NEO.TO · 2025-08-12 12:00:00

Neo Performance Materials Reports

Corporate Updates

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(1)Neo reports non-IFRS measures such as "Adjusted Net Income", "Adjusted Earnings per Share", "Adjusted EBITDA",

"Adjusted EBITDA Margin" and "EBITDA". Please see information on this and other non-IFRS measures in the "Non-IFRS

Measures" section of this new release and in the MD&A, available on Neo's website at www.neomaterials.com and on

SEDAR+ at www.sedarplus.ca.

Neo Performance Materials Inc. Second Quarter 2025 News Release

Neo Performance Materials Reports

Second Quarter 2025 Results

Neo Raises Full Year Guidance on Strong First Half-Year Performance

TORONTO, Canada, August 12, 2025 – Neo Performance Materials Inc. (“ Neo”) (TSX:NEO) (OTCQX: NOPMF)

reported today its second quarter 2025 financial results. The financial statements and management's

discussion and analysis (“ MD&A”) for the three and six months ended June 30, 2025 , are available at

www.neomaterials.com and on SEDAR+ at www.sedarplus.ca. All financial amounts in this news release and

the Company's financial disclosures are in United States dollars, unless otherwise stated.

"Neo delivered strong second quarter results, with Adjusted EBITDA up 42% year -over-year. Our performance

for the first half of 2025 is ahead of expectations and reflects strong execution across the business. The results

were driven by continued strength in our key end markets and solid operational performance across all our

segments, including 31% volume growth in Magnequench. Given our strong first -half performance and our

business outlook, we are raising our full -year Adjusted EBITDA guidance to a range of $64.0 to $68.0 million,”

said Rahim Suleman, Neo's President and Chief Executive Officer.

"Our performance provides a strong foundation to execute on our clear strategic path, which is anchored by the

long-term growth opportunity in rare earth permanent magnets,” Suleman said. “Our European permanent

magnet facility has been recognized on the global stage at the recent G7 Summit and continues to attract

incredible customer interest, demonstrated by the award of an additional traction motor program. This multi -

year agreement is expected to generate $50 million in cumulative revenue, and we are focused on disciplined

execution to deliver long-term value for shareholders."

Key Takeaways

1. Strong Adjusted EBITDA Growth: Neo delivered $19.0 million and $36.1 million in Adjusted EBITDA for

three and six months ended June 30, 2025, marking a 41.6% and 49.5% increase, respectively, from the

same periods last year.

a. Magnequench (“MQ”) achieved an Adjusted EBITDA of $7.6 million and $14.2 million for the

three and six months ended June 30, 2025, increasing by $1.4 million and $1.9 million,

respectively, over the same periods last year.

b. Chemicals & Oxides (“C&O”) reported an Adjusted EBITDA of $5.4 million and $12.3 million for

the three and six months ended June 30, 2025, increasing by $2.8 million and $10.0 million,

respectively, over the same periods last year.

c. Rare Metals (“ RM”) experienced an improvement in Adjusted EBITDA, reporting $10.8 million

and $19.4 million for the three and six months ended June 30, 2025, increasing by $2.0 million

and $1.4 million, respectively, over the same periods last year.

2. Neo Raises Full Year 2025 Adjusted EBITDA Guidance : Neo has increased its 2025 Adjusted EBITDA

outlook to $64.0 to $68.0 million (up from $55.0 to $60.0 million) based on strong first -half

performance, while continuing to leverage its global supply chain to manage risks and capture

opportunities amid shifting geopolitical conditions.

3. Neo’s Permanent Magnet Highlighted at G7 Summit Emphasizing Need for Geographic

Diversification: In June 2025, Neo’s Made -in-Europe permanent magnet was showcased by EU

Commission President Ursula von der Leyen during the 2025 G7 Summit in Kananaskis, Alberta . The

President noted the strong global cooperation in building resilient critical material supply chains.

4. Neo Wins Additional Tier 1 and OEM Customer Award in Europe : In July 2025, Neo was awarded the

supply contract for a new platform of permanent rare earth magnets with an additional European Tier

_____________________________________________

(1)Neo reports non-IFRS measures such as "Adjusted Net Income", "Adjusted Earnings per Share", "Adjusted EBITDA",

"Adjusted EBITDA Margin" and "EBITDA". Please see information on this and other non-IFRS measures in the "Non-IFRS

Measures" section of this new release and in the MD&A, available on Neo's website at www.neomaterials.com and on

SEDAR+ at www.sedarplus.ca.

Neo Performance Materials Inc. Second Quarter 2025 News Release

1 supplier of EV traction motors to another major original equipment manufacturer (“ OEM”),

demonstrating Neo’s reputation as a preferred supplier.

