Key Highlights
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EBITDA(2) was $26.0 million in the second quarter 2016, a 4% increase over the same period in 2015
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Net income attributable to shareholders more than tripled to $13.4 million in the second quarter 2016 from $3.8 million in the second quarter 2015
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EPS, on a fully diluted basis, increased to $0.48 in the second quarter 2016, from $0.14 in the same period in 2015
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Cash flows from operating activities increased by 116% to $24.3 million in the second quarter 2016 from $11.3 million in the second quarter 2015
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Annualized return on capital employed increased to 17.8% in the second quarter 2016, as compared to 15.7% in the second quarter 2015
Amsterdam, 4 August 2016 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (« AMG », EURONEXT AMSTERDAM: « AMG ») reported EBITDA for the second quarter 2016 of $26.0 million, a 4% increase from $25.1 million in the second quarter 2015. Net income attributable to shareholders increased to $13.4 million in the second quarter 2016 from $3.8 million in the second quarter 2015. On a year to date basis, EBITDA increased by 4% to $47.2 million, from $45.5 million in the prior year, despite an increase in AMG’s Performance Share Unit (PSU) plan costs of $3.2 million, compared to the same period in 2015, driven by AMG’s strong share price performance.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, « AMG’s focus on operational excellence, cost reduction and price risk management resulted in solid financial results in the second quarter 2016. Despite weak metals prices, AMG performed well across all key financial metrics during the quarter.
AMG Engineering achieved EBITDA of $5.6 million during the second quarter 2016, a 33% increase from $4.2 million in the second quarter of 2015. AMG Engineering signed $92.8 million in new orders during the second quarter of 2016, the highest quarterly order intake since Q4 2010, representing a 1.39x book to bill ratio. The Engineering division continues to experience strong demand for plasma remelting, induction and turbine blade coating furnaces for the aerospace market and heat treatment furnaces for the automotive market. Order backlog was $158.8 million as of June 30, 2016, an increase of 17% from March 31, 2016.
AMG Critical Materials generated EBITDA of $20.5 million during the second quarter 2016. Year-over-year double-digit declines in average quarterly prices of Nickel, Aluminum, Chrome, Niobium and Antimony negatively affected revenue in the second quarter of 2016 compared to the second quarter of 2015.
Cash flows from operating activities increased to $24.3 million in the second quarter 2016 from $11.3 million in the second quarter 2015, due to lower levels of working capital driven by the advance payments received by AMG Engineering. »
Key Figures
| In 000’s US Dollar | |||
| Q2 ’16 | Q2 ’15 | Change | |
| Revenue | $248,349 | $257,443 | (4%) |
| Gross profit | 53,756 | 44,613 | 20% |
| Gross margin | 21.6% | 17.3% | |
| Operating profit | 18,967 | 12,122 | 56% |
| Operating margin | 7.6% | 4.7% | |
| Net income attributable to shareholders | 13,447 | 3,808 | 253% |
| EPS – Fully diluted | 0.48 | 0.14 | 243% |
| EBIT (1) | 18,585 | 18,031 | 3% |
| EBITDA (2) | 26,049 | 25,142 | 4% |
| EBITDA margin | 10.5% | 9.8% | |
| Cash flows from operating activities | 24,315 | 11,264 | 116% |
Note:
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EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring and equity-settled share-based payments and includes foreign currency gains or losses.
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EBITDA is defined as EBIT adjusted for depreciation and amortization.
Operational Review
AMG Critical Materials
| Q2 ’16 | Q2 ’15 | Change | |
| Revenue | $181,619 | $201,188 | (10%) |
| Gross profit | * 38,230 | 32,112 | 19% |
| Operating profit | 15,016 | 12,272 | 22% |
| EBITDA | 20,485 | 20,955 | (2%) |
* Includes $3.6 million non-cash benefit related to reversal of previously expensed vanadium, nickel and molybdenum inventory adjustments
AMG Critical Materials continues to be impacted by weak metal prices, and as a result, revenue decreased by 10%, to $181.6 million.
Double-digit declines in average quarterly prices of Nickel, Aluminum, Chrome, Niobium and Antimony negatively affected revenue in the second quarter of 2016 compared to the second quarter of 2015.
Gross profit in the second quarter increased by $6.1 million, or 19%, to $38.2 million, due to strong sales of Aluminum combined with lower production costs in Aluminum, Tantalum, Chrome and Silicon. In addition, Vanadium gross profit in the second quarter 2016 benefited from a $3.6 million reversal of previously recorded inventory adjustment expenses, due to improving vanadium and molybdenum prices.
