Neo Performance Materials Inc.

Good morning, ladies and gentlemen, and welcome to the NIO Performance Materials, Inc. Q4 2024 Earnings Conference Call. At this time, our lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Tuesday, March 18, 2025. I would now like to turn the conference over to Irina Kuznetsova, Director of Investor Relations for NIO. Please go ahead.

Thank you, Operator, and good day, everyone. Today's call is being recorded. A replay will be available starting tomorrow in the Investor Center on our website at newmaterials.com. On today's call are Hinn Solan, now President and Chief Executive Officer, and Jonathan Batch, NEOS Chief Financial Officer. 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, bills regarding revenue, EBITDA, adjusted EBITDA, product volumes, product pricing, other income and expense measures, cash returns, operational changes, and future business outlook, including potential expansion plans and contracts. Actual results with trends could differ materially from those discussed today. For more information, please refer to the risk factors discussed on NEAL's most recent financial filings, which were filed on CR earlier today and also available on our website. NEAL 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 US dollars. Non-IFRS financial measures will be used during this conference call. I will now turn the call over to Rahim.

Good morning, everyone, and thanks for joining the call. Today, I'll focus on four key topics. First, our financial results, highlighting our strong even of performance, working capital improvements, and balance sheet strength. Second, our execution and accountability in 2024, demonstrating how we delivered on our commitments to streamline our business and execute major projects on time and on budget. Third, our platform for long-term growth, which has been reinforced for our industry-leading capabilities in permanent magnets, emission catalysts, and value-added metals. Then I'll turn the call over to Jonathan for a deeper dive into the numbers before closing with our 2025 outlook and then opening up the call for Q&A. Before we get started, a quick comment on the strategic review process. As we announced previously, we began a comprehensive strategic asset review across our geographic and operating footprint. to consider strategic alternatives and opportunities to maximize value for our shareholders. The strategic review process is continued under the leadership of NEO's special committee and financial advisors. In the context of the strategic review, we have continued to take steps to optimize NEO's business, including the divestment of non-core assets, executing improvements in operational performance, and progressing with major capital programs. There can be no assurance. that the strategic review process will result in any transaction or any alternative, nor any assurance as to its outcome or timing. MEO does not intend to comment further unless it determines that further disclosure is necessary or appropriate. Okay, so to begin, 2024 was an incredible year for MEO. We are pleased to report exceptional financial performance with adjusted EBITDA exceeding our guidance rate. Full-year EBITDA grew more than 70% year-over-year to $64 million, including $21 million in Q4. This growth was broad-based across our portfolio, with Magnet Fletch delivering a full-year adjusted EBITDA increase of 21%, and Rare Metals more than doubled its EBITDA over the prior year. Nearly all facilities contributed to this strong performance. And our outstanding performance in 2024 has reinforced our momentum and positioned us to continue success. In addition to EBITDA growth, we also achieved significant working capital improvements, generating $52 million in cash flow from operations. Working capital efficiencies, along with higher cost controls, strengthened our cash flow and helped fund key strategic projects, including our permanent magnet facility in Europe and our emissions control catalyst facility. To maintain strong financial flexibility, we secure debt financing to optimize our capital structure while generating sufficient cash flow from operations, including working capital improvements. Looking ahead, we see further opportunities to enhance cash flow and capital efficiency, supporting our ability to self-fund this space of growth. Future funding decisions will be guided by our capital allocation priorities and the most advantageous options available to the company and our shareholders. Our strong balance sheet remains a key pillar of our financial stability. We ended the year with $85 million in cash and ample liquidity, successfully executing our strategy to right-size leverage while securing additional debt capacity to deliver our two major building projects. This solid financial foundation positions Neo for accelerated growth as we execute our transformational projects that will define our next phase of future growth. Secondly, we are proud to note that over the past year, we have delivered on every commitment we made at the end of 2023 and more. Our focus on execution, efficiency, and strategic transformation has strengthened our business, improved our profitability, and positioned NEO for long-term growth. To give a quick overview of some of our accomplishments, we have launched our emissions