amg investor presentation october 2010
TRANSCRIPT
AMG Advanced Metallurgical Group N.V.
Investor Presentation
October 2010
2AMG ADVANCED METALLURGICAL GROUP N.V.
Disclaimer
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.
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 H1 2010 June 30 Revenues - $479.3 million
EBITDA - $45.9 million, 9.6% margin EPS of $0.31 (1)
Net debt - $119.7 million
Capital Investment - $11.9 million
Global presence Europe, North America, South America and Asia
2,500 employeesSustainable Metals Technology
Introduction
(1) Excluding 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 & End Markets
InfrastructureAerospaceEnergySpecialty Metals &
Chemicals
6AMG ADVANCED METALLURGICAL GROUP N.V.
End 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.
End 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
H1 2010 Revenue by
Product
H1 2010 Revenue by End
Market
Vacuum Furnaces 26%
Al Master Alloys 15%
Ti Master Alloys and Coatings
15%
Si Metal 10%
FeV & FeNiMo 8%
Antimony 10%
Chromium Metal 8%
Tantalum & Niobium
4%
Graphite 4%
Aerospace 27%
Energy - Solar & Nuclear 23%
Infrastructure 15%
Specialty Metals & Chemicals 35%
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 $10,000/mt in
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 2001 – Secured furnace
exclusivity with REC
2005 – Introduced single
crucible furnaces
2009 – >$172 mm in
revenue, 2nd largest
market participant
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 – H1 2010
2010 H1 Revenues $479.3
$292.5
$124.8
$62.0
Advanced Materials Engineering Systems GK
2010 H1 EBITDA $45.9
$22.7
$20.0
$3.2
Advanced Materials Engineering Systems GK
Europe56%
North America
21%
Asia18%
South America
4%ROW
1%
Revenue by Geography
Revenues and EBITDA in millions
15AMG ADVANCED METALLURGICAL GROUP N.V.
- -- -
$22.2$18.6
$12.4
$22.0 $23.9
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
Financial Highlights
$214.9$205.4
$231.4 $235.8$243.5
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
(in millions)
(in millions)
Q2 Revenue: $243.5 million
Up 13% from Q2 2009
Q2 EBITDA: $23.9 million
Up 8% from Q2 2009
Balance sheet highlights at June 30, 2010
Cash: $84.6 million
Debt: $204.3 million
Net debt: $119.7 million
Total liquidity: $163.6 million
HighlightsRevenue
EBITDA
16AMG ADVANCED METALLURGICAL GROUP N.V.
Advanced Materials
Financial Summary Highlights
( in millions)
-$0.5 $5.0 $5.3$8.5
$14.2
$95.9
$110.1
$124.3
$140.5
$152.0
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
Revenue EBITDA
- - -
$2.1 $1.9
$5.0
$3.3$4.2
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
CAPEX
■ Infrastructure - ferrovanadium
■ Reference prices increased 83% v. Q2
2009
■ Volumes declined 28% v. Q2 2009
■ Aerospace – master alloys prices improved 71%
v. Q2 2009
■ CAPEX
■ Expansion of ferrovanadium operations
in the United States
■ Expansion of the tantalum and lithium
mine in Brazil
17AMG ADVANCED METALLURGICAL GROUP N.V.
Engineering Systems
Financial Summary Highlights
( in millions)
- - - -
$22.5$11.0 $5.9 $12.1 $8.0
$91.2
$61.6$73.8 $65.3
$59.5
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
Revenue EBITDA
- - - - -
$1.7$1.2
$3.0
$0.8 $1.3
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
CAPEX
Revenue: $59.5 million, 35% decrease quarter
over quarter
Solar silicon DSS furnace revenues
decreased 67% in Q2 2010 v. Q2 2009
EBITDA: $8.0 million
Backlog declined from $162 million at
December 31 2009 to $121 million at June
30, 2010
Order backlog is now primarily
comprised of furnaces for aerospace
end market
2010 EBITDA is expected to be lower than
2009 due to the decline in backlog
18AMG ADVANCED METALLURGICAL GROUP N.V.
