Amg investor presentation february 2011

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Amg investor presentation february 2011

  1. 1. Investor Presentation<br />February 2011<br />
  2. 2. Cautionary Note<br />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.<br />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. <br />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.<br />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.<br />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.<br />The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice.<br />This document has not been approved by any competent regulatory or supervisory authority.<br />
  3. 3. AMG Advanced Metallurgical Group N.V.<br /><ul><li>Sustainable Metals Technology Products:
  4. 4. High purity raw materials, metals and complex metal products
  5. 5. Vacuum furnaces used to produce high purity metals</li></li></ul><li>Macroeconomic Trends and Markets<br /><ul><li>AMG participates in the macro economic trend of:
  6. 6. Growing demand for natural resources in context of CO2 reduction and sustainable environmental demands for:
  7. 7. Responsible energy production and use
  8. 8. Emerging market infrastructure
  9. 9. Aerospace and light weight materials
  10. 10. Specialty metals and chemicals</li></li></ul><li>Critical Raw Materials<br /><ul><li>The EU identified 14 critical raw materials(1) to the European economy – focusing on two determinants – economic importance and supply risk
  11. 11. AMG currently produces 4 of those elements</li></ul>“Critical” raw materials<br />(1) European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials<br />
  12. 12. Products & Markets<br />Advanced Materials<br />Engineering Systems<br /><ul><li>Capital equipment for high purity materials
  13. 13. High-value alloys
  14. 14. Essential raw materials</li></ul>Infrastructure<br />Aerospace<br />Energy<br />Specialty Metals & Chemicals<br />
  15. 15. Critical Raw Materials<br /><ul><li>Primary producers of critical raw materials</li></ul>Titanium<br />Vanadium<br />Magnesium<br />Chromium<br />Antimony Graphite<br />Lithium Magnesium<br />Silicon Titanium Vanadium<br />Titanium<br />Magnesium<br />Antimony<br />Titanium<br />Magnesium<br />Graphite<br />Graphite<br />Tantalum<br />Tantalum<br />Niobium<br />Tantalum<br />Lithium<br />Tantalum<br />Chromium<br />Vanadium<br />AMG raw material mines<br />
  16. 16. Advanced Materials - Market, Products and Customers<br />Aerospace <br />Infrastructure - FeV<br />Specialty Metals<br /><ul><li>Chromium Metals
  17. 17. Tantalum
  18. 18. Antimony
  19. 19. Aluminium master alloys
  20. 20. Specialty alloys for titanium
  21. 21. Coatings for wear resistance
  22. 22. Ferro-vanadium
  23. 23. Ferro-nickel molybdenum</li></ul>Products<br /><ul><li>Reading Alloys Inc.
  24. 24. Evraz Group S.A. (Stratcor)
  25. 25. Evraz Group S.A. (Highveld Steel & Vanadium)
  26. 26. Eramet S.A. (Gulf Chemical & Metallurgical Corporation
  27. 27. Evraz Group S.A. (Stratcor)
  28. 28. Xstrata plc
  29. 29. Chengde Vanadium & Titanium Stock Co. Ltd.
  30. 30. KBM Affilips B.V.
  31. 31. KB Alloys, Inc.
  32. 32. Delachaux S.A.
  33. 33. Campine S.A.
  34. 34. Chemtura Corporation</li></ul>Competitors<br />Sample Customers<br />
  35. 35. Advanced Materials - Specialty metals pricing<br />Prices are still below pre-crisis levels; <br />tied to demand for carbon and stainless steel<br />
  36. 36. Engineering Systems - Market, Products and Customers<br />Energy - Solar<br />Aerospace<br />Energy - Nuclear<br /><ul><li>Solar silicon melting and crystallisation systems (DSS furnaces)
  37. 37. Vacuum Melting and Re-melting Systems
  38. 38. Precision Casting and Coating Systems
  39. 39. Heat Treatment with high pressure gas quenching
  40. 40. Vacuum Sintering Systems </li></ul>Products<br />Notable Successes<br /><ul><li>2005 – Introduced single crucible furnaces
  41. 41. 2005 –2009 – >$172 mm in revenue, 2nd largest market participant
  42. 42. 2010 – Introduced SCU 600+ DSS system
