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AMG Investor Presentation - March 2017

The document is an investor presentation by AMG Advanced Metallurgical Group N.V. It provides an overview of AMG's business segments which involve sourcing, processing, and supplying critical raw materials. It discusses AMG's focus on enabling technologies to reduce CO2 emissions and highlights several critical raw materials in its portfolio. The presentation also provides financial highlights such as revenue, EBITDA, gross profit and net debt figures for fiscal years 2015-2016 showing overall growth. It outlines AMG's strategic goals of improving return on capital employed, gross margins, and pursuing growth opportunities while maintaining a conservative balance sheet.

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1 LEADING THE CRITICAL MATERIALS REVOLUTION AMG Advanced Metallurgical Group N.V. Investor Presentation March 9, 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 26 Key Products & End Markets 30 Appendix 36 TABLE OF CONTENTS
3 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. Cautionary Note
4 SUPPLY: AMG Sources, processes, and supplies the critical materials the market demands 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 AMG IS A CRITICAL MATERIALS COMPANY
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) AMG HAS DEVELOPED INTO A LEADER IN ENABLING TECHNOLOGIES A GLOBAL IMPERATIVE FOR THE 21ST CENTURY CO2 REDUCTION LEADER IN ADVANCED TECHNOLOGIES TO ADDRESS CO2 REDUCTION
66 • 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 & ACQUISITIONS RETURN EXCESS CASH TO SHAREHOLDERS Strong capital structure, free of net debt, positioned for growth Driving long term sustainable growth and shareholder value
7 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 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: – 5 EU critical raw materials – 4 US critical raw materials – Highly engineered Titanium Alloys for the aerospace industry – High value added Aluminum Master Alloys – Vanadium, Nickel and Molybdenum from recycled secondary raw materials Melted or treated by AMG vacuum systemsProduced by AMG Critical raw materials identified by the US and produced by AMG EU Critical Raw Materials *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. Titanium alloys Lithium
8 Critical Materials Price Trends CRITICAL MATERIAL PRICES OUTPERFORM THE LME -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 1. AMG EU Critical Materials 2. AMG Portfolio (includes #1) 3. LME Metals 4. Oil 10 Yr CAGR: -5.3% 10 Yr CAGR: 2.5% 10 Yr CAGR: 2.8% 10 Yr CAGR: -1.7% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AMG: EU Critical Materials OIL LME Metals AMG Portfolio Note: Compound annual growth rates are calculated over the period Dec ‘06 through Dec ‘16 using the equation ((Ending Value / Beginning Value) ^ (1 / # of years) - 1) where ending value is avg monthly price in Dec ‘16 and beginning value is avg monthly price in Dec ‘06; 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 Dec of the given year and beginning value is avg monthly price in Dec ‘06. The cumulative average 10 year price appreciation of the AMG Portfolio was 8.1 percentage points higher than London Metal Exchange metals and 4.5 points higher than oil, while the AMG EU Critical Materials outperformed LME Metals and oil by 7.8 and 4.2 percentage points, respectively
9 Critical Materials Prices: 10 Year Perspective AMG has significant potential upside within certain critical materials based on historical price ranges 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 [(Dec ‘06 month avg – min. monthly avg) / (max. monthly avg – min. monthly avg) *10] where maximum and minimum monthly averages are measured over the period 1 Dec ‘06 through 31 Dec ‘16. 1.8 0.8 0.7 1.7 2.5 2.3 0.9 3.6 5.8 0.3 2.62.6 0.2 0.2 0.2 3.8 1.2 2.2 4.7 5.8 0.0 0.8 0 2.5 5 7.5 10 Scale Metals Dec 2016 Position Dec 2015 Position Cr Mo Ni FeV Ti Al C Si Ta Sb Highest Price in 10 years Lowest Price in 10 years [unchanged] • 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 Nb
10 AMG Business Segments AMG CRITICAL MATERIALS AMG’S CONVERSION, MINING, AND RECYCLING BUSINESSES • LITHIUM (H1 2018) • VANADIUM • SUPERALLOYS • TITANIUM ALLOYS & COATINGS • ALUMINUM ALLOYS • TANTALUM & NIOBIUM • ANTIMONY • GRAPHITE • SILICON AMG ENGINEERING AMG’S VACUUM SYSTEMS AND SERVICES BUSINESS • ENGINEERING • HEAT TREATMENT SERVICES
1111 AMG Global Footprint – Critical Materials
1212 AMG Global Footprint – Engineering 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 LEADING SAFETY INDICATORS • The number of safety improvement items reported in 2016 increased by 16% compared to full year 2015. These are essential in order to avoid potential injuries. • Safety training hours increased 10% in 2016. • Lost time incident rate was essentially unchanged while total incident rate and incident severity rate for 2016 are down 16% and 35% from 2015. • The incidents that occurred in 2016 were typically less serious continuing a 5 year improvement trend in severity rate. RIGOROUS COMMITMENT TO SAFETY REFLECTED IN CONTINUALLY IMPROVING SAFETY RECORDS YEAR LOST TIME INCIDENTS IN THE LAST 12 MONTHS 12 MONTH AVERAGE LOST TIME INCIDENT RATE 12 MONTH AVERAGE INCIDENT SEVERITY RATE 12 MONTH AVERAGE TOTAL INCIDENT RATE 2015 27 1.03 0.17 2.00 2016 28 1.04 0.11 1.68
