February 26, 2019 | Montréal, Québec
5N Plus Inc. (TSX:VNP) (“5N Plus” or the “Company”), a leading global producer of engineered materials and specialty chemicals, today reported financial results for the quarter and fiscal year ended December 31, 2018. All amounts are expressed in U.S. dollars.
Fiscal year 2018 was the third year in which 5N Plus grew its earnings. This performance was delivered despite unfavorable movement of metal notations associated with the Company’s business, throughout 2018 as compared to stable or favorable movement of the same notations in 2016 and 2017. The Company’s performance in 2018 is a clear proof that the new business model is delivering on its commitments and the Company is well on track to deliver 5N21 targets.
During 2018, the demand for the Company’s products remained strong and the diversity of the markets in which 5N Plus participates remained an asset. During the same period, the Company continued to invest on its growth initiatives which aim to further improve quality and sustainability of the Company’s earnings. Moreover, in 2018, 5N Plus remained somewhat unaffected by the trade and tariff related themes mainly due to the positioning of its assets, with emphasis on local entities supporting local markets and optimizing the Company’s supply chain to become more diverse and agile.
Arjang Roshan, President and Chief Executive Officer, said “With the closing of 2018 fiscal year, we mark the halfway point in our journey under 5N21 strategic plan and the third year in which both earnings and return on capital employed grew. We are simply pleased with how the transformation of our business model is translating to positive and tangible results.” Mr. Roshan added “Perhaps the most gratifying event in 2018 was the fact that despite significant unfavorable movement in the metal markets, an event which would have historically left a large gap in the Company’s earnings, 5N Plus continued to grow its earnings and delivered healthy margins.” Mr. Roshan concluded “As we move to the second half of our strategic plan, we believe we have achieved our objective with respect to significantly reducing earnings volatility and remain well on track to deliver further earnings growth and improvement in return on capital employed as defined by our strategic plan.”
1 See Non-IFRS Measures
5N Plus will host a conference call on Wednesday, February 27, 2019 at 8:00 am Eastern Time with financial analysts to discuss results of the quarter and fiscal year ended December 31, 2018. All interested parties are invited to participate in the live broadcast on the Company’s website at www.5nplus.com. A replay of the webcast and a recording of the Q&A will be available until March 6, 2019.
To participate in the conference call:
Enter access code 2617518.
5N Plus is a leading global producer of engineered materials and specialty chemicals with integrated recycling and refining assets to manage the sustainability of its business model. The Company is headquartered in Montreal, Québec, Canada and operates R&D, manufacturing and commercial centers in several locations in Europe, the Americas and Asia. 5N Plus deploys a range of proprietary and proven technologies to manufacture products which are used as enabling precursors by its customers in a number of advanced electronics, optoelectronics, pharmaceutical, health, renewable energy and industrial applications. Many of the materials produced by 5N Plus are critical for the functionality and performance of the products and systems produced by its customers, many of whom are leaders within their industry.
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’ 2018 MD&A dated February 26, 2019 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.
EBITDA means net earnings (loss) before interest expenses (revenues), 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, share-based compensation expense, impairment of non-current assets, litigation and restructuring costs (income), 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 certain expenses. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.
Gross margin is a measure we use to monitor the sales contribution after paying cost of sales excluding depreciation of property, plant and equipment and impairment inventory charge. We also expressed this measure in percentage of revenues by dividing the gross margin value by the total revenue.
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. We use it as an indicator of our overall financial position, and calculate it by taking our total debt, including the current portion and the cross-currency swap related to the convertible debenture, and subtracting cash and cash equivalents.
Backlog represents the expected orders we have received but have not yet executed and that are expected to translate into sales within the next twelve months expressed in number of days.
Bookings represent orders received during the period considered, expressed in days, and is calculated by adding revenues to the increase or decrease in backlog for the period considered divided by annualized year revenues. We use backlog to provide an indication of expected future revenues in days, and bookings to determine our ability to sustain and increase our revenues.
Return on Capital Employed (ROCE) is a non-IFRS financial measure, calculated by dividing the annualized Adjusted EBIT by capital employed at the end of the period. Adjusted EBIT is calculated as the Adjusted EBITDA less depreciation and amortization (adjusted for accelerated depreciation charge, if any). Capital employed is the sum of the accounts receivable, the inventory, the PPE, the goodwill and intangibles less trade and accrued liabilities (adjusted for exceptional items). We use ROCE to measure the return on capital employed, whether the financing is through equity or debt. In our view, this measure provides useful information to determine if capital invested in the Company yields competitive returns. The usefulness of ROCE is limited by the fact that it is a ratio and not providing information as to the absolute amount of our net income, debt or equity. It also excludes certain items from the calculation and other companies may use a similar measure but calculate it differently.
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5N Plus Inc.
(514) 856-0644 x6178