amg investor presentation may 2011
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THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMGADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHERDISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITHTHIS 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 acquiresecurities 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 connectionwith, 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 anyaccompanying 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 mentionedin 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 ofapplication 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, expressor 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. TheCompany and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, noneof the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from anyuse 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 acceptanceof new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economicconditions. 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 anyof 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
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Overview
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
Revenues: $1,072M LTM March 2011
EBITDA: $89.0M LTM March 2011
Employees: 2,600
Facilities: Netherlands, Germany, UK, USA, Brazil, France,
Turkey, Canada, Czech Republic, China, Mexico,
Belgium, Poland, India, Sri Lanka
Market cap: €412M
Shares outstanding: 27.5M
52 week range: €6.25–€16.76
Recent share price: €14.99 (May 10, 2011)
Sustainable Metals Technology Products:
High purity raw materials, metals and complex metal products
Vacuum furnaces used to produce high purity metals
4
■ Serve growing end markets with high value-added specialty metal
products and engineering solutions, related to CO2 reduction and
conservation of natural resources
■ Execute through a combination of:■ Vertical integration
■ Industry consolidation
■ Continuous investment in productivity and technology
■ Serve the end markets of:■ Responsible energy production and use
■ Emerging market infrastructure
■ Aerospace and light weight materials
■ Specialty metals and chemicals
Strategy
5
Advanced Materials
High-value alloys
Essential raw materials
Engineering Systems
Capital equipment for high purity
materials
Products & Markets
InfrastructureAerospaceEnergySpecialty Metals &
Chemicals
6
The EU identified 14 critical raw materials(1) to the European economy –
focusing on two determinants – economic importance and supply risk
AMG currently has raw material sources for 4 of those elements
Critical Raw Materials
“Critical” raw
materials
(1) European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials
7
Critical Raw Materials – AMG’s activities
1
HHydrogen
1.0
3
LiLithium
6.9
11
NaSodium
23.0
19
KPotassium
39.1
37
RbRubidium
85.5
55
CsCaesium
132.9
87
FrFrancium
223.0
88
RaRadium
226.0
4
BeBeryllium
9.0
20
CaCalcium40.1
38
SrStrontium
87.6
56
BaBarium
137.4
39
YYitrium
88.9
57-71
89-103
21
ScScandium
45.0
22
TiTitanium
47.9
40
ZrZirconium
91.2
72
HfHafnium
178.5
104
RfRutherfordlium
261
23
VVanadium
50.9
41
NbNiobium
92.9
73
TaTantalum
181.0
105
DbDubnium
262
24
CrChromium
52.0
42
MoMolybdenum
95.9
74
WTungsten
183.9
106
SgSeaborgium
263
25
MnManganese
54.9
43
TcTechnetium
99
75
ReRhenium
186.2
107
BhBohrium
264
26
FeIron
55.9
44
RuRuthenium
101.0
76
OsOsmium
190.2
108
HsHassium
265
27
CoCobalt
58.9
45
RhRhodium
102.9
77
IrIridium
192.2
109
MtMeitnerium
266
28
NiNickel
58.7
46
PdPalladium
106.4
78
PtPlatinum
195.1
110
DsDarmstadtium
269
29
CuCopper
63.5
47
AgSilver
107.9
79
AuGold
197.0
111
RgRoentgenium
272
30
ZnZinc
65.4
48
CdCadmium
112.4
80
HgMercury
200.6
112
UumUnunbium
277
5
BBoron
10.8
13
AlAluminum
27.0
31
GaGallium
69.7
49
InIndium
114.8
81
TlThallium
204.4
113
UutUnuntrium
284
6
CCarbon
12.0
14
SiSilicon
28.1
32
GeGermanium
72.6
50
SnTin
118.7
82
PbLead
207.2
114
UuqUnunquadium
289
7
NNitrogen
14.0
15
PPhosphorus
31.0
33
AsArsenic
74.9
51
SbAntimony
121.8
83
BiBismuth
209.0
115
UupUnunpentium
288
8
OOxygen
16.0
16
SSulfur
32.1
34
SeSelenium
79.0
52
TeTellurium
127.6
84
PoPolonium
210.0
116
UuhUnunhexium
292
9
FFluorine
19.0
17
ClChlorine
35.5
35
BrBromine
79.9
53
IIodine
126.9
85
AtAstatine
210.0
2
HeHelium
4.0
10
NeNeon
20.2
18
ArArgon
40.0
36
KrKrypton
83.8
54
XeXenon
131.3
86
RnRadon
222.0
57
LaLanthanum
138.9
89
AcActinium
132.9
90
ThThorium
232.0
58
CeCerium
140.1
59
PrPraseodymium
140.9
91
PaProtactinium
231.0
60
NdNeodymium
144.2
92
UUranium
238.0
61
PmPromethium
147.0
93
NpNeptunium
237.0
62
SmSamarium
150.4
94
PuPlutonium
242.0
62
EuEuropium
152.0
95
AmAmericium
243.0
64
GdGadolinium
157.3
96
CmCurium
247.0
65
TbTerbium
158.9
97
BkBerkelium
247.0
66
DyDysprosium
162.5
98
CfCalifornium
251.0
67
HoHolmium
164.9
99
EsEinsteinium
254.0
68
ErErbium
167.3
100
FmFermium
253.0
69
TmThallium
168.9
101
MdMendelevium
256.0
70
YbYtterbium
173.0
102
NoNobelium
254.0
71
LuLutetium
175.0
103
LrLawrencium
257.0
12
MgMagnesium
24.3
AMG manufactures products with these elements
AMG has development projects with these elements
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Graphite
Primary producers of selected critical raw materials
Critical Raw Materials
Antimony Graphite
Lithium Magnesium
Silicon Titanium
Vanadium
Tantalum
Niobium
Chromium
Vanadium
Tantalum
Tantalum
Titanium Vanadium
Chromium Magnesium
Titanium
MagnesiumTitanium
Lithium
Tantalum
Antimony
Graphite
Chromium
Magnesium
AMG raw material
mines
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■ Acquired aluminum master alloy producer KB Alloys, LLC for $23.5
million
■ Signed agreements to supply tantalum concentrate production through
the end of 2012
■ AMG installed a 200,000 kwh solar power facility at its Vanadium
production facility
■ AMG completed a new $300 million term debt and revolving credit
facility that does not expire until April 2016
Recent Developments
10
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.
