Q1 2020 - neomaterials.com · value spot sales orders in Q1-2019, which did not repeat in Q1-2020. • Slight decline in revenue and Adjusted EBITDA were largely driven by the selling

Corporate presentationFebruary 2020Investor Presentation

Q1 2020

Forward-Looking InformationThe following presentation contains “forward-looking information” within the meaning of applicable securit ies laws in Canada. Forward-looking information may relate to future events or future performance of Neo. All statements in this presentation, other than statements of historical facts, with respect to Neo's

objectives and goals, as well as statements with respect to its beliefs, plans, objectives, expectations, anticipations, estimates, and intentions, are forward-

looking information. Specific forward-looking statements in this presentation include, but are not limited to: expectations regarding certain of Neo's future results and information, including, among other things, revenue, expenses, revenue growth, capital expenditures, and operations; ; r isk factors relating to national or

international economies ( including the impact of COVID-19), and other risks present in the jurisdictions in which Neo, its customers, its suppliers, and/or its logistics partners operate, and; statements with respect to expected use of cash balances; continuation of prudent management of working capital; source of

funds for ongoing business requirements and capital investments; expectations regarding sufciency of the allowance for uncollectible accounts and inventory

provisions; analysis regarding sensit ivity of the business to changes in exchange rates; impact of recently adopted accounting pronouncements; risk factorsrelating to intellectual property protection and intellectual property lit igation; and, expectations concerning any remediation efforts to Neo's design of its internal

controls over financial reporting and disclosure controls and procedures. Often, but not always, forward-looking information can be identif ied by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “continues”, “forecasts”, “projects”, “predicts”, “intends”, “anticipates” or “believes”, or

variations of, or the negat ives of, such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be

taken, occur or be achieved. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. N e o believes the expectat ions reflected in such forward-looking information are

reasonable but no assurance can be given that these expectat ions will prove to be correct and such forward-looking information included in this discussion and analysis should not be unduly relied upon. For more information on Neo, investors should review Neo's cont inuous disclosure filings that are available

under its profile at www.sedar.com. Information contained in forward-looking statements in this Presentation is provided as of the date hereof and N e o disclaims

any obligation to update any forward-looking statements, whether as a result of new information or future events or results, except to the extent required byapplicable securit ies laws.

Non-IFRS MeasuresThis presentation refers to certain non-IFRS financial measures such as “Operating Income”, “Adjusted Net Income”, “EBITDA”, “Adjusted EBITDA”, and

“Adjusted EB ITD A Margin”. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS, and may not

be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS financial measures by providing further understanding of Neo's results of operations from management 's perspective. Neo's definitions of non-IFRS measures

used in this news release may not be the same as the definitions for such measures used by other companies in their reporting.

Non- IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of Neo's financial information

reported under IFRS. N e o uses non-IFRS financial measures to provide investors with supplemental measures of its base-line operating performance and to eliminate items that have less bearing on operating performance or operating condit ions and thus highlight trends in its core business that may not otherwise

be apparent when relying solely on IFRS financial measures. N e o believes that securit ies analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. Neo's management also uses non-IFRS financial measures in order to facilitate operating performance

comparisons from period to period. For the operating segments, N e o also uses “OIBDA” and “Adjusted OIBDA”, which reconciles to operating income. N e o

uses O I B D A and EB ITD A interchangeably as the use of adjustments in each measure provides the same calculated outcome of operating performance. For definitions of how N e o defines such financial measures, p lease see the "Non-IFRS Financial Measures” section of Neo’s management ’s discussion and analysis

filing for the three months ended March 31 , 2020, available on Neo’s web site at www.neomaterials.com and on S E D A R at www.sedar.com

Disclaimers

2 2

At A Glance

Exchange /

Ticker Symbol

Headquarters

Operational and

R&D footprint

Employees

Shares Outstanding

(as of 3-31-2020)

Market Cap

(as of 5-13-2020)

52-Week Range

(as of 5-14-2020)

