amg investor presentation may 2012
TRANSCRIPT
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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
Overview
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
2011 Revenues: $1,351.3M
2011 EBITDA: $110.1M
Employees: 3,154
Facilities: Netherlands, Germany, UK, USA, Brazil, France, China,
Belgium, Turkey, Poland, India, Sri Lanka, Czech
Republic
Market cap: €193M ($252M)
Shares outstanding: 27.5M
52 week range: €6.67–€15.38
Recent share price: €7.00 (May 11, 2012)
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
Antimony and tantalum High-value alloys
Critical raw materials
Capital equipment for high
purity materials
Silicon metal
Natural graphite
Advanced Materials Engineering Systems
Business Units, Products, and End Markets
Infrastructure Aerospace Energy
Graphit Kropfmühl
Specialty Metals & Chemicals
AMG Mining
67% of Q1 2012 revenue
62% of Q1 2012 EBITDA
21% of Q1 2012 revenue
14% of Q1 2012 EBITDA
12% of Q1 2012 revenue
24% of Q1 2012 EBITDA
Creating new reporting
segment in 2012
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Increase Capital
Efficiency
Invest in Vertical
Integration
Drive Organic Growth
Why Invest in AMG
Revenue
2009 – 2011
24.8%
CAGR
2011:
$ 1,351.3 million
+ 36% over 2010
EBITDA
EPS
2009 – 2011
26.2%
CAGR
2011:
$ 110.1 million
+ 30% over 2010
Strong growth in
2011
Adjusted 2011 EPS:
$1.34
+ 79% over 2010
ROCE
2009 – 2011
19.9%
CAGR
2011:
15.1%
+ 27% over 2010
Increase
Shareholder
Value
6
Critical Raw Materials Matrix
■ USA, Germany, UK and EU have each identified critical materials – common factors
include supply risks, economic importance and technology demand
■ AMG mines or processes 13 of those critical materials
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Advanced Materials
Input & Critical
Raw Materials
Key
Products
Conversion
Recycling
Material
Science
Aerospace
Infrastructure
Specialty
Metals &
Chemicals
Specialty alloys
for titanium
Coatings for
wear resistance
Everyday
Applications
Sample
Customers
Recycling Ferrovanadium
Ferro-nickel
molybdenum
Mining
Conversion
Tantalum
concentrate
and powder
Antimony
trioxide
Chromium
metals
Aluminium
master alloys
End
Markets
Surface
Coating
Property
Modification
Property
Modification
Surface
Coating
Property
Modification
FeV is added
into high-
strength
light-weight
steel as used
in the
Shanghai
World
Financial
Center²
A Boeing 787
Dreamliner contains
~250,000 lb titanium,
5x more than a
comparable airplane,
the A340¹
An iPhone
installed
~469
tantalum
capacitors³
¹ Titanium Metal Industry Primer, by J.P. Morgan research on January 23, 2012
² Resource Revolution: Meeting the world’s energy, materials, food, and water needs, by McKinsey, November 2011
³ iSuppli in August 2010
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Nearly 90 % of all
nuclear residues from
reprocessing of Pu are
processed into new
fuels with AMG’s
technology¹
Engineering Systems
Input & Critical
Raw Materials
Key
Products
Technology
Material
Science
Aerospace
Energy
– Solar
Energy
– Nuclear
Vacuum Melting
and Re-melting
Systems
Precision Casting
and Coating
Systems
Heat Treatment
with high pressure
gas quenching
Everyday
Applications
Sample
Customers
Technology Solar silicon
melting and
crystallisation
systems- DSS
furnaces
Mono2(TM)
technology
Technology Vacuum
Sintering
Systems for
nuclear fuel
Development
project for the
safe storage of
nuclear waste
End
Markets
Surface
Coating
Property
Modification
Property
Modification
Property
Modification
All modern turbine
engines use titanium
compressor blades and
discs to reduce weight
and lower CO2
emission¹
Solar power could
achieve $1 per watt by
2020, down from $4
per watt in 2010²
¹ AMG Management
² Resource Revolution: Meeting the world’s energy, materials, food, and water needs, by McKinsey in November 2011
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Li-iron batteries for
electric vehicles (EV)
typically use graphite
as anode. One car
battery requires ~24
Kg graphite.³
Graphit Kropfmühl
Input & Critical
Raw Materials
