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AMG Advanced Metallurgical Group N.V.
Investor Presentation August 2017
About AMG 4
CO2 Reduction 5
Strong Capital Structure 6
Critical Raw Materials 7
Critical Materials Price Trends 8
Critical Materials Prices: 10 Year Perspective 9
AMG Business Segments 10
Global Footprint 11
Health and Safety Focus 13
Financial Highlights 14
Strategy & Outlook 25
Key Products & End Markets 29
Appendix 35
TABLE OF
CONTENTS
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.
3
4
GLOBAL TRENDS
CO2 emission reduction,
population growth, increasing
affluence, and energy
efficiency
DEMAND
Innovative new products
that are lighter, stronger,
and resistant to higher
temperatures
SUPPLY
AMG sources, processes, and
supplies the critical materials
that the market demands
AMG IS A CRITICAL
MATERIALS COMPANY
4
5
AMG: MITIGATING TECHNOLOGIES
Products and processes saving raw
materials, energy and CO2 emissions
during manufacturing
(i.e., recycling of Ferrovanadium)
AMG: ENABLING TECHNOLOGIES
Products and processes saving
CO2 emissions during use
(i.e., light-weighting and fuel efficiency in
the aerospace and automotive industries)
A GLOBAL IMPERATIVE FOR THE 21ST CENTURY
CO2 REDUCTION
LEADER IN ADVANCED TECHNOLOGIES
TO ADDRESS CO2 REDUCTION
AMG has developed into a
leader in enabling technologies
STRONG CAPITAL STRUCTURE, FREE OF NET DEBT, POSITIONED FOR GROWTH
6
• Refinanced credit facility in 2016,
providing a stable capital base
and liquidity for strategic growth
• Deleveraged balance sheet
Optimized
capital structure
• Rigorous process to review
strategic growth opportunities that
is both selective and opportunistic
• Organic growth strategy is focused
on areas of our portfolio that are
marked by strong demand growth
or supply limitations
• Financially and operationally
capable of quickly assessing
opportunities
• Initiated first dividend to
shareholders in 2015
• Reflecting AMG commitment to
return value to shareholders
Disciplined organic
growth and
acquisitions
Return excess cash
to shareholders
Driving long term sustainable growth and shareholder value
CRITICAL RAW MATERIALS
• The EU identified 20 critical
raw materials* to the
European economy in
2014, focusing on two
determinants: economic
importance and supply risk
• The US identified 30 critical
materials* which are vital
to national defense,
primarily through assessing
supply risk
• AMG has a unique
critical materials
portfolio comprising:
o 5 EU critical raw materials
o 4 US critical raw materials
o Highly engineered Titanium
Alloys for the aerospace industry
o High value added Aluminum
Master Alloys
o Vanadium, Nickel and
Molybdenum from recycled
secondary raw materials
Heavy REE
Niobium
Chromium
Light REE
Magnesium
Germanium
Indium
Gallium
Cobalt
Beryllium
PGMS
Fluorspar
Phosphate Rock
Borate
Magnesite
Tungsten
Coking Coal
Vanadium
Aluminum alloys
TinMolybdenum
Nickel
Antimony
Silicon Metal
Natural
Graphite
Tantalum
SUPPLYRISK
ECONOMIC IMPORTANCE
Melted or treated by AMG vacuum systemsProduced by AMG
Critical raw materials identified by the US and produced by AMG EU Critical Raw Materials
Titanium alloys
Lithium
*Report on Critical Raw Materials for the EU, May 2014; Strategic and Critical Materials 2015 Report on Stockpile Requirements
by Department of Defense in January 2015.
7
CRITICAL MATERIALS PRICE TRENDS
8
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
1. AMG EU Critical Materials 2. AMG Portfolio
(includes #1)
3. LME Metals 4. Oil
10 Yr
CAGR:
-5.6%
10 Yr
CAGR:
2.7%
10 Yr
CAGR:
-3.9%
AMG: EU Critical Materials
OIL
LME Metals
AMG Portfolio
The cumulative average
10 year price appreciation
of the AMG Portfolio was 9.6
percentage points higher than
London Metal Exchange
(LME) metals and 7.9 points
higher than oil, while AMG
EU Critical Materials
outperformed LME Metals
and oil by 8.3 and 6.6
percentage points,
respectively
Critical materials
prices typically
outperform the LME
Note: Compound annual growth rates are calculated over the period Jun ‘07 through Jun ‘17 using the equation ((Ending Value / Beginning
Value) ^ (1 / # of years) - 1) where ending value is avg monthly price in Jun ‘17 and beginning value is avg monthly price in Jun ‘07; and where
AMG EU Critical Materials include Sb, Cr, Graphite & Si; AMG Portfolio includes Sb, Cr, FeV, Li, Nb, Si, Sr, Graphite, Ta, Sn & Ti; and LME
Metals include Al, Co, Cu, Pb, Mo, Ni, & Zn. Avg annual growth rates (plotted above) are calculated over the same period using the equation
((Ending Value / Beginning Value) -1) and considering the same metal categorizations where ending value is avg monthly price in Jun of the
given year and beginning value is avg monthly price in Jun ‘07.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
10 Yr
CAGR:
4.0%
CRITICAL MATERIALS PRICES: 10 YEAR PERSPECTIVE
• Metal prices are
measured on a scale
of 0 to 10, with 0 and 10
representing the minimum
and maximum average
quarterly prices occurring
during the past 10 years
• The positions demonstrate
the current price level of
each metal with respect to
their various historical
price points over the past
10 years
AMG’s relevant
prices have started to
move into the second
quartile
1.2
1.0
1.9
3.2 3.1
0.9
4.2
3.9
1.5
3.6
0.3
1.2
0.3
1.5
2.5
1.7
0.9
1.2
2.9
0.8
1.8
0
2.5
5
7.5
10
Scale
Metals
Jun 2017 Position Jun 2016 Position
Cr Mo Ni FeV Ti Al C Si Ta Sb
Highest
Price in
10 years
Lowest
Price in
10 years
Nb
[unchanged]
Note: Metal Positions are measured on a scale of 0 to 10, with 0 being the minimum price and 10 being the maximum price. They are calculated
using the formula [(Jun ‘07 month avg – min. monthly avg) / (max. monthly avg – min. monthly avg) *10] where maximum and minimum monthly
averages are measured over the period 1 Jun ‘07 through 30 Jun ‘17.
