Earnings call transcript: 5N Plus Inc. Q3 2025 sees strong earnings beat

5N Plus Inc. reported its third-quarter 2025 earnings, significantly surpassing market expectations with an earnings per share (EPS) of $0.20, compared to the forecasted $0.0925, marking a surprise increase of 116.22%. The company also reported revenue of $104.9 million, exceeding the forecast of $94.56 million by 10.93%. Following the announcement, 5N Plus Inc.'s stock rose by 3.49%, closing at $20.76.

Key Takeaways

• 5N Plus posted a record quarterly revenue, the highest in a decade.
• The company raised its 2025 EBITDA guidance significantly, reflecting strong operational performance.
• Terrestrial renewable energy and space power sectors showed substantial revenue growth.
• The stock price increased by 3.49% in post-earnings trading.

Company Performance

5N Plus Inc. demonstrated robust performance in Q3 2025, with a 33% increase in revenue, reaching $104.9 million. This marks the highest quarterly revenue in ten years. The company attributes this growth to strong demand in terrestrial renewable energy and space power sectors. Year-to-date revenue stands at $289.1 million, indicating a positive trajectory compared to previous years.

Financial Highlights

• Revenue: $104.9 million (up 33% YoY)
• Earnings per share: $0.20 (up from the forecasted $0.0925)
• Adjusted Gross Margin: $38.7 million (36.9% of sales)
• Adjusted EBITDA: $29.1 million (up 86% YoY)

Earnings vs. Forecast

5N Plus Inc. reported an EPS of $0.20, significantly beating the forecast of $0.0925, resulting in a surprise percentage of 116.22%. The revenue of $104.9 million also exceeded expectations by 10.93%. This performance reflects a strong operational quarter and effective cost management, contributing to higher-than-expected profitability.

Market Reaction

Following the earnings announcement, 5N Plus Inc.'s stock experienced a 3.49% increase, closing at $20.76. This rise reflects investor confidence in the company's ability to surpass expectations and capitalize on growth opportunities in renewable energy and space power sectors. The stock remains near its 52-week high of $20.88, illustrating strong market sentiment.

Outlook & Guidance

5N Plus Inc. has revised its 2025 EBITDA guidance upwards from $65-70 million to $85-90 million, highlighting confidence in continued strong demand and operational efficiency. The company anticipates further growth in its semiconductor compound supply volumes and is preparing for increased demand in 2026 through capacity expansions.

Executive Commentary

CEO Gerard Vajrak stated, "This quarter marks another financial milestone for 5N Plus, with our strongest quarterly revenue in a decade, record adjusted gross margin, and a new high for quarterly adjusted EBITDA." CFO Richard emphasized the company's unique positioning, saying, "We remain one of the few businesses in our sector and geographies that can both source critical minerals and recycle or refine secondary materials."

Risks and Challenges

• Supply Chain Disruptions: Potential geopolitical tensions could impact the supply of critical minerals.
• Market Saturation: Increasing competition in renewable energy sectors may pressure margins.
• Economic Uncertainty: Macroeconomic factors could affect investment in clean energy infrastructure.

Q&A

During the earnings call, analysts inquired about the company's M&A strategy, focusing on mature, EBITDA-generating assets. Management confirmed germanium sourcing from Canada, Europe, and small U.S. volumes. They also discussed pricing strategies and emerging opportunities in medical imaging and defense sectors.

Full transcript - 5N Plus Inc. (VNP) Q3 2025:

Richard, CFO/President, 5N Plus: Good morning, everyone, and thank you for joining us for our Q3 twenty twenty five Results Conference Call and Webcast. We will begin with a short presentation followed by a question period with financial analysts. Joining me this morning is Gerard Vajrak, our CEO. We issued our financial results yesterday and posted a short presentation on the Investors section of our website. I would like to draw your attention to Slide two of this presentation.

Information in this presentation and remarks made by the speakers today will contain statements about expected future events and financial results that are forward looking and therefore subject to risks and uncertainties. A detailed description of the risk factors that may affect future results is contained in our management discussion and analysis of 2024 dated 02/25/2025, available on our website in our public filings. The analysis of our quarterly results, you will note that we use and discuss certain non IFRS measures, which definitions may differ from those used by other companies. For further information, please refer to our management discussion and analysis. I would now turn the conference call over to Gerbert.

