1

Financial Statements

Quarter Ended

March 31, 2024

5N PLUS INC.

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands of United States dollars) (unaudited)

March 31

December 31

Notes

2024

2023

$

$

Assets

Current

33,929

34,706

Cash and cash equivalents

Accounts receivable

34,957

33,437

Inventories

3

113,521

105,850

Income tax receivable

1,667

1,672

Derivative financial assets

10

2,893

591

Other current assets

5,746

5,707

Total current assets

192,713

181,963

Property, plant and equipment

6

88,759

84,600

Right-of-use assets

6

30,806

29,290

Intangible assets

6

28,439

29,304

Goodwill

11,825

11,825

Deferred tax assets

8,290

8,261

Other assets

10

5,946

4,959

Total non-current assets

174,065

168,239

Total assets

366,778

350,202

Liabilities

Current

37,440

37,024

Trade and accrued liabilities

Income tax payable

5,968

4,535

Current portion of deferred revenue

4

14,629

13,437

Current portion of lease liabilities

1,906

1,811

Current portion of long-term debt

5

-

25,000

Total current liabilities

59,943

81,807

Long-term debt

5

118,169

83,500

Deferred tax liabilities

5,996

5,284

Employee benefit plan obligations

12,862

13,393

Lease liabilities

29,729

28,328

Deferred revenue

4

6,029

5,629

Other liabilities

3,647

3,669

Total non-current liabilities

176,432

139,803

Total liabilities

236,375

221,610

Equity

130,403

128,592

Total liabilities and equity

366,778

350,202

Commitments and contingencies (Note 11)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed Interim Consolidated Financial Statements ▪ 1

5N PLUS INC.

INTERIM CONSOLIDATED STATEMENTS OF EARNINGS

For the three-month periods ended March 31

(in thousands of United States dollars, except per share information) (unaudited)

Notes

Revenue

Cost of sales

3, 6

Selling, general and administrative expenses

6

Other expenses (income), net

6

Operating earnings

Financial expense

Interest on long-term debt

Imputed interest and other interest expense

Foreign exchange and derivative (gain) loss

Earnings before income taxes

Income tax expense

Current

Deferred

Net earnings

Basic earnings per share

7

Diluted earnings per share

7

Net earnings are completely attributable to equity holders of 5N Plus Inc.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

2024

2023

$

$

65,019

55,287

48,020

42,002

7,317

6,893

2,250

1,666

57,587

50,561

7,432

4,726

1,795

2,032

411

228

(387)

15

1,819

2,275

5,613

2,451

2,514

914

592

83

3,106

997

2,507

1,454

0.03

0.02

0.03

0.02

Condensed Interim Consolidated Financial Statements ▪ 2

5N PLUS INC.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three-month periods ended March 31

(in thousands of United States dollars) (unaudited)

2024

2023

$

$

Net earnings

2,507

1,454

Other comprehensive (loss) income

Items that may be reclassified subsequently to net earnings

Currency translation adjustment

(1,041)

792

(1,041)

792

Items that will not be reclassified subsequently to net earnings

Remeasurement of employee benefit plan obligations

188

(337)

Income taxes

(58)

106

130

(231)

Other comprehensive (loss) income

(911)

561

Comprehensive income

1,596

2,015

Comprehensive income is completely attributable to equity holders of 5N Plus Inc.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed Interim Consolidated Financial Statements ▪ 3

5N PLUS INC.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the three-month periods ended March 31

(in thousands of United States dollars, except number of shares) (unaudited)

Accumulated

other

Number

Share

Contributed

comprehensive

Total

2024

of shares

Capital

Surplus

loss

Deficit

equity

$

$

$

$

$

Balances at beginning of period

88,704,724

21,884

343,012

(6,477)

(229,827)

128,592

Net earnings for the period

-

-

-

-

2,507

2,507

Other comprehensive loss

-

-

-

(911)

-

(911)

Comprehensive (loss) income

-

-

-

(911)

2,507

1,596

Exercise of stock options

85,165

225

(65)

-

-

160

Share-based compensation

-

-

55

-

-

55

Balances at end of period

88,789,889

22,109

343,002

(7,388)

(227,320)

130,403

Accumulated

other

Number

Share

Contributed

comprehensive

Total

2023

of shares

Capital

Surplus

loss

Deficit

equity

$

$

$

$

$

Balances at beginning of period

88,330,236

21,004

342,985

(5,987)

(245,226)

112,776

Net earnings for the period

-

-

-

-

1,454

1,454

Other comprehensive income

-

-

-

561

-

561

Comprehensive income

-

-

-

561

1,454

2,015

Exercise of stock options

124,488

255

(74)

-

-

181

Share-based compensation

-

-

74

-

-

74

Balances at end of period

88,454,724

21,259

342,985

(5,426)

(243,772)

115,046

Equity is completely attributable to equity holders of 5N Plus Inc.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed Interim Consolidated Financial Statements ▪ 4

5N PLUS INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three-month periods ended March 31

(in thousands of United States dollars) (unaudited)

