Mr. Rahim Suleman reports

NEO PERFORMANCE MATERIALS REPORTS FOURTH QUARTER AND FULL YEAR 2024 RESULTS; NEO GROWS ADJUSTED EBITDA(1) BY 70% YEAR-OVER-YEAR, EXCEEDING GUIDANCE BY 20%

Neo Performance Materials Inc. has released its fourth quarter and full-year 2024 financial results. The financial statements and the management's discussion and analysis (MD&A) are available on the company's website and on SEDAR+. All financial amounts in this news release and the company's financial disclosures are in United States dollars, unless otherwise stated.

"Neo delivered outstanding financial and operational results in 2024, exceeding guidance with adjusted EBITDA growth of over 70 per cent, driven by strong performance in rare metals and Magnequench. We successfully executed major capital projects, including completing our emissions control catalyst facility on time and under budget. Our European permanent magnet facility remains on track for a grand opening in 2025, marking a significant step forward in strengthening our global supply chain for permanent magnets.

"We maintained a strong balance sheet with a net cash position, supported by healthy cash flow generation and working capital improvements. At the same time, we took decisive action to streamline our portfolio, divesting our rare earth separation assets in China, subject to closing conditions. This aligns with our strategy to reduce earnings volatility and focus on high-value-add growth business.

"With a reinforced foundation, Neo is positioned for long-term growth as we expand our permanent magnet capabilities to meet accelerating demand, creating lasting value for our shareholders," said Rahim Suleman, Neo's president and chief executive officer.

(1) Neo reports certain non-IFRS (international financial reporting standards) financial measures, including EBITDA (earnings before interest, taxes, depreciation and amortization), adjusted EBITDA, adjusted EBITDA margin, adjusted net income or loss, adjusted earnings per share, and others, which are not measures recognized under IFRS and do not have any standardized meaning prescribed by IFRS. Please refer to the non-IFRS financial measures section of this news release and the fourth quarter MD&A for more information.

Financial highlights:

• Revenue for Q4 (fourth quarter) 2024 was $134.9-million, compared with Q4 2023 revenue of $128.7-million. On a year-over-year basis, 2024 revenue was $475.8-million compared with $571.5-million in 2023.
• Operating income for Q4 2024 was $12.4-million, compared with Q4 2023 operating loss of $5.5-million. On a year-over-year basis, 2024 operating income was $35.3-million, compared with $11.2-million in 2023.
• Adjusted net loss (1) for Q4 2024 was $4.9-million, or 12 cents per share, compared with Q4 2023 adjusted net income (1) of $900,000, or two cents per share. On a year-over-year basis, 2024 adjusted net income was $1.9-million, or five cents per share, compared with adjusted net loss of $1.0-million, or two cents per share, in 2023.
• Adjusted EBITDA for Q4 2024 was $20.7-million, compared with Q4 2023 of $3.1-million. On a year-over-year basis, 2024 adjusted EBITDA was $64.4-million, compared with $37.2-million in 2023.
• Adjusted EBITDA margin as a percentage of revenue for Q4 2024 increased to 15.3 per cent from 2.4 per cent an improvement of 1,300 basis points from the prior-year quarter. Two thousand twenty-four adjusted EBITDA increased to 13.5 per cent from 6.5 per cent, an improvement of 700 basis points from prior year.
• For the year ended Dec. 31, 2024, Neo generated $51.5-million in cash from operating activities, driven by strong income from operations and continued working capital improvements.
• Neo had $85.5-million in cash, $68.8-million in gross debt and $2.7-million in bank advances on its balance sheet as of Dec. 31, 2024. Neo invested $80.2-million in capital expenditures for the year ended Dec. 31, 2024, mainly comprising $26.8-million for the construction of the emissions control catalyst facility and $42.5-million for the construction of the new permanent magnet manufacturing facility in Europe.
• Neo distributed $12.3-million in dividends to Neo's shareholders and repurchased $2.3-million of common shares for cancellation in 2024.
• A quarterly dividend of 10 Canadian cents per common share was declared on March 11, 2025, for shareholders of record on March 18, 2025, with a payment date of March 27, 2025.

Solid business performance:

• Magnequench: Magnequench delivered robust growth in 2024, with sales volumes increasing by 7.9 per cent for the full year, driven by strong demand in bonded permanent magnets and bonded powders in traction motor applications. The segment continues to capitalize on key growth areas while optimizing cost efficiencies, leading to improved profitability.
• Significant developments and key performance drivers include:
  • Bonded magnet sales delivered record volumes up 23 per cent for the full year;
  • Bonded powders in traction motors delivered growth and won next generation product platform;
  • Reduced conversion costs by 20 per cent for the full year at its largest facility;
  • Adjusted EBITDA for 2024 increased by $4.4-million, or 21 per cent, compared with the prior year.
• C&O (customer and operations): While C&O faced challenges in rare earth separation, impacting earnings, the segment is taking tactical steps to drive growth and profitability. Automotive catalyst volumes were impacted by relocation of NAMCO and market conditions. The new emissions control catalyst facility is ramping up, positioning Neo for long-term success. The planned sale of the Chinese separation facilities remains on track, reinforcing the company's shift to high-value-add downstream businesses. At the same time, the waste water treatment business continues to gain momentum, supporting future growth.
• Significant developments and key performance drivers include:
  • Waste water treatment business delivered record volumes up 46 per cent for the full year;
  • C&O rare earth separation business delivered negative $1.6-million gross margin in 2024. Adjusted EBITDA for 2024 declined by $4.4-million, or 47 per cent, compared with the prior year.
• Rare metals: Rare metals delivered another record year, with strong performance across all facilities. The primary factor influencing financial performance was its hafnium business. The whole segment delivered improved financial and operational performance through notable changes to its manufacturing strategy.
• Significant developments and key performance drivers include:
  • Hafnium gross margins increased 76 per cent for the full year;
  • Closure of hydrometallurgical processing in Silmet, Estonia, delivered measurable improvements;
  • Gallium business strengthened its position in the supply chain, benefiting from regulatory tailwinds;
  • Adjusted EBITDA for 2024 increased by $27.6-million, or 114 per cent, versus the prior year.

