AMG Advanced Metallurgical Group N.V.
amsterdam : AMG

May 03, 2013 01:41 ET

AMG Advanced Metallurgical Group N.V. Reports First Quarter 2013 Results

AMSTERDAM, THE NETHERLANDS--(Marketwired - May 3, 2013) -


Key Highlights

* Revenue was $296.5 million in the first quarter 2013, an 8% decrease from the same period in 2012

* EBITDA([1]) was $22.2 million in the first quarter 2013, a 1% increase over the same period in 2012

* EPS on a fully diluted basis was $0.09 in the first quarter 2013, a 31% decrease from the same period in 2012

* AMG Processing generated revenue of $153.1 million and EBITDA of $8.7 million in the first quarter 2013

* AMG Engineering generated revenue of $60.5 million and EBITDA of $5.6 million in the first quarter 2013

* AMG Mining generated revenue of $82.9 million and EBITDA of $7.9 million in the first quarter 2013

* As of March 31, 2013, cash on the balance sheet was $106.7 million; net debt was $200.7 million

(Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported first quarter 2013 revenue of $296.5 million, an 8% decrease from $324.0 million in the first quarter 2012.

EBITDA increased 1% to $22.2 million in the first quarter 2013 from $22.0 million in the first quarter 2012. Net income attributable to shareholders for the first quarter 2013 was $2.5 million, or $0.09 per fully diluted share, a 31% decrease compared to the first quarter 2012. Net income attributable to shareholders for the first quarter 2012 was $3.6 million, or $0.13 per fully diluted share.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "Business conditions remained challenging in the first quarter 2013. Revenue decreased due to the stagnant global economy; however, the decline was more than offset by cost reductions and operational improvements, resulting in a slight increase in EBITDA. In particular, AMG Mining and AMG Engineering reduced costs, generating increases in operating profit and EBITDA. AMG Processing continues to make strides to improve its cost structure and more work can be done. AMG is focusing primarily on generating cash flow."

Key Figures

  In 000's US Dollar

                                               Q1'13      Q1'12   Change

  Revenue                                   $296,478   $323,984     (8%)
-------------------------------------------------------------------------
  Gross profit                                48,258     53,437    (10%)

  Gross margin                                 16.3%      16.5%


-------------------------------------------------------------------------
  Operating profit                            11,040     11,363     (3%)

  Operating margin                              3.7%       3.5%

  Net profit attributable to shareholders      2,460      3,648    (33%)
-------------------------------------------------------------------------

  EPS- Fully diluted                            0.09       0.13    (31%)

  EBIT ((1))                                  13,532     14,886     (9%)

  EBITDA ((2))                                22,232     22,002      1%

  EBITDA margin                                 7.5%       6.8%


Note: 1. EBIT is defined as earnings before interest, tax and excludes non-recurring items

2. EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes non-recurring items


Operational Review

AMG Processing
                        Q1'13                  Q1'12    Change
---------------------------------------------------------------
  Revenue            $153,076               $166,315      (8%)

  Gross profit         19,925                 25,182     (21%)

  Operating profit      5,232                  7,516     (30%)

  EBITDA                8,713                 12,562     (31%)

  Capital expenditures  6,557                  5,640       16%


AMG Processing's first quarter 2013 revenue decreased $13.2 million, or 8%, to $153.1 million. The decrease in revenue was primarily the result of 27%, 17%, and 11% decreases in revenue from chrome products, titanium master alloys, and ferrovanadium, respectively, partially offset by an 8% increase in coating revenue, compared to the first quarter 2012. Prices and volumes decreased across most of AMG Processing's materials.

The first quarter 2013 gross margin decreased to 13%, from 15% in the first quarter 2012. The gross margin decline was caused by lower revenues resulting in lower economies of scale and the ramp up at the ferrovanadium facility, slightly offset by a 68% increase in aluminum master alloy gross margins due to a reduction of low margin product sales and productivity improvements.

The first quarter 2013 EBITDA decreased $3.8 million, to 6% of revenue from 8% of revenue in the first quarter 2012. The EBITDA decrease was the result of the $5.3 million decrease in gross profit slightly offset by $1.3 million decrease in SG&A personnel expenses.

