Amsterdam, 12 January 2021 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) announces that AMG Brasil S.A. (“AMG Brazil”) has entered into an Exclusive Cooperation Agreement (“ECA”) with one of its major customers for lithium concentrates. The ECA provides for AMG Brazil to supply 200,000 DMT over a 5-year supply term, which will be obtained from an expansion (targeting 40,000 DMT per annum) of AMG Brazil’s existing lithium concentrate plant. The ECA includes an Advanced Payment for lithium concentrate which will fund AMG Brazil’s investment in the expansion. Sales prices under the agreement are indexed to the published market price of lithium carbonate with a minimum price.
“AMG Brazil’s existing lithium concentrate plant is producing at its nameplate capacity, and its production costs are in line with our prior projections. Consequently, we take this opportunity to expand our capacity and further build our relationships in the lithium supply chain,” said Heinz Schimmelbusch, CEO of AMG.
“This Cooperation Agreement and associated expansion represents AMG Brazil’s continuing commitment to invest and grow its presence in the Minas Gerais state of Brazil,” said Fabiano Costa, CEO of AMG Brazil.
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
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 Clean Energy Materials combines our recycling and mining operations producing materials for infrastructure and energy storage solutions while reducing the CO2 footprint of both suppliers and customers. Clean Energy Materials spans the vanadium, lithium, and tantalum value chains. AMG Critical Materials Technologies combines our leading vacuum furnace technology line with high-purity materials serving global leaders in the aerospace sector. AMG Critical Minerals consists of our mineral processing operations in antimony, graphite and silicon metal.
With approximately 3,000 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the United States, China, Mexico, Brazil, India, Sri Lanka, and Mozambique, 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. +1 610 975 4979 Michele Fischer mfischer@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.
Amsterdam, 30 November 2020 (Regulated Information) — The Saudi Arabian Oil Company (Saudi Aramco), Shell & AMG Recycling B.V. signed a memorandum of understanding (MOU) to evaluate the feasibility of creating a venture in support of Saudi Arabia’s (“The Kingdom”) vision to maximize value from its vast natural resources. The Kingdom is becoming a globally important region for the supply and demand of vanadium, and desires to enable the development of a world class vanadium recycling industry. In support of this initiative, Shell & AMG Recycling B.V., along with Shell Catalysts & Technologies, will explore the feasibility of building a catalyst manufacturing and recycling “supercenter” in The Kingdom.
This “supercenter” will enable Saudi Aramco to refine its crudes in an environmentally sustainable manner through the manufacturing of fresh residue upgrading catalysts required to convert heavy oil fractions into valuable products and recycling the resulting spent catalysts and gasification ash which are otherwise hazardous wastes. The “supercenter” will have the ability to make significant contributions toward the circular economy by bringing state-of-the-art fresh catalyst and recycling technologies to The Kingdom, enabling the realization of renewable energy and GHG emission reduction goals in the region.
An MOU related to the spent catalyst and gasification ash recycling project was exchanged among Mohammed A. Al-Shammary, Vice President, Procurement and Supply Chain Management of Saudi Aramco, and Andrew Crowe, Vice President and Country Chairman of Shell Saudi Arabia, on behalf of Andy Gosse, President of Shell Catalysts & Technologies; and Dr. Heinz C. Schimmelbusch, Chairman & CEO of AMG.
“AMG is privileged to be a partner in this ambitious project to build a vanadium recycling industry in The Kingdom. The concept is to turn oil refinery waste into a domestic resource for the production of vanadium, a critical alloy that improves the quality of infrastructure steel. The project advances the goals of a circular economy and is essential in achieving the societal benefits of reducing global CO2 emissions. In addition, the vanadium produced by the project can be used for grid-stabilization batteries which will facilitate a more efficient use of renewable energy and in turn accelerate the fulfillment of The Kingdom’s CO2 reduction goals,” said Heinz C. Schimmelbusch.
“Shell is excited to continue our long history of collaborating with Saudi Aramco and bringing market leading technologies to The Kingdom,” said Andy Gosse, adding that “as the world continues its energy transition journey, these value-added investment opportunities will contribute towards maximising the benefits from the Kingdom’s natural resources and support The Kingdom’s ambitions towards lowering GHG emissions. These are critical elements as Saudi Aramco looks to maximize return from bottom of the barrel conversion and its oil to chemicals initiatives while importantly, supporting IKTVA’s goals of capturing value that produces long-term tangible benefits for The Kingdom.”
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
About Saudi Arabian Oil Company (Saudi Aramco): Aramco is a global integrated energy and chemicals company. We are driven by the core belief that energy is opportunity. From producing approximately one in every eight barrels of the world’s oil supply to developing new energy technologies, our global team is dedicated to creating impact in all that we do. We focus on making our resources more dependable, more sustainable and more useful. This helps promote stability and long-term growth around the world. www.aramco.com Media Relations: International.media@aramco.com l Aramco
About Shell & AMG Recycling B.V. Shell & AMG Recycling B.V. brings together the innovative technology and operating experience of Shell and AMG to address refiners’ waste management challenges. In addition, refiners will benefit by creating value from their waste streams.
About Shell Catalysts & Technologies The companies that comprise Shell Catalysts & Technologies, all of which are Shell’s wholly owned subsidiaries, provide technical services and licensed technologies. Shell Catalysts & Technologies also offers a market-leading catalyst portfolio with a specific focus on providing innovative refinery, petrochemical and environmental catalyst solutions. www.shell.com/CT
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; 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, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, and has sales and customer service offices in Russia and Japan (www.amg-nv.com).