9
[unchanged]
AMG BUSINESS SEGMENTS
10
AMG CRITICAL
MATERIALS
AMG’s conversion, mining,
and recycling businesses
• Vanadium
• Superalloys
• Titanium Alloys & Coatings
• Aluminum Alloys
• Tantalum & Niobium & Lithium
• Antimony
• Graphite
• Silicon Metal
AMG ENGINEERING
AMG’s vacuum systems and
services business
• Furnaces
• Heat treatment services
AMG GLOBAL FOOTPRINT – CRITICAL MATERIALS
11
AMG GLOBAL FOOTPRINT – AMG ENGINEERING
12
Mexico City,
MEXICO
Port Huron
(MI), USA
Berlin,
GERMANY
Limbach,
GERMANY
Mumbai,
INDIA
Suzhou,
CHINA
Wixom
(MI), USA
Grenoble,
FRANCE
Headquarters Production Facility Heat Treatment Services
Hanau,
GERMANY
Head Office
HEALTH AND SAFETY FOCUS
13
Rigorous commitment
to safety reflected in
continually improving
safety records
LEADING SAFETY INDICATORS
• The number of safety improvement items reported in Q2 2017
was only 3% lower than in Q2 2016. These are essential in order to
avoid potential injuries.
• Safety training hours increased 4% in Q2 2017 compared to Q2
2016.
• At the end of Q2 2017, lost time incident rate was 48% lower and
total incident rate and incident severity rate were down 41% and
36%, respectively, from Q2 2016.
YEAR
LOST TIME
INCIDENTS
IN THE LAST
12 MONTHS
12 MONTH
AVERAGE
LOST TIME
INCIDENT RATE
12 MONTH
AVERAGE
INCIDENT
SEVERITY RATE
2016 36 1.33 0.14
2017 19 0.69 0.09
14
AMG Advanced Metallurgical Group N.V.
Financial Highlights
Q2 2017 AT A GLANCE
15
• Q2 ‘17 EBITDA up 23%
versus Q2 ‘16 due to
improved profitability
within both AMG Critical
Materials and AMG
Engineering
• Annualized ROCE
increased to 23.9%
in Q2 2017 versus 17.8%
for Q2 2016
Net Debt Reduction
of $80.5 million since
December 2014
AMOUNTS IN $M
(EXCEPT EARNINGS PER SHARE) Q2 2017 Q2 2016 % CHANGE
Revenue $262.0 $248.3 6%
Gross Profit * $54.3 $53.3 2%
Gross Margin % 20.7% 21.5% (4%)
Profit Before Income Taxes $20.8 $15.6 33%
EBITDA $31.9 $26.0 23%
EBITDA Margin % 12.2% 10.5% 16%
Net Debt $7.3 $5.5 33%
Return On Capital Employed (ROCE) 23.9% 17.8% 34%
Net Income Attributable To Shareholders $13.1 $13.4 (2%)
Earnings Per Share 0.42 0.48 (13%)
* Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations.
FINANCIAL HIGHLIGHTS
16
$26.0
$23.4
$30.0
$33.0 $31.9
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
$248.3 $247.5
$237.9
$258.0 $262.0
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
$53.3
$46.3
$43.0
$52.5
$54.3
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
REVENUE (IN MILLIONS OF US DOLLARS)
$92.8
$68.1
$61.7
$81.8
$76.9
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17
* Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations.
GROSS PROFIT * (IN MILLIONS OF US DOLLARS)
ORDER INTAKE (IN MILLIONS OF US DOLLARS)EBITDA (IN MILLIONS OF US DOLLARS)
6%
YoY
22%
YoY
17%
YoY
2%
YoY
FINANCIAL DATA: ROCE & EBITDA
17
• Q2 ‘17 EBITDA up 22%
versus Q2 ‘16 due to
improved profitability
within both AMG Critical
Materials and AMG
Engineering
• Q2 2017 annualized ROCE
improved to 23.9% from
17.8% in Q2 2016
• ROCE improvements
are the result of efficient
use of capital and
improved profitability
Annualized ROCE
EBITDA (IN MILLIONS OF US DOLLARS)
$26.0
$23.4
$30.0
$33.0 $31.9
Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17
Q2 ‘17 ROCE
IMPROVED TO
23.9% FROM
17.8% IN Q2 ‘16
Q2 ‘17 EBITDA
UP 22%
VERSUS Q2 ‘16
9.2%
7.4%
11.9% 12.0%
17.8%
23.9%
2012 2013 2014 2015 Q2 '16 Q2 '17
FINANCIAL DATA: NET DEBT & NET CASH FROM OPERATIONS
18
• Net debt: $7.3 million
o $186.9 million reduction of net
debt since December 31, 2012
• AMG’s primary debt
facility is a $400 million
multicurrency term loan
and revolving credit facility
o 5 year term (until 2021) with
an accordion feature that
allows the Company, subject
to certain conditions, to
increase the commitment
amount by up to $100 million
o In compliance with all
debt covenants
• AMG generated cash from
operating activities of $28.5
million for the first half of
2017, $8.5 million higher
than the first half of 2016
$194.2
$160.5
$87.8
($1.0)
$6.2 $7.3
2012 2013 2014 2015 Q2 '16 Q2 '17
-$10
$5
$20
$35
$50
Q1 Q2 Q3 Q4
2012 2013 2014
2015 2016 2017
NET DEBT (CASH) (IN MILLIONS OF US DOLLARS)
OPERATING CASH FLOW (IN MILLIONS OF US DOLLARS)
$187M
REDUCTION
IN NET DEBT
SINCE 2012
Q2 2017
OPERATING
CASH FLOW
OF $10.6M
DIVISIONAL FINANCIAL HIGHLIGHTS – Q2 2017 VS. Q2 2016
19
REVENUE
EBITDA
Q2 2017 EBITDA: $31.9
Q2 2017 REVENUE: $262.0 Q2 2017 GROSS MARGIN: 20.7%
GROSS MARGIN *
CAPITAL EXPENDITURE
Q2 2017 CAPEX: $18.6
$66.7
$181.6
$59.4
$202.6
AMG
Engineering
AMG Critical
Materials
Q2 2017
Q2 2016
$5.6
$20.5
$8.0
$23.9
AMG
Engineering
AMG Critical
Materials
Q2 2017
Q2 2016 $1.3
$6.2
$1.7
$16.9
AMG
Engineering
AMG Critical
Materials
Q2 2017
Q2 2016
23.0%
20.9%
28.2%
18.5%
AMG
Engineering
AMG Critical
Materials
Q2 2017
Q2 2016
(IN MILLIONS OF US DOLLARS)
(IN MILLIONS OF US DOLLARS) (IN MILLIONS OF US DOLLARS)
* Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations.
