EDITOR: | August 12th, 2021

Neo Performance Materials Reports Strong Second Quarter 2021 Results

| August 12, 2021 | No Comments
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August 12, 2021 (Source) — Q2 2021 Highlights
(unless otherwise noted, all financial amounts in this news release are expressed in U.S. dollars)

  • Q2 2021 revenue of $135.1 million higher by 99.5% YoY.
  • Volumes in the quarter of 4,063 tonnes improved by 59.6% YoY.
  • Operating income of $18.2 million in the quarter.
  • Adjusted Net Income(1) of $14.1 million, or $0.37 per share.
  • Adjusted EBITDA(1) of $22.2 million.
  • Cash balance of $59.6 million after distributing $3.1 million in dividends to shareholders.
  • A quarterly dividend of Cdn$0.10 per common share was declared on August 11, 2021 for shareholders of record at September 20, 2021, with a payment date of September 29, 2021.

Neo Performance Materials Inc. (“Neo“, the “Company“) (TSX: NEO) released its second quarter 2021 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 and on SEDAR at www.sedar.com.

HIGHLIGHTS OF Q2 2021 CONSOLIDATED PERFORMANCE

For the three months ended June 30, 2021, consolidated revenue was $135.1 million compared to $67.7 million in the second quarter of 2020; an increase of $67.4 million or 99.5%.  Neo reported a net income of $13.0 million, or $0.34 per share.  Adjusted Net Income(1) totaled $14.1 million, or $0.37 per share.  Adjusted EBITDA(1) was $22.2 million, an increase of $21.0 million over the comparable prior-year period.

As of June 30, 2021, Neo had cash and cash equivalents of $59.6 million plus restricted cash of $4.2 million, compared to $72.2 million plus $4.2 million as at December 31, 2020.  In the six months ended June 30, 2021, Neo paid $6.2 million in dividends to its shareholders, remitted $3.0 million related to withholding taxes on stock-based awards and received $1.5 million from stock options exercised.  In addition, Neo has approximately $6.5 million available under its credit facilities with $4.4 million drawn as at June 30, 2021, compared to $2.4 million drawn as at December 31, 2020.

_____________________________________________

(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.

“We had an outstanding second quarter that exceeded our expectations, with record revenue and robust profitability, while our plants operated at near-record output,” said Constantine Karayannopoulos, Neo’s CEO. “Dialogue with existing and new customers on product innovation remained very active as we continue to collaborate on next generation products. We are continuing to diversify our sources of rare earth feed materials to include material sourced from North America for our European-based rare earth processing facility in Sillamäe, Estonia, which will strengthen our ability to meet growing demand from our global customers. Our R&D pipelines are full and the outstanding customer service provided by our global teams is helping us win new business. With the organic growth we are seeing across all business units, the significant macro tailwinds boosting the entire rare earths sector, and a number of strategic growth opportunities on the radar screen, we remain confident in the sustainability of our long term vision and growth strategy.”

SELECTED FINANCIAL RESULTS

TABLE 1: Selected Consolidated Results

Quarter-over-Quarter
Comparison

Year-over-Year
Comparison

Q2 2021

Q2 2020

YTD Q2 2021

YTD Q2 2020

Volume (tonnes)

4,063

2,545

8,269

5,848

($000s)

Revenue

135,141

67,734

265,996

158,431

Operating income (loss)

18,195

(64,993)

34,603

(59,986)

EBITDA(1)

21,810

(59,542)

36,610

(50,481)

Adjusted EBITDA(1)

22,177

1,191

44,613

10,836

Adjusted EBITDA %(1)

16.4 %

1.8 %

16.8 %

6.8 %

_________________________

(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.

For the three and six months ended June 30, 2021, revenues were 99.5% and 67.9% higher, respectively, than the corresponding periods of 2020.  All three segments experienced an increase in revenues due to higher pricing and volumes.  Aside from this lower comparable period, all three segments demonstrated strong growth in volumes and profitability compared to recent (non-COVID-19) historical periods.