Key
Products
Mining
Conversion
Material
Science
Infrastructure
Energy
– Solar
Specialty
Metals &
Chemicals
Natural graphite
for heat insulation
materials for
building
construction
Everyday
Applications
Sample
Customers
Conversion Silicon metal for
polycrystalline
for solar cells
Mining
Conversion
Natural
graphite for
transportation
and lithium-ion
batteries
Silicon metal
for aluminum
and silicones
End
Markets
Property
Modification
Property
Modification
Property
Modification
Improving energy
efficiency in buildings
could provide ~19%
of the total benefits
thus increasing
resource productivity¹
In 2010, ~ 87% of
solar cells are silicon-
based²
¹ Resource Revolution: Meeting the world’s energy, materials, food, and water needs, by McKinsey in November 2011
³ Solarbuzz
³ AMG Management
10
Recent Developments
Increase
Shareholder
Value
AMG Mining
Focus on improving mining operational efficiencies at AMG's existing
antimony and tantalum mines
■ Appointed Mr. Hoy Frakes as President of AMG Mining
AMG Aluminum
Began the next phase in the coordination of global production sites
and global customer service activities
■ Appointed Mr. Julien Crisnaire as President of AMG Aluminum to
lead this initiative
Graphit Kropfmühl
AMG completed the public Voluntary Tender process
■ AMG acquired over 5.4% of the outstanding shares of GK
through the voluntary tender offer completed on May 2, 2012
■ AMG now owns 93.5% of GK's shares – more than the 90%
threshold required to initiate a squeeze out
11
Financial Highlights
12
Revenue
$26.2
$31.4 $27.7
$24.8
$21.9
Down 16% YoY
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Financial Highlights
$318.0
$368.3 $356.4
$308.6
$324.0
Up 2% YoY
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
■ Q1 2012 EPS: $0.26 (1)
■ Down 26% from Q1 2011 (1)
■ LTM EPS: $1.25 (1)
2011 Gross Profit
EBITDA
(in USD millions)
Adjusted EPS
- - - - - - - - - -
$59.8 $69.0
$58.7 $50.5
$53.4
Down 11% YoY
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
LTM: $1,357.3
LTM: $105.8
(in USD millions) LTM: $231.6
(in USD millions)
(1) Adjusted to exclude non-recurring charges and Timminco Results
13
10.5% 11.9%
15.1%
8.0% 0
2009 2010 2011
Capital Base
■ Net debt: $206.4 million ■ Debt to capitalization: 0.55x ■ Net Debt to LTM EBITDA: 1.95x
■ Revolver availability: $47.9 million ■ Total liquidity: $129.1 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 Q1 2012 in conjunction with the Voluntary Tender Offering for GK
$66.1 $61.1 $71.3 $79.6
$81.2
$267.1 $278.5 $274.9 $268.6 $287.6
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Cash Debt ( in USD millions)
Cash and Debt
ROCE
14
Key Products
Q1 2012: $324.0
Revenue Gross Profit
Q1 2012: $53.4 ( in USD millions) ( in USD millions)
$-
$50
$100
$150
$200
$250
$300
YTD Q1 2011 YTD Q1 2012
Vacuum Furnaces Ti Master Alloys and Coatings
Al Master Alloys and Powders FeV & FeNiMo
Antimony Chromium Metal
Tantalum & Niobium Graphite
Si Metal
$-
$10
$20
$30
$40
$50
$60
YTD Q1 2011 YTD Q1 2012
Vacuum Furnaces Ti Master Alloys and Coatings
Al Master Alloys and Powders FeV & FeNiMo
Antimony Chromium Metal
Tantalum & Niobium Graphite
Si Metal
15
End Markets
Aerospace + 26%
v. Q1 2011
Infrastructure + 3%
v. Q1 2011
Q1 2012: $324.0
Revenue Gross Profit
Q1 2012: $53.4 ( in USD millions) ( in USD millions)
Aerospace
32.4%
Infrastructure
14.2%
Energy
14.3%
Specialty Metals
& Chemicals
39.1%
Aerospace
33.5%
Energy
19.6%
Specialty Metals
& Chemicals
29.1%
Infrastructure
17.8%
16
■ Q1 2012 revenue up 3% from Q1 2011
■ Titanium master alloys revenue up
83%
■ Antimony revenue down 6%
■ FeV revenue down 5%
■ Q1 2012 gross margin 14% of revenue
■ Lower gross margin due to an increase
in Aluminium alloy revenue
■ Q1 2012 EBITDA margin 6% of
revenue
■ SG&A costs down 8% v. Q1 2011
■ Q1 2012 CAPEX $8.3 million
■ $3.5 million for FeV expansion
$210.8
$235.6 $226.8
$198.7 $216.5
$14.6
$17.5
$12.3
$6.0
$13.7
$1.0
$6.0
$11.0
$16.0
$21.0
$(20.0)
$30.0
$80.0
$130.0
$180.0
$230.0
$280.0
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Revenue EBITDA
Advanced Materials
