5n Plus Inc Stock

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the 5N Plus Second Quarter 2026 Results Conference Call. [Operator Instructions] [Foreign Language]

I will now turn the floor over to Stefano Bertolli, Director of Communication and Corporate Affairs. Please go ahead, sir.

[Foreign Language] Good morning, everyone, and thank you for joining us for our Q2 2026 results conference call and webcast. We will begin with a short presentation, followed by a question period with financial analysts. Joining us this morning are Pierre Richard Perron, our President and CEO; and Alban Fournier, our CFO. We issued our financial results yesterday and posted a short presentation on the Investors section of our website. We would like to draw your attention to Slide 2 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 these risk factors that may affect future results is contained in our management's discussion and analysis of 2025 dated February 24, 2026, and 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 discussion and analysis. We now turn the conference over to Richard.

Thank you, Stefano. Good morning, everyone, and thank you for joining us. While the second quarter presented a more challenging operating environment, our results demonstrated the strength of demand across our strategic end markets and the resilience of our business. We delivered another quarter of solid growth, capping a strong first half of 2026 in support of our full year objectives.

Revenue increased 28% in Q2 and 30% year-to-date, reaching just over $240 million for the first 6 months of the year. Adjusted EBITDA increased 10% in the quarter and reached $55.8 million year-to-date, representing growth of 24% over the same period last year. Profitability remained strong, although margins reflected higher input costs as expected and temporary reduced operational efficiencies. Most of these cost pressures are expected to be recovered over time. The equipment downtime and suboptimal operations experienced during the quarter and associated incremental expenses are temporary in nature.

Turning first to Specialty Semiconductors. The business delivered a strong quarter, reflecting structural demand across our strategic end markets. Terrestrial renewable energy had a standout quarter, with higher volumes translating into record quarterly revenue. This performance reflects our key customers' continuous expansion and reinforces our position as a critical supplier within its value chain. Commercial activity also remained very strong in space solar power. We secured significant new contract awards in H1 and participated in a record level of bids by dollar value during the quarter. This momentum reinforces the structural growth of this end market. It also underscores AZUR's position as a global leader in solar cell technology and a partner of choice.

The quarter, however, was not without challenges. Both our renewable energy and space power businesses experienced comparable levels of unplanned equipment maintenance. Our teams responded quickly through contingency planning, operational flexibility and targeted inventory allocation. We continue to support customer demand and maintain deliveries during the quarter. Our teams continued to resolve the remaining issues and strengthened preventive maintenance measures. Beyond these temporary operational impacts, margin contraction in specialty semiconductors also reflected higher metal input costs.

A portion of these costs is expected to be recovered over subsequent quarters, although the timing will vary by product and customer. In the meantime, we are working to partially offset these pressures through economies of scale and continued operating efficiencies. Performance Materials also delivered a solid quarter. Segment revenue increased nearly 40%, driven primarily by higher volumes of business-based products. As anticipated, margins continued to normalize from the record levels achieved last year and sustained in the first quarter. This reflects higher metal input costs and a significant increase in chemical costs in recent months.

Even so, the business continued to generate profitable growth and demonstrate the resilience of its portfolio. Halfway through the year, we continue to take a prudent approach to our outlook. Geopolitical risks continue to evolve rapidly and influence inflation across many regions. Various input and operating costs remain elevated. We're also increasing production volumes and operating our equipment at high capacity, while integrating a significant number of new employees. In this context, we remain firmly focused on disciplined execution and operational excellence. As we enter Q3, our priorities are to improve operational and maintenance processes, advance our productivity initiatives and execute our capacity expansion plans. These expansion plans all remain on plan.

Finally, our balance sheet continues to provide us with significant financial flexibility. Organic investment remains a priority as we expand capacity to support contracted demand. We also continue to actively evaluate external opportunities that could complement or extend our capabilities. Near-term impacts and quarterly variations aside, we are building a business positioned to deliver sustainable, profitable growth over the long term by supplying advanced materials to critical industries. That strategy continues to be validated.

Customers increasingly value secure, reliable Western supply chains, particularly in markets tied to renewable energy, space, security and advanced technologies. These trends reinforce the value of our differentiated capabilities, manufacturing footprint and long-standing customer relationships. As a result, we remain well positioned to create sustainable value by executing our growth strategy.

With that, I'll turn the call over to Alban, who will review our financial results and outlook in more detail.

Thank you, Richard, and good morning to all of you. Before turning to the results, I would like to reiterate how enthusiastic I am to be a member of the executive team of 5N Plus at such a critical juncture in its growth and development. I've engaged with our teams and with the investment community in the last 3 months. Those discussions have reinforced my confidence in our strategy, in the inherent strength of our business and the strong financial foundation and the opportunities ahead.

Turning now to our financial performance. Revenue increased 28% to $122.4 million in Q2 2026 compared with Q2 2025. For the first half of the year, revenue reached $240.3 million, an increase of 30% over the same period last year. The increase primarily reflected higher volumes in renewable energy and more favorable product mix in space part, also reflected higher volumes of bismuth-based products. Adjusted gross margin increased to $37 million in Q2 2026, representing 30.3% of sales. This compares with $33 million or 34.6% of sales in the second quarter of last year. While adjusted gross margin increased in absolute dollars, margin percentage declined. This primarily reflects higher metal input costs, temporary operational inefficiencies associated with the production ramp-up and higher chemical costs.

For the first half of the year, adjusted gross margin represented 32.6% of sales. Adjusted EBITDA increased 10% to $26.6 million in Q2 2026 compared with Q2 2025. Year-to-date adjusted EBITDA reached $55.8 million, slightly above the midpoint of our full year guidance range. Net earnings amounted to $19.7 million or $0.22 per share compared with $15.2 million or $0.17 per share in the second quarter of last year.

In Specialty Semiconductors, revenue increased 25% year-over-year to $89.2 million. The increase was primarily driven by higher volumes in renewable energy. Adjusted gross margin represented 30.2% of sales compared with 32.7% in Q2 2025. This decrease primarily reflected higher metal input costs and lower operating efficiency. Adjusted EBITDA increased by 16% to $22.1 million. Higher volumes mitigated the impact of suboptimal operational performance and higher maintenance expenses.

Backlog remains at the maximum level of 365 days as per our definition, with the effective backlog for this segment continuing to well surpass the 12-month mark. In Performance Materials, revenue increased 38% year-over-year to $33.2 million, driven by higher volumes of business-based products. Adjusted gross margin was 30.9% of sales compared with 41.1% in the prior year period. The decrease reflected the anticipated margin normalization with higher metal input and chemical costs.

Adjusted EBITDA increased 7% to $8.5 million. The increase was primarily attributable to a more favorable product mix and higher volumes, net of higher metal input and chemical costs. Backlog represented 99 days of annualized revenue, reflecting the timing of contract renewals and the continued execution of long-term contract.

Turning now to our balance sheet and cash flow. In Q2 2026, cash used in operating activities was $1.9 million compared to cash from operating activities of $22.3 million in Q2 2025. Year-to-date operating cash flow reflects continued growth in working capital in line with revenue and COGS increased. Looking ahead, we expect net working capital to evolve broadly in line with revenue growth. Cash from investing activities includes $16.6 million of PP&E CapEx year-to-date with proceeds from the renewal of our total return swap. These proceeds were largely used to reduce debt.

As a result, our financial position continues to strengthen. Net debt stood at $23.7 million as of the end of June compared with $50.3 million at the end of 2025. Our net debt to adjusted EBITDA ratio improved to 0.21x. This highlights the strength of our balance sheet and provides significant financial flexibility to support our long-term growth.

Turning now to guidance. In Specialty Semiconductors, structural growth across our core end markets continues to support demand, particularly in renewable energy and space power. In Performance Materials, pricing conditions are normalizing largely as anticipated. More broadly, we continue to operate in a dynamic, rising cost environment. We notably expect margins to come under additional pressure in the near term due to higher metal input costs and chemical costs, which will partially be recovered with a time line of at least 2 quarter. Against this backdrop, we are reaffirming our 2026 full year adjusted EBITDA guidance of between $100 million and $105 million. This reflects our confidence in continued revenue growth and higher gross margin dollars during the second half. It also incorporates a prudent assessment of ongoing operating and input cost environment.

That concludes our formal remarks. I will now turn the call back to the operator for the question-and-answer session with financial analysts. Thank you.

[Foreign Language] Thank you. [Operator Instructions] Your first question comes from Baltej Sidhu from National Bank of Canada.

Questions for you, you noted higher metal input costs and the unplanned equipment maintenance at both the renewable and solar side as the primary drivers for the pressure in the semi business. Could you help us think about the relative impact of both those factors as it pertains to margins?

Yes. We assess that both factors, the higher metal input cost and the operational difficulties have had a fairly equal impact on our gross margin during the second quarter of the year. So, it's been fairly well shared between both partners.

Great. And I think Richard had noted that the unplanned maintenance is temporary. How much of an impact could we see in the second half of the year? And by extension, didn't have any impact on the backlog and decision to maintain guidance?

At this point in time, we don't see -- we don't foresee impact from a delivery perspective in H2. All of our people applying themselves, obviously, to -- on the remaining issues, improving our preventing plan, better staffing our night and weekend shifts. So everyone is applying itself to turn this around. So we continue to say it's a temporary measure with no expected impact from a shipment perspective in H2.

Great. And then turning over to the ongoing capacity expansions. How much of an impact did it have on margins in Q2? And then would it be correct to think of it as not being able to attribute the absorb overhead?

I'm not sure I missed the beginning of your question, Baltej.

Yes. So how much of an impact did the ongoing capacity expansions have on the margins? And is it accurate to assume that this is largely attributable to unabsorbed overhead?

