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Neo Performance Materials Reports Third Quarter 2022 Results

Highlights
(unless otherwise noted, all financial amounts in this news release are expressed in U.S. dollars)

  • Q3 2022 revenue of $146.6 million, higher by 22.4% YoY. For the nine months ended September 30, 2022, Neo’s revenue was $481.1 million, an increase of 24.7% YoY.

  • Operating income of $2.2 million in the quarter, lower by 82.2% YoY. For the nine months ended September 30, 2022, operating income was $51.9 million, an increase of 10.0% YoY.

  • Adjusted Net Loss(1) of $1.9 million in the quarter, or $(0.04) per share. For the nine months ended September 30, 2022, Neo’s Adjusted Net Income(1) was $37.4 million, or $0.91 per share.

  • Adjusted EBITDA(1) of $7.0 million in the quarter, lower by 60.1% YoY. For the nine months ended September 30, 2022, Adjusted EBITDA(1) was $66.6 million, higher by 7.0% YoY.

  • Cash balance of $123.9 million after distributing $9.9 million for the nine months ended September 30, 2022 in dividends to shareholders.

  • On August 16, 2022, Neo entered into a loan agreement with Export Development Canada (“EDC”) for a term loan of up to $75.0 million, to finance the relocation, expansion, and sustainability upgrades to one of its environmental emissions catalyst manufacturing facilities (the “NAMCO Project”).

  • On August 22, 2022, Neo announced its intent to acquire an exploration license from Hudson Resources Inc. to pursue development of the Sarfartoq Carbonatite Complex in southwest Greenland, which hosts a mineral deposit enriched in neodymium and praseodymium.

  • On August 26, 2022, Hastings Technology Metals Ltd. (“Hastings”) entered into a binding Share Purchase Agreement with an affiliate of Oaktree Capital L.P. (“Oaktree”) to acquire common shares of Neo at Cdn. $15.00 per share. The transaction was completed on October 13, 2022.

  • To supplement Neo’s existing cash position, support working capital levels, and plan for future growth, Neo completed a bought deal treasury offering on September 16, 2022 at Cdn. $15.00 per share, for net proceeds of approximately $47.7 million.

  • On October 14, 2022, Neo entered into a non-binding Memorandum of Understanding with Australian Rare Earths Limited (“AR3”) to accelerate development of AR3’s Koppamurra Rare Earth in western Australia, which is enriched in neodymium, praseodymium, dysprosium and terbium.

  • On November 9, 2022, Neo announced it has been awarded a grant of up to $18.3 million (€18.7 million) from the Government of Estonia under Europe’s Just Transition Fund (“JTF”) for eligible project costs of up to $95.7 million (€98 million). The terms of the award are governed under the Government of Estonia’s regulations on general conditions for granting and using funds from the operational program of the EU cohesion and internal security policy funds for the period 2021-2027 and related regulations, and includes factors such as total eligible costs incurred, and employment created. The grant to Neo is the first such award to any critical materials company in the EU under the JTF program.

  • A quarterly dividend of Cdn$0.10 per common share was declared on November 10, 2022 for shareholders of record at December 20, 2022, with a payment date of December 29, 2022.

Story continues

TORONTO, Nov. 11, 2022 /CNW/ – Neo Performance Materials Inc. (“Neo”, the “Company”) (TSX: NEO) released its third quarter 2022 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.sedar.com.

Neo Performance Materials Inc. (CNW Group/Neo Performance Materials, Inc.)

“Neo is very grateful to the Government of Estonia for choosing to partner with us by providing a grant of up to $18.3 million (€18.7 million) to help accelerate our plans to construct a vertically integrated rare earth magnet manufacturing facility in Estonia,” said Constantine Karayannopoulos, CEO of Neo.  “Coupled with our existing rare earth separations plant in Europe, this new strategic magnet manufacturing facility will help Europe move closer to achieving its greenhouse gas reduction and climate resiliency goals.”

“With regard to the quarter, while rare earth pricing remains attractive in absolute dollar terms, and is nearly double pre-pandemic norms, the retreat in pricing we have seen over the past six months placed short-term pressure on our margin levels, as higher cost inventory flows through our results of operations,” he added. “This lead-lag volatility is normal in our industry and, of course, we reap the benefit in a rising price environment. More important, the strategic initiatives we are pursuing are designed to place Neo in a unique position to take full advantage of the long-term opportunities presented by the global energy transition.” 

