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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
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Overview
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
Revenues: $1,197.5M LTM June 2011
EBITDA: $96.6M LTM June 2011
Employees: 3,000
Facilities: Netherlands, Germany, UK, USA, Brazil, France,
Turkey, Canada, Czech Republic, China, Mexico,
Belgium, Poland, India, Sri Lanka
Market cap: €245.9M ($346.6M)
Shares outstanding: 27.5M
52 week range: €6.25–€16.76
Recent share price: €8.94 (September 7, 2011)
Sustainable Metals Technology Products:
High purity raw materials, metals and complex metal products
Vacuum furnaces used to produce high purity metals
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■ Serve growing end markets with high value-added specialty metal
products and engineering solutions, related to CO2 reduction and
conservation of natural resources
■ Execute through a combination of: ■ Vertical integration
■ Industry consolidation
■ Continuous investment in productivity and technology
■ Serve the end markets of: ■ Responsible energy production and use
■ Emerging market infrastructure
■ Aerospace and light weight materials
■ Specialty metals and chemicals
Strategy
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Advanced Materials
High-value alloys
Critical raw materials
Engineering Systems
Capital equipment for
high purity materials
Products & Markets
Infrastructure Aerospace Energy
Graphit Kropfmühl
Silicon metal
Natural graphite
Specialty Metals & Chemicals
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End Markets – by the Numbers
2011 H1 Gross Profit
$128.8 million
2011 H1 Revenue
$686.3 million
Energy 19.0%
Aerospace 27.1%
Infrastructure 14.4%
Specialty Metals &
Chemicals 39.4%
Energy 24.9%
Aerospace 29.9%
Infrastructure 14.2%
Specialty Metals &
Chemicals 31.0%
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The EU identified 14 critical raw materials(1) to the European economy –
focusing on two determinants – economic importance and supply risk
AMG currently has raw material sources for 4 of those elements
Critical Raw Materials
“Critical” raw
materials
(1) European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials
(Turkey)
(Brazil)
(Brazil)
(Sri Lanka)
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1,097
1,246
1,384
1,514
1,704
1,829
2010 2011e 2012e 2013e 2014e 2015e
B 707
B 727
B 737B 747
A 300B 747 SP
B 767
B 757A 320
A 321
A 340
A 330
B 777
A 318A380
B 787
A 350
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
1950 1960 1970 1980 1990 2000 2010 2020
Aerospace End Market: a growing market
(‘% of total weight)
Source: Airbus, Boeing and Company estimates
% of Titanium in Airframes Commercial Aircraft Delivery Forecast
Source: Davenport & Company
(No. of planes)
11% CAGR
(1) Davenport & Company
27% of H1 2011 revenue; 45% growth over 2010
Titanium in commercial aircraft is expected to grow over 25%(1) in
2012
Increases in Airbus and Boeing production rates
Light weight materials used to improve fuel efficiency
Master alloy demand expected to double by 2018 (B787, A350)
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Business Units
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Advanced Materials - Market, Products and Customers
Products
Aerospace
Specialty alloys for titanium
Coatings for wear
resistance
Infrastructure - FeV
Ferrovanadium
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.
Sunxing Chemical and
Metallurgical Materials Co
Delachaux S.A.
Campine S.A.
Chemtura Corporation
Twinkling Star Co., Ltd.
Sample Customers
Chromium Metals
Tantalum
Antimony Trioxide
Aluminium master alloys
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Significant Metals Prices
Spot Prices as of September 1
Ferrovandium $15.38/lb
Molybdenum $32,022/mt
Nickel $21,155/mt
Tantalum $129/lb
Antimony $15,450/mt
Chromium Metal $14,605/mt
Silicon Metal $1.59/lb
12
Advanced Materials
Financial Summary Highlights
( in millions)
$14.2 $9.4 $7.7 $14.6 $17.5
$152.0 $154.9
$168.9
$210.8
$235.6
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Revenue EBITDA ■ Q2 2011 revenue up 55% from Q2 2010
■ KB Alloys acquisition contributed $25.0
million
■ Antimony trioxide revenue up 38%
■ Q2 2011 Gross Margin 16% of revenue
■ Q2 2011 EBITDA up 24% over Q2 2010
■ 7% of revenue
■ CAPEX
■ $6.2 million
■ $1.6 million for tantalum mine
■ $1.0 million for aerospace alloy
expansion
- - - - -
$4.2 $5.6
$7.3
$5.6 $6.2
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
CAPEX
Capital Expenditure
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Engineering Systems – Market, Products and Customers
Energy - Solar
Solar silicon melting and
crystallisation systems-
DSS furnaces
Mono2™ technology
Aerospace
Vacuum Melting and Re-
melting Systems
Precision Casting and
Coating Systems
Heat Treatment with high
pressure gas quenching
Energy - Nuclear
Vacuum Sintering
Systems for nuclear fuel
Development project for
the safe storage of
nuclear waste
Competitors GT Solar International,
Inc.
