Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the 5N Plus Inc. Third Quarter 2023 Results Conference Call. At this time, note that all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star, then the one on your telephone keypad. If you require immediate assistance from the operator, please press star zero. Je vais maintenant céder la parole à Richard Perron, chef de la direction financière. I would like to turn the conference over to your speaker today, Richard Perron, Chief Financial Officer. Please go ahead. Bonjour à tous, à toutes et à tous. Good morning, everyone, and thank you for joining us for our Q3 2023 financial 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 Gervais 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 2 of this presentation. Information in this presentation and remarks made by 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 2022, dated February 21, 2023, available on our website 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. I would now turn the conference over to Gervais. Thank you, Richard, and welcome everyone. We are from Lübeck, Germany today. Yesterday, we announced Q3 results from the quarter ended September 30, 2023. Our solid performance year-to-date continues to support our growth strategy and Commercial Excellence program. We have successfully evolved to focus on higher value-added products for growth industries, and this is reflected in our results. We have strong long-term customer relationships, and we are leveraging our position as a leading global supplier of ultra-high purity semiconductor materials based outside of China. Our year-to-date results put us on track to achieve a strong annual performance and realize our Adjusted EBITDA guidance for fiscal year 2023. We are also well positioned as we head into 2024, despite global macroeconomic and geopolitical uncertainties. In Performance Materials, revenue for the quarter and year-to-date was lower than the same period last year, but only because of our strategic exit from the low-end margin extractive and catalytic products in the second half of 2022. Importantly, due to our higher value-added and higher-margin products, adjusted EBITDA and Adjusted Gross Margin have continued to improve significantly. In our Specialty Semiconductors segment, while the timing of incremental contributions from AZUR resulted in softer adjusted EBITDA, we were pleased that revenue was up $9.8 million this quarter and $20.8 million year-to-date compared to the corresponding periods last year. The backlog for this segment remains extremely strong, maxed out at 365 days as per our definition. You may have seen some examples of our long-term customer relationship this past quarter. Our space solar cell technology is on the Indian Space Research Organisation's Chandrayaan-3 lunar mission, with AZUR's solar cells powering the propulsion module, the lander, and the rover, as announced late this summer. Back on Earth, RayGen opened its energy storage power plant in Australia in September, powered by AZUR's triple-junction solar cells, which we developed in close partnership with RayGen over the last few years. As the plant is the world's largest and highest efficiency next generation, long-duration solar energy storage project, we are making a significant contribution to the clean energy transition. These strong customer relationships are the central focus of our Commercial Excellence program. We build them through our value-added product development, our innovation and customization, our value optimizations pricing strategy, and our co-investment initiatives. These pillars bolster our industry leading position and will serve us well over the coming years. To match our innovative corporate mindset, recently, we revamped our corporate logo and website with a more contemporary appearance. Over the past several years, we have moved away from a commodity metals business to a more value-added company focused on advanced materials for critical growth markets. With this refresh, we feel our brand image now better reflects the company we have become. To meet the increasing demand from our customer, our previously announced plans to expand our production for AZUR and our renewable energy applications are both on schedule. As previously disclosed, we are extending AZUR's output capacity by 30% by the end of 2024, as well as increasing production capacity for renewable energy application by 35% in 2023, and 100% in 2024, compared to 2022, to meet contracted demand. We also continue to secure additional complex feeds and secondary streams for the recovery of critical minerals, following our recent expansion of recycling and refining capacity in Montréal. Our strong customer relationships and long-term contracts, as evidenced by our increasing backlog, support our expectation that demand will remain strong in both the terrestrial renewable energy and space solar power markets, under Specialty Semiconductors, and in the health and pharmaceutical sector under Performance Materials. As we continue our commitment to execute on our Commercial Excellence program and value-added product mix to achieve growth, we look forward to further solidifying our market-leading position and partner of choice. Richard, I will turn the call back to you to provide a deeper dive into our financial results before we take questions from analysts. Thank you, Gervais. So we are pleased with our results to date this year. Despite a shift in contributions from AZUR from the third to the fourth quarter, our key performance indicators remain strong, and our fundamentals for growth are unchanged. We continue to see increasing demand and have a consistently