Amg Critical Materials N.v. · EURONEXT:AMG
Amg Critical Materials — AMG Advanced Metallurgical Group — Q3 2018 Earnings Presentation
39 slides from Amg Critical Materials's earnings presentation, November 2018
Slide 1: AMG Advanced Metallurgical Group N.V. Investor Presentation November 2018
AMG ADVANCED METALLURGICAL GROUP N.V. INVESTOR PRESENTATION NOVEMBER 2018 1
Slide 2: Agenda
About AMG 4 CO2 Reduction 5 Strong Capital Structure 6 Critical Raw Materials 7 Critical Materials Price Trends 8 Critical Materials Prices: Historical Pricing 9 AMG Business Segments 10 Global Footprint 11 Health and Safety Focus 13 Financial Highlights 14 Strategy & Outlook 26 Key Products & End M
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
GLOBAL TRENDS CO2 emission reduction, population growth, increasing affluence, and energy efficiency DEMAND Innovative new products that are lighter, stronger, and resistant to higher temperatures AMG IS A SUPPLY AMG sources, processes, CRITICAL and supplies the critical materials that the market M
Slide 5: CO2 Reduction
Leader in advanced technologies to address CO2 reduction CO REDUCTION 2 A GLOBAL IMPERATIVE FOR THE 21ST CENTURY AMG: ENABLING TECHNOLOGIES AMG: MITIGATING TECHNOLOGIES Products and processes saving Products and processes saving raw CO2 emissions during use materials, energy and CO2 emissions (e.g.,
Slide 6: Strong Capital Structure, Positioned for Growth
S T R O N G C A P I TA L S T R U C T U R E , P O S I T I O N E D F O R GROWTH OPTIMIZED RETURN EXCESS CASH DISCIPLINED ORGANIC CAPITAL STRUCTURE TO SHAREHOLDERS GROWTH AND ACQUISITIONS • $650 million credit facility • Initiated first dividend to • Rigorous process to review provides a stable capital
Slide 7: Critical Raw Materials: AMG Presence
C R I T I C A L R A W M AT E R I A L S : A M G P R E S E N C E Light REE Heavy REE Antimony • The EU identified 27 critical raw materials* to the Phosphorus Bismuth Magnesium*** European economy in Borate 2017, focusing on two Niobium determinants: economic Natural Graphite Scandium importance and s
Slide 8: Critical Materials Price Trends
C R I T I C A L M AT E R I A L S P R I C E T R E N D S 60% 10 Yr The cumulative average CAGR: 10 year price appreciation 40% 5.4% of the AMG Portfolio was 3.5 10 Yr CAGR: percentage points higher than 20% AMG Portfolio London Metal Exchange (LME) 4.6% metals and 4.3 points higher AMG: EU Critical Ma
Slide 9: Critical Materials Prices: Historical Pricing
C R I T I C A L M AT E R I A L S P R I C E S : H I S T O R I C A L P R I C I N G Sep 2018 Position Sep 2017 Position • Metal prices are measured 10 Highest Price on a scale of 0 to 10, with 0 8.9 9.0 and 10 representing the minimum and maximum 7.9 average quarterly prices 7.5 7.5 7.2 occurring since
Slide 10: AMG Business Segments
AMG BUSINESS SEGMENTS A M G C R I T I C A L M AT E R I A L S AMG ENGINEERING AMG’s conversion, mining, and recycling AMG’s vacuum systems and services businesses business • Vanadium • Furnaces • Superalloys • Heat treatment services • Titanium Alloys & Coatings • Aluminum Alloys • Tantalum & Niobium
Slide 11: AMG Global Footprint: Critical Materials
A M G G L O B A L F O O T P R I N T: C R I T I C A L M AT E R I A L S 11
Slide 12: AMG Global Footprint: AMG Engineering
A M G G L O B A L F O O T P R I N T: A M G E N G I N E E R I N G Limbach, 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
Slide 13: Health and Safety Focus
H E A LT H A N D S A F E T Y F O C U S S A F E T Y I N D I C AT O R S At the end of Q3 2018, lost time incident rate and total incident rate were down 22% and 13%, respectively, from Q3 2017. LOST TIME 12 MONTH 12 MONTH YEAR INCIDENTS IN THE AVERAGE LOST TIME AVERAGE TOTAL LAST 12 MONTHS INCIDENT RA
Slide 14: Financial Highlights
