Q2 2023 Highlights
(unless otherwise noted, all financial amounts in this news release are expressed in
- Q2 2023 record revenue of
$170.4 million , higher by 1.3% YoY. - Operating income of
$13.7 million in the quarter. - Adjusted Net Income(1) of
$2.5 million in the quarter, or$0.05 per share. - Adjusted EBITDA(1) of
$19.5 million in the quarter. - Completed the acquisition of 90% of
SG Technologies Group Limited ("SGTec"). - Investment of
$4.5 million for 44% ofNeo North Star Resources Inc. ("NNSR"), including an off-take agreement of 60% of the product produced. - Cash balance of
$126.9 million , after funding acquisitions and investments of$16.1 million , distributing$6.7 million in dividends to its shareholders, and repurchasing$1.2 million of shares under the Normal Course Issuer Bid (the "NCIB"). - A quarterly dividend of
Cdn$0.10 per common share was declared onAugust 10, 2023 for shareholders of record atSeptember 20, 2023 , with a payment date ofSeptember 29, 2023 .
"Neo reported record sales during the second quarter, driven by the strength of our Rare Metals business unit," said
For the three months ended
As of
TABLE 1: Selected Consolidated Results | ||||
Quarter-over-Quarter Comparison | Year-over-Year Comparison | |||
($000s) | Q2 2023 | Q2 2022 | YTD Q2 2023 | YTD Q2 2022 |
Revenue | 170,430 | 168,221 | 305,960 | 334,503 |
Operating income | 13,675 | 20,963 | 9,678 | 49,648 |
EBITDA(1) | 14,584 | 27,225 | 13,440 | 60,608 |
Adjusted EBITDA(1) | 19,548 | 26,456 | 20,335 | 59,573 |
Adjusted EBITDA %(1) | 11.5 % | 15.7 % | 6.6 % | 17.8 % |
_________________________ |
(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 | ||||
Quarter-over-Quarter Comparison | Year-over-Year Comparison | |||
Q2 2023 | Q2 2022 | YTD Q2 2023 | YTD Q2 2022 | |
Volume (tonnes) | 1,037 | 1,218 | 2,024 | 2,523 |
($000s) | ||||
Revenue | 49,329 | 78,412 | 104,494 | 152,426 |
Operating income | 1,077 | 12,862 | 2,032 | 23,098 |
EBITDA(1) | 1,412 | 15,923 | 4,639 | 29,469 |
Adjusted EBITDA(1) | 5,274 | 15,325 | 8,530 | 28,102 |
_________________________ |
(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 three and six months ended
TABLE 3: Selected C&O Results | ||||
Quarter-over-Quarter Comparison | Year-over-Year Comparison | |||
($000s) | Q2 2023 | Q2 2022 | YTD Q2 2023 | YTD Q2 2022 |
Revenue | 71,276 | 69,350 | 122,565 | 137,013 |
Operating income (loss) | 1,524 | 8,146 | (4,602) | 26,622 |
EBITDA(1) | 2,618 | 10,755 | (2,905) | 29,721 |
Adjusted EBITDA(1) | 2,913 | 9,663 | (1,649) | 29,573 |
_________________________ |
(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 three months ended
TABLE 4: Selected Rare Metals Results | ||||
Quarter-over-Quarter Comparison | Year-over-Year Comparison | |||
($000s) | Q2 2023 | Q2 2022 | YTD Q2 2023 | YTD Q2 2022 |
Revenue | 49,825 | 25,892 | 78,901 | 54,954 |
Operating income | 16,686 | 4,264 | 22,518 | 7,987 |
EBITDA(1) | 17,109 | 5,358 | 22,316 | 9,870 |
Adjusted EBITDA(1) | 16,950 | 5,174 | 23,114 | 9,515 |
_________________________ |
(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 continued its strong earnings trend in the first six months of 2023. In the three months ended
In
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 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 three and six months ended
($000s) | ||||
ASSETS | ||||
Current | ||||
Cash and cash equivalents | $ 126,915 | $ 147,491 | ||
Restricted cash | 3,272 | 1,179 | ||
Accounts receivable | 87,304 | 81,409 | ||
Inventories | 178,020 | 212,702 | ||
Income taxes receivable | 1,191 | 355 | ||
Assets held for sale | 66 | — | ||
Other current assets | 24,074 | 23,279 | ||
Total current assets | 420,842 | 466,415 | ||