5. Neo Announces Grand Opening Date of European Permanent Magnet Facility in September 2025 :

Construction of the European Permanent Magnet facility remains on track and on budget, with the

grand opening scheduled for September 2025, where Neo expects to host an international audience of

leadership representatives from government, investors, suppliers, media, and broader stakeholder

institutions. In the second quarter, the facility shipped its first sintered magnet samples matching

customer-defined specifications.

6. Heavy Rare Earth Pilot Line Commences Construction at the Silmet Facility : Neo started construction

of a heavy rare earth pilot line at its Silmet facility . The mini -production line is planned to produce

dysprosium and terbium, capable of supplying the newly constructed European Permanent Magnet

facility during its ramp -up phase in addition to serving other users and end -markets. This initiative

serves as a precursor to a potential full -scale commercial production line, adding heavy rare earth

capabilities to the light rare earths already separated by Neo in Europe.

7. Strategic Review Concludes, Reinforcing Neo’s Long -term Growth Strategy : Following a

recommendation from Neo’s Special Committee of independent directors, the board has resolved to

accelerate the implementation of Neo’s strategic plan. This approach will prioritize strengthening Neo’s

established leadership position in rare earth magnetics and critical materials and drive a transformative

and value-maximizing strategy for Neo, as evidenced by Neo’s efforts towards its European Permanent

Magnet facility. Neo’s strategic plan will continue to achieve enhancements in its cost of capital, and its

long-term return on capital, which includes Neo re -establishing a normal course issuer bid in June

2025.

Neo Performance Materials Inc. Second Quarter 2025 News Release

Q2 Financial Highlights

• Revenue for Q2 2025 was $114.7 million, compared to Q 2 2024 revenue of $107.5 million. On a first -

half basis, 2025 revenue was $236.3 million compared to $229.6 million in 2024.

• Operating income for Q 2 2025 was $8.2 million , compared to Q 2 2024 operating income of $5.8

million. On a first -half basis, 2025 operating income was $17.8 million, compared to $11.8 million in

2024.

• Adjusted Net Income(1) for Q 2 2025 was $7.8 million, or $0.19 earnings per share, compared to Q 2

2024 Adjusted Net Income(1) of $5.3 million or $0.13 earnings per share. For the six months ended June

30, 2025, Adjusted Net Income was $11.4 million, or $0.27 earnings per share, compared to Adjusted

Net Income of $5.6 million, or $0.14 earnings per share for the first six months of 2024.

• Adjusted EBITDA reached $19.0 million for Q2 2025 and $36.1 million for the six months ended June

30, 2025, compared to $13.4 million and $24.2 million, respectively, in the prior year period. This

drove a corresponding improvement in Adjusted EBITDA margin to 16.5% for the quarter and 15.3% for

the first half, which represents gains of 400 and 480 basis points over the prior -year periods,

respectively.

• For the six months ended June 30, 2025 , Neo used $22.8 million in cash from operating activities,

which includes the impact of the European patent settlement, increased accounts receivable from

customer sales timing, and strategic inventory held due to geopolitical risks. Neo had $80.3 million in

cash and $93.6 million in gross debt on its balance sheet as of June 30, 2025.

• Neo invested $10.2 million in capital expenditures for the six months ended June 30, 2025 mainly

comprised of $4.9 million for the construction of the new permanent magnet facility in Europe.

• For the six months ended June 30, 2025, Neo distributed $6.1 million in dividends to Neo's

shareholders and repurchased $2.3 million of common shares for cancellation, which began on June

11, 2025.

• A quarterly dividend of CAD$0.10 per common share was declared on August 7, 2025, for shareholders

of record on September 16, 2025, with a payment date of September 26, 2025.

Solid Business Performance

• Magnequench: Delivered a strong second quarter of 2025, with volumes up 30.9% and Adjusted

EBITDA improving by 23% over the same quarter last year. The solid performance was driven by

continued execution in strategic growth areas, including bonded magnets and bonded powders in

traction motor applications, as well as increased demand as customers built inventory reserves in

response to supply concerns and geopolitical risks. Magnequench continues to capitalize on key growth

areas while optimizing its cost structure through a reduction in conversion cost, driving improved

profitability.

• Key news and highlights this quarter include:

◦ Magnequench advances European magnetics strategy with new award and facility milestones -

additionally securing a new supply platform in July 2025.

◦ Bonded Magnets and Powders quarterly volumes up 36% and 30%, respectively, from the prior

year.

◦ Adjusted EBITDA of $7.6 million and $14.2 million, respectively, for the three and six months

ended June 30, 2025 was up 23% and 16% versus the same periods last year.