Gerard Vajrak, CEO, 5N Plus: Good morning. Thank you, Richard, and thank you all for joining us this morning. This quarter marks another financial milestone for 5N Plus. With our strongest quarterly revenue in a decade, record adjusted gross margin and a new high for quarterly adjusted EBITDA. These results reflect strong performance across strategic sectors reinforced by our global sourcing, our manufacturing capabilities and our focus on high growth and high value markets.

These trends have continued consistently throughout the year. In a complex environment, we are executing our growth strategy with discipline, focusing on the factors within our control. We are building on our unique advanced materials capabilities and leveraging our market positioning as the trusted partner of choice. Entering the year with incredible momentum, our performance has exceeded our expectations improving quarter after quarter. This is reflected in the latest upward revision to our annual adjusted EBITDA guidance and sets a high bar for the year ahead.

Now let's start with an overview of our specialty semiconductor segment. In terrestrial renewable energy, demand remained very strong in the third quarter with revenue for this sector up 53% over the past year. We continue to shift increased volumes to our key strategic customer under the terms of the extended supply agreement which we announced along with our Q2 results in August. Under the new terms, semiconductor compound supply volumes are set to rise approximately 33% above initial contract levels for twenty twenty five-twenty twenty six period, with a further 25% increase expected over the subsequent two year term. Our teams in Montreal and Germany are working diligently to meet this higher demand building on our experience from previous expansions.

New equipment has mostly been installed and we are now progressively ramping up effective capacity with a focus on hiring and training new staff and on maximizing efficiency and productivity. Turning to space power sector, Azure's revenues increased 43% compared to the same period last year. We have a robust long term project pipeline firmly in place. At our Ibram site, the ramp up of solar cell production is on track to add an additional 30% by year end as planned. We continue to explore further opportunities to expand our operations and capture growing demand.

On the Performance Materials side, we continue to benefit from exceptional margins despite lower volumes. This once again reflects our unique positioning in a volatile business environment and the strength of our strategic diversified global supply. Thanks to our market leadership and competitive advantages, we will continue to solidify our position as the strategic partner of choice. Looking to 2026, several demand trends are expected to support our continued growth. As discussed last quarter, domestic solar energy is expected to remain a key component of The U.

S. Energy equation despite shifts in U. S. Energy policy. 5N Plus is poised to benefit as a key strategic North American supplier within our U.

S.-based customers value chain as reflected in our expanded supply agreement. This outlook is further reinforced by the acceleration in AI adoption, which will rely on abundant clean power and seamless global connectivity. We are uniquely positioned at the intersection of both these megatrends. We can deliver the advanced semiconductor compounds required for the TIMFEM photovoltaics on earth as well as space solar cells using germanium substrates which are needed for clean energy and satellite infrastructure. Although the global business environment remains unpredictable, our unique expertise in manufacturing footprint position us to grow organically while we also pursue external growth opportunities.

Before moving to financial details, I would like to say a few words about who as we announced last week was appointed President on November 1 and will succeed me as CEO at the May. Having worked closely with Vishal over the past five years, I have full confidence in his leadership, strategic insight, and ability to drive 5N Plus forward. He has been instrumental in shaping our growth strategy and strengthening our operations, making him exceptionally well placed to lead the company into its next phase. This transition also comes at the right time for 5N Plus, ensuring continuity at the time of strong momentum. We believe this position for 5N Plus to maintain its market leadership, execute on growth initiatives, and continue delivering for our shareholders.

For my part, I look forward to taking on taking on the new role of executive chair, Yupon Richard's appointment as CEO next May. In that capacity, I will continue to support the leadership team in the execution of our strategic priorities, ensuring that we remain steadfast in our focus on long term value creation. With that, I'll pass it over to Richard for a review of our financial results.

Richard, CFO/President, 5N Plus: Good morning, everyone, and thank you, Jarvis, for your kind words. I appreciate your trust and support. I'm honored by this appointment, and I look forward to taking on increased responsibilities as president and to leading 51Plus into its next chapter. We have a strong foundation and a clear strategy and a great team. Also look forward to continuing to work closely with Jarvee and the rest of the board to keep five plus on its path for growth.