For further information, please contact:
Mohamed Al-Zumaia General Manager Shell Overseas Services Ltd – Saudi Arabia Fax: +966115118923 Cell: +966 56 0599996 Mohammed.Alzomaia@shell.com
Hassan Almarashi Head Media Relations Middle East & North Africa Shell EP International Ltd Tel: +9714 705 5783 Cell: +97156 226 0924 Hassan.Almarashi@shell.com
Michele Fischer Vice President Investor Relations AMG Advanced Metallurgical Group N.V. +1 610 975 4979 mfischer@amg-nv.com
Cautionary note The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this press release “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Royal Dutch Shell plc and subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this press release refer to entities over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.
This press release contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”, “ambition’, ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this press release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2019 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward looking statements contained in this press release and should be considered by the reader. Each forward-looking statement speaks only as of the date of this press release, November 30, 2020. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this press release.
We may have used certain terms, such as resources, in this press release that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov.
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.
As of today, we have 13 active confirmed coronavirus cases globally. AMG has not experienced any coronavirus related fatalities, and our current cases have not resulted in a facility closure or operational interruption. AMG continues to implement preventive measures such as practicing social distancing, remote working when possible, and restrictions on travel to protect the health and safety of our employees.
Strategic Highlights
The Company will change its organizational structure effective January 1, 2021. This change will result in three reporting segments: AMG Clean Energy Materials (“CEM”), AMG Critical Materials Technologies (“CMT”) and AMG Critical Minerals (“CMI”).
The construction of AMG’s second ferrovanadium plant in Zanesville, Ohio is proceeding as planned. As of September 30, 2020, AMG has committed $184 million in construction and engineering contracts for the project.
AMG continued basic engineering for its lithium hydroxide refinery project in Sachsen-Anhalt, Germany and a final investment decision is presently expected in early 2021.
Shell & AMG Recycling B.V. signed a memorandum of understanding (MOU) with Shandong Yulong Petrochemical Co., Ltd. to enter into exclusive arrangements to evaluate the potential for construction and operation of a spent catalyst recycling facility in Yantai, China.
Financial Highlights
AMG Engineering’s order intake in the first 9 months of 2020 was $177 million, a 5% increase from $169 million in the first 9 months of 2019.
AMG’s liquidity as of September 30, 2020, was $376 million, with $206 million of unrestricted cash and $170 million of revolving credit availability.
EBITDA was $14.1 million in the third quarter of 2020, a 42% decrease from $24.4 million in the third quarter of 2019. COVID-19 had a negative $23 million impact in the third quarter of 2020 which is explained in more detail on page 3.
AMG reduced SG&A by 16% in the third quarter of 2020 to $29.6 million, compared to $35.1 million in the third quarter of 2019, due to lower personnel costs and ongoing cost reduction initiatives.
Cash from operating activities on a year to date basis was $8.3 million, an increase of $17.2 million over the same period in 2019.
Amsterdam, 28 October 2020 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) reported third quarter 2020 revenue of $197.7 million, a 27% decrease from $269.9 million in the third quarter of 2019. EBITDA for the third quarter of 2020 was $14.1 million, a 42% decrease from $24.4 million in the third quarter of 2019, largely due to pandemic-induced lower volumes and prices versus the third quarter of last year. EBIT decreased to $3.1 million in the third quarter of 2020 from $13.9 million in the third quarter of 2019.
Revenue dropped 27% in the third quarter of 2020, driven by pandemic-related impacts across AMG’s entire portfolio. AMG Critical Materials achieved an EBITDA of $9.4 million, a 7% increase from the third quarter of 2019, due to select volume increases and cost reduction efforts across the segment. AMG Technologies achieved an EBITDA of $4.7 million in the third quarter of 2020, a 70% decline from the third quarter of 2019. The decline was primarily driven by reduced aerospace activity leading to project execution delays and volume reductions, as well as lower profitability associated with metal price declines for the Titanium Alloys and Coatings business.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, “Out of over 3,000 AMG employees at 33 sites in 15 countries, AMG has 13 active confirmed coronavirus cases globally. AMG’s priority continues to be the health and safety of our employees.
“In these unprecedented times, we believe it is imperative to preserve a strong liquidity position. The current global pandemic continued to significantly impact our financial results in the third quarter with dramatically lower volumes in our aerospace exposed businesses, compounding the historically low prices AMG is experiencing across our portfolio. Our ongoing focus is on our comprehensive programs to reduce operating costs, SG&A, working capital, and limit all non-essential capital expenditures. We are implementing an 8% workforce reduction, or 250 positions, and we have 285 full time equivalent employees on furlough or Kurzarbeit. As a result of these ongoing efforts, our liquidity position is $376 million as of September 30, 2020.
“It is important to note that AMG Engineering’s order intake in the first 9 months of 2020 increased 5% from $169 million in 2019 to $177 million in 2020. This increase is due to the end-market diversity within AMG Engineering’s product portfolio.
“We continue to execute our key strategic programs: the construction of the plant in Zanesville, Ohio, which will essentially double our recycling capacity for refinery residues, is proceeding as planned, utilizing the funds raised from our municipal bond. Basic engineering of the new lithium hydroxide refinery in Germany continues and a final investment decision is presently expected in early 2021. Shell & AMG Recycling B.V. continues to pursue refinery residue recycling opportunities globally with a focus on the Middle East and China, including the signed memorandum of understanding (MOU) earlier this week with Shandong Yulong Petrochemical Co., Ltd. to enter into exclusive arrangements to evaluate the potential for construction and operation of a spent catalyst recycling facility in Yantai, China.