Capital expenditures were $6.6 million for the first quarter 2013, a 16% increase from the first quarter 2012. Growth capital investments made in the first quarter included $4.7 million for the expansion of the spent catalyst recycling facility for ferrovanadium production.

AMG Engineering
                              Q1'13        Q1'12      Change
-------------------------------------------------------------
  Revenue                   $60,511      $68,035       (11%)

  Gross profit               15,366       14,837         4%

  Operating profit            1,597          887        80%

  EBITDA                      5,592        3,525        59%

  Capital expenditures          318        1,076       (70%)


AMG Engineering's first quarter 2013 revenue decreased $7.5 million, or 11%, to $60.5 million. Revenue from casting and sintering furnace systems increased 74% to $14.1 million. This increase was more than offset by 61%, 34%, and 7% decreases in revenues from heat treatment furnaces, remelting furnaces, and heat treatment services, respectively, compared to the first quarter 2012.

Order backlog decreased 20% to $132.2 million at March 31, 2013 from $165.3 million at December 31, 2012 as a number of orders were delayed until the second quarter. AMG Engineering generated order intake of $30.9 million in the first quarter 2013, a 62% decrease compared to the first quarter 2012 and a 0.51x book to bill ratio. Heat treatment services were the largest portion of the order intake accounting for 39% of the total.

The first quarter 2013 gross margin increased to 25%, from 22% in the first quarter 2012. Improved profitability on certain large projects was the primary driver of the increase in gross margin. This was slightly offset by lower revenues, which resulted in a decline in economies of scale.

The first quarter 2013 EBITDA increased $2.1 million, to 9% of revenue from 5% of revenue in the first quarter 2012. The EBITDA increase was primarily the result of the $0.5 million increase in gross profit and the $0.7 million decrease in research and development expenses.

Capital expenditures were $0.3 million in the first quarter 2013, 70% less than the first quarter 2012. Capital investments in the first quarter were primarily maintenance capital expenditures for the heat treatment services business.

AMG Mining
                          Q1 '13        Q1 '12     Change
---------------------------------------------------------
  Revenue                $82,891       $89,634      (8%)

  Gross profit            12,967        13,418      (3%)

  Operating profit         4,211         2,960      42%

  EBITDA                   7,927         5,915      34%

  Capital expenditures     2,249         4,810     (53%)


AMG Mining's first quarter 2013 revenue decreased $6.7 million, or 8%, to $82.9 million. Volume declines caused revenue to decrease 21% and 8% for antimony and silicon metal, respectively. The decrease was partially offset by 16% and 3% increases in revenue from graphite and tantalum, respectively, compared to the first quarter 2012.

The first quarter 2013 gross margin increased to 16%, from 15% in the first quarter 2012. The gross margin increase was primarily the result of substantially improved operational performance of the tantalum mine, slightly offset by 11% lower average silicon metal prices.

The first quarter 2013 EBITDA increased by $2.0 million, to 10% of revenue from 7% of revenue in the first quarter 2012. The EBITDA increase was the result of the improvement in gross profit and a 9% decrease in SG&A due to cost containment measures.

Capital expenditures were $2.2 million in the first quarter 2013, 53% less than the first quarter 2012. Capital expenditures were primarily composed of the Mozambique natural graphite mine exploration program.

Financial Review

For purposes of this release, AMG restated the December 31, 2012 statement of financial position and 2012 income statement to comply with new IFRS standards and interpretations. IAS 19R and IFRIC 20 were effective for periods beginning after January 1, 2013 and require restatement for comparability.

Tax

AMG recorded a tax expense of $3.7 million, or a 65% effective tax rate in the first quarter 2013. In the first quarter 2013, AMG generated losses in countries where the benefits of those losses cannot be booked, thus generating a high effective tax rate.

SG&A

AMG's first quarter 2013 SG&A expenses were $36.0 million, compared to $39.0 million in the first quarter 2012, a decrease of 8%. The $3.0 million decrease in SG&A expenses was due to a decrease in personnel and research and development costs.

Non-Recurring Items

AMG's first quarter 2013 $11.0 million operating profit includes non-recurring items, which are not included in the calculation of EBITDA. These items are comprised of income and expense items, that in the view of management, do not arise in the normal course of business and items that, because of their nature and/or size, should be presented separately to enable better analysis of the results.

