5N Plus (TSE:VNP) reported higher third-quarter revenue and adjusted EBITDA, driven by increased volumes across its Specialty Semiconductors and Performance Materials segments, while management said it is advancing capacity projects in the U.S. and Germany to address demand in defense, space solar and other markets.
Revenue rose 30% year over year to $136.4 million in the third quarter, while adjusted EBITDA increased 7% to $31.1 million. For the first nine months of 2026, revenue increased 30% to $376.6 million and adjusted EBITDA rose 17% to $86.8 million.
Net earnings were $12.3 million, or $0.14 per share, compared with $18.2 million, or $0.20 per share, in the prior-year quarter.
Specialty Semiconductors Sets Revenue Record
Specialty Semiconductors revenue increased 34% to a quarterly record of $100.7 million. The company attributed the growth to higher terrestrial renewable-energy volumes and a more favorable space-solar product mix.
Adjusted EBITDA for the segment rose 35% to $25.9 million, while adjusted gross margin increased to 31.7% of revenue from 30.8% a year earlier. Chief Financial Officer Alban Fournier said higher volumes, economies of scale and the recovery from operational inefficiencies experienced in the second quarter contributed to the sequential margin improvement.
Fournier said most of the sequential improvement in gross margin came from increased deliveries, with a smaller contribution from remediation actions. President and Chief Executive Officer Richard Perron said the underlying causes of the earlier operating inefficiencies had been largely addressed during the third quarter.
The segment’s backlog remained at the company’s maximum reported level of 365 days, with Perron saying its effective backlog continued to extend beyond 12 months. He also said the company is evaluating scenarios for a larger next phase of expansion at its AZUR SPACE operations in Germany, beyond the annual capacity additions it has announced in recent years.
AZUR SPACE is ramping a previously announced 25% increase in space-solar-cell production capacity for 2026. Perron said the company sees opportunities in Europe and North America that could significantly alter the operation’s scale for 2029 through 2031, though he said decisions on additional capacity would be aligned with anticipated or contracted demand.
Performance Materials Margins Normalize
Performance Materials revenue rose 20% to $35.7 million, largely due to higher bismuth-based product volumes. However, adjusted EBITDA declined 31% to $9.2 million as margins normalized from elevated levels in the prior-year period.
Adjusted gross margin in the segment was 31.2% of revenue, compared with 53.1% a year earlier, reflecting higher metal input and chemical costs. Backlog reached 108 days, an increase of nine days sequentially, which the company said reflected contract-signing and renewal timing, net of long-term contract realization.
Perron said a competitor’s loss of good manufacturing practice certification in pharmaceutical and health products could benefit 5N Plus over time. He said the company expects to see potential effects during the annual contract renewal period spanning the fourth quarter and first quarter, but said it was too early to quantify any impact on volume or margins.
Utah Projects Target Defense and Germanium Opportunities
During the quarter, 5N Plus was selected for a $7.3 million U.S. government award to establish production of gallium arsenide components for U.S. defense applications at its St. George, Utah, site. The project includes crystal-growth and gallium-arsenide compounding equipment, with customer product qualification planned before controlled production begins.
The company also began construction on an approximately 50% expansion of the St. George facility. Completion is expected in the second half of 2027, and management said the added space is intended to support demand in defense, space solar, medical imaging and industrial sensing.
Perron also discussed efforts to expand recycling and refining of complex germanium-bearing feeds. He said the company is adding equipment progressively and expects it will take roughly a year to a year and a half to establish its full planned capacity of about 20 metric tons of germanium-based metal. The company expects to refine more germanium and convert it into products as the equipment is installed.
Outlook, Cash Flow and Investment Plans
5N Plus said it expects to achieve the high end of its full-year adjusted EBITDA guidance range of $100 million to $105 million. Management expects fourth-quarter adjusted EBITDA to exceed the $18.4 million reported in the fourth quarter of 2025, although Fournier noted that fourth quarters have historically been softer and that the company is operating in a complex environment.
The company expects second-half adjusted gross margin as a percentage of revenue to remain in line with the 30.3% reported in the second quarter, plus or minus about one percentage point. Fournier said this implies a somewhat lower margin percentage in the fourth quarter than in the third quarter because of expected lower volumes.
Management said it is continuing to pursue customer cost pass-throughs to mitigate higher input costs. The process is expected to be substantially complete around the middle of 2027, with timing varying by customer, project and contract terms.
Cash used in operating activities was $2.3 million during the third quarter and $17.7 million during the first nine months, primarily due to working-capital requirements associated with growth. Net debt stood at $32.4 million at Sept. 30, down from $50.3 million at the end of 2025, while net debt to EBITDA was 0.31 times.
Capital expenditures totaled about $22 million year to date, including $5.2 million in the third quarter. Fournier said fourth-quarter capital spending is expected to be about $5 million, while spending is expected to increase substantially beginning in 2027 to support growth projects. Management said future expansion could be funded through a combination of balance-sheet leverage and customer contributions, while the company remains interested in potential acquisitions.
About 5N Plus (TSE:VNP)
5N+ is a leading global producer of specialty semiconductors and performance materials. The Company’s ultra-pure materials often form the core element of its customers’ products. These customers rely on 5N+’s products to enable performance and sustainability in their own products. 5N+ deploys a range of proprietary and proven technologies to develop and manufacture its products. The Company’s products enable various applications in several key industries, including renewable energy, security, space, pharmaceutical, medical imaging and industrial.