Yes, exactly. It's a combination of unabsorbed overhead and also extra maintenance expenses, okay? That's how we come up with, as Alban just mentioned earlier, the actual impact in Q2 was pretty balanced between the 2. So a combination of it -- in the case of the equipment, a combination of extra maintenance expenses and as you just referred to unabsorbed operating costs during the period.

Fantastic. And the last one for me is just on the PM side. And you've noted in the past few quarters, you expect the pricing to normalize. Would you say that Q2 represents a reasonable run rate for the business? Or could we see incremental pressure just given what you're seeing in the market, I would say?

In the case of Performance Materials going forward, it will depend in large to the actual product and mix to be realized over H2. Q2 was particularly low, okay? So going forward, I guess, gross margin around the year-to-date could be used for the moment, okay? The tricky part remains chemical costs and other costs like this that continues to be on the rise. Nitric acid, caustic soda and all of those chemicals that we're using on the rice. That's the unknown part. But from a forecasted time and product mix at this point in time, the year-to-date gross margin could be used as an assumption for H2 on Performance Materials.

Your next question comes from Amr Ezzat from Canaccord.

Maybe just on the equipment. I think, Richard, your comments suggested that some but not all of it has been resolved that I misunderstand. Then can you help us understand, are these issues like a function of the operational intensity associated with the significant volume and capacity ramp? Or can you just tell us what's the nature of the equipment issues you've had?

We've been integrating a number of equipment, new equipment in a sense, new design and else, all of that at the same time, we've been integrating a large number of new employees. So -- and we're pushing every equipment we have close to its limit, okay? While in parallel, we continue to increase capacity by adding additional equipment to meet demand of '27. And so on and so forth, so it's really a combination of a large number of new equipment, new equipment with different designs and operating parameters, a large number of new employees. We need definitely to better staff our night and weekend shifts, and we need to improve our preventive maintenance in light of those new equipment and parameters that we're working with today.

Understood. And are they largely resolved? I understand you won't have any issues delivering, but are these equipment issues largely resolved?

Most of them, but we still have issues here and there throughout the different product lines that we have. All of those issues are being addressed by some key members of the team and now with the support of external contractors and else. We're bringing on board a bit more -- a larger number of spare part, for example, and all of these things. So look, we used to operate manufacturing operations with various sites. So look, we're going -- it's more challenging because there's a larger -- there are more equipment, as I just said, new design and else and all. But look, we're addressing all of those issues. We have contingency plans. So on that basis, we don't see any foreseen issue or risk of not making required shipments in H2.

Fantastic. Like your revenue is obviously extremely strong, significantly ahead of expectations. But like we spoke to EBITDA was only modestly ahead because of some of the issues you've outlined. But I'm wondering like how much of the revenue upside actually came from higher physical volumes versus the metal prices and sometimes you've got contractual pass-throughs, so they could inflate your sales and they're just like pass-throughs? Or would you quantify the revenue -- the strong revenues is really mostly volume driven, i.e., very high quality?

As we've mentioned, in the case of business, clearly volume, okay? Same thing with renewable energy and to a smaller extent because of different operational challenges and a small extent, our space solar business. But overall, volume is the main factor behind the increase in revenue.

Fantastic. Then maybe one last one for me. On CapEx, I'm just looking at the year-to-date, you guys are approximately $17 million, and I appreciate like there's some of the equipment issues that you've outlined. And I believe that you said you guys are building redundancy as well. But I believe a couple of quarters ago, you guys mentioned like the 2026 output for CapEx would be similar to 2025 that's like $20 million or $21 million. Do you guys have a revised sort of full year expectation for it?

On a net cash out basis, considering that some of the equipment that we'll be adding in the U.S. is supported by a government grant. So the value remains valid at this point in time. We did do, however, brought on board different equipment earlier in the year than later this time in order to be ready to address 2027 volume requirement.

Fantastic. Congrats on the very strong revenues and I'll pass the line.

Your next question comes from Michael Glen from Raymond James.

Hey, Richard, just hoping that you can dig into some of the backlog that you're looking at in terms of the AZUR project wins right now. We've been reading a lot about these space-based data centers. Are you seeing any projects come in with those type of build-outs?

The data centers and space, those are still under development. It will take probably a couple of years before you actually see those being launched announced. So at this point in time, it's too early. As I've said in our introduction, in terms of bids that we placed in this first half of the year on a dollar basis, it's at least twice the dollar amount compared to last year's same period. But to our knowledge, none of those are specific to data centers. And based on our intel of the market, this is still a product development under product development phase.

And are you in, is there -- are you able to indicate did you add new customers in the segment this quarter?

New customers? No, I cannot say specifically. I mean, we've been supplying for years all of those primaries and our subcontractors. And there's been a few newcomers in the last 2, 3 years, but for most of them, if not all of them, they are already clients of other space.

Okay. And then just on the renewable side or I'm not sure if it translates to the space side as well. Can you give an update on where your product line sits with [ Perovskite ] and the time line associated with -- for any significant increase in Perovskite volumes from 5N Plus?

Well, currently, the strategy for the company is to focus on the individual elements making up Perovskite rather than the actual encapsulation technology or else, okay? At this point in time, it's still early stage for the -- outside China to introduce Perovskite as a tandem material. So, it's still early stage. We still -- we believe before any meaningful volume and introduction of Perovskite into -- in a commercial phase, we're still most likely a year or 2 away.

Okay. And this is only applicable to terrestrial? Or would it be applicable to both space and terrestrial?

It could be applied on both, but for the terrestrial applications are a lot more advanced in terms of introduction.

Your next question comes from Daniel Lavoie from Ventum Financial.

I got 2 questions to start. One is the overall capacity expansion and the recent issues running unplanned maintenance. Just wondering if that makes you think differently about the pace of capacity expansion. And when looking at Asia's end customer, what needs to happen for you to see accelerating demand and give you confidence in taking a bolder move in terms of adding more capacity? And the second question is related to guidance. When looking at the guidance for 2026, obviously, a very strong half at $55.8 million of realized EBITDA in H1. It kind of implies like a flattish EBITDA dollar into H2 despite the strong revenue momentum. So I understand there's some, there's some couple of quarter for pass-through for the metal input costs, but can you just help us understanding the math for the margin over there?

Okay. So, on capacity expansion, same approach that we've been applying ourselves to in the last 2, 3 years, in line with earning contracts, we're reassessing the capacity that we need to have installed and we take at that point in time, the appropriate measures to have capacity. So that's the approach we'll continue to apply. We'll try to correlate as much as we can order taking with capacity investments. So that's for the first question.

In terms of -- you had a question on forward-looking. Look, we continue to take a prudent approach, okay, continue to take a prudent approach. I mean it's a complex environment. We see a lot of inflation across many regions. And as you probably -- as you know, those factors continue to contribute to ongoing uncertainty and often with a very limited warning to us. So forward-looking for the second half, we take a prudent approach, and we anticipate a certain lag, especially for metal input costs to be in order to recover.

And lastly, if I may, is the CESU line up and running right now in Montreal?

Sorry, at this point in time, the plan is to have it to start running at some point in the second half, most likely around the end of Q3, okay? We currently have products that are being prequalified, but the ramp-up and the formal qualification will occur later in the second half of this year.

Your next question comes from Nick Boychuk from ATB Cormark.

Curious, you mentioned that some of the larger constellations you're bidding on the size of the backlog, the RFP. What makes these either interesting to you guys? Is there something about the characteristic of the style of constellation, size of the opportunity? Just looking for a little bit of color, especially as that pertains to the mix comments that you made this quarter about how as you had positive mix?

Look, it's quite diversified in terms of referring to the high number and the high dollar value of the bids, it's highly diversified as to the clients and the hand constellation and/or satellite programs. It varies a lot. There's nothing very specific that is -- that came up in H2 other than it's a large number with actually large dollars actually of bids that have been placed.

Okay. Anything in terms of the industry though? Are everybody -- is everyone still acting rationally and sort of behaving as you would expect? Or are you starting to see a little bit more increased demand either regionally, by constellation, by customer?

No, at this point in time, the distribution region and out is similar to what we've been experiencing for the last couple of years. It's just the number of the dollar values that have been, as I've just said, at least twice this first half of the year compared to the same period last year.

Okay. And then on the metal pass-through, what's the timing and the lag that you expect you'll be able to recover some of those costs?

The metal pass-through, we expect it to happen with at least 2 quarter lags and in a partial way, it won't be 100%. So we are at the point where we see the margin for Q2 2026 being extended in the second half of the year within approximately 1 percentage point.

Okay. So, is it fair to assume then on that comment that the normalized margins this quarter, excluding the unplanned maintenance and the price impact of the metals, it would have been about 2 percentage points higher than where it currently landed?

Mathematically, assuming it's about half, that's our estimate. Yes, that would work.

Your next question comes from Nelson Ng from RBC Capital Market.

So, your comment in terms of adding a lot of equipment and lots of employees, just to clarify, that's in the terrestrial renewable energy side or both renewables and AZUR space as well?

It's almost equally attributable to both terrestrial and space.

Okay. Got it. And then I think you mentioned that the ramp-up in the AZUR Space side is taking place in the second half of the year. So, on the renewable energy side, obviously, you have more volumes with First Solar over the next 2 years as well as starting last year. Like is that ramp pretty gradual over like last year, this year and the next 2 years?

This year, we definitely have more volume than last year. And then for the coming 2 years, we'll have more volume, but not at the same magnitude in terms of incremental volume if you compare it to '25 to '26.

Okay. But '26 year will have more volume.

Yes, '26 is a bigger volume increase and then '27 and '28 are also increased volume, but of a smaller scale.

Got it. Okay. And then just on the balance sheet, like net debt was standing at around $24 million. So, it sounds like you are on track to have -- to be roughly net debt free by the end of the year. I think you commented that working capital will be consistent with the revenue increases. Is that correct?

