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THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMGADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHERDISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITHTHIS 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 acquiresecurities 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 connectionwith, 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 anyaccompanying 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 mentionedin 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 ofapplication 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, expressor 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. TheCompany and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, noneof the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from anyuse 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 acceptanceof new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economicconditions. 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 anyof 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
AMG Advanced Metallurgical Group N.V.
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
Revenues: $951.1M TTM
Employees: 2,500
Facilities: Netherlands, Germany, UK, USA, Brazil, France,
Turkey, Czech Republic, China, Mexico, Belgium,
Sri Lanka
Market cap: €364.1M
Shares outstanding: 27.5M
52 week range: €6.25–€13.74
Recent share price: €13.24 (February 10, 2011)
Sustainable Metals Technology Products:
High purity raw materials, metals and complex metal products
Vacuum furnaces used to produce high purity metals
4
■ AMG participates in the macro economic trend of:
■ Growing demand for natural resources in context of CO2
reduction and sustainable environmental demands for: ■ Responsible energy production and use
■ Emerging market infrastructure
■ Aerospace and light weight materials
■ Specialty metals and chemicals
Macroeconomic Trends and Markets
5
The EU identified 14 critical raw materials(1) to the European economy –
focusing on two determinants – economic importance and supply risk
AMG currently produces 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
6
Advanced Materials
High-value alloys
Essential raw materials
Engineering Systems
Capital equipment for high purity
materials
Products & Markets
InfrastructureAerospaceEnergySpecialty Metals &
Chemicals
7
Graphite
Primary producers of critical raw materials
Critical Raw Materials
Antimony Graphite
Lithium Magnesium
Silicon Titanium
Vanadium
Tantalum
Niobium
Chromium
Vanadium
Tantalum
Tantalum
Titanium
Vanadium
Magnesium
Titanium
MagnesiumTitanium
Lithium
Tantalum
Antimony
Graphite
Chromium
Magnesium
AMG raw material
mines
8
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.
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.
KB Alloys, Inc.
Delachaux S.A.
Campine S.A.
Chemtura Corporation
Sample Customers
Chromium Metals
Tantalum
Antimony
Aluminium master alloys
9
Advanced Materials - Specialty metals pricing
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2007 2008 2009 2010 2011
Pri
ce /
Po
un
d –
V,
Mo
, N
i
Ferro Vanadium Molybdenum Nickel
AMG IPO
Increase from 2009 lows:
FeV: 59%
Mo: 117%
Ni: 142%
Prices are still below pre-crisis levels;
tied to demand for carbon and stainless steel
10
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 2005 – Introduced single
crucible furnaces
2005 –2009 – >$172 mm
in revenue, 2nd largest
market participant
2010 – Introduced SCU
600+ DSS system
2010 – Market Share leader
in Ti remelting in China, the
fastest growing Ti market
2010 – Leading market share
in turbine blade coating
Secured first nuclear
engineering contract with
DOE, through Shaw-Areva
Two strategic acquisitions
completed to expand product
portfolio
Sample Customers
11
Financial Overview
12
Markets & Products – by the Numbers
YTD 2010 Revenue by
Product
YTD 2010 Revenue by
End Market
Aerospace 26%
Energy - Solar & Nuclear 22%
Infrastructure 16%
Specialty Metals & Chemicals 36%
Vacuum Furnaces 25%
Al Master Alloys 14%
Ti Master Alloys and Coatings
16%
Si Metal 9%
FeV & FeNiMo 8%
Antimony 11%
Chromium Metal 8%
Tantalum & Niobium
4%
Graphite 5%
13
Financial Highlights – YTD September 2010
2010 YTD Revenue $719.8
2010 YTD EBITDA $64.7
Europe56%
North America
21%
Asia18%
South America
4%ROW
1%
Revenue by Geography
Revenue and EBITDA in millions
447.4 178.0
94.4
Advanced Materials Engineering Systems
Graphit Kropfmühl
32.1 27.5
5.1
Advanced Materials Engineering Systems
Graphit Kropfmühl
14
- - -- - -
$18.6
$12.4
$22.0 $23.9
$18.8
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Financial Highlights
$205.4
$231.4 $235.8$243.5 $240.4
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(in millions)
(in millions)
Q3 Revenue: $240.4 million
Up 17% from Q3 2009
Q3 EBITDA: $18.8 million
Up 1% from Q3 2009
Q3 EPS: $0.11
Up from ($0.50) in Q3 2009
YTD Revenue: $719.8 million
Up 13% from YTD 2009
YTD EBITDA: $64.7 million
Up 14% from YTD 2009
YTD EPS: $0.42 (1)