A summary of non-recurring items in the first quarter 2013 and 2012 are below:

                        For the three months ended

                                March                                 March
                                  2013                                2012
---------------------------------------------------------------------------
 Non-recurring items included in operating profit:

 Restructuring expense                                1,336           2,843

 Environmental expense                                   33             728
---------------------------------------------------------------------------
 Total non-recurring items included in operating      1,369           3,571
 profit


AMG incurred $1.4 million of non-recurring items in the first quarter 2013, consisting of $1.3 million for the management restructuring of AMG Engineering and less than $0.1 million in environmental costs.

Currency Fluctuations

AMG transacts business in many currencies other than the U.S. dollar, the Company's reporting currency. AMG's financial statements are prepared in U.S. dollars, so fluctuations in the exchange rates between the U.S. dollar and other currencies have an effect both on the results of operations and on the reported value of assets and liabilities as measured in U.S. dollars. The appreciation in the value of the U.S. dollar as of March 31, 2013 compared to December 31, 2012, resulted in a decrease in the assets and liabilities on the balance sheet of $18.6 million and $12.6 million, respectively. The net result of the slight depreciation in the value of the U.S. dollar in the first quarter 2013 compared to the first quarter 2012, resulted in an increase in revenue and EBITDA of $1.3 million and $0.1 million, respectively.

Liquidity
                            March 31, 2013   December 31, 2012   Change
------------------------------------------------------------------------
  Total debt                      $307,350            $315,844     (3%)

  Cash & short-term investments    106,697             121,639    (12%)
------------------------------------------------------------------------
  Net debt                         200,653             194,205       3%


AMG had a net debt position of $200.7 million as of March 31, 2013. AMG's net debt position increased $6.4 million since December 31, 2012 primarily due to $10.8 million increase in working capital and provisions, $9.1 million in capital investments, $6.4 million of cash tax payments, $2.2 million of net cash interest payments, reduced by $22.2 million of EBITDA. Including the $106.7 million of cash, AMG had $172.9 million of total liquidity as of March 31, 2013.

Cash Flow
                                                       Q1'13          Q1'12
---------------------------------------------------------------------------

 Net cash flows from (used in) operations             $665         ($3,066)
---------------------------------------------------------------------------
 Capital expenditures                               (9,124)        (11,526)

 Cash flows from other investing activities             29              104
---------------------------------------------------------------------------
 Net cash flows used in investing activities        (9,095)        (11,422)
---------------------------------------------------------------------------
 Net cash flows (used in)  from financing           (4,163)         14,642
 activities
--------------------------------------------------------------------------


Cash flows from operations were $0.7 million in the first quarter 2013 compared to cash used in operations of $3.1 million in the first quarter 2012. The first quarter 2013 cash flows from operations are primarily the result of $22.2 million in EBITDA less $10.8 million increase in working capital and provisions, $6.4 million in cash tax payments and $2.2 million in cash interest payments.

Cash used in investing activities was $9.1 million in the first quarter 2013. The $2.3 million decrease compared to the first quarter 2012 is primarily composed of a $2.4 million decrease in capital investments.

Cash used in financing activities was $4.2 million in the first quarter 2013 as the Company repaid balances on its revolving credit facility. In the first quarter 2012, AMG drew $16.3 million on its revolving lines of credit, which was the primary driver for the $14.6 million of cash flows from financing activities in that period. The borrowings on the revolving lines of credit in the first quarter 2012 were used to fund working capital increases as well as the acquisition of Graphit Kropfmühl shares and related transaction costs.

Outlook

AMG's markets, particularly for the European centric businesses, remain challenging. While AMG is addressing this low growth environment through securing long-term contracts, where possible, and focusing on cost reductions, global demand is expected to remain sluggish. AMG is making progress on reducing costs, achieving an 8% reduction in SG&A in the first quarter 2013. AMG believes that cost reductions and operational improvements will generate an increase in EBITDA and stable cash flows in 2013.

Composition of Supervisory Board

General Wesley Clark has asked the Supervisory Board of AMG to withdraw his nomination for re-appointment to the AMG Supervisory Board at AMG's 2013 Annual General Meeting. General Clark's term as a Supervisory Board member of AMG will end on May 13, 2013. The Supervisory Board of AMG wishes to thank General Clark for his six years of service to the Company.

