Neo Material Technologies Reports Third Quarter 2009 Financial Results
- Revenues of US$54.1 million
- Strong EBITDA of US$13.8 million
- Cash and net cash positions of US$51.6 million and US$41.7 million
- Net income and EPS at US$9.1 million or US$0.08 per share
For the three-month period ended
Compared to the second quarter, the third quarter demonstrated an accelerated recovery in demand for the Company's specialty products, especially in the Magnequench division, where lower input costs coupled with increased volumes led to gross margin expansion. The Performance Materials division (formerly the AMR Performance Materials division) continued its steady recovery during the quarter. As a result of the strong rebound in share price, the consolidated quarterly results included a mark-to-market non-cash expense of
On
For the nine month period ended
"I am very pleased with the pace of recovery and outlook in our business, particularly at the Magnequench division. With no long term debt and a strong cash position, we are well positioned to take advantage of opportunities that augment our diversification strategy." said Constantine Karayannopoulos, President & CEO.
Magnequench
$000's (except for ----------------------------------------------------
quantity shipped) Q3 Q4 Q1 Q2 Q3 Trailing
2008 2008 2009 2009 2009 Twelve
Months
-------------------------------------------------------------------------
Quantity Shipped
(tonnes) 1,178 777 505 878 1,268 3,428
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Revenues 33,830 21,914 13,840 24,411 34,049 94,214
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Operating Income(1) 9,464 4,040 1,340 9,014 16,255 30,649
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Performance Materials
$000's (except for ----------------------------------------------------
quantity shipped) Q3 Q4 Q1 Q2 Q3 Trailing
2008 2008 2009 2009 2009 Twelve
Months
-------------------------------------------------------------------------
Quantity Shipped
(tonnes) 1,825 1,726 974 992 1,143 4,835
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Revenues 39,746 28,134 14,951 18,222 21,678 82,985
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Operating Income
(Loss)(1) 1,869 (2,864) (3,451) (184) (48) (6,547)
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Consolidated
$000's (except for ----------------------------------------------------
quantity shipped) Q3 Q4 Q1 Q2 Q3 Trailing
2008 2008 2009 2009 2009 Twelve
Months
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Inter-segment sales (2,467) (3,456) - (879) (1,582) (5,917)
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Revenues 71,109 46,592 28,791 41,754 54,145 171,282
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Operating Income
(Loss) 10,924 (968) (5,178) 4,954 11,197 10,005
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EBITDA 13,851 1,759 (2,637) 7,490 13,805 20,417
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Note: (1) Divisional Operating Income (Loss) presented in the tables
above excludes stock-based compensation expense.
About Neo Material Technologies
Neo Material Technologies is a producer, processor and developer of neodymium-iron-boron magnetic powders, rare earths and zirconium based engineered materials and applications, and other high value niche metals and their compounds through its Magnequench and Performance Materials business 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. Products from the newly acquired Recapture Metals Limited are primarily used in the wireless, LED, flat panel, solar and catalyst industries. The Company is headquartered in
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.
