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description
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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: €245M ($320M)
Shares outstanding: 27.5M
52 week range: €6.79–€16.92
Recent share price: €8.89 (March 13, 2012)
Serve growing end markets with high value-added specialty metal alloys and
engineering solutions, related to CO2 reduction and conservation of natural resources
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
65% of 2011 revenue
46% of EBITDA
23% of 2011 revenue
31% of EBITDA
12% of 2011 revenue
23% of EBITDA
Creating new reporting
segment in 2012
5
Increase Shareholder
Value
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
+ 76% over 2010
ROCE
2009 – 2011
19.9%
CAGR
2011
15.1%
+ 27% over 2010
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 currently has raw material sources for 4 of those elements
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 higher-
strength
light-weight
steel adopted
by the
Shanghai
World
Financial
Center²
A Boeing 787
Dreamliner contains
~250,000 lb titanium,
17% increased fuel
efficiencies compared
to Boeing 737¹
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 in 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
– 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 guarantee
high-performance and
light-weight thus low
CO2 emission¹
Solar power capacity
could become available
at around $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
9
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 deliver ~19% of
the total benefits that
could accrue from
boosting 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
■ AMG currently owns 88.16% of GK’s shares
■ Commenced the preparation of a voluntary public tender offer on February 29
■ Offering €31.75/share
■ Expected completion Q2 2012
■ Securing ~ $62 million in incremental credit from its banking consortium
■ AMG intends to initiate a squeeze out of the remaining minority shareholders with
a goal to own 100% of GK, upon getting above 90% ownership
■ Upon successful completion of the Voluntary Tender, AMG will begin segment
reporting of AMG Mining's financial results
Voluntary Tender Offering for Graphit Kropfmühl
Expand
AMG's mine
based
businesses
Simplify
AMG’s
corporate
structure
+
Increase Shareholder Value
Increase
operational
and financial
flexibility
+ Eliminate
redundancies +
11
Financial Highlights
12
Revenue
$20.2
$26.2
$31.4 $27.7
$24.8
Up 23% YoY
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Financial Highlights
$270.7
$318.0
$368.3 $356.4
$308.6
Up 14% YoY
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
■ Q4 2011 EPS: $0.26 (1)
■ Up 13% from Q4 2010 (1)
■ 2011 EPS: $1.34 (2)
■ Up 76% from 2010 (2)
Gross Profit
EBITDA
(1) Excluding Timminco Limited related charges
(2) Excluding Timminco Limited related charges and loss on debt extinguishment
(in USD millions)
EPS
- - - - - - - - - -
$49.4 $59.8
$69.0 $58.7
$50.5
Up 2% YoY
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
2011: $1,351.3
2011: $110.1
(in USD millions) 2011: $238.0
(in USD millions)
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10.5% 11.9%
15.1%
8.0% 0
2009 2010 2011
Capital Base
■ Net debt: $189.1 million ■ Debt to capitalization: 0.55x ■ Net Debt to 2011 EBITDA: 1.72x
■ Revolver availability: $79.6 million ■ Total liquidity: $138.6 million ■ AMG’s primary debt facility is a $315
million term loan and revolving credit facility ■ 5 year term ■ Securing an additional $62 million for
its credit facility in Q1 2012 in conjunction with the Voluntary Tender Offering to GK
$89.3 $66.1 $61.1 $71.3
$79.6
$237.1 $267.1 $278.5 $274.9
$268.6
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Cash Debt ( in USD millions)
Cash and Debt
ROCE
14
Key Products
2011: $1,351.3
$-
$200
$400
$600
$800
$1,000
$1,200
YTD Q4 2010 YTD Q4 2011
Vacuum Furnaces Ti Master Alloys and Coatings
Al Master Alloys and Powders FeV & FeNiMo
Antimony Chromium Metal
Tantalum & Niobium Graphite
Si Metal
$-
$50
$100
$150
$200
YTD Q4 2010 YTD Q4 2011
Vacuum Furnaces Ti Master Alloys and Coatings
Al Master Alloys and Powders FeV & FeNiMo
Antimony Chromium Metal
Tantalum & Niobium Graphite
Si Metal
Revenue Gross Profit
2011: $238.0 ( in USD millions) ( in USD millions)
33% 36%
15
End Markets
Aerospace + 48% Aerospace + 47%
Up 36% Up 33%
2011: $1,351.3
Revenue Gross Profit
2011: $238.0 ( in USD millions) ( in USD millions)
2010: $990.5 2010: $178.6
Aerospace
28.5%
Infrastructure
14.5% Energy
18.0%
Specialty Metals
& Chemicals
38.9%
Aerospace
26.1%
Infrastructure
16.4%
Specialty Metals
& Chemicals
36.1%
Energy
21.3%
Aerospace
33.5%
Energy
26.2%
Specialty Metals
& Chemicals
25.9%
Infrastructure
14.4%
Aerospace
30.4%
Infrastructure
19.5%
Specialty Metals
& Chemicals
23.7%
Energy
26.5%
16
■ Q4 2011 revenue up 18% from Q4 2010
