Neo Material Technologies Reports Second Quarter 2009 Financial Results



    
    -   EBITDA of US$7.5 million
    -   Cash and net cash positions of US$53.6 million and US$45.8 million
    -   Net income and EPS at US$4.4 million or US$0.04 per share
    

    TORONTO, Aug. 11 /CNW/ - Neo Material Technologies Inc. (TSX: NEM) (the
"Company" or "Neo") today reported its financial results for the three-month
period ending June 30, 2009. Unless otherwise specified, all currency amounts
are expressed in U.S. dollars.
    For the three-month period ended June 30, 2009, the Company reported
revenues of $41.8 million, net income of $4.4 million, and earnings per share
("EPS") of $0.04 (on a basic and fully diluted basis). Operating income plus
depreciation and amortization ("EBITDA") for the quarter was $7.5 million.
Revenues, net income, EBITDA and EPS for the three-month period ended June 30,
2008 were $83.5 million, $7.9 million, $16.7 million and $0.08 basic ($0.07
per share on fully diluted basis), respectively. Operating income for the
second quarter of 2009 was $5.0 million compared to $13.8 million in the
corresponding period in 2008. Cash provided by operating activities was $5.7
million for the second quarter.
    The second quarter demonstrated a rapid recovery in consumer demand for
Neo's products resulting in a 45% increase in consolidated revenue over the
first quarter of 2009. Consolidated EBITDA also improved from a loss of $2.6
million in the first quarter of 2009 to a gain of $7.5 million in the second
quarter of 2009, and EPS on a basic and fully diluted basis improved from a
loss of $0.04 in the first quarter of 2009 to earnings of $0.04 in the second
quarter of 2009. Magnequench and AMR revenues were up 77% and 22%,
respectively, over the first quarter of 2009.
    For the six month period ended June 30, 2009, net income, EBITDA and EPS
were nil, $4.9 million and $0.00 (on a basic and fully diluted basis),
respectively. This compares to net income, EBITDA and EPS for the six month
period ended June 30, 2008 of $16.2 million, $33.2 million, and $0.16 basic
($0.15 per share on fully diluted basis), respectively. Revenues for the six
months ended June 30, 2009 were $70.5 million compared to $148.9 million in
the corresponding period in 2008.
    "The past nine months have shown the resiliency of our company during
difficult economic times. With the initiatives announced in the second
quarter, we are optimistic about our business over the long term. In the near
term, we expect sales volumes to return to more normal business patterns,
resulting in increased sales and earnings for the remainder of 2009," said
Constantine Karayannopoulos, President & CEO.
    The Company continues to maintain a strong balance sheet, which at June
30, 2009, contained no long-term debt and a significant cash position of $53.6
million. Expected operating cash flow in 2009 and a strong cash position have
positioned the Company with a strong and flexible balance sheet, which will
enable it to pursue growth opportunities that will complement its strong
organic growth profile.

    
    Magnequench
    $000's (except for
     quantity shipped)
                         ----------------------------------------------------
                                                                    Trailing
                            Q2       Q3       Q4       Q1       Q2    Twelve
                           2008     2008     2008     2009     2009   Months
    -------------------------------------------------------------------------
    Quantity Shipped
     (tonnes)             1,404    1,178      777      505      878    3,338
    -------------------------------------------------------------------------
    Revenues             40,867   33,830   21,914   13,840   24,411   93,995
    -------------------------------------------------------------------------
    Operating Income(1)  11,814    9,464    4,040    1,340    9,014   23,858
    -------------------------------------------------------------------------


    AMR Performance Materials
    $000's (except for
     quantity shipped)
                         ----------------------------------------------------
                                                                    Trailing
                            Q2       Q3       Q4       Q1       Q2    Twelve
                           2008     2008     2008     2009     2009   Months
    -------------------------------------------------------------------------
    Quantity Shipped
     (tonnes)             2,271    1,825    1,726      974      992    5,517
    -------------------------------------------------------------------------
    Revenues             48,502   39,746   28,134   14,951   18,222  101,053
    -------------------------------------------------------------------------
    Operating Income
     (Loss)(1)            6,222    1,869   (2,864)  (3,451)    (184)  (4,630)
    -------------------------------------------------------------------------


    Consolidated
    $000's (except for
     quantity shipped)
                         ----------------------------------------------------
                                                                    Trailing
                            Q2       Q3       Q4       Q1       Q2    Twelve
                           2008     2008     2008     2009     2009   Months
    -------------------------------------------------------------------------
    Inter-segment sales  (5,917)  (2,467)  (3,456)       -     (879)  (6,802)
    -------------------------------------------------------------------------
    Revenues             83,452   71,109   46,592   28,791   41,754  188,246
    -------------------------------------------------------------------------
    Operating Income
     (Loss)              13,790   10,924     (968)  (5,178)   4,954    9,732
    -------------------------------------------------------------------------
    EBITDA               16,738   13,851    1,759   (2,637)   7,490   20,463
    -------------------------------------------------------------------------

    Note: (1) Divisional Operating Income (Loss) presented in the tables
              above excludes stock-based compensation expense.
    