AMG Advanced Metallurgical Group N.V.
Consolidated Income Statement

 For the period ended March 31

 In thousands of US Dollars                                 2013       2012

 Continuing operations                                           (restated)

 Revenue                                                 296,478    323,984

 Cost of sales                                           248,220    270,547

 Gross profit                                             48,258     53,437

 Selling, general and administrative expenses             36,017     38,971

 Restructuring expense                                     1,336      2,843

 Environmental expense                                        33        728

 Other income, net                                         (168)      (468)

 Operating  profit                                        11,040     11,363

 Finance expense                                           5,717      6,691

 Finance income                                            (143)      (155)

 Foreign exchange (gain) loss                              (919)        409

 Net finance costs                                         4,655      6,945

 Share of (loss) profit of associates and joint
 ventures                                                  (712)        166

 Profit before income tax                                  5,673      4,584

 Income tax expense                                        3,712      1,228

 Profit for the period                                     1,961      3,356


 Attributable to:

   Shareholders of the Company                             2,460      3,648

   Non-controlling interests                               (499)      (292)

                                                           1,961      3,356

 Earnings per share

 Basic earnings per share                                   0.09       0.13

 Diluted earnings per share                                 0.09       0.13


 AMG Advanced Metallurgical Group N.V.
 Consolidated Statement of Financial Position

 In thousands of US Dollars                    March 31,        December 31
                                               2013,            2012

                                                                 (restated)

 Assets

   Property, plant and equipment                281,786             288,269

   Goodwill                                      24,278              24,751

   Intangible assets                             14,962              13,971

   Investments in associates and joint
   ventures                                       6,449               7,351

   Derivative financial instruments                 133                 527

   Deferred tax assets                           35,296              37,437

   Restricted cash                               11,829              11,888

   Notes receivable                                 255                 227

   Other assets                                  21,894              22,262

 Total non-current assets                       396,882             406,683

   Inventories                                  205,384             211,531

   Trade and other receivables                  187,193             177,232

   Derivative financial instruments               3,380               3,229

   Other assets                                  32,101              30,438

   Cash and cash equivalents                    106,697             121,639

 Total current assets                           534,755             544,069

 Total assets                                   931,637             950,752


   AMG Advanced Metallurgical Group N.V.
   Consolidated Statement of Financial Position (continued)

 Equity

   Issued capital                                   743                 743

   Share premium                                382,176             382,176

   Other reserves                               (14,396)           (10,190)

   Retained earnings (deficit)                 (201,745)          (204,284)

 Equity attributable to shareholders of the
 Company                                        166,778             168,445

 Non-controlling interests                        6,412               6,818

 Total equity                                   173,190             175,263

 Liabilities

   Loans and borrowings                         258,923             265,553

   Employee benefits                            132,821             137,957

   Provisions                                    31,109              31,852

   Deferred revenue                                   -               2,724

   Government grants                                447                 472

   Other liabilities                              9,370               6,690

   Derivative financial instruments              10,770              11,082

   Deferred tax liabilities                      29,381              28,102

 Total non-current liabilities                  472,821             484,432

   Loans and borrowings                          14,764              20,333

   Short term bank debt                          33,662              29,958

   Government grants                                 54                  55

   Other liabilities                             52,922              58,934

   Trade and other payables                     135,593             125,342

   Derivative financial instruments               4,325               3,900

   Advance payments                              21,810              26,989

   Deferred revenue                               5,258               2,533

   Current taxes payable                          2,809               8,623

   Provisions                                    14,429              14,390

 Total current liabilities                      285,626             291,057

 Total liabilities                              758,447             775,489

 Total equity and liabilities                   931,637             950,752


AMG Advanced Metallurgical Group N.V.
Consolidated Statement of Cash Flows

 For the period ended March 31

 In thousands of US Dollars                             2013          2012

 Cash flows from (used in) operating activities                  (restated)

 Profit for the period                                 1,961          3,356

 Adjustments to reconcile net profit to net cash flows:

 Non-cash:

    Income tax expense                                 3,712          1,228

    Depreciation and amortization                      8,700          7,116

    Net finance costs                                  4,655          6,945

    Share of loss (profit) of associates and joint
    ventures                                             712          (166)

    Loss on sale or disposal of property, plant and
    equipment                                            107            28

