amg investor presentation aug 2012 2
DESCRIPTION
AMG - Investor Presentation Aug 2012TRANSCRIPT
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
Overview
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
LTM Revenues: $1,308.6M
LTM EBITDA: $98.0M
Employees: 3,100
Facilities: Netherlands, Germany, UK, USA, Brazil, France, China,
Belgium, Turkey, Poland, India, Sri Lanka, Czech
Republic
Market cap: €200M ($248M)
Shares outstanding: 27.5M
52 week range: €5.81–€10.56
Recent share price: €7.31 (August 8, 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
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 H1 2012 revenue
62% of H1 2012 EBITDA
21% of H1 2012 revenue
15% of H1 2012 EBITDA
12% of H1 2012 revenue
23% of H1 2012 EBITDA
Creating new reporting
segment in 2012
5
Advanced Technology
Vertical Integration
Operational
Efficiency
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
7
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 requires
~250,000 lb titanium
product purchased for
manufacturing, 5x
more than the A340
comparable airplane¹
An iPhone
contains
~469
tantalum
capacitors³
¹ Titanium Metal Industry Primer, by J.P. Morgan research, on January 23, 2012 and TIMET 2010 AR; Per Boeing, titanium constitutes 15% of its airframe weight
² Resource Revolution: Meeting the world’s energy, materials, food, and water needs, McKinsey, November 2011
³ iSuppli in August 2010
8
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
– Efficiency
Energy
– Nuclear
Vacuum Melting
and Remelting
Systems
Precision Casting
and Coating
Systems
Heat Treatment
with high pressure
gas quenching
Everyday
Applications
Sample
Customers
Technology Heat Treatment
Systems
Heat Treatment
Services
Technology Vacuum
Sintering and
Annealing
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
33% of all new energy
saving automotive
gears are produced by
using AMG’s heat
treatment processes1
¹ AMG Management
9
Li-iron batteries for
electric vehicles (EV)
can 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, McKinsey, November 2011
³ Solarbuzz
³ AMG Management
10
■ Q2 2012
■ AMG credit facility extension for additional $62 million
■ Provides GK simplified and secured long-term debt financing
with lower costs
■ Independent valuation of GK by auditor
■ GK Supervisory Board meeting approved the merger
■ Q3 2012
■ GK AGM to approve the merger squeeze-out On Plan
Recent Developments – Graphit Kropfmühl Squeeze-out
Increase Shareholder Value
11
Financial Highlights
12
Revenue
$31.4 $27.7
$24.8 $21.9
$23.6
Down 25% YoY
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Financial Highlights
$368.3 $356.4
$308.6 $324.0
$319.6
Down 13% YoY
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
■ Q2 2012 EPS: ($0.10) (1)
■ Down from $0.12 in Q2 2011 (1)
■ LTM EPS: $0.64 (1)
Gross Profit
EBITDA
(in USD millions)
Adjusted EPS
- - - - - - - - - -
$69.0 $58.7
$50.5 $53.4
$54.0
Down 22% YoY
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
LTM: $1,308.6
LTM: $98.0
(in USD millions) LTM: $216.6
(in USD millions)
(1) Adjusted to exclude Timminco
13
10.5% 11.9%
15.1%
8.0%0
2009 2010 2011
Capital Base
■ Net debt: $212.3 million ■ Debt to capitalization: 0.59x ■ Net Debt to LTM EBITDA: 2.17x
■ Revolver availability: $62.6 million ■ Total liquidity: $156.2 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
$61.1 $71.3 $79.6 $81.2
$93.6
$278.5 $274.9 $268.6 $287.6
$305.9
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Cash Debt( in USD millions)
Cash and Debt
ROCE
14
Key Products
YTD Q2 2012: $643.6
Revenue Gross Profit
YTD Q2 2012: $107.4 ( in USD millions) ( in USD millions)
15
End Markets
Aerospace + 9%
vs. Q2 2011
Specialty Metals &
Chemicals - 22%
vs. Q2 2011
YTD Q2 2012: $643.6
Revenue Gross Profit
YTD Q2 2012: $107.4 ( in USD millions) ( in USD millions)
Aerospace
31.5%
Infrastructure
14.5%
Energy
15.3%
Specialty Metals
& Chemicals
38.7%
Aerospace
35.2%
Energy
19.7%
Specialty Metals
& Chemicals
28.8%
Infrastructure
16.3%
16
■ Q2 2012 revenue down 10% from Q2
2011
■ Titanium master alloys up 12%
■ Aluminium down 18%
■ Antimony down 16%
■ Q2 2012 gross margin 15% of revenue
■ Aluminium margin up 21%
■ Higher raw material costs for antimony
■ Q2 2012 EBITDA margin 7% of revenue
■ SG&A down 14% vs. Q2 2011
■ Q2 2012 CAPEX $6.2 million
■ $1.4 million for FeV expansion
■ $1.3 million for Tantalum expansion
$235.6 $226.8
$198.7 $216.5 $211.7
$17.5
$12.3
$6.0
$13.7 $14.5
$1.0
$6.0
$11.0
$16.0
$21.0
$(20.0)
$30.0
$80.0
$130.0
$180.0
$230.0
$280.0
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Revenue EBITDA
