Amg investor presentation february 2011

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Amg investor presentation february 2011

  1. 1. Investor Presentation February 2011
  2. 2. Cautionary Note THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG ADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS. This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunction herewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. This presentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, or dispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities for sale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, none of the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Certain statements in this presentation constitute forward-looking statements, including statements regarding the Companys financial position, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should” and similar expressions, reflect the beliefs and expectations of the management board of directors of the Company and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability, growth, cost and synergy of the Company’s recent acquisitions, the timely development and acceptance of new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. This document has not been approved by any competent regulatory or supervisory authority.2
  3. 3. AMG Advanced Metallurgical Group N.V. Listed: NYSE-Euronext Amsterdam: AMG Founded: 2006 Revenues: $951.1M TTM Employees: 2,500 Facilities: Netherlands, Germany, UK, USA, Brazil, France, Turkey, Czech Republic, China, Mexico, Belgium, Sri Lanka Market cap: €364.1M Shares outstanding: 27.5M 52 week range: €6.25–€13.74 Recent share price: €13.24 (February 10, 2011)  Sustainable Metals Technology Products:  High purity raw materials, metals and complex metal products  Vacuum furnaces used to produce high purity metals3
  4. 4. Macroeconomic Trends and Markets ■ AMG participates in the macro economic trend of: ■ Growing demand for natural resources in context of CO2 reduction and sustainable environmental demands for: ■ Responsible energy production and use ■ Emerging market infrastructure ■ Aerospace and light weight materials ■ Specialty metals and chemicals4
  5. 5. Critical Raw Materials  The EU identified 14 critical raw materials(1) to the European economy – focusing on two determinants – economic importance and supply risk  AMG currently produces 4 of those elements “Critical” raw materials (1) European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials5
  6. 6. Products & Markets Advanced Materials Engineering Systems  High-value alloys  Capital equipment for high purity  Essential raw materials materials Specialty Metals & Energy Aerospace Infrastructure Chemicals6
  7. 7. Critical Raw Materials  Primary producers of critical raw materials Titanium Vanadium Magnesium Chromium Titanium Antimony Graphite Antimony Magnesium Lithium Magnesium Silicon Titanium Titanium Magnesium Vanadium Graphite Graphite Tantalum Tantalum Niobium Tantalum Lithium Chromium Tantalum Vanadium AMG raw material mines7
  8. 8. Advanced Materials - Market, Products and Customers Aerospace Infrastructure - FeV Specialty Metals Products  Specialty alloys for titanium  Ferro-vanadium  Chromium Metals  Coatings for wear  Ferro-nickel molybdenum  Tantalum resistance  Antimony  Aluminium master alloys Competitors  Reading Alloys Inc.  Evraz Group S.A. (Highveld  KBM Affilips B.V. Steel & Vanadium)  Evraz Group S.A.  KB Alloys, Inc. (Stratcor)  Eramet S.A. (Gulf Chemical  Delachaux S.A. & Metallurgical Corporation  Campine S.A.  Evraz Group S.A. (Stratcor)  Chemtura Corporation  Xstrata plc  Chengde Vanadium & Titanium Stock Co. Ltd. Sample Customers8