WORKING CAPITAL REDUCTION
20
WORKING CAPITAL DAYS REDUCED BY 72% SINCE Q3’10
79
69 70 70 70
65 65 65 65
62 61
53
47
43
47
42
31
23
28
30 30
19
26
17 17
15
18
22
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
57 DAYS,
OR 72%
REDUCTION
Q1
‘11
Q2
‘11
Q3
‘11
Q4
‘11
Q1
‘12
Q2
‘12
Q3
‘12
Q4
‘12
Q1
‘13
Q2
‘13
Q3
‘13
Q4
‘13
Q1
‘14
Q2
‘14
Q3
‘14
Q3
‘10
Q4
‘10
Q4
‘14
Q1
‘15
Q2
‘15
Q3
‘15
Q4
‘15
Q1
‘16
Q2
‘16
Q3
‘16
Q4
‘16
Q1
‘17
Q2
‘17
AMG CRITICAL MATERIALS
21
• Q2 2017 revenue of
$202.6 million was 12%
higher than Q2 2016
• EBITDA increased by $3.4
million over Q2 2016 to $23.9
million in the second quarter
of 2017, driven primarily by
strong financial performance
in vanadium and titanium
alloys
• Capital expenditures
increased to $16.9 million
in Q2 2017 vs. $6.2 million in
Q2 2016
• The largest expansion capital
projects were AMG’s lithium
project in Brazil, and titanium
aluminide expansion in
Germany
$181.6 $177.5
$166.0
$194.5
$202.6
$20.5
$14.5
$22.1
$25.7 $23.9
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Revenue EBITDA
$6.2
$7.7
$20.2
$9.5
$16.9
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
REVENUE & EBITDA (IN MILLIONS OF US DOLLARS)
CAPITAL EXPENDITURES (IN MILLIONS OF US DOLLARS)
Q2 2017 REVENUE
INCREASED BY
$21.0M OVER Q2
2016
INCREASE OF $10.7M
Q2 ‘17 VS. Q2 ’16
DUE TO EXPANSION
PROJECTS
AMG CRITICAL MATERIALS – QUARTERLY REVENUE DRIVERS
22
• AMG Critical Materials Q2 2017
revenue of $202.6 million was
12% higher than Q2 2016
• Improving vanadium,
molybdenum, nickel, aluminum,
titanium and antimony prices,
and higher sales volumes of
chrome, antimony, silicon and
titanium products resulted in
higher revenue in Q2 2017
versus the same period in the
prior year
• Lower sales of tantalum in the
quarter, due to the temporary
shut-down in one of AMG's two
tantalum production lines, were
partially offset by higher sales of
niobium products
• Tantalum sales prices declined
following the termination of
AMG’s long-term, supply
agreement
• Silicon revenue and gross profit
declined in the second quarter
2017, versus the same period in
the prior year, due to lower sales
prices
KEY PRODUCT Q2 ‘17 REV
($M)
Q2 ‘16 REV
($M)
VOLUME PRICE
FeV & FeNiMo $27.0 $22.8
Al Master Alloys
& Powders
$45.8 $43.0
Chromium Metal $26.1 $19.9
Tantalum &
Niobium
$13.5 $17.2
Titanium Alloys
& Coatings
$26.2 $21.1
Antimony $27.3 $19.0
Graphite $16.2 $16.4
Silicon Metal $20.5 $22.4
CRITICAL MATERIALS – AVERAGE QUARTERLY PRICES
23
MATERIALS
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Ferrovanadium ($/lb) $10.03 $9.99 $10.65 $12.35 $12.30
Molybdenum ($/lb) $7.42 $7.01 $6.63 $7.90 $8.03
Nickel ($/MT) $8,819 $10,262 $10,685 $10,267 $9,222
Aluminum ($/MT) $1,571 $1,620 $1,710 $1,851 $1,909
Chrome ($/lb) $3.76 $3.67 $3.65 $3.83 $4.02
Tantalum ($/lb) $62 $60 $56 $57 $67
Niobium Oxide ($/kg) $27 $28 $26 $27 $30
Ti Sponge ($/kg) $8.25 $8.15 $8.15 $8.24 $8.74
Antimony ($/MT) $6,252 $7,271 $7,482 $8,098 $8,890
Graphite ($/MT) $585 $585 $585 $585 $585
Silicon Metal (€/MT) €1,684 €1,648 €1,733 €1,993 €1,989
Q2 ‘17 VS. Q2
‘16 % CHANGE
23%
8%
5%
21%
7%
9%
9%
6%
42%
–
18%
Q2 ‘17 VS. Q1
‘17 % CHANGE
–
2%
(10%)
3%
5%
17%
11%
6%
10%
–
–
AMG ENGINEERING
24
• EBITDA increased by
$2.4 million in Q2 2017
versus Q2 2016
• AMG Engineering
continues to experience
strong sales of turbine
blade coating powder
metallurgy and plasma re-
melting furnaces for the
aerospace market and heat
treatment furnaces for the
automotive market
• AMG Engineering order
backlog of $183.3 million
as of June 30, 2017, a 35%
increase compared to
December 31, 2016
• AMG Engineering signed
$76.9 million in new orders
during Q2 2017, a 1.29x
book to bill ratio
$66.7
$70.0 $71.9
$63.5
$59.4
$5.6
$8.9
$7.9
$7.3
$8.0
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Revenue EBITDA
$92.8
$68.1
$61.7
$81.8
$76.9
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
REVENUE & EBITDA (IN MILLIONS OF US DOLLARS)
ORDER INTAKE (IN MILLIONS OF US DOLLARS)
EBITDA
IMPROVEMENT
OF 43% VS. Q2 2016
BOOK TO BILL
RATIO OF 1.29X
IN Q2 2017
AMG Advanced Metallurgical Group N.V.
Strategy &
Outlook
AMG: READY FOR GROWTH
26
2012 2013 2014 2015 2016 to 2020
COST REDUCTION
PRODUCT MIX OPTIMIZATION
SUPPLY CHAIN EXCELLENCE
TARGETED W/C & DEBT LEVELS
SCALING PROFITABLE GROWTH
Cost-reduction and capex
discipline in response to
global economic slowdown
Competitive advantage through
manufacturing and supply
chain excellence, accelerating
cost-reduction efforts
Properly positioned, financially
and operationally, to pursue
growth targets across portfolio
Streamlined operations
and improved operating
performance by eliminating
low-margin product lines
Further reduction in both
working capital and net
debt, strengthening the
balance sheet
STRATEGY
27
INDUSTRY
CONSOLIDATION
PROCESS INNOVATION
& PRODUCT
DEVELOPMENT
Pursue opportunities for horizontal and vertical industry consolidation
across AMG’s critical materials portfolio
Continue to focus on process innovation and product development to
improve the market position of AMG’s businesses
AMG’s strategy is to build its critical materials business through industry
consolidation, process innovation and product development
EXPANSION OF
EXISTING HIGH GROWTH
BUSINESSES
Pursue opportunities in high-growth areas within the existing
product portfolio
AMG’s overriding strategic objective is to achieve industry leadership while being
the low cost producer
27
2017 OUTLOOK & LITHIUM PROJECT UPDATE
28
LITHIUM PROJECT
UPDATE
OUTLOOK
Overview: Project is progressing in-line with expectations – production expected to
commence mid-2018.
Mibra Resource: In April 2017, AMG published an updated resource statement for the Mibra
mine showing an increase of approximately 38% compared to the previous mineral resource
statement completed in 2013.
Spodumene Expansion: Target to increase annual lithium concentrate production capacity
up to 180,000 tons by the end of 2019.
