Amg investor presentation august 2013

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<ul><li> 1. Investor Presentation August 2013 </li> <li> 2. 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 Companys 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 </li> <li> 3. 3 Overview Listed: NYSE-Euronext Amsterdam: AMG Founded: 2006 LTM Revenues: $1,160.1M LTM EBITDA: $83.7M Employees: 3,145 Facilities: Netherlands, Germany, France, Czech Republic, Poland, UK, USA, Brazil, Mexico, China, India, Sri Lanka, Turkey, Zimbabwe, Mozambique Market Cap: 182M ($242M) Enterprise Value: 317M ($422M) Shares outstanding: 27.6M 52 week range: 5.847.34 Recent share price: 6.60 (August 8, 2013) Global provider of high value added specialty metals and related engineering systems for growing end markets, including energy, aerospace, infrastructure, and specialty metals and chemicals </li> <li> 4. 4 Business Units, Products and Markets High-value metals &amp; alloys Coating materials Capital equipment &amp; service for high purity materials Critical raw materials AMG Processing AMG Engineering InfrastructureAerospaceEnergy AMG Mining Specialty Metals &amp; Chemicals AMGs conversion and recycling based businesses AMGs vacuum systems and services business Integrated AMGs mine based businesses Serving the Technology Trends in Energy, Aerospace, Infrastructure, and Specialty Metals &amp; Chemicals </li> <li> 5. 5 Critical Raw Materials F e The EU identified 14 critical raw materials* to the European economy focusing on two determinants economic importance and supply risk Note: *European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials Materials mined or processed by AMG, or treated in AMG vacuum systems Materials treated by AMG vacuum systems REE Li Al V Sb Cr Ni C Ta Nb Ti Si Mo </li> <li> 6. 6 Business Units AMG Processing Aluminum grain refiners and master alloys for high performance materials in aerospace, automotive and infrastructure applications Value Proposition Ferrovanadium for high strength, low alloy steels for infrastructure; ferronickel-molybdenum for stainless steel Titanium master alloys for high performance ,light weight aerospace engine and frame, and coating materials for aerospace turbines Tantalum and niobium superalloys and chrome metal for aerospace engine and industrial gas turbines Major ApplicationsKey Products AMG Processing conversion and recycling operations </li> <li> 7. 7 Business Units AMG Mining Antimony trioxide and master batches for flame retardant on electronics, paints, and plastics Value Proposition Conflict-free tantalum concentrate for tantalum capacitors used on portable electronics Natural graphite for building insulation materials, energy storage, li-ion batteries for electrical vehicle, and lubricants Silicon metal for aluminum production and solar panel materials Major ApplicationsKey Products AMG Mining mine based value chains </li> <li> 8. 8 Business Units AMG Engineering Vacuum melting and re- melting furnaces for high- performance titanium, steel and alloys, and purification of rare metals and alloys Value Proposition Vacuum heat treatment furnaces and services for high-performance materials of aerospace and automotive applications Vacuum coating furnace for aerospace turbine blade coatings Vacuum sintering and annealing furnaces for nuclear fuel productions Major ApplicationsKey Products AMG Engineering vacuum systems and services </li> <li> 9. 9 Recent Developments Operations Update AMG is improving operational performance and cash flow 2013 Objectives Progress Update H113 SG&amp;A reduced by 8.8%, or $6.8M, compared to H112Reduce SG&amp;A by 5% H113 Gross margin 16.5%, down 0.2% compared to H112 Significant decline in metal prices impacted margins AMG Engineering gross margin up 4.1% compared to H112 Improve Gross Margin Increase Operating Cash Flow H113 Operating cash flow $32.6M, up $29.5M compared to H112 H113 Working capital reduced $54.4M, or 25% compared to H112 H113 - 53 Days in Working capital, a decline of 12 days Reduce Net Debt H113 Net Debt reduced by $14.2M, compared to December 2012 </li> <li> 10. 