Neo reported operating income of $18.2 million and net income of $13.0 million for the three months ended June 30, 2021; and operating income of $34.6 million and net income of $20.6 million for the six months ended June 30, 2021. Operating income in the three and six months ended June 30, 2021 was higher in all three segments.  Operationally, all segments reported significant increases in volume, revenue and earnings.  Magnequench saw broad volume increases across the majority of its applications including key end markets such as solutions for electrified vehicles (including traction motors) and in other applications such as factory automation and home appliances.  C&O saw continued strong demand particularly for its magnetic-based rare earth elements, growth in environmental catalysts exceeding market growth rates and record sales volumes in its environmentally protective water treatment solutions.  The Rare Metals segment saw some recovery in the aerospace end market and made key progress to extended its sales into additional, non-aerospace markets.

Adjusted EBITDA for the three and six months ended June 30, 2021 was $22.2 million and $44.6 million, respectively, an increase of $21.0 million and $33.8 million compared to the same periods of the prior year.  Similar to operating income, in the three and six months ended June 30, 2021, Adjusted EBITDA in all three segments increased over the same periods in the prior year.

MAGNEQUENCH SEGMENT RESULTS

TABLE 2: Selected Magnequench Results

Quarter-over-Quarter Comparison

Year-over-Year Comparison

Q2 2021

Q2 2020

YTD Q2 2021

YTD Q2 2020

Volume (tonnes)

1,509

1,024

3,234

2,295

($000s)

Revenue

67,888

30,267

132,793

68,793

Operating income

12,585

3,421

23,675

8,960

EBITDA(1)

15,502

6,116

29,467

13,763

Adjusted EBITDA(1)

14,937

5,565

28,369

13,280

_________________________

(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 months ended June 30, 2021, revenue in the Magnequench segment was $67.9 million, compared to $30.3 million in the three months ended June 30, 2020; an increase of $37.6 million or 124.3%.  For the six months ended June 30, 2021, revenue in the Magnequench segment was $132.8 million, compared to $68.8 million in the six months ended June 30, 2020; an increase of $64.0 million or 93.0%.  Volume increased to 1,509 tonnes compared to 1,024 tonnes in the three months ended June 30, 2020.  For the six months ended June 30, 2021, volume increased to 3,234 tonnes, compared to 2,295 tonnes in the same period in 2020; an increase of 40.9%.

Operating income for the three and six months ended June 30, 2021 was $12.6 million and $23.7 million, respectively, an increase of $9.2 million and $14.7 million when compared to the three and six months ended June 30, 2020.

For the three and six months ended June 30, 2021, volumes in the Magnequench segment saw a continued rebound and strong growth compared to prior periods.  For the three months ended June 30, 2021, Adjusted EBITDA in the Magnequench segment was $14.9 million, compared to $5.6 million in the three months ended June 30, 2020; an increase of $9.4 million.  For the six months ended June 30, 2021, Adjusted EBITDA in the Magnequench segment was $28.4 million, compared to $13.3 million in same period of 2020; an increase of $15.1 million

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

TABLE 3: Selected C&O Results

Quarter-over-Quarter Comparison

Year-over-Year Comparison

Q2 2021

Q2 2020

YTD Q2 2021

YTD Q2 2020

Volume (tonnes)

2,443

1,466

4,866

3,401

($000s)

Revenue

52,255

25,320

106,645

58,858

Operating income

7,920

(37,748)

20,042

(34,774)

EBITDA(1)

8,105

(36,020)

13,992

(32,347)

Adjusted EBITDA(1)

8,735

(1,462)

21,653

2,951

_________________________

(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 months ended June 30, 2021, revenue in the C&O segment was $52.3 million, compared to $25.3 million in the same period in 2020; an increase of $26.9 million or 106.4%.  For the six months ended June 30, 2021, revenue in the C&O segment was $106.6 million, compared to $58.9 million in the same period in 2020; an increase of $47.8 million or 81.2%.

For the three and six months ended June 30, 2021, the C&O segment reported operating income of $7.9 million and $20.0 million, respectively, compared to an operating loss of $37.7 million and $34.8 million in the same periods of the prior year.  The operating loss in the three and six months ended June 30, 2020 was mainly due to a $35.1 million impairment charge.

The C&O segment continues to see strong demand for various rare earth products, particularly magnetic-based products.  For the three months ended June 30, 2021, Adjusted EBITDA was $8.7 million, compared to $(1.5) million in the same period in the prior year.  For the six months ended June 30, 2021, Adjusted EBITDA was $21.7 million, compared to $3.0 million in the same period in the prior year; an increase of $18.7 million or 633.8%.