“In addition, we are pleased to announce a change in the organizational structure from January 1, 2021 and segmental realignment, which will provide investors increased transparency in the way we will manage our business and highlight our capital allocation strategy. AMG Clean Energy Materials will be comprised of the Vanadium, Lithium and Tantalum business units. AMG Critical Materials Technologies will be comprised of the Engineering, Titanium Alloys and Chrome Metal business units. AMG Critical Minerals will be comprised of the Graphite, Silicon, and Antimony business units.
“AMG Clean Energy Materials combines our recycling and mining operations producing materials for infrastructure and energy storage solutions while reducing the CO2 footprint of both suppliers and customers. Clean Energy Materials spans the vanadium, lithium, and tantalum value chains, and in lithium we will move further downstream into lithium hydroxide production. AMG Critical Materials Technologies combines our leading vacuum furnace technology line with high-purity materials serving global leaders in the aerospace sector. AMG Critical Minerals consists of our mineral processing operations in antimony, graphite and silicon metal.”
AMG
·Clean Energy
·Critical Minerals
·Critical Materials
Materials
Technologies
·Vanadium
·Antimony
·Engineering
·Tantalum
·Silicon
·Titanium Alloys
·Lithium
·Graphite
·Chrome Metal
COVID-19 Effect on AMG’s Business
EBITDA was significantly lower during the quarter due to temporary pandemic-related interruptions to our business. As such, we are providing a summary of the estimated impact of the pandemic on our operations during the third quarter. Our estimated COVID-19 EBITDA impact is approximately $23 million for the third quarter. This has been estimated based on a bottom-up analysis of our business units and a detailed comparison to the Company’s financial plan prior to the pandemic.
AMG Critical Materials’ pandemic-related impacts continued from the second quarter into the third, but we saw increased volumes being sold to our customers in four of seven of our business units. Prices continue to be affected by high inventories across global supply chains, particularly in our vanadium and chrome businesses.
AMG Technologies’ pandemic-related impacts continued to be driven by the decreased and postponed volumes from our aerospace customers, but we also experienced difficulty finalizing vacuum furnace orders and servicing our customers with replacement parts due to global travel restrictions. These effects were offset by an improved performance from our Heat Treatment Services business, which experienced higher demand as a result of the rapidly recovering automotive sector.
Key Figures
In 000’s US dollars
Q3 ‘20
Q3 ‘19
Change
Revenue
$197,740
$269,873
(27%)
Gross profit
20,849
24,907
(16%)
Gross margin
10.5%
9.2%
Operating loss
(8,687)
(10,621)
18%
Operating margin
(4.4%)
(3.9%)
Net loss attributable to shareholders
(12,775)
(17,775)
28%
EPS – Fully diluted
(0.45)
(0.60)
25%
EBIT (1)
3,097
13,917
(78%)
EBITDA (2)
14,143
24,396
(42%)
EBITDA margin
7.2%
9.0%
Cash used in operating activities
(8,393)
(4,852)
(73%)
Note:
EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring, asset impairment, inventory cost adjustments, environmental provisions, exceptional legal expenses, equity-settled share-based payments, strategic expenses and includes foreign currency gains or losses.
EBITDA is defined as EBIT adjusted for depreciation and amortization.
Operational Review
AMG Critical Materials
Q3 ‘20
Q3 ‘19
Change
Revenue
$117,708
$165,227
(29%)
Gross profit (loss)
8,223
(1,317)
N/A
Gross profit excluding exceptional items
13,896
20,426
(32%)
Operating loss
(7,330)
(20,887)
65%
EBITDA
9,398
8,803
7%
AMG Critical Materials’ revenue in the third quarter decreased by $47.5 million, or 29%, to $117.7 million, driven largely by lower average prices across six of the seven business units during the quarter, partially offset by higher sales volumes of ferrovanadium, lithium concentrate, tantalum, graphite and silicon.
Gross profit in the third quarter increased by $9.5 million to $8.2 million. The increase was primarily driven by a non-cash expense in the prior year related to a vanadium inventory adjustment as a result of lower vanadium prices.
SG&A expenses in the third quarter of 2020 were $15.6 million, $4.0 million lower than the third quarter 2019, primarily due to lower personnel costs, lower professional fees, and cost reduction efforts across the business.
The third quarter 2020 EBITDA margin was 8%, compared to 5% in the same period in the prior year, due to cost reduction efforts as noted above.
AMG Technologies
Q3 ‘20
Q3 ‘19
Change
Revenue
$80,032
$104,646
(24%)
Gross profit
12,626
26,224
(52%)
Gross profit excluding exceptional items
12,691
26,623
(52%)
Operating (loss) profit
(1,357)
10,266
N/A
EBITDA
4,745
15,593
(70%)
Order backlog increased slightly versus June 30, 2020, resulting in a level of $217.7 million as of September 30, 2020, as the Company signed $40.9 million in new orders during the third quarter of 2020. This represents a 0.7x book to bill ratio. The quarter benefited from strong orders of induction melting and arc remelting furnaces for specialty steel producers.
AMG Technologies’ third quarter 2020 revenue decreased due to reduced aerospace activity leading to order postponements and volume reductions, as well as lower profitability associated with metal price declines for the Titanium Alloys and Coatings business. Consequently, third quarter 2020 gross profit decreased by $13.6 million, or 52%, to $12.6 million.
