Mr. Rahim Suleman reports

NEO PERFORMANCE MATERIALS REPORTS YEAR-END 2023 RESULTS

Neo Performance Materials Inc. has released its 2023 year-end financial results. The financial statements and management's discussion and analysis (MD&A) of these results can be viewed on Neo's website and on SEDAR+. Unless otherwise noted, all financial amounts in this news release are expressed in United States dollars.

"Neo continues to lay the groundwork for our long-term ambitions in the critical material and electric vehicle space," said Rahim Suleman, president and chief executive officer of Neo. "Our rare earth magnet plant construction in Estonia remains on track, and we have recently started the commissioning process for our relocated environmental catalyst plant. Our teams have implemented new cost-savings measures and are continuing to optimize our production infrastructure to meet our customers where they are located.

"Our results for the year 2023 were negatively impacted by declining rare earth prices and lower volumes in China due to the slowing economic activity. In Q4, our results were particularly negatively impacted by our rare metals segment due to specific factors affecting 2023. The full-year results for rare metals were at a record-setting level and we expect that 2024 will also be a strong year."

Highlights of year-end 2023 consolidated performance

Neo's consolidated revenue for the year ended Dec. 31, 2023, was $571.5-million compared with $640.3-million for the same period in the prior year. Neo reported a net loss of $8.4-million, or 19 cents per share, compared with net income of $26.4-million, or 62 cents per share, for the same period in the prior year. Adjusted net loss totalled $1-million, or two cents per share, compared with adjusted net income of $31.8-million, or 75 cents per share, for the same period in the prior year. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $37.2-million, compared with adjusted EBITDA of $79-million for the same period in the prior year.

As of Dec. 31, 2023, Neo had cash and cash equivalents of $86.9-million plus restricted cash of $3.3-million, compared with $147.5-million plus $1.2-million as at Dec. 31, 2022.

Magnequench revenue in the quarter and year ended Dec. 31, 2023, declined by 4.8 per cent and 23 per cent, respectively, as compared with the comparable prior-year periods, primarily due to declining volumes in the legacy magnetic powder business which was negatively impacted by economic slowdown and demand softness across the industry. In spite of market headwinds, Magnequench delivered growth in its high-margin magnet business through increasing business with new customers, in-sourcing magnet production as well as the acquisition of a 90-per-cent equity interest in U.K. magnet producer SG Technologies Group Ltd. (SGTec) in April, 2023. The business continues to make progress on phase 1 construction of its new rare earth magnet plant in Europe which remains on budget and on schedule.

In the quarter and year ended Dec. 31, 2023, C&O revenue declined by 5.5 per cent and 4.9 per cent, respectively, as compared with comparable prior-year periods, primarily due to mixed end market dynamics and rare earth pricing headwinds. High-purity dysprosium used in multilayer ceramic capacitors continued to deliver stable volumes and margins. The environmental protective water treatment solutions business delivered increased volumes and expanding margins throughout 2023. However, rapid declines in rare earth prices continued to drive headwinds for the business negatively impacting C&O rare earth separation margins. C&O is nearing completion on the relocation of its Neo Jia Hua Advanced Materials (Zibo) Co. Ltd. facility in China, which will have additional capacity for environmental emissions catalysts including capacity for new products under development.

Rare Metals revenue declined by 55 per cent and 4.4 per cent, respectively, in the quarter and year ended Dec. 31, 2023, as compared with the same periods of the prior year. The segment delivered solid full-year earnings driven by strength in hafnium pricing and demand, which has been driven by demand for memory chips and superalloys. The segment has a healthy hafnium order book for 2024 with contracted volumes at strong pricing and sufficient inventory on hand. Rare metals reached a significant milestone in its manufacturing strategy with its plant in Sillamae, Estonia, shifting focus on downstream, value-add operations, by halting the energy-intensive hydrometallurgical processing of niobium- and tantalum-bearing ores. Going forward, future products will be derived from oxides and recycled materials which will increase sourcing optionality and reduce working capital, simplify the manufacturing process, and improve the environmental footprint of the plant. In executing this operational transformation, the rare metals business incurred one-time charges in the fourth quarter of 2023 related to impairment of assets and employee restructuring costs.

Conference call on Friday, March 15, 2024, at 10 a.m. Eastern Time

Management will host a teleconference call on Friday, March 15, 2024, at 10 a.m. Eastern Time to discuss the fourth quarter 2023 results. Interested parties may access the teleconference by calling 416-764-8650 (local) or 888-664-6383 (toll-free long-distance). A recording of the teleconference may be accessed by calling 416-764-8677 (local) or 888-390-0541 (toll-free long-distance), and entering pass code 612419 followed by the pound key until April 15, 2024.

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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