14 FINANCIAL HIGHLIGHTS AMG Advanced Metallurgical Group N.V.
15 AMOUNTS IN $M (EXCEPT EARNINGS PER SHARE) FY 2016 FY 2015 % CHANGE REVENUE $971.1 $977.1 (1%) GROSS PROFIT $186.8 $156.9 19% GROSS MARGIN % 19.2% 16.1% N/A PROFIT BEFORE INCOME TAXES $49.7 $28.6 74% EBITDA $100.7 $75.6 33% EBITDA MARGIN % 10.4% 7.7% N/A NET DEBT (CASH) $7.3 ($1.0) N/A RETURN ON CAPITAL EMPLOYED (ROCE) 18.8% 12.0% 57% NET INCOME ATTRIBUTABLE TO SHAREHOLDERS $40.6 $11.1 266% EARNINGS PER SHARE 1.32 0.40 230% FY 2016 at a Glance • FY ‘16 EBITDA up 33% versus FY ‘15 due to improved profitability within AMG Engineering • Annualized ROCE increased to 18.8% in 2016 versus 12.0% for 2015 • Earnings per share, on a fully diluted basis, increased by 230% to $1.32 in 2016 from $0.40 in 2015 • Net debt position of $7.3 million NET DEBT REDUCTION OF $80.5 MILLION SINCE DECEMBER 2014
16 $9.7 $21.2 $26.0 $23.4 $30.0 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 $220.8 $237.4 $248.3 $247.5 $237.9 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 $35.4 $44.2 $53.3 $46.3 $43.0 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Financial HighlightsFinancial Highlights REVENUE (IN MILLIONS OF US DOLLARS) EBITDA (IN MILLIONS OF US DOLLARS) GROSS PROFIT * (IN MILLIONS OF US DOLLARS) 21% YoY $48.0 $50.5 $92.8 $68.1 $61.7 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ORDER INTAKE (IN MILLIONS OF US DOLLARS) 209% YoY 29% YoY 8% YoY * Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations.
17 IMPROVE ROCE IMPROVE GROSS MARGIN • Increase ROCE through operational improvements and disciplined capital management • Increase productivity through continuous cost and product mix optimization 2016 Financial Objectives FINANCIAL OBJECTIVE DESCRIPTION PURSUE GROWTH OPPORTUNITIES MAINTAIN CONSERVATIVE BALANCE SHEET • Optimize capital structure for financial flexibility PROGRESS UPDATE • Net debt of $7.3 million • Completed enlargement and extension of syndicated credit facility - from $320 million to $400 million with the maturity extended from May 2018 to July 2021 • On July 20th, 2016, AMG’s Supervisory Board approved the construction of a lithium concentrate (spodumene) plant at the Mibra mine in Brazil, with an initial annual production of 90,000 tons • See lithium update on slide 30 • Annualized ROCE increased to 18.8% in 2016, as compared to 12.0% in 2015 • AMG gross margin increased to 18.1% in Q4 2016 from 16.0% in Q4 2015 • Pursue organic opportunities in high-growth areas within the existing product portfolio • Pursue opportunities for horizontal and vertical industry consolidation across AMG’s critical materials portfolio
18 Financial Data: ROCE & EBITDA • Q4 ‘16 EBITDA up 209% versus Q4 ‘15 due to improved profitability within AMG Engineering • FY 2016 annualized ROCE improved to 18.8% from 12.0% in FY 2015 • ROCE improvements are the result of efficient use of capital and improved profitability ANNUALIZED ROCE EBITDA (IN MILLIONS OF US DOLLARS) $9.7 $21.2 $26.0 $23.4 $30.0 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 FY ‘16 ROCE IMPROVED TO 18.8% FROM 12.0% IN FY ‘15 Q4 ‘16 EBITDA UP 209% VERSUS Q4 ‘15 9.2% 7.4% 11.9% 12.0% 18.8% 2012 2013 2014 2015 2016
19 $194.2 $160.5 $87.8 ($1.0) $7.3 2012 2013 2014 2015 2016 -$10 $5 $20 $35 $50 Q1 Q2 Q3 Q4 2012 2013 2014 2015 2016 Financial Data: Net Debt & Operating Cash flowFinancial Data: Net Debt & Net Cash from Operations • Net debt: $7.3 million – $186.9 million reduction of net debt since December 31, 2012 – Net Debt to LTM EBITDA: 0.07x • AMG’s primary debt facility is a $400 million multicurrency term loan and revolving credit facility – 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 – In compliance with all debt covenants • FY ‘16 net cash from operating activities of $56.2 million, which included voluntary cash contributions to the Company’s pension plans of $23.1 million made during the year NET DEBT (CASH) (IN MILLIONS OF US DOLLARS) OPERATING CASH FLOW (IN MILLIONS OF US DOLLARS) $187M REDUCTION IN NET DEBT SINCE 2012 FY 2016 OPERATING CASH FLOW OF $56.2M
20 Divisional Financial Highlights – Q4 2016 vs. Q4 2015 REVENUE EBITDA Q4 2016 EBITDA: $30.0 Q4 2016 REVENUE: $237.9 Q4 2016 GROSS MARGIN: 18.1% GROSS MARGIN * CAPITAL EXPENDITURE Q4 2016 CAPEX: $21.3 $54.6 $166.2 $71.9 $166.0 AMG Engineering AMG Critical Materials Q4 2016 Q4 2015 $2.7 $7.0 $7.9 $22.1 AMG Engineering AMG Critical Materials Q4 2016 Q4 2015 $1.0 $10.0 $1.1 $20.2 AMG Engineering AMG Critical Materials Q4 2016 Q4 2015 22.1% 14.0% 18.6% 17.9% AMG Engineering AMG Critical Materials Q4 2016 Q4 2015 (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.