SG&A expenses decreased to $14.0 million in the third quarter of 2020, $1.5 million lower than the same period in 2019 due to lower personnel costs, lower professional fees, and ongoing cost reduction efforts across the business.
AMG Technologies’ third quarter EBITDA decreased by 70%, or $10.8 million, to $4.7 million from $15.6 million in the third quarter of 2019 due to lower profitability related to the challenging economic environment as outlined above.
Financial Review
AMG recorded an income tax expense of $0.1 million in the third quarter of 2020, compared to an expense of $1.5 million in the same period in 2019. This decreased tax expense was mainly driven by a quarter-over-quarter decrease of $2.7 million in non-cash tax expense due to movements in the Brazilian real. Movements in the Brazilian real exchange rate impact the valuation of the Company’s net deferred tax assets. The devaluation of the real during the third quarter of 2020 resulted in an additional non-cash tax expense of $1.7 million, compared to an expense of $4.4 million in the same period in 2019.
AMG made tax payments of $10.7 million in the third quarter of 2020, compared to tax payments of $7.2 million in the same period in 2019. The current quarter payments were a result of international COVID-19 tax measures which enabled AMG to delay most of its tax payments from the first half of 2020 to the third quarter.
Exceptional Items
AMG’s third quarter 2020 gross profit of $20.8 million includes exceptional items, which are not included in the calculation of EBITDA.
A summary of exceptional items included in gross profit in the third quarters of 2020 and 2019 are below:
Exceptional items included in gross profit
Q3 ‘20
Q3 ‘19
Change
Gross profit
$20,849
$24,907
(16%)
Inventory cost adjustment
4,867
21,112
(77%)
Restructuring expense
528
732
(28%)
Asset impairment expense
–
298
N/A
Strategic project expense
343
–
N/A
Gross profit excluding exceptional items
26,587
47,049
(43%)
As a result of decreases in metal prices versus the second quarter of 2020, AMG had a $4.9 million exceptional non-cash expense for inventory cost adjustments during the third quarter which has been adjusted in EBITDA. The Company is in the ramp-up phase for three significant strategic expansion projects, including AMG Vanadium’s expansion project, the joint venture with Shell, and the lithium expansion in Germany, which incurred project expenses during the quarter but are not yet operational. AMG is adjusting EBITDA for these exceptional charges.
Liquidity
September 30, 2020
December 31, 2019
Change
Senior secured debt
$365,148
$366,682
–
Cash & equivalents
206,080
226,218
(9%)
Senior secured net debt
159,068
140,464
13%
Other debt
17,619
12,144
45%
Net debt excluding municipal bond
176,687
152,608
16%
Municipal bond debt
319,753
319,911
–
Restricted cash
241,145
309,581
(22%)
Net debt
255,295
162,938
57%
AMG had a net debt position of $255.3 million as of September 30, 2020. This increase was mainly due to the significant investment in growth initiatives during the quarter, especially the vanadium expansion.
Cash used in operating activities of ($8.4) million in the third quarter of 2020 decreased by $3.5 million compared to the same period in 2019, primarily due to lower profitability and higher tax payments due to COVID-19 tax measures noted previously.
Capital expenditures, including capitalized borrowing costs, increased to $38.2 million in the third quarter of 2020 compared to $13.3 million in the same period in 2019. Capital spending is largely attributable to AMG Vanadium’s expansion project.
As of September 30, 2020, AMG had $206 million of unrestricted cash and equivalents and total liquidity of $376 million.
Net Finance Costs
AMG’s third quarter 2020 net finance costs decreased to $4.5 million from $5.9 million in the third quarter of 2019. Additionally, AMG capitalized $3.7 million of borrowing costs in the third quarter of 2020 primarily driven by interest associated with the Company’s tax-exempt municipal bond supporting the vanadium expansion in Ohio.
SG&A
AMG’s third quarter 2020 SG&A expenses were $29.6 million compared to $35.1 million in the third quarter of 2019, due to continued cost reduction efforts across the business as detailed earlier.
Outlook
AMG’s first and most important priority is to ensure the health and safety of our employees.
We are focused on three priorities:
preserving our strong liquidity position;
reducing costs and improving our productivity to maintain our low-cost position and prepare the Company for an economic upturn;
driving long-term value creation by executing our transformational strategic projects in vanadium recycling and our lithium downstream expansion.
We believe second quarter EBITDA was the low point and we expect to continue to progress our EBITDA growth in 2021.
Segmental Realignment
AMG’s pro forma segmental information for AMG Clean Energy Materials, AMG Critical Materials Technologies, and AMG Critical Minerals for 2020 is shown below:
AMG Clean Energy Materials
Q1 ‘20
Q2 ‘20
Q3 ‘20
Revenue
69,219
53,054
56,396
Gross profit (loss)
4,307
1,818
(135)
Operating loss
(5,654)
(5,481)
(8,269)
EBITDA
(1,048)
1,279
3,268
AMG Critical Materials Technologies
Q1 ‘20
Q2 ‘20
Q3 ‘20
Revenue
151,311
106,648
89,177
Gross profit
28,564
12,582
12,342
Operating profit (loss)
9,695
(2,403)
(3,827)
EBITDA
16,570
2,829
4,313
AMG Critical Minerals
Q1 ‘20
Q2 ‘20
Q3 ‘20
Revenue
57,760
47,908
52,167
Gross profit
10,289
6,141
8,642
Operating profit
4,285
1,194
3,409
EBITDA
6,807
3,648
6,562
Net loss to EBITDA reconciliation
Q3 ‘20
Q3 ‘19
Net loss
($13,644)
($18,021)
Income tax benefit
32
1,541
Net finance cost*
5,431
6,276
Equity-settled share-based payment transactions
3,212
1,363
Restructuring expense
528
732
Inventory cost adjustment
4,867
21,112
Asset impairment expense
–
298
Strategic project expense
1,995
–
Others
676
616
EBIT
3,097
13,917
Depreciation and amortization
11,046
10,479
EBITDA
14,143
24,396
*Excludes foreign exchange income.