    Equity-settled share-based payment transactions      205           362

    Movement in provisions, pensions and government
    grants                                            (1,597)        3,155

    Change in working capital                         (9,242)      (18,745)
                                                     ----------------------
 Cash flows from operating activities                  9,213          3,279

 Finance costs paid, net                              (2,192)       (3,114)

 Income tax paid, net                                 (6,356)       (3,231)
                                                     ----------------------
 Net cash flows from (used in) operating activities      665        (3,066)

 Cash flows used in investing activities

 Proceeds from sale of property, plant and equipment      12             32

 Acquisition of property, plant and equipment and
 intangibles                                           (9,124)     (11,526)

 Change in restricted cash                                (20)           78

 Other                                                     37           (6)
                                                     ----------------------
 Net cash flows used in investing activities           (9,095)     (11,422)

 Cash flows (used in) from financing activities

 Proceeds from issuance of debt                             -        16,298

 Repayment of borrowings                               (4,159)      (1,628)

 Acquisition of non-controlling interests                   -          (76)

 Other                                                     (4)           48
                                                     ----------------------
 Net cash flows (used in) from financing activities    (4,163)       14,642



 Net (decrease) increase in cash and cash equivalents  (12,593)         154

 Cash and cash equivalents at January 1                121,639       79,571

 Effect of exchange rate fluctuations on cash held      (2,349)       1,515

 Cash and cash equivalents at March 31                 106,697       81,240


The notes are an integral part of these consolidated financial statements.

About AMG

AMG creates and applies innovative metallurgical solutions to the global trend of sustainable development of natural resources and CO(2) reduction. AMG produces highly engineered specialty metal products and advanced vacuum furnace systems for the Energy, Aerospace, Infrastructure and Specialty Metals and Chemicals end markets. AMG consists of three segments: AMG Processing, AMG Engineering and AMG Mining.

AMG Processing develops and produces specialty metals, alloys and high performance materials. AMG is a significant producer of specialty metals, such as ferrovanadium, ferronickel-molybdenum, aluminum master alloys and additives, chromium metal and ferrotitanium for Energy, Aerospace, Infrastructure and Specialty Metal and Chemicals applications. Other key products include specialty alloys for titanium and superalloys, coating materials and vanadium chemicals.

AMG Engineering designs, engineers and produces advanced vacuum furnace systems and operates vacuum heat treatment facilities, primarily for the Aerospace and Energy (including solar and nuclear) industries. Furnace systems produced by AMG include vacuum remelting, solar silicon melting and crystallization, vacuum induction melting, vacuum heat treatment and high pressure gas quenching, turbine blade coating and sintering. AMG also provides vacuum case-hardening heat treatment services on a tolling basis.

AMG Mining produces critical materials utilizing its secure raw material sources in Africa, Asia, Europe and South America. AMG Mining produces critical materials such as high purity natural graphite, tantalum, antimony and silicon metal. These materials are of significant importance to the global economy and are available in limited supply. End markets for these materials include electronics, energy efficiency, green energy and infrastructure.

With over 3,000 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, United States, China, Mexico, Brazil, Turkey, Poland, India and Sri Lanka and has sales and customer service offices in Belgium, Russia and Japan (www.amg-nv.com).

Disclaimer

Certain statements in this press release are not historical facts and are "forward looking." Forward looking statements include statements concerning AMG's plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans and intentions relating to acquisitions, AMG's competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, AMG's business strategy and the trends AMG anticipates in the industries and the political and legal environment in which it operates and other information that is not historical information. When used in this press release, the words "expects," "believes," "anticipates," "plans," "may," "will," "should," and similar expressions, and the negatives thereof, are intended to identify forward looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. These forward-looking statements speak only as of the date of this press release. AMG expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in AMG's expectations with regard thereto or any change in events, conditions, or circumstances on which any forward-looking statement is based.

1. EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items

Q1 2013: http://hugin.info/138060/R/1698977/560299.pdf

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Source: AMG Advanced Metallurgical Group N.V. via Thomson Reuters ONE

[HUG#1698977]

Contact Information

  • For further information, please contact:
    AMG Advanced Metallurgical Group N.V.
    +1 610 975 4901

    Jonathan Costello
    Vice President of Corporate Development and Corporate Communications
    Email Contact