Marketing efforts: On March 3, 2017, AMG announced that it had signed a multi-year
contract to supply 90,000 tons per year of lithium concentrate with deliveries commencing in
the second half of 2018. Sales prices are partially indexed to the published market price of
lithium carbonate, subject to a contractual minimum threshold. The sales price (CIF China),
determined with reference to the current published lithium carbonate market price, would
exceed $800 per ton lithium concentrate.
AMG expects full year 2017 profitability to improve relative to 2016.
AMG's management team is focused on delivering our highly accretive lithium project and
executing our long-term lithium strategy. In addition, we will continue to pursue other
acquisition opportunities and organic growth projects in order to generate long term value for
our shareholders.
28
Management’s priority in 2017 is to execute our highly accretive lithium project
AMG Advanced Metallurgical Group N.V.
Key Products
& End Markets
29
KEY PRODUCTS
30
$-
$45
$90
$135
$180
$225
$270
Q2 2016 Q2 2017
Vacuum Furnaces Ti Master Alloys & Coatings Al Master Alloys & Powders
Vanadium & FeNiMo Chromium Metal Antimony
Tantalum & Niobium Graphite Si Metal
$-
$10
$20
$30
$40
$50
$60
Q2 2016 Q2 2017
$54.0
$262.0
$248.3 $53.8
* Before non-recurring items
REVENUE (IN MILLIONS OF US DOLLARS) GROSS PROFIT * (IN MILLIONS OF US DOLLARS)
CRITICAL MATERIALS – MARKET TRENDS
31
ENERGY TRANSPORTATION INFRASTRUCTURE SPEC. METALS & CHEM.
CRITICAL MATERIALS MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS
AMG ANTIMONY
ANTIMONY TRIOXIDE
ANTIMONY MASTERBATCHES
ANTIMONY PASTES
PLASTICSFLAME RETARDANTS
MICRO CAPACITORS,
SUPERALLOYS
AMG BRAZIL
TANTALUM & NIOBIUM
COMMUNICATIONS &
ELECTRONICS
FUEL EFFICIENCY
EXPANDED
POLYSTYRENE (EPS),
BATTERY ANODES
AMG GRAPHITE
NATURAL GRAPHITE
ENERGY SAVING
ENERGY STORAGE
ALUMINUM ALLOYS,
SOLAR
AMG SILICON
SILICON METAL
FUEL EFFICIENCY
CLEAN ENERGY
BATTERIES
AMG LITHIUM
LITHIUM CONCENTRATE
(SPODUMENE)
RENEWABLE ENERGY
COMMUNICATIONS &
ELECTRONICS
CONFIDENTIAL
CRITICAL MATERIALS – MARKET TRENDS
AMG ALUMINUM
ALUMINUM MASTER
ALLOYS
ALUMINUM POWDERS
FUEL EFFICIENCY
AEROSPACE,
AUTOMOTIVE
INFRASTRUCTURE
AMG VANADIUM
FERROVANADIUM
FERRONICKEL-
MOLYBDENUM
INFRASTRUCTURE
GROWTH
AEROSPACE
AMG TITANIUM
ALLOYS & COATINGS
TITANIUM MASTER ALLOYS
& COATINGS
FUEL EFFICIENCY
ENERGY SAVING
AMG SUPERALLOYS UK
CHROMIUM METAL
FUEL EFFICIENCYAEROSPACE
CRITICAL MATERIALS MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS
ENERGY TRANSPORTATION INFRASTRUCTURE SPEC. METALS & CHEM.
32
ENGINEERING – MARKET TRENDS
33
AMG ENGINEERING
CAPITAL GOODS
(VACUUM FURNACES)
FUEL EFFICIENCY
ELECTRONICS
AMG ENGINEERING
VACUUM HEAT TREATMENT
SERVICES
FUEL EFFICIENCY
AEROSPACE,
AUTOMOTIVE
AEROSPACE,
AUTOMOTIVE
PRODUCTS & SERVICES MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS
ENERGY TRANSPORTATION INFRASTRUCTURE SPEC. METALS & CHEM.
AMG AT A GLANCE
34
AMG IS A GLOBAL
SUPPLIER OF
CRITICAL
MATERIALS TO:
Q2 2017 REVENUE
TRANSPORTATIONENERGY INFRASTRUCTURE SPECIALTY METALS
AND CHEMICALS
BY END MARKET: BY REGION:BY SEGMENT:
45% Europe
32% North America
18% Asia
5% ROW
23% Engineering
77% Critical
Materials
25% Infrastructure
22% Specialty Metals
& Chemicals
43% Transportation
10% Energy
Market leading producer of highly engineered specialty metals and vacuum furnace systems
~3,000
Employees
~$1 billion
Annual Revenues
At the forefront of
CO2 Reduction
34
AMG Advanced Metallurgical Group N.V.
Appendix
3535
CONSOLIDATED BALANCE SHEET
36
AS OF
IN MILLIONS OF US DOLLARS
JUNE 30, 2017
UNAUDITED
DECEMBER 31, 2016
Fixed assets 247.5 226.1
Goodwill and intangibles 36.1 33.2
Other non-current assets 83.3 91.7
Inventories 146.8 143.6
Receivables 153.0 129.2
Other current assets 42.9 35.8
Cash 168.9 160.7
TOTAL ASSETS 878.5 820.3
TOTAL EQUITY 241.1 197.8
Long term debt 149.6 151.0
Employee benefits 150.4 141.6
Other long term liabilities 46.7 49.9
Current debt 26.6 17.1
Accounts payable 140.9 133.3
Advance payments 38.0 29.4
Accruals 52.4 57.5
Other current liabilities 32.8 42.9
TOTAL LIABILITIES 637.4 622.5
TOTAL EQUITY AND LIABILITIES 878.5 820.3
CONSOLIDATED INCOME STATEMENT
37
FOR THE SIX MONTHS ENDED
IN MILLIONS OF US DOLLARS
JUNE 30, 2017
UNAUDITED
JUNE 30, 2016
UNAUDITED
Revenue 520.0 485.7
Cost of sales 413.2 388.2
Gross profit * 106.8 97.5
Selling, general & administrative 63.6 66.1
Other income, net (0.3) (0.4)
Operating profit 43.6 31.9
Net finance costs 3.8 5.2
Share of profit of associates – 1.4
Profit before income taxes 39.8 28.2
Income tax expense 11.2 3.1
Profit for the period 28.6 25.1
Shareholders of the Company 28.7 25.4
Non-controlling interest (0.1) (0.3)
ADJUSTED EBITDA 64.8 47.2
* Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest
recommendations.
