Neo Material Technologies reports record 2011 financial results

FY 2011 Financial Highlights

• Revenues of US$800 million
• EBITDA of US$286 million
• Net cash positions of US$83 million
• Net Income and EPS of US$201 million or US$1.69 per share

Q4 2011 Financial Highlights

• Revenues of US$203 million
• EBITDA of US$47 million
• Net Income and EPS of US$38 million or US$0.33 per share

TORONTO, March 8, 2012 /CNW/ -  Neo Material Technologies Inc. (TSX: NEM) (the "Company") today reported its financial results for the three-month and twelve-month periods ended December 31, 2011. Unless otherwise specified, all currency amounts are expressed in U.S. dollars.

For the three-month period ended December 31, 2011, revenues were $203 million compared to $248 million in the previous quarter, and $102 million in the corresponding period in 2010.  The decrease in revenues on a consecutive quarter basis was primarily driven by anticipated moderating pricing and volumes at both operating divisions relative to previous quarters in fiscal 2011. The Company reported net income attributable to equity holders of NEM ("Net Income") of $38 million, earnings per share ("EPS") of $0.33 and $0.30 on a basic and fully diluted basis, respectively, and operating income plus depreciation and amortization ("EBITDA") of $47 million. This compares to fourth quarter 2010 Net Income of $15 million, EPS of $0.13 on a basic and fully diluted basis and EBITDA of $21 million. Operating income was $44 million compared to $18 million in the corresponding period in 2010.

At December 31, 2011, the Company had a cash balance of $307 million and long-term debt amounted to $198 million. During the fourth quarter, the Company continued to repurchase its common shares as part of a normal course issuer bid, resulting in the repurchase of 2,411,100 common shares for cancellation as at the end of the reported period and the use of $17 million which would have otherwise been reflected in the Company's cash balance at year-end.

For the year ended December 31, 2011, Net Income was $201 million, EPS was $1.69 and $1.59 on a basic and fully diluted basis, respectively, and EBITDA was $286 million. This compares to Net Income of $59 million, EPS of $0.49 on a basic and fully diluted basis, and EBITDA of $84 million for the year ended December 31, 2010. Revenues for the twelve-month period in 2011 were $800 million compared to revenues of $338 million in the corresponding period in 2010.

"I am pleased with our fourth quarter performance in light of continuing inventory reductions through our supply chains, the negative impact of seasonality and the impact of the Thai floods throughout the electronics industry," noted Constantine Karayannopoulos, President and CEO. "Based on our ability to generate these levels of earnings during a challenging quarter, I believe we are very well positioned for growth as volumes return to more normalized levels through 2012."

Magnequench
$000's (except for quantity shipped)				Q4 2010			Q1 2011			Q2 2011			Q3 2011			Q4 2011			Trailing Twelve Months
Quantity Shipped (tonnes)				1,545			1,725			1,671			1,256			1,222			5,874
Revenues				47,184			55,135			66,265			111,176			90,206			322,782
Operating Income^(1)				14,727			16,795			18,632			49,650			13,099			98,176
Performance Materials
$000's (except for quantity shipped)				Q4 2010			Q1 2011			Q2 2011			Q3 2011			Q4 2011			Trailing Twelve Months
Quantity Shipped (tonnes)				1,358			1,555			1,770			1,176			938			5,439
Revenues				60,777			83,571			164,888			152,204			113,059			513,722
Operating Income^(1)				14,478			33,518			70,906			58,118			38,726			201,268
Consolidated
$000's (except for quantity shipped)				Q4 2010			Q1 2011			Q2 2011			Q3 2011			Q4 2011			Trailing Twelve Months
Inter-segment sales				(6,052)			(5,908)			(15,010)			(15,541)			-			(36,459)
Revenues				101,909			132,798			216,143			247,839			203,265			800,045
Operating Income				18,305			40,651			81,984			109,252			44,042			275,929
EBITDA				21,393			43,378			84,520			111,776			46,586			286,260
Net Income attributed to equity holders of NEM				15,348			31,875			52,247			78,952			37,883			200,957
EPS (basic)				0.13			0.27			0.44			0.66			0.33			1.69
Impact of Stock-based Compensation^(2)
$000's (except for quantity shipped)				Q4 2010			Q1 2011			Q2 2011			Q3 2011			Q4 2011			Trailing Twelve Months
Stock-based Compensation Expense (Income)				7,932			4,625			3,400			(5,223)			4,423			7,225
Adjusted Operating Income				26,237			45,276			85,384			104,029			48,465			283,154
Adjusted EBITDA				29,325			48,003			87,920			106,553			51,009			293,485
Adjusted Net Income attributed to equity holders of NEM				22,570			36,045			55,156			74,195			41,884			207,280
Adjusted EPS (basic)				0.19			0.30			0.46			0.62			0.36			1.74

Note:

(1)

Divisional Operating Income (Loss) presented in the tables above excludes stock-based compensation expense.

