Earnings call transcript: 5N Plus Inc. Q4 2024 misses EPS forecast

5N Plus Inc. reported its fourth-quarter 2024 earnings, revealing a shortfall in earnings per share (EPS) compared to analyst expectations. The company posted an EPS of $0.02, missing the forecasted $0.04. Despite a 9% increase in quarterly revenue to $17.9 million, the revenue also fell short of the anticipated $73.75 million. Following the earnings release, 5N Plus Inc.’s stock saw a modest increase of 0.87% in after-hours trading, closing at $6.99. According to InvestingPro data, the company maintains strong fundamentals with a healthy current ratio of 3.49, indicating robust liquidity position. Three analysts have recently revised their earnings expectations downward for the upcoming period.

Key Takeaways

• 5N Plus Inc. missed both EPS and revenue forecasts for Q4 2024.
• The company achieved a record adjusted EBITDA of $53.3 million for the year.
• Semiconductor and space solar cell capacities expanded significantly.
• Strong demand continues in renewable energy and space markets.

Company Performance

5N Plus Inc. reported a 9% increase in Q4 2024 revenue, reaching $17.9 million, and a full-year revenue of $289.3 million, marking a 19% increase from 2023. The company achieved a record adjusted EBITDA of $53.3 million, up 39% from the previous year. The firm continues to focus on expanding its semiconductor and space solar cell production capacities, reflecting its commitment to growth in high-demand sectors. InvestingPro analysis shows the company trading at an attractive PEG ratio of 0.13, suggesting potential undervaluation relative to its growth prospects. Discover more insights and 8 additional ProTips with an InvestingPro subscription.

Financial Highlights

• Revenue for Q4 2024: $17.9 million (9% growth year-over-year)
• Full-year 2024 revenue: $289.3 million (19% increase from 2023)
• Adjusted EBITDA: $53.3 million (39% increase)
• Net debt: $100.1 million
• Adjusted gross margin for the year: 31.6%

Earnings vs. Forecast

5N Plus Inc. reported an EPS of $0.02, falling short of the forecasted $0.04. The revenue of $17.9 million also missed the forecasted $73.75 million. This represents a significant deviation from expectations, highlighting potential challenges in meeting market forecasts.

Market Reaction

Despite missing earnings expectations, 5N Plus Inc.’s stock price increased by 0.87% in after-hours trading, closing at $6.99. The stock remains within its 52-week range, with a high of $8.99 and a low of $4.29, indicating moderate investor confidence in the company’s long-term prospects. InvestingPro data reveals an impressive 60.79% return over the past year, significantly outperforming many peers. The company’s market capitalization stands at $431.14 million, with strong financial health metrics earning a "GOOD" overall rating from InvestingPro’s comprehensive analysis system.

Outlook & Guidance

5N Plus Inc. projects an adjusted EBITDA of $55-60 million for 2025, driven by anticipated revenue growth in the renewable and space sectors. The company plans further capacity expansions and is exploring potential mergers and acquisitions, primarily in North America.

Executive Commentary

CEO Gerard Jacques highlighted the company’s achievements, stating, "We generated annual adjusted EBITDA of $53.3 million, a 39% increase from the previous record year." He emphasized the company’s commitment to both organic and external growth. CFO Richard Perron noted, "Current global economic uncertainty introduces new variables to be dealt with in a very short period of time."

Risks and Challenges

• Economic uncertainty could impact future financial performance.
• Supply chain disruptions may affect production timelines.
• Potential market saturation in key sectors could limit growth.
• Dependence on a few strategic clients could pose revenue risks.

Q&A

During the earnings call, analysts inquired about potential spot business opportunities with First Solar (NASDAQ:FSLR) and the company’s M&A targets. Management reiterated strong demand in the solar and space markets and noted that M&A efforts are focused on North America.