Up from ($0.65) YTD 2009 (1)
HighlightsRevenue
EBITDA
(1) Excluding the equity losses from AMG’s 42.5% ownership in Timminco Limited
15
Advanced Materials
Financial Summary Highlights
( in millions)
$5.0 $5.3$8.5 $14.2 $9.4
$95.9
$124.3
$140.5
$152.0 $154.9
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Revenue EBITDA ■ Infrastructure - ferrovanadium
■ Reference prices increased 18% v. Q3
2009
■ Volumes improved 32% v. Q3 2009
■ Ferronickel-molybdenum demand
decreased 43% v. Q3 2009
■ Aerospace – master alloys prices declined 23%
v. Q3 2009; volumes improved 165%
■ CAPEX
■ Expansion of ferrovanadium operations
in the United States
- - - - -
$1.9
$5.0
$3.3$4.2
$5.6
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
CAPEX
16
Engineering Systems
Financial Summary Highlights
( in millions)
- - - - -$11.0
$5.9$12.1 $8.0 $7.4
$61.6
$73.8 $65.3
$59.5
$53.2
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Revenue EBITDA
- - - - -
$1.2
$3.0
$0.8$1.3
$0.8
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
CAPEX
Q3 revenue decreased 14% v. Q3 2009
Solar silicon DSS furnace revenues
decreased 44% in Q3 2010 v. Q3 2009
Q3 EBITDA decreased 33% v. Q3 2009
September 30, 2010 Backlog improved to
$147.1 million from $121 million at June 30,
2010
Order intake $66.9 million in Q3 2010
1.26x book to bill ratio
Diversified backlog - solar, aerospace
and transportation
17
Graphit Kropfmühl
Financial Summary Highlights
( in millions)
- - - - -$2.6 $1.2 $1.5 $1.7 $2.0
$33.7$33.3
$29.9$32.1 $32.4
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Revenue EBITDA
- - - - -
$0.4
$0.8$1.0
$1.3
$0.7
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
CAPEX
Q3 revenue decreased 4% v. Q3 2009
Decrease in silicon metal revenues due to
production issues
Silicon metal down 7%
Natural graphite up 37%
Q3 EBITDA decreased 23% v. Q3 2009
Lower revenues and higher costs in
silicon metal
Silicon metal down $1.0 million
Natural graphite up $0.5 million
CAPEX for graphite milling expansion
18
Capital Base
■ Cash: $90.2 million
■ Total debt: $234.8 million
■ Net debt: $144.6 million
■ Revolver availability: $61.3 million
■ Total liquidity $151.5 million
Note: Cash includes short term investments
$124.4
$117.0
$98.9
$84.6
$90.2
$202.3 $203.8 $203.0 $204.3
$234.8
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Cash Debt
( in millions)
Cash and Debt – September 30, 2010 Summary
19
Outlook■ Advanced Materials
■ Markets are improving
■ Antimony, tantalum and titanium alloys and coatings will drive growth in 2011
■ Engineering Systems
■ Backlog is increasing; renewed interest in solar silicon furnaces
■ Order intake driven by titanium, solar and specialty steel markets
■ Graphit Kropfmühl
■ AMG owns 88% of GK
■ Silicon metal pricing is improving
■ Timminco
■ AMG owns 42.5% of Timminco; not consolidated
■ Timminco sold 49% of its silicon metal operations for C$40.3 million; up to C$10.0 million more based upon meeting performance metrics
20
Appendix
21
Consolidated Balance Sheet
December 31, 2009 September 30, 2010
Fixed assets 211,022 212,440
Goodwill and intangibles 28,253 38,924
Other non-current assets 78,209 54,848
Inventories 193,378 202,318
Receivables 147,787 177,586
Other current assets 35,313 48,903
Cash 117,016 90,213
TOTAL ASSETS 810,978 825,232
TOTAL EQUITY 228,423 219,427
Long-term debt 168,319 184,499
Pension liabilities 91,358 88,500
Other long-term liabilities 51,249 34,896
Current debt 35,477 50,295
Accounts payable 69,791 84,450
Advance payments 54,764 44,556
Accruals 46,179 48,061
Other current liabilities 65,418 70,548
TOTAL LIABILITIES 582,555 605,805
TOTAL LIABILITIES AND EQUITY 810,978 825,232
in thousands
22
Consolidated Income Statement
Q3 2009 Q3 2010
Revenue 205,406 240,427
Cost of sales 165,457 198,325
Gross profit 39,949 42,102
Selling, general and admin. 31,876 31,682
Asset impairment and restructuring 5,302 -
Environmental 4,075 257
Other income (1,194) (270)
Operating profit (110) 10,433
Net finance costs 5,465 2,921
Share of loss of associates (1,285) (17,554)
Profit before income taxes (6,860) (10,042)
Income tax expense 5,694 325
Profit for the year from continuing operations (12,554) (10,367)
Loss after tax for the year from discontinued operations (14,240) -
Loss for the year (26,794) (10,367)
Attributable to:
Shareholders of the Company (20,302) (11,170)
Minority interest (6,492) 803
in thousands
23
Consolidated Cash Flows
Nine months ended
September 30, 2009
Nine months ended
September 30, 2010
Cash Flows from Operations (6,033) (13,903)
Capital Expenditures (20,755) (19,054)
Other Investing Activities (55,796) (26,622)
Cash Flows from Investing Activities (76,551) (45,676)
Cash Flows from Financing Activities 59,247 36,812
Net increase (decrease) in cash (23,337) (22,767)
Beginning Cash 143,473 117,016
Effects of exchange rates on cash 4,255 (4,036)
Ending Cash 124,391 90,213
Approximate availability under AMG lines of credit 97,708 61,300
Total Liquidity 222,099 151,513
in thousands