Amg investor presentation october 2010

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  • 1. Investor Presentation October 2010 AMG Advanced Metallurgical Group N.V.
  • 2. Disclaimer 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 Company's 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. AMG ADVANCED METALLURGICAL GROUP N.V. 2
  • 3. Introduction  Listed on NYSE-Euronext Amsterdam (Euronext: AMG)  Products  High purity metals and complex metal products  Vacuum furnaces used to produce high purity metals  2010 H1 2010 June 30  Revenues - $479.3 million  EBITDA - $45.9 million, 9.6% margin  EPS of $0.31 (1)  Net debt - $119.7 million  Capital Investment - $11.9 million  Global presence  Europe, North America, South America and Asia  2,500 employees Sustainable Metals Technology (1) Excluding AMG’s 42.5% ownership in Timminco Limited AMG ADVANCED METALLURGICAL GROUP N.V. 3
  • 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 chemicals AMG ADVANCED METALLURGICAL GROUP N.V. 4
  • 5. Products & End Markets Advanced Materials Engineering Systems  High-value alloys  Capital equipment for high purity  Essential raw materials materials Specialty Metals & Energy Aerospace Infrastructure Chemicals AMG ADVANCED METALLURGICAL GROUP N.V. 5
  • 6. End Markets AMG Advanced Metallurgical Group N.V. Specialty Metals & Aerospace Infrastructure Energy Chemicals Titanium Alloys Structural Steel Solar Vacuum Furnaces Silicones Superalloys Specialty Steel Superalloys Paints & Pigments Turbine Coatings Building Materials Silicon Metal Glass, Tools & Optics Vacuum Furnaces Nuclear Fuel Vaccum Furnaces Capacitors Energy Storage Technologies AMG ADVANCED METALLURGICAL GROUP N.V. 6
  • 7. End Products Aerospace Infrastructure – Recycling Ti alloys (includes VAl) Superalloys High purity stainless steel Typical aerospace jet engine Energy – Solar & Nuclear Specialty Metals & Chemicals Stackable Graphite Blocks Tantalum based capacitor Paints and pigments Vacuum furnaces for solar ingot production AMG ADVANCED METALLURGICAL GROUP N.V. 7
  • 8. Markets & Products – by the Numbers H1 2010 Revenue by End H1 2010 Revenue by Market Product Tantalum & Niobium Graphite 4% 4% Chromium Metal 8% Aerospace 27% Vacuum Furnaces Specialty Metals 26% & Chemicals 35% Antimony 10% FeV & FeNiMo Al Master Alloys 8% 15% Energy - Solar & Nuclear 23% Infrastructure Si Metal 10% 15% Ti Master Alloys and Coatings 15% AMG ADVANCED METALLURGICAL GROUP N.V. 8
  • 9. 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 Customers AMG ADVANCED METALLURGICAL GROUP N.V. 9
  • 10. Advanced Materials – Specialty Metals Acquisition Material  Antimony – AMG is the largest producer of antimony trioxide (a flame retardant) in Europe Transaction  In August 2010 AMG acquired antimony mining rights and an adjacent antimony metal smelter in Turkey for a total investment of up to approximately $20 million Strategic  Secure supply of antimony raw material used in AMG’s antimony trioxide operation Rationale  AMG uses approximately 10,000 mt of antimony metal per year  Antimony metal prices have increased from $4,500/mt in 2009 to $10,000/mt in 2010  This will result in substantial raw material cost savings in 2011 Competitors  Campine S.A., Chemtura Corporation, Hsikwangshan Twinkling Star Antimony Co. Ltd Antimony Metal Oxidation Antimony Dispersions, Pastes, Purchase Process Trioxide Granules, Microgranules AMG ADVANCED METALLURGICAL GROUP N.V. 10