CONSOLIDATED STATEMENT OF CASH FLOWS
38
FOR THE SIX MONTHS ENDED
IN MILLIONS OF US DOLLARS
JUNE 30, 2017
UNAUDITED
JUNE 30, 2016
UNAUDITED
EBITDA 64.8 47.2
Change in working capital and deferred revenue (22.9) (5.0)
Other operating cash flow (4.2) (15.4)
Cash generated from operating activities 37.7 26.8
Finance costs paid, net (4.2) (3.2)
Income tax paid (4.9) (3.7)
Net cash from operating activities 28.5 20.0
Capital expenditures (29.5) (14.4)
Other investing activities 1.8 (4.9)
Net cash used in investing activities (27.7) (19.3)
Net cash used in financing activities (0.5) (3.7)
Net increase (decrease) in cash and equivalents 0.2 (3.0)
Cash and equivalents at January 1 160.7 127.8
Effect of exchange rate fluctuations on cash held 7.9 0.3
CASH AND EQUIVALENTS AT JUNE 30 168.9 125.1

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AMG Investor Presentation August 2017

  • 1. AMG Advanced Metallurgical Group N.V. Investor Presentation August 2017
  • 2. About AMG 4 CO2 Reduction 5 Strong Capital Structure 6 Critical Raw Materials 7 Critical Materials Price Trends 8 Critical Materials Prices: 10 Year Perspective 9 AMG Business Segments 10 Global Footprint 11 Health and Safety Focus 13 Financial Highlights 14 Strategy & Outlook 25 Key Products & End Markets 29 Appendix 35 TABLE OF CONTENTS
  • 3. 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. 3
  • 4. 4 GLOBAL TRENDS CO2 emission reduction, population growth, increasing affluence, and energy efficiency DEMAND Innovative new products that are lighter, stronger, and resistant to higher temperatures SUPPLY AMG sources, processes, and supplies the critical materials that the market demands AMG IS A CRITICAL MATERIALS COMPANY 4
  • 5. 5 AMG: MITIGATING TECHNOLOGIES Products and processes saving raw materials, energy and CO2 emissions during manufacturing (i.e., recycling of Ferrovanadium) AMG: ENABLING TECHNOLOGIES Products and processes saving CO2 emissions during use (i.e., light-weighting and fuel efficiency in the aerospace and automotive industries) A GLOBAL IMPERATIVE FOR THE 21ST CENTURY CO2 REDUCTION LEADER IN ADVANCED TECHNOLOGIES TO ADDRESS CO2 REDUCTION AMG has developed into a leader in enabling technologies
  • 6. STRONG CAPITAL STRUCTURE, FREE OF NET DEBT, POSITIONED FOR GROWTH 6 • Refinanced credit facility in 2016, providing a stable capital base and liquidity for strategic growth • Deleveraged balance sheet Optimized capital structure • Rigorous process to review strategic growth opportunities that is both selective and opportunistic • Organic growth strategy is focused on areas of our portfolio that are marked by strong demand growth or supply limitations • Financially and operationally capable of quickly assessing opportunities • Initiated first dividend to shareholders in 2015 • Reflecting AMG commitment to return value to shareholders Disciplined organic growth and acquisitions Return excess cash to shareholders Driving long term sustainable growth and shareholder value
  • 7. CRITICAL RAW MATERIALS • The EU identified 20 critical raw materials* to the European economy in 2014, focusing on two determinants: economic importance and supply risk • The US identified 30 critical materials* which are vital to national defense, primarily through assessing supply risk • AMG has a unique critical materials portfolio comprising: o 5 EU critical raw materials o 4 US critical raw materials o Highly engineered Titanium Alloys for the aerospace industry o High value added Aluminum Master Alloys o Vanadium, Nickel and Molybdenum from recycled secondary raw materials Heavy REE Niobium Chromium Light REE Magnesium Germanium Indium Gallium Cobalt Beryllium PGMS Fluorspar Phosphate Rock Borate Magnesite Tungsten Coking Coal Vanadium Aluminum alloys TinMolybdenum Nickel Antimony Silicon Metal Natural Graphite Tantalum SUPPLYRISK ECONOMIC IMPORTANCE Melted or treated by AMG vacuum systemsProduced by AMG Critical raw materials identified by the US and produced by AMG EU Critical Raw Materials Titanium alloys Lithium *Report on Critical Raw Materials for the EU, May 2014; Strategic and Critical Materials 2015 Report on Stockpile Requirements by Department of Defense in January 2015. 7
  • 8. CRITICAL MATERIALS PRICE TRENDS 8 -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% 1. AMG EU Critical Materials 2. AMG Portfolio (includes #1) 3. LME Metals 4. Oil 10 Yr CAGR: -5.6% 10 Yr CAGR: 2.7% 10 Yr CAGR: -3.9% AMG: EU Critical Materials OIL LME Metals AMG Portfolio The cumulative average 10 year price appreciation of the AMG Portfolio was 9.6 percentage points higher than London Metal Exchange (LME) metals and 7.9 points higher than oil, while AMG EU Critical Materials outperformed LME Metals and oil by 8.3 and 6.6 percentage points, respectively Critical materials prices typically outperform the LME Note: Compound annual growth rates are calculated over the period Jun ‘07 through Jun ‘17 using the equation ((Ending Value / Beginning Value) ^ (1 / # of years) - 1) where ending value is avg monthly price in Jun ‘17 and beginning value is avg monthly price in Jun ‘07; and where AMG EU Critical Materials include Sb, Cr, Graphite & Si; AMG Portfolio includes Sb, Cr, FeV, Li, Nb, Si, Sr, Graphite, Ta, Sn & Ti; and LME Metals include Al, Co, Cu, Pb, Mo, Ni, & Zn. Avg annual growth rates (plotted above) are calculated over the same period using the equation ((Ending Value / Beginning Value) -1) and considering the same metal categorizations where ending value is avg monthly price in Jun of the given year and beginning value is avg monthly price in Jun ‘07. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 10 Yr CAGR: 4.0%