HIGHLIGHTS OF Q3 2022 CONSOLIDATED PERFORMANCE

For the three and nine months ended September 30, 2022, revenues of $146.6 million and $481.1 million were 22.4% and 24.7% higher, respectively, than the corresponding periods of 2021.  All three segments experienced higher revenues.  Selling prices for rare earth products, including Magnequench powders, rose significantly starting from the fourth quarter of 2020 and through the first quarter of 2022.  By the third quarter of 2022, rare earth prices declined 30% to 40% from the peak (in the first quarter of 2022), although they remain almost 100% higher than recent historical norms.  Neo benefited from rising prices from the fourth quarter of 2020 to the second quarter of 2022 and Neo was adversely affected by the rapid decline in prices in the third quarter of 2022.  The overall pricing and margin environment is higher than historical trends but quarterly results are positively (when prices are rising) or negatively (when prices are falling) affected due to the lead-lag effect of higher cost inventory on hand.  In addition to lower margin on sales in the quarter, Neo recorded $8.0 million of provisions for inventories in the third quarter, related to higher cost inventory on hand, relative to lowered selling prices.  In the long term, there are higher dollar value margins available with higher prices.

Operationally, Neo reported significant increases in revenue and earnings year-over-year.  Magnequench saw weaker volume across the majority of its applications due primarily to customer slowdowns in Asia related to COVID-19 and the slowdown in automotive due to the semiconductor chip shortage.  C&O saw mixed volumes for rare earth elements but slower volumes in the environmental catalyst end markets driven by semiconductor chip shortages.  Rare Metals saw record earnings driven by higher selling prices and the continued recovery in aerospace markets and demand from new customers in other end markets, tempered by the elimination of sales to Russian customers.

____________________________

(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 new release and in the MD&A, available on Neo’s website at www.neomaterials.com and on SEDAR at www.sedar.com.

SELECTED FINANCIAL RESULTS

TABLE 1: Selected Consolidated Results

Quarter-over-Quarter
Comparison

Year-over-Year
Comparison

($000s)

Q3 2022

Q3 2021

YTD Q3 2022

YTD Q3 2021

Revenue

146,627

119,841

481,130

385,837

Operating income

2,239

12,558

51,887

47,161

EBITDA(1)

5,460

14,695

66,068

51,305

Adjusted EBITDA(1)

7,034

17,650

66,607

62,263

Adjusted EBITDA %(1)

4.8 %

14.7 %

13.8 %

16.1 %

_________________________

(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

Quarter-over-Quarter
Comparison

Year-over-Year
Comparison

Q3 2022

Q3 2021

YTD Q3 2022

YTD Q3 2021

Volume (tonnes)

1,097

1,374

3,620

4,608

($000s)

Revenue

67,402

60,063

219,828

192,856

Operating income

4,897

8,130

27,995

31,805

EBITDA(1)

6,345

9,773

35,814

39,240

Adjusted EBITDA(1)

7,282

10,503

35,384

38,872

_________________________

(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 nine months ended September 30, 2022, revenue in the Magnequench segment of $67.4 million and $219.8 million, respectively, were higher by 12.2% and 14.0%, respectively, over the prior-year periods. Volumes in the segment saw a decline with respect to the prior-year period as well as sequentially, driven largely by the recent spike in COVID-19 cases and resulting shutdowns in Asia, several natural disasters impacted production facilities and customers, and the on-going semiconductor chip shortage.

Margins per ton in the Magnequench segment remained strong in the quarter despite being lower than margins in the first half of 2022.  Magnequench has pass-through pricing agreements on the vast majority of its sales contracts, and with rare earth magnetic prices having declined from March 2022, Magnequench is beginning to see the reversal of the lead-lag benefit in the three months ended September 30, 2022.

CHEMICALS & OXIDES (“C&O”) SEGMENT RESULTS

TABLE 3: Selected C&O Results

Quarter-over-Quarter
Comparison

Year-over-Year
Comparison

($000s)

Q3 2022

Q3 2021

YTD Q3 2022

YTD Q3 2021

Revenue

52,231

45,677

189,244

152,322

Operating (loss) income

(5,298)

7,142

21,324

27,184

EBITDA(1)

(3,231)

8,099

26,490

22,091

Adjusted EBITDA(1)

(3,863)

8,059

25,710

29,712

_________________________

(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.

The C&O segment continues to see strong demand for various rare earth products, particularly its magnetic-based products, although the segment was adversely affected by the rapid decline of rare earth prices while processing higher cost inventory (lead-lag impact).  Rare earth prices are still more than 100% higher than prices in the 2-3 years prior to the third quarter of 2020.  The outlook, both in demand and pricing, remains strong for rare earths, which is expected to lead to higher dollar value margins for C&O in the long term.  The rapid decline in prices necessitated C&O to record $6.0 million of provisions for inventories in the three months ended September 30, 2022.

In C&O’s environmental catalysts business, volumes were reasonably strong in the first nine months of 2022, although they were lower than the comparable period in the prior year, which benefited from customers refilling their supply chains.  Volumes have seen less of an impact from the semiconductor chip shortage as occurred in Magnequench.  C&O’s environmentally protective water treatment solutions business continues to perform well with higher volume and new customer adoption, despite challenges in global shipping and logistics availability.

