Amg investor presentation june 2013


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Amg investor presentation june 2013

  1. 1. Investor PresentationJune 2013
  2. 2. 2THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMGADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHERDISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITHTHIS 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 acquiresecurities 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 connectionwith, 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 anyaccompanying 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 mentionedin 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 ofapplication to subscribe for securities. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, anyoffer or commitment whatsoever. The information contained in this presentation has not been independently verified. No representation or warranty, expressor 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. TheCompany and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, noneof the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from anyuse 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 theCompany 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 acceptanceof new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economicconditions. 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 anyof 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.Cautionary Note
  3. 3. 3OverviewListed: NYSE-Euronext Amsterdam: AMGFounded: 2006LTM Revenues: $1,188.1MLTM EBITDA: $85.1MEmployees: 3,275Facilities: Netherlands, Germany, France, Czech Republic, Poland,UK, USA, Brazil, Mexico, China, India, Sri Lanka,Turkey, Zimbabwe, MozambiqueMarket cap: €187M ($247M)Shares outstanding: 27.6M52 week range: €5.81–€7.34Recent share price: €6.84 (May 29, 2013)AMG provides high value-added specialty metal alloys and engineering systems,related to CO2 reduction and conservation of natural resources to growing end markets
  4. 4. 4Business Units, Products and Markets High-value metals & alloys Coating materials Capital equipment & servicefor high purity materials Critical raw materialsAMG Processing AMG EngineeringInfrastructureAerospaceEnergyAMG MiningSpecialty Metals &Chemicals AMG’s conversion andrecycling based businesses AMG’s vacuum systemsand services business Integrated AMG’s minebased businessesServing the Technology Trends in Energy, Aerospace, Infrastructure,and Specialty Metals & Chemicals
  5. 5. 5Critical Raw MaterialsFe The EU identified 14 critical raw materials* to the European economy – focusing on twodeterminants – economic importance and supply riskNote: *European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materialsMaterials mined or processed by AMG,or melted by AMG vacuum systemsHighlighted materials meltedby AMG vacuum systemsREELiAlVSbCrNiCTaNbTiSiMo
  6. 6. 6Business Units (reporting segment) – AMG Processing Aluminum grain refiners andhigh-value master alloys forhigh performance materials inaerospace, automotive andinfrastructure applicationsValue Proposition Ferrovanadium for highstrength light weight steels ininfrastructure and ferronickelmolybdenum for stainlesssteels Titanium master alloys forhigh performance lightweight aerospace engine andframe, and coating materialsfor corrosion resistance onaerospace turbine Tantalum and niobiumsuperalloys and chrome metalfor aerospace engine andindustrial gas turbineMajor ApplicationsKey ProductsAMG Processing – conversion and recycling operations
  7. 7. 7Business Units (reporting segment) – AMG Mining Antimony trioxide and masterbatches for flame retardant onelectronics, paints, and plasticsValue Proposition Conflict-free tantalumconcentrate for tantalumcapacitors used on portableelectronics Natural graphite for insulationmaterials of buildingconstruction materials, forenergy storage of li-ironbattery for electrical vehicle,and for lubricants Silicon metal for aluminumproduction and solar panelmaterialsMajor ApplicationsKey ProductsAMG Mining – mine based value chains
