Neo Performance Materials Inc. – 3Q 2026 Earnings Call - DEFI TECHNOLOGIES INC

Good morning and welcome to the NEO Performance Materials 3rd Quarter 2026 Earnings Conference Call. For opening remarks and introductions, let me turn the call over to Jim Fitzpatrick, Senior Vice President of Investor Relations and Communications for NEO. Jim, please proceed. Thank you, Operator, and good day, everyone. Today's call is being recorded. A replay will be available starting tomorrow in the Investor Center on our website at neomaterials.com. Our call will be accompanied by a live webcast presentation. If you're joining us online, the slides will advance automatically as we progress through the discussion. You can also download a copy of the presentation from our website to follow along or reference afterward. On today's call are Raheem Suleiman, NEO's President and Chief Executive Officer, and Jonathan Baksh, NIO's Executive Vice President and chief financial officer. Before we begin, I want to remind listeners that some of the information discussed today will include forward-looking statements within the meaning of applicable securities laws. These statements reflect current expectations but involve risks and uncertainties that may cause actual results to differ materially. We refer you to our filings on CDAR and the Investors section of our website for a discussion of these risks. Financial figures are presented in U.S. dollars unless otherwise stated and will reference certain non-IFRS financial measures. Reconciliations are available in our financial statements and MD&A. I'll now turn the call over to Raheem Suleiman, President and CEO of NEO. Good morning, everyone, and thank you for joining us today. The third quarter was another excellent one for NIO, and it caps an exceptional first nine months of 2026. There were several significant milestones across three areas, financial and operational outcomes, short-term tactical execution, and mid-term strategic objectives. Seldom does one see such positive momentum across all three dimensions simultaneously. Let me start with the financial and operational updates. Adjusted EBITDA in the quarter was $47 million, up nearly 150% from $19 million in the third quarter of last year. Year-to-date, adjusted EBITda is $140 million, up 150% from $55 million in the first nine months of 2025. Demand remains robust across our portfolio, reflecting the durable, long-term trends shaping the market for rarest magnetics and critical materials. Jonathan will cover each of the business units in more detail, so I'll just comment that a lot of attention has been focused on the robust earnings of our rare metals business unit, but all three business units are delivering growth, operational improvements, and new business opportunities. From an adjusted EBITDA perspective, Magnet Clench is also up 25% and Chemicals and Oxides up close to 70% from prior year. Today, we're again raising our guidance as we now expect full-year 2026 adjusted EBITA of $180 to $185 million, up from our prior range of $140 to $150 million, and up from our 2025 full-year actual adjusted EBITDA result of 76 months. This increase reflects our strong operating performance through the first nine months of the year, a healthy demand outlook, sustained pricing, and continued operating efficiencies through the business. Moving to slide four. On the short-term tactical execution side, in September we achieved the milestone that the industry has been watching for, commercial production at our European magnet facility. We are now shipping volumes of rigorous centered magnets to a European tier one traction motor customer going into the electric vehicle market in Europe. Reaching this commercial production milestone was another example of our ability to consistently deliver on our commitments to our customers and to the market. We built one of the most capital-efficient and cost-effective rare-earth magnetic facilities outside of China, and in one of its shortest timeframes. We delivered sintered magnets just three years after initially breaking ground. And this is a large-volume, multi-year traction motor program going into one of our largest and fastest-growing end markets for rare-earth magnetics. This is the type of foundation that great magnet factories need to be built on. This is a testament to NIO's 30 years of experience in rare earth magnetics, our established operating experience as an industrial supplier, and the capabilities of our dedicated team. I'm proud to be part of such a talented team and grateful to our long-standing customers for their continued support and business. Every automotive magnet program moves through three stages – development and sampling, full automotive qualification, and then commercial production. We remain on track to launch two to three customer programs into commercial production by the end of this year. The first of those is now in production. Customer demand is also broadening well beyond automotive. We're in active discussions with customers across industrial, robotics, wind, data centers, and clean energy applications, reflecting growing demand for qualified magnet supply in Europe and in the United States. Looking further ahead, our long-term roadmap continues to target 20,000 tonnes of annual production, which brings us to the next set of key achievements in the quarter, strategic accomplishments. Moving to slide 5. Commercial production at a European magnet facility is not only a critical milestone, but it is also a foundation. It