21 WORKING CAPITAL DAYS REDUCED BY 81% SINCE Q3’10 Financial Highlights 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 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 Working Capital Reduction 64 DAYS, OR 81% 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
22 $166.3 $176.6 $181.6 $177.5 $166.0 $7.0 $16.5 $20.5 $14.5 $22.1 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Revenue EBITDA $10.0 $4.5 $6.2 $7.7 $20.2 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Financial Data: Net Debt & Operating Cash flowAMG Critical Materials REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) CAPITAL EXPENDITURES (IN MILLIONS OF US DOLLARS) Q4 2016 REVENUE IMPACTED BY WEAK METALS PRICES INCREASE OF $10.2M Q4 ‘16 VS. Q4 ’15 DUE TO EXPANSION PROJECTS • Q4 2016 revenue of $166.0 million was in-line with prior year • EBITDA increased by $15.1 million to $22.1 million in the fourth quarter of 2016, driven primarily by higher gross profit and lower segment specific SG&A expenses. • Capital expenditures increased to $20.2 million in Q4 2016 vs. $10.0 million in Q4 2015 • The largest expansion capital projects in 2016 were AMG’s lithium project in Brazil, titanium aluminide expansion in Germany, Ancuabe graphite mine project in Mozambique, and silicon furnace upgrade in Germany
23 Key Product Q4 ‘16 Rev ($M) Q4 ‘15 Rev ($M) Volume Price Currency FeV & FeNiMo $21.7 $16.9 Al Master Alloys & Powders $38.0 $43.5 Chromium Metal $20.7 $16.8 Tantalum & Niobium $16.2 $18.7 Titanium Alloys & Coatings $22.2 $21.2 Antimony $18.6 $17.1 Graphite $13.2 $13.2 Silicon Metal $15.4 $19.1 AMG Critical Materials – Quarterly Revenue Drivers • AMG Critical Materials Q4 2016 revenue of $166.0 million was in-line with prior year • Strong sales volumes in AMG Vanadium, AMG Titanium Alloys & Coatings, AMG Antimony and AMG Superalloys resulted in higher revenue in Q4 2016 versus the same period in the prior year • Improving ferrovanadium prices also impacted Q4 2016 revenue and gross profit in AMG Vanadium • AMG Silicon Q4 2016 revenue declined versus the prior year due to the scheduled furnace upgrade in the fourth quarter 2016 • AMG Aluminum revenue declined due to price effects • AMG Brazil revenue declined due to timing of delivery to customers
24 Critical Materials – Average Quarterly Prices MATERIALS Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 FERROVANADIUM ($/LB) $8.90 $6.79 $6.59 $10.03 $9.99 $10.65 MOLYBDENUM ($/LB) $5.83 $4.85 $5.33 $7.42 $7.01 $6.63 NICKEL ($/MT) $10,557 $9,434 $8,496 $8,819 $10,262 $10,685 ALUMINUM ($/MT) $1,591 $1,495 $1,515 $1,571 $1,620 $1,710 CHROME ($/LB) $4.41 $4.09 $3.92 $3.76 $3.67 $3.65 TANTALUM ($/LB) $74 $59 $60 $62 $60 $56 NIOBIUM OXIDE ($/KG) $28 $25 $25 $27 $28 $26 TI SPONGE ($/KG) $9.40 $9.05 $8.69 $8.25 $8.15 $8.15 ANTIMONY ($/MT) $6,888 $5,588 $5,359 $6,252 $7,271 $7,482 GRAPHITE ($/MT) $750 $750 $725 $585 $585 $585 SILICON METAL (€/MT) €2,273 €2,054 €1,869 €1,684 €1,648 €1,733 Q4 ‘16 VS. Q4 ‘15 % CHANGE 57% 37% 13% 14% (11%) (5%) 4% (10%) 34% (22%) (16%) Q4 ‘16 VS. Q3 ‘16 % CHANGE 7% (5%) 4% 6% – (7%) (7%) – 3% – 5%
25 $54.6 $60.8 $66.7 $70.0 $71.9 $2.6 $4.6 $5.6 $8.9 $7.9 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Revenue EBITDA $48.0 $50.5 $92.8 $68.1 $61.7 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Financial Data: Net Debt & Operating Cash flowAMG Engineering REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) ORDER INTAKE (IN MILLIONS OF US DOLLARS) EBITDA IMPROVEMENT DUE TO HIGHER SALES AND LOWER COSTS BOOK TO BILL RATIO OF 0.86X IN Q4 2016 • Q4 2016 revenue increased by $17.3 million, or 32%, vs. Q4 2015, the highest quarterly revenue in 5 years, due to strong sales of plasma remelting, induction and turbine blade coating furnaces for the aerospace market • EBITDA increased by $5.3 million in Q4 2016 versus Q4 2015 • AMG Engineering Order backlog of $135.5 million as of December 31, 2016, a 4% decrease versus $140.9 million as of December 31, 2015 • AMG Engineering signed $273.1 million in new orders during 2016, a 1.01x book to bill ratio
26 STRATEGY & OUTLOOK AMG Advanced Metallurgical Group N.V.
27 AMG: Ready for Growth 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
2828 Strategy AMG’s overriding strategic objective is to achieve industry leadership while being the low cost producer 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
2929 2017 Outlook & Lithium Project Update Management’s priority in 2017 is to execute our transformational lithium project OUTLOOK AMG is well positioned to maintain full year 2016 levels of profitability in 2017, subject to a high degree of global uncertainty. In addition to delivering our highly accretive lithium project and executing our long term, transformational lithium strategy, AMG will continue to pursue other acquisition opportunities and organic growth projects in order to generate long term value for our shareholders. LITHIUM PROJECT UPDATE Overview: Project is progressing in-line with expectations - production expected to commence mid-2018. Mibra Resource: In Q2 2017, AMG will finalize and publish an updated resource statement for the Mibra mine. 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.
