5N Plus Inc. Reports 2024 Third Quarter Financial Results

5N Plus Inc. Reports 2024 Third Quarter Financial Results

Canada NewsWire

  • 25% year-over-year increase in revenue to $78.8 million
  • 62% year-over-year increase in Adjusted EBITDA[1] to $15.6 million
  • Adjusted gross margin1 of 31.1%
  • Backlog1 of $250 million, representing 289 days of annualized revenue, as at September 30, 2024

MONTREAL, Nov. 4, 2024 /CNW/ - 5N Plus Inc. (TSX: VNP) ("5N+" or "the Company"), a leading global producer of specialty semiconductors and performance materials, today announced its financial results for the third quarter of fiscal 2024 ended September 30, 2024 ("Q3 2024"). All amounts in this press release are expressed in U.S. dollars unless otherwise stated.

"Our strong results in the third quarter of 2024 reflect sustained growth momentum in our Specialty Semiconductors business, coupled with a stellar performance by our Performance Materials segment. Our teams are also executing seamlessly on the operational front with our specialty semiconductor capacity initiatives, enabling us to meet near term contracted demand and to efficiently expand capacity in future. Given our strong results year to date, we now expect to be able to surpass our previously disclosed guidance range and to slightly exceed $50 million in Adjusted EBITDA for the full fiscal year," said Gervais Jacques, President and CEO of 5N+.

"Looking ahead, our collective work and strong execution of our strategy over the last few years also position us well for the next chapter of our growth as a valued and trusted global actor in advanced materials technology. We are now in a strong position to efficiently capture additional organic growth and actively on the lookout for external growth opportunities. We will remain focused on opportunities that enable us to extend or leverage our competitive advantages, capabilities and Specialty Semiconductor value chain, while ensuring that our advanced materials remain a critical enabler of our customer's product without being a critical cost component," concluded Mr. Jacques.

Q3 2024 Highlights

  • Revenue in Q3 2024 increased by 25% to $78.8 million, compared to $62.9 million in Q3 2023, primarily driven by strong growth under Specialty Semiconductors.
  • Adjusted EBITDA in Q3 2024 increased by 62% to $15.6 million, compared to $9.6 million in Q3 2023, driven by higher volume from the terrestrial renewable energy and space solar power sectors, better prices over inflation, and a strong quarterly performance under Performance Materials from a product mix and operating costs perspective.
  • Adjusted gross margin increased by 56% to reach $24.5 million in Q3 2024, favourably impacted by the same factors as above. Adjusted gross margin as a percentage of sales was 31.1%, compared to 24.9% in Q3 2023.
  • Net earnings in Q3 2024 were $6.4 million, compared to $1.5 million in Q3 2023.
  • Backlog stood at $249.7 million, representing 289 days of annualized revenue as at September 30, 2024, 11 days lower than the previous quarter and at a similar level than the same period last year, primarily due to the timing of contract signings and renewals.
  • Net debt1 was $93.7 million as at September 30, 2024, compared to $73.8 million as at December 31, 2023, reflecting an increase in working capital1 and planned capital expenditures in the first half of 2024 under Specialty Semiconductors. The Company's net-debt-to-EBITDA ratio1 stood at 1.99x as at September 30, 2024.

__________________________________

1 These measures are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. See Non-IFRS Measures for more information.

Other Developments

  • On October 15, 2024, 5N+ announced the completion of its 2024 production capacity program ahead of schedule at its wholly-owned subsidiary, AZUR SPACE Solar Power GmbH ("AZUR"), and that it expanded its capacity by 35% over 2022 levels, surpassing its initial 30% target. 5N+ also announced that AZUR intends to increase its space solar cell production capacity by a further 30% in early 2025, with minimal additional investments as most of the equipment has been purchased and delivered.

Outlook

In Specialty Semiconductors, 5N+ continues to benefit from its position as the leading global supplier of ultra-high purity semiconductor compounds outside China, with long-term partnerships with key customers. Growing demand remains the rule, particularly in terrestrial renewable energy and space solar power. 5N+ is well-positioned to capitalize on future opportunities in these high-growth sectors, as well as other markets, including sensing and medical imaging.

Management expects growth in the Performance Materials segment to be primarily derived from health and pharmaceutical products, which provide high profitability and predictable cashflows. Additional long-term opportunities are expected to stem from product expansion and development initiatives, including through partnerships.

