Neo Performance Materials Inc.

please stand by we're about to begin good day and welcome to the neo performance materials inc 3q 2021 earnings announcement conference call today's conference is being recorded at this time i would like to turn the conference over to ali madavi please go ahead sir thank you operator and good morning everyone thanks for joining us this morning to review neo performance materials q3 2021

financial results. On today's call, I am joined by CEO Constantine Karyanopoulos, who will provide opening remarks, and Rahim Suleiman, NEO's Chief Financial Officer, who will give a short overview of the company's third quarter results, which were published on November 8th. Please note that some of the information you will hear during today's presentation and discussion will consist of forward-looking statements, including, without limitation, those regarding revenue, EBITDA, adjusted EBITDA, product volumes, product pricing, other income and expense measures, cash returns, and future business outlook, including potential expansion plans. 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 this month and are also available on our website. NIO 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 the conference call. Further information regarding NIO's use of non-IFRS measures is available in NIO's Q3 2021 earnings press release which is available on CDAR and on our website at neomaterials.com. Let me now turn the call over to Konstantin.

Thanks, Ali, and good morning, everyone. We're hosting today's call slightly outside of the typical pattern due to the completion of NEO's recent $100 million bought deal, which we announced its closing two weeks ago. Our third quarter financial and operating results were filed and published in early November, as Ali noted. In summary, we reported 119.8 million of revenue and adjusted net income of $9.8 million. We reported adjusted EBITDA of 17.7 million. And over the past 12-month period, our cumulative sales revenue is just shy of $500 million. This is an encouraging milestone, particularly while some supply chain disruptions continue across the manufacturing sector. Rahim will provide a bit more color on our third quarter results. From my perspective, I would note that current operating trends are in line with our expectations in what remains a strong market environment, despite the headwind continuing to face both the automotive industry the semiconductor sector, and general supply chain issues globally. In short, we continue to experience strong demand for NEO's rare earth and magnetic-based materials, and we're doing everything we can to maintain the reliable shipment of products to our key customers around the world. As we come to the close of 2021, it's a natural time to reflect on the past year and envisioning its future. The strength of our business is a direct result of years of investment in producing high quality, highly engineered specialty materials that meet the demanding needs of our very sophisticated customers. We have developed new technologies and products, and we strive to provide excellent customer service to deliver upon those. We've been around for a few decades now, and as we assemble the rarest and advanced materials company for the next few decades, we're keeping those values at the forefront of all of our strategic initiatives. Over the past year, we've been diligently working to advance four core business goals. First, protect, strengthen, and grow our core business. Second, expand through innovation, into next generation technologies and products. Third, expand and diversify our geographic footprint in order to capture growing demand for specialty rare earth products in Europe and globally. And fourth, improve our global sustainability leadership. These are the four core pillars of our growth strategy. Given a current macro environment that strongly favors the adoption and acceleration of sustainable technologies, NEO is certainly working from a position of strength, as many of the products we make are essential to the functioning of a wide range of green tech. A key example of this growth strategy is the revitalization within our rare metals business unit. Following multiple years of mid single digit EBDA margins, Our team underwent an extensive and systematic approach to improving that business unit's economic model. And through those efforts, we have been able to secure reliable sources of additional raw material feedstock. We launched several engineering projects to improve our operations efficiency. And we have identified several new paths to commercialize new products and access new markets as the recovery in the aerospace market, our main market for the business unit, continues. I've been pleased with the results so far. Rare metals recently improved its EBITDA margins to double-digit levels, and we're setting a path forward for capacity expansion and allocating more of our capacity to value-added technologies. I want to express my gratitude for the hard work, dedication, and commitment from our team members around the world in that business as well as all the business units for driving these initiatives forward. Similarly, we've been executing upon operational excellence initiatives within both our MagnaQuench and chemicals and oxides units. Within MagnaQuench, we have expanded our operating capacity for bonded magnetic powders, and we have been growing our capacity to manufacture compression molded magnets. Within chemicals and oxides, we're working to diversify our raw material feedstock for all of our plants, but with particular focus on our operations in Europe. For example, during the quarter, we started to process that new raw material supplied by energy fuels, which originates in the United States as a byproduct of other mining operations, as we target expanded capacity and operating rates. Later in the quarter, We started receiving shipments at one of our plants in China from a new heavy rare earth mining operation in Vietnam. We expect more shipments in the new year. Across all of our business units, we're proud of the strong health and safety culture that has been established over the years at our various manufacturing sites around the globe. As we look to the future, I'm cognizant of some major trends that have been accelerated as a result of the COVID pandemic and supply chain trends. Our customers have been clamoring for localized supply chains and sustainably produced materials that meet the world's leading environmental, social, and governance standards. We're carefully listening and incorporating feedback from our shareholders in terms of ESG initiatives. We're also hearing directly from more and more customers who are hungry for verification and validation of their transparent upstream supply partners. As we think through innovation and long-term business planning, ESG will be at the center of everything NEO does. For example, earlier this year, we became a participant in the United Nations Global Compact, the world's largest corporate sustainability initiative. and we committed to implementing the Global Compact 10 principles on human rights, labor, environment, and anti-corruption. We also recently joined the Responsible Minerals Initiative, which serves as an umbrella organization designed to support responsible mineral sourcing. We've always served as a trusted, reliable partner for our customers around the world. We serve our customers through a geographically diverse production footprint We not only want to meet our customers where they are in terms of their ESG practices, but also lead our supply chains to where we all need to be. This approach has led to several significant advantages by means of NIO's critical infrastructure. As the world's only rare company that operates parallel supply chains both inside