Neo Performance Materials Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the NEO Performance Materials Q3 2020 earnings announcement. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star, then 1 on your telephone. If you require any further assistance, please press star 0 for operator assistance. I would now like to hand the conference over to your first speaker today. Ali Madavi, please go ahead.

Thank you, Operator, and good morning, everyone. Just a reminder, today's call is being recorded, and a replay will be available starting tomorrow in the Investor Center of our website located at neomaterials.com. I'm joined this morning by NEO's President and CEO, Konstantin Karianopoulos, and Raheem Suleiman, NEO's Chief Financial Officer, who will then provide additional details regarding the company's third quarter performance. Then we will open the call to questions from analysts only. Please note that some of the information you will hear during today's presentation and discussion will consist on forward-looking statements, including, without limitation, those regarding revenue, EBITDA, and adjusted EBITDA, product volumes, gross margin, other income and expense measures, ROC, cash returns, and future business outlook. Actual results or trends could differ materially from those discussed today. For more information, please refer to the risk factors discussed in NEO's most recent financial filings, which were filed on CDAR earlier today and are also available on our website. NEO assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. Financial amounts presented today will be in U.S. dollars. Non-IFRS financial measures will be used during this conference call. Further information regarding NEO's use of non-IFRS measures is available in NEO's 3Q 2020 earnings press release, which is also available on CDAR and on our website at neomaterials.com. Let me now turn the call over to Konstantin for opening remarks. Konstantin.

Thanks, Ali, and good morning, everybody. I hope everybody's safe. It's a pleasure to update our shareholders, investors, and employees around the world on our progress over the third quarter. With the health and safety of our employees top of mind during the pandemic, our business in the third quarter performed better than we expected as we're coming out of the second quarter, generating about $78 million of sales during that third quarter. We started growing again and returned to a better level of profitability and free cash flow generation. Our global operations experienced no major disruptions. and we saw customers start rebuilding inventory levels at a modest pace while their businesses improved. Macroeconomic trends over the past few weeks, as well as updates we are receiving from customers in our key end markets, are pointing in a sound direction. Our order books are rebuilding, and there are signs that customer demand is getting back on a path towards historical normal levels in most of our end markets. While the trajectory of the pandemic is impossible to predict, we and our customers were able to regain our footing in the third quarter. It is too early to claim that we have fully turned the corner, but the latter part of the third quarter felt like the worst was behind us. We're not out of the woods yet and COVID, of course, will have the final word on that. Excuse me. But at least for now, we're seeing signs of recovery, gaining momentum in several downstream sectors. Most of our customers are also saying that they both hope and believe that the worst is behind them. I'm proud of the new team's performance in managing this global challenge, particularly in terms of our employees' health and safety. We have experienced very few infections across our facilities. In fact, we have no reports of infections in any of our facilities in Asia. As I reported to you in the last quarter, we have full implementation of all measures at all of our facilities. In recent weeks, we've seen a slight uptick of infections in North American and European plants. Fortunately, none of these cases has resulted in serious health complications. I'm also very pleased with the fact that we have been able to avoid the layoffs and severe restructuring that have plagued much of the industrial sector. That's a testament to the dedication and professionalism of our more than 1,800 employees around the world. Over the past four months, I've spent a lot of time, virtually of course, with our individual business units. In normal times, that would have meant a lot of us living on airplanes and out of suitcases for weeks on end. While it is frustrating to not see our employees and interact with our customers in person, I'm pleased to report that our teams have been hard at work before and during the pandemic to grow Neo's business. In fact, in-person customer meetings have started again for our sales managers in Japan, Korea, China, Singapore, and Thailand. Small victories, but given how the world looked one or two quarters ago, we'll happily take it. Our teams have now completed our divisional and corporate strategic planning efforts. It is clear to me that we have the ability to protect and grow our core business while also planting key seeds of innovation that should take root in the coming quarters and years. Our strong financial position and operational flexibility also allow us to evaluate options and opportunities for strategic growth. As we finalize these plans, we will be continuously reassessing how to accelerate each of these efforts while utilizing our competitive advantages and unique global footprint to more quickly grow Neo in the near term. One of the key drivers of long-term growth for NIO, as well as the global economy, is the accelerating trend towards technologies that are sustainable and climate friendly. It is our view that these trends will only intensify as the world emerges from the COVID pandemic. Consumers and governments increasingly want lighter weight, more energy efficient mobility, and reduced greenhouse gas emissions. Each of our three business units, MagniQuench, chemicals and oxides, and rare metals, has core product, technology, and applications portfolios that will contribute to addressing each of these societal goals. We will continue to reinvest in next-generation technologies and customize advanced