Neo Performance Materials Inc.

Standby, we are about to begin. Good day and welcome to the NEO Performance Materials first quarter 2022 earnings and business update conference call. This conference is being recorded. Now at this time, I would like to turn the conference over to Ali Madavi. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us this morning. As a reminder, This call is being recorded, and a replay will also be available starting tomorrow in the Investor Center on our website located at neomaterials.com. I'm joined this morning by NEO's President and CEO, Konstantin Karianopoulos, who will provide opening remarks, and Raheem Suleiman, NEO's Chief Financial Officer, who will then follow with a short overview of the company's first quarter financial results. 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 today and are also available on our website. NEO assumes no obligation to update any forward-looking statements or other information which speak as of the respective dates. Financial amounts presented today will be in U.S. dollars. Non-IFRS financial measures will be used during today's call. Further information regarding NEO's use of non-IFRS measures is available in NEO's earnings press release, which is available on CDAR and, again, on our website at neomaterials.com. Let me now turn the call over to Konstantin.

Thank you, Ali. Excuse me, and good morning, everyone. We're pleased to report record financial and operating performance during the first quarter of 2022. Driven by continued strength in end consumer demand, an increased price environment, and a favorable mix. All three of our business units are performing well and have built a healthy head start on our full year plans. NIO's first quarter sales were $166 million. Net income was $23 million, or $0.54 per diluted share. And we delivered adjusted EBITDA of $33.1 million. All three of these metrics represent records for quarterly performance since we reemerged as a public company in 2017. Our EBITDA growth is nearly 50% over the prior year period. The strength of our business model rests in our customer service and technical development skill sets. These unspoken heroes of our operating model may not be evident when reviewing our financial performance, however. but they are critical to our ability to gain new business and to retain existing customers. It's also the cornerstone of our growth strategy as we continue to strengthen our foundation for future growth. While our financial results are largely driven by recent favorable market and pricing dynamics, you can only take advantage of these current prices through a consistent high-quality product offering that is sought after and valued by our customers. The rare earth and rare metal price environment has continued its somewhat volatile journey over the past year and a half. Magnetic elements such as neodymium, praseodymium, terbium, and dysprosium appear to have set high watermarks in the late February and early March timeframe, right about when we reported full year 2021 results. Since then, Pricing for neodymium, praseodymium or NDPR has eased about 15 to 20% from those highs and is now approaching just under $140 per kilogram. At $140, these pricing levels remain supported by higher demand for higher efficiency permanent magnet motors, particularly for electric vehicles and other new energy technologies. Pricing for specialized terbium products has shown to be even more resilient and remains near its peak earlier this year and continues to be supported by current buying. At these prices, there is sustained profitability throughout the supply chain without a significant risk from higher prices motivating a significant switch to competing materials or technologies by the downstream customers. While the elevated price environment confers obvious benefit It also presents significant near-term operational challenges that must be managed. Our pass-through pricing mechanisms, such as in our magnet quench division, mitigate this risk and provide transparency to our customers. Inventory management remains a top operating priority, but working capital requirements are naturally higher in this environment. In the event that Pricing for magnetic materials continues to soften. We could face a scenario where our lead lag position shifts with higher cost inventories countered by a decreasing market price environment. While we're not making a call on the market price direction, we are prepared to manage through these volatile price environments. We have done this many times before in our nearly three decades in this business. Amidst the opportunities and challenges of the market, we continue to see significant supply chain disruptions, particularly in China and other Asian countries as the recent COVID variant has instituted further lockdowns. Last week, the preventive endemic measures in parts of China caught up to us and our high purity heavy rare earth separations facility in Jianying is currently subject to a citywide lockdown. This is the first direct interruption at one of our manufacturing sites and follows on from spillover cases in other larger cities in Jiangsu province and further from the cases in Shanghai last month. None of our employees at the site have currently tested positive for the virus. Given that this is an unplanned shutdown, our local management is doing everything in its control to get back to normal operations, and we're limited in the types of maintenance we can perform until the current government measures are relaxed. We have managed, however, to prepare sufficient volumes of product for export shipments, and we managed to send good volumes to the port of Shanghai ahead of the lockdown. That said, we're currently in discussion with all of our top customers for specialty products manufactured at Jianying, and we're confident that this disruption will be both short-lived and have minimal impact. There may be minor timing shifts of product deliveries from May into June, but we have ample safety stock to cover these sales with finished goods ready to be shipped the moment traffic lanes reopen, as well as other volumes awaiting shipment at the port of Shanghai, as I mentioned. Shifting to Europe, we have continued to manage through the contentious environment resulting from the war in Ukraine. Our rare earth and rare metal production facility in Estonia continues to operate without interruption, largely driven by the strength of our long-term supply relationships and our ability to continue to diversify our suppliers. Through recent visits with employees, shareholders, and government officials, I'm confident in our European team's ability to manage our operations through this turbulent time. We will