European permanent magnet facility nearing completion:

• Neo's European permanent magnet facility remains on schedule and on budget. The core manufacturing building is complete and all key equipment has been received. Customer qualification sample production is set to begin in first half of 2025, with large-scale commercial production expected in 2026.
• Neo has invested $57.1-million (before the European Union grant reimbursement received of $5.6-million) since project inception, with an expected phase 1 capital cost of $75.0-million before the anticipated EU grant reimbursement of 23 per cent of eligible project costs.
• In November, 2024, Neo secured a $50.0-million credit facility from Export Development Canada (EDC) to support facility construction and commissioning, with $25.0-million drawn as of Dec. 31, 2024.

Emissions control catalyst plant completed under budget:

• Neo successfully completed its new emissions control catalyst facility under budget, with total project spending expected to be $68.0-million, approximately $7.0-million below initial estimates.
• Neo has invested $49.8-million since project inception; with construction and commissioning complete, the remaining spend relates primarily to outstanding postcommissioning vendor payments.
• Construction was partly financed through an EDC credit facility, with $45.0-million drawn as of Dec. 31, 2024.

Asset portfolio rebalancing to improve quality of earnings:

• Neo's 2024 portfolio rebalancing focused on divesting non-core separation assets in China to improve earnings quality, streamline operations and optimize capital allocation.
• Neo has entered into agreements to sell: (i) an 86-per-cent equity interest in JAMR; and (ii) 88 per cent of the equity interest in ZAMR, amended from the original agreement to sell 98 per cent of the equity interest of ZAMR. The two transactions are expected to generate approximately 209.1 million renminbi ($28.9-million) in aggregate cash proceeds. The sales are expected to close in the first half of 2025 after the completion of customary closing conditions, including local jurisdictional, administrative filings, registrations and approvals.

Non-core divestment -- sale of gallium trichloride facility:

• On Dec. , 2024, Neo completed the sale of its 80-per-cent ownership interest in its gallium trichloride facility in Oklahoma, which includes a seven-year agreement for the facility to purchase gallium from, and transfer gallium scrap to, Neo's Peterborough facility.

Strategic review:

• Neo continues to progress its previously announced special-committee-led strategic review process, which includes the consideration of strategic alternatives and opportunities to maximize shareholder value. The special committee remains committed to advancing the strategic review process with Neo's financial advisers.
• There can be no assurance that the strategic review process will result in any transaction or other alternative, nor any assurance as to its outcome or timing.

Conference call on Tuesday, March 18, 2025, at 10 a.m. Eastern Time

Management will host a teleconference call on Tuesday, March 18, 2025, at 10 a.m. ET, to discuss the fourth quarter 2024 results.

Interested parties may access the teleconference by calling 1-416-945-7677 (local) or 1-888-699-1199 (toll-free, long distance). A webcast will be available.

A teleconference recording may be accessed by calling 1-289-819-1450 (local) or 1-888-660-6345 (toll-free) and entering passcode 47143 followed by the pound key until April 18, 2025.

Non-IFRS financial measures

This new release refers to certain specified financial measures, including non-IFRS financial measures and ratios, such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, debt to adjusted EBITDA, free cash flow and free cash flow conversion. These specified financial measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and may not be comparable with measures presented by other companies. Rather, these specified financial 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.

Specified financial measures such as non-IFRS measures and ratios 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. Neo uses specified financial measures to provide investors with supplemental measures of its baseline operating performance and to eliminate items that have less bearing on operating performance or operating conditions, and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. Neo believes that securities analysts, investors and other interested parties frequently use specified financial measures such as non-IFRS financial measures and ratios in the evaluation of issuers. Neo's management also uses non-IFRS financial measures and ratios to facilitate operating performance comparisons from period to period. Readers are cautioned that these measures should not be construed as an alternative to their nearest or directly comparable financial measures determined in accordance with IFRS as an indication of Neo's financial performance. For further information on how Neo defines such specified financial measures, including non-IFRS financial measures and ratios, and, where applicable, their reconciliations to the nearest comparable IFRS measures, please see the non-IFRS financial measures section of Neo's MD&A for the three months and year ended Dec. 31, 2024, which is hereby incorporated by reference into this news release, and is available on the company's website and on SEDAR+.

About Neo Performance Materials Inc.

Neo manufactures the building blocks of many modern technologies that enhance efficiency and sustainability. Neo's advanced industrial materials -- magnetic powders, rare earth magnets, magnetic assemblies, specialty chemicals, metals and alloys -- are critical to the performance of many everyday products and emerging technologies. Neo's products fast-forward technologies for the net-zero transition. The business of Neo is organized along three segments: Magnequench, chemicals and oxides, and rare metals. Neo is headquartered in Toronto, Ont., Canada, with corporate offices in Greenwood Village, Colo., U.S., in Singapore, and in Beijing, China. Neo has a global platform that includes manufacturing facilities located in China, Germany, Canada, Estonia, Thailand and the United Kingdom, as well as one dedicated research and development centre in Singapore.

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