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Amg investor presentation nov 2013

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  • 1. Investor Presentation November 2013
  • 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 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. 2
  • 3. Overview Listed: NYSE-Euronext Amsterdam: AMG Founded: 2006 LTM Revenues: $1,149.6M LTM EBITDA: $81.6M Employees: 3,145 Facilities: Netherlands, Germany, France, Czech Republic, Poland, UK, USA, Brazil, Mexico, China, India, Sri Lanka, Turkey, Zimbabwe, Mozambique Market Cap: €243M ($305M) Enterprise Value: €312M ($470M) Shares outstanding: 27.6M 52 week range: €5.88–€8.35 Recent share price: €8.11 (November 7, 2013) Global provider of high value added specialty metals and related engineering systems for growing end markets, including energy, aerospace, infrastructure, and specialty metals and chemicals 3
  • 4. Business Units, Products and Markets AMG Processing AMG Mining AMG Engineering  AMG’s conversion and recycling based businesses  Integrated AMG’s mine based businesses  AMG’s vacuum systems and services business  High-value metals & alloys  Coating materials  Critical raw materials  Capital equipment & service for high purity materials Serving the Technology Trends in Energy, Aerospace, Infrastructure, and Specialty Metals & Chemicals Energy 4 Aerospace Infrastructure Specialty Metals & Chemicals
  • 5. Critical Raw Materials  The EU identified 14 critical raw materials* to the European economy – focusing on two determinants – economic importance and supply risk Materials mined or processed by AMG, or treated in AMG vacuum systems REE Materials treated by AMG vacuum systems Nb Sb C Ta Li Ti V Mo Si F e 5 Note: *European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials Al Ni Cr
  • 6. Business Units – AMG Processing AMG Processing – conversion and recycling operations Value Proposition  Aluminum grain refiners and master alloys for high performance materials in aerospace, automotive and infrastructure applications  Ferrovanadium for high strength, low alloy steels for infrastructure; ferronickel-molybdenum for stainless steel  Titanium master alloys for high performance ,light weight aerospace engine and frame, and coating materials for aerospace turbines  Tantalum and niobium 6 superalloys and chrome metal for aerospace engine and industrial gas turbines Key Products Major Applications
  • 7. Business Units – AMG Mining AMG Mining – mine based value chains Value Proposition  Antimony trioxide and master batches for flame retardant on electronics, paints, and plastics  Conflict-free tantalum concentrate for tantalum capacitors used on portable electronics  Natural graphite for building insulation materials, energy storage, li-ion batteries for electrical vehicle, and lubricants  Silicon metal for aluminum production and solar panel materials 7 Key Products Major Applications
  • 8. Business Units – AMG Engineering AMG Engineering – vacuum systems and services Value Proposition  Vacuum melting and re- melting furnaces for highperformance titanium, steel and alloys, and purification of rare metals and alloys  Vacuum heat treatment furnaces and services for high-performance materials of aerospace and automotive applications  Vacuum coating furnace for aerospace turbine blade coatings  Vacuum sintering and annealing furnaces for nuclear fuel productions 8 Key Products Major Applications
  • 9. Recent Developments – Operations Update AMG is improving operational performance and cash flow 2013 Objectives Reduce SG&A by 5% Improve Gross Margin Increase Operating Cash Flow Reduce Net Debt 9 Progress Update ■ YTD Q3‘13 SG&A reduced by 7.9%, or $8.8M, compared to YTD Q3’12, in excess of the 2013 target ■ YTD Q3’13 Gross Margin 15.6%, down 0.8% compared to YTD Q3’12 ■ Significant decline in metal prices impacted margins ■ YTD Q3’13 Operating cash flow $57.3M, up $23.8M or 71%, compared to YTD Q3’12 ■ Sep.30, 2013 Working Capital reduced $27.4M, compared to Dec. 31, 2012 – Working Capital Days reduced by 16 days ■ Sep. 30, 2013 Net Debt reduced by $30.6M, compared to Dec. 31, 2012; $16.4M reduction in Q3 2013