high backlog, especially in specialty semiconductors. As we invest in our production to meet the demand from our clients, we see strong return on investment for our future. I will start by providing details on our revenue, gross margin, and Adjusted EBITDA. Revenue for Q3 2023 was $62.9 million, which was down 5% from $66.4 million last year. As we have previously noted, this decline is largely a result of our strategic exit from the manufacturing of low-margin products, with the divestiture of our Tilly, Belgium operations in the second half of 2022. By executing on our strategy to focus on higher margin, value-added products, we continue to generate higher Adjusted Gross Margin and adjusted EBITDA. For the quarter, Adjusted Gross Margin was 24.9%, and year-to-date was 29.1% this year, compared to 22.9% last year. Not only has our strategy to improve our product mix improved our gross margin performance, but also the successful execution of our Commercial Excellence program has had a positive impact. In Q3, we generated adjusted EBITDA of $9.6 million, representing a 6% increase over the same period in 2022. On a year-to-date basis, the increase is more notable. We achieved adjusted EBITDA of $29.3 million, an increase of 26% compared to $23.3 million last year. On a segmented basis, Adjusted EBITDA for Specialty Semiconductors was $4.7 million for the quarter, representing a 28% decrease from last year. But year to date, it came in at $20.1 million, up 8% over last year. Softer Q3 results reflect a shift in incremental contributions from AZUR from Q3 to Q4, which also resulted a less favorable, product mix. In addition to Q3 2022 being AZUR's strongest quarter last year, this change was not unlike the shift we saw for AZUR from Q1 to Q2 earlier this year. Results for the segments were also impacted by planned reductions to our summer operations, which impacted productivity and period costs. For our Performance Materials segment, Adjusted EBITDA was $6.6 million for the quarter, up $1.5 million or 30%, and was $17.3 million year to date, up $4.1 million or 31% over the same period last year. The improvement for this segment is primarily attributable to our exit from the manufacturing of extractive and catalytic products and related divestiture, as previously mentioned. In terms of EBITDA, we've reached $9.6 million for the third quarter of 2023, compared to $1.8 million in the same quarter of 2022. Year to date, EBITDA was $35.9 million, compared to $8.3 million for the same period of 2022. The increase for the quarter of $7.8 million is largely a result of an impairment of non-current assets of $7.1 million recorded in Q3 last year. Turning to backlog. Our backlog on September 30 of this year represented 284 days of annualized revenue, a decrease of only 5 days or 2% compared to June 2023. For Specialty Semiconductors, our backlog remained max at 365 days, which is the same when compared to June. As we have noted in the past, while the estimated number of days based on annualized revenue cannot exceed 300, 365 days per our definition, with confirmed contracts in both renewable energy and space solar power, our effective backlog under Specialty Semiconductors still surpasses the next 12 months. The backlog for Performance Materials represented 122 days of annualized revenue, up 9 days or 8% compared to the backlog on June. As I noted last quarter, the difference is largely because of the quarterly realization of yearly contracts. The key contracts under the segments, which now represent an improved product mix, continue to be mainly renewed in the fourth and first quarters of the year. This also explains the slight decrease in the consolidated backlog. Turning to liquidity, year-to-date, cash generated from operating activities was $5.5 million, compared to $10.3 million year-to-date in 2022. The decrease this year for the nine months is mainly from the net difference from the higher contribution of funds from operating activities of $17.1 million, negatively impacted by an unfavorable change in non-cash working capital year to date in 2023, to support our expected growth and demand for 2024. Year to date, cash used in investing activities was $4.3 million, compared to $10.1 million year to date of 2022. As noted last quarter, the decrease is mainly explained by the proceeds on settlement of an index deposit agreement amended during Q1 of this year, resulting in a receipt of cash of $6.5 million, which was partially mitigated by proceeds from the disposal of assets held for sale in Q3 of last year, net of lower additions to PPE year to date. Year to date, cash used in financing activities amounted to $14 million in 2023, compares to cash generated from financing activities of $4.7 million in 2022. The $18.7 million increase is mainly attributable to the reimbursements of $7.5 million in Q2, and $5 million in Q3 of 2023 of the credit facility, while we made a net drawdown of $7.5 million year to date of 2022. Now looking at debts. Net debt ended at $78.6 million on September 30, from $78.3 million on December 31, 2022. Sequentially, net debt did increase by $5.2 million, primarily reflecting ongoing capacity building to meet contracted demand in 2024 in our Specialty Semiconductors segment. Finally, on outlook, our results to date for fiscal 2023, including a strong Adjusted Gross Margin, Adjusted EBITDA, and consistently high backlog, are a testament to our strategy for growth and ability to execute on it. We are pleased that we remain a critical supplier and preferred partner to key players in critical industries. With these results, we are on track to achieve our target Adjusted EBITDA of between $35 million-$40 