Yes, that's correct.

So, it's going to be aligned with growth, plus or minus, obviously, some additional investment we may make in terms of safety stock.

Essentially in line with revenue growth, plus whatever specific action we need to take for safety inventory or strategic inventory, but roughly in line with revenue.

Okay. And then I know you previously talked about M&A opportunities and how you want to find the right opportunity sometime this year. But can you just talk about the environment now? And obviously, there has been a bit of a pullback in valuations in some sectors, including the space-related sector. Can you just talk about some of the opportunities you're seeing, whether things are -- whether the environment has improved?

Look, we continue to scout our market for M&A opportunities. Obviously, despite some corrections that you referred to in the space industry, remains across many, many sectors that we cover quite high still today. But we continue to be very optimistic to get our hand on something accretive and strategic to 5N Plus. But things are definitely expensive still today.

Okay. Got it. And just one last question. Just marine shipping costs, I don't know how big of an exposure you have on shipping costs. But since the Iran war, can you talk about how that has kind of impacted your transportation costs?

So you're talking about the increased shipping costs that we see right now in the market. So I think, we cannot single out this factor, but overall, it contributes to the increase we see in our chemical products, generally speaking. So it's one factor, which we cannot single out which is a contributor.

Your next question come from Frederic Tremblay from Desjardin Capital Market.

On the 2-quarter lag to recover higher metal costs, I'm just curious, is that a lag because the metal prices went up so fast that it's -- I mean, it's going to be more gradual to implement price actions? Or is it more contractual in nature? Just trying to better understand the 2-quarter dynamic there.

It's a combination of both, obviously, the speed and the magnitude plus after that, the recovery depends on a per product on a per client basis, so contractual.

Okay. Perfect. And then just on the bidding environment, you mentioned for that things are going well on that front. I'm just wondering about competitive discipline, meaning is the higher metal environment being properly reflected in new contracts and new bids across the industry? Or are we kind of resetting to a different margin level given the metal environment?

No, so I think as Richard mentioned, there is a way to structure contractually our growth. We are working on it. So, there will be capacity to pass through metal cost with a delay and with a certain percentage, but we are building that pure growth.

Okay. And then last question, just on the U.S. germanium refining capacity expansion in the grand that you received or announced. Do you have an update on that and how that's progressing?

It's progressing as per plan. It's a fairly large project at the end. So we're expanding the building that we're in today. We started to receive some additional equipment order, more equipment that is on its way. So to complete the project, it's going to take probably close to 1.5 years, 2 years. But gradually, we're adding more capacity and capabilities from one quarter to the next. So it's actually -- it's all in our plan.

Your next question comes from Jonathan Goldman from Scotiabank.

I just want to clarify a couple of points on the margin discussion. So gross margin was down 430 basis points year-on-year and you're saying half of that was due to the unplanned maintenance. Is that correct?

Yes, yes, that's about that, yes.

Okay. And when do you think you would recover that impact? Would it be a couple of quarters, a few quarters, but the unplanned maintenance part, the overhead efficiencies from that, when would that be resolved?

Okay. So, on planned maintenance and else, we're applying ourselves to resolve the remaining, let's say, issues that we have, okay? So for us, this is temporary, and we have mitigation plans and else, and we don't foresee any issue from -- in order to realize contracts on hand in H2. Metal is a bit more tricky because it varies from -- as I've said earlier, it varies from product and clients and by default also contracts that are different depending on the business lines and lines of products. So for that, we take a prudent approach, and we see at least 2 quarters for that to be resolved.

Okay. That makes sense. And maybe I missed this in the prepared remarks, but did you mention additional margin pressure before we come back to the normalized margins when you recover the metal prices?

Nothing specific other than, look, it's a complex environment and inflation, chemicals, energy and else can occur on a -- with a limited warning. That's why we continue to take a prudent approach on our guidance and forecast for the second half of the year.

Okay. And Alban, I missed your comment. You said the margins in the second half kind of being where the Q2 level is within 1%. Is that correct?

Yes, that's the view that we currently have that the gross margin that we've seen for Q2 would probably be a good projections for the second half within 1 percentage point.

Okay. Understood. And then very strong growth in Performance Materials on the revenue line. I've always thought of this business as kind of a GDP type of growing business. And I think, Richard, you mentioned a lot of that was supported by volume. So I'm just trying to understand what's supporting the strong growth there? And how should we think about the balance of the year in terms of the top line in Performance Materials?

Typically, historically, if you look at a numerous number of years, Performance Materials would typically do better in the first half than the second half with many of our clients under that segment, I guess, reducing the inventory at year-end to show a better balance sheet than else. So typically, historically, the first half from a volume perspective has always been better than the second half. So that's essentially what we anticipate will happen again this year.

Okay. Makes sense. And on AZUR, can you give us an update on the order book? How much of the order book is fully booked in '27? And how much orders are currently taking to '28 and maybe beyond?

Look, '26 -- at this point in time, '26 is sold out, '27 is sold out. And we continue obviously -- we're assessing opportunities to increase further capacity for '27. But at this point in time, we're working out scenarios for '28, '29 and '30 forward.

Okay. Perfect. And maybe one more for me. If you could just remind us your capital allocation priorities. I mean balance sheet is in great shape. It got better. I think an earlier analyst mentioned be leverage neutral by the end of the year. But how do you evaluate M&A versus buybacks here, organic growth? And what's the runway for organic growth to expand capacity further?

With no surprise, and I'll let Alban complement, but with no surprise, organic growth, proper inventory levels is the priority at this point in time because, as you know, commercially, we have a lot of visibility, and we need to fulfill those contracts.

And just to complement that, as I've said, we are making room in our balance sheet. We continue to scan for M&A opportunities. So, we want to have the room and the capability to make a valuable acquisition if it presents itself.

And is there any update on the M&A pipeline? Has anything become more interesting lately?

There is nothing specifically.

No, we have obviously a list of parts that we're going to spend more time than others, but nothing that we can communicate this morning.

[Foreign Language] [Operator Instructions] Your next question comes from Baltej Sidhu from National Bank of Canada. Baltej?

I just wanted to quickly ask on AZUR. Another product lines you may be considering just the number of satellites that are looking to be set up and order over the next, call it, 10 years. Right now, you're tackling true LEO, MEO and GEO. Are you looking at opportunities within the VLEO market? And then how should we think about the product suite that could culminate?

At the present time, as you know, our technology referred to as 35 multi-junction solar cells applied to what I often refer to as true LEO, MEO and GEO distances from earth. Are we contemplating adding a new product line to address the VLEO market? Maybe, but nothing confirmed or very concrete this morning. So, we continue to focus on high-end applications for solar cell.

And there are no further questions at this time. I will turn the call back over to Richard Perron for closing remarks.

Look, I would like to wish you all a good day, and thanks for being with us this morning.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the 5N Plus Inc. First Quarter 2026 Results Conference Call.

[Operator Instructions] I would like to turn the conference over to your speaker today, Richard Perron, President. Please go ahead, sir.

Good morning, everyone, and thank you for joining us for our Q1 2026 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 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 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 2025 dated February 24, 2026, 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 information, please refer to our management's discussion and analysis.

I would now turn the conference call over to Gervais.

Thank you, Richard. Good morning, everyone, and thank you for joining us today. Before we begin, I would like to say a few words. As you know, I'm transitioning to the role of Executive Chair. So this is my last earnings call as Chief Executive Officer of 5N Plus. It has been a privilege and an honor to serve as CEO, and I would like to thank our shareholders and the broader investment community for their continued support. I look forward to contributing in my new capacity to the company's strategic direction and long term development.

I have great confidence in Richard as he steps into the CEO role. Richard has been instrumental in our success, and he is well positioned to continue executing on our strategy and take 5N Plus to the next level.

Now turning to the quarter. Q1 2026 reflects a powerful start to the year with strong momentum across our core end markets above expectations. Performance was driven by sustained demand in Specialty Semiconductors, as well as favorable pricing conditions in Performance Materials. In Specialty Semiconductors, demand remained strong across our strategic sectors with backlog continuing to provide excellent visibility, supported by ongoing strength in terrestrial renewable energy and space solar power. Bookings are now extending even beyond 2028.

Segment performance in the quarter was driven by demand in terrestrial renewable energy in large part, reflecting our expanded agreement with our strategic U.S.-based customer in this sector. As you will recall, under this agreement, volumes increased by 33% for the year of '25-'26 and will increase by a further 25% for the subsequent term through 2028. In Performance Materials, the favorable pricing conditions we benefited from in 2025 persisted longer than anticipated and contributed positively to results, once again, reflecting the agility of our global sourcing platform. Across the business, we remain focused on disciplined execution, productivity initiatives and capacity expansion plans.

At our AZUR facility in Heilbronn, Germany, we initiated work on our latest and previously announced capacity expansion project. This follows the 30% increase in solar cell production capacity achieved in 2025. We have begun our work and are now progressing towards an additional 25% increase, which is expected to come online by the second half of 2026, in line with customer demand. As a reminder, this capacity expansion requires targeted investment because much of the equipment is already in place.

Overall, our first quarter performance reflects disciplined strategy execution. We remain focused on the right value-added products in the right end markets, supported by agile operations and sourcing as well as strong customer relationships. At the same time, we are fully engaged to mitigate the best we can the pressure resulting from the uncertain economic environment.

Before turning the call over, I would also like to mention that our new Chief Financial Officer, Alban Fournier, joined the company just a few days ago. We are very pleased to welcome him to the leadership team, and we look forward to introducing him to the investment community ahead of our next call.

With that, I will now turn it over to Richard.