Based on its performance to date, management has revised its Adjusted EBITDA guidance for 2024 upward and now expects to slightly exceed $50 million in Adjusted EBITDA. This is over and above the top end of its previously disclosed guidance range for 2024 of between $45 and $50 million in Adjusted EBITDA. Its Adjusted EBITDA guidance range for 2025 of between $50 million and $55 million remains unchanged. As in previous years, management will communicate guidance for 2025 and 2026 as part of its full year 2024 earnings release.

Conference Call

5N+ will host a conference call on Tuesday, November 5, 2024, at 8:00 am Eastern Time to discuss third quarter of 2024 financial results. 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: 646-357-8785
  • Toll‐Free: 1-800-836-8184
  • Enter access code: 74914

A replay of the conference call will be available two hours after the event and until November 12, 2024. To access the recording, please dial 1-888-660-6345 and enter access code 74914.

About 5N+

5N+ 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+'s products to enable performance and sustainability in their own products. 5N+ 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+ 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. Such forward‐looking statements are based on a number of estimates and assumptions that the Company believes are reasonable when made, including that 5N+ will be able to retain and hire key personnel and maintain relationships with customers, suppliers and other business partners, that 5N+ will continue to operate its business in the normal course, that 5N+ will be able to implement its growth strategy, that 5N+ will be able to successfully and timely complete the realization of its backlog, that 5N+ will not suffer any supply chain challenges or any material disruption in the supply of raw materials on competitive terms, that 5N+ will be able to generate new sales, produce, deliver, and sell its expected product volumes at the expected prices and control its costs, as well as other factors believed to be appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict and 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 the Company's 2023 MD&A dated February 27, 2024, and note 10 of the unaudited condensed interim consolidated financial statements for the three and nine-month periods ended September 30, 2024 and September 30, 2023 available on 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 statements in this press release will transpire or occur, or if any of them do so, what benefits that 5N+ will derive therefrom. In particular, no assurance can be given as to the future financial performance of 5N+. The forward‐looking statements 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
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


2024

2023

2024

2023



$

$

$

$


Revenue

78,828

62,946

218,427

177,308


Cost of sales

57,904

50,389

160,309

135,156


Selling, general and administrative expenses

8,135

6,249

24,169

20,711


Other expenses (income), net

3,295

943

7,874

(1,891)



69,334

57,581

192,352

153,976


Operating earnings

9,494

5,365

26,075

23,332








Financial expense






Interest on long-term debt

2,191

2,081

6,132

6,254


Imputed interest and other interest expense

452

308

591

451


Foreign exchange and derivative gain

(450)

(238)

(835)

(497)



2,193

2,151

5,888

6,208


Earnings before income taxes

7,301

3,214

20,187

17,124


Income tax expense (recovery)






Current

1,347

2,293

6,038

6,062


Deferred

(416)

(597)

483

(2,053)



931

1,696

6,521

4,009


Net earnings

6,370

1,518

13,666

13,115








Basic earnings per share

0.07

0.02

0.15

0.15


Diluted earnings per share

0.07

0.02

0.15

0.15









Net earnings are completely attributable to equity holders of 5N+.

5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of United States dollars) (unaudited)


September 30, 2024

December 31, 2023


$

$

Assets



Current



Cash and cash equivalents

24,565

34,706

Accounts receivable

45,371

33,437

Inventories

124,459

105,850

Income tax receivable

1,666

1,672

Derivative financial assets

6,183

591

Other current assets

6,187

5,707

Total current assets

208,431

181,963

Property, plant and equipment

90,592

84,600

Right-of-use assets

30,421

29,290

Intangible assets

25,376

29,304

Goodwill

11,825

11,825

Deferred tax assets

8,074

8,261

Other assets

5,541

4,959

Total non-current assets

171,829

168,239

Total assets

380,260

350,202




Liabilities



Current



Trade and accrued liabilities

40,186

37,024

Income tax payable

5,624

4,535

Current portion of deferred revenue

11,833

13,437

Current portion of lease liabilities

2,034

1,811

Current portion of long-term debt

-

25,000

Total current liabilities

59,677

81,807

Long-term debt

118,271

83,500

Deferred tax liabilities

5,579

5,284

Employee benefit plan obligations

13,444

13,393

Lease liabilities

29,597

28,328

Deferred revenue

9,125

5,629

Other liabilities

825

3,669

Total non-current liabilities

176,841

139,803

Total liabilities

236,518

221,610




Equity

143,742

128,592

Total liabilities and equity

380,260

350,202

Non‐IFRS Measures
EBITDA means net earnings (loss) before interest expenses, income tax expense (recovery), depreciation and amortization. 5N+ 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)

