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 “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.
Cautionary Note
3. 3
Overview
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
LTM Revenues: $1,188.1M
LTM EBITDA: $85.1M
Employees: 3,275
Facilities: Netherlands, Germany, France, Czech Republic, Poland,
UK, USA, Brazil, Mexico, China, India, Sri Lanka,
Turkey, Zimbabwe, Mozambique
Market cap: €191M ($249M)
Shares outstanding: 27.6M
52 week range: €5.81–€7.81
Recent share price: €6.92 (May 2, 2013)
AMG provides high value-added specialty metal alloys and engineering systems,
related to CO2 reduction and conservation of natural resources to growing end markets
4. 4
Business Units, Products and Markets
High-value metals & alloys
Coating materials
Capital equipment & service
for high purity materials
Critical raw materials
AMG Processing AMG Engineering
InfrastructureAerospaceEnergy
AMG Mining
Specialty Metals &
Chemicals
AMG’s conversion and
recycling based businesses
AMG’s vacuum systems
and services business
Integrated AMG’s mine
based businesses
Serving the Technology Trends in Energy, Aerospace, Infrastructure,
and Specialty Metals & Chemicals
5. 5
Critical Raw Materials
Fe
The EU identified 14 critical raw materials* to the European economy – focusing on two
determinants – 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 melted by AMG vacuum systems
Highlighted materials melted
by AMG vacuum systemsREE
Li
Al
V
Sb
Cr
Ni
C
Ta
Nb
Ti
Si
Mo
6. 6
Business Units (reporting segment) – AMG Processing
Aluminum grain refiners and
high-value master alloys for
high performance materials in
aerospace, automotive and
infrastructure applications
Value Proposition
Ferrovanadium for high
strength light weight steels in
infrastructure and
ferronickelmolybdenum for
stainless steels
Titanium master alloys for
high performance light
weight aerospace engine and
frame, and coating materials
for corrosion resistance on
aerospace turbine
Tantalum and niobium
superalloys and chrome metal
for aerospace engine and
industrial gas turbine
Major ApplicationsKey Products
AMG Processing – conversion and recycling operations
7. 7
Business Units (reporting segment) – AMG Mining
Antimony trioxide and master
batches for flame retardant on
electronics, paints, and plastics
Value Proposition
Conflict-free tantalum
concentrate for tantalum
capacitors used on portable
electronics
Natural graphite for insulation
materials of building
construction materials, for
energy storage of li-iron
battery for electrical vehicle,
and for lubricants
Silicon metal for aluminum
production and solar panel
materials
Major ApplicationsKey Products
AMG Mining – mine based value chains
8. 8
Business Units (reporting segment) – AMG Engineering
Vacuum melting and re-melting
furnaces for high-performance
titanium, steel and alloys, and
purification of rare metals and
alloys
Value Proposition
Vacuum heat treatment
furnaces and services for
high-performance materials
of aerospace and automotive
applications
Vacuum coating furnace for
aerospace turbine blade
coatings
Vacuum sintering and
annealing furnaces for nuclear
fuel productions
Major ApplicationsKey Products
AMG Engineering – vacuum systems and services
9. 9
Recent Developments – Operations Update
■ Process begun in Q3 2012 with implementation of a clear and direct management structure
■ Instituting a number of operational improvement initiatives companywide
