Neo Material Technologies reports 2009 financial results

    
    -  Revenues of US$187.5 million
    -  Strong EBITDA of US$35.1 million
    -  Cash and net cash positions of US$57.3 million and US$50.3 million
    -  Net Income and EPS at US$19.7 million or US$0.17 per share
    

TORONTO, March 11 /CNW/ - Neo Material Technologies Inc. (TSX: NEM) (the "Company") today reported its financial results for the three-month and twelve-month periods ending December 31, 2009. Unless otherwise specified, all currency amounts are expressed in U.S. dollars.

For the three-month period ended December 31, 2009, the Company reported a 34 percent increase in revenues amounting to $62.8 million, with net income increasing to $8.7 million, or $0.07 per share on a basic and fully diluted basis. Operating income plus depreciation and amortization ("EBITDA") during the quarter was $14.6 million. This compares to fourth quarter 2008 revenues of $46.6 million, a net loss of $0.7 million, or $0.01 per share on a basic and fully diluted basis and EBITDA of $1.8 million. Operating income for the fourth quarter of 2009 was $11.6 million compared to an operating loss of $1.0 million in the corresponding period in 2008. Neo's fourth quarter operating results reflect the continuing strong recovery in demand for the Company's products.

For the year ended December 31, 2009, the Company reported revenues of $187.5 million and net income of $19.7 million, or $0.17 per share on a basic and fully diluted basis. EBITDA for the year was $35.1 million. This compares to 2008 revenues of $266.6 million, net income of $23.3 million, or $0.22 per share on a basic and fully diluted basis, and EBITDA of $48.8 million. The decrease in the full year revenues, EBITDA and net earnings is due primarily to a slowdown in demand for the Company's products in light of the global economic contraction, which commenced in the fourth quarter of 2008 and lasted well into 2009.

At December 31, 2009, the Company had a record $57.3 million in cash. Long-term debt was nil as at December 31, 2009 and December 31, 2008.

"We were not immune from the global economic crisis of 2008/2009. Our focus over the past few years, however, on strengthening our balance sheet, paying close attention to what our customers were telling us and having all of our employees rowing in the same direction, helped us prepare for, and manage through these turbulent times" noted Constantine Karayannopoulos, President & CEO. "With the depths of the recession behind us, it is gratifying to see our business returning to its usual growth patterns. From what we can see, there is strong demand for our products and we expect the growth trends to continue for the foreseeable future."

Based on the current business climate and market demand for its products, management maintains a positive outlook for 2010.

    
    Magnequench
    $000's (except for   ----------------------------------------------------
     quantity shipped)                                              Trailing
                             Q4       Q1       Q2       Q3       Q4   Twelve
                           2008     2009     2009     2009     2009   Months
    -------------------------------------------------------------------------
    Quantity Shipped
     (tonnes)               777      505      878    1,268    1,293    3,944
    -------------------------------------------------------------------------
    Revenues             21,914   13,840   24,411   34,049   32,941  105,241
    -------------------------------------------------------------------------
    Operating Income(1)   4,040    1,340    9,014   16,255   15,132   41,741
    -------------------------------------------------------------------------

    Performance Materials
    $000's (except for   ----------------------------------------------------
     quantity shipped)                Q1       Q2       Q3          Trailing
                             Q4     2009     2009     2009       Q4   Twelve
                           2008 restated restated restated     2009   Months
    -------------------------------------------------------------------------
    Quantity Shipped
     (tonnes)             1,726      974      992    1,144    1,954    5,064
    -------------------------------------------------------------------------
    Revenues             28,134   14,951   18,222   21,678   31,611   86,462
    -------------------------------------------------------------------------
    Operating Income
     (Loss)(1)(2)        (2,864)  (2,092)     170      151    1,279     (492)
    -------------------------------------------------------------------------

    Consolidated
    $000's (except for   ----------------------------------------------------
     quantity shipped)                Q1       Q2       Q3          Trailing
                             Q4     2009     2009     2009       Q4   Twelve
                           2008 restated restated restated     2009   Months
    -------------------------------------------------------------------------
    Inter-segment sales  (3,456)       -     (879)  (1,582)  (1,756)  (4,217)
    -------------------------------------------------------------------------
    Revenues             46,592   28,791   41,754   54,145   62,796  187,486
    -------------------------------------------------------------------------
    Operating Income
     (Loss)(2)             (968)  (3,819)   5,308   11,396   11,637   24,522
    -------------------------------------------------------------------------
    EBITDA(2)             1,759   (1,278)   7,844   14,004   14,577   35,147
    -------------------------------------------------------------------------

    Note:
    (1) Divisional Operating Income (Loss) presented in the tables above
        excludes stock-based compensation expense.
    (2) Operating Income for the quarters ending March 31, 2009, June 30,
        2009 and September 30, 2009 has been restated as a result of
        adjustments to the currency conversion of items sold from inventory
        and accordingly, the costs of sales and inventory balances have also
        been restated. The net effect of the restatements was an increase to
        inventory of $1.4 million, $0.3 million and $0.2 million as at
        March 31, June 30, and September 30, 2009, respectively, and an
        equivalent increase to operating income and EBITDA in each of those
        periods. The only effect on earnings per share was to reduce the
        March 31, 2009 loss per share from $0.04 to $0.03.
    

