Can you give a sense of what types of minerals are currently in demand and are growing in demand?

Kevin Morris

Absolutely. The two most important minerals are probably neodymium and praseodymium, and there are other magnetic rare earths.

What surprised me about the neodymium and praseodymium, or as we call them for short ND and PR is that they have these excellent magnetic properties that are very useful for permanent magnets. And when we think about whether it's electric vehicles or wind turbines, this trend toward electrification that is tied to reducing the release of green house gas emissions really depends on the availability of magnetic, rare earth and high strength magnets.

Maureen Farmer

So, tell us a little bit about your journey to MolyCorp and what you were recruited to do.

Kevin Morris

When I first joined MolyCorp, I joined to help with the administration function initially and to help the company on its growth trajectory, as it ramped up the mine, at the same time, it needed to have you know, significant HR, IT, corporate communications, all of these other supporting functions grow along with it.

Although it was already a publicly traded company, it was still going through that growth curve. And so, my role was to help the CEO and, the board by developing these different administrative functions to serve ultimately the growth path of the company and get the mine up producing and serving our customers.

Maureen Farmer

How many employees were at MolyCorp at the time, Kevin?

Kevin Morris

Yeah, at the time, we were a little less than 400 employees and most of those were at the mine and we were still adding many employees there to ramp up our production. And then we had a corporate office in the Denver area where I worked and we probably had more than 400 at that point.

We also had a factory in Estonia. The one that won the EcoVadis gold medal, which we're really, really thrilled to have achieved.

Maureen Farmer

Yes, of course. Congratulations on that!

Kevin Morris

Thank you. And so one of the things that was going on in MolyCorp was while we had a mine that we were very enthusiastic about in terms of its ability to deliver critical materials, we also wanted to have a greater downstream, if you will, processing capability, the ability to add more value to the minerals that we were extracting. Somet (factory in Estonia) was a part of that strategy. It was the first acquisition that was made to enhance the downstream capabilities of MolyCorp. And the second opportunity was the acquisition of Neo materials, which was a company headquartered in Canada, but that had processing facilities throughout the world.

And what Neo lacked was a mine, a sort of guaranteed source of supply. And so the strategic opportunity that both companies saw was the ability to combine the mine of MolyCorp with the excellent downstream processing capabilities that Neo had. And that was what drove the merger of those two companies in 2012.

Maureen Farmer

And that's when you were asked to lead the integration, is that right?

Kevin Morris

That's right. It was really less than six months into my tenure at MolyCorp that this transaction to acquire Neo was unfolding. There was a need to integrate these two companies of course, and to begin planning for that integration even before the deal closed.

And in my role of overseeing the administrative function, it just...it dovetailed well for me to take a leadership role in how we combined the two companies from a cultural perspective and also from an operational perspective.

Maureen Farmer

For what is now more than an 1800 person company.

Kevin Morris

That's right.

And in fact Neo had more employees and more locations...I would say that was probably the more complicated of the two companies. And so, although MolyCorp was the acquirer, there was a lot we had to learn about Neo, and then had to think about bringing Neo and MolyCorp together into a single company that would execute on this broader vision of having a mine all the way through to finished magnets if possible, to serve what we saw as a really growing need for those high strength magnets, and other rare earth materials.

Maureen Farmer

So, I'm thinking about that journey at MolyCorp. And can you walk us through, because I know that there is a culmination of the two companies and then there was an IPO, is that correct?

Kevin Morris

So both companies were public at the time of the acquisition and it wasn't until later that the combined company was privatized. And then a subsequent IPO following that.

Maureen Farmer

I'm very, very curious about that process. You know, how long after the acquisition or the integration of the two companies did that process take place? I know it would've been a period of time because they were both public and then there was a number of things that went on there, but can you give us a sense of the timing and the process and the outcome?

Kevin Morris

You bet. So, after the two companies combined, there were some real changes in the industry that which put a lot of financial stress on the company and the prices for what we sold dropped very dramatically in a short period of time. And another contributing factor was that we didn't have as much success with ramping the MolyCorp mine quickly.