Teleconference Call
Management will host a teleconference call on
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
NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(All figures in thousands of United States dollars)
September 30 December 31
2009 2008
(Unaudited)
-------------------------------------------------------------------------
ASSETS
Current
Cash $ 51,618 $ 51,507
Accounts receivable 36,182 18,171
Inventories 40,937 54,415
Future income tax asset 2,078 915
Asset held for sale - 1,526
Other current assets 2,443 2,137
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Total current assets 133,258 128,671
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Property, plant and equipment 43,613 36,933
Patents and other intangible assets 13,843 16,248
Pension benefit asset 3,967 4,031
Goodwill 50,290 34,987
Other long-term assets 6,592 6,389
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Total assets $ 251,563 $ 227,259
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank advances and other short-term debt $ 9,953 $ 12,979
Accounts payable and other accrued charges 29,543 21,994
-------------------------------------------------------------------------
Total current liabilities 39,496 34,973
-------------------------------------------------------------------------
Future income tax liability 1,017 898
Accrued post-retirement benefits 477 502
Other long-term liabilities 6,850 10,167
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Total liabilities 47,840 46,540
-------------------------------------------------------------------------
Non-controlling interest 1,424 1,867
Shareholders' equity 202,299 178,852
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Total liabilities and shareholders' equity $ 251,563 $ 227,259
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
(Unaudited - all figures in thousands of United States dollars, except
per share information)
Three months ended Nine months ended
September 30 September 30
2009 2008 2009 2008
-------------------------------------------------------------------------
Revenues $ 54,145 $ 71,109 $ 124,690 $ 220,049
Cost of sales
Costs excluding
depreciation and
amortization 30,269 49,958 79,673 147,965
Depreciation and
amortization 2,017 2,101 5,894 6,330
-------------------------------------------------------------------------
Gross profit 21,859 19,050 39,123 65,754
Expenses
Selling, general
and administrative 5,837 8,080 18,635 22,930
Stock-based
compensation 2,984 (2,170) 4,117 (1,042)
Depreciation and
amortization 591 826 1,791 2,459
Research and
development 1,250 1,390 3,607 3,189
-------------------------------------------------------------------------
10,662 8,126 28,150 27,536
-------------------------------------------------------------------------
Operating income
before the
undernoted 11,197 10,924 10,973 38,218
Other income (166) (319) (341) (470)
Interest expense,
long-term debt - 670 - 3,631
Interest expense,
other 477 452 968 1,598
Foreign exchange
(gain) loss (611) (147) (1,095) 399
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Income from
operations before
taxes,
non-controlling
interest and
equity income of
affiliate 11,497 10,268 11,441 33,060
Income taxes 2,666 2,021 2,799 7,451
-------------------------------------------------------------------------
Income from
operations before
non-controlling
interest and
equity income of
affiliate 8,831 8,247 8,642 25,609
Equity income of
affiliate 245 270 6 553
Non-controlling
interest in
earnings (loss)
of subsidiaries 24 (689) 443 (2,146)
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Net income for
the period $ 9,100 $ 7,828 $ 9,091 $ 24,016
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Net income per
share, basic $ 0.08 $ 0.07 $ 0.08 $ 0.23
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Net income per
share, diluted $ 0.08 $ 0.07 $ 0.08 $ 0.23
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Weighted average
number of shares
outstanding,
basic 116,059,610 107,693,986 115,249,786 102,581,693
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Weighted average
number of share
outstanding,
diluted 117,633,357 108,355,862 115,861,083 103,582,325
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - all figures in thousands of United States dollars)
Three months ended Nine months ended
September 30 September 30
2009 2008 2009 2008
-------------------------------------------------------------------------
Operating Activities
Net income for
the period $ 9,100 $ 7,828 $ 9,091 $ 24,016
Add (deduct)
items not
affecting cash
Depreciation and
amortization 2,608 2,927 7,685 8,789
Stock-based
compensation
expense 2,984 (2,170) 4,117 (1,042)
Non-controlling
interest in
(earnings) loss
of subsidiaries (24) 689 (443) 2,146
Accretion in
carrying value of
long-term
liabilities 187 345 566 1,749
Future income tax 643 87 (736) (621)
Equity income of
affiliate (245) (270) (6) (553)
Accrued benefit
expense 6 119 40 173
Loss on disposal
of assets 9 - 61 -
Net change in
non-cash working
capital balances
related to
operations (5,682) 11,578 (1,398) (3,958)
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Cash provided by
operating activities 9,586 21,133 18,977 30,699