demonstrates that we can make automotive-qualified magnets in Europe for the most demanding customers, and it dovetails directly into our strategy, building the most vertically integrated magnetics value chain in Europe. During the quarter, NIO's European Integrated Magnet Project was selected under the European Union's Innovation Fund for a grant of up to €126 million, or approximately US$140 million. U.S. dollars. This is a non-repayable, non-dilutive government grant following our successful application, which was selected from hundreds of clean technology projects submitted to the Innovation Fund. Projects are assessed by independent experts on their degree of innovation, emissions reduction potential, maturity, scalability, and cost efficiency. Our project as four key elements. First, separation. SILMET 2.0 is expected to triple the total light and heavy rare earth separation capacity of our existing separation facility in Estonia. We'll be able to process new and higher value feedstock from multiple sources. We expect SILT 2.2 to be more efficient with new process technologies and chemistries designed to reduce energy and steam consumption by up to 30% compared with an equivalently sized existing facility, lowering both operating costs and CO2 emissions. By processing different feedstocks, SOMET 2.0 is expected to produce a broader range of higher value products, including the heavy rare earths dysprosium and terbium, as well as samarium, yttrium, and gadolidium at magnetic, medical, and electronic grade purity lines. These are products, technologies, and customers that we have already developed. Second is metalization. This involves converting light and heavy rare earth oxides into metals. This is a step that connects our separation business to our magnet business. This addition will be built on our knowledge of rare earth magnetic materials, making metals in our rare metal segment, as well as our existing light rare earth metalization capabilities. This process will allow NEO to capture cost efficiencies from co-location within our European separation and permanent magnet facilities. The third element of the European Integrated Magnet Project is the expansion of our European Magnet Facility, which we've been referring to as Phase 1b. This would take the facility from approximately 2,000 tons today to approximately 5,000 tonnes of namely block capacity per year and as part of the grant criteria at least one-third of the 3 000 tons of additional capacity would be allocated to offshore wind farms in the eu as we've discussed before we designed our european magnet facility from the outset as a 5 000 ton operation phase 1a built the foundation and phase 1b completes it and underpinning the separation metalization and phase one b magnets his new digital infrastructure digital twins and artificial intelligence would run across separation metalization and magnet manufacturing learning from our existing plant data and our operators expertise to predict quality optimized resources translate validated insights into process controls overall this project reinforces neil's leadership role as one of the few companies with integrated capabilities across separation metals and magnets commercial production in september proved our magnet capability in europe decades of experience prove our separation knowledge existing infrastructure supports metalization and an actual operating experience with years of data collection capabilities will prove our digital transformation taken together These are the core advantages and unique capabilities of NEO as an established and experienced operator in the rare earth magnetic supply chain. NEO expects the total capex of this project to be approximately $450 million. We'll update our capital cost estimates as planning and engineering progress and we expect the project to take about three years to complete in line with both the volume growth from phase 1a and the availability of additional feedstock. Moving to slide six. With several growth opportunities ahead of us, including phase 1B, it's worth addressing how we plan to finance. NEO is a profitable, established business today, and our future capital needs are tied to growth, largely in areas where we already operate successfully. In other words, this is capital to grow, not capital to survive. This speaks to the relevance of the $140 million grant from the Innovation Fund, and also to the designation of CILMET 2.0 as a strategic project by the European Commission. The designation of cilmet 2. 0 as a Strategic Project in the EU is important because it brings priority administrative treatment, accelerated permitting, and access to current and future EU funding and debt financing. We announced grant funding from the Innovation Fund. There are also in place and in development a variety of additional EU debt financing and funding opportunities for critical materials projects, and of particular importance for projects designated as strategic. Under its RE-Source EU plan, the European Commission has set aside up to €3 billion or roughly $3.5 billion to accelerate critical raw material projects, including through the European Investment Bank lending. Looking further ahead, the EU Parliament has also backed an additional €2 billion for Critical Material Projects Fund under the EU's 2028-2034 budget, which is currently being negotiated. We will provide updates in the future regarding the combination of grant, debt, and equity strategies to fund our future growth. Moving to slide 7. For SILNET 2.0 