• C&O: Delivered substantial gains in the second quarter of 2025 with Adjusted EBITDA improving by

105% over the same quarter last year. With the completion of C&O’s new emissions control catalyst

facility and the sale of the Chinese separation facilities in March 2025, C&O is well positioned for

continued success.

Neo Performance Materials Inc. Second Quarter 2025 News Release

• Key news and highlights this quarter include:

◦ Emissions catalyst volumes for the quarter were up 11% from the prior year, which reflects

substantial progress towards management’s target of double -digit growth as previously laid

out.

◦ Wastewater treatment volumes for the quarter were up 23% from the prior year.

◦ Continued progress on heavy rare earth separation pilot line in Europe, remaining on budget

and on schedule with construction underway.

◦ Adjusted EBITDA of $5.4 million and $12.3 million, respectively, for the three and six months

ended June 30, 2025 was up 105% and 441% compared to the same periods last year.

• Rare Metals : Delivered ahead of expectations, the business continues to deliver strong operational

execution and financial performance across all of its facilities, while benefiting from market tailwinds

across many of its critical material products amid rising geopolitical tension.

• Key news and highlights this quarter include:

◦ Hafnium volumes continued to grow with strong end market demand, combining with further

tailwinds driven by increased U.S. tariffs, causing customers to accelerate purchases and build

inventory. This was offset by lower prices and margins as hafnium prices have now retreated

from previous all-time highs.

◦ The g allium business continues to see strong demand and higher prices amidst regulatory

tailwinds. Neo continues to be the only gallium recycler and upgrader in North America.

◦ Adjusted EBITDA of $10.8 million and $19.4 million, respectively, for the three and six months

ended June 30, 2025 was up 22% and 8% versus the same periods last year.

Neo continues to demonstrate robust growth and strategic advancements in the second quarter of 2025. With

significant improvements in Adjusted EBITDA across all segments, successful completion of major projects, and

new contracts secured, Neo is well -positioned for the rest of 2025. Looking ahead, the Company remains

committed to leveraging its global supply chain, driving innovation, and delivering value to stakeholders.

Conference Call

Neo’s second quarter 2025 financial results webcast and conference calls details are provided below.

Webcast / Conference Call Details:

Date: Tuesday, August 12, 2025

Time: 10:00 AM ET | 7:00 AM PT

Listen Only Webcast: Webcast Link

Conference call: 1-416-945-7677 (local) or 1 -888-699-1199 (toll -free long distance) or by visiting Dial-in Link

and completing the online registration form. Once registered, you will receive the dial -in information and a

unique PIN to join the call.

A replay of the webcast will be available by clicking on the webcast LINK above and will be archived on the

Company’s website for a limited time.

Neo Performance Materials Inc. Second Quarter 2025 News Release

Contacts

Irina Kuznetsova Vasileios Tsianos

Investor Relations Media Requests

(416) 367-8588 ext. 7334 (416) 367-8588 ext. 7335

[email protected] [email protected]

Non-IFRS Financial Measures

This new release refers to certain specified financial measures, including non-IFRS financial measures and ratios

such as “EBITDA”, “Adjusted EBITDA”, “Adjusted EBITDA Margin”, “Adjusted Net Income”, “Adjusted Earnings per

Share”, “Debt to Adjusted EBITDA”, “Free Cash Flow”, “Free Cash Flow conversion”, “Net Debt”, and “Gross

Margin”. These specified financial measures are not recognized measures under IFRS, do not have a

standardized meaning prescribed by IFRS, and may not be comparable to similar measures presented by other

companies. Rather, these specified financial measures are provided as additional information to complement

IFRS financial measures by providing further understanding of Neo’s results of operations from management's

perspective. Neo’s definitions of non -IFRS measures used in this presentation may not be the same as the

definitions for such measures used by other companies in their reporting.

Specified financial measures such as non -IFRS measures and ratios have limitations as analytical tools and

should not be considered in isolation nor as a substitute for analysis of Neo’s financial information reported

under IFRS. Neo uses specified financial measures to provide investors with supplemental measures of its base-

line operating performance and to eliminate items that have less bearing on operating performance or

operating conditions and thus highlight trends in its core business that may not otherwise be apparent when

relying solely on IFRS financial measures. Neo believes that securities analysts, investors and other interested

parties frequently use specified financial measures such as non -IFRS financial measures and ratios in the

evaluation of issuers. Neo’s management also uses non -IFRS financial measures and ratios to facilitate

operating performance comparisons from period to period. Readers are cautioned that these measures should

not be construed as an alternative to their nearest or directly comparable financial measures determined in

accordance with IFRS as an indication of Neo’s financial performance. For further information on how Neo

defines such specified financial measures, including non -IFRS financial measures and ratios and, where

applicable, their reconciliations to the nearest comparable IFRS measures, please see the “Non -IFRS Financial

Measures” section of Neo’s MD&A for the three and six months ended June 30, 2025 , which is hereby

incorporated by reference into this news release, and at www.neomaterials.com and on SEDAR+ at

www.sedarplus.ca.