But all of that is to say that in approximately 2015, the company went through a chapter 11 restructuring or bankruptcy process. Which was a real challenge of course and something that, you know, required quite a few changes in the company and some pretty…

Maureen Farmer

Big decisions…

Kevin Morris

Some very rapid decisions to refocus on what we did well, to respond to changes in the market dynamics, and to just obviously manage cash as well. But certainly, it's a challenging process. It tests, it tests the team. But I think what happened is when we came out of that, we had a, we still had a very strong team. We still had our customers base…because it put a lot of stress on customers and suppliers too.

But we came out as a private company and that was in late 2016 that we finally got through the restructuring process and came out as a privately held company under the ownership of Oaktree capital management. And, and suddenly it was just, you know, the clouds part it seems when you get out of bankruptcy and you can take a deep breath and really think about, okay, where do we go from here?

And the company really flourished in those next 18 months. The market, of course supportive customers were much more relaxed, much more open to working with us on new products and new opportunities.

Maureen Farmer

And is this because you emerged from the, the chapter 11 or is this because of the current market realities?

Because it's a very volatile industry that you're in. There's so many, you know, rapidly changing dynamics that you have no control over.

Kevin Morris

That's very true. And, and it was a combination. I think of both. The market dynamics had turned somewhat more favorable and, and the company was also better positioned. They had a clean balance sheet, customers were no longer asking themselves, you know, is this company, is this key supplier of ours still going to be around…that was clear to them that, that the longevity and staying power they needed.

Maureen Farmer

And so Kevin, in that role because I know you do now, did you have regular communications with the procurement people at your customer companies?

Kevin Morris

Yeah, I did. Yeah. And during, during the restructuring phase, I ran a particular business segment that we called rare metals and definitely for all of the customer facing leaders, it was critical for us to, to talk to the customer.

And keep them very informed of our progress. Through the restructuring and reassure them and the same one for our employees about our ability to continue to meet their needs during this stressful time. And that went a long way toward really cementing those relationships today in my role as COO.

And as we emerge from bankruptcy, I transitioned from running one of the business units to being the chief operator. And having the three different business units, all report to me. Of course I talked to a broader range of customers and that was a really nice. Once we were as I said, able to partner again with customers on long term opportunities.

Because the products that we make tend to require a fair amount of time for our customers to qualify. And they don't want to do that unless they're confident that we can supply them for many years, it's expensive for them to re-qualify a replacement supplier. If it comes to that.

Maureen Farmer

Right. And would you say that your communication style with both your customers and the employees were a critical factor...it's kind of a leading question but you know, it seems to me that it would be very important to keep the lines of communication open with your customers and employees, to make sure that they have the confidence in, you know, the company's ability to provide a product that they require.

Kevin Morris

Yeah, absolutely, the clarity of communication and frequency of communication. It's always important in business going through that restructuring process. It's that much more important because people will fill a gap if there isn't clear and frequent communication, with assumptions that are usually the worst.

Maureen Farmer

Well I just finished reading an article this morning. Published by the Harvard business review. And this is just one paragraph that just speaks to me at this moment. “Boards and investors love a steady hand and employees trust predictable leaders.” That's what I wanted to say is that the predictability, the reliability, you know and the consistency of communication is, is really pivotal in terms of keeping people confident and happy.

Kevin Morris

Absolutely. And all of our customers, you know, have their own set of customers. To whom, and I'll take it as an example of the automotive industry...As we were emerging from the restructuring process, we made it a real point to focus on serving the automotive industry more. We thought that was a good growth opportunity for the company. The customers who were in that segment…reliability was key to them. They entered into long term arrangements with their customers. And if we fail to deliver to our customers, then that could have the effect of stopping an entire automotive line.

And in fact, we see today that automotive production is down and, you know, many people will be familiar. This that. It's the shortage of chips and other key components that that are causing have caused many automotive manufacturers to, to have to slow down production. Nobody wants to be the reason for a huge multinational car maker to have to slow down production.

Maureen Farmer

Well, we saw that in Canada earlier this year, Kevin. And so we won't go into the details, but there was a, a tremendous interruption of flow of goods between Canada and the United States that, that brought that industry to a grinding hault very quickly.

