Stock Market

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 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.

 

TORONTOMarch 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 item

(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.

For further information: Ali Mahdavi, SVP, Corporate Development & Capital Markets, (416) 962-3300, Email: a.mahdavi@neomaterials.com; Jim Sims, Director of Corporate Communications, (303) 503-6203, Email: j.sims@neomaterials.com; Website: www.neomaterials.com, Email: a.mahdavi@neomaterials.com