Sunxing Chemical and
Metallurgical Materials Co
Delachaux S.A.
Campine S.A.
Chemtura Corporation
Sample Customers
Chromium Metals
Tantalum
Antimony
Aluminium master alloys
11
Significant Metals Prices
2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011 Q1
Year over
year change
Ferrovanadium $ 29,652 $ 35,759 $ 31,989 $ 30,027 $ 30,865 4.1%
Molybdenum 34,678 36,177 33,025 34,700 38,007 9.6%
Nickel 20,072 22,376 21,184 23,594 26,863 33.8%
Tantalum Oxide 87,435 111,708 160,276 206,463 260,145 197.5%
Chrome Metal 10,337 11,618 11,728 12,412 14,065 36.1%
Antimony Metal 6,518 8,771 9,603 11,273 14,243 118.5%
Silicon Metal 2,771 3,012 3,328 3,439 3,615 30.5%
■ Tantalum price movements are driven by demand for smart
phones
■ Antimony and silicon metal price movements are driven by supply
restrictions in China
12
Engineering Systems – Market, Products and Customers
Energy - Solar
Solar silicon melting and
crystallisation systems-
DSS furnaces
Mono2™ technology
Aerospace
Vacuum Melting and Re-
melting Systems
Precision Casting and
Coating Systems
Heat Treatment with high
pressure gas quenching
Energy - Nuclear
Vacuum Sintering
Systems for nuclear fuel
Development project for
the safe storage of
nuclear waste
Competitors GT Solar International,
Inc.
PVA TePla AG
Chinese producers
Inteco Specialty Melting
Technologies GmbH
Consarc Corporation
Aichelin GmbH
No significant competition
Sample Customers
Products
(1) Market shares are an AMG management estimate.
13
Graphit Kropfmühl – Market, Products and Customers
Energy - Solar
Silicon metal for
polycrystalline for solar
cells
Specialty Metals & Chemicals
Natural graphite for
insulation, transportation
and industrial uses
Silicon metal for aluminium
and silicones
Competitors Bluestar Silicone Materials Ltd.
Globe Specialty Metals Inc.
Grupo FerroAtlantica, S.L.
Timminco Limited
Dow Corning Corporation
Wacker Chemie AG
Asbury Graphite Mills, Inc.