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Income Statement
For the quarter ended September 30
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Continuing operations
Revenue
197,740
269,873
Cost of sales
176,891
244,966
Gross profit
20,849
24,907
Selling, general and administrative expenses
29,619
35,067
Environmental expense
–
491
Other income
(83)
(30)
Net other operating (income) expense
(83)
461
Operating loss
(8,687)
(10,621)
Finance income
(1,155)
(706)
Finance cost
5,651
6,565
Net finance cost
4,496
5,859
Share of loss of associates
(429)
–
Loss before income tax
(13,612)
(16,480)
Income tax expense
32
1,541
Loss for the period
(13,644)
(18,021)
Loss attributable to:
Shareholders of the Company
(12,775)
(17,775)
Non-controlling interests
(869)
(246)
Loss for the period
(13,644)
(18,021)
Loss per share
Basic loss per share
(0.45)
(0.60)
Diluted loss per share
(0.45)
(0.60)
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Income Statement
For the nine months ended September 30
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Continuing operations
Revenue
683,640
920,008
Cost of sales
599,090
832,140
Gross profit
84,550
87,868
Selling, general and administrative expenses
91,715
106,242
Environmental expense
55
491
Other income
(169)
(155)
Net other operating (income) expense
(114)
336
Operating loss
(7,051)
(18,710)
Finance income
(2,446)
(3,066)
Finance cost
18,679
24,916
Net finance cost
16,233
21,850
Share of loss of associates
(429)
–
Loss before income tax
(23,713)
(40,560)
Income tax expense (benefit)
16,134
(6,057)
Loss for the period
(39,847)
(34,503)
Loss attributable to:
Shareholders of the Company
(38,853)
(34,044)
Non-controlling interests
(994)
(459)
Loss for the period
(39,847)
(34,503)
Loss per share
Loss earnings per share
(1.37)
(1.14)
Loss earnings per share
(1.37)
(1.14)
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Financial Position
In thousands of US dollars
September 30, 2020 Unaudited
December 31, 2019
Assets
Property, plant and equipment
500,736
429,993
Goodwill and other intangible assets
42,314
41,923
Derivative financial instruments
485
922
Other investments
22,914
23,565
Deferred tax assets
55,544
60,945
Restricted cash
241,145
309,581
Other assets
7,341
11,072
Total non-current assets
870,479
878,001
Inventories
167,198
204,152
Derivative financial instruments
2,396
2,693
Trade and other receivables
107,376
119,052
Other assets
44,400
33,860
Current tax assets
2,477
7,980
Cash and cash equivalents
206,080
226,218
Total current assets
529,927
593,955
Total assets
1,400,406
1,471,956
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Financial Position
(continued)
In thousands of US dollars
September 30, 2020 Unaudited
December 31, 2019
Equity
Issued capital
831
831
Share premium
489,546
489,546
Treasury shares
(80,584)
(83,880)
Other reserves
(124,854)
(116,358)
Retained earnings (deficit)
(177,857)
(129,626)
Equity attributable to shareholders of the Company
107,082
160,513
Non-controlling interests
24,809
23,893
Total equity
131,891
184,406
Liabilities Loans and borrowings
671,799
669,497
Lease liabilities
44,511
46,490
Employee benefits
184,237
175,870
Provisions
14,641
28,984
Other liabilities
7,947
3,629
Derivative financial instruments
4,268
4,289
Deferred tax liabilities
7,330
4,300
Total non-current liabilities
934,733
933,059
Loans and borrowings
23,221
21,740
Lease liabilities
4,285
4,227
Short-term bank debt
7,500
7,500
Other liabilities
60,897
61,479
Trade and other payables
162,470
157,108
Derivative financial instruments
13,481
4,037
Advance payments
30,465
57,650
Current tax liability
6,568
18,299
Provisions
24,895
22,451
Total current liabilities
333,782
354,491
Total liabilities
1,268,515
1,287,550
Total equity and liabilities
1,400,406
1,471,956
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Cash Flows
For the nine months ended September 30
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Cash from (used in) operating activities
Loss for the period
(39,847)
(34,503)
Adjustments to reconcile net loss to net cash flows:
Non-cash:
Income tax expense (benefit)
16,134
(6,057)
Depreciation and amortization
32,181
30,645
Asset impairments
98
5,522
Net finance cost
16,233
21,850
Loss (gain) on sale or disposal of property, plant and equipment
248
(96)
Equity-settled share-based payment transactions
5,956
4,092
Movement in provisions, pensions, and government grants
(7,468)
(5,630)
Working capital and deferred revenue adjustments
8,242
10,875
Cash generated from operating activities
31,777
26,698
Finance costs paid, net
(14,261)
(18,361)
Income tax paid
(9,255)
(17,281)
Net cash from (used in) operating activities
8,261
(8,944)
Cash used in investing activities
Proceeds from sale of property, plant and equipment
48
305
Acquisition of property, plant and equipment and intangibles
(77,042)
(38,422)
Investments in associates and joint ventures
(1,000)
–
Change in restricted cash
68,436
(314,671)
Interest received on restricted cash
1,107
1,486
Capitalized borrowing cost
(15,134)
–
Other
25
–
Net cash used in investing activities
(23,560)
(351,302)
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Cash Flows
(continued)
For the nine months ended September 30
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Cash (used in) from financing activities
Proceeds from issuance of debt
7,684
324,996
Payment of transaction costs related to the issuance of debt
–
(4,981)
Repayment of borrowings
(2,997)
(2,728)
Proceeds from issuance of common shares
–
3,100
Net repurchase of common shares
(638)
(89,881)
Dividends paid
(9,513)
(16,703)
Payment of lease liabilities
(3,308)
(2,876)
Contributions by non-controlling interests
557
–
Net cash (used in) from financing activities
(8,215)
210,927
Net decrease in cash and cash equivalents
(23,514)
(149,319)
Cash and cash equivalents at January 1
226,218
381,900
Effect of exchange rate fluctuations on cash held
3,376
(3,551)
Cash and cash equivalents at September 30
206,080
229,030
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; 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, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, 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. +1 610 975 4979 Michele Fischer mfischer@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.
