Strongest quarterly and YTD Adjusted EBITDA
and gross margin performance in nearly a decade
MONTRÉAL, Aug. 1, 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 second
quarter of fiscal 2023 ("Q2 2023") ended
June 30, 2023. All amounts in this press release are
expressed in U.S. dollars unless otherwise stated.
"Our strong financial results year to date are a testament to
our strategy and market leadership. They reflect our improved
product mix and high-growth-end-market focus, as well as the
effectiveness of our commercial excellence program implemented over
a year ago. The disciplined execution of our strategic priorities
has translated into delivering our strongest quarterly and
year-to-date Adjusted EBITDA1 and gross margin
performance in nearly a decade. At mid-year, we are on track to
achieve our FY 2023 Adjusted EBITDA guidance.
"As a leader in the production of critical engineered materials
and critical metal recovery, as well as a leading supplier of
ultra-high purity specialty semiconductor materials outside of
China, we are uniquely positioned
to continue to benefit from strong demand in our end markets. This
includes the space solar power and terrestrial renewable energy
sectors, where we continue to invest in building capacity to meet
unprecedented customer demand," said Gervais Jacques, President and CEO of 5N
Plus.
Q2 2023 Highlights
- Revenue in Q2 2023 reached $59.1
million, compared to $72.4
million for the same period last year. The decrease is
primarily attributable to the Company's strategic exit from the
manufacturing of low-margin extractive and catalytic products in
the second half of 2022.
- In Q2 2023, EBITDA1 was $17.5
million, compared to $6.7
million in Q2 2022. The $10.8
million increase is mainly explained by litigation and
restructuring income of $9.0 million
received from the previous shareholder of AZUR SOLAR Space GmbH
("AZUR") as per stipulations of the share purchase agreement.
- Adjusted EBITDA in Q2 2023 reached $10.8
million, compared to $8.6
million for the same period last year, an increase of 26%,
with Specialty Semiconductors increasing by 27% to $8.1 million, due to higher demand and
Performance Materials increasing by 12% to $6.2 million due to a more favourable product
mix.
- Adjusted gross margin1 in Q2 2023 was 32.9%,
compared to 22.4% in Q2 2022.
- On June 30, 2023, the
backlog1 represented 289 days of annualized revenue, 17
days lower than the previous quarter due to the quarterly
realization of yearly contracts under Performance Materials and 149
days higher than the same period last year primarily due to the
demand for terrestrial renewable energy and space solar power.
- Net debt1 stood at $73.4
million as at June 30, 2023,
compared to $78.3 million as at
December 31, 2022, representing a
decrease of $4.9 million.
Outlook
Management continues to expect strong demand in its target end
markets, including terrestrial renewable energy and space solar
power sectors under Specialty Semiconductors and in the health and
pharmaceutical sector under Performance Materials. Management
continues to approach future business opportunities with discipline
and within the framework of its commercial excellence program
pillars of innovation, value optimization and client
partnership.
The ongoing implementation of the Company's capacity expansion
programs – to increase output capacity at AZUR by 30% by 2024 and
to increase production capacity under renewable energy applications
by 35% in 2023 and 100% in 2024 – is progressing well and as
planned. The Company is also in the advanced stages of securing
additional complex feeds and secondary streams for the recovery of
critical minerals, following the recent expansion of recycling and
refining capacity at its Montreal
plant.
Management maintains 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.
__________
|
1 See
Non-IFRS Measures
|
Conference Call
5N Plus will host a conference call
on Wednesday, August 2, 2023 at 8:00
am Eastern Time to discuss results of
the second 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: 13570887
A replay of the conference call will be available two hours
after the event and until August 9,
2023. To access the recording, please dial 1-888-390-0541
and enter access code 570887.
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 six-month
periods ended June 30, 2023 and
June 30, 2022 available on
www.sedar.com.
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.
5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF
EARNINGS (LOSS)
For the three and six-month periods ended June 30
(in thousands of United States
dollars, except per share information) (unaudited)
|
Three
months
|
Six
months
|
|
2023
|
2022
|
2023
|
2022
|
|
$
|
$
|
$
|
$
|
Revenue
|
59,075
|
72,388
|
114,362
|
136,809
|
Cost of
sales
|
42,765
|
60,147
|
84,767
|
114,396
|
Selling, general and
administrative expenses
|
7,569
|
7,421
|
14,462
|
14,914
|
Other (income)