  8. 8. 8Business Units (reporting segment) – AMG Engineering Vacuum melting and re-meltingfurnaces for high-performancetitanium, steel and alloys, andpurification of rare metals andalloysValue Proposition Vacuum heat treatmentfurnaces and services forhigh-performance materialsof aerospace and automotiveapplications Vacuum coating furnace foraerospace turbine bladecoatings Vacuum sintering andannealing furnaces for nuclearfuel productionsMajor ApplicationsKey ProductsAMG Engineering – vacuum systems and services
  9. 9. 9Recent Developments – Operations Update■ Process begun in Q3 2012 with implementation of a clear and direct management structure■ Instituting a number of operational improvement initiatives companywideAMG is focused on improving operational performance and increasing cash flowObjective Progress Update■ Q1 ‘13 SG&A decreased 8% compared to Q1 ‘12Reduce SG&Aby 5%■ AMG Engineering Q1 ‘13 Gross Margin improved to 25%, from22% in Q1 ’12■ AMG Mining Q1 ‘13 Gross Margin improved to 16%, from 15%in Q1 ‘12Improve GrossMarginIncreaseOperating CashFlow■ Q1 ‘13 cash from operations improved by $3.7 mm, compared toQ1 ’12■ Reduced working capital days to 61 in Q1 ‘13, from 65 in Q1 ‘12Reduce NetDebt■ Aims to reduce net debt in H2 2013
  10. 10. 10Financial Highlights
  11. 11. 11Revenue- - - - -- - - - -$22.0 $23.6 $21.6$17.7$22.2Up1%YoYQ1 12 Q2 12 Q3 12 Q4 12 Q1 13Financial Highlights$324.0 $319.6$296.9$275.2$296.5Down8%YoYQ1 12 Q2 12 Q3 12 Q4 12 Q1 13■ Q1 2013 EPS: $0.09■ Down 31% from Q1 2012Gross ProfitEBITDA(in USD millions)Adjusted EPS- - - - -- - - - -$53.4 $54.0$47.7$41.4$48.3Down10%YoYQ1 12 Q2 12 Q3 12 Q4 12 Q1 13LTM: $1,188.1LTM: $85.1(in USD millions)LTM: $191.4(in USD millions)
  12. 12. 12Capital Base■ Net debt: $200.7 million■ Debt to capitalization: 0.64x■ Net Debt to LTM EBITDA: 2.34x■ Revolver availability: $66.2 million■ Total liquidity: $172.9 million■ AMG’s primary debt facility is a $377million term loan and revolving creditfacility■ 5 year term – until 2016■ Secured an additional $62 million forits credit facility in 2012 inconjunction with the VoluntaryTender Offering for GK$81.2 $93.6$111.4 $121.6$106.7$287.6$305.9 $309.9 $315.8 $307.4Q1 12 Q2 12 Q3 12 Q4 12 Q1 13Cash Debt( in USD millions)Cash and DebtCash Flow from Operations- - - -- - - --$2.1 -$1.6$45.0$65.62009 2010 2011 2012( in USD millions)
  13. 13. 13Key ProductsQ1 2013: $296.5Revenue Gross ProfitQ1 2013: $48.3( in USD millions) ( in USD millions)Q1 2013Q1 2012 Q1 2013Q1 2012
  14. 14. 14End MarketsAerospace - 10%vs. Q1 2012Added Aluminum MasterAlloys serving AerospaceQ1 2013: $296.5Revenue Gross ProfitQ1 2013: $48.3( in USD millions) ( in USD millions)Aerospace40.7%Infrastructure12.2%Energy17.1%Specialty Metals& Chemicals30.0%Aerospace46.6%Energy16.4%Specialty Metals& Chemicals28.5%Infrastructure8.5%Aerospace + 12%vs. Q1 2012Focusing on higher marginproducts for Aerospace
  15. 15. 15■ Q1 ‘13 revenue down 8% from Q1 ‘12■ Coatings up 8%■ Chrome down 27%■ Titanium Master Alloys down 17%■ Q1 ‘13 gross margin 13% of revenue,decreased from 15% in Q1 ‘12■ Aluminum gross margins up 68%■ Lower economies of scale due to lowerrevenues■ Ramp up at the ferrovanadium facility■ Q1 ‘13 EBITDA margin 6% of revenue,decreased from 8% in Q1 ‘12■ $1.3 million decrease in personnel costs■ Q1 ‘13 CAPEX $6.6 million■ $4.7 million for FeV expansion$166.3$153.1$12.6$8.7$1.0$6.0$11.0$16.0$21.0$-$20.0$40.0$60.0$80.0$100.0$120.0$140.0$160.0$180.0$200.0Q1 12 Q1 13Revenue EBITDAAMG ProcessingFinancial Summary- -$5.6$6.6Q1 12 Q1 13Capital Expenditure( in USD millions)( in USD millions)
  16. 16. 16 Q1 ‘13 revenue down 8% from Q1 ‘12 Tantalum up 3% Natural graphite up 16% Antimony down 21% Q1 ‘13 gross margin 16% of revenue,improved from 15% in Q1 ‘12 Substantially improved tantalum mineoperations Q1 ‘13 EBITDA 10% of revenue,improved from 7% in Q1 ‘12 SG&A reduced by 9% due to costcontainment measures■ Q1 ‘13 CAPEX $2.2 million Mozambique natural graphite mineexploration programAMG MiningFinancial SummaryCapital Expenditure( in USD millions)( in USD millions)$89.6$82.9$5.9$7.9$1.0$6.0$11.0$-$20.0$40.0$60.0$80.0$100.0Q1 12 Q1 13Revenue EBITDA- -$4.8$2.2Q1 12 Q1 13