RARE METALS SEGMENT RESULTS

TABLE 4: Selected Rare Metals Results

Quarter-over-Quarter
Comparison

Year-over-Year
Comparison

($000s)

Q3 2022

Q3 2021

YTD Q3 2022

YTD Q3 2021

Revenue

31,567

19,509

86,521

56,308

Operating income

5,199

2,074

13,186

4,168

EBITDA(1)

6,587

1,733

16,457

6,014

Adjusted EBITDA(1)

5,797

2,715

15,312

6,080

_________________________

(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 achieved record earnings in the first nine months of 2022, continuing the improvement that started in the fourth quarter of 2021.  Rare Metals experienced strength in pricing for key products such as hafnium and tantalum while also benefiting from lower-cost inventory on hand.  Hafnium prices, in particular, have increased rapidly starting in the fourth quarter of 2021 and the segment benefited by having lower-cost inventory on hand.  In addition, the recycling purchases and activities of Rare Metals was particularly impactful to lowering its overall material costs as some of the material purchased in the quarter was not rising as fast as selling prices.  While higher selling prices are leading to both lead-lag benefits as well as fundamental improvements in the margin spread between current raw material purchase costs and finished goods selling prices, this was partially offset by the segment not selling some of its niobium oxide products to customers resident in or with connections to Russia, resulting in lower margins and higher inventory on hand at period-end for its niobium oxide products.

The Rare Metals business continues to make progress in several key strategic initiatives, including selling more products outside of the aerospace industry, expanding its customer base, and diversifying its total end-market exposure.  Sales prices in a number of end markets have recovered and gallium-based products are exhibiting improved market demand.

CONFERENCE CALL ON FRIDAY NOVEMBER 11, 2022 AT 10 AM EASTERN

Management will host a teleconference call on Friday November 11, 2022 at 10:00 a.m. (Eastern Time) to discuss the third quarter 2022 results.  Interested parties may access the teleconference by calling (647) 794-4605 (local) or  (888) 254-3590 (toll free long distance) or by visiting http://cnw.en.mediaroom.com/events.  A recording of the teleconference may be accessed by calling (647) 436-0148 (local) or (888) 203-1112  (toll free long distance), and entering pass code 1561511# until December 12, 2022, or by visiting http://cnw.en.mediaroom.com/events.

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 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 nine months ended September 30, 2022, available on Neo’s web site at www.neomaterials.com and on SEDAR at www.sedar.com.

TABLE 5: CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

($000s)

September 30,
2022

December 31,
2021

ASSETS

Current

Cash and cash equivalents

$           123,903

$             89,037

Restricted cash

1,210

1,283

Accounts receivable

81,226

65,209

Inventories

199,802

200,954

Income taxes receivable

498

1,667

Other current assets

22,697

19,211

Total current assets

429,336

377,361

Property, plant and equipment

71,845

73,378

Intangible assets

43,450

49,961

Goodwill

65,034

70,082

Investments

17,145

13,759

Deferred tax assets

9,372

6,638

Other non-current assets

1,998

2,903

Total non-current assets

208,844

216,721

Total assets

$           638,180

$           594,082

LIABILITIES AND EQUITY

Current

Bank advances and other short-term debt

$             15,219

$               6,502

Accounts payable and other accrued charges

60,785

94,201

Income taxes payable

11,140

7,059

Provisions

643

5,560

Lease obligations

1,082

1,589

Derivative liability

17,206

14,704

Current portion of long-term debt

683

Other current liabilities

364

1,455

Total current liabilities

107,122

131,070

Long term debt

5,809

Employee benefits

1,157

1,210

Provisions

23,020

15,127

Deferred tax liabilities

16,030

13,366

Lease obligations

1,143

1,388

Other non-current liabilities

1,335

1,405

Total non-current liabilities

48,494

32,496

Total liabilities

155,616

163,566

Non-controlling interest

3,028

2,891

Equity attributable to equity holders of Neo Performance Materials Inc.

479,536

427,625

Total equity

482,564

430,516

Total liabilities and equity

$           638,180

$           594,082

See accompanying notes to this table in Neo’s Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2022, available on Neo’s website at www.neomaterials.com and on SEDAR at www.sedar.com.

