5N Plus Reports Financial Results for the Second Quarter Ended June 30, 2016

MONTREAL, Aug. 2, 2016 /CNW Telbec/ - 5N Plus Inc. (TSX: VNP),  the leading producer of specialty metal and chemical products, today reported financial results for the second quarter ended June 30, 2016. All amounts are expressed in U.S. dollars.

The Company completed a second quarter characterized by healthy demand for its products in an environment of moderate stability with respect to most commodity prices resulting in the best quarter performance since 2014. In addition, the Company continued to manage cash diligently and operating expenses judiciously, ending the quarter once again with a solid balance sheet, presenting no usage of its credit facility and high level of liquidity.

  • Adjusted EBITDA1 and EBITDA1 reached $4.7 million and $5.4 million in Q2 2016 compared to $2.0 million and ($6.0) million in Q2 2015. The Adjusted EBITDA recovered from the last 6 quarters accommodated by moderately stable commodity prices, favorable mix, and reduced operating expenses.
  • Net debt1 was reduced during the quarter standing at $27.5 million as at June 30, 2016 down from $58.4 million one year earlier, following reduction of working capital requirements and overall better performance.
  • Revenues for Q2 2016 reached $57.4 million compared to $87.3 million for the same quarter of 2015, impacted by significant decrease of underlying commodity pricing over the course of 2015.
  • Backlog1 reached as at June 30, 2016 a level of 157 days of sales outstanding, an improvement over the backlog as at March 31, 2016 registered at 145 and June 30, 2015 at 137 days. Bookings1 for the second quarter of 2016 reached 86 days compared to 89 days in the first quarter of 2016, and 73 days in the second quarter of 2015.

Arjang (AJ) Roshan, President and Chief Executive Officer, said "Following improved profitability in Q1 2016, we are encouraged by further improvement in our performance during Q2 2016.  During the quarter, price of the metals we utilize in our products remained moderately stable, while working capital was further reduced as compare to the same period last year and Q1 2016.  Consequently, any inherent influence from the metal markets on our performance in the reporting period was muted."

Mr. Roshan continued, "Given the environment of lower metal prices along with continued favorable product mix; in part driven by our selective approach toward market opportunities, significant improvement in Gross Margin1 was realized when compared to last year.  While the general market for a number of end-products associated with Gallium and Indium remained challenging, the demand for most other products remained healthy."

Mr. Roshan concluded, "During this period, we finalized a Strategic Plan aimed at improving our profitability along with reducing our volatility exposure. As communicated last quarter, the highlights of the plan will be shared early September.  In the meanwhile, we have moved forward with implementing certain aspects of the plan including maximization of the core business, appropriate positioning of the growth initiatives and optimization of the existing assets and operations. One immediate outcome from these activities has been the closure of a jointly-owned European manufacturing site and select regional corporate offices."

Webcast Information
5N Plus will host a conference call on Wednesday, August 3, 2016 at 8:00 am ET with financial analysts and institutional investors to discuss results of the quarter ended June 30, 2016. All interested parties are invited to participate in the live broadcast on the Company's Web site at www.5nplus.com.  A replay of the webcast and a recording of the Q&A will be available until August 10, 2016.

To participate in the conference call:

  • Montreal area: 514-807-9895
  • Toronto area: 647-427-7450
  • Toll-Free : 1-888-231-8191

Enter access code 57680403.

Non-IFRS Measures
EBITDA means net earnings (loss) before interest expenses (income), income taxes, depreciation and amortization. We use EBITDA because we believe it is a meaningful measure of the operating performance of our 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 EBITDA means EBITDA as defined above before impairment of inventories, allowance for doubtful of a receivable from a related party, litigation and restructuring costs, gain on disposal of property, plant and equipment, change in fair value of debenture conversion option, foreign exchange and derivatives loss (gain). We use adjusted EBITDA because we believe it is a meaningful measure of the operating performance of our ongoing business without the effects of inventory write-downs. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

Net debt or net cash is a measure we use to monitor how much debt we have after taking into account cash and cash equivalents and restricted cash. We use it as an indicator of our overall financial position, and calculate it by taking our total debt, including the current portion, and subtracting cash and cash equivalents and restricted cash.

Gross margin is a measure we use to monitor the sales contribution after paying cost of sales excluding depreciation of property, plant and equipment. We also expressed this measure in percentage of revenues by dividing the gross margin value by the total revenue.