and our European Magnet business, we need new, diversified, and higher-value sources of rare earths, particularly heavy rare earth. Two partnerships we announced during the quarter are important steps towards securing that supply. First, in August, we signed a binding term sheet with Carister, a French rare earth technology company building a recycling and heavy rare separation facility in France. The collaboration works in three ways. Carister will supply separated dysprosium and terbium oxides for our European magnet facility. We will send our magnetic swerve scrap to Carister for recycling and receive the recovered NDPR, dysprassium and terbian oxides back, closing the lube and keeping those valuable rare earths in our supply chain, and we may toll process any source of Carister's mixed rare earth carbonate at SILMET. Second, in September, we signed an MOU with Rainbow Rare Earths for its project in South Africa. This project is designed to recover rare earth from stockpiled fossil gypsum, a byproduct of previous mine production. Because this byproduct material is already at the surface, the project requires no new mining and has the potential to reach the market quickly and competitively. Under the MOU, NEO would receive offtake rights to 40% of the project's annual NDPR oxide production and 65% of its mixed heavy rare earth carbonate, which contains dysphrosium and terbium. In return, we would provide design input and technical support for the project's solvent extraction circuit to help it achieve its targeted product mix and purity. Both of these agreements are examples of industry participants working together to create a more solid and sound infrastructure for the whole industry to grow upon. Demand for rare earth magnets from secure, diversified sources is large and growing rapidly. We are proud to be working alongside industry participants to build supply chains that can keep pace with this demand. Carister and Rainbow are just two of the agreements we have across the broader feedstock landscape. As an established separator, NIO is well positioned to work with many of the new producers now developing mines and processing operations. We've signed several other MOUs with feedstock suppliers and are in active discussions with many more, offering our technical expertise and a reliable customer further mixed rare earth carbonates, oxides, or metals. That gives us both integration and flexibility. Moving to slide eight. Stepping back from the quarter, I'd like to spend a few minutes on the fundamentals of our business and why we remain confident in the long-term demand for the materials we make. The structural driver's demand for rare earth magnets and critical materials are not changing. The electrification of transportation, the automation of industry, the build-out of AI data centers, the rise of robotics and drones, and the continued expansion of clean energy. Each of these trends requires more rare earth magnets and more specialty materials, and increasingly, customers need them to come from secure, diversified, and localized supply chains. That combination of growing demand and the need for diversified global supply is exactly where NIO is positioned, across separation, metals, bonded and sintered magnets, and rare metals. When we think about growth in our end markets, we look at it across two dimensions. First, the growth of the market themselves. As I mentioned, these markets are tied to future-facing energy-saving technologies. The long-term direction is clear. Even if we hear about individual markets growing faster or slower than expected in any given year. In Europe, demand is being driven by vehicle electrification, wind farms, and robotics. In North America, data centers, drones, and other advanced technologies are leading the way. That growth is spread across multiple markets, applications, and customers. And just as we talk about the importance of diversified supply, our end markets are diversified too, so they are not dependent on any single macro trend, any single end market, or any single customer. Second, we think about the market in terms of the concepts around diversity and security of supply. Take the European market for permanent magnets as an example. Today, Europe imports about 25,000 tons of permanent magnets a year, and this continues to grow each year. In other words, this isn't a market that we're waiting to develop. The demand already exists and customers need secure, diversified sources of supply. Europe imports more than 90% of those 25,000 tons from a single jurisdiction outside of Europe. Customers and end markets all recognize the need for supply chain resilience and security. NIO has just started the production of the largest permanent magnet facility in Europe with 2,000 tonnes of capacity and plans to expand to 5,000 tons, and that is still only a fraction of what's needed to build diversified and secured supply chains, especially as that 25,000 tons continues to grow rapidly. In our rare metals business, demand is being driven by aerospace, power generation, data centers, magnets, and semiconductors. Gas turbine orders have more than doubled over the past year, supported in part by data center power demand, and jet engines deliveries rose close to 20% in the last 12 months. Haffnium, tantalum, and rhenium are critical to the superalloys used in jet engines and gas turbines, and gallium is essential to the semiconductors behind AI, telecommunications, power electronics, and Gallium is used in rare magnets. At the same