Toronto Stock Exchange:TSX:NEO

Toronto, Canada

China, U.S., Germany, U.K., Canada, Thailand, South Korea, Singapore, Estonia

1,835

• 37,672,756• 39,850,315 (diluted)

C$276.1 million

C$5.55 – C$13.49

3

Magnequench

42%

Chemicals

& Oxides35%

Rare

Metals23%

LTM Revenue by Segment1

China31%Japan

15%

Thailand4%

South Korea

2%

North America…

Europe24%

Other2%

LTM Revenue by Geography $382

$434 $454

$407 $390

$-

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

2016 2017 2018 2019 TTM

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Ad

just

ed

EB

ITD

A in

US$

mill

ion

s

Re

ve

nu

e i

n U

S$

mil

lio

ns

Consolidated Revenue / Adjusted EBITDA2016 - Current

Revenue Adj. EBITDA

___________________________

1. Percentages shown after inter-segment revenue eliminations

2. Includes restricted cash.

$389.6

million

$389.6

million

Neo manufactures the building blocks of everyday

products and emerging technologies. Our materials

deliver a range of powerful properties to the

products in which they are used, including magnetic,

catalytic, luminescent, electrochemical, thermal

stability, and superconductive.

Quarterly Dividend of C$0.10/share and Strong Net Cash Balance of $78.8 Million1

Hybrid / Electric Automobiles

Macro Trends That Drive Demand for Neo’s Advanced Industrial Materials

Increased use of Micromotors in

Vehicles

Increasing Industrial

Automation

Expanding Health Care Diagnostics

& Imaging

Demand for Stronger, Smaller & Faster

Electronic Devices

Superalloy-Enabled

AerospaceApplications

Tighter Wastewater Treatment Standards &

Concern Over Algae Blooms

Growing Use of Renewable Energy

4

Growing Demand for Energy-Efficient Motors & Pumps

Increasingly StringentAir and GHG Emission

Standards

Neo’s Products Enable Better Energy Efficiency, Sustainability, and Performance.

Hybrid / ElectricVehicles

5

Residential Appliances

Industrial Automation

High EfficiencyMotors

Neo Products That Enable Customer Applications:Advanced Magnetic Materials

#1 MARKET LEADER of powders for

bonded and hot deformed magnets .

NdFeB magnetic mater ials that

enable more energy eff ic ient motors across mult iple markets.

6

Neo Products That Enable Customer Applications:Advanced Industrial Materials

TOP 3 GLOBAL PRODUCER of

mate r ia l s fo r env i ronmenta l emiss ion ca ta lys ts .

Advance d mate r ia l s tha t e nab le

ke y func t iona l i t y and susta inab i l i t y in mu l t ip le app l ica t ions .

Multi-Layer Ceramic Capacitors

WastewaterTreatment

Auto Catalysts Permanent

Magnetic

Materials

7

Neo Products That Enable Customer Applications:Superalloys / Electronic Metals

TOP 3 GLOBAL PRODUCER of

tanta lum for supera l loys .

Rare metals and compounds used in

superal loys, electronic, communicat ions, and other markets.

AerospaceApplications

Medical Imaging

Systems

MobileCommunications

High Efficiency

Lighting

At Neo, we make the bui lding blocks of modern technologies that enhance eff ic iency and sustainabi l i ty.

Our advanced industr ial materials – magnetic powders and magnets, specialty chemicals, metals, and al loys –

are cri t ical to the performance of many everyday and emerging technologies.

We make our customers’

products more eff ic ient and environmental ly sustainable, as wel l as stronger, smal ler, and faster.

Sustainable technologiesstart with Neo Materials.

Advancing Our Customers’ Sustainability Goals

More Energy-

Efficient Motors

Fewer Automotive

Emissions

More Efficient

Hybrid/Electric

Vehicles

Reduced Phosphorus

Discharge into Fresh

Water Bodies

Reduced Energy

Consumption from

Lighting

8

Neo’s Three Foundational Elements

9

R&D Investment andTechnical Expertise

Long-Standing Relationships

With Customers

Global Manufacturing

Footprint in Cost-Competitive Markets

1

2

3

Longstanding Relationships with Global Customer Base

• A balanced and well-diversified customer base that includes large industrial, consumer electronics and chemical processing companies.