Thank you, Gervais, and good morning, everyone. Before turning to the financials, I too would like to acknowledge Gervais for his leadership and contributions to 5N Plus. Gervais and I established a strong working relationship over the years, and we will continue to cooperate closely in his capacity as Executive Chair. I look forward to building on the strategy we developed and deployed the success as a team.

I also look forward to working closely with our new CFO, Alban, who is quite quickly setting up to speed on all aspects of the business and the rest of our leadership team. As we move into our next phase of growth, our focus remains on disciplined execution, scaling our position in high-growth end markets, thanks to our value-added expertise and driving operational efficiency. All of this is being pursued with a view to delivering long term sustainable value to our stakeholders.

Turning now to our financial performance for the first quarter. Revenue for Q1 2026 was $117.9 million, an increase of 33% compared to $88.9 million in Q1 of last year, primarily driven by higher volumes in Specialty Semiconductors and stronger pricing in Performance Materials, all of which reflects a favorable product mix. Adjusted gross margin increased by 36% to $41.4 million, representing 35.1% of sales compared to 34.2% in the prior year, reflecting a favorable product mix and pricing above input costs. Adjusted EBITDA reached $29.2 million, up 41% year-over-year compared to Q1 last year. Net earnings were $17.8 million or $0.20 per share compared to $9.6 million or $0.11 per share in Q1 last year.

In Specialty Semiconductors, revenue increased to $86.2 million, up 37% year-over-year, primarily driven by higher volumes in terrestrial renewable energy. Adjusted EBITDA increased by 42% to $25.1 million, reflecting higher demand in terrestrial renewable energy and improved unit costs from economies of scale. Adjusted gross margin remained strong at $34.4 million of sales compared to 35% in Q1 last year. The decrease reflects less favorable metal input costs, partially mitigated by economies of scale. Backlog remains effectively maxed out at 365 days, providing continued visibility into future demand.

In Performance Materials, revenue increased to $31.7 million, up 21% year-over-year. Adjusted EBITDA increased by 67% to $10.1 million, supported by favorable pricing and product mix. Adjusted gross margin expanded to an impressive 37.8% of sales compared to 32.9% of sales in Q1 last year. The improvement also reflects favorable pricing and product mix, partly offset by less favorable metal input costs. Backlog represented 130 days of annualized revenue, reflecting contract timing and renewals.

Cash used in operating activities was $13.5 million in Q1 compared to cash generated in the prior year, primarily reflecting higher working capital requirements to support increased volumes and sustained demand. Net debt stood at $74.7 million at March 31 during 2026 compared to $50.3 million at the end of '25, reflecting the working capital investment in the quarter. Despite this increase, our net debt-to-EBITDA ratio remains low at 0.71x, highlighting the strength of our financial position.

Turning to the outlook. In Specialty Semiconductors, structural growth across our core end markets continues to support demand, particularly in terrestrial renewable energy and space solar power. Long-term customer agreements and FT backlog also provides strong visibility. In Performance Materials, favorable pricing conditions extended into the first quarter longer than we had anticipated. That said, we continue to expect a gradual normalization over the remainder of the year.

More broadly, we continue to operate in a dynamic environment with anticipated cost volatility and inflationary pressures due to the current geopolitical context. While we delivered strong performance in the first quarter, we continue to expect higher input and operating costs to exert some pressure on margins over the course of the year. In this context, we remain focused on the elements within our control, disciplined execution, including on productivity initiatives and capacity expansion lans to support long term growth and drive economies of scale. Taking these factors into account, along with our strong first quarter performance, we're maintaining our full year adjusted EBITDA guidance of $100 million to $105 million. We expect a more balanced contribution across the year compared to our prior expectations.

We also continue to actively evaluate external growth opportunities to further strengthen our leadership in Advanced Materials across our key markets. Overall, we are confident in the underlying growth fundamentals of our end markets, our competitive positioning within those markets and our ability to execute on our strategy to deliver sustained profitable growth.

So that concludes our formal remarks. I will now turn the call back over to the operator for the Q&A with our financial analysts.

[Operator Instructions] Your first question comes from Baltej Sidhu with National Bank of Canada.

Congratulations once again, Gervais and Richard, on the transition. Just a few questions from me.

So on the adjusted EBITDA margins in the SS segment, they reached a record high, partly driven by economies of scale. Just thinking looking forward, how sustainable are these margin levels going forward, just given the strong underlying demand? And is that a fair run rate assumption to consider going forward?

On a consolidated basis, yes. If we have any variations from a gross margin expressed as a percentage of sales, it's going to be quite limited. It's going to be quite reasonable, nothing drastic. The current margins we have is what we're expecting for the remainder of the year for the most part of the year. If anything -- if there's any variation from one quarter to another, it will be most likely due to the product mix rather than the fundamentals of our business.

That's great. And then could you share an update on your pipeline in the Space segment? And are there any changes in the competitive landscape that you're seeing right now, whether that's capacity? And it seems like pricing has continued to stay above inflation. Just any commentary that you have around AZUR SPACE.

The market is essentially -- there's essentially no newcomers, and we have 2 competitors essentially and all 3 of us are all very busy. And like we often say in the, let's say, the history of the satellite industry for the actual products that we're supplying to that industry, the Space ourselves, we expect pricing to continue to be very extremely interesting and capacity to be maxed out. That's why we continue to -- again, earlier this year, we announced a further expansion of our production capacity. And going forward, we expect similar announcement will come as well.

Perfect. And just one more here, just more on the terrestrial solar side. So in your CSR report last month, you highlighted Perovskite Precursors. Could you comment on the broader opportunity that you're seeing here and the path forward towards commerciality?

Sorry, I missed the beginning of your question.

In the CSR report, you highlighted Perovskite Precursors for terrestrial solar. Just if you can comment on the broader opportunity and path towards commerciality.

Well, as you know, we've been working in our customers and the entire industry is working to develop Perovskite. Perovskite is quite promising, but this is something that still required the development in order to make sure that the efficiency could last with a long period of time. Then we know that Perovskite could produce energy for a short period of time, a few months, but could it last for 15 years? That remains to be seen. And this is why the different companies are working on that.

So it's still under a product development phase and then we'll follow qualification before full commercialization.

Your next question comes from Nick Boychuk with ATB Cormark.

Coming back to Baltej's question on the consolidated gross margin profile, specifically for SS and your comments in the MD&A about the ongoing year's efficiency program. I'm curious how much of that is tied to either incremental capacity expansion within the existing 4 walls of terrestrial solar AZUR SPACE versus the optimization of margins and how much each could increase? If we are seeing your U.S. customer on the terrestrial solar side, expanding in the U.S. further, speaking about adding more capacity, would you be able to address that? Is that part of your ongoing program? Or is everything right now focused on margin enhancements?

Specific to the space industry, the combination of capacity expansion, the high demand, independent of the positions of our competitors from a margin perspective, we expect that it will continue to be good forward as the pressure on the actual -- on the volume that is required from a solar cell perspective continues to increase, and it seems to be the case for many years to come.

Your next question comes from Michael Glen with Raymond James.

Yes, congrats, Gervais, on everything achieved during your tenure at 5N. And Richard, congratulations too, as you transition to your new role. Just Richard, you're talking about the metal input costs. Like can you give some insight into how those maybe trend in both segments through the rest of this year in both the Specialty Semiconductor and the Performance Materials?

We typically don't speculate on where the patients will go forward. But just in the last year, for all metals that we're using to make our products, there's been some substantial increase in the patients.

Would you be able to comment at all regarding how there would be some pricing mechanisms with your customers in the various segments?

Yes. Each segment and sectors within the segments that we serve, all contracts have their own behavior. But typically, within a certain range, it's a fixed price and after that comes a formula. In other contracts that are more long term, we have special clauses where adjustments are made in time based on the most recent notation. In other parts of our business, it's typically a formula that is applied -- a premium that is applied on top of the notation. So it varies from one product to another.

We're always exposed but much, much less exposed than ever in the history of the company. But look, we're making products out of metal. So there's always a little exposure. But quite minimal today versus what we experienced in many years ago. The key is obviously the quality of the product portfolio today essentially being made of value-added products. So there could be a lag. So a lag could happen, but it will definitely not hurt our margins like in other industries, relying much less on the patients than in the past and other industries.

The sales gains you saw, you highlight the scale gains. Now does the scale gains that you expect from top line and revenue through the rest of the year, do you see that as being enough to offset the notation inflation that's been seeing?

That's what is foresees, yes.

Okay. And then just one clarification for me. So maybe I missed the first 4 minutes of the conference call. But in the MD&A, you talked about AZUR expanding by 30% of capacity. Is that a tick higher than the 25% that was...

Yes. The 30% is the capacity increase realized last year, out of which we'll get the benefits this year. And earlier this year, we made another announcement at 25%, out of which we'll get the benefit next year in '27.

Your next question comes from Frederic with Desjardins.

I just wanted to start with Performance Materials and the pricing there. You mentioned that it's been more favorable or favorable for longer than initially expected. Can you just remind us what's behind your view that this favorable pricing will eventually reverse?

It's essentially the continuation of last year where security of supply is the #1 priority these days on the current geopolitical context. And we're able to supply our clients with quality products on time without any interruption due to our footprint relations and processes in place. So that's what's behind. Essentially continuity of last year's theme, which is security of supply.

Just on First Solar, they had good comments on U.S. bookings and manufacturing utilization in the Q1 results recently. Can you share anything about the volume trends that you're seeing there relative to the contracted volumes that you have with them? Are you -- in the past, you talked about selling spot volumes to them. Maybe general thoughts on the volumes that you're seeing now and expecting for the next couple of years with them?

The volume is essentially as per the contract, no changes to that. If anything, every volume of material that we're producing needs to be expedited to First Solar in the U.S. So the contract is essentially a take-or-pay commitment and there a desperate need for the products. So there's definitely no changes to the volume other than every volume produced needs to be expedited to First Solar rapidly.