Kevin Morris

And so that's where that, that drive for, for reliability really counts and for a company who's going through a restructuring process.

Obviously customers need to be satisfied that you can continue to deliver. And so, as we emerged think we had demonstrated that and, and it meant that there were more doors open to us than to grow.

Maureen Farmer

So, when you think about that time, that period of time between MolyCorp and as it, it emerged from chapter 11, you know, now you're private. You now need to make some decisions about, you know, financing and things like that. Recapitalization, tell us a little bit about that journey. What surprised you the most during that initial public offering process?

Kevin Morris

I think the first thing that surprised us was how quickly our business bounced back and how quickly we saw earnings growing revenue, growing our balance sheet, looking much stronger and, and how receptive investors were to the possibility of an IPO for our sponsor Oak Tree. Obviously they need needed to find a way to eventually gain liquidity and realize a return on their investment that, that they had made in us. And we talked with them about the different opportunities for, for that liquidity event.

And I think even they were surprised that the public markets were as receptive to us less than 18 months after we had emerged right from bankruptcy. So that certainly was a wonderful surprise and it created the opportunity for us quite quickly to begin to help Oak Tree recover their investment and, and also raise the profile of the company and demonstrate the strength of the company in a short period of time.

Maureen Farmer

Do you think it was a combination of factors? Or can you put your finger on one or two that might have caused that?

Kevin Morris

Yeah, I think the underlying accomplishment of getting through the entire restructuring process was keeping the team together. And keeping the team focused on what it was that we needed to execute on day to day to succeed the, the production, making sure product was showing up on time and inspected for customers through thick and thin. And, and so having kept the team together, once the balance sheet issues were taken care of, and once the market conditions started to improve, because we talk about part of how we got to the structuring process was a real downturn in the market.

Really all the pieces were in place that the team had been together for a long time and knew what to do, knew how to really seize those new growth opportunities that were in front of us. And again, we were focusing on automotive. This was a time period where automotive production was growing and the need for our products was greater than before.

So, all of those things combined with sort of the meeting of this market opportunity with a team that had come together through a challenging period and was now ready to grow with the market…

Maureen Farmer

I have to keep going back to this article. It's speaking to me the same article, the Harvard business review article, and I'll we'll have the, the, the name of it in the show notes says our data supports the paramount importance of re reliability of stunning 94% of strong CEO candidates.

We analyzed, scored high on consistently following through on their commitments. So, this article was meant to be today.

Kevin Morris

It certainly resonated with our experience that, that the reliability factor for our customers was key.

Maureen Farmer

CEOs who ranked high on reliability, employed several other tactics as well. Three quarters of them were rated strong on organizational planning skills. They established business management systems that included at cadence of meetings, dashboards of metrics, clear accountability, and multiple channels for monitoring performance and making rapid course corrections. And just as you said, most important, they surrounded themselves with strong teams.

So, does any of that resonate with you, Kevin?

Kevin Morris

Yeah, certainly a couple of pieces of that. The rapid course corrections was a hallmark of getting through the restructuring process. So many decisions come at you quickly and there are a lot of constraints. So sometimes that you don't even aware of as you start to make a decision and you just have to adjust and course correct. And, and do so quickly.

Maureen Farmer

It says here, good CEOs realize that a wrong decision may be better than no decision at all. And there was a, a gentleman I interviewed on the podcast, Henry…a few episodes ago and he said, and this article corroborates his claim that he feels as though as long as he has 65% of the information he needs, he's good to make a decision. I don't know if that resonates with you or not, but…

Kevin Morris

You never have as a hundred percent that's for sure. As much as you would like to get there and being nimble and being prepared to, to jump on opportunities when you have enough certainty, you can't go on nothing but enough…65%. Yeah, it sounds about right.

You mentioned also with reliability, the having dashboards and metrics, and, and certainly as we worked with Oak tree, I think they were very interested to have transparency about what was happening in our operations.

And, and so creating those, those dashboards. The metrics setting goals for the management team that we all thought would drive value creation. That was a big part of, of that early time period as a private company and the cadence there was quite frequent as well. Probably more meetings with the board.