■ KB Alloys contributed $19.5 million
■ Titanium master alloys revenue up
458%
■ Tantalum revenue up 400%
■ Q4 2011 gross margin 10% of revenue
■ Q4 2011 EBITDA margin 3% of
revenue
$168.9
$210.8
$235.6 $226.8
$198.7
$7.7
$14.6
$17.5
$12.3
$6.0
$1.0
$6.0
$11.0
$16.0
$21.0
$-
$50.0
$100.0
$150.0
$200.0
$250.0
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Revenue EBITDA
Advanced Materials
Financial Summary
- - - - -
$7.3 $5.6 $6.2 $6.6
$10.7
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Capital Expenditure
( in USD millions)
( in USD millions)
■ Q4 2011 CAPEX $10.7 million
■ $2.6 million for tantalum mine
■ $1.2 million for aerospace coatings
and master alloy expansion
17
Q4 2011 revenue up 8% from Q4 2010
Heat treatment revenue up 130%
Remelting systems revenue up 49%
Solar DSS revenue down 70%
Q4 2011 gross margin 30% of revenue
Increasing price pressure
Q4 2011 EBITDA up 18%
16% of revenue
$67.7 $64.9
$89.8 $86.3
$72.9
$10.0
$5.3
$7.7
$9.3
$11.8
$1.0
$6.0
$11.0
$16.0
$21.0
$(5.0)
$5.0
$15.0
$25.0
$35.0
$45.0
$55.0
$65.0
$75.0
$85.0
$95.0
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Revenue EBITDA
Engineering Systems
Financial Summary
- - - - -
$107.6
$65.7 $88.6
$68.5 $69.5
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Order Intake
( in USD millions)
( in USD millions)
Order backlog decreased 8% to $158.5
million at December 31, 2011
Order intake $69.5 million in Q4
2011
0.95x book to bill ratio
18
Q4 2011 revenue up 8% from Q4 2010
Natural graphite revenue up 16%
Silicon metal revenue up 4%
Q4 2011 gross margin 26% of revenue
Higher sales prices for natural
graphite and silicon metal
Q4 2011 EBITDA up 183% over Q4
2010
19% of revenue
$34.2
$42.3 $42.9 $43.3
$37.0
$2.5
$6.3 $6.2 $6.2 $7.0
$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
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Revenue EBITDA
Graphit Kropfmühl
Financial Summary
- - - - -
$1.7 $1.2
$2.5 $2.7 $3.2
Q4 10 Q1 11 Q2 11 Q3 11 Q4 11
Capital Expenditure
( in USD millions)
( in USD millions)
■ Q4 2011 CAPEX – $3.2 million
Graphite milling expansion
Upgrading silicon metal facility
Outlook
20
Outlook
■ AMG expects Revenue and EBITDA growth in 2012
■ AMG announces Q1 2012 financial results on May 15, 2012
Antimony expansion
is progressing
Tantalum mine
impacted by Brazil
floods
Challenging start to
2012
Aerospace is strong
Financial market
uncertainty is
reducing visibility
Heat Treatment
Services business
providing more stable
recurring revenues
Aerospace and
nuclear is strong;
solar is challenging
Voluntary Tender
launched
Silicon metal prices
locked in for 2012
Graphite demand is
strong
Advanced Materials Engineering Systems Graphit Kropfmühl AMG Mining
21
Appendix
22
Consolidated Balance Sheet
in thousands
Balance Sheet Actual FYE in December 2010 2011
Fixed assets 228.6 263.6
Goodwill and intangibles 27.0 38.1
Other non-current assets 80.8 63.4
Inventories 207.2 228.9
Receivables 175.4 188.1
Other current assets 46.8 39.1
Cash 89.3 79.6
TOTAL ASSETS 855.1 900.8
TOTAL EQUITY 234.0 220.6
Long-term debt 187.8 210.4
Pension liabilities 88.4 90.1
Other long-term liabilities 52.9 71.6
Current debt 49.3 58.2
Accounts payable 102.3 128.5
Advance payments 49.6 30.2
Accruals 43.3 51.7
Other current liabilities 47.5 39.5
TOTAL LIABILITIES 621.1 680.2
TOTAL LIABILITIES & EQUITY 855.1 900.8
23
Consolidated Income Statement
in thousands
Summary Financials Actual 2010 Actual 2011 Quarter to date December Q4 Q4
Revenue 270.7 308.6 Cost of sales 221.3 258.1
Gross profit 49.4 50.5
Selling, general & administrative 36.8 34.9
Timminco receivables write-off - 7.5 Asset impairment & restructuring 1.0 (1.9)
Environmental 5.7 5.5
Other income (0.4) (1.0)
One Time Expenses - (4.3)
Operating profit 6.3 9.8
Net finance costs 2.0 6.2
Share of income (loss) of associates 7.6 (13.5)
Profit (loss) before income taxes 11.9 (10.0)
Income tax (benefit) expense (0.1) 2.2
Profit (Loss) for the quarter 12.0 (12.1)
Attributable to:
Shareholders of the Company 12.5 (13.2)
Minority interest (0.5) 1.1
Adjusted EBITDA 20.2 24.8
24
Consolidated Statement of Cash Flows
in thousands
Cash Flow Statement Actual FYE in December 2010 2011
EBITDA 84.9 110.1 +/- Change in operating assets/liabilities (45.2) (13.8) -Interest paid, net (13.8) (12.1) Other operating cash flow 7.9 (4.7) Dividend income (0.3)
Cash flows from operations before taxes 33.8 79.2 Income tax paid (35.4) (34.2)
Total cash flows from operations (1.6) 45.0
Capital expenditures (33.0) (51.9)
Acquisitions (20.2) (29.5)
Other investing activities (9.4) (1.4)
Cash flows from investing activities (62.6) (82.8)
Cash flows from financing activities 42.4 27.9
Net increase (decrease) in cash (21.8) (9.9)
Beginning cash 117.0 89.3
Effects of exchange rates on cash (5.9) 0.1
Ending cash 89.3 79.6
Ending Liquidity 138.6