Canada NewsWire
MONTREAL, Feb. 20, 2018
MONTREAL, Feb. 20, 2018 /CNW Telbec/ - 5N Plus Inc. (TSX: VNP) ("5N Plus", the "Company" or the "Group"), a leading producer of specialty chemicals and engineered materials, today reported financial results for the quarter and fiscal year ended December 31, 2017. All amounts are expressed in U.S. dollars.
5N Plus completed a second financial year under the guidance of its strategic plan 5N21 ("5N21"), delivering significant improvement reflected by the various financial metrics, lending credence to the efficacy of the plan. By the end of 2017, nearly all initiatives linked to the first pillar of 5N21, namely extraction of more value from core businesses and existing assets, were successfully completed. At the same time, new initiatives related to the second and third pillars of 5N21, namely increasing contribution from upstream activities and delivering quality growth from new initiatives gained momentum. Consequently, at the end of the year, significant enhancement in margins and profitability were achieved, while, earnings volatility reduced as the Company continued to shift focus from lower margin products with high content of pass-through commodities to products and services requiring higher contribution from value-added activities and technological solutions. Furthermore, the Company continued to deliver recurrent cashflows and further solidified its balance sheet which has enhanced its options going forward.
Arjang Roshan, President and Chief Executive Officer, said "The end of 2017 marks the second, and a full year, under 5N21. Thus far, our performance is driven by the execution of the plan's short‐term objectives, mainly related to optimizing core businesses and global assets. The outcome can be summarized by significant growth in profitability, enhancement in quality of earnings and reduction of earnings volatility. Consequently, return on capital employed has improved markedly and we have continued to strengthen our balance sheet aided by recurrent cashflows."
Mr. Roshan concluded, "With the short-term objectives of the plan successfully fulfilled, we have intensified our focus on mid to long-term objectives under 5N21 with the aim of transforming ourselves from a specialty chemicals and metals company to a leading materials technology company across the globe. Further expansion into future markets with value-added activities, increased contribution from growth initiatives and exerting more control over pass-through component of sales will be the topics of focus and relevance."
Webcast Information
5N Plus will host a conference call on Wednesday, February 21, 2018 at 8:00 am Eastern Time with financial analysts and institutional investors to discuss results of the quarter and fiscal year ended December 31, 2017. 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 February 28, 2018.
To participate in the conference call:
Enter access code 6698626.
Non-IFRS Measures
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. EBITDA margin is defined as EBITDA divided by revenues.
Adjusted EBITDA means EBITDA as defined above before impairment of inventories, 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 inventory write-downs. The definition of this non-IFRS measure used by the Company may differ from that used by other companies. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenues.
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.
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.
About 5N Plus Inc.
5N Plus is a leading producer of specialty chemicals and engineered materials. 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 pharmaceutical, healthcare, renewable energy, aerospace, security and sensing, imaging, technical and industrial materials, extractive and catalytic materials, and animal feed additive.
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' 2017 MD&A dated February 20, 2018 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. | ||
December 31 |
December 31 | |
$ |
$ | |
Assets |
||
Current |
||
Cash and cash equivalents |
34,024 |
24,301 |
Accounts receivable |
25,639 |
29,799 |
Inventories |
90,647 |
80,309 |
Income tax receivable |
6,145 |
6,819 |
Other current assets |
8,773 |
2,831 |
Total current assets |
165,228 |
144,059 |
Property, plant and equipment |
56,607 |
59,945 |
Intangible assets |
10,856 |
11,109 |
Deferred tax assets |
6,891 |
1,883 |
Investment accounted for using the equity method |
718 |
779 |
Derivative financial assets |
3,602 |
189 |
Other assets |