RARE METALS SEGMENT RESULTS

TABLE 4: Selected Rare Metals Results

Quarter-over-Quarter Comparison

Year-over-Year Comparison

Q2 2021

Q2 2020

YTD Q2 2021

YTD Q2 2020

Volume (tonnes)

161

90

279

232

($000s)

Revenue

20,083

13,529

36,799

33,979

Operating income (loss)

1,836

(24,728)

2,094

(24,905)

EBITDA(1)

2,127

(23,725)

4,281

(22,826)

Adjusted EBITDA(1)

2,462

376

3,365

1,287

_________________________

(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 months ended June 30, 2021, revenue in the Rare Metals segment was $20.1 million, compared to $13.5 million in the same period in the prior year; an increase of $6.6 million or 48.4%.  For the six months ended June 30, 2021, revenue in the Rare Metals segment was $36.8 million, compared to $34.0 million in the same period in the prior year; an increase of $2.8 million or 8.3%.

For the three and six months ended June 30, 2021, the Rare Metals segment reported an operating income of $1.8 million and $2.1 million, respectively, compared to an operating loss of $24.7 million and $24.9 million in the same periods of 2020.  The operating loss in the three and six months ended June 30, 2020 was mainly due to a $24.0 million impairment charge.

For the three months ended June 30, 2021, Adjusted EBITDA in the Rare Metals segment was $2.5 million, compared to $0.4 million in the same period in 2020; an increase of $2.1 million or 554.8%.  For the six months ended June 30, 2021, Adjusted EBITDA was $3.4 million, compared to $1.3 million in 2020; an increase of $2.1 million or 161.5%.

CONFERENCE CALL ON THURSDAY AUGUST 12, 2021 AT 10 AM EASTERN

Management will host a teleconference call on Thursday August 12, 2021 at 10:00 a.m. (Eastern Time) to discuss the second quarter 2021 results.  Interested parties may access the teleconference by calling (647) 792-1240 (local) or  (800) 430-8332 (toll-free long distance) or by visiting http://cnw.en.mediaroom.com/events. A recording of the teleconference may be accessed by calling (416) 436-0148 (local) or (888) 203-1112 (toll-free long distance), and entering pass code 5960788# until September 12, 2021 or by visiting http://cnw.en.mediaroom.com/events.

NON-IFRS MEASURES

This news release refers to certain non-IFRS financial measures such as “Adjusted Net Income”, “EBITDA”, “Adjusted EBITDA”, and “Adjusted EBITDA Margin”. These measures 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 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 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 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 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, please see the “Non-IFRS Financial Measures” section of Neo’s management’s discussion and analysis filing for the three and six months ended June 30, 2021, 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)

June 30, 2021

December 31, 2020

ASSETS

Current

Cash and cash equivalents

$

59,596

$

72,224

Restricted cash

4,167

4,219

Accounts receivable

68,981

51,851

Inventories

134,291

130,867

Income taxes receivable

1,808

2,186

Assets held for sale

415

Other current assets

18,804

13,889

Total current assets

287,647

275,651

Property, plant and equipment

74,035

74,322

Intangible assets

51,742

53,653

Goodwill

69,408

68,967

Investments

11,321

10,045

Deferred tax assets

3,165

3,040

Other non-current assets

1,633

864

Total non-current assets

211,304

210,891

Total assets

$

498,951

$

486,542

LIABILITIES AND EQUITY

Current

Bank advances and other short-term debt

$

4,415

$

2,428

Accounts payable and other accrued charges

59,950

79,106

Income taxes payable

6,367

2,945

Provisions

2,450

2,628

Lease obligations

1,475

1,297

Derivative liability

11,138

9,428

Other current liabilities

390

940

Total current liabilities

86,185

98,772

Employee benefits

2,294

2,358

Provisions

15,551

4,201

Deferred tax liabilities

13,044

13,970

Lease obligations

2,316

2,243

Other non-current liabilities

1,559

1,513

Total non-current liabilities

34,764

24,285

Total liabilities

120,949

123,057

Non-controlling interest

2,239

1,490

Equity attributable to equity holders of Neo Performance Materials Inc.

