2. 2
THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG
ADVANCED METALLURGICAL GROUP N.V. (THE âCOMPANYâ) 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,â
âexpect,â âanticipate,â âintends,â âestimate,â âforecast,â âproject,â âwill,â âmay,â âshouldâ 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 Companyâs 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
3. 3
Overview
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
LTM Revenues: $1,160.1M
LTM EBITDA: $83.7M
Employees: 3,145
Facilities: Netherlands, Germany, France, Czech Republic, Poland,
UK, USA, Brazil, Mexico, China, India, Sri Lanka,
Turkey, Zimbabwe, Mozambique
Market Cap: âŹ182M ($242M)
Enterprise Value: âŹ317M ($422M)
Shares outstanding: 27.6M
52 week range: âŹ5.84ââŹ7.34
Recent share price: âŹ6.60 (August 8, 2013)
Global provider of high value added specialty metals and related engineering systems
for growing end markets, including energy, aerospace, infrastructure, and specialty
metals and chemicals
4. 4
Business Units, Products and Markets
ï§ High-value metals & alloys
ï§ Coating materials
ï§ Capital equipment & service
for high purity materials
ï§ Critical raw materials
AMG Processing AMG Engineering
InfrastructureAerospaceEnergy
AMG Mining
Specialty Metals
& Chemicals
ï§ AMGâs conversion and
recycling based businesses
ï§ AMGâs vacuum systems and
services business
ï§ Integrated AMGâs mine
based businesses
Serving the Technology Trends in Energy, Aerospace, Infrastructure,
and Specialty Metals & Chemicals
5. 5
Critical Raw Materials
F
e
ï§ The EU identified 14 critical raw materials* to the European economy â focusing
on two determinants â economic importance and supply risk
Note: *European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials
Materials mined or processed by
AMG, or treated in AMG vacuum
systems
Materials treated by AMG
vacuum systems
REE
Li
Al
V
Sb
Cr
Ni
C
Ta
Nb
Ti
Si
Mo
6. 6
Business Units â AMG Processing
ï§ Aluminum grain refiners
and master alloys for high
performance materials in
aerospace, automotive and
infrastructure applications
Value Proposition
ï§ Ferrovanadium for high
strength, low alloy steels
for infrastructure;
ferronickel-molybdenum
for stainless steel
ï§ Titanium master alloys for
high performance ,light
weight aerospace engine
and frame, and coating
materials for aerospace
turbines
ï§ Tantalum and niobium
superalloys and chrome
metal for aerospace
engine and industrial gas
turbines
Major ApplicationsKey Products
AMG Processing â conversion and recycling operations
7. 7
Business Units â AMG Mining
ï§ Antimony trioxide and
master batches for flame
retardant on electronics,
paints, and plastics
Value Proposition
ï§ Conflict-free tantalum
concentrate for tantalum
capacitors used on
portable electronics
ï§ Natural graphite for building
insulation materials, energy
storage, li-ion batteries for
electrical vehicle, and
lubricants
ï§ Silicon metal for aluminum
production and solar panel
materials
Major ApplicationsKey Products
AMG Mining â mine based value chains
8. 8
Business Units â AMG Engineering
ï§ Vacuum melting and re-
melting furnaces for high-
performance titanium, steel
and alloys, and purification
of rare metals and alloys
Value Proposition
ï§ Vacuum heat treatment
furnaces and services for
high-performance materials
of aerospace and
automotive applications
ï§ Vacuum coating furnace for
aerospace turbine blade
coatings
ï§ Vacuum sintering and
annealing furnaces for
nuclear fuel productions
Major ApplicationsKey Products
AMG Engineering â vacuum systems and services
9. 9
Recent Developments â Operations Update
AMG is improving operational performance and cash flow
2013 Objectives Progress Update
â H1â13 SG&A reduced by 8.8%, or $6.8M, compared to H1â12Reduce SG&A
by 5%
â H1â13 Gross margin 16.5%, down 0.2% compared to H1â12
â Significant decline in metal prices impacted margins
â AMG Engineering gross margin up 4.1% compared to H1â12
Improve Gross