Full transcript - 5N Plus Inc. (VNP) Q4 2024:

Conference Operator: morning, ladies and gentlemen. Thank you for standing by, and welcome to the 5N Plus Inc. Fourth Quarter twenty twenty four Results Conference Call. At this time, note that all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session.

And I would like to turn the conference over to your speaker today, Richard Perron, Chief Financial Officer. Please go ahead, sir.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Good morning, everyone, and thank you for joining us for our Q4 and full year twenty twenty four 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 Jacques, our President and 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’s discussion and analysis of 2024, dated 02/25/2025, available on our website and in our public filings. In 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’s discussion and analysis.

David Ocampo, Analyst, Cormark Securities: I would

Richard Perron, Chief Financial Officer, 5N Plus Inc.: like now turn the conference over to Gerard.

Gerard Jacques, President and CEO, 5N Plus Inc.: Thank you, Richard, and thank you all for joining us on the call this morning. I am pleased to report strong operational and financial results for the fourth quarter confirming 2024 as another outstanding year for 5N Plus. At this time last year, we gave ourselves the objective to break our 2023 adjusted EBITDA record, and I am proud to say we went even further. We generated annual adjusted EBITDA of $53,300,000 a 39% increase from the previous record year. Across both segments, we continued to deliver on our margin expansion efforts.

We sustained an elevated backlog, particularly in specialty semiconductors, where the backlog continues to be maxed out. We also ended the year with a solid balance sheet, providing for flexibility to invest in our business growth. From a financial perspective, our Specialty Semiconductors business had another stellar year with strong demand driving volume growth in our strategic sectors and continued margin expansion. From an operational standpoint, we accomplished a lot in 2024. I want to acknowledge our teams, both in Montreal and at our Eisenhuttenstad and Heilbronn locations in Germany for their impeccable execution.

We made targeted investments and increased capacity at several sites to meet demand. In Montreal, new semiconductor compound capacity was commissioned in Q3 of last year. Installed capacity has now tripled from twenty twenty two levels and will enable us to meet the strong demand we’re seeing, including to serve our strategic client in this sector. As you know, we renewed our multi year agreement with this client in early twenty twenty four with favorable terms and a 50% volume increase compared to the previous agreement. At Azure in Heilbron, we completed a program to increase space solar cell production capacity last year ahead of schedule.

It is now 35% over 2022 levels, 5% more than initially targeted, and we’re not done. As announced last year, we are growing capacity by another 30% with minimal additional investment, a work that is now well underway. This puts us in a strong position to stay competitive in two high growth sectors, terrestrial renewable energy and space solar power. We expect that the demand will remain the rule in both of these end markets. Demand for energy is rising, especially in The U.

S. And solar energy, which is both clean and fastest to market, is part of the solution. In the space solar power market, there is also unprecedented growth from telecommunication and national security to scientific research and exploration, the space revolution is in full swing. We also anticipate continued growth in imaging and sensing applications for the security, defense and medical sectors. On the medical imaging front, Photon (WA:PENP) Counting Detector, PCD technology, which is set to replace traditional scintillator detectors, represents the new the next frontier.

In 2024, we work closely with several major corporations in their product development ahead of this transition. This work will continue in 2025, and we expect this to provide an additional growth avenue in the medium term. Turning now to Performance Materials. An improved product mix and solid operational execution also contributed to strong profitability in this segment. Despite flat revenues, this segment generated outstanding gross margins and good earning generation, reflecting on our continued focus on value add over volume.

In Performance Material, growth will continue to be primarily driven by the Health and Pharmaceutical (TADAWUL:2070) sector, where we expect demand for bismuth chemicals to keep increasing in line with GDP. We are well positioned to capture this opportunity with our state of the art facilities in Lubeck. And since we already supply what we estimate to be the lion’s share of global demand for bismuth chemicals. As we celebrate our twenty fifth anniversary milestone later this year, we are determined to pursue both organic and external growth and further cement our position as a trusted partner in growing markets. We will continue to build on our 2024 momentum and forge ahead on our profitable growth path in 2025, as reflected in the upward revision to our 2025 adjusted EBITDA guidance.