and outside of China, we are uniquely situated to understand the pressures and rapidly changing dynamics of upstream advanced material supply chains. The twin crises of global supply chain bottlenecks and constrained semiconductor supply have spotlighted the risks of centralized logistics channels. This has accelerated the needs of many of our direct customers in the automotive and electronic spaces and their OEM counterparts to source locally, to rely less on ocean freight, and to prioritize responsibly sourced materials that incorporate circular end-of-life strategies. NIO has already integrated material recycling in several areas of our production operations, including our rare earth magnetic materials. Many of our top strategic plans for growth involve expanding our nameplate capacity in Europe to serve increasing demand in the region. By nearly all measures, global vehicle electrification is going to drive enormous increases in demand for permanent rare earth magnets. Not only would magnet customers need additional supply, but they will also require greater geographic diversity of supply in order to minimize supply chain risk. This is what we're hearing very directly, in fact, loud and clear, from our OEM and Tier 1 customers, especially across Europe. They've told us in no uncertain terms that they want to see NEO expand their operations in Europe into the production of rare metals, alloys, and permanent magnets. Fortunately, we're extraordinarily well positioned to respond to this increasing demand. In Sillame, Estonia, we run the only commercially operating rarest operations facility of its kind within the European Union. The strategic importance of having existing infrastructure, including a large operations base located on the Baltic Sea and a highly skilled labor force, is crucial. to accelerating a large-scale project, such as expanding into alloy and magnetic manufacturing within Europe. Moreover, our rare earth separations facility in Estonia has in the past produced rare earth metals, and it is producing tantalum and niobium metals. That capability could be rapidly restarted. Additionally, we make rare earth metals through two joint ventures, one in China and one in Thailand. and we produce rare earth iron boron alloys in China and Thailand. So while our MagnetQuench division is a global leader in the production of bonded and hot deformed rare earth magnets and magnetic materials, expanding our operations to produce centered rare earth magnets is not a big leap for NEO. The alloy jet casting process that we have invented and perfected at MagnetQuench is actually a very similar but much more severe and demanding process than the strip casting process used in the production of centered magnet alloys. We have a large number of people in NEO who are highly skilled in making centered magnets, and we're exploring partnerships with potential state-of-the-art partners who already produce sophisticated centered rare earth magnets for the EV space globally. For us, the centered magnet space is a relatively low risk with a strong market demand that appears evident at this point, and with the emerging government support. It also presents us with a global market that is an order of magnitude larger than the current addressable market for MagnaQuench with all the opportunities that this brings to the table. As we're working our way around managing the technical risk of such a project, we're staying very focused on also minimizing market and financial risks. We expect to turn the expression of strong interest by European customers and their customers into contracts once our sampling and qualification process gets underway in the new year, which will help minimize the market risk. Similarly, our expectation, one that is shared by OEMs and Tier 1 suppliers at this point, is that the European Union and the Estonian government will help NIO and the supply chain with shared funding to address the financial risk of such a project. Both elements are absolutely vital to any decision by NIO to allocate the capital required in this effort. They're also vital to the long-term commercial success of any such venture. That's why I'm especially thankful for the assistance and vision of key stakeholders, including the Estonian government and its Ministry of Economic Affairs, for their commitment to securing financial and other assistance to our project at all levels within their control. Gaining alignment through public stakeholders, such as the European Union, customers such as OEMs across the automotive, aerospace, and wind energy sectors, And our local teams on the ground is a critical and rewarding effort. We're very encouraged by efforts from all sides to date and look forward to continuing to move this process forward to a successful outcome. In addition to potentially expanding production of separated rareth oxides in Europe and moving further downstream to produce rareth metals, alloys, and centered magnets, We're also examining potential long-term expansion in other regions, including North America. While the auto industry in the United States and Canada is moving toward greater vehicle electrification, I think it is fair to say that the North American industry will likely lag its European brethren in terms of public charging infrastructure, local government commitments, and general customer adoption over the next couple of years. That said, I fully expect North American manufacturers to catch up. That will provide NIO with additional opportunities for potential expansion. While final decisions on these and other expansion plans have not been yet made by NIO, I remain optimistic that market conditions, new and expanded options on rare earth feedstock sources around the world, Rarer separation in North America and necessary government support can come together to allow these investments to proceed in a manner that makes these projects attractive to all stakeholders. A recent primary capital raise of $50 million Canadian is largely intended to support this type of growth and expansion. As we look at servicing all of our customers globally, we will continue to invest in our businesses to ensure a strong return on shareholders' capital. Further, we will seek to protect and grow our core business and incorporate sustainable technologies where appropriate. For example, we're in the process of revitalizing one of our primary operating facilities in China. This project will modernize its infrastructure, improve our operating efficiencies, and ensure a stable manufacturing site for next-generation environmental emission catalyst technologies within the chemicals and oxides business units. The products manufactured at this site are essential bridging technologies for hybrid vehicles as electric vehicles continue to grow through both public infrastructure and consumer support. The complex catalyst systems required on these hybrid vehicles are expected to continue to evolve through the adoption of the very tight Euro 7 regulations and related global standards and to be in place largely for the next several decades. In closing, The operating and market environments for rare earth and rare metals-based materials remains quite robust. Magnetic materials, in particular, have been reaching sustained heights this year amid growing end-use demand and short-term supply chain disruptions, including consolidation within China and the global shipping crisis. That said, the micro-trends towards the use of sustainable technologies requires a thoughtful view to responsibly source materials. We look forward at NIO to continuing our efforts to ensure high quality materials for our customers and to deliver the key technical customer service and innovation required to develop next generation technologies. And with that, let me turn the call over to Rahim.