time, supply remains tight and concentrated. Again, there is existing and growing demand in an area requiring specialized technical expertise in a constrained supply environment. That drives higher demand and higher pricing. This is ultimately NIO's investment thesis, an established profitable business with customers, technology, and supply chain integration in one of the fastest growing and most strategic segments of the critical materials market. With that, I'll turn the call over to Jonathan to walk through the financial results in more detail. Thank you, and good morning, everyone. Moving to slide nine, as Rahim highlighted, NIO delivered an excellent third quarter. Revenue for the quarter was $194 million, a nearly 60% increase from the third quarter of last year. Adjusted EBITDA was $47 million, up almost 150% year-over-year. Adjusting earnings per share was $0.40 compared to $0,14 per share in the same quarter last year. This performance reflects healthy demand, favorable pricing, and operating discipline across the portfolio. Moving to slide 10 and taking a closer look at our segments. MagnetQuench delivered another strong quarter, led by record bonded magnet volumes and record powder volumes for traction motor applications. Revenue increased 42% year over year to $79 million. Demand remained healthy across a number of applications, particularly in industrial and automotive applications, as well as advanced computing infrastructure. Bonded magnet volumes rose 17% year-over-year, led by server cooling fan applications and AI data centers. Bonded powder volumes for traction motors reached a quarterly record as a new vehicle model year ramped up. Magnet Quench's adjusted EBITDA for the quarter was $10.1 million, a nearly 25% improvement year-ever-year. These results reflect a combination of strong volumes, disciplined cost management, and sustained strength in rare earth prices. Moving to slide 11. Chemicals and oxides also delivered a solid quarter. Adjusted EBITDA was $6.8 million, up almost 70% from the third quarter of last year. These results reflect solid performance in emission catalysts as well as favorable rare earth pricing. Our water treatment business continues to advance its new process enhancement technology that we shared last quarter as it builds towards broader commercial adoption. As part of our European Integrated Magnet Project, SILMIT is starting a planned transition away from its legacy feed sources towards new and higher-value feedstock for multiple sources. As partof this transition, certain portions of the facility will be temporarily idled while existing lines are reconfigured and prepared for new feed sources. These new higher-value feedstocks are expected to fundamentally improve the economics of SILMIT based on higher utilization, a stronger product mix, and greater stability of supply for customers. Moving to slide 12, our rare metals segment had another outstanding quarter with revenue of $88 million up almost 125% and adjusted EBITDA of $35 million up over 200% year-over-year. These results were driven by robust volumes amid tight global supply, as well as sustained elevated pricing. These market conditions reflect ongoing geopolitical risk and increased prioritization of secure access to critical materials across end markets, including aerospace, industrial gas turbines, and semiconductors. Our hafnium business continued to benefit from favorable pricing, with spot volumes holding steady. Gallium had its best quarter ever, delivering record gross profit as prices continued to climb on export restrictions and tightening global supply. Rennium also posted record quarterly results driven by favorable pricing and solid demand from super alloy applications. Moving to slide 13. On the balance sheet, we ended the quarter with $78 million in cash and $143 million in total debt, and we remain in a healthy financial position. As we saw last quarter, inventory levels increased primarily due to low-cost hafnium scrap materials purchased, strategic inventory for our magnet quench business, as well as ramp-up of our European-centered magnet business, which is now in commercial production. As Rahim mentioned, we're raising our 2026 adjusted EBITDA guidance to $180 million to $185 million, up from our prior range of $140 to $150 million. At the midpoint, that's 26% above our prior guidance and roughly 2.4 times our full year 2025 adjusted EBITDA of $76 million. This increase reflects our year-to-date results, healthy demand across the business, firm pricing, as well as higher contracted hafnium volumes for the fourth quarter. With that, I'll turn the call back to Rahim for closing remarks. Thank you, Jonathan. To summarize, this was an outstanding quarter for NEAP. building on the momentum we established in the first half of the year. As you heard today, our results reflect healthy demand across all three segments, disciplined execution, and a favorable pricing environment. Looking ahead, we see significant opportunities for future growth. That's why we're investing in the capacity and capabilities that NIO needs to meet accelerating demand for permanent magnets and critical materials. Three long-term pillars continue to support our growth. First, the sustained demand from a number of high-growth sectors. Second, a global push to diversify critical material supply chains and reduce reliance on concentrated sources. And third, NEO's competitive advantage, built on 30 years of operating experience, a technical depth in rare earth magnetics and