million for fiscal year 2023. We are tracking towards the middle to upper end of this range. In addition, as we look to our strong customer relationships and long-term contracts, we're also maintaining our guidance for fiscal 2024, which we expect to be in the range of $45 million-$50 million. Beyond that, we expect to have enough visibility in early 2024 to provide guidance for fiscal 2025, so stay tuned for that. On Adjusted Gross Margin, we are tracking to end the year in the area of 29%, which far surpasses our performance in prior years. We believe this margin range is not only sustainable over the long term, but also that there is room for further expansion over the short to medium term, contingent on continued revenue growth, favorable product mix, and further optimization efforts. As I noted before, our long-term customer relationships that we have developed through our Commercial Excellence program, position us for further growth in our margin segments. With our investments in production capacity, we look forward to capitalizing on the increasing demand for our innovative products in the areas of space, solar power, and terrestrial renewable energy. This concludes our formal remarks. I will now turn the call back to the operator to open the call to questions from our financial analysts. Thank you. Ladies, ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Did you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Rupert Merer with National Bank. Please go ahead. Hi, good morning. Morning, Rupert. Good morning. Looking at AZUR, so you have more than 365 days in the backlog, and you are adding production capacity. Can you remind us what you're doing on the shifts, how many shifts you're running now, and how that's increased over the last year? Essentially, what we've done since spring is to progressively add enough shifts to cover the seven days. But that's, and then I'm using the term progressively because, in time, but also on a, per production phase. So not all stages of the production was increased at the same pace, and, and each of them were progressively filled up by additional employee in order to reach that capacity. So we're now, getting into Q4 at a point where most of our shifts, for most, if not all of our processes, are properly staffed for a 24/7 schedule. Okay, so you can't add any more. Is there enough in your backlog for delivery? That's from the number of shift perspective, but we have also ordered equipment in order to increase further capacity, equipment that should come online towards the middle end of Q2 next year. Right. Okay, very good. And then can you give a little more color on the product mix you saw in the Specialty Semiconductors segment this quarter? Seems like you had higher revenue, lower margin mix than what we might have anticipated, and I understand there's some revenue moved into Q4. Just wondering if you can give us a little more color on the scale of what we shifted there. Well, if what we experienced in Q3 and we're gonna experience in Q4, is similar to what we've gone through between Q1 and Q2. As you recall, we had a fairly very strong Q2 over Q1, and a large portion of it was explained by AZUR's performance. So AZUR, while we have a lot of visibility on the year from one quarter to another, due to a combination of factor and the product mix being an important one, we'll have some highs and lows. Mm. So Q2 was a low, and Q4 will be a high. So what the market should expect is that for Q4, in terms of allocation of EBITDA and gross margin contributions from the segments, is an allocation that will be much more aligned with what we've been through in Q1 and Q2 of this year. Okay, and then can you give a little color on the product mix you saw in Specialty Semiconductors in the quarter? Seemed like higher revenue, despite having some revenue shifted into Q4 and lower margin. Was that, say, an increasing mix coming from products sold to First Solar? Mix has more than one level. It's between the sectors, the weight of each sector within the quarter, and within a sector. For example, within AZUR's client and product mix, there's another level of mix. Yeah. -which was unfavorable on both levels. And don't forget that the contract that we're currently fulfilling are the one that have been signed a year and a half ago and two years ago. There's always a lag between when we've been awarded a contract, and then we can deliver it. This now and next year, the contract that we will be, you know- Realizing. realizing, will be the one that we signed a year ago and that we've been signing since then. Then, we're about to complete the portfolio of the former products. So we're depleting prior backlog earned by a predecessor, realizing more favorable contracts forward, and time-wise, Q2 was impacted by that. Plus, what I've mentioned, we had some planned reductions to our summer operations, which impacted productivity and period cost. Yeah. Explaining the shift between Q3 and Q4. Yeah, and the demand is very healthy. We keep having discussion with customers for more, for more demand than... I think, this market is, you know, is, is still booming, and, the, the, I think we'll see, that over the next few months, everything will continue to improve. Okay, very good. Thank you for the color. Your next question comes from Frédéric Tremblay with Desjardins. Please go ahead. Thanks. Good morning, Gervais and Richard. Good morning. Good morning. I just want to dig maybe a bit deeper on the working cap. It was a negative drag on cash generation in the quarter. Just maybe your expectations in terms of maybe inventories and other working cap items as you move towards high growth 2024. Is