1,030 |
1,093 |
Total non-current assets |
79,704 |
74,998 |
Total assets |
244,932 |
219,057 |
Liabilities |
||
Current |
||
Trade and accrued liabilities |
57,043 |
57,381 |
Income tax payable |
11,339 |
8,422 |
Current portion of long-term debt |
271 |
325 |
Total current liabilities |
68,653 |
66,128 |
Convertible debentures |
48,768 |
43,157 |
Deferred tax liabilities |
251 |
715 |
Employee benefit plan obligation |
15,396 |
14,813 |
Derivative financial liabilities |
- |
68 |
Other liabilities |
6,436 |
5,662 |
Total non-current liabilities |
70,851 |
64,415 |
Total liabilities |
139,504 |
130,543 |
Equity |
||
Equity holders of 5N Plus Inc. |
105,446 |
88,522 |
Non-controlling interest |
(18) |
(8) |
Total equity |
105,428 |
88,514 |
Total liabilities and equity |
244,932 |
219,057 |
5N PLUS INC. | |||
2017 |
2016 | ||
$ |
$ | ||
Revenue |
219,916 |
231,498 | |
Cost of sales |
170,514 |
190,036 | |
Selling, general and administrative expenses |
26,220 |
25,986 | |
Other expenses, net |
4,441 |
12,072 | |
Share of loss (gain) from joint ventures |
110 |
(23) | |
201,285 |
228,071 | ||
Operating earnings |
18,631 |
3,427 | |
Financial expenses |
|||
Interest on long-term debt |
3,261 |
3,429 | |
Imputed interest and other interest expense |
2,836 |
4,812 | |
Changes in fair value of debenture conversion option |
(85) |
(20) | |
Foreign exchange and derivative loss (gain) |
79 |
(925) | |
6,091 |
7,296 | ||
Earnings (loss) before income taxes |
12,540 |
(3,869) | |
Income tax expense (recovery) |
|||
Current |
3,595 |
440 | |
Deferred |
(3,068) |
1,587 | |
527 |
2,027 | ||
Net earnings (loss) |
12,013 |
(5,896) | |
Attributable to: |
|||
Equity holders of 5N Plus Inc. |
12,023 |
(5,895) | |
Non-controlling interest |
(10) |
(1) | |
12,013 |
(5,896) | ||
Earnings (loss) per share attributable to equity holders of 5N Plus Inc. |
0.14 |
(0.07) | |
Basic earnings (loss) per share |
0.14 |
(0.07) | |
Diluted earnings (loss) per share |
0.14 |
(0.07) |
5N PLUS INC. | |||||
Revenue by Segment and Gross Margin |
Q4 2017 |
Q4 2016 |
FY 2017 |
FY 2016 | |
$ |
$ |
$ |
$ | ||
Electronic Materials |
17,917 |
19,333 |
73,448 |
79,038 | |
Eco-Friendly Materials |
34,575 |
35,371 |
146,468 |
152,460 | |
Total revenue |
52,492 |
54,704 |
219,916 |
231,498 | |
Cost of sales |
(41,035) |
(44,802) |
(170,514) |
(190,037) | |
Depreciation on property, plant and equipment |
2,363 |
2,046 |
7,908 |
10,353 | |
Gross margin1 |
13,820 |
11,948 |
57,310 |
51,814 | |
Gross margin percentage1 |
26.3% |
21.8% |
26.1% |
22.4% | |
Adjusted EBITDA and EBITDA |
Q4 2017 |
Q4 2016 |
FY 2017 |
FY 2016 | |
$ |
$ |
$ |
$ | ||
Revenue |
52,492 |
54,704 |
219,916 |
231,498 | |
Adjusted operating expenses[1] * |
(46,441) |
(50,373) |
(194,799) |
(211,387) | |
Adjusted EBITDA1 |
6,051 |
4,331 |
25,117 |
20,111 | |
Impairment of inventory |
- |
- |
- |
- | |
Gain on disposal of property, plant and equipment |
1,497 |
- |
1,887 |
- | |
Impairment of non-current assets |
(3,100) |
- |
(3,100) |
- | |
Litigation and restructuring (costs) income |
(415) |
- |
2,953 |
(5,945) | |
Change in fair value of debenture conversion option |
67 |
14 |
85 |
20 | |
Foreign exchange and derivative gain (loss) |
320 |
458 |
(79) |
925 | |
EBITDA1 |
4,420 |
4,803 |
26,863 |
15,111 | |
Interest on long-term debt, imputed interest and other interest expense |
1,372 |
1,851 |
6,097 |
8,241 | |
Depreciation and amortization |
2,434 |
2,120 |
8,226 |
10,739 | |
Earnings (loss) before income taxes |
614 |
832 |
12,540 |
(3,869) | |
Income tax expense (recovery) |
|||||
Current |
243 |
(1,145) |
3,595 |
440 | |
Deferred |
(1,851) |
1,819 |
(3,068) |
1,587 | |
(1,608) |
674 |
527 |
2,027 | ||
Net earnings (loss) |
2,222 |
158 |
12,013 |
(5,896) | |
Basic earnings (loss) per share |
$0.03 |
$0.00 |
$0.14 |
($0.07) | |
Diluted earnings (loss) per share |
$0.03 |
$0.00 |
$0.14 |
($0.07) |
*Excluding litigation and restructuring (income) costs, impairment of non-current assets, gain on disposal of property, plant and equipment and depreciation and amortization. |
Net Debt |
As at December 31, 2017 |
As at December 31, 2016 |
$ |
$ | |
Bank indebtedness |
- |
- |
Long-term debt including current portion |
271 |
325 |
Convertible debentures |
48,768 |
43,157 |
Cross-currency swap |
(3,602) |
(189) |
Total Debt |
45,437 |
43,293 |
Cash and cash equivalents |
(34,024) |
(24,301) |
Net Debt1 |
11,413 |
18,992 |
______________________
1 See Non-IFRS Measures
SOURCE 5N Plus Inc.
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