1
Financial Statements
Quarter Ended
March 31, 2024
5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands of United States dollars) (unaudited)
March 31 | December 31 | ||
Notes | 2024 | 2023 | |
$ | $ | ||
Assets | |||
Current | 33,929 | 34,706 | |
Cash and cash equivalents | |||
Accounts receivable | 34,957 | 33,437 | |
Inventories | 3 | 113,521 | 105,850 |
Income tax receivable | 1,667 | 1,672 | |
Derivative financial assets | 10 | 2,893 | 591 |
Other current assets | 5,746 | 5,707 | |
Total current assets | 192,713 | 181,963 | |
Property, plant and equipment | 6 | 88,759 | 84,600 |
Right-of-use assets | 6 | 30,806 | 29,290 |
Intangible assets | 6 | 28,439 | 29,304 |
Goodwill | 11,825 | 11,825 | |
Deferred tax assets | 8,290 | 8,261 | |
Other assets | 10 | 5,946 | 4,959 |
Total non-current assets | 174,065 | 168,239 | |
Total assets | 366,778 | 350,202 | |
Liabilities | |||
Current | 37,440 | 37,024 | |
Trade and accrued liabilities | |||
Income tax payable | 5,968 | 4,535 | |
Current portion of deferred revenue | 4 | 14,629 | 13,437 |
Current portion of lease liabilities | 1,906 | 1,811 | |
Current portion of long-term debt | 5 | - | 25,000 |
Total current liabilities | 59,943 | 81,807 | |
Long-term debt | 5 | 118,169 | 83,500 |
Deferred tax liabilities | 5,996 | 5,284 | |
Employee benefit plan obligations | 12,862 | 13,393 | |
Lease liabilities | 29,729 | 28,328 | |
Deferred revenue | 4 | 6,029 | 5,629 |
Other liabilities | 3,647 | 3,669 | |
Total non-current liabilities | 176,432 | 139,803 | |
Total liabilities | 236,375 | 221,610 | |
Equity | 130,403 | 128,592 | |
Total liabilities and equity | 366,778 | 350,202 |
Commitments and contingencies (Note 11)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Condensed Interim Consolidated Financial Statements ▪ 1
5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS
For the three-month periods ended March 31
(in thousands of United States dollars, except per share information) (unaudited)
Notes | |
Revenue | |
Cost of sales | 3, 6 |
Selling, general and administrative expenses | 6 |
Other expenses (income), net | 6 |
Operating earnings | |
Financial expense | |
Interest on long-term debt | |
Imputed interest and other interest expense | |
Foreign exchange and derivative (gain) loss | |
Earnings before income taxes | |
Income tax expense | |
Current | |
Deferred | |
Net earnings | |
Basic earnings per share | 7 |
Diluted earnings per share | 7 |
Net earnings are completely attributable to equity holders of 5N Plus Inc.
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
2024 | 2023 |
$ | $ |
65,019 | 55,287 |
48,020 | 42,002 |
7,317 | 6,893 |
2,250 | 1,666 |
57,587 | 50,561 |
7,432 | 4,726 |
1,795 | 2,032 |
411 | 228 |
(387) | 15 |
1,819 | 2,275 |
5,613 | 2,451 |
2,514 | 914 |
592 | 83 |
3,106 | 997 |
2,507 | 1,454 |
0.03 | 0.02 |
0.03 | 0.02 |
Condensed Interim Consolidated Financial Statements ▪ 2
5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three-month periods ended March 31
(in thousands of United States dollars) (unaudited)
2024 | 2023 | |
$ | $ | |
Net earnings | 2,507 | 1,454 |
Other comprehensive (loss) income | ||
Items that may be reclassified subsequently to net earnings | ||
Currency translation adjustment | (1,041) | 792 |
(1,041) | 792 | |
Items that will not be reclassified subsequently to net earnings | ||
Remeasurement of employee benefit plan obligations | 188 | (337) |
Income taxes | (58) | 106 |
130 | (231) | |
Other comprehensive (loss) income | (911) | 561 |
Comprehensive income | 1,596 | 2,015 |
Comprehensive income is completely attributable to equity holders of 5N Plus Inc.