Second quarter 2016 EBITDA margin increased to 11% from 10% in the second quarter 2015.
AMG Engineering
| Q2 ’16 | Q2 ’15 | Change | |
| Revenue | $66,730 | $56,255 | 19% |
| Gross profit | 15,526 | 12,501 | 24% |
| Operating profit | 3,951 | (150) | N/A |
| EBITDA | 5,564 | 4,187 | 33% |
AMG Engineering signed $92.8 million in new orders during the second quarter of 2016, representing a 1.39x book to bill ratio. Order backlog was $158.8 million as of June 30, 2016, an increase of 17% from March 31, 2016. Order intake in the quarter benefited from a number of orders which had been postponed from the first quarter of 2016. Year to date, AMG Engineering signed $143.3 million in new orders, representing a 1.12x book to bill ratio.
AMG Engineering’s second quarter 2016 revenue increased $10.5 million, or 19%, to $66.7 million, due to strong sales of plasma remelting and induction furnaces for the aerospace market and heat treatment furnaces for the automotive market.
Second quarter 2016 gross margin increased to 23% from 22% in the second quarter of 2015 due to higher revenue, product mix effects and improved project cost management.
EBITDA increased by $1.4 million to $5.6 million in the second quarter of 2016, the highest quarterly EBITDA in twelve quarters, due to higher levels of gross profit.
Financial Review
Tax
AMG recorded an income tax expense of $2.8 million in the second quarter of 2016 as compared to a tax expense of $4.1 million in the same period in 2015. The currency effect of the strengthening Brazilian Real on deferred taxes positively affected tax expense in the quarter.
AMG paid taxes of $1.8 million in the second quarter of 2016 as compared to tax payments of $1.6 million in the same period in 2015. For the second quarter of 2016, AMG’s effective cash tax rate was 11%.
Liquidity
| June 30, 2016 | December 31, 2015 | Change | |
| Total debt | $131,251 | $126,743 | 4% |
| Cash and cash equivalents | 125,075 | 127,778 | (2%) |
| Net debt (cash) | 6,176 | (1,035) | N/A |
AMG had a net debt position of $6.2 million as of June 30, 2016. Net debt and gross debt increased $7.2 million and $4.5 million, respectively, from December 31, 2015.
Cash flows from operating activities increased to $24.3 million in the second quarter 2016 from $11.3 million in the second quarter 2015, primarily due to lower levels of working capital driven by advance payments received by AMG Engineering.
Historic declines in discount rates have negatively influenced AMG’s defined benefit plan liabilities and the related funding status of those plans. In response, the Company made cash contributions to its pension plans of $20.6 million during the second quarter 2016. Voluntary contributions to the plans create flexibility in reducing plan liabilities and allow the Company to avoid certain future costs associated with plan deficits. The contributions made during the quarter negatively impacted cash flows from operating activities and the Company’s net debt balance.
Cash flow used in investing activities increased to $7.8 million in the second quarter of 2016 compared to $0.7 million in the same period in 2015, due to higher levels of capital expenditures.
Capital expenditures increased to $7.5 million in the second quarter of 2016 compared to $3.3 million in the same period in 2015. Capital spending in the second quarter of 2016 included $3.0 million of maintenance capital. The largest expansion capital project was for AMG’s Ancuabe graphite mine project.
Including the $125.1 million of cash, AMG had $268.0 million of total liquidity as of June 30, 2016.
SG&A
AMG’s second quarter 2016 SG&A expenses were $34.8 million compared to $32.9 million in the second quarter of 2015, an increase of 6%. This increase was primarily due to higher costs associated with AMG’s Performance Share Unit (PSU) plan as a result of recent increases in the Company’s share price compared to the defined peer group.
Interim Dividend
AMG has announced an interim dividend in respect of the period from January 1, 2016, to June 30, 2016, of €0.13 per ordinary share, an increase of €0.03, or 30%, compared to the interim dividend paid in September 2015.
The increased dividend reflects AMG’s ongoing commitment to return value to our shareholders and the Board’s confidence in our long term ability to generate solid cash flow.
Outlook
In this challenging market environment, AMG expects 2016 full year profitability to improve relative to 2015. AMG will also continue to generate strong operating cash flows throughout the year.