Teleconference Call

Management will host a teleconference call on Friday, March 12, 2010 at 10:00 a.m. (Eastern Time) to discuss these results. Interested parties may access the teleconference by calling (647) 427-7450 (local) or (888) 231-8191 (toll free long distance) or by visiting http://www.newswire.ca/webcast. A recording of the teleconference may be accessed by calling (416) 849-0833 (local) or (800) 642-1687 (toll free long distance), and entering pass code 60597278 followed by the number sign until April 12, 2010 or by visiting http://www.newswire.ca/webcast.

Online Access

The financial statements and the Management's Discussion and Analysis will be posted to SEDAR (www.sedar.com) and available online at www.neomaterials.com on or before March 15, 2010.

Notice of Shareholder Meeting

The Company will hold its Annual General and Special Meeting of Shareholders on Thursday, June 17, 2010 at 4:00 pm at The Gallery, TSX Conference Centre, The Exchange Tower, 130 King Street West, Toronto, Ontario

About Neo Material Technologies

Neo Material Technologies is a producer, processor and developer of neodymium-iron-boron magnetic powders, rare earths and zirconium based engineered materials and applications, and other high value niche metals and their compounds through its Magnequench and Performance Materials business divisions. These innovative products are essential in many of today's high technology products. Magnequench's Neo powders are used to produce bonded magnets, generally used in micro motors, precision motors, sensors and other applications requiring high levels of magnetic strength, flexibility, small size and reduced weight. Rare earth and zirconium applications include catalytic converters, computers, television display panels, optical lenses, mobile phones and electronic chips. Products from the newly acquired Recapture Metals Limited are primarily used in the wireless, LED, flat panel, solar and catalyst industries. The Company is headquartered in Toronto, Canada.

Forward Looking Statements

From time to time, the Company may publish forward-looking statements relating to such matters as expected financial performance, business prospects, technological developments, and development activities and like matters. These statements involve risk and uncertainties, including but not limited to the risk factors previously described. Actual results could differ materially from those projected as a result of these risks and should not be relied upon as a prediction of future events. Neo Material Technologies Inc. undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

    
                           Financial Results follow



    NEO MATERIAL TECHNOLOGIES INC.
    CONSOLIDATED BALANCE SHEETS
    (All figures in thousands of United States dollars)

                                                    December 31  December 31
                                                           2009         2008
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash                                              $  57,308    $  51,507
    Accounts receivable                                  36,195       18,171
    Inventories                                          48,914       54,415
    Future income tax asset                               2,536          915
    Asset held for sale                                       -        1,526
    Other current assets                                  7,886        2,137
    -------------------------------------------------------------------------
    Total current assets                                152,839      128,671
    -------------------------------------------------------------------------
    Property, plant and equipment                        44,755       36,933
    Patents and other intangible assets                  13,118       16,248
    Pension benefit asset                                 3,780        4,031
    Goodwill                                             44,481       34,987
    Other long-term assets                                6,849        6,389
    -------------------------------------------------------------------------
    Total assets                                      $ 265,822    $ 227,259
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Bank advances and other short-term debt           $   6,977    $  12,979
    Accounts payable and other accrued charges           34,397       21,994
    -------------------------------------------------------------------------
    Total current liabilities                            41,374       34,973
    -------------------------------------------------------------------------
    Future income tax liability                           4,533          898
    Accrued postretirement benefits                         493          502
    Other long-term liabilities                           4,446       10,167
    -------------------------------------------------------------------------
    Total liabilities                                    50,846       46,540
    -------------------------------------------------------------------------
    Non-controlling interest                              1,666        1,867
    Contingencies and commitments
    Shareholders' equity                                213,310      178,852
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity        $ 265,822    $ 227,259
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    NEO MATERIAL TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
    (All figures in thousands of United States dollars,
     except per share information)