The next question comes from Nick Boychuk with ATB Cormark.

I was cut off on the question before. I just want to come back to that gross margin dynamic, specifically on the Specialty Semiconductor. I want to understand the new run rate that we're talking about here, the 34% plus. Does that factor in all of the efficiency improvements and gains that you're seeing from the improved economies of scale and cost per ton? Or could we actually see a further benefit into the year as things continue to progress?

The current margins that we are realizing is on the back of favorable market conditions and economies of scale. Going forward, we're applying ourselves to introduce various productivity initiatives and that on top of additional capacity and further economies of scale is going to bring additional benefits to the margins. That, to some extent, will obviously improve, but will mitigate any negative impact if any other factors were to increase in time due to inflation and else.

Then tying that into the unchanged guidance for the full year, what would have to happen over the next 3 quarters for either guidance not to be met or for things to be exceeded? Because on this new margin profile, assuming the top line persists and given the visibility you have there, it feels as if we're set up for a materially larger year. I'm curious if you can help me understand that.

Well, like we often bring -- I mean, in our business and many other businesses, you have typically 3 main risks. Commercially, as you know, a large portion of our business is under contract. So we have a pretty good idea of where it's going to land at year-end and the type of mix we're going to have both products and clients. What we don't know is the exact distribution per quarter. Technology-wise, this year, we're going to be essentially doing more of the same. So that's also well under control. So what we're left with is the operational risk, okay? Which -- to which will also include inflation and else.

So look, if we have a stellar year in terms of energy, consumables, reliable equipment and else, yes, the likelihood to beat the guidance is very good. Otherwise, we still believe no matter what kind of headwinds we're going to have from those factors, we still believe the guidance we have on hand is a valid guidance.

Is there material energy exposure risk to some of your European assets?

Yes, mostly, mostly. But that -- I mean, obviously, we have different measures in place also to limit our risk, but we cannot control everything, as you can imagine, in today's complex environment.

The next question comes from Yuri Lynk with Canaccord.

Yes. I want to come back to the guidance question, and maybe I'll attack it a different way. I mean, really strong start to the year. You're pointing to sustainable with some upside margins in Specialty Semiconductors. But to stay within the full year guidance, I mean, it's -- you're essentially downgrading the back half view versus what you might have had previously. So is that all within Performance Materials? Or am I misreading the implied guidance there? Just some detail on how your back half of 2026 outlook might have changed since we last spoke?

When -- before starting the year, what we anticipated was a stronger second half. Now we expect the whole -- the first 6 months and the last 6 months to be more and more aligned with similar level. So that's what we're seeing. The reason behind it is we expect some normalization of the margins under Performance Materials.

But that was the expectation previously, right? Would...

Yes, we expected that right from Q1. And as we've said, Q1 is a nice surprise from that standpoint.

Okay. So no real change to your Specialty Semiconductors...

Specialty Semi out of our 2 segments because we have long-term contracts, have a pretty good idea of the mix and the releases. No, it was originally -- and again, it was all essentially based on our expectations that Performance Materials will normalize earlier in the year, and we had an incredible Q1. But we continue to be prudent and believe that it will be normalized over the coming quarters. But it will still be an incredible superb business, obviously. Everything is relative here.

Yes, of course. I mean, we're more than a month into Q2. I mean, have you started to see that normalization? Or has those positive trends continued into Q2?

It's still positive.

So you'd say the outlook is fairly conservative for the year, the guidance? That's what it sounds like.

Yes. No, exactly. As I said, from an operational perspective, we remain prudent as to any inflation, operational challenges in the current complex environment and else. So we remain prudent. It's only 1 quarter out of 4. So years go by quickly, but at the same time, it's a little marathon that we have to go to.

[Operator Instructions] Your next question comes from Michael Glen with Raymond James.

Just a follow-up on the working capital. You had the AR and the inventory build in the quarter. Maybe how should we think about those trending over the next few quarters?

As it is often the case, in the first half of the year, we typically carry a bit more net working cap than usual. But that being said, year-over-year because of the growth, the important growth under both, especially under renewable energy and space power, there will be an increase in the net working cap by year-end. But again, in the first half, a bit more pronounced than in the second half. But on a full year basis, you'll have a little increase in net working cap aligned with the growth.

Any notable updates that you guys can share with progress on M&A targets?

Nothing specific other than as we often say, we're highly motivated to complete the transaction. We're looking at many different files with an internal team dedicated to it and the help of external resources. So we're spending a fair bit of time looking at various files. So we're very serious about it.

There are no further questions at this time. I will now turn the call over to Richard, for closing remarks.

Well, I would like to thank you all for joining us this morning, and we wish you all a good day. Thank you.

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

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to 5N Plus Fourth Quarter 2025 Results Conference Call. [Operator Instructions] And I would now like to turn the conference over to your speaker today, Richard Perron, President and Chief Financial Officer. Please go ahead.

Good morning, everyone, and thank you for joining us for our Q4 and full year 2025 results conference call and webcast. We'll begin with a short presentation, followed by a question period with financial analysts.

Joining me this morning is Gervais Jacques, 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 2 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 2025 dated February 24, 2026, 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. Further information, please refer to our management's discussion and analysis. I would now turn the conference over to Gervais.

Thank you, Richard, and thank you all for joining us today. 2025 was truly record-setting year for 5N Plus. By leaning on our strength, we navigated a complex macroeconomic and geopolitical environment with agility and delivered phenomenal growth.

This was driven by our strategic focus on value-added products in key end markets, our flexible global sourcing and manufacturing capabilities and strong customer relationships. Customers recognize our expertise. They trust us to deliver reliability and quality in demanding advanced material applications.

In 2025, we also reached new heights in our financial performance, far exceeding the objectives we set for ourselves when we started the year. This includes accelerated revenue growth, record adjusted EBITDA and significant margin expansion, and it was made possible by contributions from both of our segments.

In Specialty Semiconductors, our strong performance across the board once again confirm our status of -- as a supplier of choice in the high-growth renewable energy and SPACE Solar Power sectors. Starting with renewable energy. The new and expanded agreement for the supply of thin-film semiconductor materials with our strategic customer announced last August was an important milestone, providing visibility on a multiyear growth path.

Under the new agreement, we increased volumes by 33% for the 2025 and '26 period underway and by another 25% for the subsequent term, taking us to the end of 2028. This agreement supports our customers' U.S. manufacturing growth plans as the leading American solar technology company. It also reinforces our critical supplier role within this value chain.

SPACE Solar Power is another key end market with a clear and multiyear path for growth. After a strong year, our project pipeline at AZUR is very robust, extending beyond 2028. By the end of 2025, we successfully increased solar cell production capacity by 30% as planned. We are also now working towards an additional 25% capacity increase, which we expect to start gradually coming online in the second half of 2026, in line with customer demand.

Whether in Montreal or in Germany, our sites are focused on scaling production and pursuing capacity expansion with discipline, unlocking productivity improvements and operational efficiencies along the way. Earlier this year, we also announced that we received a USD 18.1 million award from the American government to expand germanium recycling and refining capacity at our St. George, Utah facility.

This investment aims to strengthen domestic supply chains for optics and SPACE Solar applications. Once again, it is a recognition of our expertise in reliability in a strategic sector. Finally, in performance materials, our intentional focus on key products in the health, pharmaceuticals and technical materials sectors has been the right one.

In 2025, we capitalized on favorable pricing conditions and delivered strong results despite lower volumes. And this was no accident. As the leading supplier of bismuth-based chemicals and compounds, we took full advantage of our flexible sourcing and manufacturing capabilities to realize improved margins. Looking ahead, while the operating environment is expected to remain complex, the underlying growth trends across our key end markets remain clear.

Strategically, 5N Plus sits at the intersection of utility scale and space-based renewable energy infrastructure. We supply advanced materials that enable critical sought-after technologies. As we previously discussed, solar energy remains a key component of the U.S. energy mix despite policy shifts. One of the driver is the fast adoption of AI technology, which required large data centers with significant power needs.

At the same time, structural expansion in the space industry continues at elevated levels, where we are the go-to partner to the main players in this sector, thanks to our leadership in solar cell technology. Medium term, we also anticipate growth opportunities in imaging and sensing, both on the security and the medical imaging front.

In performance materials, we remain a key partner for health and technical materials with growth expected to remain broadly in line with GDP, consistent with historical trends. With strong foundations, a clear growth path and a proven strategy, we are well positioned to level up our performance in 2026 and deliver long-term value for our shareholders.

With that, I will now turn it over to Richard for a detailed review of our financial results and outlook.

Thank you, Gervais, and good morning, everyone. We are very pleased with our record financial performance of 2025. What you're seeing today is the result of strategic choices. Over the past several years, we have made a concerted effort to grow our specialty semiconductor business and to increase the proportion of revenue and earnings coming from high-end and high-growth sectors.

At the same time, we have streamlined our performance materials activities, increasing the resilience of our highly complementary business. We have accomplished this by adjusting our footprint and investing in operations over the years, streamlining our product portfolio with a focus on growing or solidifying our position in key end markets and prioritizing client partnerships built over the long term.

Our results speak for themselves and validate our strategy. In full year 2025, total revenue increased by 35% year-over-year, reaching $391.1 million with $285.4 million of those revenues coming from specialty semiconductors. Adjusted gross margin increased 44% year-over-year to reach $131.8 million in full year 2025. This translated into a robust adjusted gross margin as a percentage of sales of 33.7% for the year. This was boosted by an exceptional adjusted gross margin of 42.4% of sales for full year 2025 in performance materials.