AMG is focused on improving operational performance and increasing cash flow
Objective Progress Update
■ Q1 ‘13 SG&A decreased 8% compared to Q1 ‘12Reduce SG&A
by 5%
■ AMG Engineering Q1 ‘13 Gross Margin improved to 25%, from
22% in Q1 ’12
■ AMG Mining Q1 ‘13 Gross Margin improved to 16%, from 15%
in Q1 ‘12
Improve Gross
Margin
Increase
Operating Cash
Flow
■ Q1 ‘13 cash from operations improved by $3.7 mm, compared to
Q1 ’12
■ Reduced working capital days to 61 in Q1 ‘13, from 65 in Q1 ‘12
Reduce Net
Debt
■ Aims to reduce net debt in H2 2013
12. 12
Capital Base
■ Net debt: $200.7 million
■ Debt to capitalization: 0.64x
■ Net Debt to LTM EBITDA: 2.34x
■ Revolver availability: $66.2 million
■ Total liquidity: $172.9 million
■ AMG’s primary debt facility is a $377
million term loan and revolving credit
facility
■ 5 year term – until 2016
■ Secured an additional $62 million for
its credit facility in 2012 in
conjunction with the Voluntary
Tender Offering for GK
$81.2 $93.6
$111.4 $121.6
$106.7
$287.6
$305.9 $309.9 $315.8 $307.4
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13
Cash Debt
( in USD millions)
Cash and Debt
Cash Flow from Operations
- - - -- - - --$2.1 -$1.6
$45.0
$65.6
2009 2010 2011 2012
( in USD millions)
14. 14
End Markets
Aerospace - 10%
vs. Q1 2012
Added Aluminum Master
Alloys serving Aerospace
Q1 2013: $296.5
Revenue Gross Profit
Q1 2013: $48.3
( in USD millions) ( in USD millions)
Aerospace
40.7%
Infrastructure
12.2%
Energy
17.1%
Specialty Metals
& Chemicals
30.0%
Aerospace
46.6%
Energy
16.4%
Specialty Metals
& Chemicals
28.5%
Infrastructure
8.5%
Aerospace + 12%
vs. Q1 2012
Focusing on higher margin
products for Aerospace
15. 15
■ Q1 ‘13 revenue down 8% from Q1 ‘12
■ Coatings up 8%
■ Chrome down 27%
■ Titanium Master Alloys down 17%
■ Q1 ‘13 gross margin 13% of revenue,
decreased from 15% in Q1 ‘12
■ Aluminum gross margins up 68%
■ Lower economies of scale due to lower
revenues
■ Ramp up at the ferrovanadium facility
■ Q1 ‘13 EBITDA margin 6% of revenue,
decreased from 8% in Q1 ‘12
■ $1.3 million decrease in personnel costs
■ Q1 ‘13 CAPEX $6.6 million
■ $4.7 million for FeV expansion
$166.3
$153.1
$12.6
$8.7
$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
Q1 12 Q1 13
Revenue EBITDA
AMG Processing
Financial Summary
- -
$5.6
$6.6
Q1 12 Q1 13
Capital Expenditure
( in USD millions)
( in USD millions)
16. 16
Q1 ‘13 revenue down 8% from Q1 ‘12
Tantalum up 3%
Natural graphite up 16%
Antimony down 21%
Q1 ‘13 gross margin 16% of revenue,
improved from 15% in Q1 ‘12
Substantially improved tantalum mine
operations
Q1 ‘13 EBITDA 10% of revenue,
improved from 7% in Q1 ‘12
SG&A reduced by 9% due to cost
containment measures
■ Q1 ‘13 CAPEX $2.2 million
Mozambique natural graphite mine
exploration program
AMG Mining
Financial Summary
Capital Expenditure
( in USD millions)
( in USD millions)
$89.6
$82.9
$5.9
$7.9
$1.0
$6.0
$11.0
$-
$20.0
$40.0
$60.0
$80.0
$100.0
Q1 12 Q1 13
Revenue EBITDA
- -
$4.8
$2.2
Q1 12 Q1 13
17. 17
Q1 ‘13 revenue down 11% from Q1 ‘12
Casting and sintering furnaces up 74%
Heat Treatment furnaces down 61%
Remelting furnaces down 34%
Q1 ‘13 gross margin 25% of revenue,
improved from 22% in Q1 ‘12
Improved profitability on certain large
projects
Q1 ‘13 EBITDA 9% of revenue,
improved from 5% of revenue in Q1 ‘12
Order backlog down 20% to $132.2
million at Mar. 31, 2013
Order intake $30.9 million in Q1 ‘13
0.51x book to bill ratio
AMG Engineering
