41,428
|
|
(1,948)
|
|
(4,405)
|
|
Income tax (expense)
benefit
|
|
(11,683)
|
|
(17,793)
|
|
39
|
|
(2,022)
|
|
(Loss) income from
operations before equity (loss) income of
associates
|
|
(5,513)
|
|
23,635
|
|
(1,909)
|
|
(6,427)
|
|
Equity (loss) income
of associates (net of income tax)
|
|
(2,878)
|
|
2,783
|
|
780
|
|
(735)
|
|
Net (loss)
income
|
|
$
(8,391)
|
|
$
26,418
|
|
$ (1,129)
|
|
$ (7,162)
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
Equity holders of Neo
Performance Materials Inc
|
|
$
(8,442)
|
|
$
25,947
|
|
$ (1,367)
|
|
$ (7,291)
|
|
Non-controlling
interest
|
|
51
|
|
471
|
|
238
|
|
129
|
|
|
$
(8,391)
|
|
$
26,418
|
|
$ (1,129)
|
|
$ (7,162)
|
|
(Loss) earnings per
share attributable to equity holders of Neo Performance Materials
Inc.:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.19)
|
|
$
0.62
|
|
$
(0.03)
|
|
$
(0.16)
|
|
Diluted
|
|
$
(0.19)
|
|
$
0.61
|
|
$
(0.03)
|
|
$
(0.16)
|
|
See Management's
Discussion and Analysis for the year ended December 31,
2023, available on Neo's website at www.neomaterials.com and
on SEDAR+ at www.sedarplus.ca.
|
TABLE 7: RECONCILIATIONS OF NET (LOSS) INCOME TO EBITDA,
ADJUSTED EBITDA AND FREE CASH FLOW
|
($000s)
|
|
Year Ended
December 31,
|
|
Three Months
Ended
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net (loss)
income
|
|
$
(8,391)
|
|
$
26,418
|
|
$
(1,129)
|
|
$
(7,162)
|
|
Add back
(deduct):
|
|
|
|
|
|
|
|
|
|
Finance cost (income),
net
|
|
6,707
|
|
15,259
|
|
(742)
|
|
11,116
|
|
Income tax expense
(benefit)
|
|
11,683
|
|
17,793
|
|
(39)
|
|
2,022
|
|
Depreciation and
amortization included in cost of sales
|
|
9,626
|
|
9,406
|
|
2,416
|
|
2,361
|
|
Depreciation and
amortization included in operating expenses
|
|
7,187
|
|
7,313
|
|
1,813
|
|
1,784
|
|
EBITDA
|
|
26,812
|
|
76,189
|
|
2,319
|
|
10,121
|
|
Adjustments to
EBITDA:
|
|
|
|
|
|
|
|
|
|
Other (income) expense
(1)
|
|
(3,138)
|
|
2,228
|
|
(2,776)
|
|
492
|
|
Foreign exchange loss
(gain) (2)
|
|
1,428
|
|
(301)
|
|
(4)
|
|
(476)
|
|
Equity loss (income)
of associates
|
|
2,878
|
|
(2,783)
|
|
(780)
|
|
735
|
|
Share-based
compensation (3)
|
|
3,738
|
|
2,483
|
|
1,946
|
|
610
|
|
Fair value adjustments
to inventory acquired (4)
|
|
1,217
|
|
—
|
|
222
|
|
—
|
|
Transaction and
project startup costs (recoveries)
(5)
|
|
2,571
|
|
(22)
|
|
457
|
|
—
|
|
Impairment of assets
(6)
|
|
1,713
|
|
1,233
|
|
1,713
|
|
938
|
|
Adjusted EBITDA
(6)
|
|
$
37,219
|
|
$
79,027
|
|
$
3,097
|
|
$
12,420
|
|
Adjusted EBITDA
Margins (7)
|
|
6.5 %
|
|
12.3 %
|
|
2.4 %
|
|
7.8 %
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Capital expenditures
(8)
|
|
$
43,961
|
|
$
17,470
|
|
$
24,332
|
|
$
6,372
|
|
Free Cash Flow
(7)
|
|
$
(6,742)
|
|
$
61,557
|
|
(21,235)
|
|
6,048
|
|
Free Cash Flow
Conversion (7)
|
|
(18.1 %)
|
|
77.9 %
|
|
(685.7 %)
|
|
48.7 %
|
|
Notes:
|
|
|
(1)
|
Represents other
(income) expenses resulting from non-operational related
activities, including provisions for damages for outstanding legal
claims related to historic volumes. These expenses and
recoveries are not indicative of Neo's ongoing activities.