Backlog represents the expected value of orders we have received but have not yet executed and that are expected to translate into sales within the next twelve months. Bookings represents the value of orders received during the period considered and is calculated by adding revenues to the increase or decrease in backlog for the period considered. We use backlog to provide an indication of expected future revenues, and bookings to determine our ability to sustain and increase our revenues.

About 5N Plus Inc.
5N Plus is the leading producer of specialty metal and chemical products.  Fully integrated with closed-loop recycling facilities, the Company is headquartered in Montreal, Québec, Canada and operates manufacturing facilities and sales offices in several locations in Europe, the Americas and Asia.  5N Plus deploys a range of proprietary and proven technologies to produce products which are used in a number of advanced pharmaceutical, electronic and industrial applications.  Typical products include purified metals such as bismuth, gallium, germanium, indium, selenium and tellurium, inorganic chemicals based on such metals and compound semiconductor wafers.  Many of these are critical precursors and key enablers in markets such as solar, light-emitting diodes and eco-friendly materials.

Forward-Looking Statements and Disclaimer
This press release may contain forward-looking information within the meaning of applicable securities laws.  All information and statements other than statements of historical facts contained in this press release are forward-looking information.  Such statements and information may be identified by words such as "about", "approximately", "may", "believes", "expects", "will", "intends", "should", "plans", "predicts", "potential", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof or other comparable terminology.  Forward-looking statements are based on the best estimates available to 5N Plus at this time and involve known and unknown risks, uncertainties and other factors that may cause 5N Plus' 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 5N Plus' business and activities appears under the heading "Risk and Uncertainties" of 5N Plus' 2015 MD&A dated February 23, 2016 and notes 11 and 12 of the unaudited condensed interim consolidated financial statements for the three and six-month periods ended June 30, 2016 and 2015, available on SEDAR at www.sedar.com. 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 5N Plus undertakes 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.



Condensed Interim Consolidated Statements of Financial Position



(in thousands of United States dollars) (unaudited)








June 30, 2016


December 31, 2015


$

$

Assets



Current



Cash and cash equivalents

15,225

8,816

Accounts receivable

29,028

37,325

Inventories

82,665

89,052

Income tax receivable

3,235

2,632

Other current assets

1,430

1,820

Total current assets

131,583

139,645

Property, plant and equipment

63,510

67,646

Intangible assets

9,113

7,315

Deferred tax assets

4,003

3,478

Investment accounted for using the equity method

866

310

Derivative financial assets

1,538

-

Other assets

1,358

2,343

Total non-current assets

80,388

81,092

Total assets

211,971

220,737




Liabilities






Current



Trade and accrued liabilities

47,431

38,744

Income tax payable

5,674

6,598

Current portion of long-term debt

350

435

Total current liabilities

53,455

45,777

Long-term debt

-

1,512

Convertible debentures

43,879

40,288

Deferred tax liabilities

746

668

Employee benefit plan obligation

15,814

13,934

Derivative financial liabilities

345

1,530

Other liabilities

4,576

20,403

Total non-current liabilities

65,360

78,335

Total liabilities

118,815

124,112




Equity






Equity holders of 5N Plus Inc.

93,164

96,632

Non-controlling interests

(8)

(7)

Total equity

93,156

96,625

Total liabilities and equity

211,971

220,737


5N PLUS INC.



Condensed Interim Consolidated Statements of Earnings (Loss)



For the three-month and six-month periods ended June 30



(in thousands of United States dollars, except per share information) (unaudited)







Three months

Six months


2016

2015

2016

2015


$

$

$

$

Revenue

57,435

87,250

121,303

182,913

Cost of sales

46,913

86,624

100,652

176,546

Selling, general and administrative expenses

6,773

6,719

13,151

13,743

Other expenses

1,516

13,132

4,566

14,327

Share of loss (gain) from joint ventures

39

(57)

(74)

21


55,241

106,418

118,295

204,637

Operating earnings (loss)

2,194

(19,168)

3,008

(21,724)






Finance expense





Interest on long-term debt

876

1,198

1,756

2,388

Imputed interest and other interest expense

989

1,549

2,808

2,442

Changes in fair value of debenture conversion option

(57)

(933)

252

(1,646)

Foreign exchange and derivative (gain) loss

(587)

2,362

(560)

(61)


1,221

4,176

4,256

3,123

Earnings (loss) before income taxes

973

(23,344)

(1,248)

(24,847)

Income tax expense (recovery)






Current

347

316

1,046

28


Deferred

539

(3,196)

(472)

(2,460)


886

(2,880)

574

(2,432)

Net earnings (loss)

87

(20,464)

(1,822)

(22,415)






Attributable to:





Equity holders of 5N Plus Inc.

