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AMG Advanced Metallurgical Group N.V. Investor Presentation November 2010

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Page 1: Amg  -investor_presentation_november_2010

AMG Advanced Metallurgical Group N.V.

Investor Presentation

November 2010

Page 2: Amg  -investor_presentation_november_2010

2AMG ADVANCED METALLURGICAL GROUP N.V.

Disclaimer

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.

Page 3: Amg  -investor_presentation_november_2010

3AMG ADVANCED METALLURGICAL GROUP N.V.

Listed on NYSE-Euronext Amsterdam (Euronext: AMG)

Products High purity metals and complex metal products

Vacuum furnaces used to produce high purity metals

2010 YTD September 30 2010 Revenues - $719.8 million

EBITDA - $64.7 million, 9.0% margin EPS of $0.42 (1)

Net debt - $144.6 million

Capital Investment - $19.1 million

Global presence Europe, North America, South America and Asia

2,500 employeesSustainable Metals Technology

Introduction

(1) Excluding the equity losses from AMG’s 42.5% ownership in Timminco Limited

Page 4: Amg  -investor_presentation_november_2010

4AMG ADVANCED METALLURGICAL GROUP N.V.

■ 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

Page 5: Amg  -investor_presentation_november_2010

5AMG ADVANCED METALLURGICAL GROUP N.V.

Advanced Materials

High-value alloys

Essential raw materials

Engineering Systems

Capital equipment for high purity

materials

Products & Markets

InfrastructureAerospaceEnergySpecialty Metals &

Chemicals

Page 6: Amg  -investor_presentation_november_2010

6AMG ADVANCED METALLURGICAL GROUP N.V.

Markets

AMG Advanced Metallurgical Group N.V.

Aerospace Infrastructure EnergySpecialty Metals &

Chemicals

Titanium Alloys Structural Steel Solar Vacuum Furnaces Silicones

Superalloys Specialty Steel Superalloys Paints & Pigments

Turbine Coatings Building Materials Silicon Metal Glass, Tools & Optics

Vacuum Furnaces Nuclear Fuel Vaccum Furnaces Capacitors

Energy Storage Technologies

Page 7: Amg  -investor_presentation_november_2010

7AMG ADVANCED METALLURGICAL GROUP N.V.

Products

Vacuum furnaces for solar ingot

production

Stackable

Graphite

Blocks

Energy – Solar & Nuclear

Tantalum based capacitor Paints and pigments

Specialty Metals & Chemicals

High purity stainless steel

Infrastructure – Recycling

Typical aerospace jet engine

SuperalloysTi alloys

(includes VAl)

Aerospace

Page 8: Amg  -investor_presentation_november_2010

8AMG ADVANCED METALLURGICAL GROUP N.V.

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%

Page 9: Amg  -investor_presentation_november_2010

9AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 10: Amg  -investor_presentation_november_2010

10AMG ADVANCED METALLURGICAL GROUP N.V.

Advanced Materials – Specialty Metals Acquisition

Material

Competitors

Antimony – AMG is the largest producer of antimony trioxide (a flame retardant) in

Europe

In August 2010 AMG acquired antimony mining rights and an adjacent antimony metal

smelter in Turkey for a total investment of up to approximately $20 million

Secure supply of antimony raw material used in AMG’s antimony trioxide operation

AMG uses approximately 10,000 mt of antimony metal per year

Antimony metal prices have increased from $4,500/mt in 2009 to over $10,000/mt

in October 2010

This will result in substantial raw material cost savings in 2011

Campine S.A., Chemtura Corporation, Hsikwangshan Twinkling Star Antimony Co. Ltd

Transaction

Strategic

Rationale

Antimony Metal

Purchase

Oxidation

Process

Antimony

Trioxide

Dispersions, Pastes,

Granules, Microgranules

Page 11: Amg  -investor_presentation_november_2010

11AMG ADVANCED METALLURGICAL GROUP N.V.

Advanced Materials - Infrastructure metals pricing

$0

$50

$100

$150

$200

$250

$0

$10

$20

$30

$40

$50

$60

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Pri

ce /

Po

un

d –

V,

Mo

, N

i

Ferro Vanadium Molybdenum Nickel

Prices are still below pre-crisis levels

2010

Page 12: Amg  -investor_presentation_november_2010

12AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 13: Amg  -investor_presentation_november_2010

13AMG ADVANCED METALLURGICAL GROUP N.V.

Financial Overview

Page 14: Amg  -investor_presentation_november_2010

14AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 15: Amg  -investor_presentation_november_2010

15AMG ADVANCED METALLURGICAL GROUP N.V.

- - -- - -

$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

Page 16: Amg  -investor_presentation_november_2010

16AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 17: Amg  -investor_presentation_november_2010

17AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 18: Amg  -investor_presentation_november_2010

18AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 19: Amg  -investor_presentation_november_2010

19AMG ADVANCED METALLURGICAL GROUP N.V.

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

Cash and Debt

( in millions)

Highlights – September 30, 2010

Page 20: Amg  -investor_presentation_november_2010

20AMG ADVANCED METALLURGICAL GROUP N.V.

Outlook

■ Advanced Materials

■ Markets are improving but remain volatile

■ Antimony, tantalum and aerospace alloys and coatings will drive growth in 2011

■ Engineering Systems

■ Backlog is increasing; renewed interest in solar silicon furnaces

■ Order intake driven by Chinese and Indian markets

■ Graphit Kropfmühl

■ High purity natural graphite demand and 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

■ Repaid all of its senior bank debt (non-recourse to AMG)

Page 21: Amg  -investor_presentation_november_2010

21AMG ADVANCED METALLURGICAL GROUP N.V.

Appendix

Page 22: Amg  -investor_presentation_november_2010

22AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 23: Amg  -investor_presentation_november_2010

23AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 24: Amg  -investor_presentation_november_2010

24AMG ADVANCED METALLURGICAL GROUP N.V.

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

Page 25: Amg  -investor_presentation_november_2010

AMG Advanced Metallurgical Group N.V.