The rapidly evolving trade environment has injected additional uncertainty in some of the jurisdictions where we have operations or do business. But we believe that we have the right strategy and competitive advantages to navigate the headwinds ahead. We will maintain our focus on higher margin, value added advanced materials, a critical supplier without being a critical cost to customer operating in high growth markets. With our more resilient and agile business model and clear strategy, I am confident in our ability to continue on our path of long term value creation to the benefit of our stakeholders. Richard, over to you for a review of our financial results in more detail.

So thank you, Gerven,

Richard Perron, Chief Financial Officer, 5N Plus Inc.: and good morning, everyone. So our performance in Q4 contributed to our strong 2024 results, including solid revenue growth, record adjusted EBITDA generation and further margin expansion. We are very pleased with the evolution of our business segment with Specialty Semiconductors ready to meet high demand and strategic sectors. Performance Materials is also more a more resilient and higher margin business with an improved product mix. All of this positions us well to build on our 2024 momentum as we pursue our growth this year.

Turning now to our consolidated financial results for Q4 and the full year. Revenue in Q4 grew 9% reaching $17,900,000 The increase is primarily attributable to strong growth under specialty semiconductors, offsetting the minor decrease on the performance materials. Total (EPA:TTEF) revenue in 2024 reached $289,300,000 representing a healthy 19% increase over 2023. Adjusted gross margin increased by 26 to reach $23,400,000 in Q4. For the year, adjusted gross margin was $91,300,000 compared to $70,200,000 in the same period last year.

Gross margin was favorably impacted by our Specialty Semiconductors volume and better prices over inflation. As a percentage of sales, adjusted gross margin improved year over year both in the quarter and for the year, coming in at 33% for Q4 and 31.6% for 2024. Adjusted EBITDA increased by 38% in Q4 to $12,500,000 Adjusted EBITDA was a record $53,300,000 for the full year, representing a 39% increase over 2023. Of note, our 2023 adjusted EBITDA was also a record. With another strong performance in 2024, we surpassed the top end of our initial $45,000,000 to $50,000,000 guidance range on this annual key metric.

Turning now to our segments. Under Specialty Semiconductors, revenue in Q4 was $51,900,000 compared to $45,700,000 in Q4 last year. For the full year, revenue was $202,300,000 compared to $156,500,000 in 2023. This strong growth was supported by higher demand from the terrestrial renewable energy and space solar power sectors. Adjusted gross margin as a percentage of sales was 33.3% in Q4 compared to 26.7% in the prior year quarter, a marked improvement.

Adjusted gross margin as a percentage of sales for the full year was 30.1%, also a significant improvement over 26.3% in 2023. Margin expansions was primarily driven by economies of scale, thanks to higher production and higher prices net of inflation. Adjusted EBITDA in Q4 increased by $5,200,000 or 69% over the same period last year to reach $12,600,000 Adjusted EBITDA in 2024 increased by $16,500,000 to $44,000,000 The increase is primarily attributed to higher demand in the terrestrial renewable energy and space solar power sectors, higher prices, net of inflation and favorable unit costs from economies of scale. Underperformance materials, revenue in Q4 reached $19,000,000 compared to $19,400,000 in Q4 last year. For 2024, revenue was $87,000,000 compared to $85,900,000 Adjusted gross margin as a percentage of sales was 33.5% in Q4 compared to 33.8% in Q4 last year.

For the year, adjusted gross margin as a percentage of sales was 35.9% compared to 34.6% in full year 2023, perfecting a more favorable product mix throughout the year. Adjusted EBITDA for Q4 decreased by $900,000 and came in at $3,700,000 Adjusted EBITDA in 2024 increased by $100,000 to $22,100,000 Turning now to backlog. Backlog at year end number of days for Specialty Semiconductors represented three sixty five days, an increase of fifteen days compared to the backlog of December. This segment’s backlog has been maxed out for the last several quarters due to confirmed long term contracts, which speaks to sector demand and anticipated volumes. As a reminder, as per our definition, backlog cannot exceed two sixty five days, but in reality, it goes beyond the next twelve months.