That note, let's move to our financial results. Another record quarter that highlights the continued strength of our strategy and operations. Increase in revenue, earnings and margins this quarter reflects the accelerating demand we have seen since the beginning of the year in the terrestrial renewable energy and space solar power sectors, as well as strong pricing for bismuth based products. Once again, these results speak for themselves. In today's complex environment, our unique positioning, expertise and agile global supply chain makes us the reliable partner of choice across our strategic sectors.

We remain one of the few businesses in our sector and geographies that can both source critical minerals and recycle or refine secondary materials, a key competitive advantage in the current geopolitical context. Starting with our consolidated results, revenue in Q3 increased by 33% reaching $104,900,000 and marking a ten year high, while year to date revenue reached 289,100,000.0 delivered record quarterly adjusted gross margin both in terms of dollars and as a percentage of sales. In dollars, adjusted gross margin increased by 58% to $38,700,000 and came in at 36.9% of sales. Adjusted gross margin year to date was $102,100,000 and 35.3 percent of sales. We also generated our highest adjusted EBITDA, which increased by 86% to a record $29,100,000 in Q3 and grew to $74,000,000 year to date 2025, an 81% increase compared to year to date 2024.

Turning now to our segments, starting with Specialty Semiconductors, where we saw strong volumes across our strategic sectors, better pricing that outpaced inflation and continued benefits from economies of scale. Segment revenue was $75,200,000 compared to $53,000,000 in Q3 last year. Year to date revenue was $209,200,000

Unknown, Financial Analyst/Executive, 5N Plus: compared to $150,500,000 last year. Adjusted gross margins was 30.8% of sales compared to 24.8% in Q3 last year. Year to date, it was 32.7% compared to 29% last year, favorably impacted by economies of scale due to higher production and higher pricing net of inflation.

Richard, CFO/President, 5N Plus: Adjusted EBITDA increased by 120% to reach 19,200,000.0 Q3 and year to date increased by $24,500,000 to $55,800,000 Backlog for specialty semiconductors was maxed out at two sixty five days of annualized revenue definition. However, the effective backlog in reality surpassed the next twelve months at quarter end given our strong pipeline of locked in orders. Turning now to Performance Materials where we continue to experience extraordinary margins, thanks to a combination of favorable inventory positioning, strong pricing conditions over metal output costs input costs. Segment revenue was $29,700,000 in Q3 compared to twenty five point nine million in Q3 last year, where year to date revenue was $79,900,000 compared to $68,000,000 year to date last year. Adjusted gross margin was a record 53.1% of sales in Q3 this year compared to 44.4 in Q3 last year and 42.9% for year to date this year versus 36.5% year to date last year.

Adjusted EBITDA in Q3 increased by 39% to 13,300,000.0 Adjusted EBITDA year to date increased by $9,000,000 to $27,400,000 Backlog for Performance Materials was one hundred and four days, twenty three days lower than on June. Combined with specialty semiconductors, this bring our consolidated backlog to three eleven days of annualized revenue at quarter end, fourteen days higher than in the previous quarter. Looking now at our financial position, net debt was once again maintained at a low level of $63,300,000 This represents a decrease of $26,800,000 compared to year end. That brings our net debt to EBITDA ratio to 0.74x at quarter end. Our strong balance sheet and borrowing capacity continue to give us the flexibility to pursue growth opportunities.

We are actively assessing potential acquisitions with the preference for The U. S, but we will take the time needed to find the right fit. Parallel, we remain highly focused on hitting our increased capacity targets, optimizing production and identifying more opportunities to expand capacity to meet anticipated demand. Turning now to guidance. For the remainder of 2025, we anticipate demand under specialty semiconductors from both the terrestrial renewable energy and space solar power markets to remain strong as customers look to secure advanced materials from trusted and reliable partners.

Performance Materials volumes are expected to be slightly lower compared to the first half of the year, consistent with historical trends. Margins will continue to benefit from our strategic global supply chain and sourcing capabilities in today's volatile business environment. Based on our financial performance year to date, along with anticipated seasonality and other operational factors, we have increased our adjusted EBITDA guidance from a range of 65,000,000 to 70,000,000 to a new range of 85,000,000 to $90,000,000 This means that 2025 will be a truly exceptional year from an earnings generation perspective and the whole team deserves recognition for making this possible. Now we must remain focused on execution through the end of the year. We look forward to providing 2026 guidance in conjunction with our Q4 results released in February.