(2)

The table above contains non-IFRS financial measures. Management believes these items are useful supplemental measures of the Company's operating performance and will assist readers in comparing operating results from period to period. These measures do not have any standardized meanings prescribed by IFRS and may not be comparable to similar measures presented by other companies. Readers should be cautioned, however, that these non-IFRS financial measures should not be considered as alternatives to financial measures calculated in accordance with IFRS.

Teleconference Call

Management has postponed its quarterly teleconference call and will reschedule for the latter part of the week of March 12, 2012. Details of this will be available online at www.neomaterials.com.

Online Access

The financial statements and the Management's Discussion and Analysis will be posted to SEDAR (www.sedar.com) and available online at www.neomaterials.com on or before March 9, 2012.

About Neo Material Technologies

Neo Material Technologies Inc. is a producer, processor and developer of neodymium-iron-boron magnetic powders, rare earths and zirconium based engineered materials and applications, and other rare metals and their compounds through its Magnequench and Performance Materials divisions. These innovative products are essential in many of today's high technology products.  Magnequench's Neo Powders are used to produce bonded magnets, generally used in micro motors, precision motors, sensors and other applications requiring high levels of magnetic strength, flexibility, small size and reduced weight. Rare earth and zirconium applications include catalytic converters, computers, television display panels, optical lenses, mobile phones and electronic chips. The Company's rare metals products are primarily used in the wireless, LED, flat panel, turbine, solar and catalyst industries. The Company is headquartered in Toronto, Canada.

Forward Looking Statements

From time to time, the Company may publish forward-looking statements relating to such matters as expected financial performance, business prospects, technological developments, and development activities and like matters.  These statements involve risk and uncertainties, including but not limited to the risk factors previously described.  Actual results could differ materially from those projected as a result of these risks and should not be relied upon as a prediction of future events. Neo Material Technologies Inc. undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

Financial Results follow

NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited - all figures in thousands of United States dollars)

						December 31 2011				December 31 2010				January 1 2010
ASSETS
Current
Cash and cash equivalents					$	306,757			$	86,769			$	57,308
Accounts receivable						65,923				52,035				36,195
Loans receivable						11,807				-				-
Inventories						273,631				88,679				48,914
Other current assets						20,182				6,474				7,886
Total current assets						678,300				233,957				150,303
Property, plant and equipment						58,487				46,127				44,470
Patents and other intangible assets						12,780				15,155				13,118
Deferred tax asset						27,300				9,193				5,019
Goodwill						58,031				48,198				44,481
Investments in associates						11,976				6,975				5,697
Other long-term assets						3,587				5,418				1,152
Total non-current assets						172,161				131,066				113,937
Total assets					$	850,461			$	365,023			$	264,240
LIABILITIES AND EQUITY
Current
Bank advances and other short-term debt					$	25,862			$	10,171			$	6,977
Accounts payable and other accrued charges						93,745				53,329				33,229
Income taxes payable						30,609				8,576				2,296
Contingent consideration						8,257				-				-
Long-term debt due within one year						216				265				-
Total current liabilities						158,689				72,341				42,502
Long-term debt						198,020				519				-
Deferred tax liability						14,771				10,655				4,533
Employee benefit liabilities						2,812				1,968				1,563
Derivative liability						8,325				5,794				-
Other long-term liabilities						1,825				3,034				4,446
Total liabilities						384,442				94,311				53,044
Non-controlling interest						12,344				3,445				1,666
Shareholders' equity						453,675				267,267				209,530
Commitments
Subsequent events
Total liabilities and equity					$	850,461			$	365,023			$	264,240

NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - all figures in thousands of United States dollars, except per share information)

