Neo Performance Materials Reports Year-End 2023 Results
Highlights of Full Year 2023
(unless otherwise noted, all financial amounts in this news release are expressed in
For the year ended
- 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 onMarch 13, 2024 for shareholders of record onMarch 18, 2024 , with a payment date ofMarch 27, 2024 .
"Neo continues to lay the groundwork for our long-term ambitions in the critical material and electric vehicle space," said
"Our results for the year 2023 were negatively impacted by declining rare earth prices and lower volumes in
Neo's consolidated revenue for the year ended
As of
TABLE 1: Selected Consolidated Results |
||||
|
Year-over-Year Comparison |
Quarter-over-Quarter |
||
($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. |
TABLE 2: Selected Magnequench Results |
||||
|
Year-over-Year Comparison |
Quarter-over-Quarter |
||
|
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
TABLE 3: Selected C&O Results |
|
|
|
|
|
Year-over-Year Comparison |
Quarter-over-Quarter |
||
($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
TABLE 4: Selected Rare Metals Results |
||||
|
Year-over-Year Comparison |
Quarter-over-Quarter |
||
($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
Management will host a teleconference call on
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
TABLE 5: CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($000s) |
|
|
|
|
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 |
|
|
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 |
|
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 |
TABLE 6: CONSOLIDATED RESULTS OF OPERATIONS
Comparison of the year and three months ended
($000s) |
|
Year Ended |
|
Three Months Ended |
||||
|
|
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 |
|
$ (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 |
|
|
|
|
|
|
|
|
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 |
TABLE 7: RECONCILIATIONS OF NET (LOSS) INCOME TO EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW
($000s) |
|
Year Ended |
|
Three Months Ended |
||||
|
|
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 |
|
|
(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 |
|
|
(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 |
|
|
(6) |
For the year ended and three months ended |
|
|
(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 |
TABLE 8: RECONCILIATIONS OF NET (LOSS) INCOME TO ADJUSTED NET (LOSS) INCOME
($000s) |
|
Year Ended |
|
Three Months Ended |
||||
|
|
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 |
|
|
(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 |
|
|
(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 |
|
|
(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 |
|
|
(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. |
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
This news release contains "forward-looking information" within the meaning of applicable securities laws in
SOURCE