The backlog for Performance Materials represented one hundred and seventy three days at year end, an increase of sixteen days compared to one hundred and fifty seven days on December. Year. Combined, our backlog at year end represented two twenty six days of annualized revenue, an increase over last year representing the timing of contract signings and renewals. Net debt. Net debt was 100,100,000 at year end compared to $73,800,000 as of December.

This reflects an increase in working capital and planned capital expenditures under Specialty Semiconductors as previously discussed. Finally, we ended the year with a net debt to EBITDA ratio of two in line with our targeted range. Turning now to guidance. Chavez spoke to the opportunity and strong demand in many of our markets in the near and medium term. Looking at 2025 specifically based on existing contracts and anticipated demand primarily in specialty semiconductors, we believe the business will generate adjusted EBITDA between $55,000,000 and $60,000,000 in 2025.

This represents an upward revision from the range of $50,000,000 to $55,000,000 we had introduced at the beginning of last year when we provided a two year guidance. As you know, we’re focusing our strategy on value added products, long term customer relationships and growing end markets where we have unique expertise has threatened the resilience and agility of our business. It has also helped us get good predictability and visibility into the future. That’s why our intention was to remain it was to maintain the practice providing a two year guidance on adjusted EBITDA. However, current global economic uncertainty associated with most recent U.

S. Presidential orders, unprecedented in terms of scope and number, introduces new variables to be dealt with in a short in a very short period of time. This includes, but is not limited to potential U. S. Tariffs and virus global retaliatory measures, altogether making it difficult at this time to make forecast beyond 2025.

For this reason, we are differing 2026 guidance until we can get better handle on the implications of a new trade landscape on our business. It’s a responsible thing to do. Whatever the impact may be, it doesn’t alter our commitment to our long term objectives, from a profitable growth or margin expansion perspective nor the execution of our ongoing strategic initiatives. From energy to health and pharma applications, we play a central role in today and tomorrow’s economy and across numerous critical sectors. We will leverage our strength and competitive advantages to capture opportunities in those in these dynamic markets, while managing any headwinds in the short term.

So that concludes our formal remarks. I will now turn the call back over to the operator for the Q and A session.

Conference Operator: Thank you. You. First, we will hear from David Ocampo at Cormark Securities. Please go ahead, David.

David Ocampo, Analyst, Cormark Securities: Thanks. Good morning, everyone.

Gerard Jacques, President and CEO, 5N Plus Inc.: Good morning.

David Ocampo, Analyst, Cormark Securities: My first question is just based on First Solar’s conference call yesterday. I’m sure you guys listened in as well, but they did mention that they’re taking additional measures to reduce their Chinese Tellurium dependency just given the export restrictions that are being put in place. Maybe it’s a bit too early, but can you guys speak to maybe some of the discussions that you’re having with them as it relates to First Solar’s international capacity that you might be supplying in the Tellurium. Is it something that could increase beyond, I think, the 50% that you alluded to in the past?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Yes. Without being able to go into the all the details of it, we are expecting additional spot business essentially over and above the current contract that is in place. So that’s how it’s likely to come up. So it’s likely to be extremely positive to us in time.

David Ocampo, Analyst, Cormark Securities: Yes, that makes sense. And then just on the potential tariffs that could come to Canada, curious if First Solar is willing to absorb any 25% tariffs that may be placed on the Touring and that’s coming out of your Montreal campus or if there’s even pricing escalators built in the first colt solars contract that could absorb some of that impact?