any further investment in working cap needed? Probably not much, if any, anymore. One other factor, there's definitely the inventory that we have increased to be ready to meet demand of 2024, which is gonna be, as you can imagine from the guidance, is gonna be fairly important. There's also a cut-off issue. We've been paid first week of October, payments due late September, due to systems challenges with one of our key clients. All of that collected today. But the main reason behind the increase in net working capital is ready to be geared for 2024, and the level that we're at is pretty most likely the level that we're gonna be maintaining forward rather than increasing it further. Okay, great. And then you mentioned that you may be in a position to provide 2025 guidance early next year. Does that, does that mean that your discussions with, you know, First Solar, for example, are progressing nicely? And any sort of early insights you can give into, your expectations with, with your business with them? But we're in discussions with First Solar on a weekly basis, and obviously, we're both working together in order to reach our respective production level. In terms of contract information, it's most likely gonna happen early in the year 2024, rather than later in the year, as we've done in the past. Yeah. Both parties are well aligned in order to meet our respective plans for the future. Great. Maybe if I could squeeze in the last one here. On Performance Materials is really strong, Adjusted EBITDA margins in the quarter of 31%, is that something that you feel is sustainable, or was there something related to product mix, specific to the quarter in Q3? It's like what we've experienced in Q3 is like the perfect world on the Performance Materials, and then one of the worst on the semi. Altogether, all good for companies. We're happy with the consolidated results, but Performance Materials was definitely on a super high end in terms of margins for this quarter. ... Understood. Thanks for taking the questions. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one. Your next question comes from Michael Glen with Raymond James. Please go ahead. Hey, good morning. Just to circle back on the AZUR dynamic. Richard, in the past, I think you've talked about AZUR sort of tracking towards maybe a revenue line in and around $60 million. Can you give a sense as to where that would have lined up in the quarter? Like, was the revenue substantially below that type of runway at AZUR? No, revenue was not lower. Actually, revenue was at a decent level. But as we've been explaining this business, you have visibility over the year, but when it comes to the actual release on a quarterly basis, that can be uneven. And then, as we've mentioned, we're still, I'm gonna use the term, depleting older contracts. Yeah. Okay, which are not as durable as the newer contracts that we're gonna be realizing in the coming quarters. So it's not a question of revenue level, more of a mix- Yep. - and timing of release of a poorer mix. Okay. So this was, there was a sizable release on an unfavorable portion of a contract- Yeah. Is that- Contracts that were released based on customer demand and the schedule was definitely not optimal. Mm. While Q2 was optimal. So what you're gonna see, what we're referring to on this call, is a shift from Q3 to Q4, and the full year will be aligned with our expectations. Then on a forward-looking basis, you'll have better contracts coming in and kicking in, as we've been mentioning in the past. That's why we're confident that the current gross margin on a consolidated level of 29% or so has plenty of room to improve in the coming quarters, years. When you look at that AZUR backlog, are there other instances of this type of contract, maybe with other customers, that you see still in there that will come impact results in future quarters as well? Should we be thinking about that? What will continue to occur, it's the nature of the industry. From one quarter to another, while production and deliveries for the years are known, there'll be some movement from one quarter to another. But in terms of, I don't know, the intensity of or... or I'm gonna use the word, how bad the contracts that we actually realized in the quarter, that's most likely like the worst case scenario- Yeah. that we just experienced. Not to the same extent, you know, to the same type of volume that we're referring to. You'll have volatility from one quarter to another, but the volatility will be much less than what we experienced in this Q3. Mm. Okay. And then I know you don't talk about, you know, specific margins of AZUR, but it does. It would appear that AZUR was negative EBITDA in the quarter. Is that a safe assumption? No, it was a very small contributor to the EBITDA of the quarter, but it was a positive EBITDA. Yeah. It was a positive EBITDA? Okay. And was there any difference then in what we should expect? In this quarter, would there be any difference in what we should expect from First Solar margins in the period? No. First Solar, the margins are known. Then it's a question of sales cut-off and else as we distribute our products to various locations of First Solar. Okay. Okay. There, too, the yearly volume is well known and committed. Yeah, exactly. Okay. Thank you. There are no further questions at this time. Please proceed. Okay. Well, thank you all for joining us this morning, and we wish you all a good day. Yeah, and again, I think what we can see is that the market is still very strong and we're meeting customers currently, and I think we're quite busy to complete the year. And thanks again. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.