specialty materials, a combination that is difficult to replicate. Thank you all for joining us this morning. I'll now turn the call back to the operator for questions. Thank you, Mr. Solomon. Ladies and gentlemen, we now begin the question and answer session. If you would like to ask a question, please press star followed by number one on your telephone keypad. If your question has been answered, you would actually withdraw from the queue, please press start followed by the number two. And if you're using a speakerphone, please lift your hands before pressing any keys. One moment, please. I will compile the roster. So, your first question comes from Nick Giles with The O'Reilly. Please go ahead. Nick Gillespie Yeah. Thank you, operator. Good morning, everyone. Raheem and Jonathan, I want to congratulate you on yet another record quarter across multiple fronts here. It's good to see the selection for the EU Innovation Fund, and my question was ultimately, how should we think about the potential earnings uplift that you could unlock from the separation expansion and, uh, metalization as well, kind of separating it from phase one B at Narva. Thank you. Yeah. Thanks, Nick. Um, great question. I mean, I think that in time we'll give, um, more guidance and more information on, on the specifics of, of the earnings opportunities. But what I would say, uh. Is this today, you know, we we've given general ranges on where we thought phase one A, uh would land in terms of, you, know, when it's filled the 15 to 20 million of EBITDA. We've talked about phase 1B will be a factor much greater than that, given that you're dealing with operating leverage, you're doing with newer customer contracts, you're getting with more experience in execution. So our views on the phase 1b outlook remain exactly consistent with the things that we've talked already. And then you add to that the separation capability. And there's a couple of dynamics in the separation capability that really matter. One is today, we're running substantially a light-rare separation facility, and we're running it at about 50% capacity, and мы're running it with a feedstock whose basket value, whose underlying composition is not, let's say, market-leading in that environment. As we go forward, we see better compositions in feedstock, more volume composition in feed stock, not only to our existing capacity, but to our expanded capacity, and then adding heavy-rare separation on top of that. It is an order of magnitude greater than what SOMET 1.0 can do today. We'll give specific kind of information on how we see that guidance unfolding over time, but I think it's a significant and material change to the existing earnings profile of the company. No, that's great to hear and look forward to those future updates. My second question was, you know, just around the rare metals segment, you obviously, earnings continue to be very robust there, and just was looking for updated color around opportunities to expand either Haskingham or Gallium production, you know, what the capital intensity might be, the sources of feedstock, and if you could be, you know, recipient of any government support on that front. Thank you. That makes sense. So you're right. It's incredibly robust. It continues to be robust. On expansion of those facilities, I think that both of those facilities have opportunities to run more volume in their existing footprint and with existing capacity in place. But I think in particular, especially for something like Hafnium, the step for us would be to increase the scope of the scrap and the material that we can receive. So separating the two between the production volumes and the facilities, I think there's plenty of opportunity to grow. So there's no CapEx really needed for continued growth in that area. There's obviously plenty of customer demand. The dynamic is accessing more scrap sources. And we are making investments primarily in technology, less so in actual CapEx. These are not big CapEx numbers for us. But it is adding to our technology to be able to separate more sources of scrap. So we're continuing to have dialogue with more sources of scrap around the world and then opening our window of what type of material we can receive and process. And I think both of those are moving along extremely well. I think you'll see outcomes from that process probably later in 27 and then into 28. Okay, fantastic. Well, congrats again, guys. And thanks for taking my questions. Thanks very much. Thank you. Your next question comes from Nick Wojciech with ATB Cormac, please go ahead. Thanks, good morning guys. I want to stick on the vertical integration in this EU innovation fund grant. The incremental capital spend of 400 million euros is obviously a quantum shift from what we were expecting for phase one B. And I appreciate Rahim your comments that the better mixed volumes is that are going to be a magnitude of revenue. But I'm curious the visibility specifically around either offtake agreements, partnerships, agreement that you're going to see that feedstock or that it has to come through to you i recognize that 3 000 of the metric tons um from phase 1b a third of that goes to offshore wind do you have a similar arrangement for these other things related to the metalization um it's i want that extra color please yeah so a great question um and maybe i'll start from the back and go forward so we actually have a ton of visibility in terms of end product um for the permanent magnet facility Right. I mean, that's just continuing