Advanced Materials
Financial Summary
- - - - -
$6.2 $6.6
$10.7 $8.3
$6.2
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Capital Expenditure
( in USD millions)
( in USD millions)
17
Q2 2012 revenue down 27% from Q2
2011
Heat Treatment Services up 16%
DSS furnace down 71%
Sintering furnaces down 38%
Q2 2012 gross margin 23% of revenue
Increasing end market pricing pressure
Favourable product mix
Q2 2012 EBITDA 6% of revenue
SG&A down 19%
Order backlog decreased 15% to $150
million at June 30, 2012
Order intake $36.4 million in Q2 2012
Heat treatment systems accounted for
29% of total order intake
0.56x book to bill ratio
$89.8 $86.3
$72.9 $68.0 $65.4
$7.7
$9.3
$11.8
$3.0 $3.7
$-
$5.0
$10.0
$15.0
$20.0
$(15.0)
$5.0
$25.0
$45.0
$65.0
$85.0
$105.0
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Revenue EBITDA
Engineering Systems
Financial Summary
- - - - -
$88.6 $68.5 $69.5
$80.6
$36.4
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Order Intake
( in USD millions)
( in USD millions)
18
Q2 2012 revenue down 1% from Q2 2011
Silicon metal up 1%
Natural graphite down 5%
Q2 2012 gross margin 18% of revenue
Unfavourable product mix for natural
graphite and silicon metal
Natural graphite average pricing
down 6%
Silicon metal volume up 7%
Q2 2012 EBITDA 13% of revenue
SG&A down 7%
■ Q2 2012 CAPEX $2.8 million
Upgrading silicon metal electric arc
furnace
$42.9 $43.3
$37.0 $39.5
$42.5
$6.2 $6.2 $7.0
$5.2 $5.4
$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
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Revenue EBITDA
Graphit Kropfmühl
Financial Summary
- - - - -
$2.5 $2.7 $3.2
$2.2 $2.8
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
Capital Expenditure
( in USD millions)
( in USD millions)
Outlook
20
Outlook
■ Previously anticipated growth in H2 2012 is not expected to materialize
■ AMG announces Q3 2012 financial results on November 14, 2012
New management
team operationally
focused
Antimony mineral
processing facility to
be operational in Q3
Tantalum production
stabilizing at normal
levels
The slowdown in
Europe impacting
Advanced Materials'
European centric
businesses
Aerospace remains
strong
Market visibility is
limited
Delayed orders
should be realized in
H2
Heat Treatment
Services provides
stable recurring
revenues
Capital goods
spending stable at
lower level
Silicon metal prices
locked in for 2012
Graphite demand is
impacted by
Eurozone weakness
Kropfmühl mine
opened to secure
supply
AGM in August to
approve the merger
Advanced Materials Engineering Systems Graphit Kropfmühl AMG Mining
21
Appendix
22
Consolidated Balance Sheet
Balance Sheet ($’000) Actual
As of 31-Dec-11 30-June-12
Fixed assets 263.6 261.4
Goodwill and intangibles 38.1 37.4
Other non-current assets 63.4 57.2
Inventories 228.9 223.7
Receivables 188.1 201.1
Other current assets 39.1 46.9
Cash 79.6 93.6
TOTAL ASSETS 900.8 921.3
TOTAL EQUITY 220.6 209.2
Long-term debt 210.4 259.5
Pension liabilities 90.1 88.4
Other long-term liabilities 71.6 73.6
Current debt 58.2 46.4
Accounts payable 128.5 136.1
Advance payments 30.2 32.1
Accruals 51.7 48.9
Other current liabilities 39.5 27.1
TOTAL LIABILITIES 680.2 712.1
TOTAL LIABILITIES & EQUITY 900.8 921.3
23
Consolidated Income Statement
Income Statement ($’000) Actual
For the three months ended 30-June-11 30-June-12
Revenue 368.3 319.6
Cost of sales 299.3 265.6
Gross profit 69.0 54.0
Selling, general & admin. 44.8 38.0
Asset impairment & restructuring 2.2 7.8
Environmental 0.1 0.6
Other income (0.9) (0.2)
Operating profit 22.8 7.8
Net finance costs 9.1 5.9
Share of (loss) profit of associates (1.7) 0.1
Profit before income taxes 12.0 2.0
Income tax expense 7.8 5.5
Profit (loss) for the period 4.2 (3.4)
Attributable to:
Shareholders of the Company 3.4 (2.6)
Non-controlling interest 0.9 (0.8)
Adjusted EBITDA 31.4 23.6
24
Consolidated Statement of Cash Flows
Cash Flow Statement ($’000) Actual
For the six months ended 30-June-11 30-June-12
EBITDA 57.6 45.5
+/- Change in operating assets/liabilities (51.2) (22.2)
-Interest paid, net (5.1) (9.0)
Other operating cash flow 8.2 (1.8)
Cash flows from operations before taxes 9.6 12.5
Income tax paid (21.6) (9.3)
Total cash flows (used in) from operations (12.1) 3.1
Capital expenditures (19.9) (23.4)
Other investing activities (24.0) (1.4)
Cash flows from investing activities (43.9) (24.8)
Cash flows from financing activities 23.9 36.1
Net (decrease) increase in cash (32.1) 14.4
Beginning cash 89.3 79.6
Effects of exchange rates on cash 3.9 (0.4)
Ending cash 61.1 93.6