  43. 43. Secured first nuclear engineering contract with DOE, through Shaw-Areva
  44. 44. Two strategic acquisitions completed to expand product portfolio
  45. 45. 2010 – Market Share leader in Ti remelting in China, the fastest growing Ti market
  46. 46. 2010 – Leading market share in turbine blade coating</li></ul>Sample Customers<br />
  47. 47. Financial Overview<br />
  48. 48. Markets & Products – by the Numbers <br />YTD 2010 Revenue by Product<br />YTD 2010 Revenue by End Market<br />
  49. 49. Financial Highlights – YTD September 2010 <br />2010 YTD EBITDA $64.7<br />2010 YTD Revenue $719.8<br />Revenue by Geography<br />Revenue and EBITDA in millions<br />
  50. 50. Financial Highlights<br />Highlights<br />Revenue<br />(in millions)<br /><ul><li>Q3 Revenue: $240.4 million
  51. 51. Up 17% from Q3 2009
  52. 52. Q3 EBITDA: $18.8 million
  53. 53. Up 1% from Q3 2009
  54. 54. Q3 EPS: $0.11
  55. 55. Up from ($0.50) in Q3 2009
  56. 56. YTD Revenue: $719.8 million
  57. 57. Up 13% from YTD 2009
  58. 58. YTD EBITDA: $64.7 million
  59. 59. Up 14% from YTD 2009
  60. 60. YTD EPS: $0.42(1)
  61. 61. Up from ($0.65) YTD 2009 (1)</li></ul>EBITDA<br />(in millions)<br />(1) Excluding the equity losses from AMG’s 42.5% ownership in Timminco Limited<br />
  62. 62. Advanced Materials<br />Financial Summary<br />Highlights<br /><ul><li>Infrastructure - ferrovanadium
  63. 63. Reference prices increased 18% v. Q3 2009
  64. 64. Volumes improved 32% v. Q3 2009
  65. 65. Ferronickel-molybdenum demand decreased 43% v. Q3 2009
  66. 66. Aerospace – master alloys prices declined 23% v. Q3 2009; volumes improved 165%
  67. 67. CAPEX
  68. 68. Expansion of ferrovanadium operations in the United States</li></ul>( in millions)<br />
  69. 69. Engineering Systems<br />Financial Summary<br />Highlights<br /><ul><li>Q3 revenue decreased 14% v. Q3 2009
  70. 70. Solar silicon DSS furnace revenues decreased 44% in Q3 2010 v. Q3 2009
  71. 71. Q3 EBITDA decreased 33% v. Q3 2009
  72. 72. September 30, 2010 Backlog improved to $147.1 million from $121 million at June 30, 2010
  73. 73. Order intake $66.9 million in Q3 2010
  74. 74. 1.26x book to bill ratio
  75. 75. Diversified backlog - solar, aerospace and transportation</li></ul>( in millions)<br />
  76. 76. Graphit Kropfmühl<br />Financial Summary<br />Highlights<br />( in millions)<br /><ul><li>Q3 revenue decreased 4% v. Q3 2009
  77. 77. Decrease in silicon metal revenues due to production issues
  78. 78. Silicon metal down 7%
  79. 79. Natural graphite up 37%
  80. 80. Q3 EBITDA decreased 23% v. Q3 2009
  81. 81. Lower revenues and higher costs in silicon metal
  82. 82. Silicon metal down $1.0 million
  83. 83. Natural graphite up $0.5 million
  84. 84. CAPEX for graphite milling expansion</li></li></ul><li>Capital Base<br />Cash and Debt – September 30, 2010<br />Summary<br />( in millions)<br /><ul><li>Cash: $90.2 million
  85. 85. Total debt: $234.8 million
  86. 86. Net debt: $144.6 million
  87. 87. Revolver availability: $61.3 million
  88. 88. Total liquidity $151.5 million</li></ul>Note: Cash includes short term investments<br />
  89. 89. Outlook<br /><ul><li>Advanced Materials
  90. 90. Markets are improving
  91. 91. Antimony, tantalum and titanium alloys and coatings will drive growth in 2011
  92. 92. Engineering Systems
  93. 93. Backlog is increasing; renewed interest in solar silicon furnaces
  94. 94. Order intake driven by titanium, solar and specialty steel markets
  95. 95. Graphit Kropfmühl
  96. 96. AMG owns 88% of GK
  97. 97. Silicon metal pricing is improving
  98. 98. Timminco
  99. 99. AMG owns 42.5% of Timminco; not consolidated
  100. 100. Timminco sold 49% of its silicon metal operations for C$40.3 million; up to C$10.0 million more based upon meeting performance metrics</li></li></ul><li>Appendix<br />
  101. 101. Consolidated Balance Sheet<br /> in thousands<br />
  102. 102. Consolidated Income Statement<br /> in thousands<br />
  103. 103. Consolidated Cash Flows<br /> in thousands<br />

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