  • 10. Recent Developments – Operations Update AMG Processing ■ AMG Aluminum ■ Improved product mixed and reduced costs, resulting improved margins ■ AMG Superalloys and AMG Titanium Alloys & Coatings ■ Implementing fixed cost reduction programs ■ AMG Vanadium ■ Expansion ramp up on schedule, increasing volumes AMG Engineering ■ Reduced headcount by 16%, moving past the solar market downturn ■ Simplifying the reporting structure AMG Mining ■ AMG Antimony ■ Substantially lowered costs and reduced working capital ■ Drilling and geology campaign continue at mine ■ AMG Graphite ■ Optimizing current raw material supply chains 10
  • 11. Financial Highlights 11
  • 12. Financial Highlights Revenue Gross Profit LTM: $1,149.6 (in USD millions) LTM: $178.1 (in USD millions) $286.4 $296.9 $296.5 $275.2 Q3 12 Q4 12 Q1 13 $291.5 Q2 13 Down 4% YoY Q3 13 EBITDA $39.8 $47.7 Q3 12 $41.4 Q4 12 $48.3 $48.6 Q1 13 Q2 13 Down 16% YoY Q3 13 Adjusted EPS LTM: $81.6 (in USD millions) $19.8 $19.5 Q3 12* Q4 12* $22.2 $22.2 $17.7 Q1 13* Q2 13 Q3 13 12 * Prior periods restated in consistency with 2013 classifications ■ Q3 2013 fully diluted EPS: $0.05 ■ $0.18 in Q3 2012
  • 13. Capital Base Cash and Debt ( in USD millions) Cash $315.8 Debt Net Debt $279.9 $268.6 $237.1 $194.2 $189.0 ■ Net debt: $163.6M ■ A reduction of $16.4 million in Q3’13 ■ Debt to capitalization: 0.67x ■ Net Debt to LTM EBITDA: 2.01x ■ Revolver availability: $73.7M ■ Total liquidity: $190.0M $163.6 $147.2 $121.6 $89.9 $116.3 $79.6 Dec-10 Dec-11 Dec-12 Sep. 2013 Cash Flow from Operations – First 9 months ■ AMG’s primary debt facility is a $370 million term loan and revolving credit facility ■ 5 year term – until 2016 ■ Obtained waiver for tangible net worth covenant as of June 30, 2013 ■ Currently in compliance with all debt covenants ( in USD millions) $57.3 $33.5 -$13.9 13 $10.4 - - - 2010 2011 2012 2013 ■ YTD Q3’13 $57.3M Cash Flows from Operations, up 71% compared to YTD Q3’12
  • 14. Financial Highlights Revenue Gross Margin YTD September 2013 Revenue: $874.4 (in USD millions) YTD September 2013 Gross Margin: 15.6% 24.6% AMG Engineering $193.2 15.7% 11.6% AMG Mining AMG Processing $245.5 $435.7 AMG Processing EBITDA AMG Mining AMG Processing 14 AMG Engineering Capital Expenditure YTD September 2013 EBITDA: $62.1 AMG Engineering AMG Mining $18.2 $22.5 $21.3 (in USD millions) YTD September 2013 CAPEX: $22.5 AMG Engineering AMG Mining AMG Processing $1.4 $7.3 $13.9 (in USD millions)
  • 15. Key Products Revenue Gross Profit ( in USD millions) YTD September 2013: $874.4 15 ( in USD millions) YTD September 2013: $136.7
  • 16. End Markets Revenue Gross Profit ( in USD millions) YTD September 2013: $874.4 ( in USD millions) YTD September 2013: $136.7 Aerospace 45.4% Aerospace 40.7% Energy 18.1% Infrastructure 12.2% Energy 17.2% Infrastructure 9.8% Specialty Metals & Chemicals 29.0% Aerospace - 9% vs. YTD Sep. 2012 16 Specialty Metals & Chemicals 27.6 Aerospace - 2% vs. YTD Sep. 2012 Titanium alloys and Chrome metal revenue decreased Focusing on higher margin products for Aerospace
  • 17. AMG Processing Financial Summary $180.0 Revenue $160.0 EBITDA $146.9 $140.0 ( in USD millions) $138.1 $16.0 $120.0 $100.0 $80.0 $11.0 $9.1 $60.0 $4.6 $40.0 $6.0 $20.0 $- $1.0 Q3 12 Q3 13 Capital Expenditure ( in USD millions) $5.3 $3.1 - Q3 12 17 ■ Q3’13 revenue down 6% from Q3’12 ■ AMG Aluminium up 2% ■ Significant price declines in vanadium and titanium alloy products ■ AMG Vanadium down 28% - Q3 13 ■ Q3’13 gross margin 9% of revenue, down from 13% in Q3’12 ■ Metal price declines impacted margins ■ AMG Superalloys margins down 71% unfavorable product mix ■ AMG Aluminum margins up 79% product rationalization ■ Q3’13 EBITDA margin 3% of revenue, compared to 6% in Q3’12 ■ $2.0M decrease in personnel costs ■ Q3’13 CAPEX $3.1M ■ $2.2M for maintenance
  • 18. AMG Mining Financial Summary $100.0 Revenue $78.8 Q3’13 gross margin 16% of revenue, down from 17% in Q3’12  Lower average prices for the higher volume products  Q3’13 EBITDA 11% of revenue, up from 6% in Q3’12 ■ $1.5M decrease in environmental costs ( in USD millions) $82.3 $70.0 $11.0 $8.9 $60.0 $50.0 $40.0 $30.0 Q3’13 revenue up 4% from Q3’12  Volumes increased for most products  Prices were mixed – Tantalum up 12%, Graphite up 5%, Antimony down 11%, and Silicon metal down 9%  $90.0 $80.0  EBITDA $4.9 $6.0 $20.0 $10.0 $- $1.0 Q3 12 Q3 13 Capital Expenditure ( in USD millions) $3.8 $2.8 - Q3 12 18 - Q3 13 ■ Q3’13 CAPEX $2.8M  $1.0M for silicon metal furnace efficiency upgrade  $1.1M for maintenance