Finally, full year 2025 adjusted EBITDA increased by 73% over last year to a record $92.4 million. This includes a $70.1 million contribution from specialty semiconductors, helping us exceed the high end of our twice increased annual guidance range of between $85 million and $90 million. With our increased cash flow generation and prudent balance sheet management, we have significantly reduced net debt from $100.1 million at the end of 2024 to $50.3 million at the end of 2025. This brings our net debt-to-EBITDA ratio at year-end to 0.5x.

Let's now take a closer look at our segments. Starting with our Q4 performance in Specialty Semiconductors. Revenue increased by 47% compared to Q4 last year to reach $76.2 million, supported by higher volumes in renewable energy and space solar. Adjusted gross margin increased by 27% in dollar terms. As a percentage of sales, adjusted gross margin was lower year-over-year coming in at 25.5% because of a less favorable product mix and higher planned maintenance expenses.

As discussed on our last conference calls, we completed incremental preventive maintenance in full year 2025 to support our operational objectives for the full year 2026. Adjusted EBITDA in Q4 2025 increased by 12% to reach $14.2 million, supported by higher volumes, partially offset by the same factors mentioned before.

Quarterly variations aside, the segment's performance for the year was excellent with a 41% increase in revenue to $285.4 million and a 59% increase in adjusted EBITDA to $70.1 million, while maintaining a robust annual adjusted gross margin of 30.8% of sales. Backlog also continues to be maxed out at 265 days as per our definition, with strong demand and orders in our strategic sectors booked several years out.

Turning now to performance materials with the story in Q4 consistent with what we've delivered all year. Revenue increased by 36% in the quarter to $25.8 million over Q4 2024. This brought full year segment revenue to $105.7 million, up 22% over 2024. Q4 adjusted gross margin was 40.9% of sales compared to 33.5% in Q4 of last year.

As mentioned, the segment's full year adjusted gross margin came in at an impressive 42.4% of sales. Adjusted EBITDA in Q4 increased by 108% to reach $7.8 million for the full year adjusted EBITDA increased by 59% to $35.1 million. The segment's overall performance was driven by a favorable inventory position coming into the year and improved product mix, higher prices net of inflation and higher metal input costs.

Turning now to outlook. As the geopolitical and economic backdrop continues to evolve, we expect our operating environment in 2026 to remain complex. The underlying growth fundamentals and structural expansions in our key end markets remain very strong, providing a long runway for growth. However, we must also contend with rising input and operating costs that will pressure our margins, especially after the exceptional performance of 2025.

From an operational perspective, we are laser-focused on the execution of our growth plans. This includes scaling production and increasing capacity in strategic sectors in order to meet customer demand. We have that called all of those key projects. Driving productivity and operational efficiency in 2026 is also key to help mitigate anticipated margin pressures.

With our strong balance sheet, we will continue to invest in our operations, while also pursuing external growth opportunities to further strengthen our advanced materials leadership in key markets. Taking into account this environment and what we have in the pipeline, we anticipate generating adjusted EBITDA of between $100 million and $105 million in full year 2026 with a higher contribution in the second half of the year.

This reflects a measured and disciplined approach to build on what we have achieved last year. Our focus is on solidifying our expanded earnings base and investing selectively in capacity to generate a sustainable performance. This approach positions us to further strengthen our standing as a supplier of choice in strategic sectors and to deliver continued value creation for our shareholders.

That concludes our formal remarks. I will now turn the call back over to the operator for the Q&A with our financial analyst.

[Operator Instructions] Your first question comes from Baltej Sidhu from National Bank.

Congratulations on the quarter. First one for me is on the back of the results of America's largest solar technology manufacturer, which saw its guidance coming in below expectations and some strategic underutilization of international facilities.

Just given the Trump administration's new countervailing duties for Southeast Asian imports on solar cells and panels and if this stick, we think that its U.S. operation should be a benefactor. Any comment you can provide as it relates to that, but also the pressure on international sales and any impact to BNP, if you were looking to gain more market share in that realm?

Well, thanks for the question. I believe that the emphasis that they are doing on reshoring and supply chain resilience that they've been talking about, I think it's all favorable for 5N Plus, and it's positioning us as the supplier of choice for them.

Fantastic. And now turning to your 2026 guidance. The midpoint currently aligns with consensus and implies roughly 11% year-on-year growth. Just given the underlying momentum in the business, along with the recently announced capacity expansions for Cad Tell and AZUR, can you walk us through the key drivers underpinning that 11% growth at the midpoint? And if there's any details that you can shed on puts and takes that are embedded in the guidance?

Okay. Essentially behind the guidance in terms of growth, Bal. In the case of our renewable energy, I think we've been -- it's all out there and following our press release of last year. So we have confirmed volume for 2026 and further increase in volumes to '27 and '28. That's essentially -- this is locked in, and that's by default, a solid assumption to use in our guidance.

As for space, it follows also our most recent press releases in terms of capacity expansion. So more recently, we announced capacity expansions for -- in '26 with benefits in '27. But if you go back to previous announcements of last year, all of that extra capacity on a full year basis is also embedded in our guidance numbers for this year. That's for the space business.

Everything else, we -- from a guidance perspective, we keep our assumptions as I'm going to use the term with conservatism, and small growth. And obviously, we're applying ourselves to do always better. So first 2 sectors is backed up by orders and capacity expansion projects. And on FV, we remain prudent.

Okay. That's great detail. And another one for me is just on the performance materials outperformance and the margin normalization that you noted just given the anticipated cost pressures that was noted. Could you provide more detail on your assumptions around business pricing? Margins have continued to remain elevated. What visibility are you seeing on pricing trends? And what are you hearing in conversations with your suppliers and the offtakers?

The metals we play with, it's always extremely hard to forecast any movement in prices. So we essentially -- the way we work is through our commercial contracts. That's how we protect ourselves forward. But by default, because we hold a certain inventory on hand, we have to be more prudent than less.

So again, from a guidance perspective, we tend to use either stable or decreasing prices in order to face any -- in order to plan for any, let's say, unfavorable movement from notations. But if you recall, we've made so many changes to our product portfolio and footprint that actual variations in notations, they don't have as much, impact as they had in the past. So -- but we commercially hedge ourselves to protect us against any variations rather than guess where the nations will go in time.

So we don't have a public opinion as to where bismuth prices will go in the future. We tend to manage any variation in limitations through commercial hedging and making sure that we hold on to products that have the smallest percentage of metal as possible. So value -- deliver value-added products.

Your next question comes from Amr Ezzat from Ventum Capital Markets.

Congrats to you and the 5N team on an incredible year. Maybe I should start with the margins on Specialty Semi. They stepped down meaningfully in Q4, which I think we all expected given your comments in Q3. But I'm just wondering how much of that step down is structural or product mix versus like the maintenance that you guys sort of spoke to? And what should we read as the right sort of normalized margin range heading into '26 for Specialty Semi?

Okay. Most of the key factors behind this lower margin expressed as a percentage of revenue is essentially from accelerated or definitely us applying ourselves at getting ready -- accelerated preventive maintenance expenses and us getting ready to start 2026 on solid grounds, okay?

So the vast majority of that lower margin, again, expressed as a percentage of revenue due to that. There's a little bit of product mix, and there's a little bit by default of the usual slowdown that comes in, in December. Then going forward, I think you can hold on to the full year gross margin in order to modelize your -- the business.

Fantastic. No, that's helpful. Just another one on your EBITDA guide for fiscal '26. I appreciate your remarks in the -- in your prepared commentary on the gating factors there and the inflation of input costs.

But can you speak to what assumptions you guys are using or are embedded in your model for inflation for the different input costs, like just at a very high level, then you did mention that you're being conservative as well, which is always good. So should we be expecting another 2 increases in 2026?

Yes. Look, it's not a perfect science. Obviously, labor costs, we come up with assumptions that are based on external data. When it comes to energy and consumables, we tend to anticipate a bit more than what is the market consensus right from the start. Then the tough part remains the input metal that we use, okay?

Obviously, we're using much less metal than everything we're manufacturing and selling today, but it starts with a piece of metal. There are 2, we tend to look back and assume that similar increase will happen in the following year, okay? That's our approach, which is an approach that is more -- that shows more conservatism than less. But again, the best way for us to protect us against input metal increases is through our commercial aging practices and everything else.

Okay. I appreciate that. Then maybe if we could dig into space a little bit. Can you speak to the pricing dynamics you're seeing? Should investors expect any erosion whatsoever once competitor capacity arrives or from your vantage point, demand absorption is strong enough to keep pricing rational?

Well, if you remember, the way this business works, you earn contracts today to be delivered later on. So the backlog that we have for '26, '27 and '28, all of that is based on the most recent favorable pricing environment, okay?

So everything that you're describing is more on a way forward-looking basis. But have in mind that we're producing more and more and we have economies of scale going forward that allow us to maintain margins independent of where pricing will go to.

Fantastic. That's always good to hear. Then maybe one last one, Richard. It will be your first year as CEO, then as Gervais as Chairman. What changes, if any, should we expect in strategic priorities?

Look, it's a transition where there's -- we're making sure that there's continuity in our strategy. So don't expect anything more than us applying ourselves to go further the business on everything that we've built so far.

Your next question comes from Yuri Lynk from Canaccord Genuity.

You called out in your outlook section, I think, for the first time, some medium-term opportunities in Security and Defense. Just wondering if you can provide a little more detail on that line.

Well, as you may know, we've been working really hard in developing new products for this product line. And we know all these -- the shift to photon counting detector is starting to happen, and we can feel it, we can see it.

And this will have an impact going forward. This year, quite limited, but in 2027 and '28, that's going to start to be something significant. And we also -- we're developing all sorts of detectors that are being used both for Medical and Defense application. And today, being a Western world producer being able to do that is now definitely a key attribute that position 5N favorably.