For the year ended and three months ended December 31, 2023,
included in other income was a bargain purchase gain resulting from
the acquisition of SGTec when the consideration paid was less than
the fair value of the identifiable net assets, and a net gain of
$0.7 million from the sale of Neo's property, plant and equipment
at its subsidiary in south Korea. This was partly offset by
the restructuring cost at NPM Silmet OÜ ("Silmet") from the
shuttering of its energy-intensive hydrometallurgical processing of
niobium and tantalum bearing ores, the restructuring cost at Neo's
facility in south Korea, charges for estimated damage claims
related to legal proceedings and estimated costs for the disposal
of existing NORM.
|
|
|
|
(2)
|
Represents unrealized
and realized foreign exchange losses that include non-cash
adjustments in translating foreign denominated monetary assets and
liabilities.
|
|
|
|
(3)
|
Represents share-based
compensation expense in respect of the Omnibus LTIP and the
LTIP.
|
|
|
|
(4)
|
In accordance with IFRS
3 Business Combinations, and on completion of the
acquisition of SGTec, Neo recorded SGTec's acquired inventory at
fair value, which included a mark-up for profit of $1.2
million. A portion of this inventory was sold during the
year, and had a $1.2 million and $0.2 million, respectively, impact
on Net income (loss) in the year ended and three months ended
December 31, 2023.
|
|
|
|
(5)
|
These represent
primarily legal, professional advisory fees and other transaction
costs for capital structuring associated with Neo or investments of
Neo. Neo has removed these charges to provide comparability with
historic periods. For the year ended and three months ended
December 31, 2023, Neo incurred $1.4 million and $0.5
million, respectively, of project costs related to the
establishment of the rare earth magnet manufacturing capability in
Europe. Additionally, Neo also incurred total acquisition-related
costs of $1.2 million and $nil, respectively, in the acquisition of
SGTec for the year ended and three months ended December 31,
2023. These costs have been included in selling, general and
administrative expense in the condensed consolidated statements of
profit or loss.
|
|
|
|
(6)
|
For the year ended and
three months ended December 31, 2023, the amount represents
impairment in property, plant and equipment of $1.7 million and
inventory of $1.1 million in order to streamline the operational
and business processes at the Silmet facility. This was
partly offset by the recovery of asset in the C&O segment due
to the reversal of previously impaired asset on June 30, 2020,
which will be transferred to NAMCO's new facility for
utilization. For the year ended and three months ended
December 31, 2022, the amount represents impairment in property,
plant and equipment, long-term asset and prepayment.
|
|
|
|
(7)
|
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.sedarplus.ca.
|
|
|
|
(8)
|
Includes capital
expenditures of $41.7 million and right-of-use assets of $2.2
million for the year ended December 31, 2023 and capital
expenditures of $24.3 million for the three months ended December
31, 2023. The aforementioned amounts exclude the additions of
Property, Plant and Equipment of $13.3 million from the acquisition
of SGTec.
|
TABLE 8: RECONCILIATIONS OF NET (LOSS) INCOME TO ADJUSTED NET
(LOSS) INCOME
|
($000s)
|
|
Year Ended
December 31,
|
|
Three Months
Ended
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net (loss)
income
|
|
$
(8,391)
|
|
$
26,418
|
|
$ (1,129)
|
|
$ (7,162)
|
|
Adjustments to net
(loss) income:
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss
(gain) (1)..........................................................................
|
|
1,428
|
|
(301)
|
|
(4)
|
|
(476)
|
|
Impairment of assets
(2) ..............................................................................
|
|
1,713
|
|
1,233
|
|
1,713
|
|
938
|
|
Share-based
compensation (3)..........................................................................
|
|
3,738
|
|
2,483
|
|
1,946
|
|
610
|
|
Transaction and
project startup costs (recoveries)
(4)..........................................................................
|
|
2,571
|
|
(22)
|
|
457
|
|
—
|
|
Other items included
in other (income) expense (5)..........................................................................
|
|
(2,529)
|
|
2,560
|
|
(2,251)
|
|
546
|
|
Fair value adjustments
to inventory acquired (6)..........................................................................