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated income statement | ||
| For the quarter ended June 30 | ||
| In thousands of US Dollars | 2016 | 2015 |
| Unaudited | Unaudited | |
| Continuing operations | ||
| Revenue | 248,349 | 257,443 |
| Cost of sales | 194,593 | 212,830 |
| Gross profit | 53,756 | 44,613 |
| Selling, general and administrative expenses | 34,762 | 32,863 |
| Restructuring expense | 454 | 1,965 |
| Environmental | – | (2,286) |
| Other income, net | (427) | (51) |
| Operating profit | 18,967 | 12,122 |
| Finance income | (179) | (134) |
| Finance expense | 2,423 | 5,324 |
| Foreign exchange loss (gain) | 1,082 | (1,289) |
| Net finance costs | 3,326 | 3,901 |
| Share of (loss) profit of associates and joint ventures | (14) | 122 |
| Profit before income tax | 15,627 | 8,343 |
| Income tax expense | 2,802 | 4,091 |
| Profit for the period | 12,825 | 4,252 |
| Attributable to: | ||
| Shareholders of the Company | 13,447 | 3,808 |
| Non-controlling interests | (622) | 444 |
| Profit for the period | 12,825 | 4,252 |
| Earnings per share | ||
| Basic earnings per share | 0.48 | 0.14 |
| Diluted earnings per share | 0.48 | 0.14 |
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated income statement | ||
| For the six months ended June 30 | ||
| In thousands of US Dollars | 2016 | 2015 |
| Unaudited | Unaudited | |
| Continuing operations | ||
| Revenue | 485,748 | 514,434 |
| Cost of sales | 387,701 | 426,519 |
| Gross profit | 98,047 | 87,915 |
| Selling, general and administrative expenses | 66,060 | 63,006 |
| Restructuring expense | 522 | 3,659 |
| Environmental | – | (2,286) |
| Other income, net | (435) | (139) |
| Operating profit | 31,900 | 23,675 |
| Finance income | (294) | (472) |
| Finance expense | 4,513 | 8,996 |
| Foreign exchange loss (gain) | 936 | (1,117) |
| Net finance costs | 5,155 | 7,407 |
| Share of profit of associates and joint ventures | 1,436 | 197 |
| Profit before income tax | 28,181 | 16,465 |
| Income tax expense | 3,085 | 9,556 |
| Profit for the period | 25,096 | 6,909 |
| Attributable to: | ||
| Shareholders of the Company | 25,421 | 6,484 |
| Non-controlling interests | (325) | 425 |
| Profit for the period | 25,096 | 6,909 |
| Earnings per share | ||
| Basic earnings per share | 0.91 | 0.23 |
| Diluted earnings per share | 0.90 | 0.23 |
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated statement of financial position | ||
| In thousands of US Dollars | June 30, 2016 Unaudited | December 31, 2015 |
| Assets | ||
| Property, plant and equipment | 211,897 | 215,833 |
| Goodwill | 23,141 | 18,676 |
| Intangible assets | 10,522 | 10,246 |
| Investments in associates and joint ventures | – | 2,230 |
| Other investments | 15,000 | 14,000 |
| Deferred tax assets | 32,037 | 31,551 |
| Restricted cash | 2,548 | 2,527 |
| Other assets | 21,429 | 19,883 |
| Total non-current assets | 316,574 | 314,946 |
| Inventories | 131,422 | 126,389 |
| Trade and other receivables | 143,174 | 124,270 |
| Derivative financial instruments | 3,099 | 978 |
| Other assets | 31,660 | 27,648 |
| Assets held for sale | 2,431 | 673 |
| Cash and cash equivalents | 125,075 | 127,778 |
| Total current assets | 436,861 | 407,736 |
| Total assets | 753,435 | 722,682 |
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated statement of financial position | ||
| (continued) | ||
| In thousands of US Dollars | June 30, 2016 Unaudited | December 31, 2015 |
| Equity | ||
| Issued capital | 760 | 745 |
| Share premium | 389,387 | 382,978 |
| Treasury shares | (1,716) | – |
| Other reserves | (64,166) | (49,500) |
| Retained earnings (deficit) | (182,660) | (205,662) |
| Equity attributable to shareholders of the Company | 141,605 | 128,561 |
| Non-controlling interests | 24,758 | 25,006 |
| Total equity | 166,363 | 153,567 |
| Liabilities | ||
| Loans and borrowings | 118,262 | 112,217 |
| Employee benefits | 136,704 | 137,853 |
| Provisions | 29,807 | 29,617 |
| Deferred revenue | 6,131 | 13,539 |
| Government grants | 460 | 536 |
| Other liabilities | 14,171 | 8,821 |
| Derivative financial instruments | 1,895 | 5,642 |
| Deferred tax liabilities | 11,286 | 11,691 |
| Total non-current liabilities | 318,716 | 319,916 |