to grow into the into the customers and then markets that we've already talked about. As I've talked about, the size of that market is enormous and like the existing size. Right. Not we're not talking about let's count on a bunch of reshoring to happen. Let's count out a bunch OF motor manufacturers to start new production in the jurisdiction. The jurisdiction is already twenty five thousand tons and it's the home of actuator development for robotics. It's the home of wind farm development. So it's going to continue to grow. So from an end market perspective, we can never catch the demand. So on the magnet side, we actually have no kind of concern about finding a home for the material that we will eventually turn into magnets. Stepping back one side, the metallization will be sized appropriately for a partial supply to the magnet quench business unit, which is to say that we fundamentally believe and diversified supply chains and optionality, and we'll actually continue to operate that way. So a portion of our incoming material will come from ourselves, but a portion of our upcoming material will still come from third parties. That is what we fundamentally believe in terms of robustness of a supply chain. So then you step back one further to that into separation. There's obviously homes for all the separated material because, I mean, MagnaQuench alone could consume all the material, but we will also have internal and external customers. We already have external customers. I mean, we've been selling heavy rare earths for decades. We have the largest kind of sales force and most experienced knowledge base of where the customers are for all the heavy rare. So we have, again, no concern on moving the material that we ultimately separate. The only open switch, frankly, is feedstock, right? And that is, there are, so first of all, understanding that we need to break feedstock into two. It's not a limitation in any way to MagnaQuench because there's a whole bunch of other mines that will be developing separators and there will be a bunch of oxides become available. So MagnaQuench can just continue to buy from those parties. The only open switch is whether SOMET, the separation portion, can find feedstock. And obviously, there's all bunch of mines that are coming to market and there are only four or five qualified separators in the world outside of China. Some of these mines will choose and want to separate themselves. Some of these mines will choose to have separation partners. We've just announced two MOUs just in this quarter. We have several from the past, and I assure you we're talking to several others in terms of that feedstock. So I think it's going to work out perfectly great. In fact, I mean, and we have a balance. We hear what the various resource companies are talking about in terms of volumes and timing. And then we plan our business and we're a little bit more conservative on timing to ensure that the timing would be suitable for our separation facility. We can build faster and execute faster. So we wait until we have a high level of confidence. And one of the things that we will be building in to the separation capability is the ability to process multiple feeds from multiple sources. So there's different processes that one puts in place, different ways that you balance the cascades later on in the manufacturing process. All of those things are envisioned and planned for the SILMET 2.0 build-out. In fact, even what we internally call the Silmet 1.5 build-up, which is an interim step to allow us to produce and process more feedstocks. So I don't think we're worried at all about customers and markets from any of the step of the process. The only thing that needs more clarity, I think, is assurances around feedstock. and I think you've seen the progress we've made and you can track the progress of the various mines around the world. They are beginning to make progress and I think we will be a separator and a partner of choice for them. Okay, thanks. We'll wait to get a little bit more of that color as it develops over time. I guess moving to the bonded business within MagnaQuench, given the magnitude of this investment here you're making in Europe, have your thoughts around expanding capacity for any of the bonded other magnets or powders outside of China changed? And if so, what is the outlook that you have for that business now that it's really started to grow again with some of these emerging needs? Yeah, you're absolutely right. The market is growing tremendously. And, you know, I appreciate talking about bonded. I actually enjoy talking about bondage because people forget about that as an industry. It faces a greater concentration risk and that bonded is actually like 94% concentrated in a single jurisdiction and only 6% outside of that jurisdiction. So it faces an equivalent concentration risk. It faces the equivalent in terms of end markets, data centers, robots, drones, automotive, all those types of things require bond. It has a fundamental advantage in that it doesn't use the heavywares. It doesn't used DYTB. So there's no constraint in terms of NDPR, and it doesn't face the constraint that people are worried about in terms of DYTB. So we are continuing to grow that business, and we will be growing an outside, more geographic version of that footprint with more production outside of China. And I think you'll see announcements on both powders and magnets on that in due course. okay thanks thank you your next question comes from max hero with bmo