Neo Delivers Strong Third-Quarter Results and Raises Full-Year Adjusted EBITDA Guidance
Neo Performance Materials Inc. (“Neo” or the “Company”) (TSX:NEO) (OTCQX: NOPMF) today announced its financial results for the third quarter of 2025. The financial statements and management’s discussion and analysis (“MD&A”) for the three and nine months ended September 30, 2025, are available at www.neomaterials.com and on SEDAR+ at www.sedarplus.ca. All financial amounts in this news release and the Company’s financial disclosures are in United States dollars, unless otherwise stated.
“Our third-quarter results highlight Neo’s ability to deliver strong operational performance while advancing our strategy to grow our industry-leading permanent magnet business,” said Rahim Suleman, Neo’s President and Chief Executive Officer. “During the quarter, Neo delivered $19 million in Adjusted EBITDA, bringing our year-to-date total to $55 million, a 27% increase compared to the same period last year. Reflecting this solid performance, we have raised our full-year 2025 Adjusted EBITDA guidance to a range of $67 to $71 million.”
“So far this year, we have achieved several major milestones, advancing the new heavy rare earth separation line in Europe, securing traction-motor magnet contracts with European Tier 1 customers, extending our partnership with Bosch, and, in September, celebrating the grand opening of our new industrial scale sintered magnet plant in Europe. With production beginning in mid-2026, the facility will have productive capacity of 2,000 tonnes annually in its first phase, with plans to expand to 5,000 tonnes. As we continue executing our long-term strategy, Neo is poised to become the critical enabler of diversified and localized permanent-magnet supply chains for the West.”
Strategic and Operational Highlights
Strong Adjusted EBITDA Performance: Neo delivered $19.2 million and $55.3 million in Adjusted EBITDA(1) for the three and nine months ended September 30, 2025, marking a 1.9% decrease and 26.5% increase, respectively, from the same periods last year.
Magnequench (“MQ”) achieved Adjusted EBITDA of $8.1 million and $22.4 million for the three and nine months ended September 30, 2025, increasing by $1.7 million and $3.7 million, respectively, over the same periods last year.
Chemicals & Oxides (“C&O”) experienced significant improvements in Adjusted EBITDA over the prior year, reporting $4.1 million and $16.4 million for the three and nine months ended September 30, 2025, increasing by $2.8 million and $12.8 million, respectively, over the same periods last year.
Rare Metals (“RM”) continued to deliver solid results with Adjusted EBITDA of $11.5 million and $30.9 million for the three and nine months ended September 30, 2025, decreasing by $4.8 million and $3.5 million, respectively, over the same periods last year.
Neo Raises Full Year 2025 Adjusted EBITDA Guidance: Neo has raised its 2025 Adjusted EBITDA outlook to $67.0 to $71.0 million, up from $64.0 to $68.0 million as announced in August, driven by strong third quarter performance, as the Company continues to leverage its global supply chain to respond to evolving market dynamics.
Neo Opens State-of-the-Art Permanent Magnet Facility in Europe: Neo hosted the grand opening ceremony of its new European Permanent Magnet facility in September 2025, attended by more than 270 guests, including senior leadership from the global automotive, renewable energy, and technology sectors, alongside government officials, media, and investors from across Europe, North America, Australia, and Japan. The event showcased the facility’s advanced capabilities and its strategic importance in the global shift toward electrification, sustainability and localized supply chains for critical materials.
Neo Extends Partnership with Robert Bosch GmbH (“Bosch”): On September 19, 2025, Neo announced the extension of its strategic partnership with Bosch through a multi-year Memorandum of Understanding. Under the agreement, Neo will reserve dedicated annual magnet production capacity for Bosch at its European Permanent Magnet facility, ensuring a reliable and localized supply of advanced rare-earth magnets critical for Bosch’s e-mobility and energy-efficient motor applications. The partnership underscores Neo’s growing role in strengthening Europe’s magnet supply chain, supporting the region’s transition toward clean technologies, and promoting sustainable industrial innovation through closer collaboration between material producers and global OEMs.
Heavy Rare Earth Pilot Line at Silmet Remains on Track for Production Launch: Neo’s heavy rare earth pilot line is nearing completion, with commissioning expected in early 2026. The pilot line will produce dysprosium and terbium, supplying the newly constructed European Permanent Magnet facility during its ramp-up phase, in addition to serving other users and end markets. This initiative serves as a precursor to a potential full-scale commercial production line, positioning Neo to enhance its production capabilities in Europe significantly.
Consolidated Financial Highlights
Revenue for Q3 2025 was $122.2 million, compared to Q3 2024 revenue of $111.3 million. On a year-to-date basis, 2025 revenue was $358.5 million compared to $340.9 million in 2024.
Operating income for Q3 2025 was $8.4 million, compared to Q3 2024 operating income of $11.2 million. Year-to-date 2025 operating income was $26.2 million, compared to $22.9 million in 2024.
Adjusted Net Income(1) for Q3 2025 was $8.5 million, or $0.20 earnings per share, compared to Q3 2024 Adjusted Net Income of $1.1 million or $0.03 earnings per share. For the nine months ended September 30, 2025, Adjusted Net Income was $19.9 million, or $0.48 earnings per share, compared to Adjusted Net Income of $6.8 million, or $0.16 earnings per share for the first nine months of 2024.