|
|
1,217
|
|
—
|
|
222
|
|
—
|
|
Tax impact of the
above items....................................................................
|
|
(722)
|
|
(615)
|
|
(53)
|
|
(142)
|
|
Adjusted net (loss)
income.....................................................................
|
|
$
(975)
|
|
$
31,756
|
|
$
901
|
|
$ (5,686)
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
Equity holders of
Neo ..............................................................................
|
|
$
(1,026)
|
|
$
31,285
|
|
$
663
|
|
$ (5,815)
|
|
Non-controlling
interest................................................................
|
|
$
51
|
|
$
471
|
|
$
238
|
|
$
129
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
Basic....................................................................
|
|
44,325,106
|
|
41,992,938
|
|
42,417,505
|
|
45,196,921
|
|
Diluted................................................................
|
|
44,325,106
|
|
42,327,548
|
|
42,417,505
|
|
45,196,921
|
|
Adjusted (loss)
earnings per share (7)
attributable to equity holders of Neo:
|
|
|
|
|
|
Basic....................................................................
|
|
$
(0.02)
|
|
$
0.75
|
|
$
0.02
|
|
$
(0.13)
|
|
Diluted................................................................
|
|
$
(0.02)
|
|
$
0.74
|
|
$
0.02
|
|
$
(0.13)
|
|
Notes:
|
|
|
(1)
|
Represents unrealized
and realized foreign exchange losses that include non-cash
adjustments in translating foreign denominated monetary assets and
liabilities.
|
|
|
|
(2)
|
For the year ended and
three months ended December 31, 2023, the amount represents
impairment in property, plant and equipment of $1.7 million and
inventory of $1.1 million in order to streamline the operational
and business processes at the Silmet facility. This was
partly offset by the recovery of asset in the C&O segment due
to the reversal of previously impaired asset on June 30, 2020,
which will be transferred to NAMCO's new facility for
utilization. For the year ended and three months ended
December 31, 2022, the amount represents impairment in property,
plant and equipment, long-term asset and prepayment.
|
|
|
|
(3)
|
Represents share-based
compensation expense in respect of the Omnibus LTIP and the
LTIP.
|
|
|
|
(4)
|
These represent
primarily legal, professional advisory fees and other transaction
costs for capital structuring associated with Neo or investments of
Neo. Neo has removed these charges to provide comparability
with historic periods. For the year ended and three months
ended December 31, 2023, Neo incurred $1.4 million and $0.5
million, respectively, of project costs related to the
establishment of the rare earth magnet manufacturing capability in
Europe. Additionally, Neo also incurred total acquisition-related
costs of $1.2 million and $nil, respectively, in the
acquisition of SGTec for the year ended and three months ended
December 31, 2023. These costs have been included in selling,
general and administrative expense in the condensed consolidated
statements of profit or loss.
|
|
|
|
(5)
|
Represents other
(income) expenses resulting from non-operational related
activities, including provisions for damages for outstanding legal
claims related to historic volumes. These costs and
recoveries are not indicative of Neo's ongoing activities.
For the year ended and three months ended December 31, 2023,
included in other income was a bargain purchase gain resulting from
the acquisition of SGTec when the consideration paid was less than
the fair value of the identifiable net assets, and a net gain of
$0.7 million from the sale of Neo's property, plant and equipment
at its subsidiary in south Korea. This was partly offset by
the restructuring cost at the Silmet facility from the shuttering
of its energy-intensive hydrometallurgical processing of niobium
and tantalum bearing ores and the restructuring cost at Neo's
facility in south Korea .
|
|
|
|
(6)
|
In accordance with IFRS
3 Business Combinations, and on completion of the
acquisition of SGTec, Neo recorded SGTec's acquired inventory at
fair value, which included a mark-up for profit of $1.2
million. All of this inventory was sold during the year, and
had a $1.2 million and $0.2 million, respectively, impact on Net
income (loss) in the year ended and three months ended December 31,
2023.
|
|
|
|
(7)
|
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.sedarplus.ca.
|
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, United States; Singapore; and Beijing, China. Neo has a global platform that
includes 10 manufacturing facilities located in China, the United
States, Germany,
Canada, Estonia, Thailand and the United Kingdom, as well as one dedicated
research and development centre in Singapore. 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 the 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, geopolitical risk 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.sedarplus.ca.
SOURCE Neo Performance Materials, Inc.