Looking ahead, we remain present in an evolving geopolitical environment that could have impacts on operating costs. As a preferred supplier of ultra high purity and high quality advanced materials, we are well positioned to continue certifying our leadership in key markets through the 2025 and into 2026. That concludes our formal remarks. I will now turn the call back over to the operator for the Q and A session with financial analysts.

Unknown, Conference Call Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Amir Azet with Bentham Capital Markets.

Amir Azet, Financial Analyst, Bentham Capital Markets: Congrats on the outstanding quarter. On a personal note, I'd like to congratulate both of you on the leadership transition. I'm sure I speak for many when I say it's great to see both of you continuing to play a key role in the company.

Richard, CFO/President, 5N Plus: Thank you. On

Amir Azet, Financial Analyst, Bentham Capital Markets: to that outstanding quarter, Performance Materials, like 53% gross margin prints just blew my mind. You noted in the MD and A and in your prepared remarks support from higher business pricing, product mix and favorable inventory position. Can you help disaggregate how much of that uplift actually came from pricing power versus inventory timing or other one offs?

Richard, CFO/President, 5N Plus: The most if you have to weight the various factors, the most important factor remains the better pricing over the input metal costs, okay, supported by our unique supply chain. The inventory position is a factor, but it's not the most important in realizing the great margins that we've done in Q3.

Amir Azet, Financial Analyst, Bentham Capital Markets: Understood. That's great to hear. So looking ahead, how should we think about the structural floor for Performance Materials when it comes to gross margins? I've always thought of this as a 30% to 35% sort of gross margin business is like 40% plus, you know, like the new sort of bands, or how do I think of that?

Richard, CFO/President, 5N Plus: I have to be honest. This year's performance for that segment is also a surprise for us. But ultimately, when you look back, I mean, it's the we're realizing those margins because of all the different things we've done over the years. And now based on the current geopolitical environment, we're doing even better than ever anticipated. So to answer your question, looking forward, this quarter was exceptional.

I'll be more inclined to look at the performance of the average performance of the first two quarters going forward, which still represent a fairly high gross margin.

Amir Azet, Financial Analyst, Bentham Capital Markets: Yes, indeed. Okay. Then on your updated 2025 EBITDA guidance of 85 to 90, it implies a material step down in Q4, especially considering the last couple of quarters have just been blockbuster quarters. Can you walk us through the moving pieces driving the implied Q4 EBITDA? Is it mostly like Performance Materials maybe like coming back down to what you consider to be a normal quarter or is there some costs maybe embedded in Q4 that we should think about?

Richard, CFO/President, 5N Plus: Well, there's a factor that remains on the Performance Materials. Typically, if you leave aside the pricing over the metal cost, volume tends to be lower in the second half, it's in Q4 that it occurs the most. It has the biggest impact from a seasonality perspective. For specialty semiconductors, the volume is definitely better than in previous periods within our overall financial performance. But we're in a situation where we're going to take advantage of this Q4 to most likely accelerate some of our annual maintenance and else to start 2026 on a more stronger foot than ever, okay?

We've been pushing hard on all of our teams and equipment this year. So this year, we're going to be bringing forward some of our annual maintenance that were originally planned for 2026 and other things around our operations to start the 2026,

Amir Azet, Financial Analyst, Bentham Capital Markets: perfect shape. Okay. Understood. So that's just like

Richard, CFO/President, 5N Plus: So moving moving moving we're gonna be moving maintenance schedule, essentially, and other and other and other projects

Unknown, Financial Analyst/Executive, 5N Plus: Yeah.

Gerard Vajrak, CEO, 5N Plus: Forward. In order to meet the growing demand for 2026, you need to be in we need to make sure that all the equipment are in great shape.

Amir Azet, Financial Analyst, Bentham Capital Markets: Understood. So you're moving forward some OpEx from 2026 into Q4?

Richard, CFO/President, 5N Plus: It's going to have an impact both on OpEx because we're going to be accelerating some of our planned maintenance expenses of next year, and it may have some impact also on volume that that will be most likely realized starting in the new year.

Amir Azet, Financial Analyst, Bentham Capital Markets: Yep. Understood. And ensuring that, Vishal, you've got a good first year as president and CEO. Then then maybe one last one for me. On the First Solar, like, conference call, announcements, they were speaking about, their, new 3.7 gigawatt facility in The U.