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Condensed Interim Consolidated Financial Statements ▪ 3
5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the three-month periods ended March 31
(in thousands of United States dollars, except number of shares) (unaudited)
Accumulated | ||||||
other | ||||||
Number | Share | Contributed | comprehensive | Total | ||
2024 | of shares | Capital | Surplus | loss | Deficit | equity |
$ | $ | $ | $ | $ | ||
Balances at beginning of period | 88,704,724 | 21,884 | 343,012 | (6,477) | (229,827) | 128,592 |
Net earnings for the period | - | - | - | - | 2,507 | 2,507 |
Other comprehensive loss | - | - | - | (911) | - | (911) |
Comprehensive (loss) income | - | - | - | (911) | 2,507 | 1,596 |
Exercise of stock options | 85,165 | 225 | (65) | - | - | 160 |
Share-based compensation | - | - | 55 | - | - | 55 |
Balances at end of period | 88,789,889 | 22,109 | 343,002 | (7,388) | (227,320) | 130,403 |
Accumulated | ||||||
other | ||||||
Number | Share | Contributed | comprehensive | Total | ||
2023 | of shares | Capital | Surplus | loss | Deficit | equity |
$ | $ | $ | $ | $ | ||
Balances at beginning of period | 88,330,236 | 21,004 | 342,985 | (5,987) | (245,226) | 112,776 |
Net earnings for the period | - | - | - | - | 1,454 | 1,454 |
Other comprehensive income | - | - | - | 561 | - | 561 |
Comprehensive income | - | - | - | 561 | 1,454 | 2,015 |
Exercise of stock options | 124,488 | 255 | (74) | - | - | 181 |
Share-based compensation | - | - | 74 | - | - | 74 |
Balances at end of period | 88,454,724 | 21,259 | 342,985 | (5,426) | (243,772) | 115,046 |
Equity is completely attributable to equity holders of 5N Plus Inc.
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Condensed Interim Consolidated Financial Statements ▪ 4
5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three-month periods ended March 31
(in thousands of United States dollars) (unaudited)
Notes | 2024 | 2023 | |
$ | $ | ||
Operating activities | |||
Net earnings | 2,507 | 1,454 | |
Adjustments to reconcile net earnings to cash flows | |||
Depreciation of property, plant and equipment | 2,485 | 2,549 | |
Depreciation of right-of-use assets | 637 | 695 | |
Amortization of intangible assets | 823 | 815 | |
Amortization of other assets | 63 | 64 | |
Share-based compensation expense | 2,549 | 996 | |
Deferred income taxes | 592 | 83 | |
Imputed interest | 270 | 164 | |
Employee benefit plan obligations | (58) | (41) | |
Loss (gain) on disposal of property, plant and equipment | 2 | (26) | |
Unrealized gain on non-hedge financial instruments | (2,309) | (984) | |
Unrealized foreign exchange (gain) loss on assets and liabilities | (417) | 108 | |
Cash from operations before the following: | 7,144 | 5,877 | |
Net change in non-cash working capital balances | 9 | (7,995) | (9,649) |
Cash used in operating activities | (851) | (3,772) | |
Investing activities | |||
Additions to property, plant and equipment | 9 | (8,956) | (3,709) |
Additions to intangible assets | (24) | (175) | |
Acquisition of investment in equity instruments | 10 | (1,000) | - |
Proceeds on settlement of indexed deposit agreement | 10 | - | 6,506 |
Proceeds on disposal of property, plant and equipment | - | 310 | |
Cash (used in) from investing activities | (9,980) | 2,932 | |
Financing activities | |||
Repayment of long-term debt | (10,000) | - | |
Proceeds from issuance of long-term debt | 20,889 | - | |
Deferred costs related to long-term debt | (100) | - | |
Issuance of common shares | 160 | 181 | |
Principal elements of lease payments | (741) | (771) | |
Cash flows from (used in) financing activities | 10,208 | (590) | |
Effect of foreign exchange rate changes on cash and cash equivalents | (154) | 162 | |
Net decrease in cash and cash equivalents | (777) | (1,268) | |
Cash and cash equivalents, beginning of period | 34,706 | 42,691 | |
Cash and cash equivalents, end of period | 33,929 | 41,423 | |
Supplemental information(1) | |||
Income tax paid | 1,000 | 2,229 | |
Interest paid | 1,375 | 1,953 |
- Amounts paid for income tax and interest were reflected as cash flows from operating activities in the interim consolidated statements of cash flows. The accompanying notes are an integral part of these condensed interim consolidated financial statements.