  • 11. Advanced Materials - Infrastructure metals pricing $60 $250 $50 Price / Pound – V, Mo, Ni $200 $40 $150 $30 $100 $20 $10 $50 $0 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Ferro Vanadium Molybdenum Nickel Prices are still below pre-crisis levels AMG ADVANCED METALLURGICAL GROUP N.V. 11
  • 12. 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  2001 – Secured furnace  2010 – Market Share leader  Secured first nuclear exclusivity with REC in Ti remelting in China, the engineering contract with fastest growing Ti market DOE, through Shaw-Areva  2005 – Introduced single crucible furnaces  2010 – Leading market share  Two strategic acquisitions in turbine blade coating completed to expand product  2009 – >$172 mm in portfolio revenue, 2nd largest market participant Sample Customers AMG ADVANCED METALLURGICAL GROUP N.V. 12
  • 13. Financial Overview AMG ADVANCED METALLURGICAL GROUP N.V. 13
  • 14. Financial Highlights – H1 2010 2010 H1 Revenues 2010 H1 EBITDA $479.3 $45.9 $3.2 $62.0 $22.7 $124.8 $20.0 $292.5 Revenue by Geography North America Advanced Materials Engineering Systems GK Advanced Materials Engineering Systems GK 21% Asia 18% Europe 56% South America 4% ROW 1% Revenues and EBITDA in millions AMG ADVANCED METALLURGICAL GROUP N.V. 14
  • 15. Financial Highlights Revenue Highlights (in millions)  Q2 Revenue: $243.5 million  Up 13% from Q2 2009  Q2 EBITDA: $23.9 million $243.5 $231.4 $235.8  Up 8% from Q2 2009 $214.9 $205.4  Balance sheet highlights at June 30, 2010  Cash: $84.6 million Q2 09 Q3 09 Q4 09 Q1 10 Q2 10  Debt: $204.3 million  Net debt: $119.7 million EBITDA  Total liquidity: $163.6 million (in millions) $22.2 $22.0 $23.9 $18.6 $12.4 - - Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 AMG ADVANCED METALLURGICAL GROUP N.V. 15
  • 16. Advanced Materials Financial Summary Highlights ( in millions) Revenue EBITDA ■ Infrastructure - ferrovanadium $152.0 ■ Reference prices increased 83% v. Q2 $140.5 2009 $124.3 ■ Volumes declined 28% v. Q2 2009 $110.1 ■ Aerospace – master alloys prices improved 71% v. Q2 2009 $95.9 ■ CAPEX ■ Expansion of ferrovanadium operations $8.5 $14.2 in the United States -$0.5 $5.0 $5.3 ■ Expansion of the tantalum and lithium Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 mine in Brazil CAPEX $5.0 $4.2 $3.3 $2.1 $1.9 - - - Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 AMG ADVANCED METALLURGICAL GROUP N.V. 16
  • 17. Engineering Systems Financial Summary Highlights ( in millions) Revenue EBITDA  Revenue: $59.5 million, 35% decrease quarter $91.2 over quarter  Solar silicon DSS furnace revenues $73.8 decreased 67% in Q2 2010 v. Q2 2009 $65.3 $61.6  EBITDA: $8.0 million $59.5  Backlog declined from $162 million at December 31 2009 to $121 million at June 30, 2010 $22.5  Order backlog is now primarily $11.0 $5.9 $12.1 $8.0 - - - - Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 comprised of furnaces for aerospace end market  2010 EBITDA is expected to be lower than CAPEX 2009 due to the decline in backlog $3.0 $1.7 $1.2 $1.3 $0.8 - - - - - Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 AMG ADVANCED METALLURGICAL GROUP N.V. 17
  • 18. Graphit Kropfmühl Financial Summary Highlights ( in millions) Revenue EBITDA  Revenue: $32.1 million; 17% increase over $33.7 $33.3 Q2 2009 due to increases in natural graphite $32.1 $29.9 prices and volumes $27.3  EBITDA: $1.7 million  Consistent with Q2 2009 due to cost containment measures in natural graphite and increased revenue  CAPEX only for graphite milling expansion $1.7 - $2.6 - $1.2 - $1.5 - $1.7 -  Natural graphite being used in energy Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 saving insulation applications  Silicon metal seeing stronger demand from CAPEX solar and specialty chemical markets $1.4 $1.3 $1.0 $0.8 $0.4 - - - - - Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 AMG ADVANCED METALLURGICAL GROUP N.V. 18