10 AMG Processing simplifying the organization AMG completed the sale of its 45% owned aluminum alloy joint venture in China Part of AMGs simplification of its operational structure Serving the Asia markets through its wholly owned subsidiary, AMG Aluminum China AMG Vanadium expansion ramp up on schedule AMG Engineering - implementing cost reduction programs Reduced headcount by 16% in Q2 Merging internal operations and legal entities Moving past the solar market downturn; $14.2M asset write downs AMG Mining prudently investing in mining expansions Antimony delaying mine project to improve cash flow and continuing drilling and geology campaign; $22.1M impairment charge Graphite optimizing current raw material supply chains and delaying Mozambique mine project; $13.3M impairment charge Recent Developments Operations Update </li> <li> 11. 11 Financial Highlights </li> <li> 12. 12 Revenue - - - - -- - - - - $23.2 $19.8 $19.5 $22.2 $22.2 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Financial Highlights $319.6 $296.9 $275.2 $296.5 $291.5 Down 9% YoY Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q2 2013 EPS: ($1.53) Adjusted EPS: $0.22 Gross Profit EBITDA (in USD millions) Adjusted EPS - - - - -- - - - - $53.9 $47.5 $41.6 $48.3 $48.6 Down 10% YoY Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 LTM: $1,160.1 LTM: $83.7 (in USD millions)LTM: $186.0 (in USD millions) </li> <li> 13. 13 Capital Base Net debt: $180.0M Debt to capitalization: 0.69x Net Debt to LTM EBITDA: 2.15x Revolver availability: $60.5M Total liquidity: $172.7M AMGs primary debt facility is a $370 million term loan and revolving credit facility 5 year term until 2016 Secured an additional $62M for the credit facility in 2012 in conjunction with the Voluntary Tender Offering for GK Obtained waiver for tangible net worth covenant as of June 30 $32.6M in Cash Flows from Operations in H113 $89.9 $79.6 $121.6 $112.2 $237.1 $268.6 $315.8 $292.2 $147.2 $189.0 $194.2 $180.0 Dec-10 Dec-11 Dec-12 June 2013 Cash Debt Net Debt ( in USD millions) Cash and Debt Cash Flow from Operations - - - -- - - - -$20.3 -$12.1 $3.1 $32.6 2010 H1 2011 H1 2012 H1 2013 H1 ( in USD millions) </li> <li> 14. 14 $10.8 $4.5 $0.9 AMG Processing AMG Mining AMG Engineering $297.7 $163.2 $127.1 AMG Processing AMG Mining AMG Engineering Financial Highlights New AMG Segments Revenue EBITDA (in USD millions) (in USD millions) $16.7 $13.7 $14.0 AMG Processing AMG Mining AMG Engineering H1 2013 EBITDA: $44.4 H1 2013 Revenue: $588.0 12.6% 15.7% 26.4% AMG Processing AMG Mining AMG Engineering H1 2013 Gross Margin: 16.5% Gross Margin Capital Expenditure (in USD millions)H1 2013 CAPEX: $16.2 </li> <li> 15. 15 Key Products H1 2013: $588.0 Revenue Gross Profit H1 2013: $96.9 ( in USD millions) ( in USD millions) </li> <li> 16. 16 End Markets Aerospace - 9% vs. H1 2012 Aluminum Master Alloy and Chrome metal revenue decreased Aerospace - 9% vs. H1 2012 Aluminum Master Alloy and Chrome metal revenue decreased H1 2013: $588.0 Revenue Gross Profit H1 2013: $96.9 ( in USD millions) ( in USD millions) Aerospace 40.6% Infrastructure 12.3% Energy 17.7% Specialty Metals &amp; Chemicals 29.4% Aerospace 46.0% Energy 16.2% Specialty Metals &amp; Chemicals 28.1% Infrastructure 9.7% Aerospace + 4% vs. H1 2012 Focusing on higher margin products for Aerospace Aerospace + 4% vs. H1 2012 Focusing on higher margin products for Aerospace </li> <li> 17. 17 Q213 revenue down 14% from Q212 Significant price and volume declines across most materials AMG Vanadium down 26%, AMG Superalloys down 20% Q213 gross margin 12% of revenue, down from 15% in Q212 Metal price declines impacted margins AMG Aluminum gross margins up 19% due to product rationalization Q213 EBITDA margin 6% of revenue, compared to 7% in Q212 $1.5M decrease in personnel costs Q213 CAPEX $4.3M $0.9M for FeV expansion $0.4M for maintenance $168.4 $144.6 $12.0 $8.0 $1.0 $6.0 $11.0 $16.0 $21.0 $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 $200.0 Q2 12 Q2 13 Revenue EBITDA AMG Processing Financial Summary - - $3.1 $4.3 Q2 12 Q2 13 Capital Expenditure ( in USD millions) ( in USD millions) </li> <li> 18. 18 $85.8 $80.3 $7.1 $5.7 $1.0 $6.0 $11.0 $- $20.0 $40.0 $60.0 $80.0 $100.0 Q2 12 Q2 13 Revenue EBITDA Q213 revenue down 6% from Q212 Silicon metal down 10% Antimony down 4% Natural graphite up 3% Q213 gross margin 16% of revenue, down from 17% in Q212 Challenging prices for silicon metal (13%) and antimony (10%) Q213 EBITDA 7% of revenue, down from 8% in Q212 $0.3M decrease in personnel costs Q213 CAPEX $2.3M $0.7M for silicon metal furnace efficiency upgrade $0.7M for maintenance AMG Mining Financial Summary Capital Expenditure ( in USD millions) ( in USD millions) - - $5.9 $2.3 Q2 12 Q2 13 </li> <li> 19. 19 $65.4...</li></ul>