Condensed Interim Consolidated Financial Statements ▪ 5
5N PLUS INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three-month periods ended March 31
(in thousands of United States dollars, unless otherwise indicated) (unaudited)
1. Nature of Activities
5N Plus Inc. ("5N+" or the "Company") is a Canadian-based international company. 5N+ is a leading global producer of specialty semiconductors and performance materials. The Company's ultra-pure materials often form the core element of its customer products. These customers rely on 5N+'s products to enable performance and sustainability in their own products. 5N+ deploys a range of proprietary and proven technologies to develop and manufacture its products. The Company's products enable various applications in a number of key industries including renewable energy, security, space, pharmaceutical, medical imaging and industrial. The Company is headquartered at 4385 Garand Street, Montreal, Quebec (Canada) H4R 2B4. The Company operates R&D, manufacturing and commercial centers in strategically located facilities around the world including Europe, North America and Asia. The Company's mission is to be critical to its customers, valued by its employees and trusted by its shareholders. The Company's core values focus on integrity, commitment and customer development along with emphasis on sustainable development, continuous improvement, health and safety. The Company's shares are listed on the Toronto Stock Exchange ("TSX"). 5N+ and its subsidiaries represent the "Company" mentioned throughout these consolidated financial statements. The Company has two reportable business segments, namely Specialty Semiconductors and Performance Materials.
These condensed interim consolidated financial statements were approved by the Board of Directors on May 6, 2024.
2. Basis of Presentation
These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and as applicable to the preparation of interim financial statements, including IAS 34, "Interim Financial Reporting". These condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2023, which have been prepared in accordance with IFRS Accounting Standards.
The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The accounting policies followed in these unaudited condensed interim financial statements are consistent with those of the previous financial year, with the additional policy described below.
The functional and presentation currency of the Company is the United States dollar.
Income taxes
Taxes on income in interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
3. Inventories
March 31 | December 31 | |
2024 | 2023 | |
$ | $ | |
Raw materials | 37,455 | 36,297 |
Finished goods | 76,066 | 69,553 |
Total inventories | 113,521 | 105,850 |
For the three-month period ended March 31, 2024, a total of $29,394 of inventories was included as an expense in cost of sales ($22,758 for the three-month period ended March 31, 2023).
Condensed Interim Consolidated Financial Statements ▪ 6
5N PLUS INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three-month periods ended March 31
(in thousands of United States dollars, unless otherwise indicated) (unaudited)
For the three-month period ended March 31, 2024, a total of $46 previously written down was recognized as a reduction of expenses in costs of sales concurrently with the related inventories being sold ($23 for the Specialty Semiconductors segment and $23 for the Performance Materials segment). For the three-month period ended March 31, 2023, a total of $8 previously written down was recognized as a reduction of expenses in costs of sales concurrently with the related inventories being sold ($nil for the Specialty Semiconductors segment and $8 for the Performance Materials segment).
4. Deferred revenue
March 31 | December 31 | |
2024 | 2023 | |
$ | $ | |
Prepayments from clients | 12,749 | 11,591 |
Current portion of deferred revenue related to long-term contracts | 1,880 | 1,846 |
Current portion of deferred revenue | 14,629 | 13,437 |
Non-current portion of deferred revenue related to long-term contracts | 6,029 | 5,629 |
Non-current portion of deferred revenue | 6,029 | 5,629 |
Total deferred revenue | 20,658 | 19,066 |
For the three-month period ended March 31, 2024, $5,697 (2023 - $2,345) of revenue was realized in relation to the deferred revenue balance outstanding at the beginning of the period.
5. Long-Term Debt
March 31 | December 31 | |
2024 | 2023 | |
$ | $ | |
Senior secured revolving facility of $124,000 with a syndicate of banks, maturing in April 2026 | 101,500 | 83,500 |
Subordinated term loan with Investissement Québec, maturing in March 2028 | 15,000 | 25,000 |
Interest-free loan from Investissement Québec, maturing in February 2030 | 1,186 | - |
Interest-free loan from Canada Economic Development for Quebec Regions, maturing in | ||
December 2032 | 483 | - |
118,169 | 108,500 | |
Less current portion of long-term debt | - | (25,000) |
118,169 | 83,500 |
Senior secured revolving facility
In June 2022, the Company signed a senior secured multi-currency revolving credit facility of $124,000 maturing in April 2026 to replace its existing $124,000 senior secured revolving facility maturing in April 2023. At any time, the Company has the option to request that the credit facility be expanded through the exercise of an additional $30,000 accordion feature, subject to review and approval by the lenders. This revolving credit facility can be drawn in US dollars, Canadian dollars or Hong Kong dollars (up to $4,000). Drawings bear interest at either the Canadian prime rate, US base rate, Hong Kong base rate or SOFR, plus a margin based on the Company's senior net debt to consolidated EBITDA ratio. Under the terms of its credit facility, the Company is required to satisfy certain restrictive covenants as to financial ratios. As at March 31, 2024 and December 31, 2023, the Company had met all covenants.