About Neo Performance Materials

Neo manufactures the building blocks of many modern technologies that enhance efficiency and sustainability.

Neo's advanced industrial materials – magnetic powders, rare earth magnets, magnetic assemblies, specialty

chemicals, metals, and alloys – are critical to the performance of many everyday products and emerging

technologies. Neo's products fast -forward technologies for the net -zero transition. The business of Neo is

organized along three segments: Magnequench, Chemicals & Oxides and Rare Metals. Neo is headquartered in

Toronto, Ontario, Canada; with corporate offices in Greenwood Village, Colorado, United States; Singapore; and

Beijing, China. Neo has a global platform that includes manufacturing facilities located in China, Germany,

Canada, Estonia, Thailand and the United Kingdom, as well as one dedicated research and development centre

in Singapore. For more information, please visit www.neomaterials.com.

Cautionary Statements Regarding Forward Looking Statements

This news release contains “forward -looking information” within the meaning of applicable securities laws in

Canada. Forward-looking information may relate to future events or future performance of Neo. All statements

in this news release, other than statements of historical facts, with respect to Neo’s objectives and goals, as

Neo Performance Materials Inc. Second Quarter 2025 News Release

well as statements with respect to its beliefs, plans, objectives, expectations, anticipations, estimates, and

intentions are forward-looking information.

Specific forward-looking information in this presentation include, but are not limited to: expectations regarding

certain of Neo’s future results and information, including, among other things, revenue, expenses, growth

prospects, capital expenditures, and operations; risk factors relating to national or international economies,

geopolitical risk and other risks present in the jurisdictions in which Neo, its customers, its suppliers, and/or its

logistics partners operate; statements with respect to current and future market trends that may directly or

indirectly impact sales and revenue of Neo, including but not limited to the price of rare earth elements;

expected use of cash balances; continuation of prudent management of working capital; source of funds for

ongoing business requirements and capital investments; expectations regarding sufficiency of the allowance for

uncollectible accounts and inventory provisions; analysis regarding sensitivity of the business to changes in

exchange rates and changes in rare earth prices; impact of recently adopted accounting pronouncements; risk

factors relating to intellectual property protection and intellectual property litigation; expectations regarding

demand for fan motors and superalloys; expectations regarding the growth of superconductor materials;

anticipated completion and launch of Neo’s new PM facility in Europe and related commercial production

estimates, forecasted budget, commissioning and costs associated with the facility; targeted reductions in

SG&A; Neo’s requalified product portfolio, including the NAMCO product portfolio, and continued product

qualification expected in 2025; anticipated final costs associated with the NAMCO project; expectations

regarding tariffs and export controls; securing new automotive customer agreements for PM and emissions

control facilities; expectations concerning the continued growth of the Magnequench project and

improvements in C&O; expectations concerning any remediation efforts to Neo’s design of its internal controls

over financial reporting and disclosure controls and procedures; and Neo’s 2025 guidance, including Neo’s 2025

Adjusted EBITDA guidance and the assumptions relating thereto.

Often, but not always, forward -looking information can be identified by the use of words such as “plans”,

“expects”, “is expected”, “budget”, “scheduled”, “estimates”, “continues”, “forecasts”, “projects”, “predicts”,

“intends”, “anticipates” or “believes”, or variations of, or the negatives of, such words and phrases, or state that

certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be

achieved. This information involves known and unknown risks, uncertainties and other factors that may cause

actual results or events to differ materially from those anticipated in such forward -looking information.

Additionally, Neo’s 2025 guidance reflects Neo’s expectations as to financial performance in 2025 based on

assumptions which Neo believes to be reasonable as of the date of this presentation, including but not limited

to continued Magnequench growth, significant improvements in C&O, exiting lower -margin separation assets,

strong hafnium demand despite pricing moderation, continued reduction in SG&A expenses, expectations

regarding tariffs and export restrictions; securing new automotive customer agreements for PM and emissions

control facilities; expectations concerning the continued growth of the Magnequench project and

improvements in C&O. Neo believes the expectations reflected in such forward -looking information are

reasonable, but no assurance can be given that these expectations will prove to be correct and such forward -

looking information included in this discussion and analysis should not be unduly relied upon. For more

information on Neo, investors should review Neo’s continuous disclosure filings available under its profile at

www.sedarplus.ca. Information contained in forward -looking statements in this presentation is provided as of

the date hereof and Neo disclaims any obligation to update any forward -looking information, whether as a

result of new information or future events or results, except to the extent required by applicable securities

laws.

