Neo Performance Materials Reports Fourth Quarter and Full Year 2024 Results

Canada NewsWire

TORONTO, March 18, 2025

Neo Grows Adjusted EBITDA(1) by 70% Year-Over-Year, Exceeding Guidance by 20%

TORONTO, March 18, 2025 /CNW/ - Neo Performance Materials Inc. ("Neo") (TSX: NEO) reported today its fourth quarter and full year 2024 financial results. The financial statements and management's discussion and analysis ("MD&A") are available at www.neomaterials.com/investors/ and on SEDAR+ at www.sedarplus.ca. All financial amounts in this news release and the Company's financial disclosures are in United States dollars, unless otherwise stated.

"Neo delivered outstanding financial and operational results in 2024, exceeding guidance with Adjusted EBITDA growth of over 70%, driven by strong performance in Rare Metals and Magnequench. We successfully executed major capital projects, including completing our Emissions Control Catalyst facility on time and under budget. Our European Permanent Magnet facility remains on track for a grand opening in 2025, marking a significant step forward in strengthening our global supply chain for Permanent Magnets.

We maintained a strong balance sheet with a net cash position, supported by healthy cash flow generation and working capital improvements. At the same time, we took decisive action to streamline our portfolio, divesting our rare earth separation assets in China, subject to closing conditions. This aligns with our strategy to reduce earnings volatility and focus on high-value-add growth business.

With a reinforced foundation, Neo is positioned for long-term growth as we expand our Permanent Magnet capabilities to meet accelerating demand, creating lasting value for our shareholders," said Rahim Suleman, Neo's President and Chief Executive Officer.

 
(1)  Neo reports certain non-IFRS financial measures including 
      "EBITDA", "Adjusted EBITDA", "Adjusted EBITDA Margin", 
      "Adjusted Net Income or Loss", "Adjusted Earnings 
      per Share" and others, which are not measures recognized 
      under IFRS and do not have any standardized meaning 
      prescribed by IFRS. Please refer to the "Non-IFRS 
      Financial Measures" section of this news release and 
      the fourth quarter MD&A for more information. 
 

Key Takeaways

 
1.   Neo Delivers Strong Adjusted EBITDA Growth, Exceeding 
      Guidance and Increasing Outlook: Neo delivered $64 
      million in Adjusted EBITDA for 2024, 
      a 73% increase year-over-year, and 20% above guidance. 
      2024 Adjusted EBITDA at Magnequench increased 21% 
      year-over-year, and more than doubled 
      in Rare Metals. Despite divesting three non-core facilities 
      and the normalization of hafnium prices, Neo increases 
      its Adjusted EBITDA 2025 guidance range 
      from $53 - $58 million to $55 - $60 million. 
2..  Successful Execution on Major Capital Projects: Neo's 
     European Permanent Magnet facility remains on schedule 
     and on budget, with commercial 
     production set to begin in 2026. Notably, Neo secured 
     a major Tier 1 automotive supplier award ahead of 
     the facility's completion, reinforcing strong demand 
     for its Permanent Magnets and validating its strategic 
     expansion into this critical market.The Emissions Control Catalyst 
     facility has successfully 
     requalified most of its product portfolio, with the 
     remaining qualifications expected in the first half 
     of 2025. The project's final cost is expected to be 
     approximately 10% under budget. With a world-class 
     manufacturing footprint and a leading cost position, 
     Neo is well-positioned to grow volumes by double digits 
     in the coming years, leveraging additional capacity 
     at the new facility. 
3.   Simplifying the Business to Drive Focused Growth: 
     Neo continues to simplify its portfolio and enhance 
     its focus on value-add businesses. The planned 
     sale of its Chinese separation facilities, JAMR and 
     ZAMR, is expected to close in the first half of 2025, 
     pending customary approvals.On December 31, 2024, Neo completed the sale 
     of its 
     80% ownership interest in the Gallium Trichloride 
     facility in Oklahoma. 
4.   Strong Liquidity and Balance Sheet Position: As of 
      December 31, 2024, Neo maintains a solid liquidity 
      position with $85 million in cash and a net cash 
      balance of $14 million. The Company expects $7-10 
      million in EU grant reimbursements and approximately 
      $30 million from the announced sale of its 
      Chinese separation facilities in 2025. Further working 
      capital improvements are expected to enhance cash 
      flow, reinforcing Neo's strong balance sheet 
      and financial flexibility. 
5.   Strategic Review Progressing: Neo's financial advisors 
      are continuing to advance the Special Committee-led 
      strategic review process, and Neo remains 
      committed to taking steps to optimize its business, 
      including the divestment of non-core assets and the 
      improvement of operational performance. 
 