375,763

361,995

Total equity

378,002

363,485

Total liabilities and equity

$

498,951

$

486,542

____________________________

See accompanying notes to this table in Neo’s Consolidated Financial Statements for the Three and Six Months Ended June 30, 2021, 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 six months ended June 30, 2021 to the three and six months ended June 30, 2020:

($000s)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Revenue 

$

135,141

$

67,734

$

265,996

$

158,431

Costs of sales

Costs excluding depreciation and amortization

94,580

51,180

185,500

117,429

Depreciation and amortization

1,912

2,715

3,791

5,435

Gross profit

38,649

13,839

76,705

35,567

Expenses

Selling, general and administrative

13,617

14,690

27,677

26,651

Share-based compensation

(29)

170

1,563

(57)

Depreciation and amortization

1,935

2,018

3,890

4,054

Research and development

4,931

2,870

8,972

5,821

Impairment of assets

59,084

59,084

20,454

78,832

42,102

95,553

Operating income (loss) 

18,195

(64,993)

34,603

(59,986)

Other income (expense)

213

221

(5,861)

27

Finance cost, net

(1,457)

(2,318)

(1,673)

(3,263)

Foreign exchange (loss) gain

(788)

138

(1,089)

(312)

Income (loss) from operations before income taxes and equity income of associates

16,163

(66,952)

25,980

(63,534)

Income tax (expense) benefit

(3,479)

3,229

(6,612)

387

Income (loss) from operations before equity income of associates

12,684

(63,723)

19,368

(63,147)

Equity income of associates (net of income tax)

343

359

1,276

301

Net income (loss)

$

13,027

$

(63,364)

$

20,644

$

(62,846)

Attributable to:

Equity holders of Neo

$

12,960

$

(60,936)

$

20,406

$

(60,573)

Non-controlling interest

67

(2,428)

238

(2,273)

$

13,027

$

(63,364)

$

20,644

$

(62,846)

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

Basic

$

0.34

$

(1.62)

$

0.54

$

(1.61)

Diluted

$

0.34

$

(1.62)

$

0.54

$

(1.61)

____________________________

See Management’s Discussion and Analysis for the Three and Six Months Ended June 30, 2021, available on Neo’s website at www.neomaterials.com and on SEDAR at www.sedar.com.

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

($000s)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net income (loss) 

$

13,027

$

(63,364)

$

20,644

$

(62,846)

Add back (deduct):

Finance cost, net

1,457

2,318

1,673

3,263

Income tax expense (benefit)

3,479

(3,229)

6,612

(387)

Depreciation and amortization included in costs of sales

1,912

2,715

3,791

5,435

Depreciation and amortization included in operating expenses

1,935

2,018

3,890

4,054

EBITDA

21,810

(59,542)

36,610

(50,481)

Adjustments to EBITDA:

Other (income) expense (1)

(213)

(221)

5,861

(27)

Foreign exchange loss (gain) (2)

788

(138)

1,089

312

Equity income of associates

(343)

(359)

(1,276)

(301)

Share and value-based compensation (3)

(29)

(153)

1,563

(271)

Impairment of assets (4)

59,084

59,084

Other costs  (5)

164

2,520

766

2,520

Adjusted EBITDA

$

22,177

$

1,191

$

44,613

$

10,836

Adjusted EBITDA Margins.

16.4 %

1.8 %

16.8 %

6.8 %

Less:

Capital expenditures.

2,521

1,527

4,257

3,029

Free Cash Flow

19,656

(336)

40,356

7,807

Free Cash Flow Conversion (6)

88.6 %

(28.2) %

90.5 %

72.0 %

Notes:

(1)

Represents other expenses resulting from non-operational related activities, including provisions for estimated 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 and value-based compensation expense in respect of the Legacy Plan, the LTIP and the long-term value bonus plan, which has similar vesting criteria to the share-based plan and is settled in cash for non-executives and non-North Americans where implementation of a share settlement plan would have been prohibitively expensive in terms of administration and compliance.  Value-based compensation is included in selling, general, and administration expenses. For the three and six months ended June 30, 2021, value-based compensation expense was nil, as the financial statement impact of the liquidity event was recorded in the year ended December 31, 2020.  For the three and six months ended June 30, 2020, value-based compensation recovery was $(320) and $(213), respectively.  Neo has removed both the share and value-based compensation expense from EBITDA to provide comparability with historic periods and to treat it consistently with the share-based awards that they are intended to replace.