Adjusted EBITDA reached $19.2 million for Q3 2025 and $55.3 million for nine months ended September 30, 2025, compared to $19.6 million and $43.7 million, respectively, in the prior year periods. This resulted in Adjusted EBITDA margin of 15.7% for the quarter and 15.4% for the first nine months, representing a decrease of 190 basis points for the three-month period and an improvement of 280 basis points over the prior year-to-date period, respectively.
For the nine months ended September 30, 2025, Neo used $25.4 million in cash from operating activities, driven by the settlement of a European patent claim for $12.5 million, higher receivables due to timing of sales, and higher strategic inventory held due to geopolitical risks. Neo had $61.5 million in cash and $89.9 million in gross debt on its balance sheet as of September 30, 2025.
For the nine months ended September 30, 2025, Neo invested $18.4 million in capital expenditures, primarily for the final phase of the new permanent magnet facility and the investment in the heavy rare earth separation pilot line in Europe.
For the nine months ended September 30, 2025, Neo distributed $9.1 million in dividends to shareholders and repurchased $3.9 million of common shares for cancellation under the NCIB.
A quarterly dividend of CAD$0.10 per common share was declared on November 11, 2025, for shareholders of record on December 19, 2025, with a payment date of December 29, 2025.
Segment Highlights
Magnequench Delivers Solid Operating Performance and Strategic Progress:
Strong Profitability and Volume Growth: Third-quarter volumes increased 21% year-over-year, driving a 27% improvement in Adjusted EBITDA, Magnequench’s strongest quarterly performance in over three years. Growth reflected solid underlying demand and customer restocking in response to evolving supply-chain and geopolitical conditions.
Sustained Financial Momentum: Third-quarter Adjusted EBITDA totaled $8.1 million and $22.4 million year-to-date, increases of 27% and 20%, respectively, over the same periods last year, supported by disciplined cost management, operational efficiency, and higher volumes.
European Expansion Milestone: Magnequench advanced its European magnetics strategy with the grand opening of Neo’s new industrial scale sintered magnet facility in September.
Extended Partnership with Bosch: Neo entered into a new multi-year agreement with Bosch, securing dedicated magnet production capacity at Neo’s European magnet facility to support Bosch’s e-mobility and energy-efficient motor programs, reinforcing a stable and localized supply chain.
Record Bonded Magnet Volumes: Bonded magnet shipments reached record quarterly levels, up 38% year-over-year, supported by accelerating demand for data centers serving AI.
Strong Powder Sales: Bonded powder volumes also increased 18% year-over-year, reflecting continued market share gains and healthy downstream demand.
Chemicals & Oxides Delivers Strong Growth and Strategic Realignment:
Solid Financial Performance: Adjusted EBITDA increased 213% year-over-year in the third quarter and 358% year-to-date, reaching $4.1 million and $16.4 million, respectively. Results reflect higher rare earth prices, the successful transformation of the business and continued operational discipline.
Portfolio Optimization Drives Growth: Following the sale of the Chinese separation facilities in Q1 and the relocation of the emission catalyst operations to NAMCO, C&O remains focused on higher-margin businesses with strong growth potential, including emission catalysts and wastewater treatment solutions.
Robust Demand Across Key Markets: Emission catalyst volumes rose 20% in the quarter and 12% year-to-date, while wastewater treatment volumes achieved another record quarter, up 42% year-over-year, supported by rising global sustainability and environmental compliance needs.
Strategic European Separation Capabilities: C&O continues to operate one of the few non-captive rare earth separation facilities in Europe, equipped with a world-class laboratory, advanced analytical capabilities, and a new heavy rare earth separation pilot line that remains on track and on budget with construction nearing completion.
Rare Metals Maintains Good Performance Amid Market Normalization:
Resilient Financial Results: Adjusted EBITDA totaled $11.5 million for the quarter and $30.9 million year-to-date, down 30% and 10%, respectively, from the prior-year periods, reflecting the expected normalization of hafnium prices following record highs in 2024.
Healthy End-Market Demand: Rare Metals continues to benefit from robust demand in aerospace, industrial gas turbine, and semiconductor markets, supported by ongoing global investment in advanced manufacturing and clean energy technologies.
Hafnium Price Normalization: Hafnium gross margins declined 41% year-over-year as prices stabilized, moderating profitability compared to last year’s exceptional levels.
Gallium Business Strength: The gallium segment delivered solid results on continued pricing strength and rising regulatory tailwinds. Neo remains one of the only gallium recyclers in North America, positioning the business for sustained long-term growth.
Strategic Supply Initiatives: The segment continues to focus on securing scrap and input materials through strategic sourcing partnerships and recovery initiatives, ensuring a stable, diversified supply base to support future growth.
Source: www.neomaterials.com
Aleksei Andrievskii is the founder of the ANDRIEVSKII SEA WEALTH family office in Cyprus, a member of the advisory board at Bendura Bank AG, Liechtenstein