  • 9. CRITICAL MATERIALS PRICES: 10 YEAR PERSPECTIVE • Metal prices are measured on a scale of 0 to 10, with 0 and 10 representing the minimum and maximum average quarterly prices occurring during the past 10 years • The positions demonstrate the current price level of each metal with respect to their various historical price points over the past 10 years AMG’s relevant prices have started to move into the second quartile 1.2 1.0 1.9 3.2 3.1 0.9 4.2 3.9 1.5 3.6 0.3 1.2 0.3 1.5 2.5 1.7 0.9 1.2 2.9 0.8 1.8 0 2.5 5 7.5 10 Scale Metals Jun 2017 Position Jun 2016 Position Cr Mo Ni FeV Ti Al C Si Ta Sb Highest Price in 10 years Lowest Price in 10 years Nb [unchanged] Note: Metal Positions are measured on a scale of 0 to 10, with 0 being the minimum price and 10 being the maximum price. They are calculated using the formula [(Jun ‘07 month avg – min. monthly avg) / (max. monthly avg – min. monthly avg) *10] where maximum and minimum monthly averages are measured over the period 1 Jun ‘07 through 30 Jun ‘17. 9 [unchanged]
  • 10. AMG BUSINESS SEGMENTS 10 AMG CRITICAL MATERIALS AMG’s conversion, mining, and recycling businesses • Vanadium • Superalloys • Titanium Alloys & Coatings • Aluminum Alloys • Tantalum & Niobium & Lithium • Antimony • Graphite • Silicon Metal AMG ENGINEERING AMG’s vacuum systems and services business • Furnaces • Heat treatment services
  • 11. AMG GLOBAL FOOTPRINT – CRITICAL MATERIALS 11
  • 12. AMG GLOBAL FOOTPRINT – AMG ENGINEERING 12 Mexico City, MEXICO Port Huron (MI), USA Berlin, GERMANY Limbach, GERMANY Mumbai, INDIA Suzhou, CHINA Wixom (MI), USA Grenoble, FRANCE Headquarters Production Facility Heat Treatment Services Hanau, GERMANY Head Office
  • 13. HEALTH AND SAFETY FOCUS 13 Rigorous commitment to safety reflected in continually improving safety records LEADING SAFETY INDICATORS • The number of safety improvement items reported in Q2 2017 was only 3% lower than in Q2 2016. These are essential in order to avoid potential injuries. • Safety training hours increased 4% in Q2 2017 compared to Q2 2016. • At the end of Q2 2017, lost time incident rate was 48% lower and total incident rate and incident severity rate were down 41% and 36%, respectively, from Q2 2016. YEAR LOST TIME INCIDENTS IN THE LAST 12 MONTHS 12 MONTH AVERAGE LOST TIME INCIDENT RATE 12 MONTH AVERAGE INCIDENT SEVERITY RATE 2016 36 1.33 0.14 2017 19 0.69 0.09
  • 14. 14 AMG Advanced Metallurgical Group N.V. Financial Highlights
  • 15. Q2 2017 AT A GLANCE 15 • Q2 ‘17 EBITDA up 23% versus Q2 ‘16 due to improved profitability within both AMG Critical Materials and AMG Engineering • Annualized ROCE increased to 23.9% in Q2 2017 versus 17.8% for Q2 2016 Net Debt Reduction of $80.5 million since December 2014 AMOUNTS IN $M (EXCEPT EARNINGS PER SHARE) Q2 2017 Q2 2016 % CHANGE Revenue $262.0 $248.3 6% Gross Profit * $54.3 $53.3 2% Gross Margin % 20.7% 21.5% (4%) Profit Before Income Taxes $20.8 $15.6 33% EBITDA $31.9 $26.0 23% EBITDA Margin % 12.2% 10.5% 16% Net Debt $7.3 $5.5 33% Return On Capital Employed (ROCE) 23.9% 17.8% 34% Net Income Attributable To Shareholders $13.1 $13.4 (2%) Earnings Per Share 0.42 0.48 (13%) * Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations.
  • 16. FINANCIAL HIGHLIGHTS 16 $26.0 $23.4 $30.0 $33.0 $31.9 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 $248.3 $247.5 $237.9 $258.0 $262.0 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 $53.3 $46.3 $43.0 $52.5 $54.3 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 REVENUE (IN MILLIONS OF US DOLLARS) $92.8 $68.1 $61.7 $81.8 $76.9 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 * Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations. GROSS PROFIT * (IN MILLIONS OF US DOLLARS) ORDER INTAKE (IN MILLIONS OF US DOLLARS)EBITDA (IN MILLIONS OF US DOLLARS) 6% YoY 22% YoY 17% YoY 2% YoY
  • 17. FINANCIAL DATA: ROCE & EBITDA 17 • Q2 ‘17 EBITDA up 22% versus Q2 ‘16 due to improved profitability within both AMG Critical Materials and AMG Engineering • Q2 2017 annualized ROCE improved to 23.9% from 17.8% in Q2 2016 • ROCE improvements are the result of efficient use of capital and improved profitability Annualized ROCE EBITDA (IN MILLIONS OF US DOLLARS) $26.0 $23.4 $30.0 $33.0 $31.9 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q2 ‘17 ROCE IMPROVED TO 23.9% FROM 17.8% IN Q2 ‘16 Q2 ‘17 EBITDA UP 22% VERSUS Q2 ‘16 9.2% 7.4% 11.9% 12.0% 17.8% 23.9% 2012 2013 2014 2015 Q2 '16 Q2 '17
  • 18. FINANCIAL DATA: NET DEBT & NET CASH FROM OPERATIONS 18 • Net debt: $7.3 million o $186.9 million reduction of net debt since December 31, 2012 • AMG’s primary debt facility is a $400 million multicurrency term loan and revolving credit facility o 5 year term (until 2021) with an accordion feature that allows the Company, subject to certain conditions, to increase the commitment amount by up to $100 million o In compliance with all debt covenants • AMG generated cash from operating activities of $28.5 million for the first half of 2017, $8.5 million higher than the first half of 2016 $194.2 $160.5 $87.8 ($1.0) $6.2 $7.3 2012 2013 2014 2015 Q2 '16 Q2 '17 -$10 $5 $20 $35 $50 Q1 Q2 Q3 Q4 2012 2013 2014 2015 2016 2017 NET DEBT (CASH) (IN MILLIONS OF US DOLLARS) OPERATING CASH FLOW (IN MILLIONS OF US DOLLARS) $187M REDUCTION IN NET DEBT SINCE 2012 Q2 2017 OPERATING CASH FLOW OF $10.6M
  • 19. DIVISIONAL FINANCIAL HIGHLIGHTS – Q2 2017 VS. Q2 2016 19 REVENUE EBITDA Q2 2017 EBITDA: $31.9 Q2 2017 REVENUE: $262.0 Q2 2017 GROSS MARGIN: 20.7% GROSS MARGIN * CAPITAL EXPENDITURE Q2 2017 CAPEX: $18.6 $66.7 $181.6 $59.4 $202.6 AMG Engineering AMG Critical Materials Q2 2017 Q2 2016 $5.6 $20.5 $8.0 $23.9 AMG Engineering AMG Critical Materials Q2 2017 Q2 2016 $1.3 $6.2 $1.7 $16.9 AMG Engineering AMG Critical Materials Q2 2017 Q2 2016 23.0% 20.9% 28.2% 18.5% AMG Engineering AMG Critical Materials Q2 2017 Q2 2016 (IN MILLIONS OF US DOLLARS) (IN MILLIONS OF US DOLLARS) (IN MILLIONS OF US DOLLARS) * Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations.