S. And like, obviously, the team we've been following, the reshoring, I guess, from Southeast Asia. I'm just wondering if we should think of this as incremental demand for five And or is it just part of the agreements you guys just announced or the expanded agreement, I should say, that you guys announced last quarter? And if it is part of the agreements you announced last quarter, is there a potential for you guys to start to see some like pull forwards of volumes into the 2026 as this facility comes online? Maybe just some of your thoughts on that.

Gerard Vajrak, CEO, 5N Plus: Well, I mean, first of all, it's a great news to see First Solar investing in North America. I think it supports our strategy, and it's a great news. Secondly, the announcement was related to a finishing line. Then it's not the full line that they're moving, it's really the finishing part of the panels. Then we don't expect that to have an impact directly on our volume, though it was already embedded in the new contract we signed for the existing line.

It does not mean that further investment will not happen for first order. But for the time being, it does not have a material impact on the volume we're producing to them. Remember, we're growing 33% for 'twenty five and 'twenty six and an additional 25% for 'twenty seven and 'twenty eight.

Richard, CFO/President, 5N Plus: But as Jean Valerz said, it remains a very important announcement because that confirms that they're definitely extremely competitive in The U. S. Market, which is one of the most important growing market.

Unknown, Conference Call Operator: Your next question comes from Michael Glenn with Raymond James. Your line is now open.

Michael Glenn, Financial Analyst, Raymond James: Hey, good morning, and I'll just echo Hamer's comments. Congratulations.

Richard, CFO/President, 5N Plus: On the promotion and

Michael Glenn, Financial Analyst, Raymond James: pay for all of the progress made at five m plus since you stepped in role as well.

Richard, CFO/President, 5N Plus: Thanks. Thanks.

Michael Glenn, Financial Analyst, Raymond James: To just to come back to the pricing dynamic on Bismuth, is it natural to think or is there a scenario where if you're getting this better pricing on the Bismuth, you will have to eventually flow that through to some of the end customers in the market?

Richard, CFO/President, 5N Plus: No. No. No. No. I'm I'm I'm not sure I understand your question, but, there's there's essentially, the way it works, it's a bit different from one product to another.

But for many of our key products that are especially performing well this year, we charge a premium over the most recent notation. And then anything that we have from a positioning or supply advantage becomes part of the profit on top.

Michael Glenn, Financial Analyst, Raymond James: So you're you're able to hold on to whatever that input cost pricing it?

Richard, CFO/President, 5N Plus: Forward? Yes. Yes. Yes. Good.

Yeah. That gets repriced every period or yeah.

Michael Glenn, Financial Analyst, Raymond James: And moving over to some of the critical materials that you're you're involved with on the Azure and First Solar side, germanium availability, have you seen any limiting factors with germanium availability in your global supply chain? And maybe as well, if you could comment on tellurium as well.

Gerard Vajrak, CEO, 5N Plus: Well, in terms of germanium, you know, there's definitely no problem on availability. On pricing, though, it costs more, and you've seen the germanium price increase over the the last few months. But in terms of availability, there's no it's not an issue for us. In terms of tellurium, again, same thing. Pricing has been evolving over the last few months.

And you but in terms of availability, we have a strategy to capture all the tellurium available outside of China.

Michael Glenn, Financial Analyst, Raymond James: And just circling in on germanium, we do get a lot questions about sourcing of the material. Can you give us some sense as to how you source your internal needs for germanium, where the material comes from? And is there still material that does get supplied from Chinese sources in?

Gerard Vajrak, CEO, 5N Plus: Without disclosing names, our germanium is coming from Canada, coming from Europe and some small volume from The U. S.

Richard, CFO/President, 5N Plus: Germanium is not exclusive to China. Germanium comes from zinc and coal operations. There's definitely germanium available outside China. And germanium usage consumption for space applications remain quite small compared to other sectors like fiber optics and it.

Gerard Vajrak, CEO, 5N Plus: And currently, there's a lot of germanium being landfilled, not being valorized. Now at the new pricing, some companies that are currently not valorizing germanium, they're looking at projects to start valorizing it. One example is Connecticut, Utah copper. They're not valorizing their germanium so far.

Michael Glenn, Financial Analyst, Raymond James: Interesting. And just one final. Just with Azure, can you speak to what we should think about in terms of margin tailwinds at Azure? Is there still about 26%, 27%? Is there still pricing tailwinds, mix tailwinds?

Just trying to think about what's still there from a margin expansion perspective.

