5N Plus Reports 2023 Third Quarter Financial Results

  • On track to deliver strong FY 2023 financial performance and achieve Adjusted EBITDA1 guidance
  • Launch of refreshed logo and website to reflect the 5N Plus of today, a growth-oriented and value-focused global supplier of critical materials

MONTRÉAL, Nov. 7, 2023 /CNW/ – 5N Plus Inc. (TSX: VNP) (“5N Plus” or the “Company”), a leading global producer of specialty semiconductors and performance materials, today announced its financial results for the third quarter ended September 30, 2023 (“Q3 2023”). All amounts in this press release are expressed in U.S. dollars unless otherwise stated.

“We are pleased with our results year to date. Our commitment to improve our consolidated product mix, coupled with the successful implementation of our commercial excellence program, is reflected in the significant year-to-date increases in Adjusted EBITDA and Adjusted gross margin1, as well as our strong backlog1. While a timing shift resulted in a softer quarterly Adjusted EBITDA, we remain on track to meet our Adjusted EBITDA targets for this fiscal year – and next.

“As a leading supplier of ultra-high purity specialty semiconductor materials based outside of China, focused on cultivating long-term customer relationships, we are in a strong position heading into 2024, despite ongoing global uncertainty. The Company will continue to benefit from sustained demand from critical sectors of the economy, such as terrestrial renewable energy and space solar power. With our capacity expansion projects on schedule, our investments will enable us to meet contracted demand as the partner of choice in the market,” said Gervais Jacques, President and CEO of 5N Plus.

Q3 2023 Highlights

  • Revenue in Q3 2023 reached $62.9 million, compared to $66.4 million for the same period last year. The slight decrease is primarily attributable to the Company’s exit from the manufacturing of extractive and catalytic products in the second half of 2022, largely compensated by increased demand in Specialty Semiconductors.
  • Adjusted EBITDA in Q3 2023 was $9.6 million, compared to $9.1 million for the same period last year. Adjusted EBITDA was $29.3 million YTD 2023, compared to $23.3 million YTD 2022.
  • Adjusted gross margin YTD 2023 was 29.1%, compared to 22.9% YTD 2022.
  • On September 30, 2023, the backlog represented 284 days of annualized revenue, 5 days lower than the previous quarter, and 92 days higher than the same period last year, primarily due to demand for terrestrial renewable energy and space solar power.
  • Net debt1 stood at $78.6 million as at September 30, 2023, compared to $78.3 million as at December 31, 2022.

Logo and Website Refresh

5N Plus introduced a revamped corporate logo and website with a clearer and more contemporary appearance to represent the 5N Plus of today. Both now better reflect the Company’s growth strategy and focus on specialty semiconductors and performance materials for critical growth markets.

“As we have shifted away from being a commodity metals business over the past several years towards a more value-added company focused on commercial excellence, it is important from a customer and investor perspective to ensure that our brand image and our website accurately communicate our growth strategy and emphasis on technology and innovation,” added Mr. Jacques.

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1  See Non-IFRS Measures

Outlook

Management continues to expect demand to remain strong in both the terrestrial renewable energy and space solar power markets under Specialty Semiconductors and in the health and pharmaceutical sector under Performance Materials.

Management is maintaining its previously disclosed Adjusted EBITDA1 guidance range of between $35 million and $40 million for FY 2023 and a projected Adjusted EBITDA range of between $45 million and $50 million for FY 2024.

Conference Call

5N Plus will host a conference call on Wednesday, November 8, 2023 at 8:00 am Eastern Time to discuss results of the third quarter for fiscal 2023. All interested parties are invited to participate in the live broadcast on the Company’s website at www.5nplus.com.

To participate in the conference call:

  • Toronto area: 416-764-8659
  • Toll‐Free: 1-888-664-6392
  • Enter access code: 21526233

A replay of the conference call will be available two hours after the event and until November 15, 2023. To access the recording, please dial 1-888-390-0541 and enter access code 526233.