  • 19. AMG Engineering Financial Summary $80.0 Revenue  Q3’13 revenue down 7% from Q3’12  Nuclear furnaces up 55%  Turbine blade coating furnaces up 843%  Sintering furnaces down 51%  Remelting furnaces down 32%  Q3’13 gross margin 21% of revenue, consistent with Q3’12  Improved profitability on certain large projects  Increased focus on cost control  Q3’13 EBITDA 6% of revenue, down from 8% of revenue in Q3’12  Order backlog down 8% to $133.5M at Sep. 30, 2013, from June 30, 2013  Order intake $48.4M in Q3 ‘13  0.73x book to bill ratio $8.0 EBITDA ( in USD millions) $71.2 $70.0 $66.1 $60.0 $5.8 $50.0 $40.0 $30.0 $4.2 $20.0 $10.0 $- $3.0 Q3 12 Q3 13 Order Intake ( in USD millions) $79.7 $76.4 $67.8 $48.4 $30.9 - Q3 12 19 - Q4 12 - Q1 13 - Q2 13 - Q3 13
  • 20. Outlook
  • 21. Outlook AMG Processing AMG Mining  Continued significant declines in metal prices are impacting revenues and profitability  Implementing cost reduction programs through mid-2014  The aerospace market destocking may continue into 2014  Improved margins through cost reductions  Natural graphite volume is expected to be above 2012  Declining prices on antimony and graphite delaying mine development AMG Engineering  Order Intake is expected to improve in Q4  Continued investment in new technologies; introduced the next generation plasma melting furnace for Ti alloy industry  Full year 2013 EBITDA consistent with 2012 ■ Market conditions continue to be extremely weak, resulting in lower EBITDA in 2013 than in 2012 ■ Positive Operating Cash Flow during Q4 2013 ■ AMG announces Q4 2013 financial results on March 19, 2014 21
  • 22. Appendix 22
  • 23. Consolidated Balance Sheet Balance Sheet ($’000) As of Fixed assets Goodwill and intangibles Other non-current assets Actual 31-December-12* 30-September-13 (restated) 288,269 258,211 38,722 36,539 77,710 78,178 Inventories Receivables Other current assets Cash TOTAL ASSETS 185,569 161,310 36,496 116,278 872,581 TOTAL EQUITY 175,263 139,972 Long-term debt Pension liabilities Other long-term liabilities 265,553 137,957 78,940 244,658 132,981 84,157 Current debt Accounts payable Advance payments Accruals Other current liabilities TOTAL LIABILITIES TOTAL LIABILITIES & EQUITY 23 211,531 177,232 33,667 121,639 948,770 50,291 125,342 26,989 58,934 29,501 773,507 948,770 35,236 123,272 26,878 53,562 31,865 732,609 872,581 * AMG restated the December 31, 2012 statement of financial position and 2012 income statement to comply with new IFRS standards and interpretations.
  • 24. Consolidated Income Statement Income Statement ($’000) For the three months ended Revenue Cost of sales Gross profit Selling, general & admin. Asset impairment & restructuring Environmental Other income, net Operating profit Actual 30-September-12* 30-September-13 (restated) 296,851 286,415 249,314 246,623 47,537 39,792 34,411 476 1,712 (186) 11,124 32,343 1,753 48 (1,627) 7,275 Net finance costs Share of profit of associates Profit before income taxes 4,328 208 7,004 5,665 26 1,636 Income tax expense Profit for the period 2,101 4,903 459 1,177 Shareholders of the Company Non-controlling interest 5,006 (103) 1,407 (230) Adjusted EBITDA 24 19,814 17,701 * AMG restated the December 31, 2012 statement of financial position and 2012 income statement to comply with new IFRS standards and interpretations.
  • 25. Consolidated Statement of Cash Flows Cash Flow Statement ($’000) For the nine months ended EBITDA Actual 30-September-12* (restated) 30-September-13 64,286 62,084 +/- Change in operating assets/liabilities (10,773) 27,369 -Interest paid, net (10,030) (11,331) Other operating cash flow 1,644 (9,260) Cash flows from operations before taxes 45,127 68,862 Income tax paid (11,619) (11,544) Total cash flows from operations 33,508 57,318 (33,875) (22,534) (169) 436 (34,044) (22,098) Cash flows from (used in) financing activities 32,260 (42,596) Net increase (decrease) in cash 31,724 (7,376) Beginning cash 79,571 121,639 91 2,015 111,386 116,278 Capital expenditures Other investing activities Cash flows (used in) investing activities Effects of exchange rates on cash Ending cash 25 * AMG restated the December 31, 2012 statement of financial position and 2012 income statement to comply with new IFRS standards and interpretations.
  • 26. AMG Global Locations area enlarged above Offices 26

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