Financial Highlights

   -- Revenue for Q4 2024 was $134.9 million, compared to Q4 2023 revenue of 
      $128.7 million. On a year-over-year basis, 2024 revenue was $475.8 
      million compared to $571.5 million in 2023. 
 
   -- Operating income for Q4 2024 was $12.4 million, compared to Q4 2023 
      operating loss of $5.5 million. On a year-over-year basis, 2024 operating 
      income was $35.3 million, compared to $11.2 million in 2023. 
 
   -- Adjusted Net Loss(1) for Q4 2024 was $4.9 million, or $0.12 loss per 
      share, compared to Q4 2023 Adjusted Net Income(1) of $0.9 million or 
      $0.02 per share. On a year-over-year basis, 2024 Adjusted Net Income was 
      $1.9 million, or $0.05 per share, compared to Adjusted Net Loss of 
      $1.0 million, or $0.02 loss per share in 2023. 
 
   -- Adjusted EBITDA for Q4 2024 was $20.7 million, compared to Q4 2023 of 
      $3.1 million. On a year-over-year basis, 2024 Adjusted EBITDA was $64.4 
      million, compared to $37.2 million in 2023. 
 
   -- Adjusted EBITDA margin as a percentage of revenue for Q4 2024 increased 
      to 15.3% from 2.4% an improvement of 1300 basis points from the prior 
      year quarter. 2024 Adjusted EBITDA increased to 13.5% from 6.5%, an 
      improvement of 700 basis points from prior year. 
 
   -- For the year ended December 31, 2024, Neo generated $51.5 million in cash 
      from operating activities, driven by strong income from operations and 
      continued working capital improvements. 
 
   -- Neo had $85.5 million in cash and $68.8 million in gross debt and $2.7 
      million in bank advances on its balance sheet as of December 31, 2024. 
      Neo invested $80.2 million in capital expenditures for the year ended 
      December 31, 2024 mainly comprised of $26.8 million for the construction 
      of the Emissions Control Catalyst facility and $42.5 million for the 
      construction of the new permanent magnet manufacturing facility in 
      Europe. 
 
   -- Neo distributed $12.3 million in dividends to Neo's shareholders, and 
      repurchased $2.3 million of common shares for cancellation in 2024. 
 
   -- A quarterly dividend of CAD$0.10 per common share was declared on March 
      11, 2025, for shareholders of record on March 18, 2025, with a payment 
      date of March 27, 2025. 

Solid Business Performance

   -- Magnequench: Delivered robust growth in 2024, with sales volumes 
      increasing by 7.9% for the full year, driven by strong demand in bonded 
      permanent magnets and bonded powders in traction motor applications. The 
      segment continues to capitalize on key growth areas while optimizing cost 
      efficiencies, leading to improved profitability. 
 
   -- Significant developments and key performance drivers include: 
 
          -- Bonded magnet sales delivered record volumes up 23% for the full 
             year. 
 
          -- Bonded powders in traction motors delivered growth and won next 
             generation product platform. 
 
          -- Reduced conversion costs by 20% for the full year at its largest 
             facility. 
 
          -- Adjusted EBITDA for 2024 increased by $4.4 million, or 21% 
             compared to the prior year. 
 
   -- C&O: While C&O faced challenges in rare earth separation, impacting 
      earnings, the segment is taking tactical steps to drive growth and 
      profitability. Automotive catalyst volumes were impacted by relocation of 
      NAMCO and market conditions. The new emissions control catalyst facility 
      is ramping up, positioning Neo for long-term success. The planned sale of 
      the Chinese separation facilities remains on track, reinforcing the 
      Company's shift to high-value-add downstream businesses. At the same time, 
      the wastewater treatment business continues to gain momentum, supporting 
      future growth. 
 
   -- Significant developments and key performance drivers include: 
 
          -- Wastewater treatment business delivered record volumes up 46% for 
             the full year. 
 
          -- C&O rare earth separation business delivered negative $1.6 million 
             gross margin in 2024. 
 
          -- Adjusted EBITDA for 2024 declined by $4.4 million, or 47%, 
             compared to the prior year. 
 
   -- Rare Metals: Delivered another record year, with strong performance 
      across all facilities. The primary factor influencing financial 
      performance was its hafnium business. The whole segment delivered 
      improved financial and operational performance through notable changes to 
      its manufacturing strategy. 
 
   -- Significant developments and key performance drivers include: 
 
          -- Hafnium gross margins increased 76% for the full year. 
 
          -- Closure of hydrometallurgical processing in Silmet, Estonia 
             delivered measurable improvements. 
 

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