Amg investor presentation may 2013 v-f
- 2. 2 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
- 3. 3 Overview Listed: NYSE-Euronext Amsterdam: AMG Founded: 2006 LTM Revenues: $1,188.1M LTM EBITDA: $85.1M Employees: 3,275 Facilities: Netherlands, Germany, France, Czech Republic, Poland, UK, USA, Brazil, Mexico, China, India, Sri Lanka, Turkey, Zimbabwe, Mozambique Market cap: €191M ($249M) Shares outstanding: 27.6M 52 week range: €5.81–€7.81 Recent share price: €6.92 (May 2, 2013) AMG provides high value-added specialty metal alloys and engineering systems, related to CO2 reduction and conservation of natural resources to growing end markets
- 4. 4 Business Units, Products and Markets High-value metals & alloys Coating materials Capital equipment & service for high purity materials Critical raw materials AMG Processing AMG Engineering InfrastructureAerospaceEnergy AMG Mining Specialty Metals & Chemicals AMG’s conversion and recycling based businesses AMG’s vacuum systems and services business Integrated AMG’s mine based businesses Serving the Technology Trends in Energy, Aerospace, Infrastructure, and Specialty Metals & Chemicals
- 5. 5 Critical Raw Materials Fe The EU identified 14 critical raw materials* to the European economy – focusing on two determinants – economic importance and supply risk Note: *European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials Materials mined or processed by AMG, or melted by AMG vacuum systems Highlighted materials melted by AMG vacuum systemsREE Li Al V Sb Cr Ni C Ta Nb Ti Si Mo
- 6. 6 Business Units (reporting segment) – AMG Processing Aluminum grain refiners and high-value master alloys for high performance materials in aerospace, automotive and infrastructure applications Value Proposition Ferrovanadium for high strength light weight steels in infrastructure and ferronickelmolybdenum for stainless steels Titanium master alloys for high performance light weight aerospace engine and frame, and coating materials for corrosion resistance on aerospace turbine Tantalum and niobium superalloys and chrome metal for aerospace engine and industrial gas turbine Major ApplicationsKey Products AMG Processing – conversion and recycling operations
- 7. 7 Business Units (reporting segment) – AMG Mining Antimony trioxide and master batches for flame retardant on electronics, paints, and plastics Value Proposition Conflict-free tantalum concentrate for tantalum capacitors used on portable electronics Natural graphite for insulation materials of building construction materials, for energy storage of li-iron battery for electrical vehicle, and for lubricants Silicon metal for aluminum production and solar panel materials Major ApplicationsKey Products AMG Mining – mine based value chains
- 8. 8 Business Units (reporting segment) – AMG Engineering Vacuum melting and re-melting furnaces for high-performance titanium, steel and alloys, and purification of rare metals and alloys Value Proposition Vacuum heat treatment furnaces and services for high-performance materials of aerospace and automotive applications Vacuum coating furnace for aerospace turbine blade coatings Vacuum sintering and annealing furnaces for nuclear fuel productions Major ApplicationsKey Products AMG Engineering – vacuum systems and services
- 9. 9 Recent Developments – Operations Update ■ Process begun in Q3 2012 with implementation of a clear and direct management structure ■ Instituting a number of operational improvement initiatives companywide AMG is focused on improving operational performance and increasing cash flow Objective Progress Update ■ Q1 ‘13 SG&A decreased 8% compared to Q1 ‘12Reduce SG&A by 5% ■ AMG Engineering Q1 ‘13 Gross Margin improved to 25%, from 22% in Q1 ’12 ■ AMG Mining Q1 ‘13 Gross Margin improved to 16%, from 15% in Q1 ‘12 Improve Gross Margin Increase Operating Cash Flow ■ Q1 ‘13 cash from operations improved by $3.7 mm, compared to Q1 ’12 ■ Reduced working capital days to 61 in Q1 ‘13, from 65 in Q1 ‘12 Reduce Net Debt ■ Aims to reduce net debt in H2 2013