  17. 17. 17 Q1 ‘13 revenue down 11% from Q1 ‘12 Casting and sintering furnaces up 74% Heat Treatment furnaces down 61% Remelting furnaces down 34% Q1 ‘13 gross margin 25% of revenue,improved from 22% in Q1 ‘12 Improved profitability on certain largeprojects Q1 ‘13 EBITDA 9% of revenue,improved from 5% of revenue in Q1 ‘12 Order backlog down 20% to $132.2million at Mar. 31, 2013 Order intake $30.9 million in Q1 ‘13 0.51x book to bill ratioAMG EngineeringFinancial Summary- - - - -$80.6$36.4$79.7$67.8$30.9Q1 12 Q2 12 Q3 12 Q4 12 Q1 13Order Intake( in USD millions)( in USD millions)$68.0$60.5$3.5$5.6$1.0$6.0$-$10.0$20.0$30.0$40.0$50.0$60.0$70.0$80.0Q1 12 Q1 13Revenue EBITDA
  18. 18. Outlook
  19. 19. 19Outlook■ AMG’s markets, particularly for the European centric businesses, remain challenging■ Cost reductions and operational improvements targeted to increase EBITDA and cash flow in 2013■ AMG announces Q2 2013 financial results on August 9, 2013 Improved margins throughcost reductions Long-term tantalum supplycontract begins delivery in Q2;resource increased by 150% Natural graphite volumesconsistent with 2012 Declining prices on antimonyimpacting mine development Aerospace alloys demand isstable in mid-term AMG Vanadium continues toramp up the expanded facility AMG Aluminum isrationalizing production andreducing costs; sold 45% equityinterests in YKB to streamlineoperations Improved margins throughcost reductions Order intake, backlog, andrevenue will be consistent Heat Treatment Servicesoperating near capacity Generate revenue throughdiversified vacuum technologyapplicationsAMG Processing AMG EngineeringAMG Mining
  20. 20. 20Appendix
  21. 21. 21Consolidated Balance SheetBalance Sheet ($’000) ActualAs of 31-December-12* 31-March-13(restated)Fixed assets 288.3 281.8Goodwill and intangibles 38.7 39.2Other non-current assets 79.7 75.8Inventories 211.5 205.4Receivables 177.2 187.2Other current assets 33.8 35.5Cash 121.6 106.7TOTAL ASSETS 950.8 931.6TOTAL EQUITY 175.3 173.2Long-term debt 265.6 258.9Pension liabilities 138.0 132.8Other long-term liabilities 80.9 81.1Current debt 50.3 48.4Accounts payable 125.3 135.6Advance payments 27.0 21.8Accruals 58.9 52.9Other current liabilities 29.5 26.9TOTAL LIABILITIES 775.5 758.4TOTAL LIABILITIES & EQUITY 950.8 931.6* 2012 Balance Sheet restated for IFRS required adjustments to pension liabilities and mine stripping costs
  22. 22. 22Consolidated Income StatementIncome Statement ($’000) ActualFor the three months ended 31-March-12 31-March-13(restated)Revenue 323,984 296,478Cost of sales 270,547 248,220Gross profit 53,437 48,258Selling, general & admin. 38,971 36,017Asset impairment & restructuring 2,843 1,336Environmental 728 33Other income (468) (168)Operating profit 11,363 11,040Net finance costs 6,945 4,655Share of (loss) profit of associates 166 (712)Profit before income taxes 4,584 5,673Income tax expense 1,228 3,712Profit (loss) for the period 3,356 1,961Attributable to:Shareholders of the Company 3,648 2,460Non-controlling interest (292) (499)Adjusted EBITDA 22,002 22,232
  23. 23. 23Consolidated Statement of Cash FlowsCash Flow Statement ($’000) ActualFor the year ended 31-March-12 31-March-13(restated)EBITDA 22,002 22,232+/- Change in operating assets/liabilities (18,745) (9,242)-Interest paid, net (3,106) (2,192)Other operating cash flow 21 (3,777)Cash flows from operations before taxes 173 7,021Income tax paid (3,231) (6,356)Total cash flows (used in) from operations (3,058) 665Capital expenditures (11,526) (9,124)Other investing activities 28 29Cash flows from investing activities (11,498) (9,095)Cash flows from financing activities 14,709 (4,162)Net (decrease) increase in cash 1,669 (12,592)Beginning cash 79,571 121,639Effects of exchange rates on cash 1,517 (2,350)Ending cash 82,757 106,697
  24. 24. 24AMG Global LocationsareaenlargedaboveOffices