To go over those metrics to go over the dashboards, to make sure that we were on track, then you might have seen in a public company environment. And I think that was a contributing factor as well, to really ramping quickly as the market opportunities grew. And as we were coming out of that restructuring and getting to the next phase, which was the IPO.

Maureen Farmer

Right. I read and heard from others that that IPO journey can take up to about 18 months. Was that your experience or, or was it shorter than that?

Kevin Morris

It was shorter than that for, for us, the time period for us was, was really less than a year and, and probably closer to even to maybe six months. So it did, it did happen quite rapidly.

Once we saw that there was a good opportunity there to execute one.

Maureen Farmer

So, because you already had an established brand, you had an established, you know, supply chain of customers and things like that.

Kevin Morris

That's right. We had a lot that was, was well established. And in fact, we had a team, a financial team in particular that had done public reporting before, because we'd been public previously.

And so that transition from private to public was pretty smooth, was pretty seamless from that point of view and the reporting and having all of the, not just the customers and the production and all of that, which is key. All of the financial reporting and the other things that go along with being a public company are different.

And because we had a team that had done that before, that part of the transition went pretty quickly so it was really more of a six month, I would say, process from…Yes, we think this is an avenue we can explore to…Okay, we just did a road show and we have investors who are ready to make the commitment of capital, which was very, very gratifying.

Maureen Farmer

Yes, I can imagine. So, after the IPO, why don't you just walk us through the post IPO period, and what year was that Kevin?

Kevin Morris

It was in late 2017 right December of 2017 that we became a public company.

Maureen Farmer

Right. It's now 2022. We've seen a global pandemic. You've had some acquisitions. Tell us about that. I know it's a lot to squeeze into a short conversation, but just give us a little bit of sense of the highlights and some of the challenges. That you've experienced since then.

Kevin Morris

Happy to. Maybe starting with the pandemic, of course, that had some real operational impacts to our company, as it did to all companies and you know, the immediate focus on how do we keep our employees safe? Wherever they are in the world. And the pandemic of course affected different parts of the world differently. And, and the rules around protecting your employees were somewhat different safety. And the health of our employees has always been a core value for Neo what, whether we were a public or private, right.

That never changed. And so for the pandemic, that was first and foremost, you know, the next thing that came was of course, the, the market. Demand fell off rapidly and much like what we had gone through in the restructuring timeframe where managing cash and making sure that whatever's going on in the market, you know, that you can survive until better times come along again.

We turned our focus to that and it was not, it was not as hard or. Traumatic as it might have been, because I think this team had, had been through these cycles before and knew that this was temporary, but also knew the kinds of things we needed to do to to make sure the company could withstand some, a real shock to the market, which is, which was what the pandemic drove.

And then, you know, as things started to open up again, In in 2020 in particular and the market demand came roaring back, we saw a real boost to revenue and, and earnings, and we were, it was sort of like coming outta that IPO again or, or coming out of the restructuring again, that we were ready and, and able to jump on those opportunities and really grow with the market over the last two years.

Maureen Farmer

I can only imagine that having operations. Very diverse countries must be a tremendous challenge from an employee, even just a communications point of view. But also I would think from a regulatory point of view. So, you know how, you know, you, you have, you have operations in China, you have operations in Estonia in all these different places.

So, how do you keep your finger on the pulse of, of operations when you're not there?

Kevin Morris

So, that's a good question. And obviously. When we could travel part, part of the solution was to be there and was to meet with our employees and to meet with government regulators and, and the like, and it is different in each jurisdiction and you have, so part of our, our job is to understand those differences and, and optimize how we do production in each country for what the needs are in that particular.

When you can't travel as freely as which is the sort of the time period we've been in for the last couple of years, it really comes down to, and, and I think what's made us successful is we have strong relationships that could sustain us through that period of not being able to, to, to visit folks.

And it's a lot of continuity with our production teams in each of the different regions. And, and also good relationships with the, the regulators and the, the other stakeholders I'll say in, in, in the different parts of the world where our factories are. And again, and then I think the, the communication, one thing we have learned is that you can communicate remotely.

