5N Plus Reports 2023 Second Quarter Financial Results

Strongest quarterly and YTD Adjusted EBITDA and gross margin performance in nearly a decade

MONTRÉAL, Aug. 1, 2023 /CNW/ - 5N Plus Inc. (TSX:VNP) ("5N Plus" or the "Company"), a leading global producer of specialty semiconductors and performance materials, today announced its financial results for the second quarter of fiscal 2023 ("Q2 2023") ended June 30, 2023. All amounts in this press release are expressed in U.S. dollars unless otherwise stated.

"Our strong financial results year to date are a testament to our strategy and market leadership. They reflect our improved product mix and high-growth-end-market focus, as well as the effectiveness of our commercial excellence program implemented over a year ago. The disciplined execution of our strategic priorities has translated into delivering our strongest quarterly and year-to-date Adjusted EBITDA1 and gross margin performance in nearly a decade. At mid-year, we are on track to achieve our FY 2023 Adjusted EBITDA guidance.

"As a leader in the production of critical engineered materials and critical metal recovery, as well as a leading supplier of ultra-high purity specialty semiconductor materials outside of China, we are uniquely positioned to continue to benefit from strong demand in our end markets. This includes the space solar power and terrestrial renewable energy sectors, where we continue to invest in building capacity to meet unprecedented customer demand," said Gervais Jacques, President and CEO of 5N Plus.

Q2 2023 Highlights

• Revenue in Q2 2023 reached $59.1 million, compared to $72.4 million for the same period last year. The decrease is primarily attributable to the Company's strategic exit from the manufacturing of low-margin extractive and catalytic products in the second half of 2022.
• In Q2 2023, EBITDA1 was $17.5 million, compared to $6.7 million in Q2 2022. The $10.8 million increase is mainly explained by litigation and restructuring income of $9.0 million received from the previous shareholder of AZUR SOLAR Space GmbH ("AZUR") as per stipulations of the share purchase agreement.
• Adjusted EBITDA in Q2 2023 reached $10.8 million, compared to $8.6 million for the same period last year, an increase of 26%, with Specialty Semiconductors increasing by 27% to $8.1 million, due to higher demand and Performance Materials increasing by 12% to $6.2 million due to a more favourable product mix.
• Adjusted gross margin1 in Q2 2023 was 32.9%, compared to 22.4% in Q2 2022.
• On June 30, 2023, the backlog1 represented 289 days of annualized revenue, 17 days lower than the previous quarter due to the quarterly realization of yearly contracts under Performance Materials and 149 days higher than the same period last year primarily due to the demand for terrestrial renewable energy and space solar power.
• Net debt1 stood at $73.4 million as at June 30, 2023, compared to $78.3 million as at December 31, 2022, representing a decrease of $4.9 million.

Outlook

Management continues to expect strong demand in its target end markets, including terrestrial renewable energy and space solar power sectors under Specialty Semiconductors and in the health and pharmaceutical sector under Performance Materials. Management continues to approach future business opportunities with discipline and within the framework of its commercial excellence program pillars of innovation, value optimization and client partnership.

The ongoing implementation of the Company's capacity expansion programs – to increase output capacity at AZUR by 30% by 2024 and to increase production capacity under renewable energy applications by 35% in 2023 and 100% in 2024 – is progressing well and as planned. The Company is also in the advanced stages of securing additional complex feeds and secondary streams for the recovery of critical minerals, following the recent expansion of recycling and refining capacity at its Montreal plant.

Management maintains its previously disclosed Adjusted EBITDA1 guidance range of between $35 million and $40 million for FY 2023 and a projected Adjusted EBITDA range of between $45 million and $50 million for FY 2024.

Conference Call

5N Plus will host a conference call on Wednesday, August 2, 2023 at 8:00 am Eastern Time to discuss results of the second quarter for fiscal 2023. All interested parties are invited to participate in the live broadcast on the Company's website at www.5nplus.com.