30 KEY PRODUCTS & END MARKETS AMG Advanced Metallurgical Group N.V.
31 Key Products REVENUE (IN MILLIONS OF US DOLLARS) GROSS PROFIT * (IN MILLIONS OF US DOLLARS) $- $50 $100 $150 $200 $250 Q4 2015 Q4 2016 Vacuum Furnaces Ti Master Alloys & Coatings Al Master Alloys & Powders Vanadium & FeNiMo Chromium Metal Antimony Tantalum & Niobium Graphite Si Metal $(5) $5 $15 $25 $35 $45 $55 Q4 2015 Q4 2016 Q4 2016 $48.4 Q4 2016 $237.9 Q4 2015 $220.8 Q4 2015 $32.4 * Before non-recurring items
32 Critical Materials – Market Trends SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE 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
33 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 SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE
34 AMG ENGINEERING CAPITAL GOODS (VACUUM FURNACES) FUEL EFFICIENCY ELECTRONICS AMG ENGINEERING VACUUM HEAT TREATMENT SERVICES FUEL EFFICIENCY AEROSPACE, AUTOMOTIVE Engineering – Market Trends AEROSPACE, AUTOMOTIVE PRODUCTS & SERVICES MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE
35 AMG IS A GLOBAL SUPPLIER OF CRITICAL MATERIALS TO: 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 FY 2016 REVENUE AMG at a Glance TRANSPORTATIONENERGY INFRASTRUCTURE SPECIALTY METALS AND CHEMICALS BY END MARKET: BY REGION:BY SEGMENT: 43% Europe 33% North America 20% Asia 4% ROW 28% Engineering 72% Critical Materials 23% Infrastructure 22% Specialty Metals & Chemicals 40% Transportation 15% Energy
36 APPENDIX AMG Advanced Metallurgical Group N.V.
37 AS AT IN MILLIONS OF US DOLLARS DECEMBER 31, 2016 UNAUDITED DECEMBER 31, 2015 Fixed assets 226.1 215.8 Goodwill and intangibles 33.2 28.9 Other non-current assets 91.7 70.2 Inventories 143.6 126.4 Receivables 129.2 124.3 Other current assets 35.8 29.3 Cash 160.7 127.8 TOTAL ASSETS 820.3 722.7 TOTAL EQUITY 197.8 153.6 Long term debt 151.0 112.2 Employee benefits 141.6 137.9 Other long term liabilities 49.9 69.8 Current debt 18.4 14.5 Accounts payable 133.3 108.0 Advance payments 29.4 44.2 Accruals 56.1 42.9 Other current liabilities 42.9 39.6 TOTAL LIABILITIES 622.5 569.1 TOTAL EQUITY AND LIABILITIES 820.3 722.7 Consolidated Balance Sheet
38 FOR THE TWELVE MONTHS ENDED IN MILLIONS OF US DOLLARS DECEMBER 31, 2016 UNAUDITED DECEMBER 31, 2015 UNAUDITED Revenue 971.1 977.1 Cost of sales * 784.3 820.3 Gross profit 186.8 156.9 Selling, general & administrative 130.8 122.3 Environmental 1.9 (0.8) Other income, net (5.7) (0.9) Operating profit 59.9 36.2 Net finance costs 12.0 8.2 Share of profit of associates 1.8 0.6 Profit before income taxes 49.7 28.6 Income tax expense 8.1 18.7 Profit for the period 41.6 9.9 Shareholders of the Company 40.6 11.1 Non-controlling interest 1.0 (1.2) ADJUSTED EBITDA 100.7 75.6 Consolidated Income Statement * Restated
39 Consolidated Statement of Cash Flows FOR THE YEAR ENDED IN MILLIONS OF US DOLLARS DECEMBER 31, 2016 UNAUDITED DECEMBER 31, 2015 UNAUDITED EBITDA 100.7 75.6 Change in working capital and deferred revenue (7.7) 21.6 Finance costs paid, net (6.7) (11.4) Other operating cash flow (23.5) (3.8) Cash generated from operating activities 62.8 82.0 Income tax paid (6.6) (5.7) Net cash from operating activities 56.2 76.3 Capital expenditures (44.1) (23.3) Other investing activities 2.0 2.8 Net cash used in investing activities (42.1) (20.5) Net cash from (used in) financing activities 23.3 (29.1) Net increase in cash and equivalents 37.4 26.7 Cash and equivalents at January 1 127.8 108.0 Effect of exchange rate fluctuations on cash held (4.4) (6.9) CASH AND EQUIVALENTS AT DECEMBER 31 160.7 127.8

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AMG Investor Presentation - March 2017

  • 1.
    1 LEADING THE CRITICAL MATERIALS REVOLUTION AMG AdvancedMetallurgical Group N.V. Investor Presentation March 9, 2017
  • 2.
    2 About AMG 4 CO2Reduction 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 26 Key Products & End Markets 30 Appendix 36 TABLE OF CONTENTS
  • 3.
    3 THIS DOCUMENT ISSTRICTLY 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. Cautionary Note
  • 4.