    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 through its Magnequench and AMR
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. The
Company is headquartered in Toronto, Canada and has approximately 1,300
employees in 15 locations, across 10 countries.

    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.

    Teleconference Call

    Management will host a teleconference call on Wednesday, August 12 at
10:00 am (Eastern Time) to discuss these results. Interested parties may
access the teleconference by calling (416) 644-3418 (local) or (800) 590-1817
(toll free long distance) or by visiting http://www.newswire.ca/webcast. A
recording of the teleconference may be accessed by calling (416) 640-1917
(local) or (877) 289-8525 (toll free long distance), and entering pass code
21312781 followed by the number sign until September 12, 2009 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 August 11, 2009.

    
                           Financial Results follow


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

                                                       June 30   December 31
                                                         2009        2008
                                                     (Unaudited)
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash                                             $   53,576   $   51,507
    Accounts receivable                                  27,126       18,171
    Inventories                                          36,515       54,415
    Future income tax asset                               2,194          915
    Asset held for sale                                       -        1,526
    Other current assets                                  1,838        2,137
    -------------------------------------------------------------------------
    Total current assets                                121,249      128,671
    -------------------------------------------------------------------------
    Property, plant and equipment                        35,446       36,933
    Patents and other intangible assets                  14,580       16,248
    Pension benefit asset                                 3,978        4,031
    Goodwill                                             34,987       34,987
    Other long-term assets                                6,332        6,389
    -------------------------------------------------------------------------
    Total assets                                     $  216,572   $  227,259
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Bank advances and other short-term debt          $    7,730   $   12,979
    Accounts payable and other accrued charges           21,408       21,994
    -------------------------------------------------------------------------
    Total current liabilities                            29,138       34,973
    -------------------------------------------------------------------------
    Future income tax liability                             798          898
    Accrued postretirement benefits                         483          502
    Other long-term liabilities                           7,230       10,167
    -------------------------------------------------------------------------
    Total liabilities                                    37,649       46,540
    -------------------------------------------------------------------------
    Non-controlling interest                              1,447        1,867
    Shareholders' equity                                177,476      178,852
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity       $  216,572   $  227,259
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                              Three months ended           Six months ended
                                    June 30                     June 30
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    Revenues          $     41,754  $     83,452  $     70,545  $    148,940
    Cost of sales
      Costs excluding
       depreciation
       and
       amortization         25,637        56,702        49,404        98,007
      Depreciation and
       amortization          1,948         2,141         3,877         4,229
    -------------------------------------------------------------------------
    Gross profit            14,169        24,609        17,264        46,704
    Expenses
      Selling, general
       and
       administrative        6,416         7,847        12,798        14,851
      Stock-based
       compensation            953         1,355         1,133         1,127
      Depreciation and
       amortization            588           807         1,200         1,633
      Research and
       development           1,258           810         2,357         1,799
    -------------------------------------------------------------------------
                             9,215        10,819        17,488        19,410
    -------------------------------------------------------------------------
    Operating income
     (loss) before
     the undernoted          4,954        13,790          (224)       27,294
    Other expense
     (income)                   24             8          (175)         (151)
    Interest expense,
     long-term debt              -         1,263             -         2,484
    Interest expense,
     other                     202           989           491         1,623
    Foreign exchange
     (gain) loss              (358)          421          (484)          546
    -------------------------------------------------------------------------
    Income from
     operations
     before
     taxes, non-
     controlling
     interest
     and equity
     income of
     affiliate               5,086        11,109           (56)       22,792
    Income taxes               661         2,505           133         5,430
    -------------------------------------------------------------------------
    Income (loss) from
     operations before
     non-controlling
     interest and
     equity income of
     affiliate               4,425         8,604          (189)       17,362
    Equity (loss)
     income of
     affiliate                 (33)          227          (239)          283
    Non-controlling
     interest in
     earnings of
     subsidiaries               47          (920)          419        (1,457)
    -------------------------------------------------------------------------
    Net income (loss)
     for the period   $      4,439  $      7,911  $         (9) $     16,188
    -------------------------------------------------------------------------
    Deficit, beginning
     of period             (62,706)      (73,287)      (58,258)      (81,564)
    -------------------------------------------------------------------------
    Deficit, end of
     period                (58,267)      (65,376)      (58,267)      (65,376)
    -------------------------------------------------------------------------
    Net income per
     share, basic     $       0.04  $       0.08  $          -  $       0.16
    -------------------------------------------------------------------------
    Net income per
     share, diluted   $       0.04  $       0.07  $          -  $       0.15
    -------------------------------------------------------------------------
    Weighted average
     number of
     shares
     outstanding,
     basic             114,467,514   101,083,892   114,838,163    99,997,457
    -------------------------------------------------------------------------
    Weighted average
     number of share
     outstanding,
     diluted           114,483,219   109,379,793   114,845,128   108,721,022
    -------------------------------------------------------------------------