  • 20. WORKING CAPITAL REDUCTION 20 WORKING CAPITAL DAYS REDUCED BY 72% SINCE Q3’10 79 69 70 70 70 65 65 65 65 62 61 53 47 43 47 42 31 23 28 30 30 19 26 17 17 15 18 22 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 57 DAYS, OR 72% REDUCTION Q1 ‘11 Q2 ‘11 Q3 ‘11 Q4 ‘11 Q1 ‘12 Q2 ‘12 Q3 ‘12 Q4 ‘12 Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q3 ‘10 Q4 ‘10 Q4 ‘14 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ‘16 Q4 ‘16 Q1 ‘17 Q2 ‘17
  • 21. AMG CRITICAL MATERIALS 21 • Q2 2017 revenue of $202.6 million was 12% higher than Q2 2016 • EBITDA increased by $3.4 million over Q2 2016 to $23.9 million in the second quarter of 2017, driven primarily by strong financial performance in vanadium and titanium alloys • Capital expenditures increased to $16.9 million in Q2 2017 vs. $6.2 million in Q2 2016 • The largest expansion capital projects were AMG’s lithium project in Brazil, and titanium aluminide expansion in Germany $181.6 $177.5 $166.0 $194.5 $202.6 $20.5 $14.5 $22.1 $25.7 $23.9 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Revenue EBITDA $6.2 $7.7 $20.2 $9.5 $16.9 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) CAPITAL EXPENDITURES (IN MILLIONS OF US DOLLARS) Q2 2017 REVENUE INCREASED BY $21.0M OVER Q2 2016 INCREASE OF $10.7M Q2 ‘17 VS. Q2 ’16 DUE TO EXPANSION PROJECTS
  • 22. AMG CRITICAL MATERIALS – QUARTERLY REVENUE DRIVERS 22 • AMG Critical Materials Q2 2017 revenue of $202.6 million was 12% higher than Q2 2016 • Improving vanadium, molybdenum, nickel, aluminum, titanium and antimony prices, and higher sales volumes of chrome, antimony, silicon and titanium products resulted in higher revenue in Q2 2017 versus the same period in the prior year • Lower sales of tantalum in the quarter, due to the temporary shut-down in one of AMG's two tantalum production lines, were partially offset by higher sales of niobium products • Tantalum sales prices declined following the termination of AMG’s long-term, supply agreement • Silicon revenue and gross profit declined in the second quarter 2017, versus the same period in the prior year, due to lower sales prices KEY PRODUCT Q2 ‘17 REV ($M) Q2 ‘16 REV ($M) VOLUME PRICE FeV & FeNiMo $27.0 $22.8 Al Master Alloys & Powders $45.8 $43.0 Chromium Metal $26.1 $19.9 Tantalum & Niobium $13.5 $17.2 Titanium Alloys & Coatings $26.2 $21.1 Antimony $27.3 $19.0 Graphite $16.2 $16.4 Silicon Metal $20.5 $22.4
  • 23. CRITICAL MATERIALS – AVERAGE QUARTERLY PRICES 23 MATERIALS Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Ferrovanadium ($/lb) $10.03 $9.99 $10.65 $12.35 $12.30 Molybdenum ($/lb) $7.42 $7.01 $6.63 $7.90 $8.03 Nickel ($/MT) $8,819 $10,262 $10,685 $10,267 $9,222 Aluminum ($/MT) $1,571 $1,620 $1,710 $1,851 $1,909 Chrome ($/lb) $3.76 $3.67 $3.65 $3.83 $4.02 Tantalum ($/lb) $62 $60 $56 $57 $67 Niobium Oxide ($/kg) $27 $28 $26 $27 $30 Ti Sponge ($/kg) $8.25 $8.15 $8.15 $8.24 $8.74 Antimony ($/MT) $6,252 $7,271 $7,482 $8,098 $8,890 Graphite ($/MT) $585 $585 $585 $585 $585 Silicon Metal (€/MT) €1,684 €1,648 €1,733 €1,993 €1,989 Q2 ‘17 VS. Q2 ‘16 % CHANGE 23% 8% 5% 21% 7% 9% 9% 6% 42% – 18% Q2 ‘17 VS. Q1 ‘17 % CHANGE – 2% (10%) 3% 5% 17% 11% 6% 10% – –
  • 24. AMG ENGINEERING 24 • EBITDA increased by $2.4 million in Q2 2017 versus Q2 2016 • AMG Engineering continues to experience strong sales of turbine blade coating powder metallurgy and plasma re- melting furnaces for the aerospace market and heat treatment furnaces for the automotive market • AMG Engineering order backlog of $183.3 million as of June 30, 2017, a 35% increase compared to December 31, 2016 • AMG Engineering signed $76.9 million in new orders during Q2 2017, a 1.29x book to bill ratio $66.7 $70.0 $71.9 $63.5 $59.4 $5.6 $8.9 $7.9 $7.3 $8.0 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Revenue EBITDA $92.8 $68.1 $61.7 $81.8 $76.9 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) ORDER INTAKE (IN MILLIONS OF US DOLLARS) EBITDA IMPROVEMENT OF 43% VS. Q2 2016 BOOK TO BILL RATIO OF 1.29X IN Q2 2017
  • 25. AMG Advanced Metallurgical Group N.V. Strategy & Outlook
  • 26. AMG: READY FOR GROWTH 26 2012 2013 2014 2015 2016 to 2020 COST REDUCTION PRODUCT MIX OPTIMIZATION SUPPLY CHAIN EXCELLENCE TARGETED W/C & DEBT LEVELS SCALING PROFITABLE GROWTH Cost-reduction and capex discipline in response to global economic slowdown Competitive advantage through manufacturing and supply chain excellence, accelerating cost-reduction efforts Properly positioned, financially and operationally, to pursue growth targets across portfolio Streamlined operations and improved operating performance by eliminating low-margin product lines Further reduction in both working capital and net debt, strengthening the balance sheet
  • 27. STRATEGY 27 INDUSTRY CONSOLIDATION PROCESS INNOVATION & PRODUCT DEVELOPMENT Pursue opportunities for horizontal and vertical industry consolidation across AMG’s critical materials portfolio Continue to focus on process innovation and product development to improve the market position of AMG’s businesses AMG’s strategy is to build its critical materials business through industry consolidation, process innovation and product development EXPANSION OF EXISTING HIGH GROWTH BUSINESSES Pursue opportunities in high-growth areas within the existing product portfolio AMG’s overriding strategic objective is to achieve industry leadership while being the low cost producer 27
