Mr. Rahim Suleman reports

NEO PERFORMANCE MATERIALS REPORTS THIRD QUARTER 2023 RESULTS

Neo Performance Materials Inc. has released its third quarter 2023 financial results. The financial statements and management discussion and analysis (MD&A) of these results can be viewed on Neo's website and on SEDAR+.

Highlights (unless otherwise noted, all financial amounts in this news release are expressed in U.S. dollars):

• Q3 2023 revenue of $136.9-million, lower by 6.6 per cent year over year;
• Operating income of $7-million in the quarter;
• Adjusted net income of $4-million in the quarter, or nine cents per share;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $13.2-million in the quarter, higher by 87.1 per cent year over year;
• Cash balance of $113.4-million, after financing acquisitions and investments of $16.4-million, distributing $10.1-million in dividends to its shareholders, and repurchasing $16.7-million of shares under the normal course issuer bid;
• A quarterly dividend of 10 Canadian cents per common share was declared on Nov. 9, 2023, for shareholders of record at Dec. 18, 2023, with a payment date of Dec. 28, 2023.

"I am pleased with the direction of our third quarter results as the underlying impact of a more stable rare earth pricing environment validates what the normalized earning power of Neo looks like," said Rahim Suleman, president and chief executive officer of Neo. "During the quarter, we saw rare earth prices near bottom and show signs of a steady strengthening, which we have seen continue in the current quarter. Combined with continued positive customer sentiment in Neo's key end markets, this provides us with confidence in the stability and improving trends in markets and more stable pricing and improved volumes.

"Our sintered magnet plant construction in Estonia is on track, and we look forward to emerging as the first major producer of rare earth permanent magnets for electrified vehicles and wind energy in Europe," Mr. Suleman added. "Positioning Neo to be able to deliver permanent magnets where and when our customers want them is critical to Neo and our customers."

Highlights of Q3 2023 consolidated performance

For the three months ended Sept. 30, 2023, consolidated revenue was $136.9-million, compared with $146.6-million for the same period in the prior year; a decrease of $9.7-million, or 6.6 per cent. Neo reported net income of $3.1-million, or seven cents per share, compared with net loss of $3.8-million, or nine cents per share, in the same period of 2022. Adjusted net income totalled $4-million, or nine cents per share, compared with adjusted net loss of $1.9-million, or four cents per share, in the corresponding period of the prior year. Adjusted EBITDA was $13.2-million, an improvement of 87.1 per cent compared with adjusted EBITDA of $7-million in the third quarter of 2022.

As at Sept. 30, 2023, Neo had cash and cash equivalents of $113.4-million plus restricted cash of $3.2-million, compared with $147.5-million plus $1.2-million as at Dec. 31, 2022.

Magnequench segment results

Magnequench revenue in the third quarter declined by about 19.3 per cent compared with the prior-year period, due to substantially lower pass-through prices for magnetic rare earth elements. Volumes improved compared with the prior-year period, although the permanent magnet industry remains slow in the near term. Adjusted EBITDA as a percentage of revenue expanded slightly in the quarter.

Chemicals and oxides (C&O) segment results

C&O revenue improved by 10.7 per cent during the three months ended Sept. 30, 2023, driven by a net improved product mix and improved volumes, despite a substantially lower rare earth price environment. C&O dynamics were mixed with rare earth pricing for neodymium and praseodymium elements continuing to face pricing headwinds, offset by strong performance in high-purity dysprosium. The dysprosium volumes were related to the higher-value, multilayer ceramic capacitor (MLCC) market, as opposed to the standard-grade dysprosium, which pertains to the magnetics market. C&O's environmental emission catalyst business also showed strong volumes as China recovered from a slower first quarter of 2023. Adjusted EBITDA during the quarter strongly benefited from improved pricing lead-lag dynamics in the rare earth separations business (using historical cost inventory with current sales prices).

Rare metals segment results

The rare metals segment reported 17.7 per cent lower revenue during the third quarter, although continued to report very strong earnings through the first nine months of 2023. The segment delivered healthy margin performance driven by strength in hafnium pricing and demand. The upward trend in hafnium prices, which began in the fourth quarter of 2021, has continued throughout the third quarter of 2023, with an increase of over 30 per cent during the three months ended Sept. 30, 2023. The recycling purchases and activities of rare metals were particularly impactful to maintaining and growing margins as prices for scrap material purchased in the quarter did not rise as fast as selling prices for finished goods.

Conference call on Friday, Nov. 10, 2023, AT 10 a.m. Eastern Time

Management will host a teleconference call on Friday, Nov. 10, 2023, at 10 a.m. Eastern Time, to discuss the third quarter 2023 results. Interested parties may access the teleconference by calling 416-764-8650 (local) or 888-664-6383 (toll-free long distance) or on-line. A recording of the teleconference may be accessed by calling 416-764-8677 (local) or 888-390-0541 (toll-free long distance) and entering passcode 418328 followed by the number sign until Dec. 10, 2023.

About Neo Performance Materials Inc.

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 and oxides, and rare metals. Neo is headquartered in Toronto, Ont., Canada; with corporate offices in Greenwood Village, Colo., United States; Singapore; and Beijing, China. Neo has a global platform that includes 10 manufacturing facilities, located in China, the United States, Germany, Canada, Estonia, Thailand and the United Kingdom, as well as one dedicated research and development centre in Singapore.

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