amg investor presentation q2 2010
TRANSCRIPT
AMG Advanced Metallurgical Group N.V.
Investor Presentation
2nd Quarter 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 Q1 2010 March 31
Revenues - $235.8 million
EBITDA - $22.0 million
Net debt - $104.1 million
Capital Investment - $5.1 million
Global presence
Europe, North America, South America and Asia
2,300 employees
Sustainable Metals Technology
Introduction
4AMG ADVANCED METALLURGICAL GROUP N.V.
■ Revenue: $235.8 million
■ EBITDA: $22.0 million, 9.3% EBITDA margin■ Increases in Advanced Materials sales prices
■ Advanced Materials profitability improved substantially in Q4
■ Engineering Systems order intake remained low
■ EPS, excluding Timminco and restructuring charges, of $0.11
■ Capital investment of $5.1 million in Q1 2010
■ Cash: $98.9 million and debt of $203.0 million
■ Net debt of $104.1 million
Financial Highlights - First Quarter 2010
5AMG ADVANCED METALLURGICAL GROUP N.V.
■ AMG participates in the macro economic trend of:
■ Growing demand for natural resources in context of the need for
sustainable environmental demands including:
■ CO2 reduction
■ Emerging market infrastructure
■ Aerospace and light weight materials
■ Specialty metals and chemicals
Macroeconomic Trends and Markets
6AMG ADVANCED METALLURGICAL GROUP N.V.
Advanced Materials
High-value alloys
Essential raw materials
Vacuum Furnaces
Capital equipment for high purity
materials
Products & End Markets
AerospaceEnergy InfrastructureSpecialty Metals &
Chemicals
7AMG 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 Solar - Silicon Metal Glass, Tools & Optics
Vacuum Furnaces Nuclear Fuel Vaccum Furnaces Capacitors
Energy Storage Technologies
8AMG 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
9AMG ADVANCED METALLURGICAL GROUP N.V.
Q1 2010 Revenue by End
Market
Markets & Products
Q1 2010 Revenue by
Product
Energy - Solar & Nuclear 26%
Aerospace 26%
Infrastructure -Recycling 14%
Specialty Metals &
Chemicals 34%
Vacuum Furnaces
28%
Ti Master Alloys and Coatings
18%
Al Master Alloys14%
Si metal11%
FeV & FeNiMo5%
Antimony10%
Chromium Metal
8%
Tantalum & Niobium
3%
Graphite4%
10AMG ADVANCED METALLURGICAL GROUP N.V.
Note: This chart is a simplified depiction of AMG‟s organisational structure.
(1) Timminco Limited is listed on the Toronto stock exchange (TIM CN / TIM.TO).
(2) Graphit Kropfmühl AG (“GK”) is listed on the Frankfurt stock exchange (GKRG.DE / GKR GR).
42.5%(1)
AMG Advanced Metallurgical Group N.V. (Netherlands)
Upgraded metallurgical silicon
Silicon metal
Canada
Timminco
79.5(2)
USGermany Brazil France
Ferrovanadium Ferronickel-
molybdenum
Aluminium master alloys
Chromium metal
Ferrotitanium Metals-based
powders
Tantalum oxide Niobium oxide Aluminium
master alloys
Antimony trioxide
Advanced Materials Division
Specialty alloys for titanium and superalloys
Coating materials
Vanadium chemicals
Metals-based powders
UK
Silicon metal Natural
graphite
Graphit Kropfmühl
GermanyGermany
Engineering Systems Division
US/Mexico
Heat treatment facilities
Vacuum furnace systems
Own & Operate heat treatment facilities
2009 Revenue by Geography
Global Operations
Europe56%
North America
21%
Asia18%
South America
4%ROW
1%
11AMG ADVANCED METALLURGICAL GROUP N.V.
Financial Highlights - by Business Unit
2010 Q1 Revenues 2010 Q1 EBITDA
2010 Q1 Free Cash Flow
In USD millions
$140.5
$65 .3
$30.0
Advanced Materials Engineering Systems GK
$8.5
$12.0
$1.5
Advanced Materials Engineering Systems GK
($2.5)
$25.7($19.1)
Advanced Materials Engineering Systems GK
$ in millions Q1 2010
Adjusted EBITDA 22.0
+ / - Change in working
capital (16.5)
- Maintenance capital (1.4)
Free Cash Flow 4.1
$140.5
$65 .3
$30.0
Advanced Materials Engineering Systems GK
12AMG ADVANCED METALLURGICAL GROUP N.V.
- -- -
$15.9
$22.2$18.6
$12.4
$22.0
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Financial Highlights
$215.7 $214.9$205.4
$231.4 $235.8
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
($ in millions)
($ in millions)
Q1 Revenue: $235.8 million
Up 9% from Q1 2009
Q1 EBITDA: $22.0 million
Up 39% from Q1 2009
Balance sheet highlights at Mar 31, 2010
Cash: $98.9 million
Debt: $203.0 million
Net debt: $104.1 million
Total liquidity: $190.9 million
HighlightsRevenue
EBITDA
13AMG 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.
Strategic Minerals
Corporation
Highveld Steel & Vanadium
Gulf Chemical &
Metallurgical Corporation
Strategic Minerals
Corporation
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
14AMG ADVANCED METALLURGICAL GROUP N.V.
Infrastructure - Pricing
Significant price trends – 10 years
$0
$50
$100
$150
$200
$250
$0
$10
$20
$30
$40
$50
$60
1999 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
15AMG ADVANCED METALLURGICAL GROUP N.V.