Gerard Jacques, President and CEO, 5N Plus Inc.: Thanks for the question, David. Well, let me start by for the vast majority of our commercial contracts, any import duty or similar taxes are at the buyer’s charge regardless of the final destination and this anywhere in the world. These contractual terms are applicable to all products within our high growth sectors. We would like also to highlight that for most of our products, we directly compete with China, currently and prospectively subject to duties at a higher rate level. Also worth mentioning, the company partners and supplies its clients with products that are key enablers to their products and technologies, while representing a low cost component as a percentage of our clients’ finished products.

A portion of our commercial transactions are on a spot basis with future pricing to be adjusted for any duty or similar taxes. And before anyone ask him, let me add that our exposure to consumables source from The USA is currently very limited. And just maybe to conclude, in case of any doubt, the recently announced 10% tariff on Chinese imports applies in addition to any previously existing tariff with China.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: So that applies to First Solar and as mentioned any other agro sectors we serve.

David Ocampo, Analyst, Cormark Securities: Got you. Yes, that makes a lot of sense. And then maybe just a last one from me before I turn the call over. Just Richard, when we think about the range in your guidance, maybe you could speak a little bit to the puts and takes that would either put you at the low end or the top end of your 25 EBITDA targets, especially since you guys do have those long term contracts in place with more or less fixed pricing?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: I guess, it’s going to be similar factors to what is behind the fact that we want to defer our 2026 guidance. Essentially, with everything happening, it’s likely to have indirect effect inflation, for example, at this point, an increase in consumables, energy or even international freight could have an impact. So that has an impact on the range. So that those are factors that could influence the higher to low end of the range. And it’s those are the same factors why we’re differing 2026.

But we have by default better visibility for this year than next year.

David Ocampo, Analyst, Cormark Securities: Okay. That’s it for me. I’ll hand the call over. Thanks a lot, everyone.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Thanks.

Conference Operator: Next (LON:NXT) question will be from Amir Asad at Centum Capital. Please go ahead.

Amir Asad, Analyst, Centum Capital: So I believe your last conference call was during Election Day. And I’m just wondering if like you are seeing any major shifts in customer behavior, be it shorter contract terms or maybe pricing pressure to counter the tariffs. I mean, in your prepared remarks, you guys have highlighted strong demand in both solar and space, but also held off on 2026 guidance. So I’m wondering if you could just give us a bit of color on how customer behavior, I guess, has evolved since your last conference call?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: There’s been no change in the customer behavior because, well, first twenty twenty five and 2026 for the most part is all under contract. And remember, for most of the products that we’re making and selling, the only other option or the main competitor is in China, okay? So at the end, it’s the motivation is more around securing supply than negotiating tariff. In fact, I don’t think we had any discussion with any clients since the election about tariff. It’s all about security of supply and the sectors we serve.

There is a stretch between the supply and the demand. So discussions are more about capacity level being able to ship earlier in time than any discussion on tariff.

Amir Asad, Analyst, Centum Capital: Okay. No, that’s perfect. Then like back on that, like Specialty Semiconductors, you’re still like maxed out at three sixty five days. And you guys are speaking about contracts in 2028. Just wondering like how much pricing power are you guys seeing when speaking or negotiating these longer term agreements given the strong demand environments that you’ve described?

Gerard Jacques, President and CEO, 5N Plus Inc.: Well, we’ve been able to increase our margin quarter after quarter. And I think this is reflected in our results. And I think that’s part of the answer.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Again, remember, our business, we’re looking at in most, if not all of the things we’re doing, we’re looking at those three key attributes. We want to make sure that what we’re making selling is an enabler. It represents the smallest cost components to the end products of our clients. And it all starts with the partnership, okay. So that is supporting essentially a current backlog and other federal terms we have.

Amir Asad, Analyst, Centum Capital: Fantastic. Then maybe one last one before I pass the line, like on capital allocation between like M and A opportunities, the potential debt reduction, like how should we think about 2025?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: ’20 ’20 ’5, we have internally, we have resources dedicated at identifying our next M and A targets. We’re also supported by external resources. So M and A is definitely on the agenda for this year. But I mean further capacity expansion, especially in light of additional spot business, most likely coming our way from First Solar following yesterday’s comment they’ve made. And the space industry that continues to be on a growth mode, although surprising us in terms of number of projects that we’re bidding on and else will most likely be another area where we’re going to further increase capacity.