				Three months ended December 31								Twelve months ended December 31
				2011				2010				2011				2010
Revenues				$203,265				$101,909				$800,045				$337,554
Costs of sales
Costs excluding depreciation and       amortization				129,098				60,577				432,277				198,659
Depreciation and amortization				1,658				2,017				6,824				8,442
Gross profit				72,509				39,315				360,944				130,453
Expenses
Selling, general and administrative				11,513				8,664				46,950				31,762
Stock-based compensation				4,423				7,932				7,225				11,510
Depreciation and amortization				886				1,071				3,507				3,400
Research and development				11,645				3,343				27,333				11,141
				28,467				21,010				85,015				57,813
Operating income				44,042				18,305				275,929				72,640
Other (income) expense				(10,686)				162				6,793				107
Interest expense, long-term debt				3,985				4				9,296				15
Interest expense, other				2,418				1,154				4,527				1,923
Interest income				(523)				(62)				(1,405)				(350)
Foreign exchange gain				(308)				(610)				(2,850)				(1,178)
Income from operations before income taxes and equity income of associates				49,156				17,657				259,568				72,123
Income tax expense				11,492				2,133				54,289				12,820
Income from operations before equity income of associates				37,664				15,524				205,279				59,303
Equity income of associates (net of income tax)				1,604				207				5,001				1,278
Net income				$39,268				15,731				$210,280				$60,581
Attributable to:
Equity holders of Neo Material Technologies, Inc.				37,883				15,348				$200,957				$58,802
Non-controlling interest in earnings of subsidiaries				1,385				383				$9,323				$1,779
				39.268				15,731				$210,280				$60,581
Earnings per share data attributable to equity holders of Neo Material Technologies, Inc.
Earnings per share, basic				$0.33				$0.13				$1.69				$0.49
Earnings per share, diluted				$0.30				$0.13				$1.59				$0.49
Weighted average number of shares outstanding, basic				116,209,556				119,332,187				118,888,420				119,729,575
Weighted average number of shares outstanding, diluted				134,194,481				120,902,821				130,848,141				121,185,595

NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited - all figures in thousands of United States dollars)

				Three months ended December 31								Twelve months ended December 31
				2011				2010				2011				2010
Net income for the period			$	39,268			$	15,731			$	210,280			$	60,581
Other Comprehensive (loss) income:
Change in fair value of available-for-sale securities, net of tax^1				(282)				1,425				(1,707)				1,425
Currency translation adjustment				758				-				3,963				-
Defined benefit pension plan actuarial loss				(412)				(455)				(412)				(455)
Other comprehensive income for the period				64				970				1,844				970
Comprehensive income for the period			$	39,332			$	16,701			$	212,124			$	61,551
Attributable to:
Non-controlling interest				1,385				383				9,323				1,779
Equity holders of Neo Material Technologies, Inc.				37,947				16,318				202,801				59,772
			$	39,332			$	16,701			$	212,124			$	61,551

¹ Tax recovery of $44 and expense of $238 for the three months ended December 31, 2011 and 2010 respectively.  Tax recovery of $282 and expense of $238 for the twelve months ended December 31, 2011 and 2010 respectively.

NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - all figures in thousands of United States dollars)