- 11. 11 Revenue - - - - -- - - - - $22.0 $23.6 $21.6 $17.7 $22.2 Up 1% YoY Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Financial Highlights $324.0 $319.6 $296.9 $275.2 $296.5 Down 8% YoY Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 ■ Q1 2013 EPS: $0.09 ■ Down 31% from Q1 2012 Gross Profit EBITDA (in USD millions) Adjusted EPS - - - - -- - - - - $53.4 $54.0 $47.7 $41.4 $48.3 Down 10% YoY Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 LTM: $1,188.1 LTM: $85.1 (in USD millions) LTM: $191.4 (in USD millions)
- 12. 12 Capital Base ■ Net debt: $200.7 million ■ Debt to capitalization: 0.64x ■ Net Debt to LTM EBITDA: 2.34x ■ Revolver availability: $66.2 million ■ Total liquidity: $172.9 million ■ AMG’s primary debt facility is a $377 million term loan and revolving credit facility ■ 5 year term – until 2016 ■ Secured an additional $62 million for its credit facility in 2012 in conjunction with the Voluntary Tender Offering for GK $81.2 $93.6 $111.4 $121.6 $106.7 $287.6 $305.9 $309.9 $315.8 $307.4 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Cash Debt ( in USD millions) Cash and Debt Cash Flow from Operations - - - -- - - --$2.1 -$1.6 $45.0 $65.6 2009 2010 2011 2012 ( in USD millions)
- 13. 13 Key Products Q1 2013: $296.5 Revenue Gross Profit Q1 2013: $48.3 ( in USD millions) ( in USD millions)
- 14. 14 End Markets Aerospace - 10% vs. Q1 2012 Added Aluminum Master Alloys serving Aerospace Q1 2013: $296.5 Revenue Gross Profit Q1 2013: $48.3 ( in USD millions) ( in USD millions) Aerospace 40.7% Infrastructure 12.2% Energy 17.1% Specialty Metals & Chemicals 30.0% Aerospace 46.6% Energy 16.4% Specialty Metals & Chemicals 28.5% Infrastructure 8.5% Aerospace + 12% vs. Q1 2012 Focusing on higher margin products for Aerospace
- 15. 15 ■ Q1 ‘13 revenue down 8% from Q1 ‘12 ■ Coatings up 8% ■ Chrome down 27% ■ Titanium Master Alloys down 17% ■ Q1 ‘13 gross margin 13% of revenue, decreased from 15% in Q1 ‘12 ■ Aluminum gross margins up 68% ■ Lower economies of scale due to lower revenues ■ Ramp up at the ferrovanadium facility ■ Q1 ‘13 EBITDA margin 6% of revenue, decreased from 8% in Q1 ‘12 ■ $1.3 million decrease in personnel costs ■ Q1 ‘13 CAPEX $6.6 million ■ $4.7 million for FeV expansion $166.3 $153.1 $12.6 $8.7 $1.0 $6.0 $11.0 $16.0 $21.0 $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 $200.0 Q1 12 Q1 13 Revenue EBITDA AMG Processing Financial Summary - - $5.6 $6.6 Q1 12 Q1 13 Capital Expenditure ( in USD millions) ( in USD millions)
- 16. 16 Q1 ‘13 revenue down 8% from Q1 ‘12 Tantalum up 3% Natural graphite up 16% Antimony down 21% Q1 ‘13 gross margin 16% of revenue, improved from 15% in Q1 ‘12 Substantially improved tantalum mine operations Q1 ‘13 EBITDA 10% of revenue, improved from 7% in Q1 ‘12 SG&A reduced by 9% due to cost containment measures ■ Q1 ‘13 CAPEX $2.2 million Mozambique natural graphite mine exploration program AMG Mining Financial Summary Capital Expenditure ( in USD millions) ( in USD millions) $89.6 $82.9 $5.9 $7.9 $1.0 $6.0 $11.0 $- $20.0 $40.0 $60.0 $80.0 $100.0 Q1 12 Q1 13 Revenue EBITDA - - $4.8 $2.2 Q1 12 Q1 13