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Slide 15: Q3 2018 at a Glance
Q 3 2 0 1 8 AT A G L A N C E AMOUNTS IN $M (EXCEPT EARNINGS PER SHARE) Q3 2018 Q3 2017 % CHANGE • Q3 2018 EBITDA up 114% Revenue $328.1 $258.9 27% versus Q3 2017 due to improved profitability within AMG Critical Materials and Gross Profit $79.6 $51.3 55% AMG Engineering • Annualized ROCE Gross Margi
Slide 16: Financial Highlights
FINANCIAL HIGHLIGHTS REVENUE (IN MILLIONS OF US DOLLARS) GROSS PROFIT (IN MILLIONS OF US DOLLARS) $329.3 $328.1 $79.2 $79.6 $308.4 $70.1 $258.9 $280.7 $56.5 $51.3 27% 55% YoY YoY Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 EBITDA (IN MILLIONS OF US DOLLARS) ORDER INTAKE (IN MILLIONS
Slide 17: Financial Data: ROCE & EBITDA
F I N A N C I A L D ATA : R O C E & E B I T D A EBITDA (IN MILLIONS OF US DOLLARS) • Q3 ‘18 EBITDA up 114% versus Q3 ‘17 due to $59.1 improved profitability $50.7 within AMG Critical Materials $44.5 Q3 ‘18 EBITDA and AMG Engineering $33.0 UP 114% $27.6 VERSUS Q3 ‘17 • Q3 2018 annualized ROCE improve
Slide 18: Financial Data: Net Debt & Cash from Operations
F I N A N C I A L D ATA : N E T D E B T & N E T C A S H F R O M O P E R AT I O N S NET DEBT (CASH) (IN MILLIONS OF US DOLLARS) • Net debt: $32.3 million $194.2 o $162 million reduction of net $160.5 $162M debt since December 31, REDUCTION 2012 $87.8 IN NET DEBT • AMG’s primary debt $32.3 SINCE 2012
Slide 19: Divisional Financial Highlights – Q3 2018 vs. Q3 2017
DIVISIONAL FINANCIAL HIGHLIGHTS – Q3 2018 VS. Q3 2017 REVENUE GROSS MARGIN Q3 2018 REVENUE: $328.1 (IN MILLIONS OF US DOLLARS) Q3 2018 GROSS MARGIN: 24.2% $262.0 23.5% Q3 2018 AMG Critical AMG Critical Q3 2017 Materials Materials 18.0% $203.3 AMG 27.4% AMG $66.1 Q3 2018 Engineering 26.2% Engineering
Slide 20: Working Capital Reduction
W O R K I N G C A P I TA L R E D U C T I O N 79 69 70 70 70 37 DAYS, OR 47% 65 65 65 65 REDUCTION 62 61 53 47 47 43 42 42 31 32 30 30 28 26 25 23 22 22 19 17 17 18 16 15 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 ‘10 ‘10 ‘11 ‘11 ‘11 ‘11 ‘12 ‘12
Slide 21: AMG Critical Materials
A M G C R I T I C A L M AT E R I A L S REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) • Q3 2018 revenue of $267.2 $262.0 $262.0 million was 29% $248.4 higher than Q3 2017 $203.3 $214.0 $52.1 $45.2 • EBITDA increased by $28.6 $37.1 Q3 2018 EBITDA million over Q3 2017 to $52.1 $23.5 $26.9 INCREASED BY m
Slide 22: AMG Critical Materials – Quarterly Revenue Drivers
A M G C R I T I C A L M AT E R I A L S – Q U A R T E R LY R E V E N U E DRIVERS KEY PRODUCT Q3 ‘18 REV Q3 ‘17 REV VOLUME PRICE ($M) ($M) • AMG Critical Materials’ revenue in the third quarter Vanadium $78.3 $36.9 increased by $58.6 million, or 29%, to $262.0 million Aluminum Master $51.0 $44.9 • The
Slide 23: Critical Materials — Average Quarterly Prices
C R I T I C A L M AT E R I A L S — AV E R A G E Q U A R T E R LY P R I C E S Q3 ‘18 VS. Q3 ‘18 VS. Q3 Q4 Q1 Q2 Q3 MATERIALS Q3 ‘17 % Q2 ‘18 % 2017 2017 2018 2018 2018 CHANGE CHANGE Ferrovanadium ($/lb) $17.75 $19.24 $28.60 $34.28 $39.68 124% 16% Molybdenum ($/lb) $8.21 $8.86 $12.26 $11.59 $11.86 44%
Slide 24: Critical Materials — Full Year and Current Spot Prices
C R I T I C A L M AT E R I A L S — F U L L Y E A R A N D C U R R E N T S P O T P R I C E S AVG AVG OCT 29, 2018 AVG ‘17 VS. AVG SPOT VS. AVG ‘17 MATERIALS 2016 2017 SPOT ‘16 % CHANGE % CHANGE Ferrovanadium ($/lb) $9.37 $15.30 $54.75 63% 258% Molybdenum ($/lb) $6.71 $8.25 $12.13 23% 47% Nickel ($/MT)
Slide 25: AMG Engineering
AMG ENGINEERING REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) • AMG Engineering order backlog of $251.2 million as $66.7 $66.1 of September 30, 2018, a $60.1 $62.1 $55.6 21% increase compared to December 31, 2018 REVENUE • AMG Engineering signed $7.4 $7.0 INCREASED BY $57.1 million in new orders $6.1