Advanced Materials
Financial Summary Highlights
( in millions)
-$1.3 -$0.5$5.0
$5.3 $8.5
$95.9 $96.5
$110.1
$124.3
$140.5
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Revenue EBITDA
- - -
$2.5 $2.1 $1.9
$5.0
$3.3
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
CAPEX
■ Infrastructure - ferrovanadium
■ Reference prices increased 18% v. Q1 „09
■ Volumes declined 12% v. Q1 ‟09
■ Aerospace – master alloys volumes declined
51% compared to Q4 2009
■ Year over year reduction in personnel expenses
improved EBITDA margins
■ CAPEX limited to maintenance activities and
expansion of ferrovanadium operations in the
United States
16AMG 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
2009 – Market Share leader
in Ti remelting in China, the
fastest growing Ti market
2009 – 80% market share in
turbine blade coating
July 2008 – Secured first
nuclear engineering contract
with DOE, through Shaw-
Areva
Two strategic acquisitions
completed to expand product
portfolio
Sample Customers
17AMG ADVANCED METALLURGICAL GROUP N.V.
Engineering Systems
Financial Summary Highlights
( in millions)
- - -
$23.4 $22.5$11.0 $5.9 $12.1
$96.2$91.2
$61.6$73.8 $65.3
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Revenue EBITDA
- - - -
$0.8
$1.7$1.2
$3.0
$0.8
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
CAPEX
Revenue: $65.3 million, 30% decrease QoQ
Solar silicon DSS furnace revenues
decreased 47% in Q1 „10 v. Q1 „09
EBITDA: $12 million
Backlog declined from $162 million at
December 31 2009 to $127 million at March
31, 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)
- - - -$0.8 $1.7 $2.6 $1.2 $1.5
$23.6
$27.3
$33.7$33.3
$29.9
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Revenue EBITDA
- - - -
$4.7
$1.4$0.4 $0.8 $1.0
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
CAPEX
Revenue: $29.9 million; 27% increase QoQ
increases in natural graphite revenue
EBITDA: $1.5 million
Improved from Q1 „09 due to cost
containment measures in graphite and
increased revenue
CAPEX only for graphite milling expansion
Silicon metal prices have rebounded from
Q1 ‟09.
19AMG ADVANCED METALLURGICAL GROUP N.V.
Capital Base
■ Cash: $98.9 million
■ Total debt: $203.0 million
■ Net debt: $104.1 million
■ Revolver availability: $92.0 million
■ Total liquidity $190.9 million
31 December 2008
Note: Cash includes short term investments
$117.5
$108.8
$124.4$117.0
$98.9
$180.3
$193.9$202.3 $203.8 $203.0
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Cash Debt
Cash and Debt
( in millions)
Highlights – March 31 2010
20AMG ADVANCED METALLURGICAL GROUP N.V.
Outlook
■ Advanced Materials
■ Prices have rebounded from historic lows and demand is beginning to improve; 2010 revenues and EBITDA will improve significantly
■ Engineering Systems
■ Order intake continues to be sluggish;
■ Lower order backlog will result in lower 2010 revenues and EBITDA
■ Graphit Kropfmühl
■ Natural graphite demand and pricing is improving
■ Timminco
■ AMG owns 42.3% of Timminco; AMG supports Timminco‟s focus on its core silicon metal business
21AMG ADVANCED METALLURGICAL GROUP N.V.
Appendix
22AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Balance Sheet
$ in thousands December 31, 2009 March 31, 2010
Fixed Assets 211,022 204,977
Goodwill and Intangibles 28,253 26,351
Other Non-current Assets 78,209 67,526
Inventories 193,378 180,630
Receivables 147,787 175,078
Other Current Assets 35,313 37,182
Cash 117,016 98,857
TOTAL ASSETS 810,978 790,601
TOTAL EQUITY 228,423 224,147
Long-term Debt 168,319 159,800
Pension Liabilities 91,358 86,917
Other Long-term Liabilities 51,249 37,507
Current Debt 35,477 43,179
Accounts Payable 69,791 80,658
Advance Payments 54,764 39,807
Unearned Revenue - -
Accruals 46,179 43,843
Other Current Liabilities 65,418 74,743
TOTAL LIABILITIES 582,555 566,454
TOTAL LIABILITIES AND EQUITY 810,978 790,601
23AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Income Statement
$ in thousands Q1 2009 Q1 2010
Revenue 215,719 235,793
Cost of sales 181,859 193,209
Gross profit 33,860 42,584
Selling, general and admin. 29,039 30,614
Asset impairment and restructuring 198 7
Environmental 5 257
Other income (1,691) (81)
Operating profit 6,309 11,787
Net finance costs 2,831 3,609
Share of loss of associates 787 4,395
Profit before income taxes 2,691 3,783
Income tax expense 7,938 3,867
Loss for the year from continuing operations (5,247) (84)
Loss after tax for the year from discontinued operations (18,487) -
Loss for the year (23,734) (84)
Attributable to:
Shareholders of the Company (15,394) (64)
Minority interest (8,340) (20)
24AMG ADVANCED METALLURGICAL GROUP N.V.
Consolidated Cash Flows
$ in thousands Q1 2009 Q1 2010
Cash Flows from Operations (1,062) (14,921)
Capital Expenditures (11,967) (5,146)
Other Investing Activities (25,982) (791)
Cash Flows from Investing Activities (37,949) (5,937)
Cash Flows from Financing Activities 24,437 7,643
Net increase (decrease) in cash (14,574) (13,215)
Beginning Cash 143,473 117,016
Effects of exchange rates on cash (6,126) (4,944)
Ending Cash 122,773 98,857
Approximate availability under AMG lines of credit 71,000 92,040
Total Liquidity 193,773 190,897
AMG Advanced Metallurgical Group N.V.