    4 SUPPLY: AMG Sources, processes, andsupplies the critical materials the market demands 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 AMG IS A CRITICAL MATERIALS COMPANY
  • 5.
    5 AMG: MITIGATING TECHNOLOGIES Products andProcesses 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) AMG HAS DEVELOPED INTO A LEADER IN ENABLING TECHNOLOGIES A GLOBAL IMPERATIVE FOR THE 21ST CENTURY CO2 REDUCTION LEADER IN ADVANCED TECHNOLOGIES TO ADDRESS CO2 REDUCTION
  • 6.
    66 • Refinanced creditfacility 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 & ACQUISITIONS RETURN EXCESS CASH TO SHAREHOLDERS Strong capital structure, free of net debt, positioned for growth Driving long term sustainable growth and shareholder value
  • 7.
    7 Heavy REE Niobium Chromium Light REE Magnesium Germanium Indium Gallium Cobalt Beryllium PGMS Fluorspar PhosphateRock Borate Magnesite Tungsten Coking Coal Vanadium Aluminum alloys TinMolybdenum Nickel Antimony Silicon Metal Natural Graphite Tantalum SUPPLYRISK ECONOMIC IMPORTANCE 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: – 5 EU critical raw materials – 4 US critical raw materials – Highly engineered Titanium Alloys for the aerospace industry – High value added Aluminum Master Alloys – Vanadium, Nickel and Molybdenum from recycled secondary raw materials Melted or treated by AMG vacuum systemsProduced by AMG Critical raw materials identified by the US and produced by AMG EU Critical Raw Materials *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. Titanium alloys Lithium
  • 8.
    8 Critical Materials PriceTrends CRITICAL MATERIAL PRICES OUTPERFORM THE LME -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 1. AMG EU Critical Materials 2. AMG Portfolio (includes #1) 3. LME Metals 4. Oil 10 Yr CAGR: -5.3% 10 Yr CAGR: 2.5% 10 Yr CAGR: 2.8% 10 Yr CAGR: -1.7% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AMG: EU Critical Materials OIL LME Metals AMG Portfolio Note: Compound annual growth rates are calculated over the period Dec ‘06 through Dec ‘16 using the equation ((Ending Value / Beginning Value) ^ (1 / # of years) - 1) where ending value is avg monthly price in Dec ‘16 and beginning value is avg monthly price in Dec ‘06; 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 Dec of the given year and beginning value is avg monthly price in Dec ‘06. The cumulative average 10 year price appreciation of the AMG Portfolio was 8.1 percentage points higher than London Metal Exchange metals and 4.5 points higher than oil, while the AMG EU Critical Materials outperformed LME Metals and oil by 7.8 and 4.2 percentage points, respectively
  • 9.
    9 Critical Materials Prices:10 Year Perspective AMG has significant potential upside within certain critical materials based on historical price ranges 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 [(Dec ‘06 month avg – min. monthly avg) / (max. monthly avg – min. monthly avg) *10] where maximum and minimum monthly averages are measured over the period 1 Dec ‘06 through 31 Dec ‘16. 1.8 0.8 0.7 1.7 2.5 2.3 0.9 3.6 5.8 0.3 2.62.6 0.2 0.2 0.2 3.8 1.2 2.2 4.7 5.8 0.0 0.8 0 2.5 5 7.5 10 Scale Metals Dec 2016 Position Dec 2015 Position Cr Mo Ni FeV Ti Al C Si Ta Sb Highest Price in 10 years Lowest Price in 10 years [unchanged] • 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 Nb
  • 10.
    10 AMG Business Segments AMGCRITICAL MATERIALS AMG’S CONVERSION, MINING, AND RECYCLING BUSINESSES • LITHIUM (H1 2018) • VANADIUM • SUPERALLOYS • TITANIUM ALLOYS & COATINGS • ALUMINUM ALLOYS • TANTALUM & NIOBIUM • ANTIMONY • GRAPHITE • SILICON AMG ENGINEERING AMG’S VACUUM SYSTEMS AND SERVICES BUSINESS • ENGINEERING • HEAT TREATMENT SERVICES
  • 11.
    1111 AMG Global Footprint– Critical Materials
  • 12.
    1212 AMG Global Footprint– Engineering 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.
    13 Health and SafetyFocus LEADING SAFETY INDICATORS • The number of safety improvement items reported in 2016 increased by 16% compared to full year 2015. These are essential in order to avoid potential injuries. • Safety training hours increased 10% in 2016. • Lost time incident rate was essentially unchanged while total incident rate and incident severity rate for 2016 are down 16% and 35% from 2015. • The incidents that occurred in 2016 were typically less serious continuing a 5 year improvement trend in severity rate. RIGOROUS COMMITMENT TO SAFETY REFLECTED IN CONTINUALLY IMPROVING SAFETY RECORDS YEAR LOST TIME INCIDENTS IN THE LAST 12 MONTHS 12 MONTH AVERAGE LOST TIME INCIDENT RATE 12 MONTH AVERAGE INCIDENT SEVERITY RATE 12 MONTH AVERAGE TOTAL INCIDENT RATE 2015 27 1.03 0.17 2.00 2016 28 1.04 0.11 1.68
  • 14.
  • 15.