Over the past few months, many of the big names associated with the Defense industry have come up to us and they're pretty impressed and interested in our capabilities to grow crystals, make substrates, lenses, recycle and refine strategic minerals and health. So all of that is giving us a lot of comfort that the whole topic of Defense will play favorably for us in time.

And does that Defense reference in the outlook, does that specifically tie back to the upstream expansions at St. George?

It's one of the factor, but it's the equation -- what is favorable -- what is playing favorably for us is the equation of us starting from piece of metal all the way to fancy semiconductor products. That's really the full integration that we can offer to the industry, obviously, based out of China, which is a definite -- it's a prerequisite.

Okay. And it reads to me that those security and Defense applications might show up in your revenue line before the sensing and imaging opportunity that you've talked about previously. Is that the correct way to read that?

No, it's going to -- we -- as you know, the way -- like we have this segment and we have those sectors that we serve under those segments, Defense is actually kind of spread out in between space and sensing and imaging today and to some extent, technical materials as well.

Okay. Switching gears, really nice cash generation in the quarter, balance sheet in fantastic shape. Can you talk a little bit about the M&A pipeline, if we want to call it that, and how that might have evolved over the last, say, 6 to 9 months?

We continue to look at many different files. Yes, we have what you call -- what you refer to as a pipeline, but it still requires a fair bit of work on our side before coming out to the market and say, here's the target and here's why it's a good target.

But we're actively revving many different files, meeting people, making what choose and out. We're very serious about completing a transaction this year, highly motivated as we say. But can we give you more details this morning as to the exact materials and/or markets that it came for? It's a bit hurry.

Yes. No, I understand that. I mean you say you expect to do something this year. I mean, sometimes these things aren't in your control. I mean, are you okay, if nothing -- if you can't do an acquisition this year, you're okay with that? I mean, how do we think about other ways to put the balance sheet to use?

We have a lot of internal growth to manage. This year, we're focusing on execution and deliver a strong pipeline of order that we have. And we have -- the backlog is more than 365 days. But if you look at it segmented by sectors in renewable, it's more than 3 years. Then what we're doing now is looking at M&A, but without pressure because we want the right deal. We don't want to do an acquisition. We want to do the right one, like we did successfully with AZUR 3.5 years ago.

Your next question comes from Michael Glen from Raymond James.

Maybe just to start, CapEx in '25, including intangibles, was just below $21 million for the full year. Can you provide an outlook for 2026 on CapEx?

It's going to be in a similar range.

Similar range. Okay. And then working back to the germanium investment or alignment with the U.S. Department of War. What should we think about in terms of revenue impact in 2026 and 2027 from that specific agreement?

For 2026, very little. 2027, we will start to realize some benefits out of it, but it's more a '28, '29 perspective because it takes some time to install it all and get going, and we expect it's going to take at least a year, like we have already a plan with a short list of equipment and feeds to treat, but all of that will take most likely all of this year to at least get the initial stuff in place and get going.

So it's more of an horizon '28, '29, but there will be some benefit this year and next year associated with recycling and refining complex feeds that contain germanium and from that germanium additional businesses associated with lenses, detectors and else.

Okay. And then just circling back to the First Solar-related business. So I get that a lot of what they're speaking about during the conference calls related to low capacity utilization internationally.

Can you remind us or speak to your -- what level of capacity increases you've put in Canada and Germany, maybe since the end of 2024, like how much has capacity increased for you? And speak to or remind us of the -- some of the higher level contract terms associated with First Solar volumes?

Essentially, since the end or close to the end of 2024, we must have at least doubled our capacity. And this year, we continue to add a bit capacity, and we're adding new and we're adding new equipment, brand-new capacity associated with this additional thin-film PV materials that we're going to be supplying for Solar, Cadmium [ selenide ] as we presented in our press release last August.

Okay. And are you able to remind us just the contract like pricing or volume commitments? Like how do we think about those?

Well, the volume for '25 and '26 is 33% higher than '24. And for '27 and '28, it's an additional 25%...

Over 25%, 26%.

Yes.

And that's -- we can characterize that as take-or-pay in nature.

It is.

And it is back with their capacity and most of their growth has been happening in the U.S. with their Louisiana and Alabama facility. And as you know, Petersburg has been also optimizing their production. Then what they said and what they continue to do is trying to refocus, recenter their production in North America.

Okay. And just final one. How do you think about -- are you able to give us -- I know you guide on EBITDA, but not on revenue. Are you able to give us any indication? Should we expect that revenue will -- should meaningfully outpace EBITDA growth next year?

Yes. Based on our current assumptions and again, being prudent, we're very prudent as to the actual gross margin expressed as a percentage of revenue. So you see where our guidance goes from our current 2025 EBITDA. So yes, revenue should -- as a percentage increase, should outpace a little bit the growth in EBITDA.

Your next question comes from Frederic Tremblay from Desjardins.

Just wanted to dig a bit deeper on the '26 guidance. In your comments, you did mention that you expect a higher contribution in the second half of 2026. Wondering if you can maybe provide a bit more color on the factors that are driving that? Is it just business seasonality or some of the capacity increase is coming online?

As you know, as I explained in order to build or compile our guidance, we have renewable energy and our space solar business essentially all under contract. So it's just the actual anticipated release date of those contracts that makes it -- that makes the second half a bit -- anticipated to be a bit stronger than the first half.

Obviously, releases can change from clients. We occasionally can move things around. But based on the current releases communicated by clients, assuming a stable allocation of the rest of our businesses throughout the quarter, we can anticipate the second half to be stronger. But all of that is -- I mean, it's still early stage, but it's based -- what's behind it are communicated releases from clients.

Okay. And you mentioned a bit stronger. So it's in terms of quantifying it, it's not -- it's not really a huge.

It's a bit stronger, exactly. But as I said, the full year is always committed under contract, but it may change from one quarter to another depending on confirmed releases from clients, but we start the year with a first plan discussed with clients, and that's what we have modelized and built up from a bottom-up forecast perspective.

Yes. Understood. Okay. And then you did mention your intention to drive productivity and operational efficiencies across the business. Wondering if you could provide some high-level examples of what you guys are working on, on that front?

Well, as you know, we've been adding capacity. And normally, when you're adding capacity, you're hiring new employees, you're training them, you're developing new methods of working.

And then second wave is you're doing optimization. And this is what we will be focusing on doing is trying to optimize, also bring more automation on board in both at AZUR, but also into our renewable energy. Then we've been successfully able to start the equipment, deliver products. Now we're now starting the wave of improvement.

Perfect. And then last question for me. Just on the preventive maintenance that happened in Q4, did you complete everything you wanted to complete there? Or are we expecting an impact in Q1 as well?

It's not going to be -- we did not complete everything we wanted to complete, but it's not an impact per se because if you recall, what we've done is accelerating stuff that we typically do every year. Whatever is not done in '25 is not incremental to '26. It's rather the other way around.

It's a burden to '25 that's what he said so...

[Operator Instructions] Your next question comes from Kaelan Purdie from Cormark.

It's Kaelan Purdie here filling in for Nick. Great clarity there on the maintenance strategy. Could you also maybe just speak to the pipeline for AZUR given the incremental capacity at Heilbronn, has the uptick in capacity come with any new contracts, both commercially and on behalf of government?

Well, if you recall, our approach to capacity expansion, more specifically to our SPACE Solar business is that as comes a point in time when the backlog for the following reaches the previous year's capacity level, that's when we trigger capacity expansion. So what we have announced a month or so ago is aligned with that approach, meaning that we see 2027 at level -- confirmed contracts at level of our most recent capacity and it goes on, and then we trigger those investments.

So the same will likely -- the same assessment will likely be done late '26, early '27 for '28 and so on and so forth. So to answer your question, when we increase capacity because we have the contracts.

Okay. Understood. So nothing in terms of significant pipeline without the contracts?

But the pipeline is by itself significant because the whole satellite industry continues to grow and there are more and more opportunities. It's still on a fast-growing mode today. But again, the key for us is not to bring too much capacity too earlier in time. That's where it comes to discipline that we have.

Every other week, we're bidding on projects. And when we are winning a contract, then we need to question ourselves, do we have the right capacity for -- in 2 years in time, then it's triggering decision. Then this is why we've been announcing the third expansion of AZUL might not be the last one.

Great. Understood. One last one for me. You previously identified that medical imaging is a pretty promising catalyst. I think we chat about it in the call a bit earlier here. Can you just maybe provide a quick update on the commercialization time line for the detectors? Is it still 2027?

Yes. Well, we have now one customer who is manufacturing PCBs at industrial scale. What we expect is later this year and starting next year, you will have more than one customer doing it. Then the demand will be increasing. We will play an important role. We're not the only one we're competing against China, but we will play an important role in securing the supply chain for these new products.

And that's something we've been developing for many, many years. Then I think the change is happening. We see the industry moving from scintillators to photon counting detectors. It takes time. But when it's done, it's going to be there for a long period of time.

Your next question comes from Baltej Sidhu from National Bank.

Just a quick one for me. Just given we've spoken about the cadence of contribution from the recent U.S. government investment to expand domestic germanium refining. And appreciating that it's still early days, could you share any details on how we should think about the CapEx deployment cadence?

Okay. The CapEx deployment, essentially that grant pays for CapEx. That's what's behind it ultimately. It covers also some of our own development costs, our engineers' time [indiscernible] to that. The actual deployment -- if it's for modelizing him, again, keep in mind, it's all backed up by grant, it's for your model.

It's to anticipate the business that will come out of it by default, there's a little bit of CapEx in the first year, but most of it comes in, in the second and third year by default because what's behind it is for us to finalize developing the processes and put the capabilities and capacity in place to treat various feeds that contain germanium, where by default, we will start with the easier feed and then more complex feed and even more complex feed and keep towards the end, like the real complex done, okay?