materials in partnership with our key customers. A prime example of this is our success in growing our magnetic materials and magnets portfolio, into growing segments like water and oil pumps within the automotive and household space. Electric and motor design engineers continue to look to drive efficiencies across the automotive platform for all drivetrain alternatives. The high quality and performance of the products, the consistency, and technical service offered by our MagnaQuinch group is essential to grow our share in automotive pump motor markets. This application offers substantial growth opportunities for MagnaQuest. That is because these pumps are used in all drivetrain applications, from cleaner and more efficient gas and diesel internal combustion engines to electrified hybrids and full battery and alternative fuel vehicles. There are different emerging trends within each of those drivetrain platforms, but all of them are looking for higher levels of performance. that is precisely MagnaClench's technological and market sweet spot. Our applications team has scored important wins in further diversifying our magnetics business into a greater level of penetration of key consumer markets. Not only is the case with automotive, where lighter for autonomous driving and cooling pumps and valves for electric vehicle batteries are some of the latest examples that come to mind, but also into consumer applications, such as the PS5 controllers, the new PS5 controllers, robot vacuum cleaners, stick vacuums, and hair dryers, and I could go on. At the same time, in our chemicals and oxides business, we're seeing some very interesting developments in a new generation of product lines with existing applications in broad health and safety markets. As we look to grow our core business, There is a continuous effort at improving our operations efficiency at our plant, expanding capacity and capabilities as necessary, automating where possible, and incorporating industry-leading sustainability practices across the board. I'm also encouraged to see more business leaders widening their gaze to the strategic importance and economic opportunities of technologies that enable more sustainable and environmentally preferred outcomes. We find that the more we emphasize sustainability at our core operations, the more momentum we build at both the operational and commercial level. NEO's success in leading sustainability efforts runs deep in our organization. We design advanced and highly engineered materials that help enable the technologies that curb growing greenhouse gas emissions and their impact on the environment. Said in another way, NEO's strong focus on the sustainability imperative provides us with tremendous defensive and offensive strengths. We will continue to build upon our legacy of strong environmental safeguards and we'll work to develop reporting efforts in the coming years of particular interest to our customers and shareholders. As the world continues to adapt to the global pandemic environment and preparing for life and return to growth post-COVID, An emerging element has been the emphasis of localized supply chains. A diversified geographic portfolio has always been a key strength of NIO's customer service offering, and it is becoming more important than ever. As we always evaluate options to grow our business, we also continue to diversify our supply chains, both upstream and downstream. Today, NIO is the only producer of rare earths and related value-added materials in Europe with our plant in Estonia. We're also the only company in our industry with full supply chain capabilities for rare earth specialties and magnetic materials inside and outside of China. We expect a good part of demand in the near to midterm to be driven by consumer and regulatory developments in both China, Asia, as well as Europe. We are ideally and uniquely positioned to capitalize on these opportunities as they unfold. NEO is in the value-added business with reliable raw material supplies, suppliers, and multiple continents. We value our upstream partners while we always look to diversify our raw material supply to give greater flexibility to our plans and ensure reliability of our customer supply chains. Doing so increases trust and confidence with our customers that they can depend on NIO's advanced performance molecules to arrive quickly and consistently in any region of the world. Beyond our core business, we continue to invest in our next areas of development. Innovation has long been critical to NIO's growth. In fact, a great deal of our revenues comes from products that did not exist three to five years ago. The key to our innovation is working extremely closely with customers and prioritizing new product development through our customers' eyes and objectives. Advanced critical materials by default have long technical development lead times. It is not uncommon to introduce an idea, a product or sample, and then spend years of joint development before seeing material volumes reported in our financials. We have always been driven by the demands and service needs of our customers and will respond by developing and producing what they need, where they need it. It is how we have built NIO into the robust, resilient, and profitable company that it is today, and that's how we will grow the company in the foreseeable future. In closing, it is good to be growing again from the lows of the second quarter, and in particular, June as well as July. That progress is encouraging. More important, we believe that we have built an organization that is positioned to grow organically and, in addition, capitalize on opportunities that we see in the coming global economic recovery. I'm optimistic about the company's growth prospects. Global mega trends focused on increased sustainability, lower fuel consumption, reduced environmental footprint, and enhanced energy efficiency all point to substantial opportunities for NEO. After all, we make the molecular building block for many of the technologies that help achieve these goals. Few organizations have the talent, knowledge, global infrastructure, and key commercial relationships to be as well positioned as NEO to capitalize on these trends. With that, let me turn the call over to Rahim for the financial review of the quarter.