  9. 9. Advanced Materials - Specialty metals pricing $45 Increase from 2009 lows: $40 FeV: 59% Mo: 117% Ni: 142% $35 Price / Pound – V, Mo, Ni $30 $25 $20 $15 $10 AMG IPO $5 $0 2007 2008 2009 2010 2011 Ferro Vanadium Molybdenum Nickel Prices are still below pre-crisis levels;9 tied to demand for carbon and stainless steel
  10. 10. Engineering Systems - Market, Products and Customers Energy - Solar Aerospace Energy - Nuclear  Solar silicon melting and  Vacuum Melting and Re-  Vacuum Sintering Products crystallisation systems melting Systems Systems (DSS furnaces)  Precision Casting and Coating Systems  Heat Treatment with high pressure gas quenching Notable Successes  2005 – Introduced single  2010 – Market Share leader  Secured first nuclear crucible furnaces in Ti remelting in China, the engineering contract with fastest growing Ti market DOE, through Shaw-Areva  2005 –2009 – >$172 mm in revenue, 2nd largest  2010 – Leading market share  Two strategic acquisitions market participant in turbine blade coating completed to expand product portfolio  2010 – Introduced SCU 600+ DSS system Sample Customers10
  11. 11. Financial Overview11
  12. 12. Markets & Products – by the Numbers YTD 2010 Revenue by YTD 2010 Revenue by End Market Product Tantalum & Graphite 5% Niobium 4% Chromium Metal 8% Aerospace 26% Vacuum Furnaces 25% Specialty Metals & Chemicals 36% Antimony 11% FeV & FeNiMo Energy - Solar & 8% Nuclear 22% Al Master Alloys 14% Si Metal 9% Infrastructure 16% Ti Master Alloys and Coatings 16%12
  13. 13. Financial Highlights – YTD September 2010 2010 YTD Revenue 2010 YTD EBITDA $719.8 $64.7 5.1 94.4 178.0 27.5 32.1 447.4 Revenue by Geography Advanced Materials Engineering Systems Advanced Materials Engineering Systems Graphit Kropfmühl Graphit Kropfmühl North America 21% Asia 18% Europe 56% South America 4% ROW13 Revenue and EBITDA in millions 1%
  14. 14. Financial Highlights Revenue (in millions) Highlights  Q3 Revenue: $240.4 million  Up 17% from Q3 2009 $243.5 $240.4  Q3 EBITDA: $18.8 million $231.4 $235.8  Up 1% from Q3 2009 $205.4  Q3 EPS: $0.11 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10  Up from ($0.50) in Q3 2009 EBITDA  YTD Revenue: $719.8 million (in millions)  Up 13% from YTD 2009  YTD EBITDA: $64.7 million $22.0 $23.9  Up 14% from YTD 2009 $18.6 $18.8 $12.4  YTD EPS: $0.42 (1) - - -  Up from ($0.65) YTD 2009 (1) Q3 09 Q4 09 Q1 10 Q2 10 Q3 1014 (1) Excluding the equity losses from AMG’s 42.5% ownership in Timminco Limited
  15. 15. Advanced Materials Financial Summary Highlights ( in millions) Revenue EBITDA ■ Infrastructure - ferrovanadium $152.0 $154.9 ■ Reference prices increased 18% v. Q3 $140.5 2009 ■ Volumes improved 32% v. Q3 2009 $124.3 ■ Ferronickel-molybdenum demand $95.9 decreased 43% v. Q3 2009 ■ Aerospace – master alloys prices declined 23% v. Q3 2009; volumes improved 165% $8.5 $14.2 $9.4 ■ CAPEX $5.0 $5.3 ■ Expansion of ferrovanadium operations Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 in the United States CAPEX $5.0 $5.6 $4.2 $3.3 $1.9 - - - - - Q3 09 Q4 09 Q1 10 Q2 10 Q3 1015
  16. 16. Engineering Systems Financial Summary Highlights ( in millions) Revenue EBITDA  Q3 revenue decreased 14% v. Q3 2009 $73.8  Solar silicon DSS furnace revenues $65.3 $61.6 decreased 44% in Q3 2010 v. Q3 2009 $59.5 $53.2  Q3 EBITDA decreased 33% v. Q3 2009  September 30, 2010 Backlog improved to $147.1 million from $121 million at June 30, 2010  Order intake $66.9 million in Q3 2010 $11.0 $5.9 $12.1 $8.0 $7.4  1.26x book to bill ratio - - - - - Q3 09 Q4 09 Q1 10 Q2 10 Q3 10  Diversified backlog - solar, aerospace and transportation CAPEX $3.0 $1.2 $1.3 $0.8 $0.8 - - - - - Q3 09 Q4 09 Q1 10 Q2 10 Q3 1016