• Significant portion of revenue contribution is from customers who have been with N e o for 10+ years.

• Provides significant value to its customers by being embedded within their supply chain and co-developing advanced, functional materials engineered to their needs .

• For example, Neo’s work in partnership with Daido and Honda on thecommercial ization of traction motors for hybrid electric and EVs, such as theHonda Accord, Insight, Fit, and Freed – that do not use heavy rare earths.

Representative Longstanding Customers

10

Global R&D Assets Support Integrated Product Development With Customers

11

.

Understand Customer

Requirements

Benchmark Motor

Performance

Motor Design

Magnet

Prototype

Sample Motor

Evaluation

Commercialization

“Compression Molded

MQ1TM Magnets”

Sillamäe, Estonia

Singapore

Abingdon, UKZibo, China

Integrated Process Development Example: Magnetic Materials

Unique Global Infrastructure with Cost Competitive Manufacturing

12

R&D centres and sales

offices located across

3 continents.

Production facilities

located in

cost-competitive

jurisdictions.

Corporate / Sales R&D Centres

US$ 000s

excl. Volume & EPS

Q-over-Q Comparison Last Completed FY

Q1 2020 Q1 2019 2019

Volume (tonnes)

3,303 3,607 13,599

Revenue $90,697 $108,530 $407,464

Net Income $518 $12,227 $23,075

Adjusted Net Income

$869 $8,140 $24,099

Adjusted EBITDA

$9,645 $16,486 $53,756

Basic EPS $0.01 $0.31 $0.59

Adjusted EPS $0.02 $0.21 $0.62

Net Cash (including

restricted cash)

$78,807 $72,067 $88,866

Cash Tax Paid $2,598 $1,901 $14,314

CAPEX $1,502 $2,665 $11,72311

Q1 2020 Financial Performance

Selected Consolidated Results

13

ü Low CAPEX ($8 - 15M)

ü Scalability (70 – 80% capacity)

ü Efficient Global Tax Structure

ü Low Commodity Exposure

ü Minimal Debt

ü Dividend (C$0.10)

ü Strong Net Cash Balance ($78.8M)(including restricted cash)

High Free Cash Flow Conversion

___________________________

1. Excludes the impact of the acquisition of Anhui Asia Magnets Co.,

Ltd. (“SAMAG“).

Q1 2020 Financial Performance

Business Unit Results

14

• Environmental auto catalyst volumes

continued to show growth Y/Y, despite

general slowdown in the auto markets.

Diesel catalyst sales were higher Y/Y,

as newer formulations of diesel catalyst

products are driving growth.

• RE separation was adversely impacted

by lower RE commodity prices,

resulting in higher cost inventory

relative to current selling prices. C&O

also benefited from timing of high-

value spot sales orders in Q1-2019,

which did not repeat in Q1-2020.

• Slight decline in revenue and

Adjusted EBITDA were largely driven

by the selling of higher-cost historical

inventory on hand for tantalum-based

products. The segment had

considerable material in the

production system, so when material

prices change, there is a lead-lag

impact into current period as the

operation is processing and selling

material on hand purchased in a prior

period.

• The segment was impacted by a

general slowdown in gallium

trichloride volumes and by

compressed margins.

• Revenues declined due to lower

volumes, lower material input

commodity prices, and impacts

related to the COVID-19 pandemic.

• Adjusted EBITDA was lower as a

result of lower volumes (both in

margin and overhead absorption),

changes in foreign exchange

rates, and by timing impacts from

Neo's input cost pass-through

mechanics.