always place our employees' well-being first. That is particularly the case with our employees who have family and friends affected by the conflict. Our plan to expand rare earth production in Europe and launch our manufacturing of sintered rare earth permanent magnets to help meet the rapidly growing demand continues to move forward. The government of Estonia formally included NEO's proposed project on a short list of candidate projects for funding by the European Commission's Just Transition Fund. The application process for such funding is expected to open in Estonia on June 1st, 2022. And not only will NIO apply for such funding, but we're encouraged by the strong and vocal support for our initiative from leading members of the Estonian government. For example, Mr. Andrew Soot, Estonia's Minister of Entrepreneurship and Information Technology, recently noted that a rare earth permanent magnet project is, quote, a priority for Estonia, as it not only helps fulfill the EU's commitment to develop domestic and resilient supply chains, but also to transition towards climate neutrality. NIO looks forward to partnering with the Estonian government in this effort. My senior colleagues joined me in another series of meetings across Europe in April to gauge market demand for NEO's expansion into sintered rare permanent magnets. I'm pleased to report that we continue to receive strong validations of interest from current and prospective customers for this expansion. Based upon the level of prospective customer interest we're receiving today, I'm increasingly confident that our planned phase one production of 1,200 tons per year of magnets will be confirmed and committed relatively quickly, and that we will soon look to be expanding those operations further into phase two as market and economic conditions dictate. With both market and government support continuing to build for this initiative, I look forward to providing further updates on the project in the next few weeks and months. Also important to our expansion in Europe is our focused effort to diversify our upstream sources of rare earth feedstock. Colorado-based Energy Fuels continues to ramp up its production in Utah of rare earth carbonate that feeds our plant in Estonia and to expedite shipments as much as possible. We're very grateful to them. Energy Fuels processes rare earth-rich monazite that is generally produced as a byproduct of heavy mineral sands mining. Both primary and secondary monazite resources are available in many parts of the world, and Energy Fuels and ourselves are exploring further options. We're also working in a very concerted effort with a number of other rare earth projects around the world that can further diversify the geographic distribution of our feedstock supply. As the lessons of the past two years have demonstrated, maintaining diversified operations across all levels of the supply chain yields tremendous benefits. As we expand the relationship with energy fuels and other historic suppliers, we will also continue to further expand our supplier base, diversifying the geographic distribution of our feedstock supply and ultimately grow our business with a much more diverse and secure raw materials base. Our long-term strategy for growth remains rooted in our customer service and technical development, which remain inextricably linked with the other pillars of our growth plan, which I have discussed before. So let me repeat. First, protect, strengthen, and grow our core business. This includes expanding our existing market share in magnetics, emission control catalysts, electronic materials, and aerospace technologies. Second, innovate into next-generation technologies. Historically, bringing the next improvement to meet our customers' operating and regulatory needs has been the lion's share of our R&D work. Key examples would be co-engineering toward motor technologies for new applications of energy, efficient pumps, ultra-high-speed motors, and working towards complex catalyst systems that meet more stringent regulatory demands while performing in hybrid vehicles. Third, expand and diversify our geographic footprint in order to capture growing demand for our specialty rare earth products in Europe and North America. Assuring stable supply for our customers comes from having established partnerships to improve the diversity of supply. As we continue to have ongoing dialogue with our Tier 1, Tier 2, and OEM customers, This is paramount given today's supply chain challenges. And fourth, improve our global sustainability leadership. Let me take a minute to elaborate on what sustainability means for NEO. Over the past several years, we've been engaged with numerous stakeholders, shareholders, customers, employees, and our local communities, as well as governments, to address a number of topics that fall under the umbrella of ESG. As such, many of you are aware of our efforts with award-winning plant operations as indicated through EcoVadis surveys. And for the second year, Neil has committed to the United Nations Global Compact, which directly expresses our commitment to the UN Sustainable Development Goals. In addition, We're also a member of the Responsible Minerals Initiative, or RMI. In particular, we're active participants in helping to establish industry standards as they relate to rare earth and rare metal supply chains. With a 30-year history as leaders within the rare earth space, we take our responsibility seriously to develop an appropriate framework that allows our industry to flourish. and to enable our industry to accelerate the adoption of energy efficient and climate friendly technologies. Meanwhile, in the background, we have been compiling, analyzing, and implementing a more formalized ESG program. I'm proud to note that we are in the final stages of preparing to issue our first company-wide sustainability report. I am proud of our company's culture of integrity and willingness to do the right thing without taking shortcuts. That discipline is translated into extraordinary quality, technology breakthroughs, and a stronger organization. We look forward to starting the next round of dialogue with all of our stakeholders regarding sustainability, and we adamantly believe that this will further strengthen NIO's value proposition in the market. I'd like to thank all of our employees around the world for their continued dedication and thank our customers and suppliers for continuing to put their trust in NEO. Despite the headwinds from multiple angles in the market, we continue to grow our core business, expand our market share, and are setting up the foundation for further growth. I'll now turn the call over to Rahim for details on the quarter. Rahim.