capital markets please go ahead hey guys thanks for taking my question i just wanted to ask on the the rare metals side now with customers already booking into 2027 how much of your target volumes for for next year are already contracted and then any commentary you can give on how these contracts pricing is playing out how much is that spot versus maybe legacy pricing thanks hey hey max this is jonathan here uh so so yeah i think another you know great question so uh as we've talked about we've been booking contracts into 2027 for several months now i think if you if you look at our historical business, we would generally enter the new year with roughly 70% of our book of business for the following year contracted. We're basically on that pace, basically working towards what seems like it'll be a normal year for us where we'll enter 2027 with roughly 75% of the year. 70% percent of our, our book a business contracted for the coming year. When it comes to pricing, we still have a blended average price of, of historical and new contracts. Obviously all the new contracts we're booking are at representative prices at, at current market prices. But we still have a blended average of contracts that would have been booked, for example, in 2025 and earlier in 2026. So what you're seeing in our ASPs are a blended average of those. But all of the business we're booking now are at what you would say is representative market prices today. That's helpful, Collar. Thanks, Jonathan. On the magnet build out then, when we look at the three projects from the separation, metalization and magnets. Is there the potential to separate these out and phase them in order to better use internally generated cash flows versus tapping the market? Or are they required to happen in tandem as feedstock sources? So yeah, absolutely. We would phase them. But I mean, I think that so you break the phasing into two, right? So from a pragmatic perspective, One phases them because one drives them as individual projects with customers and dynamics and outlines, right? Which, you know, step back a few months and we talked about putting in the long lead item orders for some of the equipment necessary in Phase 1B. So clearly we've already started that journey and that journey will be phased entirely to tie with the demand requirements and the growth of Phase 1A. So, you Know, we'll make those decisions independently according to where the business profile exists. But I think we see the business profile, frankly, existing for all elements of the project. So we have the ability to phase them pragmatically. All three of them need to happen kind of sooner than later. But from a customer market perspective, sooner than later. From our perspective, it's about a regimented process of when is the right time and when do you have the right information to build out the engineering to keep your budgets and your timelines as you have defined them. And as you can see from our past, we're very particular on defining our timelines and defining our budgets for these major projects. And we've done every one of our projects on time and on budget. So I think that that's about the discipline there. In terms of the capital requirement, if we could phase them in terms of all the additional requirements, again, I think this is going to be customer-driven, market-driven and growth opportunity oriented. So we'll phase the capital requirements according to when we actually need them. you've seen that we don't just take excess cash to sit on the balance sheet with excess cash. We don't think that's a good use of shareholders' money. But we do think it's a Good Use of Shareholders' Money the moment that cash is being deployed in a project that's building. Every one of these have strong return on capital profiles, strong customer dynamics. They're in a technology that we're already comfortable with. So we have a very good assessment of profitability and belief in the projects. So I think it is more tied to us focusing on the right timelines to be working on the right things, and I think that the opportunities are immense. So whether we phase it out in terms of a capital requirement, I think that's secondary to phasing out in terms of above-market requirements. Thanks, Rahim. Thank you. Your next question comes from Ian Gillis with Stifel. Please go ahead. Morning, everyone. Morning, Ian. um as it pertains um to the inventory build in the quarter um is that largely due to your confidence in and around the hafnium outlook for i guess 4q and into next year um just given where contracting is and some of the prior comments you've made hey ian uh so short answer is yes the the primary build has continued to be in hafnim uh continuing to buy low-cost scrap, again, booking contracts into next year in anticipation of, you know, continued strong profitability. So short answer is that's part of it. The other part of it is obviously we're ramping the new centered magnet facility. So we do have inventory build there as well. I do expect we'll have, you know, likely continued inventory build into 4Q. And then I expect some normalization after that. Understood. And on the startup and transition costs, they took a step change higher this quarter, and while fully acknowledging it doesn't impact adjusted EBITDA, are you able to provide any insight on where you think those costs may be in 4Q and even 2027, just because it does matter from a cash conversion perspective? so separating the two i i think you'll see um look all the inventory that jonathan talked