About 5N Plus Inc.

5N Plus is a leading global producer of specialty semiconductors and performance materials. The Company’s ultra‐pure materials often form the core element of its customers’ products. These customers rely on 5N Plus’s products to enable performance and sustainability in their own products. 5N Plus deploys a range of proprietary and proven technologies to develop and manufacture its products. The Company’s products enable various applications in several key industries, including renewable energy, security, space, pharmaceutical, medical imaging and industrial. Headquartered in Montréal, Quebec, 5N Plus operates R&D, manufacturing and commercial centers in strategically located facilities around the world including Europe, North America and Asia.

Forward‐Looking Statements

Certain statements in this press release may be forward‐looking within the meaning of applicable securities laws. Forward‐looking information and statements are based on the best estimates available to the Company at the time and involve known and unknown risks, uncertainties or other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. A description of the risks affecting the Company’s business and activities appears under the heading “Risk and Uncertainties” of 5N Plus’ 2022 MD&A dated February 21, 2023 and note 10 of the unaudited condensed interim consolidated financial statements for the three and nine-month periods ended September 30, 2023 and September 30, 2022 available on SEDAR+ at www.sedarplus.ca.

Forward‐looking statements can generally be identified by the use of terms such as “may”, “should”, “would”, “believe”, “expect”, the negative of these terms, variations of them or any similar terms. No assurance can be given that any events anticipated by the forward‐looking information in this press release will transpire or occur, or if any of them do so, what benefits that 5N Plus will derive therefrom. In particular, no assurance can be given as to the future financial performance of 5N Plus. The forward‐looking information contained in this press release is made as of the date hereof and the Company has no obligation to publicly update such forward‐looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws. The reader is warned against placing undue reliance on these forward‐looking statements.

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1  See Non-IFRS Measures

5N PLUS INC.

INTERIM CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

For the three and nine-month periods ended September 30

(in thousands of United States dollars, except per share information) (unaudited)          


Three months

Nine months


2023

2022

2023

2022


$

$

$

$

Revenue

62,946

66,372

177,308

203,181

Cost of sales

50,389

53,410

135,156

167,806

Selling, general and administrative expenses

6,249

6,468

20,711

21,382

Other expenses (income), net

943

8,935

(1,891)

18,828


57,581

68,813

153,976

208,016

Operating earnings (loss)

5,365

(2,441)

23,332

(4,835)






Financial expense





Interest on long-term debt

2,081

1,531

6,254

3,579

Imputed interest and other interest expense

308

290

451

897

Foreign exchange and derivative (gain) loss

(238)

(196)

(497)

539


2,151

1,625

6,208

5,015

Earnings (loss) before income taxes

3,214

(4,066)

17,124

(9,850)

Income tax expense (recovery)





Current

2,293

2,158

6,062

6,822

Deferred

(597)

744

(2,053)

(1,819)


1,696

2,902

4,009

5,003

Net earnings (loss)

1,518

(6,968)

13,115

(14,853)






Basic earnings (loss) per share

0.02

(0.08)

0.15

(0.17)

Diluted earnings (loss) per share

0.02

(0.08)

0.15

(0.17)

Net earnings (loss) are completely attributable to equity holders of 5N Plus Inc.

5N PLUS INC.

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands of United States dollars) (unaudited)