Property, plant and equipment | 92,167 | 75,767 | ||
Intangible assets | 39,854 | 42,984 | ||
64,311 | 66,042 | |||
Investments | 17,782 | 16,363 | ||
Deferred tax assets | 9,120 | 6,956 | ||
Other non-current assets | 1,401 | 1,933 | ||
Total non-current assets | 224,635 | 210,045 | ||
Total assets | $ 645,477 | $ 676,460 | ||
LIABILITIES AND EQUITY | ||||
Current | ||||
Bank advances and other short-term debt | $ 8 | $ 17,288 | ||
Accounts payable and other accrued charges | 62,577 | 69,093 | ||
Income taxes payable | 12,678 | 10,033 | ||
Provisions | 1,299 | 1,369 | ||
Lease obligations | 1,554 | 1,264 | ||
Derivative liability | 37,186 | 28,570 | ||
Current portion of long-term debt | — | 747 | ||
Other current liabilities | 1,131 | 278 | ||
Total current liabilities | 116,433 | 128,642 | ||
Long term debt | 26,609 | 29,885 | ||
Employee benefits | 457 | 489 | ||
Derivative liability | 1,894 | — | ||
Provisions | 24,653 | 23,604 | ||
Deferred tax liabilities | 15,869 | 13,942 | ||
Lease obligations | 3,482 | 813 | ||
Other non-current liabilities | 3,861 | 1,442 | ||
Total non-current liabilities | 76,825 | 70,175 | ||
Total liabilities | 193,258 | 198,817 | ||
Non-controlling interest | 2,874 | 3,193 | ||
Equity attributable to equity holders of | 449,345 | 474,450 | ||
Total equity | 452,219 | 477,643 | ||
Total liabilities and equity | $ 645,477 | $ 676,460 |
See accompanying notes to this table in Neo's Consolidated Financial Statements for the Three and Six Months Ended |
Comparison of the three and six months ended
($000s) | Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Revenue | $ 170,430 | $ 168,221 | $ 305,960 | $ 334,503 | ||||
Costs of sales | ||||||||
Costs excluding depreciation and amortization | 132,589 | 121,796 | 249,210 | 236,112 | ||||
Depreciation and amortization | 2,368 | 2,388 | 4,536 | 4,766 | ||||
Gross profit | 35,473 | 44,037 | 52,214 | 93,625 | ||||
Expenses | ||||||||
Selling, general and administrative | 16,111 | 14,262 | 30,982 | 28,515 | ||||
Share-based compensation | (82) | 957 | 768 | 1,138 | ||||
Depreciation and amortization | 1,814 | 1,853 | 3,580 | 3,748 | ||||
Research and development | 3,955 | 5,707 | 7,206 | 10,281 | ||||
Impairment of assets | — | 295 | — | 295 | ||||
21,798 | 23,074 | 42,536 | 43,977 | |||||
Operating income | 13,675 | 20,963 | 9,678 | 49,648 | ||||
Other expense | (171) | (855) | (649) | (1,288) | ||||
Finance cost, net | (4,085) | (2,292) | (8,097) | (2,706) | ||||
Foreign exchange (loss) gain | (662) | 959 | (1,242) | 548 | ||||
Income (loss) from operations before income taxes and equity (loss) income of associates | 8,757 | 18,775 | (310) | 46,202 | ||||
Income tax expense | (5,988) | (6,001) | (7,598) | (11,996) | ||||
Income (loss) from operations before equity (loss) income of associates | 2,769 | 12,774 | (7,908) | 34,206 | ||||
Equity (loss) income of associates (net of income tax) | (2,440) | 1,917 | (2,463) | 3,186 | ||||
Net income (loss) | $ 329 | $ 14,691 | $ (10,371) | $ 37,392 | ||||
Attributable to: | ||||||||
Equity holders of Neo | $ 310 | $ 14,607 | $ (10,144) | $ 36,957 | ||||
Non-controlling interest | 19 | 84 | (227) | 435 | ||||
$ 329 | $ 14,691 | $ (10,371) | $ 37,392 | |||||
Earnings (loss) per share attributable to equity holders of | ||||||||
Basic | $ 0.01 | $ 0.36 | $ (0.22) | $ 0.91 | ||||
Diluted | $ 0.01 | $ 0.36 | $ (0.22) | $ 0.90 |
See Management's Discussion and Analysis for the Three and Six Months Ended |
($000s) | Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Net income (loss) | $ 329 | $ 14,691 | $ (10,371) | $ 37,392 | ||||
Add back (deduct): | ||||||||
Finance cost, net | 4,085 | 2,292 | 8,097 | 2,706 | ||||
Income tax expense | 5,988 | 6,001 | 7,598 | 11,996 | ||||
