Neo Material Technologies reports strong 2007 financial results



    
    2007 year-over-year highlights:
    -   Revenue increased to US$240.5M from US$162.6M
    -   EBITDA increased to US$61.6M from US$54.6M
    -   Net income and EPS at US$28.2M and US$0.32 per share
    -   Magnequench volumes increased by 14%
    -   AMR Performance Materials volumes increased by 30%

    Fourth Quarter 2007 quarter-over-quarter highlights:
    -   Revenue increased to US$65.9M from US$44.7M
    -   EBITDA increased to US$17.2M from US$14.2M
    -   Net income and EPS at US$8.6M and US$0.09 per share
    -   Magnequench volumes increased by 23%
    -   AMR Performance Materials volumes increased by 33%
    

    TORONTO, March 6 /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, 2007. Unless otherwise specified, all
currency amounts are expressed in U.S. dollars.
    For the year ended December 31, 2007, the Company reported increased
revenues of $240.5 million and net income of $28.2 million, or $0.32 and $0.30
per share on a basic and fully diluted basis, respectively. Operating income
plus depreciation and amortization ("EBITDA") for the year was $61.6 million.
This compares to 2006 revenues of $162.6 million, net income of $27.8 million,
or $0.35 and $0.33 per share on a basic and fully diluted basis, respectively,
and EBITDA of $54.6 million. The reduction in earnings per share is due
primarily to the increased number of shares issued and outstanding on a
year-over-year comparative basis.
    For the three-month period ended December 31, 2007, the Company reported
revenues of $65.9 million and net income of $8.6 million, or $0.09 and $0.08
per share on a basic and fully diluted basis, respectively. EBITDA during the
quarter amounted to $17.2 million. This compares to fourth quarter 2006
revenues of $44.7 million, net income of $8.6 million, or $0.11 and $0.11 per
share on a basic and fully diluted basis, respectively, and EBITDA of
$14.2 million.
    At December 31, 2007, the Company had $17.2 million in cash and cash
equivalents. Long-term debt was $40.1 million at December 31, 2007, compared
to $44.3 million at September 30, 2007. The Company ended 2007 with net debt
of $48.6 million, compared to $78.1 million at the end of 2006. Expected
operating cash flow in 2008, combined with the anticipated exercise of
17.7 million share warrants generating approximately $44 million by July of
this year, would allow the Company to retire its debt. As a result, the
Company is well positioned with a strong and flexible balance sheet, which
will enable it to pursue growth opportunities that will complement its strong
organic growth profile.
    Throughout 2007 and the fourth quarter, volumes at both divisions
remained strong and reached record levels. Magnequench shipped 1,183MT in the
fourth quarter, a 23% quarter-over-quarter increase, while AMR Performance
Materials shipped 2,315MT in the quarter, a 33% increase compared to the
tonnage shipped in the same three-month period in 2006.
    Growth from "New Applications" at Magnequench continued to be strong,
while the Company continues to gain further traction within the automotive,
consumer electronics and appliances sectors. The outlook for the "Base
Business" looks very promising given the strong results and positive
commentary from leaders in the hard-disk supply chain.

    
    Magnequench
    $000's (except for quantity shipped)
                             ------------------------------------------------
                                                                    Trailing
                               Q4      Q1      Q2      Q3      Q4    Twelve
                              2006    2007    2007    2007    2007   Months
    -------------------------------------------------------------------------
    Quantity Shipped (tonnes)   962   1,032   1,152   1,097   1,183    4,464
    -------------------------------------------------------------------------
    Revenues                 25,481  26,495  29,738  31,963  35,571  123,767
    -------------------------------------------------------------------------
    Operating Income         12,932  10,877  11,977  12,566  13,070   48,490
    -------------------------------------------------------------------------


    AMR Performance Materials
    $000's (except for quantity shipped)
                              -----------------------------------------------
                                                                    Trailing
                               Q4      Q1      Q2      Q3      Q4    Twelve
                              2006    2007    2007    2007    2007   Months
    -------------------------------------------------------------------------
    Quantity Shipped (tonnes) 1,747   1,704   2,308   1,882   2,315    8,209
    -------------------------------------------------------------------------
    Revenues                 20,537  24,232  32,909  34,445  38,046  129,632
    -------------------------------------------------------------------------
    Operating Income          1,252   2,017   3,669   4,094   4,597   14,377
    -------------------------------------------------------------------------


    Consolidated
    $000's (except for quantity shipped)
                             ------------------------------------------------
                                                                    Trailing
                               Q4      Q1      Q2      Q3      Q4    Twelve
                              2006    2007    2007    2007    2007   Months
    -------------------------------------------------------------------------
    Inter-segment sales      (1,283)   (751) (1,113) (3,314) (7,725) (12,903)
    -------------------------------------------------------------------------
    Revenues                 44,735  49,976  61,534  63,094  65,892  240,496
    -------------------------------------------------------------------------
    Operating Income         12,128  10,768  13,087  13,324  14,337   51,516
    -------------------------------------------------------------------------
    EBITDA(1)                14,219  12,939  15,481  16,031  17,182   61,633
    -------------------------------------------------------------------------

    Note: (1) The Company currently calculates EBITDA as operating income,
           plus depreciation and amortization. Formerly, the Company
           calculated EBITDA as net income before interest, taxes,
           depreciation and amortization.
    