- 17. 17 Q1 ‘13 revenue down 11% from Q1 ‘12 Casting and sintering furnaces up 74% Heat Treatment furnaces down 61% Remelting furnaces down 34% Q1 ‘13 gross margin 25% of revenue, improved from 22% in Q1 ‘12 Improved profitability on certain large projects Q1 ‘13 EBITDA 9% of revenue, improved from 5% of revenue in Q1 ‘12 Order backlog down 20% to $132.2 million at Mar. 31, 2013 Order intake $30.9 million in Q1 ‘13 0.51x book to bill ratio AMG Engineering Financial Summary - - - - - $80.6 $36.4 $79.7 $67.8 $30.9 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Order Intake ( in USD millions) ( in USD millions) $68.0 $60.5 $3.5 $5.6 $1.0 $6.0 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 Q1 12 Q1 13 Revenue EBITDA
- 18. Outlook
- 19. 19 Outlook ■ AMG’s markets, particularly for the European centric businesses, remain challenging ■ Cost reductions and operational improvements targeted to increase EBITDA and cash flow in 2013 ■ AMG announces Q2 2013 financial results on August 9, 2013 Improved margins through cost reductions Long-term tantalum supply contract begins delivery in Q2; resource increased by 150% Natural graphite volumes consistent with 2012 Declining prices on antimony impacting mine development Aerospace alloys demand is stable in mid-term AMG Vanadium continues to ramp up the expended facility AMG Aluminum is rationalizing production and reducing costs; sold 45% equity interests in YKB to streamline operations Improved margins through cost reductions Order intake, backlog, and revenue will be consistent Heat Treatment Services operating near capacity Generate revenue through diversified vacuum technology applications AMG Processing AMG EngineeringAMG Mining
- 20. 20 Appendix
- 21. 21 Consolidated Balance Sheet Balance Sheet ($’000) Actual As of 31-December-12* 31-March-13 (restated) Fixed assets 288.3 281.8 Goodwill and intangibles 38.7 39.2 Other non-current assets 79.7 75.8 Inventories 211.5 205.4 Receivables 177.2 187.2 Other current assets 33.8 35.5 Cash 121.6 106.7 TOTAL ASSETS 950.8 931.6 TOTAL EQUITY 175.3 173.2 Long-term debt 265.6 258.9 Pension liabilities 138.0 132.8 Other long-term liabilities 80.9 81.1 Current debt 50.3 48.4 Accounts payable 125.3 135.6 Advance payments 27.0 21.8 Accruals 58.9 52.9 Other current liabilities 29.5 26.9 TOTAL LIABILITIES 775.5 758.4 TOTAL LIABILITIES & EQUITY 950.8 931.6 * 2012 Balance Sheet restated for IFRS required adjustments to pension liabilities and mine stripping costs
- 22. 22 Consolidated Income Statement Income Statement ($’000) Actual For the three months ended 31-March-12 31-March-13 (restated) Revenue 323,984 296,478 Cost of sales 270,547 248,220 Gross profit 53,437 48,258 Selling, general & admin. 38,971 36,017 Asset impairment & restructuring 2,843 1,336 Environmental 728 33 Other income (468) (168) Operating profit 11,363 11,040 Net finance costs 6,945 4,655 Share of (loss) profit of associates 166 (712) Profit before income taxes 4,584 5,673 Income tax expense 1,228 3,712 Profit (loss) for the period 3,356 1,961 Attributable to: Shareholders of the Company 3,648 2,460 Non-controlling interest (292) (499) Adjusted EBITDA 22,002 22,232
- 23. 23 Consolidated Statement of Cash Flows Cash Flow Statement ($’000) Actual For the year ended 31-March-12 31-March-13 (restated) EBITDA 22,002 22,232 +/- Change in operating assets/liabilities (18,745) (9,242) -Interest paid, net (3,106) (2,192) Other operating cash flow 21 (3,777) Cash flows from operations before taxes 173 7,021 Income tax paid (3,231) (6,356) Total cash flows (used in) from operations (3,058) 665 Capital expenditures (11,526) (9,124) Other investing activities 28 29 Cash flows from investing activities (11,498) (9,095) Cash flows from financing activities 14,709 (4,162) Net (decrease) increase in cash 1,669 (12,592) Beginning cash 79,571 121,639 Effects of exchange rates on cash 1,517 (2,350) Ending cash 82,757 106,697