So the CapEx will also be linked to the complexity of the feeds in time. So it's going to be gradual with the most important CapEx to be realized somewhere in the middle of the project by default. But again, if your question is around helping you to modalize CapEx, there's a grant behind it.

Yes, yes. No, I was just looking at kind of backing into the cadence of the realization for that.

And there are no further questions at this time. I will turn the call back over to Richard Perron for closing remarks.

Okay. Well, we would like to thank you all for joining us this morning, and we wish you a great day.

Thank you.

Thank you.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

[Foreign Language] Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the 5N Plus Inc. Third Quarter 2025 Results Conference Call. [Operator Instructions]

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

Good morning, everyone, and thank you for joining us for our Q3 2025 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 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 discussion and analysis of 2024 dated February 25, 2025, 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 discussion and analysis.

I would now turn the conference call over to Gervais.

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 ship increased volumes to our key strategic customer under the terms of the expanded 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 2025-2026 period, with a further 25% increase expected over the subsequent 2-year term.

Our teams in Montreal and in 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. AZUR's revenues increased 43% compared to the same period last year. We have a robust long-term project pipeline firmly in place. At our Heilbronn 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 thin-film 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 and 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 Richard, who, as we announced last week, was appointed President on November 1 and will succeed me as CEO at the end of May. Having worked closely with Richard over the past 5 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 a time of strong momentum.

We believe this positions 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 the new role of Executive Chair upon 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.

Good morning, everyone, and thank you, Gervais, 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 5N Plus into its next chapter. I have a strong foundation and a clear strategy and a great team. I also look forward to continuing to work closely with Gervais and the rest of the Board to keep 5N Plus on its path for growth.

On 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 $104.9 million and marking a 10-year high, while year-to-date revenue reached $289.1 million. We 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 $38.7 million and came in at 36.9% of sales. Adjusted gross margin year-to-date was $102.1 million and 35.3% of sales. We also generated our highest adjusted EBITDA, which increased by 86% to a record $29.1 million in Q3 and grew to $74 million 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 $75.2 million compared to $53 million in Q3 last year. Year-to-date revenue was $209.2 million compared to $150.5 million last year. Adjusted gross margin 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.

Adjusted EBITDA increased by 120% to reach $19.2 million in Q3 and year-to-date $24.5 million -- increased by $24.5 million to $55.8 million. Backlog for Specialty Semiconductors was maxed out at 365 days of annualized revenue as per our definition. However, the effective backlog in reality surpassed the next 12 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 -- input costs. Segment revenue was $29.7 million in Q3 compared to $25.9 million in Q3 last year, where year-to-date revenue was $79.9 million compared to $68 million 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 $13.3 million. Adjusted EBITDA year-to-date increased by $9 million to $27.4 million. Backlog for Performance Materials was 104 days, 23 days lower than on June. Combined with Specialty Semiconductors, this bring our consolidated backlog to 311 days of annualized revenue at quarter end, 14 days higher than in the previous quarter.

Looking now at our financial position. Net debt was once again maintained at a low level of $63.3 million. This represents a decrease of $26.8 million 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 a preference for the U.S., but we will take the time needed to find the right fit. In 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 million to $70 million to a new range of $85 million to $90 million. 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 of next year.

Looking ahead, we remain prudent 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 solidifying our leadership in key markets through the end of 2025 and into 2026.

That concludes our formal remarks. I will now turn the call back over to the operator for the Q&A session with financial analysts.

[Operator Instructions] Your first question comes from Amr Ezzat with Ventum Capital Markets.

Congrats on the outstanding quarter.

Thanks.

Yes, 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.

Thank you.

On to that outstanding quarter, Performance Materials, like 53% gross margin just blew my mind. You noted in the MD&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?

The most -- if you have to weigh 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.

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 like the new sort of bands? Or how do I think of that?

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 or the average performance of the first 2 quarters going forward, which still represent a fairly high gross margin.

Yes, indeed. Okay. Then on your updated 2025 EBITDA guidance of $85 million to $90 million, 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?

Well, there's a factor that remains under Performance Materials. Typically, if you leave aside the pricing over the metal cost, volume tends to be lower in the second half, and it's in Q4 that it occurs the most, okay? It has the biggest impact from a seasonality perspective. For Specialty Semiconductors, the volume is definitely better than in previous periods in 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 announced 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 2026 in perfect shape.

Okay. Understood. So that's just like...

So, we are moving -- we're going to be moving maintenance schedule essentially and other projects forward.

In order to meet the growing demand for 2026, you need to be -- we need to make sure that all the equipment are in great shape.

Understood. So, you're moving forward some OpEx from 2026 into Q4?

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 will be most likely realized starting in the new year.

Yes. Understood. And ensuring that, you've got a good first year as President and CEO. Then maybe one last one for me. On the First Solar conference call, an announcement, they were speaking about their new 3.7 gigawatt facility in the U.S. And like, obviously, the theme 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 5N?

Or is it just part of the agreement you guys just announced or the expanded agreement, I should say, that you guys announced last quarter? And if it is part of the agreement you announced last quarter, is there a potential for you guys to start to see some like pull forward of volumes into the second half of 2026 as this facility comes online? Maybe just some of your thoughts on that.

Well 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 are 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 Solar. 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 '25 and '26 and an additional 25% for '27 and '28.

But as Gervais 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.

Congratulations again to both of you.

Thank you.

Thanks.

Your next question comes from Michael Glen with Raymond James.

I'll just echo Amr's comments. Congratulations on the promotion and for all of the progress made at 5N Plus since you stepped into the role as well.

Thanks.

Thanks.

Just to come back to the pricing dynamic on business. Is it natural to think, or is there a scenario where if you're getting this better pricing on the business, you will have to eventually flow that through to some of the end customers in the market?

No, no, no. I'm not sure I understand your question, but 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.

So, you're able to hold on to whatever that input cost pricing is?

Yes, yes. That gets repriced every period or -- yes.

And moving over to some of the critical materials that you're involved with on the AZUR 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.

Well, in terms of germanium, there's definitely no problem on availability. On pricing, though, it costs more. And you've seen the germanium price increase over 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. But in terms of availability, we have a strategy to capture all the tellurium available outside of China.

And just circling in on germanium, we do get a lot of 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...

No. Without disclosing names, our germanium is coming from Canada, coming from Europe and some small volume from the U.S.

Germanium is not exclusive to China. Germanium comes from zinc and coal operations. So, 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 others.

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 Kennecott Utah Copper. They're not valorizing their germanium so far.

Interesting. And just one final. Just with AZUR, can you speak to what we should think about in terms of margin tailwinds at AZUR? Is there still -- for '26, '27, is there still pricing tailwinds, mix tailwinds? Just trying to think about what's still there from a margin expansion perspective.

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 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.

Next question comes from Michael Doumet with National Bank.

Again, congratulations on the results and obviously, congratulations on the [indiscernible]. The first question I had, and it really, I guess, leads up to the previous one. I was wondering if there was any change or evolution in how the company is currently securing China 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 the business side versus prior years and whether or not that's leading to [indiscernible] margins?

Look, we have not changed anything. We're just -- we just have, as you know, adjusted 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 that position where we can source business 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 to rely on us for that key material.

And then I guess turning to AZUR, 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% [indiscernible].

The way we work, and we've been super consistent on that, 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 AZUR, 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 contracts for '27, '28. We already have some volume after '28 already secured. Then once we're going to feel comfortable enough, we will look at further increasing the capacity.

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

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 going to be a quality asset in the material technology field and/or specialty chemical field that ideally has those 3 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 clients will be one that is referred to as a partnership rather than making and trying to sell stuff.

Your next question comes from Nick Boychuk with Cormark Securities.

On the AZUR 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 Heilbronn facility higher? And at that point, what the next step would look like?

Well, at Heilbronn, I think we have the space to further grow the capacity. Then I think we're not limited by the physical space of the Heilbronn facility. It will most likely -- the expansion will most likely happen in Germany to take on the benefit of having all the experts located at Heilbronn. Then it's really a matter of making sure that we have all the contracts on hand before further increasing the capacity.

We believe we still have a few rounds of capacity expansions. We're working the layout and using the available space.

Got it. And then switching to margins within the specialty 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?

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.

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 and advancing as you'd like to see?

Well, in the case of medical imaging, I think we're collaborating with different customers. We've been developing products with them together with the different customers. They are now -- they've been testing it. They've been producing their spect 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 St. 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 2 and 3.

Yes. How it's going to evolve most likely will go from spot business to long-term contracts.

And is that the same kind of picture that we're seeing with some of the long-duration storage and defense applications?

Yes, most likely, similar scenario.

Similar scenario as well, yes.

[Operator Instructions] Your next question comes from Frederic Tremblay with Desjardins.

I wanted to ask on AZUR, 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?

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 exceeding 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.

Great. And then obviously, in terrestrial, we know about your key customer there. But for AZUR, how is the customer concentration landscape? Is the customer base pretty broad? Or is there 1 or 2 that are the bulk of the business? Maybe just a reminder on that would be helpful.

The way it works is we're earning contracts. Then every year, if you look at our top 5 customers, there's a lot of movement. It's not the same 5 customers year after year. We do have one, which has been there for the last 2 years because we developed the product together, then they are already -- they are always on the top 5. But the remaining list is quite in motion depending on the contract we earn. Then if I look at the year to come, we will see again some changes on the top 5 list.

So, you have somewhere between 5 and 10 really active clients. And from one year to another, 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.

Understood. And then lastly, just on CapEx, maybe as we look to next year, I 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 AZUR?

It's most likely going to be at a similar level than this year.

There are no further questions at this time. I will now turn the call over to Mr. Perron for closing remarks.

Okay. Well, we would like to thank you all for joining us this morning, and we wish you all a good day.

Thank you.

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