86

(20,463)

(1,821)

(22,412)

Non-controlling interests

1

(1)

(1)

(3)


87

(20,464)

(1,822)

(22,415)

Earnings (loss) per share attributable to equity holders of 5N Plus Inc.

-

(0.24)

(0.02)

(0.27)

Basic earnings (loss) per share

-

(0.24)

(0.02)

(0.27)

Diluted earnings (loss) per share

-

(0.24)

(0.02)

(0.27)

5N PLUS INC.





(Figures in thousands of United States dollars)










Funds from Operations











Q2 2016

Q2 2015

YTD 2016

YTD 2015


$

$

$

$

Funds from (used in) operations1

4,521

(1,482)

6,992

(3,497)

Net acquisition of PPE and intangible assets

(1,539)

(5,313)

(3,443)

(11,567)

Working capital changes

(3,148)

22,877

3,866

37,534

Others

249

425

(19)

3,156


(4,438)

17,989

404

29,123

Total movement in net debt1

83

16,507

7,396

25,626

Net debt1, beginning of period

(27,549)

(74,888)

(34,862)

(84,007)

Net debt1, end of period

(27,466)

(58,381)

(27,466)

(58,381)











Revenue by Segment and Gross Margin











Q2 2016

Q2 2015

YTD 2016

YTD 2015


$

$

$

$

Electronic Materials

19,706

30,793

39,274

60,433

Eco-Friendly Materials

37,729

56,457

82,029

122,480

Total revenue

57,435

87,250

121,303

182,913

Cost of sales

(46,913)

(86,624)

(100,652)

(176,546)

Depreciation on property, plant and equipment

2,455

1,946

4,701

3,977

Gross margin1

12,977

2,572

25,352

10,344

Gross margin percentage1

22.6%

2.9%

20.9%

5.7%











EBITDA and Adjusted EBITDA











Q2 2016

Q2 2015

YTD 2016

YTD 2015


$

$

$

$

Revenue

57,435

87,250

121,303

182,913

Operating expenses*

(52,721)

(85,287)

(112,339)

(180,680)

Adjusted EBITDA1

4,714

1,963

8,964

2,233

Impairment of inventory

-

(6,500)

-

(6,500)

Litigation and restructuring costs

-

-

(1,030)

-

Change in fair value of debenture conversion option

57

933

(252)

1,646

Foreign exchange and derivative gain (loss)

587

(2,362)

560

61

EBITDA1

5,358

(5,966)

8,242

(2,560)

Interest on long-term debt, imputed interest and other interest expense

1,865

2,747

4,564

4,830

Depreciation and amortization

2,520

14,631

4,926

17,457

Earnings (loss) before income taxes

973

(23,344)

(1,248)

(24,847)


*Excluding litigation and restructuring costs and depreciation and amortization.      

      

Backlog and Bookings
















BACKLOG1



BOOKINGS1



Q2 2016

Q1 2016

Q2 2015

Q2 2016

Q1 2016

Q2 2015


$

$

$

$

$

$

Electronic Materials

49,790

48,481

68,368

21,015

20,824

18,095

Eco-Friendly Materials

48,825

53,192

62,981

33,362

41,778

51,742

Total

98,615

101,673

131,349

54,377

62,602

69,837








(number of days based on annualized revenues) *


BACKLOG1



BOOKINGS1



Q2 2016

Q1 2016

Q2 2015

Q2 2016

Q1 2016

Q2 2015

Electronic Materials

231

226

203

97

97

54

Eco-Friendly Materials

118

110

102

81

86

84

Weighted average

157

145

137

86

89

73








*Bookings and backlog are also presented in number of days to normalize the impact of commodity prices.

______________________________

1 See Non-IFRS Measures

SOURCE 5N Plus Inc.

For further information: Jean Mayer, Vice President, Legal Affairs and Corporate Secretary, 5N Plus Inc., (514) 856-0644 x6178, invest@5nplus.com

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