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

                                  Three months ended        Six months ended
                                         June 30                 June 30
                                  2009          2008        2009        2008
    -------------------------------------------------------------------------
    Operating Activities
    Net income (loss) for the
     period                    $   4,439   $   7,911   $      (9)  $  16,188
    Add (deduct) items not
     affecting cash
      Depreciation and
       amortization                2,536       2,948       5,077       5,862
      Stock-based compensation
       expense                       953       1,355       1,133       1,127
      Non-controlling interest
       in earnings of
       subsidiaries                  (47)        920        (419)      1,457
      Accretion in carrying
       value of long-term
       liabilities                   189         874         379       1,404
      Future income tax             (826)       (234)     (1,379)       (708)
      Equity income of affiliate      33        (227)        239        (283)
      Accrued benefit expense         23          24          34          54
      Loss on disposal                61           -          52           -
    Net change in non-cash
     working capital
     balances related to
     operations                   (1,666)     (5,995)      4,284     (15,535)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                    5,695       7,576       9,391       9,566
    -------------------------------------------------------------------------
    Investing activities
      Acquisition of property,
       plant and equipment        (1,285)     (3,026)     (2,277)     (4,642)
      Proceeds from disposal          19           -       2,032           -
      Other investments                -           -        (204)       (693)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                   (1,266)     (3,026)       (449)     (5,335)
    -------------------------------------------------------------------------
    Financing activities
      Repayment of long-term
       debt                            -     (16,780)          -     (21,155)
      Increase (decrease) in
       bank advances and
       other short-term debt          48        (286)     (5,249)      4,653
      Repurchase of common
       shares for cancellation         -           -      (1,623)          -
      Cash received from
       repayment of
       shareholder's loan              -         145           -         145
      Issue of common shares           -      12,303           -      12,320
    -------------------------------------------------------------------------
    Cash provided by (used in)
     financing activities             48      (4,618)     (6,872)     (4,037)
    -------------------------------------------------------------------------
    Effect of exchange rate
     changes on cash                  (2)         (6)         (1)         12
    -------------------------------------------------------------------------
    Cash provided (used) during
     the period                    4,475         (74)      2,069         206
    -------------------------------------------------------------------------
    Cash beginning of period      49,101      17,440      51,507      17,160
    -------------------------------------------------------------------------
    Cash end of period         $  53,576   $  17,366   $  53,576   $  17,366
    -------------------------------------------------------------------------



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

                                     June 30, 2009         December 31, 2008
                                      (Unaudited)              (Audited)
                                  Number      Amount      Number      Amount
    -------------------------------------------------------------------------
    Share Capital
      Authorized
        Unlimited common shares
      Issued
      Common Shares
      Balance at beginning
       of period             116,176,614     232,325  98,907,217     182,387
        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                 -           -      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
       period                114,467,514     228,875 116,176,614     232,325
    -------------------------------------------------------------------------
    Warrants
      Balance at beginning
       of period                       -           -  17,653,600       4,770
        Warrants exercised             -           - (17,501,800)     (4,729)
        Warrants expired               -           -    (151,800)        (41)
    -------------------------------------------------------------------------
      Balance at end of
       period                          -           -           -           -
    -------------------------------------------------------------------------
    Contributed Surplus
      Balance at beginning
       of period                               5,081                   2,615
        Stock-based
         compensation
         expense                                 256                     261
        Transfer to
         contributed
         surplus on
         expiration
         of warrants                               -                      41
        Repurchase of common
         shares for
         cancellation                          1,827                   2,164
    -------------------------------------------------------------------------
      Balance at end of
       period                                  7,164                   5,081
    -------------------------------------------------------------------------
    Deficit
      Balance at beginning of
       period                                (58,258)                (81,564)
        Net income (loss) for
         the period                               (9)                 23,306
    -------------------------------------------------------------------------
      Balance at end of period               (58,267)                (58,258)
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive
     earnings (loss)
      Balance at beginning of
       period                                      -                     115
        Unrealized gain on
         interest rate
         swap designated
         as cash flow hedge                        -                    (115)
    -------------------------------------------------------------------------
      Balance at end of period                     -                       -
    -------------------------------------------------------------------------
    Shareholders' loan
      Balance at beginning of
       period                                   (296)                   (446)
        Repayment of loan by
         shareholder                               -                     150
    -------------------------------------------------------------------------
      Balance at end of period                  (296)                   (296)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Shareholders' equity at
     end of period                           177,476                 178,852
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                                  Three months ended        Six months ended
                                         June 30                 June 30
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    Net income (loss)
     for the period            $   4,439   $   7,911   $      (9)  $  16,188
    Change in unrealized
     loss on derivatives
     designated as cash
     flow hedges, net of tax           -        (122)          -         (39)
    -------------------------------------------------------------------------
    Comprehensive income
     (loss) for the period     $   4,439   $   7,789   $      (9)  $  16,149
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00002061E




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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