    15 AMOUNTS IN $M (EXCEPTEARNINGS PER SHARE) FY 2016 FY 2015 % CHANGE REVENUE $971.1 $977.1 (1%) GROSS PROFIT $186.8 $156.9 19% GROSS MARGIN % 19.2% 16.1% N/A PROFIT BEFORE INCOME TAXES $49.7 $28.6 74% EBITDA $100.7 $75.6 33% EBITDA MARGIN % 10.4% 7.7% N/A NET DEBT (CASH) $7.3 ($1.0) N/A RETURN ON CAPITAL EMPLOYED (ROCE) 18.8% 12.0% 57% NET INCOME ATTRIBUTABLE TO SHAREHOLDERS $40.6 $11.1 266% EARNINGS PER SHARE 1.32 0.40 230% FY 2016 at a Glance • FY ‘16 EBITDA up 33% versus FY ‘15 due to improved profitability within AMG Engineering • Annualized ROCE increased to 18.8% in 2016 versus 12.0% for 2015 • Earnings per share, on a fully diluted basis, increased by 230% to $1.32 in 2016 from $0.40 in 2015 • Net debt position of $7.3 million NET DEBT REDUCTION OF $80.5 MILLION SINCE DECEMBER 2014
  • 16.
    16 $9.7 $21.2 $26.0 $23.4 $30.0 Q4 15 Q116 Q2 16 Q3 16 Q4 16 $220.8 $237.4 $248.3 $247.5 $237.9 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 $35.4 $44.2 $53.3 $46.3 $43.0 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Financial HighlightsFinancial Highlights REVENUE (IN MILLIONS OF US DOLLARS) EBITDA (IN MILLIONS OF US DOLLARS) GROSS PROFIT * (IN MILLIONS OF US DOLLARS) 21% YoY $48.0 $50.5 $92.8 $68.1 $61.7 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ORDER INTAKE (IN MILLIONS OF US DOLLARS) 209% YoY 29% YoY 8% YoY * Gross Profit has been restated to include restructuring expenses and asset impairment expenses, in order to take into consideration ESMA’s latest recommendations.
  • 17.
    17 IMPROVE ROCE IMPROVE GROSS MARGIN • Increase ROCEthrough operational improvements and disciplined capital management • Increase productivity through continuous cost and product mix optimization 2016 Financial Objectives FINANCIAL OBJECTIVE DESCRIPTION PURSUE GROWTH OPPORTUNITIES MAINTAIN CONSERVATIVE BALANCE SHEET • Optimize capital structure for financial flexibility PROGRESS UPDATE • Net debt of $7.3 million • Completed enlargement and extension of syndicated credit facility - from $320 million to $400 million with the maturity extended from May 2018 to July 2021 • On July 20th, 2016, AMG’s Supervisory Board approved the construction of a lithium concentrate (spodumene) plant at the Mibra mine in Brazil, with an initial annual production of 90,000 tons • See lithium update on slide 30 • Annualized ROCE increased to 18.8% in 2016, as compared to 12.0% in 2015 • AMG gross margin increased to 18.1% in Q4 2016 from 16.0% in Q4 2015 • Pursue organic opportunities in high-growth areas within the existing product portfolio • Pursue opportunities for horizontal and vertical industry consolidation across AMG’s critical materials portfolio
  • 18.
    18 Financial Data: ROCE& EBITDA • Q4 ‘16 EBITDA up 209% versus Q4 ‘15 due to improved profitability within AMG Engineering • FY 2016 annualized ROCE improved to 18.8% from 12.0% in FY 2015 • ROCE improvements are the result of efficient use of capital and improved profitability ANNUALIZED ROCE EBITDA (IN MILLIONS OF US DOLLARS) $9.7 $21.2 $26.0 $23.4 $30.0 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 FY ‘16 ROCE IMPROVED TO 18.8% FROM 12.0% IN FY ‘15 Q4 ‘16 EBITDA UP 209% VERSUS Q4 ‘15 9.2% 7.4% 11.9% 12.0% 18.8% 2012 2013 2014 2015 2016
  • 19.
    19 $194.2 $160.5 $87.8 ($1.0) $7.3 2012 2013 20142015 2016 -$10 $5 $20 $35 $50 Q1 Q2 Q3 Q4 2012 2013 2014 2015 2016 Financial Data: Net Debt & Operating Cash flowFinancial Data: Net Debt & Net Cash from Operations • Net debt: $7.3 million – $186.9 million reduction of net debt since December 31, 2012 – Net Debt to LTM EBITDA: 0.07x • AMG’s primary debt facility is a $400 million multicurrency term loan and revolving credit facility – 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 – In compliance with all debt covenants • FY ‘16 net cash from operating activities of $56.2 million, which included voluntary cash contributions to the Company’s pension plans of $23.1 million made during the year NET DEBT (CASH) (IN MILLIONS OF US DOLLARS) OPERATING CASH FLOW (IN MILLIONS OF US DOLLARS) $187M REDUCTION IN NET DEBT SINCE 2012 FY 2016 OPERATING CASH FLOW OF $56.2M
  • 20.
    20 Divisional Financial Highlights– Q4 2016 vs. Q4 2015 REVENUE EBITDA Q4 2016 EBITDA: $30.0 Q4 2016 REVENUE: $237.9 Q4 2016 GROSS MARGIN: 18.1% GROSS MARGIN * CAPITAL EXPENDITURE Q4 2016 CAPEX: $21.3 $54.6 $166.2 $71.9 $166.0 AMG Engineering AMG Critical Materials Q4 2016 Q4 2015 $2.7 $7.0 $7.9 $22.1 AMG Engineering AMG Critical Materials Q4 2016 Q4 2015 $1.0 $10.0 $1.1 $20.2 AMG Engineering AMG Critical Materials Q4 2016 Q4 2015 22.1% 14.0% 18.6% 17.9% AMG Engineering AMG Critical Materials Q4 2016 Q4 2015 (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.