We've continued to get better at that. And so with the frequent contact to, to maintain those relationships and understand as things evolve, what horse corrections need to be made.

Maureen Farmer

Mm-hmm . So, would you say that you, the cadence of communication with your employees is, is more, more robust now than it would've been when you were traveling? Robust in the sense of frequency.

Kevin Morris

Certainly, the frequency of communications, the virtual communications is higher for sure. And meetings that we would do face to face. They're not as much fun to do virtually usually no, but we, we do them if we do them that way. Yeah. And it, and so it allows us to maintain that continuity and maintain the, the connections and the relationships that are necessary really essential to having a successful global international business.

Maureen Farmer

Yes, it's so exciting, Kevin. So, tell me what's next for Neo?

Kevin Morris

One of the, the trends that we continue to be very focused on. As we mentioned earlier, is the demand for magnetic materials. And historically we had focused on providing the materials that go up to magnet making. And today we are now a growing magnet maker in China, and we, we see real opportunity and demand for more magnets outside of China.

We think that there's a, a very interesting opportunity ahead of us potentially for. Magnet making in Europe and in particular where our factory is in Estonia. So that's in particular one growth opportunity that, that we're exploring that we're quite excited about.

Maureen Farmer

I’m just going to read a a short quote here according to a New York times article.

Earlier this month, Americans are buying electric vehicles at record paste, undeterred by rising prices and long waits for delivery. These vehicles account for 5.6% of new car sales between April and June of this year, which is 2022, a 140% increase in demand from the year before car makers and suppliers have announced to invest more than 500 billion through to 2026 to accommodate production.

Kevin Morris

And we really see the growth in electric vehicles coming, and it's a great thing we think for, for decarbonizing mm-hmm for reducing greenhouse gas emissions. and in order to make, you know, electric vehicles feel successful, there are, there are many minerals, many critical materials that go into them.

Certainly, rare earths are one of those. We absolutely see that as a, as a growing trend. And you mentioned north America, but of course in, in some ways Europe and Asia are. Transitioning to electric vehicles even faster than north America is.

Maureen Farmer

Mm-hmm well, they've traditionally had incredibly high fuel costs and there seems to be well, there's a great deal of focus on, on ESG around the world, but and they have the, the bulk of the population there too.

I'm sure that's driving part of that. That that's right. So in terms of Neo, is, is your company expanding? Are you adding people to your workforce? I'm assuming with the growth that you're going to. More people, is that true?

Kevin Morris

We do expect to add a facility develop a facility over the next few years that will increase our employment quite substantially.

And, and we are looking to, you know, grow our footprint outside of China. Today. We have traditionally and had most of our production in China. And we continue to see that as a very important part of the. And it's where a lot of the materials that we process. Available and where, where demand is strong, but as demand grows outside of China, and you mentioned the electric vehicle demand in north America.

And we talked about Europe as well. We know that there's a real need for processing rare earths outside of China and that will turn toward growing in, in Europe and North America and bringing on employees.

Maureen Farmer

Such an interesting business. Kevin, I have a couple of more questions for you before we sign off.

I'm conscious at the time, one question I would love to know the answer to if, if there is an aspiring executive listening to this, this conversation, what would you say are your top. Maybe three leadership skills that, that have impacted your ability to achieve what you've achieved so far today.

Kevin Morris

That's a really interesting question.

The first thing that comes to mind is communication and I think it starts with the ability to actually listen and really understand your stakeholders and wherever you are in your sort of career journey, those stakeholders can be internal in the company, or they could be, if you are say a CEO, the investor community, the customer community, and the like, but the ability to really understand, engage with whoever your stakeholders are. And listening is, is such an important part of that. And then at the same time, the communication back and, and having that ability to explain persuasively at times, if necessary, but clearly and transparently what you stand for, what your company stands for, what it is that's unique that your company brings to the market, to the stakeholders, is really key.

So, that communication piece comes up first and foremost for me.