Notes

2024

2023

$

$

Operating activities

Net earnings

2,507

1,454

Adjustments to reconcile net earnings to cash flows

Depreciation of property, plant and equipment

2,485

2,549

Depreciation of right-of-use assets

637

695

Amortization of intangible assets

823

815

Amortization of other assets

63

64

Share-based compensation expense

2,549

996

Deferred income taxes

592

83

Imputed interest

270

164

Employee benefit plan obligations

(58)

(41)

Loss (gain) on disposal of property, plant and equipment

2

(26)

Unrealized gain on non-hedge financial instruments

(2,309)

(984)

Unrealized foreign exchange (gain) loss on assets and liabilities

(417)

108

Cash from operations before the following:

7,144

5,877

Net change in non-cash working capital balances

9

(7,995)

(9,649)

Cash used in operating activities

(851)

(3,772)

Investing activities

Additions to property, plant and equipment

9

(8,956)

(3,709)

Additions to intangible assets

(24)

(175)

Acquisition of investment in equity instruments

10

(1,000)

-

Proceeds on settlement of indexed deposit agreement

10

-

6,506

Proceeds on disposal of property, plant and equipment

-

310

Cash (used in) from investing activities

(9,980)

2,932

Financing activities

Repayment of long-term debt

(10,000)

-

Proceeds from issuance of long-term debt

20,889

-

Deferred costs related to long-term debt

(100)

-

Issuance of common shares

160

181

Principal elements of lease payments

(741)

(771)

Cash flows from (used in) financing activities

10,208

(590)

Effect of foreign exchange rate changes on cash and cash equivalents

(154)

162

Net decrease in cash and cash equivalents

(777)

(1,268)

Cash and cash equivalents, beginning of period

34,706

42,691

Cash and cash equivalents, end of period

33,929

41,423

Supplemental information(1)

Income tax paid

1,000

2,229

Interest paid

1,375

1,953

  1. Amounts paid for income tax and interest were reflected as cash flows from operating activities in the interim consolidated statements of cash flows. The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Condensed Interim Consolidated Financial Statements ▪ 5

5N PLUS INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three-month periods ended March 31

(in thousands of United States dollars, unless otherwise indicated) (unaudited)

1. Nature of Activities

5N Plus Inc. ("5N+" or the "Company") is a Canadian-based international company. 5N+ is a leading global producer of specialty semiconductors and performance materials. The Company's ultra-pure materials often form the core element of its customer products. These customers rely on 5N+'s products to enable performance and sustainability in their own products. 5N+ deploys a range of proprietary and proven technologies to develop and manufacture its products. The Company's products enable various applications in a number of key industries including renewable energy, security, space, pharmaceutical, medical imaging and industrial. The Company is headquartered at 4385 Garand Street, Montreal, Quebec (Canada) H4R 2B4. The Company operates R&D, manufacturing and commercial centers in strategically located facilities around the world including Europe, North America and Asia. The Company's mission is to be critical to its customers, valued by its employees and trusted by its shareholders. The Company's core values focus on integrity, commitment and customer development along with emphasis on sustainable development, continuous improvement, health and safety. The Company's shares are listed on the Toronto Stock Exchange ("TSX"). 5N+ and its subsidiaries represent the "Company" mentioned throughout these consolidated financial statements. The Company has two reportable business segments, namely Specialty Semiconductors and Performance Materials.

These condensed interim consolidated financial statements were approved by the Board of Directors on May 6, 2024.

2. Basis of Presentation

These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and as applicable to the preparation of interim financial statements, including IAS 34, "Interim Financial Reporting". These condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2023, which have been prepared in accordance with IFRS Accounting Standards.

The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The accounting policies followed in these unaudited condensed interim financial statements are consistent with those of the previous financial year, with the additional policy described below.

The functional and presentation currency of the Company is the United States dollar.

Income taxes

Taxes on income in interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

3. Inventories

March 31

December 31

2024

2023

$

$

Raw materials

37,455

36,297

Finished goods

76,066

69,553

Total inventories

113,521

105,850

For the three-month period ended March 31, 2024, a total of $29,394 of inventories was included as an expense in cost of sales ($22,758 for the three-month period ended March 31, 2023).

Condensed Interim Consolidated Financial Statements ▪ 6

5N PLUS INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three-month periods ended March 31

(in thousands of United States dollars, unless otherwise indicated) (unaudited)

For the three-month period ended March 31, 2024, a total of $46 previously written down was recognized as a reduction of expenses in costs of sales concurrently with the related inventories being sold ($23 for the Specialty Semiconductors segment and $23 for the Performance Materials segment). For the three-month period ended March 31, 2023, a total of $8 previously written down was recognized as a reduction of expenses in costs of sales concurrently with the related inventories being sold ($nil for the Specialty Semiconductors segment and $8 for the Performance Materials segment).

4. Deferred revenue

March 31

December 31

2024

2023

$

$

Prepayments from clients

12,749

11,591

Current portion of deferred revenue related to long-term contracts

1,880

1,846

Current portion of deferred revenue

14,629

13,437

Non-current portion of deferred revenue related to long-term contracts

6,029

5,629

Non-current portion of deferred revenue

6,029

5,629

Total deferred revenue

20,658

19,066

For the three-month period ended March 31, 2024, $5,697 (2023 - $2,345) of revenue was realized in relation to the deferred revenue balance outstanding at the beginning of the period.