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Investing activities
Acquisition of
property, plant and
equipment (617) (1,882) (2,894) (6,524)
Cash paid on
acquisition of
Recapture Metals
Ltd, net of cash
acquired (4,996) - (4,996) -
Proceeds from
disposal of
assets - - 2,032 -
Other investments - - (204) (693)
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Cash used in
investing
activities (5,613) (1,882) (6,062) (7,217)
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Financing
activities
Repayment of
long-term debt - (20,095) - (41,250)
Decrease in bank
advances and
other
short-term debt (6,338) (15,411) (11,587) (10,758)
Repurchase of
common shares
for cancellation - - (1,623) -
Cash received by
subsidiary from
non-controlling
interest partner - 7,819 - 7,819
Redemption of
Recapture's
preferred shares (1,607) - (1,607) -
Cash received
from repayment
of shareholder's
loan - - - 150
Issue of common
shares 2,014 38,128 2,014 50,448
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Cash (used in)
provided by
financing
activities (5,931) 10,441 (12,803) 6,409
-------------------------------------------------------------------------
Effect of exchange
rate changes on
cash - (10) (1) (3)
-------------------------------------------------------------------------
Cash (used)
provided during
the period (1,958) 29,682 111 29,888
-------------------------------------------------------------------------
Cash beginning
of period 53,576 17,366 51,507 17,160
-------------------------------------------------------------------------
Cash end of
period $ 51,618 $ 47,048 $ 51,618 $ 47,048
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(All figures in thousands of United States dollars)
September 30, 2009 December 31, 2008
(Unaudited) (Audited)
Number Amount Number Amount
-------------------------------------------------------------------------
Share Capital
Authorized
Unlimited
common shares
Issued
Common Shares
Balance at
beginning of
period 116,176,614 232,325 98,907,217 182,387
Shares
issued to
Recapture
shareholders 4,499,996 13,581 - -
Shares issued
on warrants
exercised - - 17,501,800 41,148
Fair value
assigned to
warrants
exercised - - - 4,729
Shares issued
on private
placement - - 2,375,297 9,267
Shares issued
on exercise
of stock
options 899,000 2,014 10,000 33
Shares
purchased and
cancelled
pursuant to
normal course
issuer bid (1,709,100) (1,623) (2,617,700) (3,075)
Fair value
assigned to
repurchase of
common shares - (1,827) - (2,164)
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Balance at end of
period 119,866,510 244,470 116,176,614 232,325
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Warrants
Balance at
beginning of
period - - 17,653,600 4,770
Warrants
exercised - - (17,501,800) (4,729)
Warrants
expired - - (151,800) (41)
-------------------------------------------------------------------------
Balance at end
of period - - - -
-------------------------------------------------------------------------
Contributed Surplus
Balance at
beginning of
period 5,081 2,615
Stock-based
compensation
expense 384 261
Transfer to
contributed
surplus on
expiration of
warrants - 41
Repurchase of
common shares
for
cancellation 1,827 2,164
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Balance at end
of period 7,292 5,081
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Deficit
Balance at
beginning of
period (58,258) (81,564)
Net income for
the period 9,091 23,306
-------------------------------------------------------------------------
Balance at end
of period (49,167) (58,258)
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Accumulated other
comprehensive
earnings
Balance at
beginning of
period - 115
Unrealized gain
on interest
rate swap
designated as
cash flow
hedge - (115)
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Balance at end of
period - -
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Shareholders' loan
Balance at
beginning of
period (296) (446)
Repayment of
loan by
shareholder - 150
-------------------------------------------------------------------------
Balance at end
of period (296) (296)
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-------------------------------------------------------------------------
Shareholders' equity
at end of period 202,299 178,852
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NEO MATERIAL TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited - all figures in thousands of United States dollars)
Three months ended Nine months ended
September 30 September 30
2009 2008 2009 2008
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Net income for
the period $ 9,100 $ 7,828 $ 9,091 $ 24,016
Change in
unrealized loss
on derivatives
designated as
cash flow hedges,
net of tax - (76) - (115)
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Comprehensive
income for the
period $ 9,100 $ 7,752 $ 9,091 $ 23,901
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%SEDAR: 00002061E
For further information: Michael Doolan, Chief Financial Officer, (416) 367-8588, ext.335, Website: www.neomaterials.com, e-mail: [email protected]; Ali Mahdavi, Investor Relations, (416) 962-3300, ext. 225, e-mail: [email protected]
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