Maureen Farmer

So, in the early days, I just wanna go back for a moment, go back to the early days of Molly Corp. When you were recruited in to do some of these things, what do you think the leadership saw there? You know, because you just don't bring someone along and plop them into a role and expect them to do well.

So, you must have had a consistent track record, or maybe you had, I don't know, a process, maybe you have a framework. What would you say, would it be something like trust or…

Kevin Morris

Yeah, I think they saw my ability to understand and engage with the board and with the management team and sort of be able to explain the business to key stakeholders, understand the business and in detail well enough to do that.

Maureen Farmer

Mm-hmm, a thorough knowledge of the business, how it operates, the market it's in, the trends…

Kevin Morris

Understanding, you know, all the different components that add up to a successful business is critical. You can't have that credibility with key stakeholders until you have a real command of all of the elements of the business.

And that goes back to the listening and the learning part. I was new to the industry, but I wasn't new to figuring out how to listen and understand what it was that made our particular business tick and have more expertise in that and then use that information to, obviously there are business judgements that, that are involved in deciding what the right strategy is, how to create a compelling value proposition for your various stakeholders, whether they're customers or investors or suppliers, all of that comes with a deep knowledge of your industry.

Maureen Farmer

And I think it comes down to relationships. You've mentioned that several times throughout this conversation. So Kevin, in your business career so far being a business leader, I know your career trajectory started with law practice. So, do you want to talk a little bit about your work as a lawyer before you moved into the world of a publicly traded business?

Kevin Morris

I would love to. I did begin my career as a, as a lawyer and really as a litigator in particular, the skills that, that litigators use are investigation to understand the story of their case. And then how to present that case persuasively to a judge or a jury. Some, some of those skills I found translated well to the business.

Environment the, the investigation, the building, that understanding of whatever the problem is at hand and making sure that you have a, a clear understanding of the facts and then using that understanding to communicate to whether it's a customer or the board, what your solution is. And how to, how to communicate that effectively and persuasively.

Those were, those were kind of skills that translated and that, that I think I enjoyed using in both settings, although. They are different settings. And, and, and I will say to folks who know about my legal background, you know, it was a better choice for me to be in a business world because I would much rather be using those skills in the boardroom than, than in the courtroom.

Maureen Farmer

I love that. And that's where we'll conclude our conversation. I'd like to ask you one last question. Well, two actually. The last question is what has surprised you most in your career so far?

Kevin Morris

Gosh, what has surprised me most? Just I think how much I enjoyed making various transitions. Certainly, the transition to the business world from, from the legal world was exciting within the business.

The transition from an administrative role, which was more focused on supporting various departments like HR and it to a customer facing role and a P and L role that was, was a lot of fun as well. And it just seems like every few years getting the opportunity to maybe not completely reinvent yourself.

To test yourself in a new way and to take the skills that you've had before and, and redeploy them to a slightly different challenge. How how rewarding and invigorating that is.

Maureen Farmer

Mm-hmm, the transferability of skills and experiences. Wonderful. The last question I have is. What is one or two of your favorite restaurants in your hometown?

You're in Denver, right?

Kevin Morris

I'm in Denver. One restaurant that we really enjoy is called Rioja in downtown Denver. And then I feel like because I am a coffee person that I should mention that Corvus, which is a local coffee roaster, and has a series of cafes. It is a real treat for getting my coffee fix.

Maureen Farmer

And that's where you get your beans or where you actually purchase coffee to drink?

Kevin Morris

That’s where I actually purchase coffee. When I'm not drinking my own home roasted coffee if I need a cup of coffee that, that somebody else roasted and made, that's where I would like to go.

Maureen Farmer

That's where you go.

Well, we'll make sure that we have those on in the show notes, Kevin, and it's been an absolute pleasure having this conversation with you today. I hope we get to do it again. Oh, I should ask. How can people reach you if people want to reach out to you?

Kevin Morris

You bet I can be reached at K.Morris@neomaterials.com.

Maureen Farmer

Awesome. It's been a pleasure, Kevin, we'll talk again soon.

Kevin Morris

Thanks so much. Maureen, the pleasure is mine.

Maureen Farmer

Thank you.