| Loans and borrowings | 2,945 | 3,222 |
| Short term bank debt | 10,044 | 11,304 |
| Government grants | 101 | 99 |
| Liabilities associated with assets held for sale | 1,087 | 423 |
| Other liabilities | 43,927 | 42,872 |
| Trade and other payables | 129,441 | 108,019 |
| Derivative financial instruments | 4,288 | 8,379 |
| Advance payments | 41,454 | 44,184 |
| Deferred revenue | 14,294 | 16,124 |
| Current taxes payable | 6,031 | 3,093 |
| Provisions | 14,744 | 11,480 |
| Total current liabilities | 268,356 | 249,199 |
| Total liabilities | 587,072 | 569,115 |
| Total equity and liabilities | 753,435 | 722,682 |
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated statement of cash flows | ||
| For the six months ended June 30 |
||
| In thousands of US Dollars | 2016 | 2015 |
| Unaudited | Unaudited | |
| Cash flows from operating activities | ||
| Profit for the year | 25,096 | 6,909 |
| Adjustments to reconcile net profit to net cash flows: | ||
| Non-cash: | ||
| Income tax expense | 3,085 | 9,556 |
| Depreciation and amortization | 14,838 | 14,292 |
| Net finance costs | 5,155 | 7,407 |
| Share of profit of associates and joint ventures | (1,436) | (197) |
| Gain on sale or disposal of property, plant and equipment | (80) | (156) |
| Equity-settled share-based payment transactions | 914 | 2,788 |
| Movement in provisions, pensions and government grants | (15,735) | (896) |
| Working capital and deferred revenue adjustments | (5,006) | (15,524) |
| Cash flows from operating activities | 26,831 | 24,179 |
| Finance costs paid, net | (3,162) | (6,946) |
| Income tax paid, net | (3,674) | (2,172) |
| Net cash flows from operating activities | 19,995 | 15,061 |
| Cash flows used in investing activities | ||
| Proceeds from sale of property, plant and equipment | 368 | 931 |
| Proceeds from sale of subsidiaries (net of cash divested of $35 and $1,347, respectively) | 675 | (550) |
| Acquisition of property, plant and equipment and intangibles | (14,389) | (7,040) |
| Acquisition of subsidiaries (net of cash acquired of $35 in 2016) | (4,961) | – |
| Acquisition of other non-current investments | (1,000) | – |
| Change in restricted cash | 19 | 437 |
| Other | 28 | 26 |
| Net cash flows used in investing activities | (19,260) | (6,196) |
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated statement of cash flows | ||
| (continued) | ||
| For the six months ended June 30 | ||
| In thousands of US Dollars | 2016 | 2015 |
| Unaudited | Unaudited | |
| Cash flows (used in) from financing activities | ||
| Proceeds from issuance of debt | 1,573 | 177,272 |
| Payment of transaction costs related to debt issuance | – | (4,371) |
| Repayment of borrowings | – | (184,871) |
| Change in non-controlling interests | – | 37,530 |
| Repurchase of common stock | (1,785) | – |
| Dividends paid | (3,503) | – |
| Other | 1 | (132) |
| Net cash flows (used in) from financing activities | (3,714) | 25,428 |
| Net (decrease) increase in cash and cash equivalents | (2,979) | 34,293 |
| Cash and cash equivalents at January 1 | 127,778 | 108,029 |
| Effect of exchange rate fluctuations on cash held | 276 | (5,199) |
| Cash and cash equivalents at June 30 | 125,075 | 137,123 |
About AMG
AMG is a global critical materials company at the forefront of CO2 reduction trends. AMG produces highly engineered specialty metals and mineral products and provides related vacuum furnace systems and services to the transportation, infrastructure, energy, and specialty metals & chemicals end markets.
AMG Critical Materials produces aluminum master alloys and powders, titanium alloys and coatings, ferrovanadium, natural graphite, chromium metal, antimony, tantalum, niobium and silicon metal. AMG Engineering designs, engineers, and produces advanced vacuum furnace systems and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,000 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, the United States, China, Mexico, Brazil and Sri Lanka, and has sales and customer service offices in Russia and Japan (www.amg-nv.com).
For further information, please contact:
AMG Advanced Metallurgical Group N.V. +1 610 293 5804
Steve Daniels
Senior Vice President
sdaniels@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.