    "2007 was another year of significant progress and achievement at Neo
Materials. We accomplished a number of key objectives in 2007 including the
extension of key patent protection at Magnequench and retirement of our
convertible debt through a $77 million equity offering, all while making
operational improvement and producing record results," noted Constantine
Karayannopoulos, President & CEO. "Our fourth quarter represents another
period of record results at the revenue, volume and operating income lines and
we continue to see opportunities to grow with existing and new customers in a
variety of applications. For 2008 we will continue to grow and enhance our
current operations but will also actively pursue business development
opportunities to expand our product offerings."
    Based on the current business climate and market demand for its products,
management continues to have a positive outlook for 2008.

    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 16 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 Friday, March 7, 2008 at
10:00 a.m. (Eastern Time) to discuss these results. Interested parties may
access the teleconference by calling (416) 644-3426 (local) or (800) 591-7539
(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
21264844 followed by the number sign until April 4, 2008 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 March 7, 2008

    Notice of Shareholder Meeting

    The Company will hold its Annual General Meeting of Shareholders on
Monday, April 28, 2008 at 10:00 am at The Gallery, TSX Conference Centre, The
Exchange Tower, 130 King Street West, Toronto, Ontario

    
                           Financial Results follow


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

                                                     December 31 December 31
                                                            2007        2006
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                           $ 17,160     $ 9,524
    Restricted cash                                            -         269
    Accounts receivable                                   32,919      21,304
    Inventories                                           68,892      38,461
    Loan receivable                                            -       4,378
    Future income tax asset                                  604         372
    Other current assets                                   4,408       2,594
    -------------------------------------------------------------------------
    Total current assets                                 123,983      76,902
    -------------------------------------------------------------------------
    Property, plant and equipment                         50,175      43,187
    Patents and other intangible assets                   19,776       9,432
    Pension benefit asset                                  4,165       4,038
    Goodwill                                              37,620      34,987
    Deferred expenses and other assets                     4,559       6,497
    -------------------------------------------------------------------------
    Total assets                                       $ 240,278   $ 175,043
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Bank advances and other short-term debt             $ 25,668    $ 18,080
    Accounts payable and other accrued charges            47,498      25,329
    Restructuring liabilities                                  -         105
    Long-term debt due within one year                    17,500      12,500
    -------------------------------------------------------------------------
    Total current liabilities                             90,666      56,014
    -------------------------------------------------------------------------
    Long-term debt                                        22,594      57,021
    Future income tax liability                            1,419       1,558
    Accrued postretirement benefits                          625       4,841
    Other long-term liabilities                            9,603       2,750
    -------------------------------------------------------------------------
    Total liabilities                                    124,907     122,184
    -------------------------------------------------------------------------
    Non-controlling interest                               7,494       1,556
    Contingencies and commitments
    Shareholders' equity                                 107,877      51,303
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity         $ 240,278   $ 175,043
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                                    Three months              Year ended
                                     December 31              December 31
                                  2007        2006        2007        2006
    -------------------------------------------------------------------------
    Revenues                   $  65,892   $  44,735   $ 240,496   $ 162,584
    Costs of sales
      Costs excluding
       depreciation and
       amortization               39,544      23,788     146,385      81,358
      Depreciation and
       amortization                2,065       1,333       6,925       7,649
    -------------------------------------------------------------------------
    Gross profit                  24,283      19,614      87,186      73,577
    Expenses
      Selling, general and
       administrative              7,992       6,048      28,730      24,022
      Depreciation and
       amortization                  780         758       3,192       3,603
      Research and development     1,174         680       3,748       2,613
    -------------------------------------------------------------------------
                                   9,946       7,486      35,670      30,238
    -------------------------------------------------------------------------
    Operating income              14,337      12,128      51,516      43,339
    Other income                    (171)       (611)       (339)     (1,903)
    Interest expense,
     long-term debt                1,291       2,686      10,078      10,871
    Interest expense, other          934         136       1,931         551
    Foreign exchange
     loss (gain)                     290         223        (600)        409
    -------------------------------------------------------------------------
    Income before taxes,
     non-controlling interest
     and equity income of
     affiliate                    11,993       9,694      40,446      33,411
    Income taxes                   2,177       1,060       9,799       5,609
    -------------------------------------------------------------------------
    Income before
     non-controlling interest
     and equity income of