Beijing Jingyuntong
Technology Co. Ltd
Zhejiang Jinggong S&T
In house producers
Inteco Specialty Melting
Technologies GmbH
Consarc Corporation
Aichelin GmbH
No significant competition
Sample Customers
Products
14
Engineering Systems
Financial Summary Highlights
( in millions)
- - - - - $8.0 $7.4 $10.0 $5.3 $7.7
$59.5 $53.2
$67.7 $64.9
$89.8
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Revenue EBITDA
- - - - -
$65.0 $66.9
$107.6
$65.7 $88.6
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Order Intake
Q2 2011 revenue up 51% from Q2 2010
Solar furnaces 29% of revenue
Own and Operate 12% of revenue
Order backlog increased 2% to $200.6
million at June 30, 2011
Order intake $88.6 million in Q2 2011
1.0x book to bill ratio
Q2 2011 Gross Margin 25% of revenue
Increased due to economies of scale
Q2 2011 EBITDA 9% of revenue Order Intake
15
Graphit Kropfmühl – Market, Products and Customers
Energy - Solar
Silicon metal for
polycrystalline for solar
cells
Specialty Metals & Chemicals
Natural graphite for
insulation, transportation
and lithium-ion batteries
Silicon metal for aluminium
and silicones
Competitors Bluestar Silicone Materials Ltd.
Globe Specialty Metals Inc.
Grupo FerroAtlantica, S.L.
Timminco Limited
Dow Corning Corporation
Wacker Chemie AG
Asbury Graphite Mills, Inc.
SGL Carbon SE
Qingdao Graphite Company, Ltd
Sample Customers
Products
16
Graphit Kropfmühl
Financial Summary Highlights
( in millions)
- - - - - $1.7 $2.0 $2.5 $6.3 $6.2
$32.1 $32.4 $34.2
$42.3 $42.9
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Revenue EBITDA
- - - - -
$1.3 $0.7
$1.7 $1.2
$2.5
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
CAPEX
Q2 2011 revenue up 34% from Q2 2010
37% increase in silicon metal revenue due
to higher contract prices
Natural graphite revenue up 28%
Q2 2011 Gross Margin 20% of revenue
Q2 2011 EBITDA up 269% over Q2 2010
15% of revenue
CAPEX
$2.5 million primarily for graphite milling
expansion and maintenance silicon metal
capacity
Capital Expenditures
Consolidated Financial Overview
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Revenue by Geography
2011 H1 Revenue
2010 Full Year Revenue
Europe 50%
North America
23%
Asia 21%
South America
5%
ROW 1%
Europe 51%
North America
20%
Asia 22%
South America 5%
ROW 2%
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$23.9
$18.8 $20.2
$26.2
$31.4
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Financial Highlights
$243.5 $240.4 $270.7
$318.0
$368.3
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
(in millions)
■ Q2 Revenue: $368.3 million
■ Up 51% from Q2 2010
■ Q2 Gross Profit: $69.0 million
■ Q2 EBITDA: $31.4 million
■ Up 32% from Q2 2010
■ Q2 EPS: $0.29 (1)
■ Up from $0.20 in Q2 2010 (1)
■ LTM Q2 2011
■ Revenue: $1,197.5 million
■ EBITDA: $96.6 million
■ Operating Profit: $57.0 million
■ EPS: $0.91 (1)
Highlights Revenue
EBITDA
(1) Excluding the equity losses from AMG’s 41.9% ownership in Timminco
Limited and loss on debt extinguishment
(in millions)
20
Financial Highlights
2011 Q2 Revenue $368.3 million
2011 Q2 Gross Profit $69.0 million
in millions
21
Capital Base
■ Cash: $61.1 million
■ Total debt: $278.5 million
■ Net debt: $217.3 million ■ Debt to capitalization: 0.52x ■ Net Debt to TTM EBITDA:
2.25x
■ Revolver availability: $44.8 million