  • 21.
    21 WORKING CAPITAL DAYSREDUCED BY 81% SINCE Q3’10 Financial Highlights 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 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 Working Capital Reduction 64 DAYS, OR 81% 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
  • 22.
    22 $166.3 $176.6 $181.6 $177.5 $166.0 $7.0 $16.5 $20.5 $14.5 $22.1 Q4 2015 Q12016 Q2 2016 Q3 2016 Q4 2016 Revenue EBITDA $10.0 $4.5 $6.2 $7.7 $20.2 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Financial Data: Net Debt & Operating Cash flowAMG Critical Materials REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) CAPITAL EXPENDITURES (IN MILLIONS OF US DOLLARS) Q4 2016 REVENUE IMPACTED BY WEAK METALS PRICES INCREASE OF $10.2M Q4 ‘16 VS. Q4 ’15 DUE TO EXPANSION PROJECTS • Q4 2016 revenue of $166.0 million was in-line with prior year • EBITDA increased by $15.1 million to $22.1 million in the fourth quarter of 2016, driven primarily by higher gross profit and lower segment specific SG&A expenses. • Capital expenditures increased to $20.2 million in Q4 2016 vs. $10.0 million in Q4 2015 • The largest expansion capital projects in 2016 were AMG’s lithium project in Brazil, titanium aluminide expansion in Germany, Ancuabe graphite mine project in Mozambique, and silicon furnace upgrade in Germany
  • 23.
    23 Key Product Q4 ‘16 Rev($M) Q4 ‘15 Rev ($M) Volume Price Currency FeV & FeNiMo $21.7 $16.9 Al Master Alloys & Powders $38.0 $43.5 Chromium Metal $20.7 $16.8 Tantalum & Niobium $16.2 $18.7 Titanium Alloys & Coatings $22.2 $21.2 Antimony $18.6 $17.1 Graphite $13.2 $13.2 Silicon Metal $15.4 $19.1 AMG Critical Materials – Quarterly Revenue Drivers • AMG Critical Materials Q4 2016 revenue of $166.0 million was in-line with prior year • Strong sales volumes in AMG Vanadium, AMG Titanium Alloys & Coatings, AMG Antimony and AMG Superalloys resulted in higher revenue in Q4 2016 versus the same period in the prior year • Improving ferrovanadium prices also impacted Q4 2016 revenue and gross profit in AMG Vanadium • AMG Silicon Q4 2016 revenue declined versus the prior year due to the scheduled furnace upgrade in the fourth quarter 2016 • AMG Aluminum revenue declined due to price effects • AMG Brazil revenue declined due to timing of delivery to customers
  • 24.
    24 Critical Materials –Average Quarterly Prices MATERIALS Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 FERROVANADIUM ($/LB) $8.90 $6.79 $6.59 $10.03 $9.99 $10.65 MOLYBDENUM ($/LB) $5.83 $4.85 $5.33 $7.42 $7.01 $6.63 NICKEL ($/MT) $10,557 $9,434 $8,496 $8,819 $10,262 $10,685 ALUMINUM ($/MT) $1,591 $1,495 $1,515 $1,571 $1,620 $1,710 CHROME ($/LB) $4.41 $4.09 $3.92 $3.76 $3.67 $3.65 TANTALUM ($/LB) $74 $59 $60 $62 $60 $56 NIOBIUM OXIDE ($/KG) $28 $25 $25 $27 $28 $26 TI SPONGE ($/KG) $9.40 $9.05 $8.69 $8.25 $8.15 $8.15 ANTIMONY ($/MT) $6,888 $5,588 $5,359 $6,252 $7,271 $7,482 GRAPHITE ($/MT) $750 $750 $725 $585 $585 $585 SILICON METAL (€/MT) €2,273 €2,054 €1,869 €1,684 €1,648 €1,733 Q4 ‘16 VS. Q4 ‘15 % CHANGE 57% 37% 13% 14% (11%) (5%) 4% (10%) 34% (22%) (16%) Q4 ‘16 VS. Q3 ‘16 % CHANGE 7% (5%) 4% 6% – (7%) (7%) – 3% – 5%
  • 25.
    25 $54.6 $60.8 $66.7 $70.0 $71.9 $2.6 $4.6 $5.6 $8.9 $7.9 Q4 2015Q1 2016 Q2 2016 Q3 2016 Q4 2016 Revenue EBITDA $48.0 $50.5 $92.8 $68.1 $61.7 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Financial Data: Net Debt & Operating Cash flowAMG Engineering REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) ORDER INTAKE (IN MILLIONS OF US DOLLARS) EBITDA IMPROVEMENT DUE TO HIGHER SALES AND LOWER COSTS BOOK TO BILL RATIO OF 0.86X IN Q4 2016 • Q4 2016 revenue increased by $17.3 million, or 32%, vs. Q4 2015, the highest quarterly revenue in 5 years, due to strong sales of plasma remelting, induction and turbine blade coating furnaces for the aerospace market • EBITDA increased by $5.3 million in Q4 2016 versus Q4 2015 • AMG Engineering Order backlog of $135.5 million as of December 31, 2016, a 4% decrease versus $140.9 million as of December 31, 2015 • AMG Engineering signed $273.1 million in new orders during 2016, a 1.01x book to bill ratio
  • 26.
    26 STRATEGY & OUTLOOK AMG AdvancedMetallurgical Group N.V.
  • 27.