     affiliate                     9,816       8,634      30,647      27,802
    Equity income of affiliate       129         140         713         554
    Non-controlling interest in
     earnings of subsidiaries     (1,391)       (206)     (3,149)       (564)
    -------------------------------------------------------------------------
    Net income for the period  $   8,554   $   8,568   $  28,211   $  27,792
    -------------------------------------------------------------------------
    Deficit, beginning of
     period                    $ (90,118)  $ (75,577)  $ (67,009)  $ (94,801)
    Cumulative impact of
     adopting new accounting
     requirements for
     financial instruments             -           -          38           -
    Early retirement of
     convertible debenture             -           -     (42,804)          -
    -------------------------------------------------------------------------
    Deficit, end of period     $ (81,564)  $ (67,009)  $ (81,564)  $ (67,009)
    -------------------------------------------------------------------------
    Net income per share,
     basic                     $    0.09   $    0.11   $    0.32   $    0.35
    -------------------------------------------------------------------------
    Net income per share,
     diluted                   $    0.08   $    0.11   $    0.30   $    0.33
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                                    Three months              Year ended
                                     December 31              December 31
                                  2007        2006        2007        2006
    -------------------------------------------------------------------------
    Operating Activities
    Net income for the period  $   8,554   $   8,568   $  28,211   $  27,792
    Add (deduct) items not
     affecting cash
      Depreciation and
       amortization                2,845       2,091      10,117      11,252
      Amortization of deferred
       financing costs               148         249         295         978
      Stock-based compensation
       expense                       479         246       2,809         836
      Write-off of deferred
       financing costs                 -           -       2,322           -
      Non-controlling interest
       in earnings of
       subsidiaries                1,391         206       3,149         564
      Accretion in carrying
       value of debt                   -         357       1,193       1,322
      Future income tax             (228)       (379)       (371)       (637)
      Equity income of affiliate    (129)       (140)       (713)       (554)
      Accrued benefit expense       (227)         56         (85)        263
      Loss on disposal                67          23          76         289
    Restructuring payment              -        (188)        (77)       (870)
    Net change in non-cash
     working capital balances
     related to operations        (3,354)     (5,223)    (34,392)    (22,756)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                    9,546       5,866      12,534      18,479
    -------------------------------------------------------------------------
    Investing activities
      Acquisition of property,
       plant and equipment        (1,691)     (1,985)     (4,447)     (5,327)
      Acquisition of intangible
       asset                         195           -      (4,730)          -
      Cash acquired on
       consolidation of variable
       interest entity                 -           -         308           -
      Equity and other investments  (647)          -        (797)          -
      Loan receivable                  -           -           -      (4,375)
      Acquisition of additional
       ownership interest              -        (614)          -        (614)
      Proceeds from disposal
       of assets                       -          28           -          86
      (Increase) decrease in
       restricted cash                 -        (269)        269         (21)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                   (2,143)     (2,840)     (9,397)    (10,251)
    -------------------------------------------------------------------------
    Financing activities
      Proceeds from issuance of
       long-term debt                  -           -      50,000           -
      Debt issue costs                 -           -      (1,451)          -
      Repayment of long-term
       debt                       (4,375)     (3,241)    (79,132)    (19,100)
      Premium paid on early
       retirement of convertible
       debenture                       -           -     (50,993)          -
      Increase in bank advances
       and other short-term debt   5,600         251       7,588       9,532
      Cash and dividend paid
       by subsidiaries to non
       controlling interest
       partners                   (1,083)          -      (1,083)          -
      Issue of common shares         621         102      79,714         109
    -------------------------------------------------------------------------
    Cash provided by (used in)
     financing activities            763      (2,888)      4,643      (9,459)
    -------------------------------------------------------------------------
    Effect of exchange rate
     changes on cash                 (17)         16        (144)          -
    -------------------------------------------------------------------------
    Cash provided (used)
     during the period             8,149         154       7,636      (1,231)
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     beginning of period           9,011       9,370       9,524      10,755
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period             $  17,160   $   9,524   $  17,160   $   9,524
    -------------------------------------------------------------------------


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


                                    Three months              Year ended
                                     December 31              December 31
                                  2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net income for the period  $  8,554    $   8,568   $  28,211   $  27,792
    Change in unrealized gain
     on derivatives designated
     as cash flow hedges             28            -         115           -
    -------------------------------------------------------------------------
    Comprehensive income for
     the period                $  8,582    $   8,568   $  28,326   $  27,792
    -------------------------------------------------------------------------
    





For further information:

For further information: 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@genoa.ca

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