Amsterdam, 26 October 2020 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) is pleased to announce that Shell & AMG Recycling B.V. signed a memorandum of understanding (MOU) today with Shandong Yulong Petrochemical Co., Ltd. to enter into exclusive arrangements to evaluate the potential for construction and operation of a spent catalyst recycling facility in Yantai, China.
The MOU will allow Shandong Yulong Petrochemical Co., Ltd and Shell & AMG Recycling B.V. to explore the feasibility of building a world class facility to reclaim valuable metals by recycling spent residue upgrading catalysts generated by refineries in China. Residue upgrading catalysts help refineries upgrade the bottom of the oil barrel into more valuable products, including generation of petrochemicals feedstocks. Such a facility would help maximize the benefits from China’s natural resources while addressing the need to provide environmentally responsible management of spent residue upgrading catalysts.
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
About Shell & AMG Recycling B.V.
Shell & AMG Recycling BV brings together the innovative technology and operating experience of Shell and AMG to address refiners’ waste management challenges. In addition, they will benefit by creating value from a refinery waste stream.
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; designs, engineers, and produces advanced vacuum furnace systems; and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,100 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, and has sales and customer service offices in Russia and Japan (www.amg-nv.com).
For further information, please contact:
Michele Fischer Vice President Investor Relations AMG Advanced Metallurgical Group N.V. +1 610 975 4979 mfischer@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.
Amsterdam, 28 July 2020 (Regulated Information)— AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) declares an interim dividend of €0.10 per ordinary share, reduced from €0.20 in the prior year.
The interim dividend of €0.10 per ordinary share, in respect of the period from January 1, 2020 to June 30, 2020, is payable on August 13, 2020 to shareholders of record as of August 4, 2020. The ex-dividend date will be August 3, 2020. Dutch withholding tax will be deducted from the dividend at a rate of 15%.
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; designs, engineers, and produces advanced vacuum furnace systems; and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,100 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, 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. +1 610 975 4979 Michele Fischer Vice President Investor Relations mfischer@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.
As of today, we have 4 active confirmed coronavirus cases globally. These cases have not resulted in a facility closure or operational interruption. To protect the health and safety of its employees, AMG continues to implement preventive measures such as practicing social distancing, remote working when possible, and restrictions on travel.
All of our production facilities are operating.
Strategic Highlights
AMG has committed $166 million as of June 30, 2020 in construction and engineering contracts for investment in a second ferrovanadium plant in Zanesville, Ohio and the project remains on schedule.
AMG continued basic engineering for its lithium project in Zeitz, Germany and a final investment decision is planned in due course.
Shell & AMG Recycling B.V. is operating and continues to pursue refinery residue recycling opportunities globally.
Financial Highlights
AMG’s liquidity as of June 30, 2020 was $390 million, with $220 million of unrestricted cash and $170 million of revolving credit availability.
Cash from operating activities was $20.3 million in the second quarter of 2020, a $31.4 million increase over the same period in 2019.
Free cash flow(1) was a robust $11.6 million in the second quarter of 2020.
EBITDA was $7.8 million in the second quarter of 2020, a 67% decrease from $23.8 million in the second quarter of 2019. COVID-19 had a negative $18 million impact in the second quarter of 2020 which is explained in more detail on pages 2 and 3.
SG&A declined 20% in the second quarter of 2020 to $27.2 million, compared to $33.8 million in the second quarter of 2019, due to lower personnel costs and ongoing cost reduction initiatives.
AMG declares an interim dividend of €0.10 per ordinary share, reduced from €0.20 in the prior year, to be paid in the third quarter of 2020.
Note: (1) Free cash flow is defined as cash flows from operating activities less cash flows used in investing activities.
Amsterdam, 28 July 2020 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) reported second quarter 2020 revenue of $207.6 million, a 32% decrease from $303.6 million in the second quarter of 2019. EBITDA for the second quarter of 2020 was $7.8 million, a 67% decrease from $23.8 million in the second quarter of 2019, largely due to pandemic-induced lower volumes and prices versus the second quarter of last year. EBIT decreased to ($2.9) million in the second quarter of 2020 from $13.7 million in the second quarter of 2019.