  17. 17. Graphit Kropfmühl Financial Summary Highlights ( in millions) Revenue EBITDA  Q3 revenue decreased 4% v. Q3 2009 $33.7  Decrease in silicon metal revenues due to $33.3 $32.1 $32.4 $29.9 production issues  Silicon metal down 7%  Natural graphite up 37%  Q3 EBITDA decreased 23% v. Q3 2009  Lower revenues and higher costs in silicon metal $2.6 $1.5 $1.7 $2.0 - $1.2 - - - -  Silicon metal down $1.0 million Q3 09 Q4 09 Q1 10 Q2 10 Q3 10  Natural graphite up $0.5 million  CAPEX for graphite milling expansion CAPEX $1.3 $1.0 $0.8 $0.7 $0.4 - - - - - Q3 09 Q4 09 Q1 10 Q2 10 Q3 1017
  18. 18. Capital Base Cash and Debt – September 30, 2010 Summary ( in millions) ■ Cash: $90.2 million Cash Debt $234.8 ■ Total debt: $234.8 million $202.3 $203.8 $203.0 $204.3 ■ Net debt: $144.6 million ■ Revolver availability: $61.3 million $124.4 ■ Total liquidity $151.5 million $117.0 $98.9 $90.2 $84.6 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Note: Cash includes short term investments18
  19. 19. Outlook ■ Advanced Materials ■ Markets are improving ■ Antimony, tantalum and titanium alloys and coatings will drive growth in 2011 ■ Engineering Systems ■ Backlog is increasing; renewed interest in solar silicon furnaces ■ Order intake driven by titanium, solar and specialty steel markets ■ Graphit Kropfmühl ■ AMG owns 88% of GK ■ Silicon metal pricing is improving ■ Timminco ■ AMG owns 42.5% of Timminco; not consolidated ■ Timminco sold 49% of its silicon metal operations for C$40.3 million; up to C$10.0 million more based upon meeting performance metrics19
  20. 20. Appendix20
  21. 21. Consolidated Balance Sheet December 31, 2009 September 30, 2010 Fixed assets 211,022 212,440 Goodwill and intangibles 28,253 38,924 Other non-current assets 78,209 54,848 Inventories 193,378 202,318 Receivables 147,787 177,586 Other current assets 35,313 48,903 Cash 117,016 90,213 TOTAL ASSETS 810,978 825,232 TOTAL EQUITY 228,423 219,427 Long-term debt 168,319 184,499 Pension liabilities 91,358 88,500 Other long-term liabilities 51,249 34,896 Current debt 35,477 50,295 Accounts payable 69,791 84,450 Advance payments 54,764 44,556 Accruals 46,179 48,061 Other current liabilities 65,418 70,548 TOTAL LIABILITIES 582,555 605,805 TOTAL LIABILITIES AND EQUITY 810,978 825,23221 in thousands
  22. 22. Consolidated Income Statement Q3 2009 Q3 2010 Revenue 205,406 240,427 Cost of sales 165,457 198,325 Gross profit 39,949 42,102 Selling, general and admin. 31,876 31,682 Asset impairment and restructuring 5,302 - Environmental 4,075 257 Other income (1,194) (270) Operating profit (110) 10,433 Net finance costs 5,465 2,921 Share of loss of associates (1,285) (17,554) Profit before income taxes (6,860) (10,042) Income tax expense 5,694 325 Profit for the year from continuing operations (12,554) (10,367) Loss after tax for the year from discontinued operations (14,240) - Loss for the year (26,794) (10,367) Attributable to: Shareholders of the Company (20,302) (11,170)22 Minority interest (6,492) 803 in thousands
  23. 23. Consolidated Cash Flows Nine months ended Nine months ended September 30, 2009 September 30, 2010 Cash Flows from Operations (6,033) (13,903) Capital Expenditures (20,755) (19,054) Other Investing Activities (55,796) (26,622) Cash Flows from Investing Activities (76,551) (45,676) Cash Flows from Financing Activities 59,247 36,812 Net increase (decrease) in cash (23,337) (22,767) Beginning Cash 143,473 117,016 Effects of exchange rates on cash 4,255 (4,036) Ending Cash 124,391 90,213 Approximate availability under AMG lines of credit 97,708 61,300 Total Liquidity 222,099 151,51323 in thousands
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