Amg Critical Materials N.v. · EURONEXT:AMG
Amg Critical Materials — AMG Advanced Metallurgical Group — Investor Presentation (August 2016)
40 slides from Amg Critical Materials's investor presentation, Aug 4, 2016
Slide 1: Leading the Critical Materials Revolution
LEADING THE CRITICAL MATERIALS REVOLUTION AMG Advanced Metallurgical Group N.V. Investor Presentation August 4, 2016
Slide 2: Table of Contents
TABLE OF CONTENTS About AMG 4 CO2 Reduction 5 Strong Capital Structure 6 Critical Raw Materials 7 Critical Materials Price Trends 8 Critical Materials Prices: 10 Year Perspective 9 AMG Business Segments 10 Global Footprint 11 Health and Safety Focus 13 Financial Highlights 14 Strategy & Outlook 26 K
Slide 3: Cautionary Note
Cautionary Note 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
Slide 4: AMG Is a Critical Materials Company
AMG IS A CRITICAL MATERIALS COMPANY GLOBAL TRENDS DEMAND SUPPLY: AMG CO2 emission reduction, Innovative new Sources, processes, population growth, products that are and supplies the critical increasing affluence, lighter, stronger, and materials the market and energy efficiency resistant to higher d
Slide 5: Leader in Advanced Technologies to Address CO2 Reduction
LEADER IN ADVANCED TECHNOLOGIES TO ADDRESS CO2 REDUCTION CO REDUCTION 2 A GLOBAL IMPERATIVE FOR THE 21ST CENTURY AMG: MITIGATING AMG: ENABLING TECHNOLOGIES TECHNOLOGIES Products and Processes saving Products and Processes saving raw materials, energy and CO2 CO2 emissions during use emissions during
Slide 6: Strong capital structure, free of net debt, positioned for growth
Strong capital structure, free of net debt, positioned for growth OPTIMIZED RETURN EXCESS CASH DISCIPLINED ORGANIC CAPITAL STRUCTURE TO SHAREHOLDERS GROWTH & ACQUISITIONS • Refinanced credit facility in 2016, • Initiated first dividend to • Rigorous process to review providing a stable capital base
Slide 7: Critical Raw Materials
Critical Raw Materials • The EU identified 20 critical Heavy REE raw materials* to the European economy in 2014, focusing on two determinants: economic importance and supply risk Light REE • The US identified 30 critical materials* which are vital to national defense, primarily Antimony SUPPLY RISK
Slide 8: Critical Materials Price Trends
Critical Materials Price Trends 200% The cumulative average 10 year 150% AMG: EU Critical Materials price appreciation of the AMG Portfolio was 6.4 percentage 10 Yr 10 Yr points higher than LME Metals and CAGR: CAGR: 6.8 points higher than oil, while the 100% 2.2% AMG Portfolio 2.7% AMG EU Critical
Slide 9: Critical Materials Prices: 10 Year Perspective
Critical Materials Prices: 10 Year Perspective • Metal prices are measured on a Jun 2016 Position Jun 2015 Position scale of 0 to 10, with 0 and 10 Highest representing the minimum and 10 Price in 10 years maximum average quarterly prices occurring during the past 10 years • The positions demonstrat
Slide 10: AMG Business Segments
AMG Business Segments AMG CRITICAL MATERIALS AMG ENGINEERING AMG’S CONVERSION, MINING, AMG’S VACUUM SYSTEMS AND AND RECYCLING BUSINESSES SERVICES BUSINESS • VANADIUM • ENGINEERING • SUPERALLOYS • HEAT TREATMENT SERVICES • TITANIUM ALLOYS & COATINGS • ALUMINUM ALLOYS • TANTALUM & NIOBIUM • ANTIMONY •
Slide 11: AMG Global Footprint – Critical Materials
AMG Global Footprint – Critical Materials 11 11
Slide 12: AMG Global Footprint – Engineering
AMG Global Footprint – Engineering Limbach, GERMANY Berlin, GERMANY Hanau, Wixom GERMANY (MI), USA Head Office Grenoble, Port Huron FRANCE (MI), USA Suzhou, CHINA Mexico City, MEXICO Mumbai, INDIA Headquarters Production Facility Heat Treatment Services 12 12
Slide 13: Health and Safety Focus
Health and Safety Focus LEADING SAFETY INDICATORS • The number of safety improvement items reported increased by 38% compared to the 12 month period ending June 2015. These are essential in order to avoid potential injuries. • Incident severity rate over the 12 months ending June 2016 is down 9% fro
Slide 14: Financial Highlights
FINANCIAL HIGHLIGHTS AMG Advanced Metallurgical Group N.V.