Financial Summary
- - - - -
$5.6 $6.2 $6.6
$10.7
$8.3
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Capital Expenditure
( in USD millions)
( in USD millions)
17
Q1 2012 revenue up 5% from Q1 2011
Heat treatment revenue up 128%
Remelting furnace revenue up 45%
Solar DSS revenue down 88%
Q1 2012 gross margin 22% of revenue
Increasing price pressure
Cost overruns impacted gross
margin
Q1 2012 EBITDA 5% of revenue
SG&A costs down 11%
$64.9
$89.8 $86.3
$72.9 $68.0
$5.3
$7.7
$9.3
$11.8
$3.0
$-
$5.0
$10.0
$15.0
$20.0
$(15.0)
$5.0
$25.0
$45.0
$65.0
$85.0
$105.0
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Revenue EBITDA
Engineering Systems
Financial Summary
- - - - -
$65.7 $88.6
$68.5 $69.5 $80.6
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Order Intake
( in USD millions)
( in USD millions)
Order backlog increased 11% to $176.2
million at March 31, 2012
Order intake $80.6 million in Q1
2012
1.19x book to bill ratio
18
Q1 2012 revenue down 7% from Q1
2011
Natural graphite revenue down 11%
Silicon metal revenue down 4%
Q1 2012 gross margin 19% of revenue
Lower sales prices for silicon metal
Lower volumes for natural graphite
Q1 2012 EBITDA 13% of revenue
SG&A costs down 11%
$42.3 $42.9 $43.3
$37.0 $39.5
$6.3 $6.2 $6.2 $7.0
$5.2
$1.0
$6.0
$11.0
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Revenue EBITDA
Graphit Kropfmühl
Financial Summary
- - - - -
$1.2
$2.5 $2.7 $3.2
$2.2
Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Capital Expenditure
( in USD millions)
( in USD millions)
■ Q1 2012 CAPEX $2.2 million
Upgrading silicon metal electric arc
furnace
Outlook
20
Outlook
■ AMG expects Revenue and EBITDA growth in 2012
■ AMG announces Q2 2012 financial results on August 8, 2012
Antimony expansion
is progressing on plan
Tantalum demand is
moderating
Challenging start to
2012
Aerospace is strong
Market is slowly
improving
Heat Treatment
Services business
providing more stable
recurring revenues
Result will be
consistent with 2011
Voluntary Tender
completed
Silicon metal prices
locked in for 2012
Graphite demand is
rebounding
Advanced Materials Engineering Systems Graphit Kropfmühl AMG Mining
21
Appendix
22
Consolidated Balance Sheet
Balance Sheet ($’000) Actual
As of 31-Dec-11 31-Mar-12
Fixed assets 263.6 273.8
Goodwill and intangibles 38.1 38.9
Other non-current assets 63.4 65.4
Inventories 228.9 232.5
Receivables 188.1 223.0
Other current assets 39.1 47.1
Cash 79.6 81.2
TOTAL ASSETS 900.8 961.9
TOTAL EQUITY 220.6 232.0
Long-term debt 210.4 222.2
Pension liabilities 90.1 92.9
Other long-term liabilities 71.6 75.9
Current debt 58.2 65.4
Accounts payable 128.5 145.6
Advance payments 30.2 39.5
Accruals 51.7 54.8
Other current liabilities 39.5 33.6
TOTAL LIABILITIES 680.2 729.9
TOTAL LIABILITIES & EQUITY 900.8 961.9
23
Consolidated Income Statement
Income Statement ($’000) Actual
For the three months ended 31-Mar-11 31-Mar-12
Revenue 318.0 324.0
Cost of sales 258.2 270.6
Gross profit 59.8 53.4
Selling, general & admin. 42.9 39.1
Asset impairment & restructuring 0.3 2.8
Environmental 0.1 0.7
Other income (0.9) (0.5)
Operating profit 17.4 11.2
Net finance costs 0.5 6.9
Share of (loss) profit of associates (4.4) 0.2
Profit before income taxes 12.5 4.5
Income tax expense 5.0 1.2
Profit for the period 7.6 3.2
Attributable to:
Shareholders of the Company 7.0 3.5
Non-controlling interest 0.6 (0.3)
Adjusted EBITDA 26.2 21.9
24
Consolidated Statement of Cash Flows
Cash Flow Statement ($’000) Actual
For the three months ended 31-Mar-11 31-Mar-12
EBITDA 26.2 21.9
+/- Change in operating assets/liabilities (22.1) (19.4)
-Interest paid, net (1.2) (3.1)
Other operating cash flow (0.3) 0.8
Cash flows from operations before taxes 2.6 0.2
Income tax paid (16.3) (3.2)
Total cash flows from operations (13.7) (3.0)
Capital expenditures (8.2) (11.5)
Other investing activities (24.7) 0.0
Cash flows from investing activities (32.9) (11.5)
Cash flows from financing activities 19.4 14.7
Net increase (decrease) in cash (27.2) 0.2
Beginning cash 89.3 79.6
Effects of exchange rates on cash 4.0 1.4
Ending cash 66.1 81.2