Financial Summary
- - - - -
$80.6
$36.4
$79.7
$67.8
$30.9
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13
Order Intake
( in USD millions)
( in USD millions)
$68.0
$60.5
$3.5
$5.6
$1.0
$6.0
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Q1 12 Q1 13
Revenue EBITDA
19. 19
Outlook
■ AMG’s markets, particularly for the European centric businesses, remain challenging
■ Cost reductions and operational improvements targeted to increase EBITDA and cash flow in 2013
■ AMG announces Q2 2013 financial results on August 9, 2013
Improved margins through
cost reductions
Long-term tantalum supply
contract begins delivery in Q2;
resource increased by 150%
Natural graphite volumes
consistent with 2012
Declining prices on antimony
impacting mine development
Aerospace alloys demand is
stable in mid-term
AMG Vanadium continues to
ramp up the expended facility
AMG Aluminum is
rationalizing production and
reducing costs; sold 45% equity
interests in YKB to streamline
operations
Improved margins through
cost reductions
Order intake, backlog, and
revenue will be consistent
Heat Treatment Services
operating near capacity
Generate revenue through
diversified vacuum technology
applications
AMG Processing AMG EngineeringAMG Mining
21. 21
Consolidated Balance Sheet
Balance Sheet ($’000) Actual
As of 31-December-12* 31-March-13
(restated)
Fixed assets 288.3 281.8
Goodwill and intangibles 38.7 39.2
Other non-current assets 79.7 75.8
Inventories 211.5 205.4
Receivables 177.2 187.2
Other current assets 33.8 35.5
Cash 121.6 106.7
TOTAL ASSETS 950.8 931.6
TOTAL EQUITY 175.3 173.2
Long-term debt 265.6 258.9
Pension liabilities 138.0 132.8
Other long-term liabilities 80.9 81.1
Current debt 50.3 48.4
Accounts payable 125.3 135.6
Advance payments 27.0 21.8
Accruals 58.9 52.9
Other current liabilities 29.5 26.9
TOTAL LIABILITIES 775.5 758.4
TOTAL LIABILITIES & EQUITY 950.8 931.6
* 2012 Balance Sheet restated for IFRS required adjustments to pension liabilities and mine stripping costs
22. 22
Consolidated Income Statement
Income Statement ($’000) Actual
For the three months ended 31-March-12 31-March-13
(restated)
Revenue 323,984 296,478
Cost of sales 270,547 248,220
Gross profit 53,437 48,258
Selling, general & admin. 38,971 36,017
Asset impairment & restructuring 2,843 1,336
Environmental 728 33
Other income (468) (168)
Operating profit 11,363 11,040
Net finance costs 6,945 4,655
Share of (loss) profit of associates 166 (712)
Profit before income taxes 4,584 5,673
Income tax expense 1,228 3,712
Profit (loss) for the period 3,356 1,961
Attributable to:
Shareholders of the Company 3,648 2,460
Non-controlling interest (292) (499)
Adjusted EBITDA 22,002 22,232
23. 23
Consolidated Statement of Cash Flows
Cash Flow Statement ($’000) Actual
For the year ended 31-March-12 31-March-13
(restated)
EBITDA 22,002 22,232
+/- Change in operating assets/liabilities (18,745) (9,242)
-Interest paid, net (3,106) (2,192)
Other operating cash flow 21 (3,777)
Cash flows from operations before taxes 173 7,021
Income tax paid (3,231) (6,356)
Total cash flows (used in) from operations (3,058) 665
Capital expenditures (11,526) (9,124)
Other investing activities 28 29
Cash flows from investing activities (11,498) (9,095)
Cash flows from financing activities 14,709 (4,162)
Net (decrease) increase in cash 1,669 (12,592)
Beginning cash 79,571 121,639
Effects of exchange rates on cash 1,517 (2,350)
Ending cash 82,757 106,697