Margin
Increase
Operating
Cash Flow
â H1â13 Operating cash flow $32.6M, up $29.5M compared to H1â12
â H1â13 Working capital reduced $54.4M, or 25% compared to H1â12
â H1â13 - 53 Days in Working capital, a decline of 12 days
Reduce Net
Debt
â H1â13 Net Debt reduced by $14.2M, compared to December 2012
10. 10
â AMG Processing â simplifying the organization
â AMG completed the sale of its 45% owned aluminum alloy joint venture in
China
â Part of AMGâs simplification of its operational structure
â Serving the Asia markets through its wholly owned subsidiary, AMG
Aluminum China
â AMG Vanadium expansion ramp up on schedule
â AMG Engineering - implementing cost reduction programs
â Reduced headcount by 16% in Q2
â Merging internal operations and legal entities
â Moving past the solar market downturn; $14.2M asset write downs
â AMG Mining â prudently investing in mining expansions
â Antimony â delaying mine project to improve cash flow and continuing
drilling and geology campaign; $22.1M impairment charge
â Graphite â optimizing current raw material supply chains and delaying
Mozambique mine project; $13.3M impairment charge
Recent Developments â Operations Update
13. 13
Capital Base
â Net debt: $180.0M
â Debt to capitalization: 0.69x
â Net Debt to LTM EBITDA: 2.15x
â Revolver availability: $60.5M
â Total liquidity: $172.7M
â AMGâs primary debt facility is a $370
million term loan and revolving credit
facility
â 5 year term â until 2016
â Secured an additional $62M for the
credit facility in 2012 in conjunction
with the Voluntary Tender Offering
for GK
â Obtained waiver for tangible net
worth covenant as of June 30
â $32.6M in Cash Flows from Operations
in H1â13
$89.9 $79.6
$121.6 $112.2
$237.1
$268.6
$315.8
$292.2
$147.2
$189.0 $194.2
$180.0
Dec-10 Dec-11 Dec-12 June 2013
Cash
Debt
Net Debt
( in USD millions)
Cash and Debt
Cash Flow from Operations
- - - -- - - -
-$20.3
-$12.1
$3.1
$32.6
2010 H1 2011 H1 2012 H1 2013 H1
( in USD millions)
16. 16
End Markets
Aerospace - 9%
vs. H1 2012
Aluminum Master Alloy
and Chrome metal
revenue decreased
Aerospace - 9%
vs. H1 2012
Aluminum Master Alloy
and Chrome metal
revenue decreased
H1 2013: $588.0
Revenue Gross Profit
H1 2013: $96.9
( in USD millions) ( in USD millions)
Aerospace
40.6%
Infrastructure
12.3%
Energy
17.7%
Specialty Metals
& Chemicals
29.4%
Aerospace
46.0%
Energy
16.2%
Specialty Metals
& Chemicals
28.1%
Infrastructure
9.7%
Aerospace + 4%
vs. H1 2012
Focusing on higher
margin products for
Aerospace
Aerospace + 4%
vs. H1 2012
Focusing on higher
margin products for
Aerospace
17. 17
â Q2â13 revenue down 14% from Q2â12
â Significant price and volume declines
across most materials
â AMG Vanadium down 26%, AMG
Superalloys down 20%
â Q2â13 gross margin 12% of revenue,
down from 15% in Q2â12
â Metal price declines impacted margins
â AMG Aluminum gross margins up 19%
due to product rationalization
â Q2â13 EBITDA margin 6% of revenue,
compared to 7% in Q2â12
â $1.5M decrease in personnel costs
â Q2â13 CAPEX $4.3M
â $0.9M for FeV expansion
â $0.4M for maintenance
$168.4
$144.6
$12.0
$8.0
$1.0
$6.0
$11.0
$16.0
$21.0
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
$200.0
Q2 12 Q2 13
Revenue EBITDA
AMG Processing
Financial Summary
- -
$3.1
$4.3
Q2 12 Q2 13
Capital Expenditure
( in USD millions)
( in USD millions)
18. 18
$85.8
$80.3
$7.1
$5.7
$1.0
$6.0
$11.0
$-
$20.0
$40.0
$60.0
$80.0
$100.0
Q2 12 Q2 13
Revenue EBITDA
ïź Q2â13 revenue down 6% from Q2â12
ïź Silicon metal down 10%
ïź Antimony down 4%
ïź Natural graphite up 3%
ïź Q2â13 gross margin 16% of revenue,
down from 17% in Q2â12
ïź Challenging prices for silicon metal
(13%â) and antimony (10%â)
ïź Q2â13 EBITDA 7% of revenue, down from
8% in Q2â12
â $0.3M decrease in personnel costs
â Q2â13 CAPEX $2.3M
ïź $0.7M for silicon metal furnace
efficiency upgrade
ïź $0.7M for maintenance
AMG Mining
Financial Summary
Capital Expenditure
( in USD millions)
( in USD millions)
- -
$5.9
$2.3