Slide 15: Q2 2016 at a Glance
Q2 2016 at a Glance AMOUNTS IN $M % Q2 2016 Q2 2015 • Q2 ‘16 EBITDA up 4% versus Q2 (EXCEPT EARNINGS PER SHARE) CHANGE ‘15 due to improved profitability within AMG Engineering REVENUE $248.3 $257.4 (4%) • Annualized ROCE increased to 17.8% versus 15.7% in Q2 2015 GROSS PROFIT $53.8 $44.6 20% • Q2 ‘1
Slide 16: Financial Highlights
Financial FinancialHighlights Highlights REVENUE (IN MILLIONS OF US DOLLARS) GROSS PROFIT (IN MILLIONS OF US DOLLARS) $257.4 $53.8 $241.9 $248.3 $220.8 $237.4 $44.6 $44.3 4% $39.7 20% YoY $32.4 YoY Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 EBITDA (IN MILLIONS OF US DOLLARS) ORDER I
Slide 17: 2016 Financial Objectives
2016 Financial Objectives FINANCIAL OBJECTIVE DESCRIPTION PROGRESS UPDATE MAINTAIN • Optimize capital structure for financial • Net debt down by $35.7 million, or 85%, CONSERVATIVE flexibility versus the end of Q2 2015 BALANCE • Completed enlargement and extension of SHEET syndicated credit facility
Slide 18: Financial Data: ROCE & EBITDA
Financial Data: ROCE & EBITDA EBITDA (IN MILLIONS OF US DOLLARS) • Q2 ‘16 EBITDA up 4% versus $25.1 $26.0 Q2 ’15 due to improved $20.4 $21.2 profitability within AMG Engineering Q2 ‘16 EBITDA UP 4% VERSUS $9.7 Q2 ‘15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 ANNUALIZED ROCE 17.8% • Q2 2016 annualized ROCE
Slide 19: Financial Data: Net Debt & Operating Cash Flow
Financial FinancialData: Data:Net NetDebt Debt&&Operating OperatingCash Flow Cash flow • Net debt: $6.2 million NET DEBT (IN MILLIONS OF US DOLLARS) – $188.0 million reduction of net debt since December 31, 2012 $194.2 – Net Debt to LTM EBITDA: 0.08x $160.5 • AMG’s primary debt facility is a $400 $1
Slide 20: Divisional Financial Highlights – Q2 2016 v Q2 2015
Divisional Financial Highlights – Q2 2016 v Q2 2015 REVENUE GROSS MARGIN Q2 2016 REVENUE: $248.3 (in USD millions) Q2 2016 GROSS MARGIN: 21.6% $181.6 AMG Critical 21.0% AMG Critical Materials Materials 16.0% $201.2 Q2 2016 Q2 2016 Q2 2015 Q2 2015 AMG 23.3% AMG $66.7 Engineering 22.2% Engineering $56
Slide 21: Working Capital Reduction
Working FinancialCapital Reduction Highlights WORKING CAPITAL DAYS REDUCED BY 78% SINCE Q3’10 79 69 70 70 70 62 DAYS, 65 65 65 65 OR 78% 62 61 REDUCTION 53 47 47 43 42 31 30 30 28 26 23 19 17 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14
Slide 22: AMG Critical Materials Financial Data
AMG Critical Financial Materials Data: Net Debt & Operating Cash flow REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) • Q2 2016 revenue down $19.6 million, or 10%, vs. Q2 2015 $201.2 due to double-digit declines in $187.7 average quarterly prices of $176.6 $181.6 $166.3 Q2 2016 REVENUE Nickel, Aluminum
Slide 23: AMG Critical Materials – Quarterly Revenue Drivers
AMG Critical Materials – Quarterly Revenue Drivers • Double-digit declines in the Q2 ‘16 REV Q2 ‘15 KEY PRODUCT VOLUME PRICE CURRENCY average quarterly prices of ($M) REV ($M) Nickel, Aluminum, Chrome, Niobium and Antimony FeV & FeNiMo $22.8 $28.1 negatively affected revenue in the second quarter of
Slide 24: Critical Materials – Average Quarterly Prices
Critical Materials – Average Quarterly Prices Q2 Q3 Q4 Q1 Q2 Q2 ‘16 VS. Q2 Q2 ‘16 VS. Q1 MATERIALS ‘15 % CHANGE ‘16 % CHANGE 2015 2015 2015 2016 2016 FERROVANADIUM $9.76 $8.90 $6.79 $6.59 $10.03 3% 52% ($/LB) MOLYBDENUM (1%) 39% $7.50 $5.83 $4.85 $5.33 $7.42 ($/LB) NICKEL ($/MT) $13,005 $10,557 $9,4
Slide 25: AMG Engineering Financial Data
AMG Engineering Financial Data: Net Debt & Operating Cash flow REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) $66.7 • Q2 2016 revenue up 19% vs. $60.8 Q2 2015 due to strong sales of $56.3 $54.1 $54.6 plasma remelting furnaces for EBITDA the aerospace market IMPROVEMENT DUE TO HIGHER SALES • EBITDA inc
Slide 26: Strategy & Outlook
STRATEGY & OUTLOOK AMG Advanced Metallurgical Group N.V.