about us building here over the last year it's largely opportunistic um we are well positioned and well in the money on all of the inventory that we hold there are really strong margins available to us in the inventory that that we're holding so in terms of how that unwinds over time i think it does unwind levels over time and i think event starts generating a lot of cash to the other element of the startup costs to build the magnet facility in Europe. Yeah, they're larger this quarter, obviously. Frankly, I think they'll be larger in Q4 and into 27. We are structurally building this facility and preparing this facility for 2,000 tons and 5,000 tons. We are hiring the engineering and the back office and all of those types of support quality and all those things for the number of programs that we're launching. So it's a bit of an odd dynamic where our cost structure is not actually reflective of the current operating dynamic of the business, but it speaks to our confidence level. Our ability, we can change it any time that we want, but our view right now is build more of the institutional capacity because more and more business is coming, more and more opportunities exist. So while we're ramping production here for 27, I think we'll still have low volumes relative to the size of the infrastructure that we've put in place. Maybe just the one thing I would add is I think everything aligned that the general trend is the ramp costs will increase before they decrease. I will say there were some one-time charges, some one time ramp items that did exist in the quarter. So I think that'll also normalize into 4Q. But generally, the trends Rahim outlined are absolutely i'm spot on okay and then as we think about 27 are you able to maybe help outline um what sort of working capital you think you may have to consume or release i know obviously part of that's dependent on revenue growth and the like and perhaps where you think capex may shake out just given the various opportunities um heading into next year yeah so i do so like i mentioned on inventory i do think it's the case that it it increases through 4q i think we hold steady from there but i do expect some amount of unwind obviously this is dynamic and i think every every quarter we enter the year with some level of expectation but but given prices given our contracting things change i would say generally it's it's a hold of inventory with some amount of unwind, right? Now, when you look at CapEx, if you kind of just kind of work backwards, we generally talked about sustaining CapEx being in that six to $10 million range. So that's kind of your base starting point. Obviously, CapEx spend for phase one A is behind us. And then when it comes to growth CapEx where it's basically going to be when do we initiate or when do we start providing clarity on timing of Phase 1B. We have started expedited equipment purchases for Phase 1D, so that's already starting to flow through our cash flow, so there will be some equipment purchases, but we're talking about order of magnitude, tens of millions of dollars. The real trigger will be when do we start Phase 1b, and I think that's something that will add clarity on in the coming months. That's it for me. I'll leave it there. Thanks very much for the detail. Thanks, Ian. Thank you, Ian, your follow-up question comes from Nick B. Riley, please go ahead. Yeah, thanks for taking my follow- up, I know it doesn't draw as much attention, but I did want to ask about the water treatment business, I saw that you expanded into new markets, and so I was hoping you could just remind us of kind of the overall TAM there as you see it today and what kind of revenue growth in that business we should be penciling in as we look to 2027 and beyond? Thanks. Yeah, thanks for the question, Nick. I'm really impressed with the opportunity set that exists within the water treatment universe. It's really important kind of within the NEO portfolio to be able to move all different kinds of material that you get separated, right? So everybody generally in the market talks about the four magnetics. But of course, NIO talks about a whole series of other materials as well, both on the light side and on the heavy side. And water treatment, and there's a few other products that we have that are outlets for these types of products and programs. So our water treatment business continues to grow. Although I would say it was a relatively small growth, it's still a relatively small business in the year 2026. We do expect kind of double-digit growth in that business as we continue to move forward. But I would suggest it's probably still a smallish business in 27. And then, you know, one of the elements will be, you know, as we also separate more material, then that business will grow with that capabilities as well. But, I would say in the short term in 26 and 27, it is still a smallish business. It is more of an opportunistic business of we can move more material and we have more outlets for material. And, then it is what I'd say from an R&D in a product suite perspective, a very important concept of us being in the market and being able to move materials that are not the magnetic materials. But in the year 26 and 27, from an EBITDA contribution and even from a revenue contribution perspective, there are still small numbers. Makes sense. Okay. Thanks again, guys. Thank you, Nick and everyone. That concludes the question and answer session. Ladies and gentlemen, And this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.