Q3 2024

Q3 2023

YTD 2024

YTD 2023


$

$

$

$

Net earnings

6,370

1,518

13,666

13,115

Interest on long-term debt, imputed interest and other interest expense

2,643

2,389

6,723

6,705

Income tax expense

931

1,696

6,521

4,009

Depreciation and amortization

4,424

3,979

12,418

12,053

EBITDA

14,368

9,582

39,328

35,882

Adjusted EBITDA means operating earnings (loss) as defined before the effect of impairment of inventories, share-based compensation expense (recovery), loss (gain) on disposal of property, plant and equipment, impairment of non-current assets, litigation and restructuring costs (income), and depreciation and amortization. 5N+ 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.

Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenues.

Adjusted EBITDA and Adjusted EBITDA margin are reconciled to the most comparable IFRS measure:

(in thousands of U.S. dollars)

Q3 2024

Q3 2023

YTD 2024

YTD 2023


$

$

$

$

Revenues

78,828

62,946

218,427

177,308

Operating expenses

(69,334)

(57,581)

(192,352)

(153,976)

Operating earnings

9,494

5,365

26,075

23,332

Share-based compensation expense

252

305

597

1,018

(Gain) loss on disposal of property, plant and equipment

(2,089)

-

(2,089)

1,051

Impairment of non-current assets

2,519

-

2,826

608

Litigation and restructuring costs (income)

1,021

-

1,021

(8,772)

Depreciation and amortization

4,424

3,979

12,418

12,053

Adjusted EBITDA

15,621

9,649

40,848

29,290

Adjusted EBITDA margin

19.8 %

15.3 %

18.7 %

16.5 %

Adjusted gross margin is a measure used to monitor the sales contribution after paying cost of sales, excluding depreciation and inventory impairment charges. 5N+ also expressed this measure in percentage of revenues by dividing the adjusted gross margin value by the total revenue.

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

(in thousands of U.S. dollars)

Q3 2024

Q3 2023

YTD 2024

YTD 2023


$

$

$

$

Total revenue

78,828

62,946

218,427

177,308

Cost of sales

(57,904)

(50,389)

(160,309)

(135,156)

Gross margin

20,924

12,557

58,118

42,152

Depreciation included in cost of sales

3,553

3,113

9,802

9,467

Adjusted gross margin

24,477

15,670

67,920

51,619

Adjusted gross margin percentage

31.1 %

24.9 %

31.1 %

29.1 %

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+ 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+ uses this measure as an indicator of its overall financial position.

The net debt to EBITDA ratio is defined as net debt divided by the trailing 12 months EBITDA.

Total debt and Net debt are reconciled to the most comparable IFRS measure:

(in thousands of U.S. dollars)

As at September 30, 2024

As at December 31, 2023


$

$

Bank indebtedness

-

-

Long-term debt including current portion

118,271

108,500

Lease liabilities including current portion

31,631

30,139

Subtotal Debt

149,902

138,639

Lease liabilities including current portion

(31,631)

(30,139)

Total Debt

118,271

108,500

Cash and cash equivalents

(24,565)

(34,706)

Net Debt

93,706

73,794

Working capital is a measure of liquid assets that is calculated by taking current assets and subtracting current liabilities. Given that the Company is currently indebted, it uses it as an indicator of its financial efficiency and aims to maintain it at the lowest possible level. 

Working capital ratio is calculated by dividing current assets by current liabilities.

Working capital is reconciled to the most comparable IFRS measure:

(in thousands of U.S. dollars)

As at September 30, 2024

As at December 31, 2023


$

$

Inventories

124,459

105,850

Other current assets excluding inventories

83,972

76,113

Current assets

208,431

181,963

Current liabilities

(59,677)

(81,807)

Working capital

148,754

100,156

Working capital current ratio

3.49

2.22

SOURCE 5N Plus Inc.

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