Amir Asad, Analyst, Centum Capital: Okay. So should we be looking for you guys to make a formal announcement on increased, I guess, like capacity organically?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: There’s a good chance we do so at some point during the year, yes. We’re still at this point, I think virus options and we’ll see if it’s worth mentioning publicly, but most likely without making a promise, most likely is the answer.

Amir Asad, Analyst, Centum Capital: Fantastic. That’s very good color and congrats again on the quarter.

Gerard Jacques, President and CEO, 5N Plus Inc.: Thank you.

Conference Operator: Next question will be from Rupert Merer at National Bank. Please go ahead.

Rupert Merer, Analyst, National Bank: Hi, good morning gentlemen and congratulations on the full year too.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Thanks.

Rupert Merer, Analyst, National Bank: If I could start with inventory, so it ticked up a little bit in the quarter. Give us a little color on that. Is that related to just timing of sales or is that kind of natural expansion as the company grows or maybe even strategic reason to increase inventory?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: But behind it, there’s that thing that we occasionally refer to called commercial ledging, okay. We have the contracts. We want to make sure we’re able to control the margins forward. That’s allowing us to give that guidance with a fairly small range. So behind it is the motivation, so mostly commercial.

Rupert Merer, Analyst, National Bank: Okay. And on material availability, you talked a little about the tellurium supply chain. Can you just make a quick comment on the germanium and bismuth markets and any concerns that there may be from trade restrictions coming out of China?

Gerard Jacques, President and CEO, 5N Plus Inc.: Well, if you think about germanium, we’re sourcing our germanium mainly from Europe and partially from Canada through a producer in British Columbia. Then germanium availability for us is not an issue.

Rupert Merer, Analyst, National Bank: And bismuth?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Bismuth, same thing. We have continued supply of bismuth. There’s no China introduced what they refer to as control, not a ban, not a tariff. So what we have to do is we apply to export permits and the goods are sent to various locations as expected. That’s how things stand today.

Rupert Merer, Analyst, National Bank: Okay, thanks. And moving on to capacity expansion. So you’ve got 30% to growth for the space solar business this year and of course you had the 35% from 2022. How does that phase in this year? How should we expect the cadence of your capacity expansion to support revenues?

I mean could you give us maybe a year over year capacity expansion expected in Q1 and for the full year?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Let’s see what we do on our next call, but it might actually be difficult to stage it on a per quarter basis. We have already communicated an increase year over year. That obviously does not happen at the start of 2025. Some of it will require some ramp up over the course of 2025. But give us we’ll give it a bit more thought, but most likely we won’t be communicating like a quarter over quarter increase in capacity, but continue to provide a full year basis.

Rupert Merer, Analyst, National Bank: So we should think of this as being backend loaded though for 2025?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: By default, in the case of 2025, most of it from quarter two to four rather than Q1.

Rupert Merer, Analyst, National Bank: And when you look at your operations, what sort of capacity utilization can you achieve? And with the space business, are there any issues with setups and tear downs that may reduce utilization?

Gerard Jacques, President and CEO, 5N Plus Inc.: Well, we have in the case of space solar cells, we have a team fully dedicated in operational excellence and they’re working to increase this efficiency from end to end from all the different processes there when you produce a space order sales. Then that will be the focus for to reach the next level of improvement. Adding equipment is one thing, making sure that they are fully utilized and that there’s no waste is also something super important. Then this is the challenge of 2025 is productivity.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: The way we tackle capacity expansions, like is very different between our thin film photovoltaic materials and our space dollar cells. Space solar cells by default involves a lot more steps in making the finished products than our semiconductor compounds, for example. So they’re looked at very differently. Najeeve M engine, when you get into our space solar cell business, you need to apply all of the best practices at the various steps to realize the full benefits of your most recent capacity expansion. It takes a bit more time.