Neo Performance Materials Inc. Second Quarter 2025 News Release

HIGHLIGHTS OF SECOND QUARTER 2025 CONSOLIDATED PERFORMANCE

($000s, except per share information) Three Months Ended June

30,

Six Months Ended

June 30

2025 2024 2025 2024

Revenue

Magnequench $ 50,468 $ 42,096 $ 94,740 $ 87,576

C&O 29,443 34,478 76,944 74,991

Rare Metals 35,948 31,909 68,653 69,187

Corporate / Eliminations (1,159) (1,435) (4,027) (2,110)

Consolidated Revenue $ 114,700 $ 107,549 $ 236,310 $ 229,644

Operating Income (Loss)

Magnequench $ 1,611 $ 2,257 $ 3,504 $ 5,641

C&O 3,959 198 9,687 (1,906)

Rare Metals 10,127 8,573 18,278 17,373

Corporate / Eliminations (7,487) (5,204) (13,670) (9,336)

Consolidated Operating Income $ 8,210 $ 5,824 $ 17,799 $ 11,772

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)

Magnequench $ 7,558 $ 6,168 $ 14,217 $ 12,280

C&O 5,439 2,651 12,282 2,271

Rare Metals 10,756 8,786 19,397 18,024

Corporate / Eliminations (4,785) (4,213) (9,794) (8,423)

Consolidated Adjusted EBITDA $ 18,968 $ 13,392 $ 36,102 $ 24,152

Net Earnings $ 5,688 $ 883 $ 4,301 $ 1,732

Earnings per share attributable to equity holders of Neo

Basic $ 0.14 $ 0.02 $ 0.10 $ 0.04

Diluted $ 0.13 $ 0.02 $ 0.10 $ 0.04

Cash spent on property, plant and equipment and intangible

assets

$ 8,889 $ 10,677 $ 20,317 $ 26,656

Cash taxes paid $ 2,960 $ 5,790 $ 8,166 $ 13,303

Dividends paid to shareholders $ 3,159 $ 3,127 $ 6,080 $ 6,211

Dividend paid to Buss & Buss minority shareholder $ — $ — $ 7,343 $ —

Repurchase of common shares under Normal Course Issuer Bid $ 2,342 $ — $ 2,342 $ 2,250

As at:

June 30,

2025

December

31, 2024

Cash and cash equivalents $ 80,343 $ 85,489

Short-term debt, bank advances & other $ — $ 2,740

Current & long-term debt $ 93,595 $ 68,796

Neo Performance Materials Inc. Second Quarter 2025 News Release

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Unaudited; ($000s) June 30,

2025

December 31,

2024

ASSETS

Current

Cash and cash equivalents $ 80,343 $ 85,489

Accounts receivable 83,11

61,232

Inventories 146,69

139,321

Income taxes receivable 6,53

4,108

Assets held for sale

—

40,949

Other current assets 18,65

22,389

Total current assets 335,342 353,488

Property, plant and equipment 190,31

178,925

Intangible assets 31,96

33,580

Goodwill 64,77

64,029

Equity method investments 16,705 16,330

Other investments 3,154 217

Deferred tax assets 3,87

4,045

Other non-current assets 6,34

2,640

Total non-current assets 317,130 299,766

Total assets $ 652,472 $ 653,254

LIABILITIES AND EQUITY

Current

Short-term debt $ — $ 2,740

Accounts payable and other accrued charges 66,556 69,546

Income taxes payable 13,42

10,463

Provisions 58

12,512

Lease obligations 1,04

1,229

Derivative liability 50,01

47,416

Current portion of long-term debt 4,493 4,610

Liabilities directly associated with the assets held for sale

—

10,254

Other current liabilities 311 647

Total current liabilities 136,41

159,41

7 Long-term debt 89,102 64,186

Derivative liability 1,436 1,311

Provisions 6,63

6,726

Deferred tax liabilities 9,98

12,646

Lease obligations 3,07

3,244

Other non-current liabilities 71

842

Total non-current liabilities 110,95

88,955

Total liabilities 247,370 248,372

Non-controlling interest 50

2,714

Equity attributable to common shareholders 404,59

402,168

Total equity 405,102 404,882

Total liabilities and equity $ 652,472 $ 653,254

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