To participate in the conference call:

• Toronto area: 416-764-8659
• Toll‐Free: 1-888-664-6392
• Enter access code: 13570887

A replay of the conference call will be available two hours after the event and until August 9, 2023. To access the recording, please dial 1-888-390-0541 and enter access code 570887.

About 5N Plus Inc.

5N Plus is a leading global producer of specialty semiconductors and performance materials. The Company's ultra‐pure materials often form the core element of its customers' products. These customers rely on 5N Plus's products to enable performance and sustainability in their own products. 5N Plus deploys a range of proprietary and proven technologies to develop and manufacture its products. The Company's products enable various applications in several key industries, including renewable energy, security, space, pharmaceutical, medical imaging and industrial. Headquartered in Montréal, Quebec, 5N Plus operates R&D, manufacturing and commercial centers in strategically located facilities around the world including Europe, North America and Asia.

Forward‐Looking Statements

Certain statements in this press release may be forward‐looking within the meaning of applicable securities laws. Forward‐looking information and statements are based on the best estimates available to the Company at the time and involve known and unknown risks, uncertainties or other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. A description of the risks affecting the Company's business and activities appears under the heading "Risk and Uncertainties" of 5N Plus' 2022 MD&A dated February 21, 2023 and note 10 of the unaudited condensed interim consolidated financial statements for the three and six-month periods ended June 30, 2023 and June 30, 2022 available on www.sedar.com.

Forward‐looking statements can generally be identified by the use of terms such as "may", "should", "would", "believe", "expect", the negative of these terms, variations of them or any similar terms. No assurance can be given that any events anticipated by the forward‐looking information in this press release will transpire or occur, or if any of them do so, what benefits that 5N Plus will derive therefrom. In particular, no assurance can be given as to the future financial performance of 5N Plus. The forward‐looking information contained in this press release is made as of the date hereof and the Company has no obligation to publicly update such forward‐looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws. The reader is warned against placing undue reliance on these forward‐looking statements.

5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
For the three and six-month periods ended June 30
(in thousands of United States dollars, except per share information) (unaudited)

Net earnings (loss) are completely attributable to equity holders of 5N Plus Inc.

5N PLUS INC.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of United States dollars) (unaudited)

Non‐IFRS Measures

EBITDA means net earnings (loss) before interest expenses, income taxes, depreciation and amortization. 5N Plus uses EBITDA because it believes it is a meaningful measure of the operating performance of its ongoing business, without the effects of certain expenses. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

EBITDA is reconciled to the most comparable IFRS measure:

Adjusted EBITDA means operating earnings (loss) as defined before the effect of impairment of inventories, share-based compensation expense (recovery), litigation and restructuring (income) costs, impairment of non-current assets, loss (gain) on disposal of property, plant and equipment, and depreciation and amortization. 5N Plus uses Adjusted EBITDA because it believes it is a meaningful measure of the operating performance of its ongoing business without the effects of certain expenses. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

Adjusted gross margin is a measure used to monitor the sales contribution after paying cost of sales, excluding depreciation and inventory impairment charges. 5N Plus also expressed this measure in percentage of revenues by dividing the gross margin value by the total revenue.

Adjusted gross margin is reconciled to the most comparable IFRS measure:

Backlog represents the expected orders the Company has received, but has not yet executed, and that are expected to translate into sales within the next twelve months, expressed in dollars and estimated in number of days not to exceed 365 days. Bookings represent orders received during the period considered, expressed in number of days, and calculated by adding revenues to the increase or decrease in backlog for the period considered, divided by annualized year revenues. 5N Plus uses backlog to provide an indication of expected future revenues in days, and bookings to determine its ability to sustain and increase its revenues.

Net debt is calculated as total debt less cash and cash equivalents. Any introduced IFRS 16 reporting measures in reference to lease liabilities are excluded from the calculation. 5N Plus uses this measure as an indicator of its overall financial position.

SOURCE 5N Plus Inc.

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