Condensed Interim Consolidated Financial Statements ▪ 7
5N PLUS INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three-month periods ended March 31
(in thousands of United States dollars, unless otherwise indicated) (unaudited)
Subordinated term loan from Investissement Québec
In March 2024, the Company entered into a subordinated term loan agreement with Investissement Québec of $15,000 which replaces its previous subordinated term loan of $25,000 set to expire in March 2024. The new term loan bears interest equivalent to the four-year US Treasury Bonds plus a margin of 5.38%, which equals to 9.71%. Under the terms of the loan, the Company is required to satisfy certain restrictive covenants as to financial ratios. As at March 31, 2024 and December 31, 2023, the Company has met all covenants.
Interest-free loan from Investissement Québec
In February 2024, the Company received CA$ 2,700 from Investissement Québec with respect to an interest-free term loan with a maximum drawdown of CA$ 2,850 dependent upon eligible capital expenditures related to investments in its Montreal production facility. Subject to the satisfaction of certain criteria, the Company expects CA$ 500 of the loan to be forgiven. The loan has a two-year repayment moratorium period and is subsequently reimbursable in monthly instalments over a period of four years. Under the terms of the loan, the Company is required to satisfy certain restrictive covenants as to financial ratios. As at March 31, 2024, the Company has met all covenants.
Interest-free loan from Canada Economic Development for Quebec Regions
In March 2024, the Company received CA$ 1,217 from Canada Economic Development for Quebec Regions with respect to an interest-free term loan with a maximum drawdown of CA$ 3,000 dependent upon eligible capital expenditures. At a date no later than December 31, 2025, an additional two-year repayment moratorium period will begin. Subsequently, the loan is reimbursable in monthly instalments over a period of five years.
6. Expenses by Nature
Three months | ||
2024 | 2023 | |
Wages and salaries | $ | $ |
14,340 | 13,327 | |
Depreciation of property, plant and equipment | 2,485 | 2,549 |
Depreciation of right-of-use assets | 637 | 695 |
Amortization of other assets | 63 | 64 |
Other expenses (income), net | ||
Amortization of intangible assets | 823 | 815 |
Share-based compensation expense | 360 | 12 |
Loss (gain) on disposal of property, plant and equipment | 2 | (26) |
Research and development, net of tax credit(1) | 1,084 | 910 |
Other income | (19) | (45) |
- Reduced research and development, net of tax credit by an amount of $360 for the three-month period ended March 31, 2024 resulting from research and development subsidies. There is an outstanding receivable related to this grant as at March 31, 2024 for an amount of $2,199 included within Accounts receivable.
Reduced research and development, net of tax credit by an amount of $680 for the three-month period ended March 31, 2023 resulting from research and development subsidies.
Condensed Interim Consolidated Financial Statements ▪ 8
5N PLUS INC.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three-month periods ended March 31
(in thousands of United States dollars, unless otherwise indicated) (unaudited)
7. Earnings per Share
The following table reconciles the numerators and denominators used for the computation of basic and diluted net earnings per share:
Three months | ||
Numerators | 2024 | 2023 |
$ | $ | |
Net earnings for the period | 2,507 | 1,454 |
Three months | ||
Denominators | 2024 | 2023 |
Basic weighted average number of shares | 88,733,736 | 88,367,689 |
Dilutive effect: | ||
Stock options | 670,659 | 472,982 |
Diluted weighted average number of shares | 89,404,395 | 88,840,671 |
For the three-month period ended March 31, 2024, 119,620 stock options were excluded from the diluted weighted average number of shares due to their anti-dilutive effect.
For the three-month period ended March 31, 2023, 219,864 stock options were excluded from the diluted weighted average number of shares due to their anti-dilutive effect.
Condensed Interim Consolidated Financial Statements ▪ 9
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5N Plus Inc. published this content on 06 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2024 21:06:49 UTC.