  • 28. 2017 OUTLOOK & LITHIUM PROJECT UPDATE 28 LITHIUM PROJECT UPDATE OUTLOOK Overview: Project is progressing in-line with expectations – production expected to commence mid-2018. Mibra Resource: In April 2017, AMG published an updated resource statement for the Mibra mine showing an increase of approximately 38% compared to the previous mineral resource statement completed in 2013. Spodumene Expansion: Target to increase annual lithium concentrate production capacity up to 180,000 tons by the end of 2019. Marketing efforts: On March 3, 2017, AMG announced that it had signed a multi-year contract to supply 90,000 tons per year of lithium concentrate with deliveries commencing in the second half of 2018. Sales prices are partially indexed to the published market price of lithium carbonate, subject to a contractual minimum threshold. The sales price (CIF China), determined with reference to the current published lithium carbonate market price, would exceed $800 per ton lithium concentrate. AMG expects full year 2017 profitability to improve relative to 2016. AMG's management team is focused on delivering our highly accretive lithium project and executing our long-term lithium strategy. In addition, we will continue to pursue other acquisition opportunities and organic growth projects in order to generate long term value for our shareholders. 28 Management’s priority in 2017 is to execute our highly accretive lithium project
  • 29. AMG Advanced Metallurgical Group N.V. Key Products & End Markets 29
  • 30. KEY PRODUCTS 30 $- $45 $90 $135 $180 $225 $270 Q2 2016 Q2 2017 Vacuum Furnaces Ti Master Alloys & Coatings Al Master Alloys & Powders Vanadium & FeNiMo Chromium Metal Antimony Tantalum & Niobium Graphite Si Metal $- $10 $20 $30 $40 $50 $60 Q2 2016 Q2 2017 $54.0 $262.0 $248.3 $53.8 * Before non-recurring items REVENUE (IN MILLIONS OF US DOLLARS) GROSS PROFIT * (IN MILLIONS OF US DOLLARS)
  • 31. CRITICAL MATERIALS – MARKET TRENDS 31 ENERGY TRANSPORTATION INFRASTRUCTURE SPEC. METALS & CHEM. CRITICAL MATERIALS MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS AMG ANTIMONY ANTIMONY TRIOXIDE ANTIMONY MASTERBATCHES ANTIMONY PASTES PLASTICSFLAME RETARDANTS MICRO CAPACITORS, SUPERALLOYS AMG BRAZIL TANTALUM & NIOBIUM COMMUNICATIONS & ELECTRONICS FUEL EFFICIENCY EXPANDED POLYSTYRENE (EPS), BATTERY ANODES AMG GRAPHITE NATURAL GRAPHITE ENERGY SAVING ENERGY STORAGE ALUMINUM ALLOYS, SOLAR AMG SILICON SILICON METAL FUEL EFFICIENCY CLEAN ENERGY BATTERIES AMG LITHIUM LITHIUM CONCENTRATE (SPODUMENE) RENEWABLE ENERGY COMMUNICATIONS & ELECTRONICS CONFIDENTIAL
  • 32. CRITICAL MATERIALS – MARKET TRENDS AMG ALUMINUM ALUMINUM MASTER ALLOYS ALUMINUM POWDERS FUEL EFFICIENCY AEROSPACE, AUTOMOTIVE INFRASTRUCTURE AMG VANADIUM FERROVANADIUM FERRONICKEL- MOLYBDENUM INFRASTRUCTURE GROWTH AEROSPACE AMG TITANIUM ALLOYS & COATINGS TITANIUM MASTER ALLOYS & COATINGS FUEL EFFICIENCY ENERGY SAVING AMG SUPERALLOYS UK CHROMIUM METAL FUEL EFFICIENCYAEROSPACE CRITICAL MATERIALS MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS ENERGY TRANSPORTATION INFRASTRUCTURE SPEC. METALS & CHEM. 32
  • 33. ENGINEERING – MARKET TRENDS 33 AMG ENGINEERING CAPITAL GOODS (VACUUM FURNACES) FUEL EFFICIENCY ELECTRONICS AMG ENGINEERING VACUUM HEAT TREATMENT SERVICES FUEL EFFICIENCY AEROSPACE, AUTOMOTIVE AEROSPACE, AUTOMOTIVE PRODUCTS & SERVICES MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS ENERGY TRANSPORTATION INFRASTRUCTURE SPEC. METALS & CHEM.
  • 34. AMG AT A GLANCE 34 AMG IS A GLOBAL SUPPLIER OF CRITICAL MATERIALS TO: Q2 2017 REVENUE TRANSPORTATIONENERGY INFRASTRUCTURE SPECIALTY METALS AND CHEMICALS BY END MARKET: BY REGION:BY SEGMENT: 45% Europe 32% North America 18% Asia 5% ROW 23% Engineering 77% Critical Materials 25% Infrastructure 22% Specialty Metals & Chemicals 43% Transportation 10% Energy Market leading producer of highly engineered specialty metals and vacuum furnace systems ~3,000 Employees ~$1 billion Annual Revenues At the forefront of CO2 Reduction 34
  • 35. AMG Advanced Metallurgical Group N.V. Appendix 3535
  • 36. CONSOLIDATED BALANCE SHEET 36 AS OF IN MILLIONS OF US DOLLARS JUNE 30, 2017 UNAUDITED DECEMBER 31, 2016 Fixed assets 247.5 226.1 Goodwill and intangibles 36.1 33.2 Other non-current assets 83.3 91.7 Inventories 146.8 143.6 Receivables 153.0 129.2 Other current assets 42.9 35.8 Cash 168.9 160.7 TOTAL ASSETS 878.5 820.3 TOTAL EQUITY 241.1 197.8 Long term debt 149.6 151.0 Employee benefits 150.4 141.6 Other long term liabilities 46.7 49.9 Current debt 26.6 17.1 Accounts payable 140.9 133.3 Advance payments 38.0 29.4 Accruals 52.4 57.5 Other current liabilities 32.8 42.9 TOTAL LIABILITIES 637.4 622.5 TOTAL EQUITY AND LIABILITIES 878.5 820.3
  • 37. CONSOLIDATED INCOME STATEMENT 37 FOR THE SIX MONTHS ENDED IN MILLIONS OF US DOLLARS JUNE 30, 2017 UNAUDITED JUNE 30, 2016 UNAUDITED Revenue 520.0 485.7 Cost of sales 413.2 388.2 Gross profit * 106.8 97.5 Selling, general & administrative 63.6 66.1 Other income, net (0.3) (0.4) Operating profit 43.6 31.9 Net finance costs 3.8 5.2 Share of profit of associates – 1.4 Profit before income taxes 39.8 28.2 Income tax expense 11.2 3.1 Profit for the period 28.6 25.1 Shareholders of the Company 28.7 25.4 Non-controlling interest (0.1) (0.3) ADJUSTED EBITDA 64.8 47.2 * Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations.
  • 38. CONSOLIDATED STATEMENT OF CASH FLOWS 38 FOR THE SIX MONTHS ENDED IN MILLIONS OF US DOLLARS JUNE 30, 2017 UNAUDITED JUNE 30, 2016 UNAUDITED EBITDA 64.8 47.2 Change in working capital and deferred revenue (22.9) (5.0) Other operating cash flow (4.2) (15.4) Cash generated from operating activities 37.7 26.8 Finance costs paid, net (4.2) (3.2) Income tax paid (4.9) (3.7) Net cash from operating activities 28.5 20.0 Capital expenditures (29.5) (14.4) Other investing activities 1.8 (4.9) Net cash used in investing activities (27.7) (19.3) Net cash used in financing activities (0.5) (3.7) Net increase (decrease) in cash and equivalents 0.2 (3.0) Cash and equivalents at January 1 160.7 127.8 Effect of exchange rate fluctuations on cash held 7.9 0.3 CASH AND EQUIVALENTS AT JUNE 30 168.9 125.1