Revenue dropped 32% in the second quarter of 2020, driven by pandemic-related impacts across AMG’s entire portfolio. AMG Technologies achieved an EBITDA of $2.2 million in the second quarter of 2020, an 81% decline from the second quarter of 2019. The decline was primarily driven by reduced aerospace activity leading to order postponements and volume reductions, as well as lower profitability associated with metal price declines for the Titanium Alloys and Coatings business. AMG Critical Materials achieved an EBITDA of $5.5 million, a 55% decrease from the second quarter of 2019, due to weak volumes and pricing reflecting the general economic downturn.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, “Out of our 3,124 total AMG employees at 33 sites in 15 countries, AMG has 4 active confirmed coronavirus cases globally.
“In these unprecedented times our priority is to preserve a strong liquidity position. Our liquidity position is $390 million and is higher than last quarter. Operating cash flow is strong and substantially surpasses operating cash flow in the second quarter of 2019. We are embarking on comprehensive programs to reduce operating costs, SG&A, working capital, and freezing all non-essential capital expenditures. The current global pandemic significantly impacted our financial results with dramatically lower volumes, especially in our aerospace sector, compounding the historically low prices AMG is experiencing across our portfolio.
“We continue to progress our key strategic programs: the construction of the plant in Zanesville, Ohio, which will essentially double our recycling capacity for refinery residues, is proceeding as planned, utilizing the funds raised from our municipal bond. Basic engineering of the new lithium hydroxide production facility in Germany continues and a final investment decision is planned in due course. Shell & AMG Recycling B.V. continues to pursue refinery residue recycling opportunities globally.”
COVID-19 Effect on AMG’s Business
EBITDA was significantly lower during the quarter as a result of temporary pandemic-related interruptions to our business. As such, we are providing a summary of the estimated impact of the pandemic on our operations during the second quarter. Our estimated COVID-19 EBITDA impact is approximately $18 million for the second quarter. This has been estimated based on a bottom-up analysis of our business units and a detailed comparison to the Company’s financial plan prior to the pandemic.
AMG Critical Materials’ pandemic-related impacts were due to a confluence of events in our various end-use markets. In particular, we saw decreased and postponed volumes from our aerospace and automotive customers, and we faced pandemic-related shipping issues which increased costs for our business. In addition, US steel production volumes were significantly below previous downturns, which negatively impacted vanadium price.
AMG Technologies’ pandemic-related impacts were mostly driven by decreased and postponed volumes from our aerospace customers, but we also experienced difficulty finalizing vacuum furnace orders due to global travel restrictions. Our Heat Treatment Service operations were impacted by the temporary closure of certain of our customer’s plants.
Restructuring Programs
AMG is executing an initial restructuring program which is expected to reduce operating costs by $15 million per annum. This program will be complemented by further cost cutting actions, but currently we expect to achieve the full $15 million run-rate cost savings by the end of 2021. As part of this initial program, in addition to headcount reductions, we analyzed our operational costs in each facility and took measures to extract savings from our suppliers, increase recycling of off-spec material and increase production efficiency at every plant. In addition to this substantial reduction in operating cost, AMG has taken advantage of government supported furlough and short work (“Kurzarbeit”) programs, and in the second quarter we temporarily reduced our headcount by approximately 500 full time equivalent employees. We have also reduced professional fees and research and development costs and cut back on SG&A expenses across the company.
Key Figures
In 000’s US dollars
Q2 ‘20
Q2 ‘19
Change
Revenue
$207,610
$303,612
(32%)
Gross profit (loss)
20,541
(4,159)
N/A
Gross margin
9.9%
(1.4%)
Operating loss
(6,690)
(37,885)
N/A
Operating margin
(3.2%)
(12.5%)
Net loss attributable to shareholders
(12,510)
(31,096)
N/A
EPS – Fully diluted
(0.44)
(1.02)
N/A
EBIT (1)
(2,901)
13,660
N/A
EBITDA (2)
7,756
23,791
(67%)
EBITDA margin
3.7%
7.8%
Cash from (used in) operating activities
20,333
(11,027)
N/A
Note:
EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring, asset impairment, inventory cost adjustments, environmental provisions, exceptional legal expenses, equity-settled share-based payments, strategic expenses and includes foreign currency gains or losses.
EBITDA is defined as EBIT adjusted for depreciation and amortization.
Operational Review
AMG Critical Materials
Q2 ‘20
Q2 ‘19
Change
Revenue
$127,422
$198,512
(36%)
Gross profit (loss)
9,715
(25,189)
N/A
Gross profit excluding exceptional items
12,167
22,564
(46%)
Operating loss
(4,708)
(43,029)
N/A
EBITDA
5,537
12,385
(55%)
AMG Critical Materials’ revenue in the second quarter decreased by $71.1 million, or 36%, to $127.4 million, driven largely by lower average prices across all seven business units during the quarter, partially offset by higher sales volumes of ferrovanadium and lithium concentrate.
Gross profit in the second quarter increased by $34.9 million to $9.7 million. The increase was primarily driven by a non-cash expense in the prior year related to a vanadium inventory adjustment as a result of lower vanadium prices.
SG&A expenses in the second quarter of 2020 were $14.4 million, $3.5 million lower than the second quarter 2019, primarily due to lower personnel costs, lower professional fees, and cost reduction efforts across the business.
The second quarter 2020 EBITDA margin was 4% due to lower profitability in the quarter as noted above.