Rupert Merer, Analyst, National Bank: Just a follow-up on that expansion. Now you had talked in previous quarters about the fact that you’re bringing in new contracts at new prices, but still working through some of your legacy contracts. How much of those legacy contracts remain today? So contracts signed up prices from the time before you owned Azure?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: It’s all behind ultimately.

Rupert Merer, Analyst, National Bank: All gone.

David Ocampo, Analyst, Cormark Securities: All behind us by now.

Rupert Merer, Analyst, National Bank: Very good. I’ll leave it there. Thanks very much.

Amir Asad, Analyst, Centum Capital: Thank you, Rupert.

Conference Operator: Next question will be from Michael Glenn at Raymond (NSE:RYMD) James. Please go ahead.

Michael Glenn, Analyst, Raymond James: Hey, good morning. Just to start, so the medical imaging timeline that you’re giving today, just in terms of that outlook, is this in line with your expectations you would say? Or has there been any pull forward at all with medical imaging?

Gerard Jacques, President and CEO, 5N Plus Inc.: Well, in terms of volume, we’ve been very prudent while communicating volume because the way it works with them, you have to reach multiple steps. They have to in the last four months, Siemens (ETR:SIEGn) made an announcement in Germany and then we’ve seen some volume increasing on that with them. Now what we see is a shift on other producer, other competitor from Simmons. And it maybe takes a little bit longer than expected, but we are teaming with most of them and we will benefit from this growth in due time. But they are to say the least, they are not moving super fast.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Maybe worth mentioning that’s similar to previous years when we compile our guidance range, EBITDA adjusted EBITDA range, we take into considerations contracts on hand under renewable energy space and the health and pharma, and we have similar conservative assumptions when it comes to our medical imaging business. But as we always say, we’re working hard to obviously grow that segment as fast as we can.

Michael Glenn, Analyst, Raymond James: Yes. Okay. And that Richard, those comments sort of fall into my next question. If we I know you do not provide revenue guidance, but what are some of the if we think about the three main business lines, business, Azure, first solar, what are some of the main incrementals to think about in terms of revenue in 2025 versus 2024?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: By default from a revenue perspective, the growth in revenue will come from both Renewable and Space more than our Pharma and Health business, okay? And that growth should be pretty much in the similar range for both. So this should account for about 50%, fifty %, fifty %, fifty % of the revenue growth that we’re going to be experiencing this year.

Michael Glenn, Analyst, Raymond James: Okay. Is there anything what’s new is there anything additional new business that rolls into like how much new business rolls into Azure? Should we think about the revenue growth at Azure similar to the capacity expansion? Or is

Richard Perron, Chief Financial Officer, 5N Plus Inc.: revenue growth is going to be important. As I just said, it’s going to present at least 50% of the overall revenue growth for the company. But what’s going to be very beneficial for us is the actual product mix. So even though, well, like as we’ve been vocal in the past, we expect this year that the revenue for Azure will be about twice what it was when we acquired it, but we expect the actual EBITDA to be generated from that business to be about three times what it was when we acquired it. So the product mix is definitely an important factor in the benefits we’re going to get out of that business going forward.

Beyond the volume and the impact on the revenue.

Michael Glenn, Analyst, Raymond James: Okay. And just to come back to the working capital in the inventory. So where do we sit right now in terms of total working capital? Will it continue to grow in 2025? Like what’s the outlook on working capital from here?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Okay. Working capital forward will not grow to the same extent it did last year. Essentially, last year, we applied what I referred to earlier and we do on numerous occasions as a commercial edging strategy. So we brought on board the key components to make those signed contracts for the next two years. So there’ll be obviously, at least some movement in the networking cap, but never to the extent of, let’s say, last year.