    27 AMG: Ready forGrowth 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
  • 28.
    2828 Strategy AMG’s overriding strategicobjective is to achieve industry leadership while being the low cost producer 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
  • 29.
    2929 2017 Outlook &Lithium Project Update Management’s priority in 2017 is to execute our transformational lithium project OUTLOOK AMG is well positioned to maintain full year 2016 levels of profitability in 2017, subject to a high degree of global uncertainty. In addition to delivering our highly accretive lithium project and executing our long term, transformational lithium strategy, AMG will continue to pursue other acquisition opportunities and organic growth projects in order to generate long term value for our shareholders. LITHIUM PROJECT UPDATE Overview: Project is progressing in-line with expectations - production expected to commence mid-2018. Mibra Resource: In Q2 2017, AMG will finalize and publish an updated resource statement for the Mibra mine. 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.
  • 30.
    30 KEY PRODUCTS & ENDMARKETS AMG Advanced Metallurgical Group N.V.
  • 31.
    31 Key Products REVENUE (IN MILLIONSOF US DOLLARS) GROSS PROFIT * (IN MILLIONS OF US DOLLARS) $- $50 $100 $150 $200 $250 Q4 2015 Q4 2016 Vacuum Furnaces Ti Master Alloys & Coatings Al Master Alloys & Powders Vanadium & FeNiMo Chromium Metal Antimony Tantalum & Niobium Graphite Si Metal $(5) $5 $15 $25 $35 $45 $55 Q4 2015 Q4 2016 Q4 2016 $48.4 Q4 2016 $237.9 Q4 2015 $220.8 Q4 2015 $32.4 * Before non-recurring items
  • 32.
    32 Critical Materials –Market Trends SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE 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
  • 33.
    33 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 SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE
  • 34.
    34 AMG ENGINEERING CAPITAL GOODS (VACUUMFURNACES) FUEL EFFICIENCY ELECTRONICS AMG ENGINEERING VACUUM HEAT TREATMENT SERVICES FUEL EFFICIENCY AEROSPACE, AUTOMOTIVE Engineering – Market Trends AEROSPACE, AUTOMOTIVE PRODUCTS & SERVICES MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE
  • 35.
    35 AMG IS AGLOBAL SUPPLIER OF CRITICAL MATERIALS TO: 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 FY 2016 REVENUE AMG at a Glance TRANSPORTATIONENERGY INFRASTRUCTURE SPECIALTY METALS AND CHEMICALS BY END MARKET: BY REGION:BY SEGMENT: 43% Europe 33% North America 20% Asia 4% ROW 28% Engineering 72% Critical Materials 23% Infrastructure 22% Specialty Metals & Chemicals 40% Transportation 15% Energy
  • 36.
  • 37.
    37 AS AT IN MILLIONSOF US DOLLARS DECEMBER 31, 2016 UNAUDITED DECEMBER 31, 2015 Fixed assets 226.1 215.8 Goodwill and intangibles 33.2 28.9 Other non-current assets 91.7 70.2 Inventories 143.6 126.4 Receivables 129.2 124.3 Other current assets 35.8 29.3 Cash 160.7 127.8 TOTAL ASSETS 820.3 722.7 TOTAL EQUITY 197.8 153.6 Long term debt 151.0 112.2 Employee benefits 141.6 137.9 Other long term liabilities 49.9 69.8 Current debt 18.4 14.5 Accounts payable 133.3 108.0 Advance payments 29.4 44.2 Accruals 56.1 42.9 Other current liabilities 42.9 39.6 TOTAL LIABILITIES 622.5 569.1 TOTAL EQUITY AND LIABILITIES 820.3 722.7 Consolidated Balance Sheet
  • 38.
    38 FOR THE TWELVEMONTHS ENDED IN MILLIONS OF US DOLLARS DECEMBER 31, 2016 UNAUDITED DECEMBER 31, 2015 UNAUDITED Revenue 971.1 977.1 Cost of sales * 784.3 820.3 Gross profit 186.8 156.9 Selling, general & administrative 130.8 122.3 Environmental 1.9 (0.8) Other income, net (5.7) (0.9) Operating profit 59.9 36.2 Net finance costs 12.0 8.2 Share of profit of associates 1.8 0.6 Profit before income taxes 49.7 28.6 Income tax expense 8.1 18.7 Profit for the period 41.6 9.9 Shareholders of the Company 40.6 11.1 Non-controlling interest 1.0 (1.2) ADJUSTED EBITDA 100.7 75.6 Consolidated Income Statement * Restated
  • 39.
    39 Consolidated Statement ofCash Flows FOR THE YEAR ENDED IN MILLIONS OF US DOLLARS DECEMBER 31, 2016 UNAUDITED DECEMBER 31, 2015 UNAUDITED EBITDA 100.7 75.6 Change in working capital and deferred revenue (7.7) 21.6 Finance costs paid, net (6.7) (11.4) Other operating cash flow (23.5) (3.8) Cash generated from operating activities 62.8 82.0 Income tax paid (6.6) (5.7) Net cash from operating activities 56.2 76.3 Capital expenditures (44.1) (23.3) Other investing activities 2.0 2.8 Net cash used in investing activities (42.1) (20.5) Net cash from (used in) financing activities 23.3 (29.1) Net increase in cash and equivalents 37.4 26.7 Cash and equivalents at January 1 127.8 108.0 Effect of exchange rate fluctuations on cash held (4.4) (6.9) CASH AND EQUIVALENTS AT DECEMBER 31 160.7 127.8