Download - Amg investor presentation december 2010
AMG Advanced Metallurgical Group N.V.
Investor Presentation
December 2010
2AMG ADVANCED METALLURGICAL GROUP N.V.
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3AMG ADVANCED METALLURGICAL GROUP N.V.
Listed on NYSE-Euronext Amsterdam (Euronext: AMG)
Products High purity metals and complex metal products
Vacuum furnaces used to produce high purity metals
2010 YTD September 30 2010 Revenues - $719.8 million
EBITDA - $64.7 million, 9.0% margin EPS of $0.42 (1)
Net debt - $144.6 million
Capital Investment - $19.1 million
Global presence Europe, North America, South America and Asia
2,500 employeesSustainable Metals Technology
Introduction
(1) Excluding the equity losses from AMG’s 42.5% ownership in Timminco Limited
4AMG ADVANCED METALLURGICAL GROUP N.V.
■ AMG participates in the macro economic trend of:
■ Growing demand for natural resources in context of CO2
reduction and sustainable environmental demands for: ■ Responsible energy production and use
■ Emerging market infrastructure
■ Aerospace and light weight materials
■ Specialty metals and chemicals
Macroeconomic Trends and Markets
5AMG ADVANCED METALLURGICAL GROUP N.V.
Advanced Materials
High-value alloys
Essential raw materials
Engineering Systems
Capital equipment for high purity
materials
Products & Markets
InfrastructureAerospaceEnergySpecialty Metals &
Chemicals
6AMG ADVANCED METALLURGICAL GROUP N.V.
Markets
AMG Advanced Metallurgical Group N.V.
Aerospace Infrastructure EnergySpecialty Metals &
Chemicals
Titanium Alloys Structural Steel Solar Vacuum Furnaces Silicones
Superalloys Specialty Steel Superalloys Paints & Pigments
Turbine Coatings Building Materials Silicon Metal Glass, Tools & Optics
Vacuum Furnaces Nuclear Fuel Vaccum Furnaces Capacitors
Energy Storage Technologies
7AMG ADVANCED METALLURGICAL GROUP N.V.
Products
Vacuum furnaces for solar ingot
production
Stackable
Graphite
Blocks
Energy – Solar & Nuclear
Tantalum based capacitor Paints and pigments
Specialty Metals & Chemicals
High purity stainless steel
Infrastructure – Recycling
Typical aerospace jet engine
SuperalloysTi alloys
(includes VAl)
Aerospace
8AMG ADVANCED METALLURGICAL GROUP N.V.
Markets & Products – by the Numbers
YTD 2010 Revenue by
Product
YTD 2010 Revenue by
End Market
Aerospace 26%
Energy - Solar & Nuclear 22%
Infrastructure 16%
Specialty Metals & Chemicals 36%
Vacuum Furnaces 25%
Al Master Alloys 14%
Ti Master Alloys and Coatings
16%
Si Metal 9%
FeV & FeNiMo 8%
Antimony 11%
Chromium Metal 8%
Tantalum & Niobium
4%
Graphite 5%
9AMG ADVANCED METALLURGICAL GROUP N.V.
Advanced Materials - Market, Products and Customers
Products
Aerospace
Specialty alloys for titanium
Coatings for wear
resistance
Infrastructure - FeV
Ferro-vanadium
Ferro-nickel molybdenum
Specialty Metals
Competitors Reading Alloys Inc.
Evraz Group S.A.
(Stratcor)
Evraz Group S.A. (Highveld
Steel & Vanadium)
Eramet S.A. (Gulf Chemical
& Metallurgical Corporation
Evraz Group S.A. (Stratcor)
Xstrata plc
Chengde Vanadium &
Titanium Stock Co. Ltd.
KBM Affilips B.V.
KB Alloys, Inc.
Delachaux S.A.
Campine S.A.
Chemtura Corporation
Sample Customers
Chromium Metals
Tantalum
Antimony
Aluminium master alloys
10AMG ADVANCED METALLURGICAL GROUP N.V.
Advanced Materials – Specialty Metals Acquisition
Material
Competitors
Antimony – AMG is the largest producer of antimony trioxide (a flame retardant) in
Europe
In August 2010 AMG acquired antimony mining rights and an adjacent antimony metal
smelter in Turkey for a total investment of up to approximately $20 million
Secure supply of antimony raw material used in AMG’s antimony trioxide operation
AMG uses approximately 10,000 mt of antimony metal per year
Antimony metal prices have increased from $4,500/mt in 2009 to over $10,000/mt
in October 2010
This will result in substantial raw material cost savings in 2011
Campine S.A., Chemtura Corporation, Hsikwangshan Twinkling Star Antimony Co. Ltd
Transaction
Strategic
Rationale
Antimony Metal
Purchase
Oxidation
Process
Antimony
Trioxide
Dispersions, Pastes,
Granules, Microgranules
11AMG ADVANCED METALLURGICAL GROUP N.V.