CHEMICALS & OXIDES

($000s)Q1 2020 Q1 2019

Revenue $33,538 $43,573

Adjusted EBITDA $4,413 $6,988

RARE METALS

($000s)Q1 2020 Q1 2019

Revenue $20,450 $21,531

Adjusted EBITDA $911 $1,175

MAGNEQUENCH

($000s)Q1 2020 Q1 2019

Revenue $38,526 $47,555

Adjusted EBITDA $7,715 $10,929

Multiple Avenues for Growth

Continued Growth in Existing Products

Growth from New Product Development

Product Portfolio Acquisitions

§ Well positioned to supply materials within

broader magnetic, catalytic, electronic,

healthcare and aerospace markets

§ Strong competitive position due to:

Longstanding customer relationships

Product development and processing

know-how

Cost-competitive manufacturing

locations

Global reach with direct sales

channels

Geographic diversification of rare

earth manufacturing and raw material

supply

§ Working with customers to develop new

and next generation versions of current

products

§ Driven by key macro trends that require

the functionality that rare earths provide

§ Over 20% of current revenues come from

products not sold 5 years ago

§ Neo has been successful at innovating

new products for new markets demanded

by customers

§ Strong balance sheet and the financial

flexibility to selectively pursue strategic

acquisitions

§ Target companies or assets that would

benefit from Neo’s global reach,

customer relationships, cost-competitive

facilities and product development skills

§ Proven track record of integrating

acquired assets and replicating acquired

technology in new geographies

i.e. Growth of complex auto catalysts (hybrid vehicles)

and electric vehicles

i.e. Development of traction motors with Daido and Honda, recent

commercialization of wastewater treatment

i.e. Integration of Silmet facility,replication of Oklahomafacility in South Korea

Proven Leadership Team with Exceptional Track Record

Geof Bedford

President & CEO20 years of experience at Neo1

President, CEO and board

member since 2013

Rahim Suleman

EVP & CFOEVP and CFO since 2017

Former CFO of Stackpole

International

Kevin Morris

EVP & COO8 years of experience at Neo1

EVP and COO since 2016

Greg KrollEVP Magnequench

19 years of experience at Neo1

Former SVP, Sales & Marketing,

at Magnequench

Jefrey HoganEVP Chemicals & Oxides

20 years of experience at Neo1

EVP Chemicals & Oxides

since 2016

Frank TimmermanSVP Rare Metals

14 years of experience at Neo1

SVP Rare Metals since 2012

Constantine KarayannopoulosChairman

25 years of experience at Neo.1

Served as President and CEO of

and Neo before 2012.

Industry leaders with the expertise to deliver results, based on a combined 200+ years of experience

1. Includes all years spent at Neo as well as its predecessors.

Geoff Bedford

Eric Noyrez (Independent)

Claire Kennedy (Independent)

Nicholas Basso (Oaktree)

Brook Hinchman (Oaktree)

Gail Edwards (Independent)

Edgar Lee (Independent)

Board of Directors

16

For More Information:

Ali Mahdavi, Capital Markets and Investor Relations

(416) 962-3300

[email protected]

www.neomaterials.com

17

Research Coverage

►Canaccord Genuity Corp. (Canada)►CIBC Capital Markets►Cormark Securities Ltd.►RBC Capital Markets

►Scotia Capital Inc.►Raymond James Ltd.

Corporate presentationFebruary 2020APPENDIX SLIDES

Consolidated Statements of Financial Position(All figures in thousands of United States dollars)

19

See accompanying notes to this table in Neo's Consolidated Financial Statements for the quarterended

March 31, 2020, available on Neo's website at www.neomaterials.com and on SEDAR at

www.sedar.com.

Consolidated Results of Operations(All figures in thousands of United States dollars)

20

See accompanying notes to this table in Neo's Consolidated Financial Statements for the quarterended March 31, 2020, available on Neo's website at www.neomaterials.com and on SEDAR at

www.sedar.com.

Reconciliation to Net Income to EBITDA, Adjusted EBITDA, and Free Cash Flow

21

See accompanying notes to this table in Neo's Consolidated Financial Statements for the quarter ended March 31, 2020, available on Neo's website at www.neomaterials.com and on SEDAR at www.sedar.com.

Reconciliation of Net Income to Adjusted Net Income

22

See accompanying notes to this table in Neo's Consolidated Financial Statements for the quarterended March 31, 2020, available on Neo's website at www.neomaterials.com and on SEDAR at

www.sedar.com.