Depreciation and amortization included in costs of sales | 2,368 | 2,388 | 4,536 | 4,766 | ||||
Depreciation and amortization included in operating expenses | 1,814 | 1,853 | 3,580 | 3,748 | ||||
EBITDA | 14,584 | 27,225 | 13,440 | 60,608 | ||||
Adjustments to EBITDA: | ||||||||
Other expense (1) | 171 | 855 | 649 | 1,288 | ||||
Foreign exchange loss (gain) (2) | 662 | (959) | 1,242 | (548) | ||||
Equity loss (income) of associates | 2,440 | (1,917) | 2,463 | (3,186) | ||||
Share-based compensation (3) | (82) | 957 | 768 | 1,138 | ||||
Fair value adjustments to inventory acquired (4) | 572 | — | 572 | — | ||||
Impairment of assets | — | 295 | — | 295 | ||||
Transaction costs (recoveries) (5) | 1,201 | — | 1,201 | (22) | ||||
Adjusted EBITDA (6) | $ 19,548 | $ 26,456 | $ 20,335 | $ 59,573 | ||||
Adjusted EBITDA Margins (6) | 11.5 % | 15.7 % | 6.6 % | 17.8 % | ||||
Less: | ||||||||
Capital expenditures (7) | $ 6,820 | $ 2,582 | $ 11,836 | $ 9,364 | ||||
Free Cash Flow (6) | $ 12,728 | $ 23,874 | $ 8,499 | $ 50,209 | ||||
Free Cash Flow Conversion (6) | 65.1 % | 90.2 % | 41.8 % | 84.3 % |
Notes: | |
(1) | Represents other 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. |
(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-based compensation expense in respect of the Plan and the LTIP. |
(4) | In accordance with IFRS 3 Business Combinations, and on completion of the acquisition of SGTec, Neo recorded the acquisition of SGTec's 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 three and six months ended |
(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. |
(7) | Represents capital expenditures of |
($000s) | Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Net income (loss) | $ 329 | $ 14,691 | $ (10,371) | $ 37,392 | ||||
Adjustments to net income (loss): | ||||||||
Foreign exchange loss (gain) (1) | 662 | (959) | 1,242 | (548) | ||||
Impairment of assets | — | 295 | — | 295 | ||||
Share-based compensation (2) | (82) | 957 | 768 | 1,138 | ||||
Transaction costs (recoveries) (3) | 1,201 | — | 1,201 | (22) | ||||
Other items included in other expense (4) | 212 | 947 | 619 | 1,494 | ||||
Fair value adjustments to inventory acquired (5) | 572 | 572 | ||||||
Tax impact of the above items | (429) | (44) | (547) | (397) | ||||
Adjusted net income (6) | $ 2,465 | $ 15,887 | $ (6,516) | $ 39,352 | ||||
Attributable to: | ||||||||
Equity holders of Neo | $ 2,446 | $ 15,803 | $ (6,289) | $ 38,917 | ||||
Non-controlling interest | $ 19 | $ 84 | $ (227) | $ 435 | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 45,196,921 | 40,681,902 | 45,196,921 | 40,681,548 | ||||
Diluted | 45,621,275 | 41,001,055 | 45,196,921 | 41,089,719 | ||||
Adjusted earnings (loss) per share (6) attributable to equity holders of Neo: | ||||||||
Basic | $ 0.05 | $ 0.39 | $ (0.14) | $ 0.96 | ||||
Diluted | $ 0.05 | $ 0.39 | $ (0.14) | $ 0.95 |
Notes: | |
(1) | Represents unrealized and realized foreign exchange losses (gains) that include non-cash adjustments in translating foreign denominated monetary assets and liabilities. |
(2) | Represents share-based compensation expense in respect of the Plan and the LTIP. |
(3) | 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 three and six months ended |
(4) | Represents other 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. |
(5) | In accordance with IFRS 3 Business Combinations, and on completion of the acquisition of SGTec, Neo recorded the acquisition of SGTec's inventory at fair value, which included a mark-up for profit of |
(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. |
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
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