(4)

The negative economic impacts of COVID-19 were determined to be an impairment indicator as of June 30, 2020 for all Neo’s CGUs.  In accordance with IAS 36 Impairment of Assets, the recoverable amount of Neo’s CGUs was determined based on fair value less cost of disposal for the Magnequench segment and value in use for the C&O and the Rare Metals segments. As a result of the impairment test, Neo recognized an impairment charge of $59.1 million for the six months ended June 30, 2020, with $35.1 million attributable to the C&O segment and $24.0 million attributable to the Rare Metals segment. No impairment was recorded against the Magnequench segment.

(5)

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.

(6)

Calculated as Free Cash Flow divided by Adjusted EBITDA.

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

($000s)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net income (loss)

$

13,027

$

(63,364)

$

20,644

$

(62,846)

Adjustments to net income (loss):

Foreign exchange loss (gain) (1)

788

(138)

1,089

312

Impairment of assets (2)

59,084

59,084

Share and value-based compensation (3)

(29)

(153)

1,563

(271)

Other costs (4)

164

2,520

766

2,520

Other items included in other expense (5)

243

(120)

6,422

Tax impact of the above items

(101)

(3,407)

(1,298)

(3,508)

Adjusted net income (loss)

$

14,092

$

(5,578)

$

29,186

$

(4,709)

Attributable to:

Equity holders of Neo

$

14,025

$

(5,417)

$

28,948

$

(4,703)

Non-controlling interest

$

67

$

(161)

$

238

$

(6)

Weighted average number of common shares outstanding:

Basic

37,815,403

37,665,686

37,649,443

37,702,492

Diluted

38,195,144

37,665,686

38,009,185

37,702,492

Adjusted earnings (loss) per share (6) attributable to equity holders of Neo:

Basic

$

0.37

$

(0.14)

$

0.77

$

(0.12)

Diluted

$

0.37

$

(0.14)

$

0.76

$

(0.12)

Notes:

(1)

Represents unrealized and realized foreign exchange losses (gains) that include non-cash adjustments in translating foreign denominated monetary assets and liabilities.

(2)

The negative economic impacts of COVID-19 were determined to be an impairment indicator as of June 30, 2020 for all Neo’s CGUs.  In accordance with IAS 36 Impairment of Assets, the recoverable amount of Neo’s CGUs was determined based on fair value less cost of disposal for the Magnequench segment and value in use for the C&O and the Rare Metals segments. As a result of the impairment test, Neo recognized an impairment charge of $59.1 million for the six months ended June 30, 2020, with $35.1 million attributable to the C&O segment and $24.0 million attributable to the Rare Metals segment. No impairment was recorded against the Magnequench segment.

(3)

Represents share and value-based compensation expense in respect of the Legacy Plan, the LTIP and the long-term value bonus plan, which has similar vesting criteria to the share-based plan and is settled in cash for non-executives and non-North Americans where implementation of a share settlement plan would have been prohibitively expensive in terms of administration and compliance.  Value-based compensation is included in selling, general, and administration expenses. For the three and six months ended June 30, 2021, value-based compensation expense was nil, as the financial statement impact of the liquidity event was recorded in the year ended December 31, 2020.  For the three and six months ended June 30, 2020, value-based compensation recovery was $(320) and $(213), respectively.  Neo has removed both the share and value-based compensation expense from net income to provide comparability with historic periods and to treat it consistently with the share-based awards that they are intended to replace.

(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)

Represents other expenses resulting from non-operational related activities, including provisions for estimated damages for outstanding legal claims related to historic volumes.  These costs and recoveries are not indicative of Neo’s ongoing activities.

(6)

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 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, US; Singapore; and Beijing, China. Neo operates globally with sales and production across 10 countries, being JapanChinaThailandEstoniaSingaporeGermanyUnited KingdomCanadaUnited States, and South Korea. 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 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), 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.

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: info@neomaterials.com


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