Richard, CFO/President, 5N Plus: Okay. On an absolute basis, as you're aware, we've been adding constantly capacity. So you're going to have economies of scale from producing more. From a pricing perspective, we expect that we'll be able to adjust pricing over and above inflation and or the cost of the key input materials. So that's what we foresee forward.

So economies of scale from our production, while at the same time being able to adjust price based on inflation and input costs.

Michael Glenn, Financial Analyst, Raymond James: Thank you for taking the questions.

Unknown, Conference Call Operator: Next question comes from Michael Doumet with National Bank. Your line is now open.

Michael Doumet, Financial Analyst, National Bank: Hey, good morning, guys. Again, congratulations on

Richard, CFO/President, 5N Plus: the results and obviously, on the

Michael Doumet, Financial Analyst, National Bank: The first question I had, and it really,

Richard, CFO/President, 5N Plus: I guess, leads up to the previous one.

Michael Doumet, Financial Analyst, National Bank: I was wondering if there was any change or evolution in how the company is currently securing kind of metals this year. I think you already talked about germanium, but in the previous question, but I'd like to hear a little bit more on on the business side versus prior years and whether or not that's leading to, you know, margins.

Richard, CFO/President, 5N Plus: Look, we have not changed anything. We've just have, as you know, adjusted all through our footprint over the years in our product portfolio. And today, we've been holding on to the best of the best products, the best combination of clients and products, while at the same time, we've been investing in our assets. So today, we're in position where we can source bismuth at a very good price, while at the same time, products that we're making and supplying to our clients are critical, and our clients are extremely happy,

Nick Boruchak, Financial Analyst, Cormark Security: to rely on us for that key material.

Michael Doumet, Financial Analyst, National Bank: And then I guess, trying to reserve, you talked about how well that business performed in the quarter. At what point do you think you'll have enough visibility to consider another capacity expansion beyond the 30%?

Gerard Vajrak, CEO, 5N Plus: The the way we work and we've been super consistent on that, we we are securing the contracts. And when the backlog is large enough, we're investing. Then we've been doing that since the acquisition of Azure, and we will continue to adopt this strategy. Then so far, most of the sales for next year are already being done. We're securing contract for 2728.

We already have some volume after '28 already secured. Then once we're gonna feel comfortable enough, we will look at further increasing the capacity.

Michael Doumet, Financial Analyst, National Bank: It's not not quite there yet, but presumably getting closer. Maybe just a third question, I guess. On the on the M and A piece, you you spent it sounds like quite a bit of time doing diligence and and opportunities. So I'm assuming you've refined, I guess, what you're looking at this point. Any way you can outline for us, you know, the framework or or how investors should think about next deal could look like for the company?

Richard, CFO/President, 5N Plus: It's a bit it's a bit early to give details, but I guess we can say what it won't be. It won't be a start up, and it won't be a business that does not generate EBITDA today. It's gonna be a quality asset in the material technology field and or specialty chemical field, that ideally, has those three key attributes that are behind today's success for the company. Manufacturing and selling enablers to our clients, remaining a small cost component to our clients' products, and, ideally, the relationship this business will have with its, with its clients will be one that is referred to as a partnership rather than making making and and and trying to sell stuff.

Michael Doumet, Financial Analyst, National Bank: Great. Thanks for the questions, guys.

Richard, CFO/President, 5N Plus: Thanks.

Unknown, Conference Call Operator: Your next question comes from Nick Boruchak with Cormark Security. Your line is now open.

Nick Boruchak, Financial Analyst, Cormark Security: Thanks. Good morning, gentlemen. On the Azure pipeline and capacity expansion in Germany, can you give us a little bit of color on how you're thinking about where that capacity expansion is going to happen and how much you can take the Hillbron facility higher? And at that point, what the next step would look like?

Gerard Vajrak, CEO, 5N Plus: Well, at Heilbronn, I think we have the space to further grow the capacity. Then I think we're limited by the physical space of the Heilbronn facility. It will most likely the extension will most likely happen in Germany to to take on the benefit of having all the experts located at I1. Then it's really a matter of making sure that we have all the contracts on hand before further increasing the capacity.

Richard, CFO/President, 5N Plus: We believe we still have a few rounds of capacity expansions. We're working the layout and using the available space.