catalyst control facility, re-qualified with our customers, and achieved target run rate production for the facility. We advanced our European permanent magnet plan, which is nearing completion and on track for launch this year. We streamlined our portfolio by divesting and closing non-core assets to sharpen focus on midstream and downstream magnetics and critical materials. We want important new customer programs in a competitive marketplace. We diversified our rare earth supply by securing additional contracts with sources outside of China. And again, we executed all of these things while focusing on cost controls, growing EBITDA, generating cash flows, and preparing the company for further growth opportunities. A major highlight of the year was the successful execution of two critical growth capital projects. Our new emissions control catalyst plan was completed on time and under budget and is now fully operational. This highly automated world-class manufacturing facility operating with a best-in-class cost structure not only enhances our competitive positioning but also provides significant opportunities for future growth. Meanwhile, our European permanent magnet facility remains on track, with the core building completed, 90% of the equipment installed, and commissioning well underway. We also secured a major Q1 automotive supplier award for our permanent magnets. This is an important milestone in our growth strategy and a clear validation of a strong market demand. We secured a customer commitment even before the building was completed. Beyond executing our growth initiatives, we have taken decisive steps to optimize our manufacturing footprint, simplifying our portfolio, and sharpening our focus on higher margin value-added businesses. We closed non-core operations, including the hydrometallurgical processing of niobium and tantalum, which immediately turned that portion of our rare metals business into profitability. Additionally, we completed the sale of our gallium trichloride facility in Oklahoma in December of 2024. The sale of our two Chinese separation facilities, Jammer and Zammer, continues to advance and are expected to close here in the first half of 2025, generating approximately $30 million in cash. This transaction will strengthen our balance sheet, reduce earnings volatility, improve the return on capital employed, and enhance our geographic footprint. In addition, we strengthened our supply chain through new MOUs for rare earth separation and secured multiple new customer agreements across key business segments, reinforcing our strategic positioning in critical materials. With the heavy lifting of our transformation now largely complete, we are looking ahead to the next phase, one that is centered on higher profitability, stronger cash flows, and unlocking new growth opportunities in the future. And as we look at future growth opportunities, we are proud to say that NEO has the most vertically integrated permanent magnet supply chain outside of Asia, including separation, metalmaking, and magnet manufacturing. This is a game-changing development for Western supply chains and the global critical materials independence. While China produces approximately 60% of the world's rare earth elements, it dominates over 90% of rare earth processing and magnet manufacturing. This extreme concentration leaves industries vulnerable to geopolitical headwinds and adverse developments in regional trade policy. Our European permanent magnet facility is positioned to become one of the world's most impactful rare earth projects. We are not just talking about it, we're getting it done, and we're getting it done quickly. With our long history and strong relationships in securing materials from numerous rare and upstream providers, we now have a facility that is fully built and backed by decades of operational expertise, ensuring a complete, reliable, and independent supply chain for high-performance permanent magnets that are used in electric vehicles and other advanced technologies. Our new emissions control catalyst facility is also set to become a major driver of future growth. As one of the most automated and cost efficient plants in the industry, it minimizes sustaining capex while maximizing cash flow. With tightening emission regulations globally, NIO is well positioned to grow its market share in auto catalysts for internal combustion, hybrid, and alternative fuel vehicles. In addition, NIO will expand its offerings of additional forms of specialty oxides for key target markets. NEO's recycling business remains a valuable cash flow generator with strong demand in margins in hafnium and gallium. As sustainability and supply chain security gain importance, our expertise in recycling and refining these critical metals provides a competitive advantage. We operate the only gallium recycling and upgrading facility in North America. we operate the only happy and recycling facility in europe with decades of experience relationships and technology to be able to reprocess numerous forms of recyclable feedstock with that i'd like to turn the call over to jonathan for a review on the quarter thanks for gaming good morning everyone as outlined in our press release earlier today our fourth quarter and full year 2024 results highlight neo's continued momentum across key saints