Graphit Kropfmühl
Financial Summary Highlights
( in millions)
- - - - -$1.7 $2.6 $1.2 $1.5 $1.7
$27.3
$33.7$33.3
$29.9$32.1
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
Revenue EBITDA
- - - - -
$1.4
$0.4
$0.8$1.0
$1.3
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
CAPEX
Revenue: $32.1 million; 17% increase over
Q2 2009 due to increases in natural graphite
prices and volumes
EBITDA: $1.7 million
Consistent with Q2 2009 due to cost
containment measures in natural
graphite and increased revenue
CAPEX only for graphite milling expansion
Natural graphite being used in energy
saving insulation applications
Silicon metal seeing stronger demand from
solar and specialty chemical markets
19AMG ADVANCED METALLURGICAL GROUP N.V.
Capital Base
■ Cash: $84.6 million
■ Total debt: $204.3 million
■ Net debt: $119.7 million
■ Revolver availability: $79.0 million
■ Total liquidity $163.6 million
Note: Cash includes short term investments
$108.8$124.4
$117.0
$98.9$84.6
$193.9$202.3 $203.8 $203.0 $204.3
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10
Cash Debt
Cash and Debt
( in millions)
Highlights – June 30, 2010
20AMG ADVANCED METALLURGICAL GROUP N.V.
Outlook
■ Advanced Materials
■ Demand from the Aerospace and Energy industries continues to improve from 2009, however prices and volumes for infrastructure have reached a plateau;
■ 2010 revenues and EBITDA will improve significantly
■ Engineering Systems
■ Backlog is bottoming; renewed interest in solar silicon furnaces
■ Lower order backlog will result in lower 2010 revenues and EBITDA
■ Graphit Kropfmühl
■ Natural graphite demand and pricing is improving
■ Timminco
■ AMG owns 42.5% of Timminco
■ Timminco signed an agreement to sell 49% of its silicon metal operations for $39.7 million; up to $10 million more based upon meeting performance metrics
21AMG ADVANCED METALLURGICAL GROUP N.V.
Appendix
22AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Balance Sheet
December 31, 2009 June 30, 2010
Fixed Assets 211,022 196,004
Goodwill and Intangibles 28,253 24,055
Other Non-current Assets 78,209 70,291
Inventories 193,378 180,859
Receivables 147,787 173,735
Other Current Assets 35,313 41,989
Cash 117,016 84,574
TOTAL ASSETS 810,978 771,507
TOTAL EQUITY 228,423 217,265
Long-term Debt 168,319 156,227
Pension Liabilities 91,358 80,347
Other Long-term Liabilities 51,249 32,676
Current Debt 35,477 48,044
Accounts Payable 69,791 86,651
Advance Payments 54,764 35,748
Unearned Revenue - -
Accruals 46,179 40,204
Other Current Liabilities 65,418 74,345
TOTAL LIABILITIES 582,555 554,242
TOTAL LIABILITIES AND EQUITY 810,978 771,507
23AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Income Statement
H1 2009 H1 2010
Revenue 430,652 479,338
Cost of sales 351,367 392,264
Gross profit 79,285 87,074
Selling, general and admin. 63,056 60,487
Asset impairment and restructuring 393 7
Environmental 87 506
Other income (3,083) (427)
Operating profit 18,832 26,501
Net finance costs 7,622 5,536
Share of loss of associates (1,400) (9,420)
Profit before income taxes 9,810 11,545
Income tax expense 11,948 10,993
Profit for the year from continuing operations (2,138) 552
Loss after tax for the year from discontinued operations (40,340) -
Loss for the year (42,478) 552
Attributable to:
Shareholders of the Company (25,112) 1,099
Minority interest (17,366) (547)
24AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Cash Flows
Six months ended
June 30, 2009
Six months ended
June 30, 2010
Cash Flows from Operations (1,138) (20,295)
Capital Expenditures (17,245) (11,953)
Other Investing Activities (49,133) (10,076)
Cash Flows from Investing Activities (66,378) (22,029)
Cash Flows from Financing Activities 32,004 21,207
Net increase (decrease) in cash (35,512) (21,117)
Beginning Cash 143,473 117,016
Effects of exchange rates on cash 2,119 (11,325)
Ending Cash 110,080 84,574
Approximate availability under AMG lines of credit 80,000 79,024
Total Liquidity 190,080 163,598
AMG Advanced Metallurgical Group N.V.