  • 19. Capital Base Cash and Debt Highlights – June 30, 2010 ( in millions) ■ Cash: $84.6 million Cash Debt ■ Total debt: $204.3 million $202.3 $203.8 $203.0 $204.3 $193.9 ■ Net debt: $119.7 million ■ Revolver availability: $79.0 million ■ Total liquidity $163.6 million $124.4 $108.8 $117.0 $98.9 $84.6 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Note: Cash includes short term investments AMG ADVANCED METALLURGICAL GROUP N.V. 19
  • 20. Outlook ■ Advanced Materials ■ Demand from the Aerospace and Energy industries continues to improve from 2009, however prices and volumes for infrastructure have reached a plateau; ■ 2010 revenues and EBITDA will improve significantly ■ Engineering Systems ■ Backlog is bottoming; renewed interest in solar silicon furnaces ■ Lower order backlog will result in lower 2010 revenues and EBITDA ■ Graphit Kropfmühl ■ Natural graphite demand and pricing is improving ■ Timminco ■ AMG owns 42.5% of Timminco ■ Timminco signed an agreement to sell 49% of its silicon metal operations for $39.7 million; up to $10 million more based upon meeting performance metrics AMG ADVANCED METALLURGICAL GROUP N.V. 20
  • 21. Appendix AMG ADVANCED METALLURGICAL GROUP N.V. 21
  • 22. Consolidated Balance Sheet December 31, 2009 June 30, 2010 Fixed Assets 211,022 196,004 Goodwill and Intangibles 28,253 24,055 Other Non-current Assets 78,209 70,291 Inventories 193,378 180,859 Receivables 147,787 173,735 Other Current Assets 35,313 41,989 Cash 117,016 84,574 TOTAL ASSETS 810,978 771,507 TOTAL EQUITY 228,423 217,265 Long-term Debt 168,319 156,227 Pension Liabilities 91,358 80,347 Other Long-term Liabilities 51,249 32,676 Current Debt 35,477 48,044 Accounts Payable 69,791 86,651 Advance Payments 54,764 35,748 Unearned Revenue - - Accruals 46,179 40,204 Other Current Liabilities 65,418 74,345 TOTAL LIABILITIES 582,555 554,242 TOTAL LIABILITIES AND EQUITY 810,978 771,507 AMG ADVANCED METALLURGICAL GROUP N.V. 22
  • 23. Consolidated Income Statement H1 2009 H1 2010 Revenue 430,652 479,338 Cost of sales 351,367 392,264 Gross profit 79,285 87,074 Selling, general and admin. 63,056 60,487 Asset impairment and restructuring 393 7 Environmental 87 506 Other income (3,083) (427) Operating profit 18,832 26,501 Net finance costs 7,622 5,536 Share of loss of associates (1,400) (9,420) Profit before income taxes 9,810 11,545 Income tax expense 11,948 10,993 Profit for the year from continuing operations (2,138) 552 Loss after tax for the year from discontinued operations (40,340) - Loss for the year (42,478) 552 Attributable to: Shareholders of the Company (25,112) 1,099 Minority interest (17,366) (547) AMG ADVANCED METALLURGICAL GROUP N.V. 23
  • 24. Consolidated Cash Flows Six months ended Six months ended June 30, 2009 June 30, 2010 Cash Flows from Operations (1,138) (20,295) Capital Expenditures (17,245) (11,953) Other Investing Activities (49,133) (10,076) Cash Flows from Investing Activities (66,378) (22,029) Cash Flows from Financing Activities 32,004 21,207 Net increase (decrease) in cash (35,512) (21,117) Beginning Cash 143,473 117,016 Effects of exchange rates on cash 2,119 (11,325) Ending Cash 110,080 84,574 Approximate availability under AMG lines of credit 80,000 79,024 Total Liquidity 190,080 163,598 AMG ADVANCED METALLURGICAL GROUP N.V. 24
  • 25. AMG Advanced Metallurgical Group N.V.