TABLE 6: CONSOLIDATED RESULTS OF OPERATIONS

Comparison of the three and nine months ended September 30, 2022 to the three and nine months ended September 30, 2021:

($000s)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Revenue

$         146,627

$         119,841

$      481,130

$      385,837

Costs of sales

Costs excluding depreciation and amortization

120,137

83,330

356,249

268,830

Depreciation and amortization

2,279

1,980

7,045

5,771

Gross profit

24,211

34,531

117,836

111,236

Expenses

Selling, general and administrative

13,781

13,347

42,296

41,024

Share-based compensation

735

1,198

1,873

2,761

Depreciation and amortization

1,781

1,908

5,529

5,798

Research and development

5,675

5,520

15,956

14,492

Impairment of assets

295

21,972

21,973

65,949

64,075

Operating income

2,239

12,558

51,887

47,161

Other expense

(448)

(1,284)

(1,736)

(7,145)

Finance (cost) income, net

(1,437)

999

(4,143)

(674)

Foreign exchange loss

(723)

(755)

(175)

(1,844)

(Loss) income from operations before income taxes and equity income of associates

(369)

11,518

45,833

37,498

Income tax expense

(3,775)

(3,670)

(15,771)

(10,282)

(Loss) income  from operations before equity income of associates

(4,144)

7,848

30,062

27,216

Equity income of associates (net of income tax)

332

288

3,518

1,564

Net (loss) income

$           (3,812)

$             8,136

$        33,580

$        28,780

Attributable to:

Equity holders of Neo

$           (3,719)

$             8,036

$        33,238

$        28,442

Non-controlling interest

(93)

100

342

338

$           (3,812)

$             8,136

$        33,580

$        28,780

(Loss) Earnings per share attributable to equity holders of Neo:

Basic

$             (0.09)

$               0.21

$             0.81

$             0.75

Diluted

$             (0.09)

$               0.21

$             0.80

$             0.75

See Management’s Discussion and Analysis for the Three and Nine Months Ended September 30, 2022, available on Neo’s website at www.neomaterials.com and on SEDAR atwwwsedarcom

TABLE 7: RECONCILIATION OF NET (LOSS) INCOME TO EBITDA, ADJUSTED EBITDA AND FREE CASH FLOW

($000s)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Net (loss) income

$       (3,812)

$         8,136

$       33,580

$       28,780

Add back (deduct):

Finance cost (income), net

1,437

(999)

4,143

674

Income tax expense

3,775

3,670

15,771

10,282

Depreciation and amortization included in costs of sales

2,279

1,980

7,045

5,771

Depreciation and amortization included in operating expenses

1,781

1,908

5,529

5,798

EBITDA

5,460

14,695

66,068

51,305

Adjustments to EBITDA:

Other expense (1)

448

1,284

1,736

7,145

Foreign exchange loss (2)

723

755

175

1,844

Equity income of associates

(332)

(288)

(3,518)

(1,564)

Share-based compensation (3)

735

1,198

1,873

2,761

Impairment of assets 

295

Other costs (recoveries) (4)

6

(22)

772

Adjusted EBITDA (5)

$         7,034

$       17,650

$      66,607

$       62,263

Adjusted EBITDA Margins (5)

4.8 %

14.7 %

13.8 %

16.1 %

Less:

Capital expenditures

$         1,734

$         2,374

$       11,098

$         6,631

Free Cash Flow (5)

$         5,300

$       15,276

$       55,509

$       55,632

Free Cash Flow Conversion (5)

75.3 %

86.5 %

83.3 %

89.4 %

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)

These represent primarily legal, professional advisory fees and other transaction costs incurred with respect to non-operating capital structure related transactions and restructuring costs related to management team changes.  Neo has removed these charges to provide comparability with historic periods.

(5)

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.

TABLE 8: RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED NET (LOSS) INCOME

($000s)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Net (loss) income

$           (3,812)

$             8,136

$        33,580

$        28,780

Adjustments to net (loss) income:

Foreign exchange loss (1)

723

755

175

1,844

Impairment of assets

295

Share-based compensation (2)

735

1,198

1,873

2,761

Other costs (recoveries) (3)

6

(22)

772

Other items included in other expense (4)

520

(260)

2,014

6,162

Tax impact of the above items

(76)

(43)

(473)

(1,341)

Adjusted net (loss) income (5)

$           (1,910)

$             9,792

$        37,442

$        38,978

Attributable to:

Equity holders of Neo

$            (1,817)

$             9,692

$        37,100

$        38,640

Non-controlling interest

$                 (93)

$                100

$              342

$              338

Weighted average number of common shares outstanding:

Basic

41,368,970

37,913,275

40,913,207

37,738,354

Diluted

41,368,970

38,228,888

41,353,231

38,084,902

Adjusted (loss) earnings per share (5) attributable to equity holders of Neo:

Basic

$               (0.04)

$                0.26

$              0.91

$              1.02

Diluted

$               (0.04)

$                0.25

$              0.90

$              1.01

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 incurred with respect to non-operating capital structure related transactions and restructuring costs related to management team changes.  Neo has removed these charges to provide comparability with historic periods.

(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)

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.

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 South Korea as well as one dedicated research and development centre in Singapore.  For more information, please visit www.neomaterials.com.

Information Contacts

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 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 (including the impact of COVID-19), 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.sedar.com.

SOURCE Neo Performance Materials, Inc.

Cision

Cision

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