Nick Boruchak, Financial Analyst, Cormark Security: Got it. Thanks. And then switching to margins within the specialty semiconductor semiconductor space, I'm hoping you can maybe unpack a little bit how much of the year over year improvement was due specifically to price versus economies of scale. Obviously, it's tough with First Solar given the new contracts, but how should we be thinking about what that margin profile looks like now going forward given that effectively all of the volume with First Solar is now contracted and no longer spot?

Richard, CFO/President, 5N Plus: Well, if you look at it from a year to date perspective, that should be a good level to go forward. Obviously, we'll continue to be positively impacted by economies of scale. But as we've been mentioning, being quite vocal, we expect some costs to increase due to inflation and other geopolitical factors.

Nick Boruchak, Financial Analyst, Cormark Security: Excellent. And then last one, can you give us a little bit of an update on some of the other maybe longer tail growth initiatives you have ongoing, things like MRI applications, in defense with germanium, long duration storage, any of those programs progressing, advancing as you'd like to see?

Gerard Vajrak, CEO, 5N Plus: Well, in the case of medical imaging, I think we're collaborating with different customers. We've been developing products for with them together with the the the different customers. They are now they've been testing it. They've been producing their their their specs scan or their photon counting detectors, depending on their products. And some of them are currently into commercialization like Siemens.

Other one will soon launch their products. Then we're getting closer and closer to see the demand increasing. We have all the capacity available at our Saint George facility in Montreal. Now it's a matter of meeting the demand when the demand will be there. Then we're quite confident to see the volume increasing next year, but significantly in year two and three.

Richard, CFO/President, 5N Plus: Yeah. The the how it's gonna evolve, most likely, we'll go from spot business to long term contracts. Yeah. And

Nick Boruchak, Financial Analyst, Cormark Security: is that the the same kind of picture that we're seeing with some of the long duration storage and defense applications?

Richard, CFO/President, 5N Plus: Yeah. Most likely similar scenario.

Gerard Vajrak, CEO, 5N Plus: Similar scenario as well. Yeah.

Nick Boruchak, Financial Analyst, Cormark Security: Excellent. Thanks, gentlemen.

Unknown, Conference Call Operator: Your next question comes from Frederic Cabri with Desjardins. Just

Unknown, Financial Analyst/Executive, 5N Plus: wanted to ask on Azure if you've seen any notable changes in the business environment there, whether it's from a competition perspective or customer demand in the space sector? Just your update on the business environment in space.

Gerard Vajrak, CEO, 5N Plus: Well, so far, if you look at the supply, the fundamental supply and demand, we believe that the market is still stretched, meaning that the demand is currently hitting the supply. Then we're taking because we were the first one to move and install additional capacity, we're taking full benefit of securing these contracts. Our competitors is also currently one of them is currently investing, increasing its capacity. It will have an impact on 2027 onwards. Then we have another year ahead of us to secure more contract and taking the full advantage of being the first mover.

Unknown, Financial Analyst/Executive, 5N Plus: Great. And then obviously, Terrestrial, we know about your key customer there. But for Azure, how's the customer concentration landscape? Is the customer base pretty broad or is there one or two that are the bulk of the business? Maybe just a reminder on that would be helpful.

Gerard Vajrak, CEO, 5N Plus: The way it works is we're earning contracts. Then every year, if you look at our top five customers, there's a lot of movement. It's not the same five customers year after year. We do have one which has been there for the last two years because we developed the product together, then they are already they are always on the top five. But the the remaining list is quite in motion depending of the contract we earn.

Then if I look at the year to come, we will see again some changes on the top five list.

Richard, CFO/President, 5N Plus: So you have somewhere between five and ten really active clients. And from one year to another, the actual the actual revenue level changes based on the projects that we've earned with these guys. But it does not have the concentration that we have on the renewable energy.

Unknown, Financial Analyst/Executive, 5N Plus: Understood. And then lastly, just on CapEx, maybe as we look to next year, know it's probably tough to tell right now, but directionally speaking, should we expect CapEx to move up slightly or perhaps meaningfully if there's something to do at Azure?

Richard, CFO/President, 5N Plus: It's most likely going to be at similar level than this year.

Unknown, Conference Call Operator: There are no further questions at this time. I will now turn the call over to Mr. Panhandle for closing remarks.

Richard, CFO/President, 5N Plus: Okay. Well, we would like to thank you all for joining us this morning, and we wish you all a good day.

Unknown, Conference Call Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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