Slide 27: AMG: Ready for Growth
AMG: Ready for Growth Cost Reduction Supply Chain Excellence Scaling Profitable Growth Cost-reduction and Competitive advantage Properly positioned, capex discipline in through manufacturing financially and response to global and supply chain operationally, to pursue economic slowdown excellence, ac
Slide 28: Strategy
Strategy AMG’s strategy is to build its critical materials business through industry consolidation, process innovation and product development PROCESS Continue to focus on process innovation and product development to INNOVATION improve the market position of AMG’s businesses & PRODUCT DEVELOPMENT I
Slide 29: 2016 Outlook
2016 Outlook AMG In this challenging market environment, AMG expects 2016 full year profitability to improve relative to 2015. AMG will also continue to generate strong operating cash flows throughout the year. CHANGE IN The change in AMG’s dividend policy reflects a commitment to return value to DI
Slide 30: Key Products & End Markets
KEY PRODUCTS & END MARKETS AMG Advanced Metallurgical Group N.V.
Slide 31: Key Products
Key Products REVENUE GROSS PROFIT (IN MILLIONS OF US DOLLARS) (IN MILLIONS OF US DOLLARS) $280 Q2 2015 $60 Q2 2016 $257.4 Q2 2016 $53.8 $248.3 $240 $50 Q2 2015 $44.6 $200 $40 $160 $30 $120 $20 $80 $40 $10 $- $- Q2 2015 Q2 2016 Q2 2015 Q2 2016 Vacuum Furnaces Ti Master Alloys & Coatings Al Master All
Slide 32: Critical Materials – Market Trends
Critical Materials – Market Trends CRITICAL MATERIALS MAJOR END MARKETS MARKET TRENDS MAJOR CUSTOMERS AMG ANTIMONY ANTIMONY TRIOXIDE FLAME RETARDANTS PLASTICS ANTIMONY MASTERBATCHES ANTIMONY PASTES COMMUNICATIONS & AMG BRAZIL MICRO CAPACITORS, ELECTRONICS TANTALUM & NIOBIUM SUPERALLOYS FUEL EFFICIEN
Slide 33: Critical Materials – Market Trends
Critical Materials – Market Trends CRITICAL MATERIALS MAJOR END MARKETS MARKET TRENDS MAJOR CUSTOMERS AMG ALUMINUM ALUMINUM MASTER AEROSPACE, FUEL EFFICIENCY ALLOYS AUTOMOTIVE ALUMINUM POWDERS AMG VANADIUM FERROVANADIUM INFRASTRUCTURE INFRASTRUCTURE FERRONICKEL- GROWTH MOLYBDENUM AMG TITANIUM ALLOYS
Slide 34: Engineering – Market Trends
Engineering – Market Trends PRODUCTS & SERVICES MAJOR END MARKETS MARKET TRENDS MAJOR CUSTOMERS AMG ENGINEERING FUEL EFFICIENCY AEROSPACE, CAPITAL GOODS AUTOMOTIVE ELECTRONICS (VACUUM FURNACES) AMG ENGINEERING AEROSPACE, VACUUM HEAT TREATMENT FUEL EFFICIENCY AUTOMOTIVE SERVICES ENERGY TRANSPORTATION
Slide 35: AMG at a Glance
AMG at a Glance Q2 2016 REVENUE BY SEGMENT: BY END MARKET: BY REGION: 39% Transportation 44% Europe 73% Critical Materials 23% Specialty Metals 32% North America & Chemicals 27% Engineering 22% Infrastructure 20% Asia 16% Energy 4% ROW AMG IS A GLOBAL SUPPLIER OF CRITICAL MATERIALS TO: ENERGY TRANSP
Slide 36: Appendix
APPENDIX AMG Advanced Metallurgical Group N.V.
Slide 37: Consolidated Balance Sheet
Consolidated Balance Sheet AS AT JUNE 30, 2016 DECEMBER 31, 2015 IN MILLIONS OF US DOLLARS UNAUDITED Fixed assets 211.9 215.8 Goodwill and intangibles 33.7 28.9 Other non-current assets 71.0 70.2 Inventories 131.4 126.4 Receivables 143.2 124.3 Other current assets 37.2 29.3 Cash 125.1 127.8 TOTAL AS
Slide 38: Consolidated Income Statement
Consolidated Income Statement FOR THE SIX MONTHS ENDED JUNE 30, 2016 JUNE 30, 2015 IN MILLIONS OF US DOLLARS UNAUDITED UNAUDITED Revenue 485.7 514.4 Cost of sales 387.7 426.5 Gross profit 98.0 87.9 Selling, general & administrative 66.1 63.0 Restructuring & environmental 0.5 1.4 Other income, net (0
Slide 39: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows FOR THE SIX MONTHS ENDED JUNE 30, 2016 JUNE 30, 2015 IN MILLIONS OF US DOLLARS UNAUDITED UNAUDITED EBITDA 47.2 45.5 Change in working capital and deferred revenue (5.0) (15.5) Finance costs paid, net (3.2) (6.9) Other operating cash flow (15.3) (5.9) Cash flows f
Slide 40: Investor Presentation August 2016
INVESTOR PRESENTATION AUGUST 2016
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