5N Plus Inc. (TSX: VNP) reported second quarter revenue of $122.4 million on August 3, 2026, up 28% from $95.3 million a year earlier, and said backlog stood at $420.0 million at June 30, 2026. The Montreal producer of specialty semiconductors and performance materials attributed the revenue increase primarily to higher volumes in both of its segments. All figures are in U.S. dollars.
Net earnings were $19.7 million against $15.2 million in the second quarter of 2025. Adjusted EBITDA rose 10% to $26.6 million from $24.1 million. The company reaffirmed full-year 2026 adjusted EBITDA guidance of $100 million to $105 million and said it will host a conference call on August 4, 2026.
Volume up, margin down
The margin line moved the other way from revenue. Adjusted gross margin increased 12% to $37.0 million, but as a percentage of sales it fell to 30.3% from 34.6% a year earlier, which the company said reflected higher metal input and chemical costs diluting the favourable impact of higher volumes. That is the arithmetic of a materials processor: when feedstock prices rise faster than selling prices, extra volume still adds gross profit dollars while compressing the percentage.
Richard Perron, president and chief executive officer, said the quarter “reflected increased cost pressures as expected, as well as temporary reduced operational efficiencies associated with our ongoing capacity expansion initiatives to support future growth.” The company said it expects its operating environment to remain complex and input and operating costs to increase, including a normalization in margin conditions for Performance Materials, and pointed to productivity initiatives and capacity expansion as the mitigation.
The balance sheet moved in the company’s favour over the half. Net debt was $23.7 million at June 30, 2026, down from $50.3 million at December 31, 2025, with net debt to EBITDA at 0.21x. That leaves the capacity expansion the company describes as the source of its efficiency drag funded from a modestly geared position rather than a stretched one.
Reading the backlog properly
Backlog is the number in the headline, and it needs its own units. 5N Plus reported $420.0 million representing 313 days of annualized revenue at June 30, 2026. Measured in days rather than dollars, that figure was 23 days lower than the previous quarter and 16 days higher than at June 30, 2025.
Those two comparisons point in opposite directions and both are informative. Year over year, the order book has lengthened. Sequentially it has shortened, because annualized revenue, the denominator, has risen with the quarter’s shipments. A dollar backlog that grows more slowly than revenue converts into fewer days of cover even as the absolute commitment increases. The company’s own forward-looking language flags the realization of backlog in a timely manner as an assumption rather than a certainty.
The feedstock backdrop
5N Plus works in materials whose supply chains are narrow and concentrated, which is the structural reason input costs move as sharply as the quarter suggests. The U.S. Geological Survey reports that tellurium is recovered principally as a byproduct of the electrolytic refining of primary copper, and that in 2024 the two primary electrolytic copper refineries operating in the United States produced copper telluride from anode slimes but did no refining domestically, exporting the material for further processing. Estimated global tellurium consumption in 2024 ran to solar power cells at 60%, thermoelectric devices at 20%, metallurgy at 15% and other applications at 5%. Annual average prices were about $75 per kilogram in the United States and $80 in Europe on 2024 estimates.
Bismuth, the other family 5N Plus works in, is more concentrated still. USGS put estimated world production at 16,000 tons in 2024 against 16,200 tons in 2023, of which China accounted for an estimated 13,000 tons. The United States ceased production of primary refined bismuth in 1997 and its last domestic primary lead smelter closed at yearend 2013. U.S. bismuth metal imports from China fell 40% to 580 tons in 2024 from 964 tons in 2023, and USGS noted that prices have been increasing worldwide and particularly in China since 2023 as competition for bismuth ore intensified among domestic smelters.
Analysis: the quarter the guidance did not move
The item that did not change in this release is the guidance. Revenue grew 28%, adjusted EBITDA grew 10%, gross margin percentage fell more than four points, and the full-year adjusted EBITDA guidance of $100 million to $105 million was reaffirmed rather than raised. The range was left unchanged after a first half the company described as strong, so the full-year figure still has to absorb the second quarter’s cost profile across the remaining two quarters. The release does not state what input cost path the guidance assumes.
The gap between the two growth rates is where the quarter actually sits. Revenue rising 28% while adjusted EBITDA rises 10% means the incremental sales came at materially lower incremental profitability, and the company gave two reasons: metal input and chemical costs, and temporary inefficiency from capacity expansion. Those have different half-lives. Expansion inefficiency ends when the new capacity is commissioned and running. Input cost inflation ends when either the feedstock market loosens or contract prices reset. The disclosure does not separate the two, so the durable share of the margin compression is not established by this release.
The USGS data explains why the input side is not simply a cycle to wait out. Tellurium exists as a byproduct of copper refining, which means its supply responds to copper economics rather than to demand from CdTe solar or thermoelectrics. Bismuth production is estimated at 16,000 tons a year worldwide with China supplying the large majority, and U.S. imports from China fell 40% in a single year. A processor buying into those markets has limited ability to source its way out of a price move, which puts the weight on contract structure and on the value-added positioning the company cites.
Backlog is where the next quarter can be checked without waiting for management commentary. If backlog days keep falling while dollars hold, revenue is outrunning order intake and the cover is thinning. If both rise, the demand pipeline the company describes is real in booked terms. The other observable is the margin percentage: 30.3% this quarter against 34.6% a year ago, with the company signalling normalization in Performance Materials. Whether that line stabilises near the current level or continues down is the difference between a cost pass-through problem and a mix problem, and the release reaffirms the guidance range without stating which of the two it reflects.