                                Three months ended           Year ended
                                    December 31              December 31
                                 2009         2008        2009          2008
    -------------------------------------------------------------------------
    Revenues                 $ 62,796     $ 46,592     $187,486     $266,641
    Costs of sales
      Costs excluding
       depreciation and
       amortization            35,681       36,135      113,442      184,100
      Depreciation and
       amortization             1,557        2,027        7,451        8,357
    -------------------------------------------------------------------------
    Gross profit               25,558        8,430       66,593       74,184
    Expenses
      Selling, general and
       administrative           7,169        7,883       25,804       30,813
      Stock-based
       compensation             2,497         (154)       6,614       (1,196)
      Depreciation and
       amortization             1,383          700        3,174        3,159
      Research and
       development              2,872          969        6,479        4,158
    -------------------------------------------------------------------------
                               13,921        9,398       42,071       36,934
    -------------------------------------------------------------------------
    Operating income
     (loss) before the
     undernoted                11,637         (968)      24,522       37,250
    Other (income) expense       (426)       1,221         (767)         751
    Interest expense,
     long-term debt                 -          229            -        3,860
    Interest expense, other       346          561        1,314        2,159
    Foreign exchange
     loss (gain)                   99       (1,294)        (996)        (895)
    -------------------------------------------------------------------------
    Income (loss) from
     operations
     before taxes,
     non-controlling interest
     and equity income of
     affiliate                 11,618       (1,685)      24,971       31,375
    Income tax expense
     (recovery)                 2,924       (1,238)       5,723        6,213
    -------------------------------------------------------------------------
    Income from operations
     before non-controlling
     interest and equity
     income of affiliate        8,694         (447)      19,248       25,162
    Equity income of affiliate    229           40          235          593
    Non-controlling interest
     in (loss) earnings of
     subsidiaries                (242)        (303)         201       (2,449)
    -------------------------------------------------------------------------
    Net income (loss) for
     the period              $  8,681     $   (710)    $ 19,684     $ 23,306
    -------------------------------------------------------------------------
    Net income (loss) per
     share, basic            $   0.07     $  (0.01)    $   0.17     $   0.22
    -------------------------------------------------------------------------
    Net income (loss) per
     share, diluted          $   0.07     $  (0.01)    $   0.17     $   0.22
    -------------------------------------------------------------------------
    Weighted average
     number of shares
     outstanding, basic   119,921,541  117,994,673  116,427,324  106,455,994
    -------------------------------------------------------------------------
    Weighted average
     number of shares
     outstanding,
     diluted              121,700,356  117,994,673  117,401,558  107,366,011
    -------------------------------------------------------------------------



    NEO MATERIAL TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (All figures in thousands
     of United States dollars)

                                Three months ended           Year ended
                                    December 31              December 31
                                 2009         2008        2009          2008
    -------------------------------------------------------------------------
    Operating Activities
    Net income (loss) for
     the period              $  8,681     $   (710)    $ 19,684     $ 23,306
    Add (deduct) items
     not affecting cash
      Depreciation and
       amortization             2,940        2,727       10,625       11,516
      Stock-based
       compensation             2,497         (154)       6,614       (1,196)
      Non-controlling
       interest in earnings
       (loss) of subsidiaries     242          303         (201)       2,449
      Accretion in carrying
       value of debt              185          203          751        1,952
      Future income tax         1,957         (116)       1,221         (737)
      Equity income of
       affiliate                 (229)         (40)        (235)        (593)
      Accrued benefit expense     187           29          227          202
      Loss on disposal              -          283           61          283
      Other                         -          110            -          110
    Net change in non-cash
     working capital balances
     related to operations    (11,343)       9,410      (14,653)       5,452
    -------------------------------------------------------------------------
    Cash provided by
     operating activities       5,117       12,045       24,094       42,744
    -------------------------------------------------------------------------
    Investing activities
      Acquisition of property,
       plant and equipment     (1,060)      (1,224)      (3,955)      (7,751)
      Cash paid on acquisition
       of Recapture Metals
       Limited, net of cash
       acquired                 4,231            -         (765)           -
      Redemption of Recapture
       Metals Limited
       preferred shares             -            -       (1,607)           -
      Proceeds from disposal        -            -        2,032            -
      Other investments           (53)        (495)        (257)      (1,188)
      Cash loss on
       deconsolidation
       of Ding Nan Da Hua
       Advanced Material
       Resources Co., Ltd.          -         (861)           -         (861)
    -------------------------------------------------------------------------
    Cash provided by (used
     in) investing activities   3,118       (2,580)      (4,552)      (9,800)
    -------------------------------------------------------------------------
    Financing activities
      Repayment of long-term
       debt                         -            -            -      (41,250)
      Decrease in bank
       advances and other
       short-term debt         (2,954)      (1,931)     (14,541)     (12,689)
      Cash received by
       subsidiary from
       non-controlling
       interest partners            -            -            -        7,819
      Repurchase of common
       shares for cancellation      -       (3,075)      (1,623)      (3,075)
      Cash received from
       repayment of
       shareholder's loan           -            -            -          150
      Issue of common shares      409            -        2,423       50,448
    -------------------------------------------------------------------------
    Cash (used in) provided
     by financing
     activities                (2,545)      (5,006)     (13,741)       1,403
    -------------------------------------------------------------------------
    Cash provided during
     the period                 5,690        4,459        5,801       34,347
    -------------------------------------------------------------------------
    Cash beginning of
     period                    51,618       47,048       51,507       17,160
    -------------------------------------------------------------------------
    Cash end of period       $ 57,308     $ 51,507     $ 57,308     $ 51,507
    -------------------------------------------------------------------------