expenses, net
|
(4,500)
|
2,501
|
(2,834)
|
9,893
|
|
45,834
|
70,069
|
96,395
|
139,203
|
Operating earnings
(loss)
|
13,241
|
2,319
|
17,967
|
(2,394)
|
|
|
|
|
|
Financial
expense
|
|
|
|
|
Interest on long-term
debt
|
2,141
|
1,103
|
4,173
|
2,048
|
Imputed interest and
other interest (income) expense
|
(85)
|
281
|
143
|
607
|
Foreign exchange and
derivative (gain) loss
|
(274)
|
436
|
(259)
|
735
|
|
1,782
|
1,820
|
4,057
|
3,390
|
Earnings (loss)
before income taxes
|
11,459
|
499
|
13,910
|
(5,784)
|
Income tax expense
(recovery)
|
|
|
|
|
Current
|
2,855
|
2,819
|
3,769
|
4,664
|
Deferred
|
(1,539)
|
(190)
|
(1,456)
|
(2,563)
|
|
1,316
|
2,629
|
2,313
|
2,101
|
Net earnings
(loss)
|
10,143
|
(2,130)
|
11,597
|
(7,885)
|
|
|
|
|
|
Basic earnings
(loss) per share
|
0.11
|
(0.02)
|
0.13
|
(0.09)
|
Diluted earnings
(loss) per share
|
0.11
|
(0.02)
|
0.13
|
(0.09)
|
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)
|
June
30
2023
|
December 31
2022
|
|
$
|
$
|
Assets
|
|
|
Current
|
|
|
Cash and cash
equivalents
|
40,087
|
42,691
|
Accounts
receivable
|
34,289
|
32,872
|
Inventories
|
100,406
|
86,254
|
Income tax
receivable
|
1,758
|
5,488
|
Other current
assets
|
5,382
|
19,857
|
Total current
assets
|
181,922
|
187,162
|
Property, plant and
equipment
|
79,211
|
77,951
|
Right-of-use
assets
|
29,470
|
30,082
|
Intangible
assets
|
30,337
|
31,563
|
Goodwill
|
11,825
|
11,825
|
Deferred tax
assets
|
6,997
|
6,002
|
Other assets
|
3,297
|
3,400
|
Total non-current
assets
|
161,137
|
160,823
|
Total
assets
|
343,059
|
347,985
|
|
|
|
Liabilities
|
|
|
Current
|
|
|
Trade and accrued
liabilities
|
31,022
|
40,200
|
Income tax
payable
|
4,932
|
8,780
|
Derivative financial
liabilities
|
420
|
-
|
Current portion of
deferred revenue
|
13,038
|
11,730
|
Current portion of
lease liabilities
|
2,107
|
2,136
|
Current portion of
long-term debt
|
25,000
|
-
|
Total current
liabilities
|
76,519
|
62,846
|
Long-term
debt
|
88,500
|
121,000
|
Deferred tax
liabilities
|
6,265
|
6,959
|
Employee benefit plan
obligations
|
12,156
|
11,643
|
Lease
liabilities
|
27,998
|
28,266
|
Deferred
revenue
|
5,647
|
2,354
|
Other
liabilities
|
1,926
|
2,141
|
Total non-current
liabilities
|
142,492
|
172,363
|
Total
liabilities
|
219,011
|
235,209
|
|
|
|
Equity
|
124,048
|
112,776
|
Total liabilities
and equity
|
343,059
|
347,985
|
Non‐IFRS Measures
EBITDA means net earnings (loss) before interest expenses,
income taxes, depreciation and amortization. 5N Plus uses 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.
EBITDA is reconciled to the most comparable IFRS measure:
(in thousands of U.S.
dollars)
|
Q2
2023
|
Q2 2022
|
YTD
2023
|
YTD 2022
|
|
$
|
$
|
$
|
$
|
Net earnings
(loss)
|
10,143
|
(2,130)
|
11,597
|
(7,885)
|
Interest on long-term
debt, imputed interest and other interest expense
|
2,056
|
1,384
|
4,316
|
2,655
|
Income taxes
expense
|
1,316
|
2,629
|
2,313
|
2,101
|
Depreciation and
amortization
|
4,015
|
4,856
|
8,074
|
9,685
|
EBITDA
|
17,530
|
6,739
|
26,300
|
6,556
|
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, 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)
|
Q2
2023
|
Q2 2022
|
YTD
2023
|
YTD 2022
|
|
$
|
$
|
$
|
$
|
Revenues
|
59,075
|
72,388
|
114,362
|
136,809
|
Operating
expenses
|
(45,834)
|
(70,069)
|
(96,395)
|
(139,203)
|
Operating earnings
(loss)
|
13,241
|
2,319
|
17,967
|
(2,394)
|
Share-based
compensation expense
|
701
|
1,036
|
713
|
1,160
|
Litigation and
restructuring (income) costs
|
(8,772)
|
372
|
(8,772)
|
372
|
Impairment of
non-current assets
|
608
|
-
|
608
|
5,386
|
Loss on disposal of
property, plant and equipment
|
1,051
|
-
|
1,051
|
-
|
Depreciation and
amortization
|
4,015
|
4,856
|
8,074
|
9,685
|
Adjusted
EBITDA
|
10,844
|
8,583
|
19,641
|
14,209
|
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.
Adjusted gross margin is reconciled to the most comparable IFRS
measure:
(in thousands of U.S.
dollars)
|
Q2
2023
|
Q2 2022
|
YTD
2023
|
YTD 2022
|
|
$
|
$
|
$
|
$
|
Total
revenue
|
59,075
|
72,388
|
114,362
|
136,809
|
Cost of
sales
|
(42,765)
|
(60,147)
|
(84,767)
|
(114,396)
|
Gross
margin
|
16,310
|
12,241
|
29,595
|
22,413
|
Depreciation included
in cost of sales
|
3,152
|
3,954
|
6,354
|
7,859
|
Adjusted gross
margin
|
19,462
|
16,195
|
35,949
|
30,272
|
Adjusted gross
margin percentage
|
32.9 %
|
22.4 %
|
31.4 %
|
22.1 %
|
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.
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.
(in thousands of U.S.
dollars)
|
As at June 30,
2023
|
As at December 31,
2022
|
|
$
|
$
|
Bank
indebtedness
|
-
|
-
|
Long-term debt
including current portion
|
113,500
|
121,000
|
Lease liabilities
including current portion
|
30,105
|
30,402
|
Subtotal
Debt
|
143,605
|
151,402
|
Lease liabilities
including current portion
|
(30,105)
|
(30,402)
|
Total
Debt
|
113,500
|
121,000
|
Cash and cash
equivalents
|
(40,087)
|
(42,691)
|
Net
Debt
|
73,413
|
78,309
|
SOURCE 5N Plus Inc.