5. Long-Term Debt

March 31

December 31

2024

2023

$

$

Senior secured revolving facility of $124,000 with a syndicate of banks, maturing in April 2026

101,500

83,500

Subordinated term loan with Investissement Québec, maturing in March 2028

15,000

25,000

Interest-free loan from Investissement Québec, maturing in February 2030

1,186

-

Interest-free loan from Canada Economic Development for Quebec Regions, maturing in

December 2032

483

-

118,169

108,500

Less current portion of long-term debt

-

(25,000)

118,169

83,500

Senior secured revolving facility

In June 2022, the Company signed a senior secured multi-currency revolving credit facility of $124,000 maturing in April 2026 to replace its existing $124,000 senior secured revolving facility maturing in April 2023. At any time, the Company has the option to request that the credit facility be expanded through the exercise of an additional $30,000 accordion feature, subject to review and approval by the lenders. This revolving credit facility can be drawn in US dollars, Canadian dollars or Hong Kong dollars (up to $4,000). Drawings bear interest at either the Canadian prime rate, US base rate, Hong Kong base rate or SOFR, plus a margin based on the Company's senior net debt to consolidated EBITDA ratio. Under the terms of its credit facility, the Company is required to satisfy certain restrictive covenants as to financial ratios. As at March 31, 2024 and December 31, 2023, the Company had met all covenants.

Condensed Interim Consolidated Financial Statements ▪ 7

5N PLUS INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three-month periods ended March 31

(in thousands of United States dollars, unless otherwise indicated) (unaudited)

Subordinated term loan from Investissement Québec

In March 2024, the Company entered into a subordinated term loan agreement with Investissement Québec of $15,000 which replaces its previous subordinated term loan of $25,000 set to expire in March 2024. The new term loan bears interest equivalent to the four-year US Treasury Bonds plus a margin of 5.38%, which equals to 9.71%. Under the terms of the loan, the Company is required to satisfy certain restrictive covenants as to financial ratios. As at March 31, 2024 and December 31, 2023, the Company has met all covenants.

Interest-free loan from Investissement Québec

In February 2024, the Company received CA$ 2,700 from Investissement Québec with respect to an interest-free term loan with a maximum drawdown of CA$ 2,850 dependent upon eligible capital expenditures related to investments in its Montreal production facility. Subject to the satisfaction of certain criteria, the Company expects CA$ 500 of the loan to be forgiven. The loan has a two-year repayment moratorium period and is subsequently reimbursable in monthly instalments over a period of four years. Under the terms of the loan, the Company is required to satisfy certain restrictive covenants as to financial ratios. As at March 31, 2024, the Company has met all covenants.

Interest-free loan from Canada Economic Development for Quebec Regions

In March 2024, the Company received CA$ 1,217 from Canada Economic Development for Quebec Regions with respect to an interest-free term loan with a maximum drawdown of CA$ 3,000 dependent upon eligible capital expenditures. At a date no later than December 31, 2025, an additional two-year repayment moratorium period will begin. Subsequently, the loan is reimbursable in monthly instalments over a period of five years.

6. Expenses by Nature

Three months

2024

2023

Wages and salaries

$

$

14,340

13,327

Depreciation of property, plant and equipment

2,485

2,549

Depreciation of right-of-use assets

637

695

Amortization of other assets

63

64

Other expenses (income), net

Amortization of intangible assets

823

815

Share-based compensation expense

360

12

Loss (gain) on disposal of property, plant and equipment

2

(26)

Research and development, net of tax credit(1)

1,084

910

Other income

(19)

(45)

  1. Reduced research and development, net of tax credit by an amount of $360 for the three-month period ended March 31, 2024 resulting from research and development subsidies. There is an outstanding receivable related to this grant as at March 31, 2024 for an amount of $2,199 included within Accounts receivable.
    Reduced research and development, net of tax credit by an amount of $680 for the three-month period ended March 31, 2023 resulting from research and development subsidies.

Condensed Interim Consolidated Financial Statements ▪ 8

5N PLUS INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three-month periods ended March 31

(in thousands of United States dollars, unless otherwise indicated) (unaudited)

7. Earnings per Share

The following table reconciles the numerators and denominators used for the computation of basic and diluted net earnings per share:

Three months

Numerators

2024

2023

$

$

Net earnings for the period

2,507

1,454

Three months

Denominators

2024

2023

Basic weighted average number of shares

88,733,736

88,367,689

Dilutive effect:

Stock options

670,659

472,982

Diluted weighted average number of shares

89,404,395

88,840,671

For the three-month period ended March 31, 2024, 119,620 stock options were excluded from the diluted weighted average number of shares due to their anti-dilutive effect.

For the three-month period ended March 31, 2023, 219,864 stock options were excluded from the diluted weighted average number of shares due to their anti-dilutive effect.

Condensed Interim Consolidated Financial Statements ▪ 9

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5N Plus Inc. published this content on 06 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2024 21:06:49 UTC.