Slide 26: Strategy and Outlook
STRATEGY AND OUTLOOK
Slide 27: AMG: Ready for Growth
AMG: READY FOR GROWTH 2012 2013 2014 2015 2016-2020 COST SUPPLY CHAIN SCALING PRODUCT MIX TARGETED W/C REDUCTION EXCELLENCE PROFITABLE OPTIMIZATION & DEBT LEVELS GROWTH Cost-reduction and Competitive advantage Properly positioned, Streamlined operations Further reduction capex discipline in through
Slide 28: Strategy
S T R AT E G Y AMG’s strategy is to build its critical materials business through industry consolidation, process innovation and product development PROCESS INNOVATION INDUSTRY CONSOLIDATION EXPANSION OF EXISTING & PRODUCT DEVELOPMENT HIGH GROWTH BUSINESSES Continue to focus on process Pursue opport
Slide 29: 2018-19 Outlook & Projects Update
2 0 1 8 - 1 9 O U T L O O K & P R O J E C T S U P D AT E OUTLOOK L I T H I U M P R O J E C T U P D AT E Based on improving market Lithium Concentrate Update conditions across AMG’s Critical The commissioning process for AMG’s first lithium concentrate plant is progressing. The first Materials portfo
Slide 30: Key Products & End Markets
KEY PRODUCTS & END MARKETS
Slide 31: Key Products
KEY PRODUCTS REVENUE (IN MILLIONS OF US DOLLARS) GROSS PROFIT * (IN MILLIONS OF US DOLLARS) $350 $90 $328.1 $84.1 $75 $280 $258.9 $60 $210 $51.5 $45 $140 $30 $70 $15 $- $- Q3 2017 Q3 2018 Q3 2017 Q3 2018 Vacuum Furnaces Ti Master Alloys & Coatings Al Master Alloys & Powders Vanadium Chromium Metal A
Slide 32: Critical Materials – Market Trends
C R I T I C A L M AT E R I A L S – M A R K E T T R E N D S 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 S
Slide 33: Critical Materials – Market Trends
C R I T I C A L M AT E R I A L S – M A R K E T T R E N D S CRITICAL MATERIALS MAJOR END MARKETS MARKET TRENDS MAJOR CUSTOMERS AMG ALUMINUM ALUMINUM MASTER ALLOYS AEROSPACE, AUTOMOTIVE FUEL EFFICIENCY ALUMINUM POWDERS AMG VANADIUM INFRASTRUCTURE FERROVANADIUM INFRASTRUCTURE GROWTH FERRONICKEL-MOLYBDE
Slide 34: Engineering – Market Trends
ENGINEERING – MARKET TRENDS CRITICAL MATERIALS MAJOR END MARKETS MARKET TRENDS MAJOR CUSTOMERS AMG ENGINEERING AEROSPACE, FUEL EFFICIENCY CAPITAL GOODS AUTOMOTIVE ELECTRONICS (VACUUM FURNACES) AMG ENGINEERING AEROSPACE, VACUUM HEAT FUEL EFFICIENCY AUTOMOTIVE TREATMENT SERVICES ENERGY TRANSPORTATION
Slide 35: AMG at a Glance
A M G AT A G L A N C E Q3 2018 REVENUE BY SEGMENT: BY END MARKET: BY REGION: 39% Transportation 39% Europe 80% Critical Materials 21% Specialty Metals 39% North America & Chemicals 20% Engineering 31% Infrastructure 17% Asia 9% Energy 5% ROW AMG IS A GLOBAL SUPPLIER OF CRITICAL MATERIALS TO: ENERGY
Slide 36: Appendix
APPENDIX
Slide 37: Consolidated Balance Sheet
Consolidated Balance Sheet AS OF SEPTEMBER 30, 2018 DECEMBER 31, 2017 IN MILLIONS OF US DOLLARS UNAUDITED Fixed assets 318.6 298.5 Goodwill and intangibles 35.5 38.1 Other non-current assets 87.5 92.4 Inventories 271.1 162.5 Receivables 166.7 137.2 Other current assets 53.9 49.1 Cash 349.9 178.8 TOT
Slide 38: Consolidated Income Statement
Consolidated Income Statement FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 SEPTEMBER 30, 2017 IN MILLIONS OF US DOLLARS UNAUDITED UNAUDITED Revenue 965.8 778.9 Cost of sales 737.0 620.8 Gross profit 228.8 158.1 Selling, general & administrative 108.4 97.3 Other income, net (0.4) (0.6) Operating prof
Slide 39: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 SEPTEMBER 30, 2017 IN MILLIONS OF US DOLLARS UNAUDITED UNAUDITED EBITDA 154.3 92.5 Change in working capital and deferred revenue (85.0) (27.3) Other operating cash flow 4.9 (6.0) Cash generated from operating activiti
AMG Advanced Metallurgical Group — Q3 2018 Earnings Presentation on 6ix