Neo Performance Materials Inc T.NEO

earnings - key point

[Possibleidiot01]

Commodity prices fluctuate and while higher cost inventory sales raised revenues , they also lowered margins.

""With regard to the quarter, while rare earth pricing remains attractive in absolute dollar terms, and is nearly double pre-pandemic norms, the retreat in pricing we have seen over the past six months placed short-term pressure on our margin levels, as higher cost inventory flows through our results of operations," he added. "This lead-lag volatility is normal in our industry and, of course, we reap the benefit in a rising price environment."

[freed1freed1]

ouch

[freed1freed1]

goodbye

[neosceptic]

Yes, ouch, someone recently bought 67M worth of NEO at $15/share. Of course it is still s-t and hopefully they are right. Good for NEO cash position, together with grant it can expand, but they have to do something about cost control.

[neosceptic]

Higher cost inventory do not raise revenue. Revenue is driven by market price of the commodity. If you buy expensive material, but price on it drops, nobody would care how much you pay for it. But lead lag do exist. If NEO is not covering up own mistakes or l-t problems, we should see improved margin next quarter. Magnets is good business now, but supply disruptions and economy problems is here

[Possibleidiot01]

You are making some good points. It's possible I phrased my point badly but  "while rare earth pricing remains attractive in absolute dollar terms, and is nearly double pre-pandemic norms" does not affect revenues , well, I think that might be debatable. Onto seekingalpha headline Neo Performance Materials down after Q3 results miss consensus Nov. 11, 2022 11:40 AM

[neosceptic]

Yes, it is possible that the large expense figure relate to accounting treatment and next quarter it will normalize, but 82% margin collapse still impressive, could be more than that. I think 8M charge is to get next quarter numbers look like rebound even more. Since they knew that margin will get hit, instead of smoothing, Neo decided to maximize expense to "clean up" balance sheet for