■ Total liquidity $105.9 million
■ AMG’s primary debt is a $300 million term loan and revolving credit facility
■ 5 year term
$84.6 $90.2 $89.3
$66.1 $61.1
$204.3
$234.8 $237.1
$267.1
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11
Cash Debt
( in millions)
Cash and Debt – June 30, 2011 Summary
22
■ AMG is accelerating the expansion of antimony mining activities:
■ Began antimony mining operations in Turkey in Q2 2011
■ Expects to produce 50 MT of crude oxide per month in Q3 2011
■ Expanding capacity to over 5,000/MT of antimony metal per
annum by Q2 2012, subject to completion of the detailed mine plan
■ AMG is expanding the tantalum mining and concentration capacity to
400,000/lb tantalum oxide per annum by Q1 2012
■ AMG began a three-year JV with ENRESA and CIEMAT to develop
technologies enabling safe final disposal of nuclear contaminated
graphite
Recent Developments
23
Outlook
■ Advanced Materials
■ Stable demand; strong prices for chromium, antimony and tantalum
■ Antimony mine ramp up ongoing; production beginning in H2 2011
■ Engineering Systems
■ Backlog is stable
■ Own and Operate business is growing to meet demand
■ Graphit Kropfmühl
■ Improved silicon metal and natural graphite pricing; 2011e revenue >$150M
■ AMG targets EBITDA growth greater than 25% in 2011
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Appendix
25
Consolidated Balance Sheet
in millions
Balance Sheet Actual
As of December 31, 2010 June 30, 2011
Fixed assets 228.6 262.0
Goodwill and intangibles 27.0 33.6
Other non-current assets 80.7 80.7
Inventories 207.2 258.2
Receivables 175.4 216.9
Other current assets 46.8 53.2
Cash 89.3 61.1
TOTAL ASSETS 855.1 965.7
TOTAL EQUITY 234.0 254.4
Long-term debt 187.8 219.8
Pension liabilities 88.4 98.2
Other long-term liabilities 52.9 65.5
Current debt 49.3 58.7
Accounts payable 102.3 117.5
Advance payments 49.6 45.7
Accruals 43.3 57.0
Other current liabilities 47.5 48.9
TOTAL LIABILITIES 621.1 711.3
TOTAL LIABILITIES & EQUITY 855.1 965.7
26
Consolidated Income Statement
in millions
Income Statement Actual
Quarter-to-date June Q2 2010 Q2 2011
Revenue 243.5 368.3
Cost of sales 199.1 299.3
Gross profit 44.5 69.0
Selling, general & admin. 29.9 44.8
Asset impairment & restructuring - 2.2
Environmental 0.2 0.1
Other income (0.3) (0.9)
Operating profit 14.7 22.8
Net finance costs 1.9 9.1
Share of loss of associates (5.0) (1.7)
Profit before income taxes 7.8 12.0
Income tax expense 7.1 7.8
Profit for the period 0.6 4.2
Attributable to:
Shareholders of the Company 1.2 3.4
Non-controlling interest (0.5) 0.9
Adjusted EBITDA 23.9 31.4
27
Consolidated Statement of Cash Flows
in millions
Cash Flow Statement Actual
For the six months ended June 30, 2010 June 30, 2011
EBITDA 45.9 57.6
+/- Change in operating assets/liabilities (35.7) (46.7)
-Interest paid, net (7.4) (5.1)
Other operating cash flow (1.7) 3.7
Cash flows from operations before taxes 1.1 9.5
Income tax paid (21.4) (21.6)
Total cash flows used in operations (20.3) (12.1)
Capital expenditures (12.0) (19.9)
Other investing activities (10.0) (24.0)
Cash flows used in investing activities (22.0) (43.9)
Cash flows from financing activities 21.2 23.9
Net decrease in cash (21.1) (32.1)
Beginning cash 117.0 89.3
Effects of exchange rates on cash (11.3) 3.9
Ending cash 84.6 61.1