Michael Glenn, Analyst, Raymond James: Okay. And my last question is, earlier in the to one of the questions you respond, there will be more spot business with respect to Tellurium and First Solar. I don’t understand exactly what that means. Can you just hash that out a little in more detail for me?

Gerard Jacques, President and CEO, 5N Plus Inc.: Well, the contract that we have with this customer, it’s a minimum volume. Then as you remember, we increased the capacity of this contract for the next two years, fifty percent higher than what it was, three times three times than what it was in 2022. Having said that, they could order more what we call spot business than what Richard referred to is most likely and they will ask for more than just the minimal volume, which was already a huge increase compared to previous year.

Michael Glenn, Analyst, Raymond James: I see. Okay. Thank you so much. I’ll leave it there.

Conference Operator: Thank you. Next, we will hear from Frederic Tremblay at Desjardins. Please go ahead.

Rupert Merer, Analyst, National Bank: Thanks. Good morning.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Good morning.

Frederic Tremblay, Analyst, Desjardins: Just coming back on this last question. Just wondering what’s embedded in the 2025 guidance, volume wise, from First Solar? Is it the 50%? Or are you assuming some spot business? And I guess another follow-up on that would be, do you have internal capacity now to take on significant spot business with them?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: So the guidance assumes the contract, as I’ve mentioned, we compiled our guidance using contracts on hand for the first two of our growth sectors under specialty and the contracts we have under our pharma and health business. So the guidance assumes different contract. Now in terms of additional spot business, a bit early to confirm or modify the guidance, okay, going forward. And the capacity, yes, we do have capacity to address additional spot business. If that spot business was to be like very, very important, we can quickly increase capacity under our Finfin for the water vapor control business.

Frederic Tremblay, Analyst, Desjardins: Okay, great. And then just on the 2026 uncertainties, Richard, you mentioned inflation as one potential impact. Just wondering if you’re concerned or if you’re seeing any risk to the volume, even though it’s contracted business. I mean, are you is there potential for it to be some project delays and things of that nature that could impact volumes in 2026? Or is it mostly on a from a cost inflation perspective?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: It’s not from the commercial it’s not from a commercial perspective. It’s all about costs and other challenges to move freely goods around the world. So it’s inflation and anything around all of those conflicts we see around the world. So it’s mostly around inflation and its impact on cost.

Frederic Tremblay, Analyst, Desjardins: Okay, great. Thanks for that. And are you seeing any demand pull forward in Q1 ahead of potential tariffs or is it pretty much business as usual?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: No, again, tariff, it is out there, but not a major factor for us. So none of our clients pull goods faster earlier than planned. Again, remember, we do ship goods to all of our customers from Europe and North America. So it does not come exclusively from Canada. And on top, what we’re supplying to our customers, those are enablers that again represent a very a small percentage of the cost components of our of the end product of our clients.

So mathematically, it’s not a big impact.

Frederic Tremblay, Analyst, Desjardins: Great. That’s helpful. And then just last question for me on potential M and A, you mentioned that as being on the agenda. Any color on the current pipeline? And is the current environment sort of leading you more towards U.

S. Based targets? Or are you agnostic on geography?

Richard Perron, Chief Financial Officer, 5N Plus Inc.: By default, we have a preference for assets in North America at this point for various reasons. And one of them is the fact that we want to make sure that we leverage our clients we have and we continue to further increase our product offering around material technology and specialty chemicals, okay, which by default brings more opportunities in North America these days than elsewhere.

Amir Asad, Analyst, Centum Capital: Great. Thanks for taking the questions.

Conference Operator: Thank you. And at this time, Mr. Perron, we have no other questions registered. Please proceed.

Richard Perron, Chief Financial Officer, 5N Plus Inc.: Okay. Well, we’d like to thank you all for joining us this morning and we wish you all a good day.

David Ocampo, Analyst, Cormark Securities: Thank you.

Conference Operator: Thank you, gentlemen. This does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

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