					Three months ended December 31								Twelve months ended December 31
					2011				2010				2011				2010
Operating activities
Net income for the period					$39,268				$15,731				$210,280				$60,581
Add (deduct) items not affecting cash
	Depreciation and amortization				2,544				3,088				10,331				11,842
	Stock-based compensation expense				4,423				7,932				7,225				11,510
	Accretion in carrying value of long-term debt				1,074				140				2,730				572
	Deferred tax				(2,041)				(2,695)				(19,869)				736
	Equity income of associates				(1,604)				(207)				(5,001)				(1,278)
	Impairment of available-for-sale investments				-				-				888				-
	Accrued benefit expense				(65)				(96)				(26)				(50)
	Loss on disposal of property, plant and equipment				121				145				550				334
	Interest expense, net of interest income				5,880				1,096				12,418				1,588
	Current income taxes expense				13,533				4,828				74,158				12,084
	Contingent consideration				(10,372)				-				6,128				-
	Other				(2,606)				(2,383)				(487)				(2,469)
Net change in other long-term liabilities					2,173				882				2,531				711
Income taxes paid					(13,979)				(358)				(47,050)				(3,505)
Net change in non-cash working capital balances related to operations					(11,989)				(5,927)				(185,648)				(47,187)
Cash provided by operating activities					26,360				22,176				69,158				45,469
Investing activities
	Acquisition of property, plant and equipment				(7,825)				(2,558)				(19,867)				(6,991)
	Acquisition of intangible assets				(42)				-				(973)				-
	Loan to third parties				(67)				-				(11,807)				-
	Cash paid on acquisition of Gallium Compounds, LLC				-				-				(6,500)				-
	Cash paid on acquisition of Buss & Buss net of cash acquired				-				(547)				-				(5,261)
	Proceeds from disposal of property, plant and equipment				56				-				202				51
	Investment by non-controlling interest				-				-				350				-
	Other investments				8				(1,016)				(1,000)				(1,742)
Cash used in investing activities					(7,870)				(4,121)				(39,595)				(13,943)
Financing activities
	Proceeds from convertible debentures, net of issuance costs				-				-				220,775				-
	Repayment of long-term debt				(88)				(81)				(278)				(203)
	Interest paid				(2,810)				(193)				(3,871)				(824)
	Increase in bank advances and other short-term debt				(5,200)				19				15,691				1,900
	Dividend and cash paid by subsidiary to non-controlling interest				(2,931)				-				(2,931)				-
	Repurchase of common shares for cancellation				(17,239)				-				(39,819)				(4,587)
	Issue of common shares				212				1,413				858				1,576
	Cash received from shareholders' loans				-				73				-				73
Cash (used in) provided by financing activities					(28,056)				1,231				190,425				(2,065)
Cash (used) provided during the period					(9,566)				19,286				219,988				29,461
Cash and cash equivalents, beginning of the period					316,323				67,483				86,769				57,308
Cash and cash equivalents, end of period					$306,757				$86,769				$306,757				$86,769

NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited - all figures in thousands of United States dollars)

						December 31, 2011								December 31, 2010
						Number				Amount				Number				Amount
Share capital
	Authorized
		Unlimited common shares
	Issued
	Common shares
	Balance at beginning of the year					119,790,748				$ 244,912				120,075,502				$ 244,879
		Shares issued on exercise of stock options				408,934				1,255				806,308				1,941
		Shares issued on acquisition of 19.5% stake in Atlantic Metals, net of issuance costs				-				-				180,838				688
		Shares purchased for cancellation pursuant to normal course issuer bid				(5,042,300)				(10,263)				(1,271,900)				(2,596)
	Balance at end of the year					115,157,382				$ 235,904				119,790,748				$ 244,912
Contributed surplus
	Balance at beginning of the year									5,099								7,240
		Stock-based compensation expense								1,858								215
		Modification of stock-based compensation plan								1,782								-
		Exercise of stock options								(397)								(365)
		Repurchase of common shares for cancellation								(8,342)								(1,991)
	Balance at end of the year									-								5,099
Retained earnings (deficit)
	Balance at beginning of the year									16,509								(42,293)
		Net income attributable to the equity holders of Neo Material Technologies Inc. for the period								200,957								58,802
		Repurchase of common shares for cancellation								(21,214)								-
	Balance at end of the year									196,252								16,509
Equity component of convertible debentures
	Balance at beginning of the year									-								-
		Issuance of convertible debentures								25,389								-
		Tax effect on convertible debentures								(6,461)								-
	Balance at end of the year									18,928								-
Accumulated other comprehensive income:
	Balance at beginning of the year									970								-
		Change in fair value of available-for-sale securities, net of tax recovery of $282 and tax expense of $238								(1,707)								1,425
		Currency translation adjustment								3,963								-
		Pension plan actuarial losses								(412)								(455)
	Balance at end of the year									2,814								970
Shareholders' loan
	Balance at beginning of the year									(223)								(296)
	Repayment of loan by shareholder									-								73
	Balance at end of the year									(223)								(223)
Total shareholders' equity for the year										$ 453,675								$ 267,267
Non-controlling interest
	Balance at beginning of the year									3,445								1,666
	Investment in subsidiaries by non-controlling interest									2,507								-
	Dividends paid by subsidiary to non-controlling interest partner									(2,931)								-
	Non-controlling interest in earnings of subsidiaries for the period									9,323								1,779
Balance at end of the year										12,344								3,445
Total equity for the year										$ 466,019								$ 270,712

Information Contact

Michael Doolan
Chief Financial Officer
[phone], ext.335
Website: www.neomaterials.com
e-mail: [email protected] 

Ali Mahdavi
Investor Relations
[phone], ext. 225
e-mail: [email protected]