September 30

2023

December 31

2022


$

$

Assets



Current



Cash and cash equivalents

29,875

42,691

Accounts receivable

38,686

32,872

Inventories

102,344

86,254

Income tax receivable

1,682

5,488

Derivative financial assets

45

Other current assets

8,147

19,857

Total current assets

180,779

187,162

Property, plant and equipment

78,604

77,951

Right-of-use assets

28,466

30,082

Intangible assets

29,598

31,563

Goodwill

11,825

11,825

Deferred tax assets

6,729

6,002

Other assets

3,218

3,400

Total non-current assets

158,440

160,823

Total assets

339,219

347,985




Liabilities



Current



Trade and accrued liabilities

31,281

40,200

Income tax payable

6,418

8,780

Current portion of deferred revenue

12,453

11,730

Current portion of lease liabilities

2,080

2,136

Current portion of long-term debt

25,000

Total current liabilities

77,232

62,846

Long-term debt

83,500

121,000

Deferred tax liabilities

5,749

6,959

Employee benefit plan obligations

11,188

11,643

Lease liabilities

26,977

28,266

Deferred revenue

5,198

2,354

Other liabilities

3,599

2,141

Total non-current liabilities

136,211

172,363

Total liabilities

213,443

235,209




Equity

125,776

112,776

Total liabilities and equity

339,219

347,985

Non‐IFRS Measures

Adjusted EBITDA means operating earnings (loss) as defined before the effect of impairment of inventories, share-based compensation expense (recovery), litigation and restructuring (income) costs, impairment of non-current assets, loss (gain) on disposal of property, plant and equipment, loss on disposal of assets held for sale, and depreciation and amortization. 5N Plus uses Adjusted EBITDA because it believes it is a meaningful measure of the operating performance of its ongoing business without the effects of certain expenses. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

(in thousands of U.S. dollars)

Q3 2023 

Q3 2022 

YTD 2023 

YTD 2022 


$

$

$

$

Revenues

62,946

66,372

177,308

203,181

Operating expenses

(57,581)

(68,813)

(153,976)

(208,016)

Operating earnings (loss)

5,365

(2,441)

23,332

(4,835)

Share-based compensation expense

305

10

1,018

1,170

Litigation and restructuring costs (income)

241

(8,772)

613

Impairment of non-current assets

7,092

608

12,478

Loss on disposal of property, plant and equipment

1,051

Loss on disposal of assets held for sale

216

216

Depreciation and amortization

3,979

3,996

12,053

13,681

Adjusted EBITDA

9,649

9,114

29,290

23,323

Adjusted gross margin is a measure used to monitor the sales contribution after paying cost of sales, excluding depreciation and inventory impairment charges. 5N Plus also expressed this measure in percentage of revenues by dividing the gross margin value by the total revenue. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

Adjusted gross margin is reconciled to the most comparable IFRS measure:

(in thousands of U.S. dollars)

Q3 2023 


Q3 2022 


YTD 2023 


YTD 2022 



$


$


$


$


Total revenue

62,946


66,372


177,308


203,181


Cost of sales

(50,389)


(53,410)


(135,156)


(167,806)


Gross margin

12,557


12,962


42,152


35,375


Depreciation included in cost of sales

3,113


3,194


9,467


11,053


Adjusted gross margin

15,670


16,156


51,619


46,428


Adjusted gross margin percentage

24.9

%

24.3

%

29.1

%

22.9

%

Backlog represents the expected orders the Company has received, but has not yet executed, and that are expected to translate into sales within the next twelve months, expressed in dollars and estimated in number of days not to exceed 365 days. Bookings represent orders received during the period considered, expressed in number of days, and calculated by adding revenues to the increase or decrease in backlog for the period considered, divided by annualized year revenues. 5N Plus uses backlog to provide an indication of expected future revenues in days, and bookings to determine its ability to sustain and increase its revenues. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

Net debt is calculated as total debt less cash and cash equivalents. Any introduced IFRS 16 reporting measures in reference to lease liabilities are excluded from the calculation. 5N Plus uses this measure as an indicator of its overall financial position. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

(in thousands of U.S. dollars)

As at September 30, 2023 

As at December 31, 2022 


$

$

Bank indebtedness

Long-term debt including current portion

108,500

121,000

Lease liabilities including current portion

29,057

30,402

Subtotal Debt

137,557

151,402

Lease liabilities including current portion

(29,057)

(30,402)

Total Debt

108,500

121,000

Cash and cash equivalents

(29,875)

(42,691)

Net Debt

78,625

78,309

SOURCE 5N Plus Inc.

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