Q2 12 Q2 13
19. 19
$65.4 $66.6
$4.2
$8.4
$3.0
$8.0
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Q2 12 Q2 13
Revenue EBITDA
ïź Q2â13 revenue up 2% from Q2â12
ïź Nuclear furnaces up 72%
ïź Casting and sintering furnaces up 34%
ïź Heat Treatment furnaces down 45%
ïź Remelting furnaces down 20%
ïź Q2â13 gross margin 27% of revenue,
up from 23% in Q2â12
ïź Improved profitability on certain large
projects
ïź Increased focus on cost control
ïź Q2â13 EBITDA 13% of revenue, improved
from 6% of revenue in Q2â12
ïź Order backlog up 10% to $145.2M at
June 30, 2013
ïź Order intake $76.4M in Q2 â13
ïź 1.15x book to bill ratio
AMG Engineering
Financial Summary
- - - - -
$36.4
$79.7
$67.8
$30.9
$76.4
Q2 12 Q3 12 Q4 12 Q1 13 Q2 13
Order Intake
( in USD millions)
( in USD millions)
21. 21
Outlook
â AMGâs markets, particularly for the European centric businesses, remain challenging
â AMG should generate significant cash flows and further reduce net debt in 2013
â AMG announces Q3 2013 financial results on November 8, 2013
ï§ Improved margins through cost
reductions
ï§ Natural graphite volumes
consistent with 2012
ï§ Declining prices on antimony
and graphite delaying mine
development
ï§ Operating cash flow should
improve over prior year
ï§ H2â13 will be more challenging
than H1â13
ï§ Significant declines in metal
prices are impacting revenues
and profitability
ï§ Chrome metal down 27%
ï§ FeV down 13%
ï§ AMG Vanadium expansion on
target to reach full capacity in
2013
ï§ Market remains challenging
ï§ Simplifying organizational
structure
ï§ Headcount reduction should
improve margins
ï§ EBITDA will be consistent with
prior year
ï§ Operating cash flow should
improve over prior year
AMG Processing AMG EngineeringAMG Mining
23. 23
Consolidated Balance Sheet
Balance Sheet ($â000) Actual
As of 31-December-12* 30-June-13
(restated)
Fixed assets 288.3 253.5
Goodwill and intangibles 38.7 36.3
Other non-current assets 77.7 75.5
Inventories 211.5 194.8
Receivables 177.2 171.2
Other current assets 33.8 33.7
Cash 121.6 112.2
TOTAL ASSETS 948.8 877.2
TOTAL EQUITY 175.3 133.1
Long-term debt 265.6 5.9
Pension liabilities 138.0 131.9
Other long-term liabilities 78.9 82.4
Current debt 50.3 286.3
Accounts payable 125.3 132.3
Advance payments 27.0 27.4
Accruals 58.9 47.2
Other current liabilities 29.5 30.7
TOTAL LIABILITIES 773.5 744.1
TOTAL LIABILITIES & EQUITY 948.8 877.2
* 2012 Balance Sheet restated for IFRS required adjustments to pension liabilities and mine stripping costs
24. 24
Consolidated Income Statement
Income Statement ($â000) Actual
For the three months ended 30-June-12 30-June-13
(restated)
Revenue 319,591 291,528
Cost of sales 265,694 242,910
Gross profit 53,897 48,618
Selling, general & admin. 37,803 33,994
Asset impairment & restructuring 7,821 55,102
Environmental 560 44
Other income (234) (300)
Operating profit (loss) 7,947 (40,222)
Net finance costs 5,893 6,111
Share of profit of associates 83 156
Profit (loss) before income taxes 2,137 (46,177)
Income tax expense (benefit) 5,453 (1,788)
Loss for the period (3,316) (44,389)
Shareholders of the Company (2,528) (42,230)
Non-controlling interest (788) (2,159)
Adjusted EBITDA 23,198 22,184
25. 25
Consolidated Statement of Cash Flows
Cash Flow Statement ($â000) Actual
For the year ended 30-June-12 30-June-13
(restated)
EBITDA 44,472 44,383
+/- Change in operating assets/liabilities (23,517) 11,360
-Interest paid, net (9,017) (9,296)
Other operating cash flow 540 (4,187)
Cash flows from operations before taxes 12,478 42,260
Income tax paid (9,344) (9,629)
Total cash flows from operations 3,134 32,631
Capital expenditures (23,443) (16,219)
Other investing activities 534 (2,471)
Cash flows (used in) investing activities (22,909) (18,690)
Cash flows from (used in) financing activities 34,171 (22,494)
Net increase (decrease) in cash 14,396 (8,553)
Beginning cash 79,571 121,639
Effects of exchange rates on cash (343) (856)
Ending cash 93,624 112,230