SGL Carbon SE
Qingdao Graphite Company, Ltd
Sample Customers
Products
Financial Overview
15
End Markets – by the Numbers
2011 Q1 Gross Margin by
End Market
2011 Q1 Revenue by End
Market
Energy 18.3%
Aerospace 26.1%
Infrastructure 15.3%
Specialty Metals &
Chemicals 40.3%
Energy 24.4%
Aerospace 29.9%
Infrastructure 15.5%
Specialty Metals &
Chemicals 30.3%
16
Revenue by Geography
AMG generated less than 3% of revenue from Japan
2011 Q1 Revenue 2010 Full Year Revenue
Europe 52%
North America
23%
Asia 19%
South America
5%
ROW 1%
Europe 51%
North America
20%
Asia 22%
South America 5%
ROW 2%
17
Financial Highlights
2011 Q1 Revenue $318.0
2011 Q1 Gross Profit $59.8
in millions
18
$22.0$23.9
$18.8 $20.2
$26.2
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Financial Highlights
$235.8 $243.5 $240.4
$270.7
$318.0
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
(in millions)
(in millions)
Q1 Revenue: $318.0 million
Up 35% from Q1 2010
Q1 EBITDA: $26.2 million
Up 19% from Q1 2010
Q1 EPS: $0.41 (1)
Up from $0.11 in Q1 2010 (1)
TTM Q1 2011
Revenue: $1072.7 million
EBITDA: $89.0 million
Operating Income: $48.9 million
EPS: $0.82 (1)
HighlightsRevenue
EBITDA
(1) Excluding the equity losses from AMG’s 42.5% ownership in Timminco Limited
19
Advanced Materials
Financial Summary Highlights
( in millions)
$8.5 $14.2 $9.4 $7.7$14.6
$95.9
$152.0$154.9
$168.9
$210.8
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Revenue EBITDA ■ Q1 2011 revenue up 50% over Q1 2010
■ KB Alloys acquisition contributed $11.0
million
■ Antimony trioxide revenue up 74%
■ Q1 2011 Gross Margin 15% of revenue
■ Q1 2011 EBITDA up 71% over Q1 2010
■ 7% of revenue
■ CAPEX
■ $1.1 million investment in hydropower
facility in Brazil
- - - - -
$3.3$4.2
$5.6
$7.3
$5.6
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
CAPEX
20
Engineering Systems
Financial Summary Highlights
( in millions)
- - - - -
$12.1 $8.0 $7.4 $10.0 $5.3
$65.3
$59.5
$53.2
$67.7
$64.9
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Revenue EBITDA
- - - - -$0.8 $1.3
$0.8
$4.9
$1.5
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
CAPEX
Q1 2011 revenue was flat compared to Q1
2010
Solar furnaces 27% of revenue
Own and Operate 15% of revenue
Order backlog increased 7% to $195.9
million at March 31, 2011
Order intake $65.7 million in Q1 2011
1.01x book to bill ratio
Q1 2011 Gross Margin 28% of revenue
Q1 2011 EBITDA down 56% from Q1 2010
8% of revenue
21
Graphit Kropfmühl
Financial Summary Highlights
( in millions)
- - - - -$1.5 $1.7 $2.0 $2.5$6.3
$29.9$32.1 $32.4
$34.2
$42.3
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Revenue EBITDA
- - - - -
$1.0$1.3
$0.7
$1.7
$1.2
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
CAPEX
Q1 2011 revenue up 41% over Q1 2010
34% increase in silicon metal revenue due
to lower contract prices
Natural graphite revenue up 57%
Q1 2011 Gross Margin 21% of revenue
Q1 2011 EBITDA up 332% over Q1 2010
15% of revenue
CAPEX
$1.2 million primarily for high purity
graphite milling expansion
22
Capital Base
■ Cash: $66.1 million
■ Total debt: $267.1 million
■ Net debt: $201.0 million■ Debt to capitalization: 0.52x■ Net Debt to TTM EBITDA:
2.26x
■ Revolver availability: $37.1 million
■ Total liquidity $103.2 million
Note: Cash includes short term investments
$98.9
$84.6$90.2 $89.3
$66.1
$203.0 $204.3
$234.8 $237.1
$267.1
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Cash Debt
( in millions)
Cash and Debt – March 31, 2011 Summary
23
Outlook
■ Advanced Materials
■ Increasing demand and pricing for chromium, antimony and tantalum
■ Antimony mine ramp up is on schedule for H2 2011
■ Engineering Systems
■ Backlog is gradually improving
■ Own and Operate business is growing and will be a significant contributor
■ Graphit Kropfmühl
■ Improved silicon metal pricing; strong demand and pricing for natural graphite
■ AMG EBITDA growth in 2011 in excess of 20%
24
Appendix
25
Consolidated Balance Sheet
in thousands
Balance Sheet ActualFYE in December 31, 2010 March 31, 2011
Fixed assets 228.6 244.7
Goodwill and intangibles 27.0 36.6
Other non-current assets 80.7 81.9
Inventories 207.2 244.9
Receivables 175.4 206.2
Other current assets 46.9 50.9
Cash 89.3 66.1
TOTAL ASSETS 855.1 931.3
TOTAL EQUITY 234.0 248.3
Long-term debt 187.8 211.0
Pension liabilities 88.4 95.0
Other long-term liabilities 52.9 56.0
Current debt 49.3 56.0
Accounts payable 102.3 115.9
Advance payments 49.6 53.5
Accruals 43.3 55.7
Other current liabilities 47.5 39.9
TOTAL LIABILITIES 621.1 683.0
TOTAL LIABILITIES & EQUITY 855.1 931.3
26
Consolidated Income Statement
in thousands
Summary Financials Actual
For the three months ended March 31 2010 2011
Revenue 235.8 318.0
Cost of sales 193.2 258.2
Gross profit 42.6 59.8
Selling, general & admin. 30.6 42.9
Asset impairment & restructuring - 0.3
Environmental 0.3 0.1
Other income (0.1) (0.9)
Operating profit 11.8 17.4
Net finance costs 3.6 0.5
Share of loss of associates 4.4 4.4
Profit before income taxes 3.8 12.5
Income tax expense 3.9 5.0
(Loss) profit for the period (0.1) 7.6
Attributable to:
Shareholders of the Company (0.1) 7.0
Non-controlling interest (0.0) 0.6
Adjusted EBITDA 22.0 26.2
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