Advanced Materials - Infrastructure metals pricing
$0
$50
$100
$150
$200
$250
$0
$10
$20
$30
$40
$50
$60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Pri
ce /
Po
un
d –
V,
Mo
, N
i
Ferro Vanadium Molybdenum Nickel
Prices are still below pre-crisis levels
2010
12AMG ADVANCED METALLURGICAL GROUP N.V.
Engineering Systems - Market, Products and Customers
Products
Energy - Solar
Solar silicon melting and
crystallisation systems
(DSS furnaces)
Aerospace
Vacuum Melting and Re-
melting Systems
Precision Casting and
Coating Systems
Heat Treatment with high
pressure gas quenching
Energy - Nuclear
Vacuum Sintering
Systems
Notable Successes 2005 – Introduced single
crucible furnaces
2005 –2009 – >$172 mm
in revenue, 2nd largest
market participant
2010 – Introduced SCU
600+ DSS system
2010 – Market Share leader
in Ti remelting in China, the
fastest growing Ti market
2010 – Leading market share
in turbine blade coating
Secured first nuclear
engineering contract with
DOE, through Shaw-Areva
Two strategic acquisitions
completed to expand product
portfolio
Sample Customers
13AMG ADVANCED METALLURGICAL GROUP N.V.
Financial Overview
14AMG ADVANCED METALLURGICAL GROUP N.V.
Financial Highlights – YTD September 2010
2010 YTD Revenue $719.8
2010 YTD EBITDA $64.7
Europe56%
North America
21%
Asia18%
South America
4%ROW
1%
Revenue by Geography
Revenue and EBITDA in millions
$447.4 $178.0
$94.4
Advanced Materials Engineering Systems
Graphit Kropfmühl
$32.1 $27.5
$5.1
Advanced Materials Engineering Systems
Graphit Kropfmühl
15AMG ADVANCED METALLURGICAL GROUP N.V.
- - -- - -
$18.6
$12.4
$22.0 $23.9
$18.8
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Financial Highlights
$205.4
$231.4 $235.8$243.5 $240.4
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(in millions)
(in millions)
Q3 Revenue: $240.4 million
Up 17% from Q3 2009
Q3 EBITDA: $18.8 million
Up 1% from Q3 2009
Q3 EPS: $0.11
Up from ($0.50) in Q3 2009
YTD Revenue: $719.8 million
Up 13% from YTD 2009
YTD EBITDA: $64.7 million
Up 14% from YTD 2009
YTD EPS: $0.42 (1)
Up from ($0.65) YTD 2009 (1)
HighlightsRevenue
EBITDA
(1) Excluding the equity losses from AMG’s 42.5% ownership in Timminco Limited
16AMG ADVANCED METALLURGICAL GROUP N.V.
Advanced Materials
Financial Summary Highlights
( in millions)
$5.0 $5.3$8.5 $14.2 $9.4
$95.9
$124.3
$140.5
$152.0 $154.9
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Revenue EBITDA ■ Infrastructure - ferrovanadium
■ Reference prices increased 18% v. Q3
2009
■ Volumes improved 32% v. Q3 2009
■ Ferronickel-molybdenum demand
decreased 43% v. Q3 2009
■ Aerospace – master alloys prices declined 23%
v. Q3 2009; volumes improved 165%
■ CAPEX
■ Expansion of ferrovanadium operations
in the United States
- - - - -
$1.9
$5.0
$3.3$4.2
$5.6
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
CAPEX
17AMG ADVANCED METALLURGICAL GROUP N.V.
Engineering Systems
Financial Summary Highlights
( in millions)
- - - - -$11.0
$5.9$12.1 $8.0 $7.4
$61.6
$73.8 $65.3
$59.5
$53.2
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Revenue EBITDA
- - - - -
$1.2
$3.0
$0.8$1.3
$0.8
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
CAPEX
Q3 revenue decreased 14% v. Q3 2009
Solar silicon DSS furnace revenues
decreased 44% in Q3 2010 v. Q3 2009
Q3 EBITDA decreased 33% v. Q3 2009
September 30, 2010 Backlog improved to
$147.1 million from $121 million at June 30,
2010
Order intake $66.9 million in Q3 2010
1.26x book to bill ratio
Diversified backlog - solar, aerospace
and transportation
18AMG ADVANCED METALLURGICAL GROUP N.V.