    NEO MATERIAL TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
    (All figures in thousands
     of United States dollars)

                                December 31, 2009         December 31, 2008

                               Number       Amount       Number       Amount
    -------------------------------------------------------------------------
    Share Capital
      Authorized
        Unlimited common
         shares
      Issued
      Common Shares
      Balance at beginning
       of year            116,176,614      232,325   98,907,217      182,387
        Shares issued to
         Recapture
         Metals Limited
         shareholders       4,499,996       13,581            -            -
        Shares issued on
         warrants exercised         -            -   17,501,800       41,148
        Fair value assigned
         to warrants exercised      -            -            -        4,729
        Shares issued on
         private placement          -            -    2,375,297        9,267
        Shares issued on
         exercise of stock
         options            1,107,992        2,423       10,000           33
        Shares purchased and
         cancelled pursuant
         to normal course
         issuer bid        (1,709,100)      (1,623)  (2,617,700)      (3,075)
        Fair value assigned
         to repurchase of
         common shares              -       (1,827)           -       (2,164)
    -------------------------------------------------------------------------
      Balance at end of
       year               120,075,502      244,879  116,176,614      232,325
    -------------------------------------------------------------------------
    Warrants
      Balance at beginning
       of year                      -            -   17,653,600        4,770
        Warrants exercised          -            -  (17,501,800)      (4,729)
        Warrants expired            -            -     (151,800)         (41)
    -------------------------------------------------------------------------
      Balance at end of year        -            -            -            -
    -------------------------------------------------------------------------
    Contributed Surplus
      Balance at beginning
       of year                               5,081                     2,615
        Stock-based
         compensation
         expense                               393                       261
        Transfer to
         contributed
         surplus on
         expiration of
         warrants                                -                        41
        Repurchase of
         common shares
         for cancellation                    1,827                     2,164
    -------------------------------------------------------------------------
      Balance at end of
       year                                  7,301                     5,081
    -------------------------------------------------------------------------
    Deficit
      Balance at beginning
       of year                             (58,258)                  (81,564)
        Net income for the
         year                               19,684                    23,306
    -------------------------------------------------------------------------
      Balance at end of year               (38,574)                  (58,258)
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive earnings
      Balance at beginning
       of year                                   -                       115
        Unrealized gain on
         interest rate swap
         designated as
         cash flow hedge                         -                      (115)
    -------------------------------------------------------------------------
      Balance at end of year                     -                         -
    -------------------------------------------------------------------------
    Shareholders' loan
      Balance at beginning
       of year                                (296)                     (446)
        Repayment of loan by
         shareholder                             -                       150
    -------------------------------------------------------------------------
      Balance at end of year                  (296)                     (296)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Shareholders' equity at
     end of year                           213,310                   178,852
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    NEO MATERIAL TECHNOLOGIES INC.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (All figures in thousands of United States dollars)

                                      Three months ended         Year ended
                                            December 31         December 31
                                          2009      2008      2009      2008
    -------------------------------------------------------------------------
    Net income (loss) for the period  $  8,681  $   (710) $ 19,684  $ 23,306
    Change in unrealized loss on
     derivatives designated as cash
     flow hedges, net of tax                 -         -         -     (115)
    -------------------------------------------------------------------------
    Comprehensive income (loss) for
     the period                       $  8,681  $   (710) $ 19,684  $ 23,191
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00002061E

SOURCE Neo Material Technologies Inc.

For further information: For further information: Information Contact: Michael Doolan, Chief Financial Officer, (416) 367-8588, ext.335, Website: www.neomaterials.com, e-mail: info@neomaterials.com; Ali Mahdavi, Investor Relations, (416) 962-3300, ext. 225, e-mail: amahdavi@neomaterials.com

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