Graphit Kropfmühl
Financial Summary Highlights
( in millions)
- - - - -$2.6 $1.2 $1.5 $1.7 $2.0
$33.7$33.3
$29.9$32.1 $32.4
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Revenue EBITDA
- - - - -
$0.4
$0.8$1.0
$1.3
$0.7
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
CAPEX
Q3 revenue decreased 4% v. Q3 2009
Decrease in silicon metal revenues due to
production issues
Silicon metal down 7%
Natural graphite up 37%
Q3 EBITDA decreased 23% v. Q3 2009
Lower revenues and higher costs in
silicon metal
Silicon metal down $1.0 million
Natural graphite up $0.5 million
CAPEX for graphite milling expansion
19AMG ADVANCED METALLURGICAL GROUP N.V.
Capital Base
■ Cash: $90.2 million
■ Total debt: $234.8 million
■ Net debt: $144.6 million
■ Revolver availability: $61.3 million
■ Total liquidity $151.5 million
Note: Cash includes short term investments
$124.4
$117.0
$98.9
$84.6
$90.2
$202.3 $203.8 $203.0 $204.3
$234.8
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Cash Debt
Cash and Debt
( in millions)
Highlights – September 30, 2010
20AMG ADVANCED METALLURGICAL GROUP N.V.
Outlook
■ Advanced Materials
■ Markets are improving but remain volatile
■ Antimony, tantalum and aerospace alloys and coatings will drive growth in 2011
■ Engineering Systems
■ Backlog is increasing; renewed interest in solar silicon furnaces
■ Order intake driven by Chinese and Indian markets
■ Graphit Kropfmühl
■ High purity natural graphite demand and pricing is improving
■ Timminco
■ AMG owns 42.5% of Timminco; not consolidated
■ Timminco sold 49% of its silicon metal operations for C$40.3 million; up to C$10.0 million more based upon meeting performance metrics
■ Repaid all of its senior bank debt (non-recourse to AMG)
21AMG ADVANCED METALLURGICAL GROUP N.V.
Appendix
22AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Balance Sheet
December 31, 2009 September 30, 2010
Fixed assets 211,022 212,440
Goodwill and intangibles 28,253 38,924
Other non-current assets 78,209 54,848
Inventories 193,378 202,318
Receivables 147,787 177,586
Other current assets 35,313 48,903
Cash 117,016 90,213
TOTAL ASSETS 810,978 825,232
TOTAL EQUITY 228,423 219,427
Long-term debt 168,319 184,499
Pension liabilities 91,358 88,500
Other long-term liabilities 51,249 34,896
Current debt 35,477 50,295
Accounts payable 69,791 84,450
Advance payments 54,764 44,556
Accruals 46,179 48,061
Other current liabilities 65,418 70,548
TOTAL LIABILITIES 582,555 605,805
TOTAL LIABILITIES AND EQUITY 810,978 825,232
in thousands
23AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Income Statement
Q3 2009 Q3 2010
Revenue 205,406 240,427
Cost of sales 165,457 198,325
Gross profit 39,949 42,102
Selling, general and admin. 31,876 31,682
Asset impairment and restructuring 5,302 -
Environmental 4,075 257
Other income (1,194) (270)
Operating profit (110) 10,433
Net finance costs 5,465 2,921
Share of loss of associates (1,285) (17,554)
Profit before income taxes (6,860) (10,042)
Income tax expense 5,694 325
Profit for the year from continuing operations (12,554) (10,367)
Loss after tax for the year from discontinued operations (14,240) -
Loss for the year (26,794) (10,367)
Attributable to:
Shareholders of the Company (20,302) (11,170)
Minority interest (6,492) 803
in thousands
24AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Cash Flows
Nine months ended
September 30, 2009
Nine months ended
September 30, 2010
Cash Flows from Operations (6,033) (13,903)
Capital Expenditures (20,755) (19,054)
Other Investing Activities (55,796) (26,622)
Cash Flows from Investing Activities (76,551) (45,676)
Cash Flows from Financing Activities 59,247 36,812
Net increase (decrease) in cash (23,337) (22,767)
Beginning Cash 143,473 117,016
Effects of exchange rates on cash 4,255 (4,036)
Ending Cash 124,391 90,213
Approximate availability under AMG lines of credit 97,708 61,300
Total Liquidity 222,099 151,513
in thousands
AMG Advanced Metallurgical Group N.V.