AMG Technologies
Q2 ‘20
Q2 ‘19
Change
Revenue
$80,188
$105,100
(24%)
Gross profit
10,826
21,030
(49%)
Gross profit excluding exceptional items
11,084
23,441
(53%)
Operating (loss) profit
(1,982)
5,144
N/A
EBITDA
2,219
11,406
(81%)
Order backlog decreased 10% versus March 31, 2020, resulting in a level of $216.9 million as of June 30, 2020, as the Company signed $32.0 million in new orders during the second quarter of 2020. This represents a 0.6x book to bill ratio. This lower book to bill ratio was a result of decreased activity in the aerospace market, partially offset by strong orders of heat treatment and remelting furnaces.
AMG Technologies’ second quarter 2020 revenue decreased due to lower prices and volumes driven by slowdowns in both the aerospace and automotive sectors as a result of the pandemic. Consequently, second quarter 2020 gross profit decreased by $10.2 million, or 49%, to $10.8 million.
SG&A expenses decreased to $12.8 million in the second quarter of 2020, $3.1 million lower than the same period in 2019 due to lower personnel costs, lower professional fees, and ongoing cost reduction efforts across the business.
AMG Technologies’ second quarter EBITDA decreased by 81%, or $9.2 million, to $2.2 million from $11.4 million in the second quarter of 2019 due to lower profitability related to the challenging economic environment as outlined above.
Financial Review
Tax
AMG recorded an income tax benefit of $0.4 million in the second quarter of 2020, compared to a benefit of $13.5 million in the same period in 2019. This differential is mainly due to higher pre-tax income versus the prior year’s second quarter. However, the company continued to recognize a net tax benefit due to local operating losses. Movements in the Brazilian real exchange rate impact the valuation of the Company’s net deferred tax assets. The devaluation of the real during the second quarter of 2020 resulted in an additional non-cash tax expense of $2.1 million, compared to a benefit of $1.2 million in the same period in 2019.
AMG received tax refunds of $2.4 million in the second quarter of 2020, compared to tax payments of $6.3 million in the same period in 2019. The current quarter benefited from tax refunds from 2019 as well as the extensive relief due to international COVID-19 tax measures which enabled AMG to delay most of its tax payments during the quarter.
Exceptional Items
AMG’s second quarter 2020 gross profit of $23.3 million includes exceptional items, which are not included in the calculation of EBITDA.
A summary of exceptional items included in gross profit in the second quarters of 2020 and 2019 are below:
Exceptional items included in gross profit
Q2 ‘20
Q2 ‘19
Change
Gross profit (loss)
$20,541
($4,159)
N/A
Inventory cost adjustment
1,093
44,796
(98%)
Restructuring expense
370
144
157%
Asset impairment expense
81
5,224
(98%)
Strategic project expense
1,166
–
N/A
Gross profit excluding exceptional items
23,251
46,005
(49%)
As a result of a decrease in metal prices versus the first quarter of 2020, AMG had a $1.1 million exceptional non-cash expense for inventory cost adjustments during the second quarter which has been adjusted in EBITDA. The Company is in the ramp-up phase for three significant strategic expansion projects, including AMG Vanadium’s expansion project, the joint venture with Shell, and the lithium expansion in Germany, which incurred $1.2 million of project expenses during the quarter but are not yet operational. AMG is adjusting EBITDA for these exceptional charges.
Liquidity
June 30, 2020
December 31, 2019
Change
Senior secured debt
$365,657
$366,682
–
Cash & equivalents
220,311
226,218
(3%)
Senior secured net debt
145,346
140,464
3%
Other debt
16,464
12,144
36%
Net debt excluding municipal bond
161,810
152,608
6%
Municipal bond debt
319,807
319,911
–
Restricted cash
272,327
309,581
(12%)
Net debt
209,290
162,938
28%
AMG had a net debt position of $209.3 million as of June 30, 2020. This increase was mainly due to the significant investment in growth initiatives during the quarter, especially the vanadium expansion.
Cash from operating activities of $20.3 million in the second quarter of 2020 increased by $31.4 million compared to the same period in 2019, primarily due to operational efficiency and cash preservation management in 2020 to ensure ongoing financial health and stability.
Capital expenditures, including capitalized borrowing costs, increased to $30.9 million in the second quarter of 2020 compared to $12.4 million in the same period in 2019. Capital spending in the second quarter of 2020 included $3.6 million of maintenance capital. The remaining $27.3 million of capital spending is largely attributable to AMG Vanadium’s expansion project.
As of June 30, 2020, AMG had $220 million of unrestricted cash and equivalents and total liquidity of $390 million.
Net Finance Costs
AMG’s second quarter 2020 net finance costs decreased to $6.3 million from $6.8 million in the second quarter of 2019. Additionally, AMG capitalized $3.7 million of borrowing costs in the second quarter of 2020 driven by interest associated with the Company’s tax-exempt municipal bond supporting the vanadium expansion in Ohio.
SG&A
AMG’s second quarter 2020 SG&A expenses were $27.2 million compared to $33.8 million in the second quarter of 2019, due to continued cost reduction efforts across the business as detailed earlier.
Outlook
AMG’s first and most important priority is to ensure the health and safety of our employees. Additionally, we are acutely focused on the financial health of the company and are dedicated to preserving our strong liquidity position. While maintaining a strong balance sheet, we continue to drive long-term value creation through our transformational strategic projects in vanadium recycling and in our lithium downstream expansion.
Given the results in the first half of the year, the full year EBITDA is unlikely to reach the level of 2019.
Net loss to EBITDA reconciliation
Q2 ‘20
Q2 ‘19
Net loss
($12,606)
($31,185)
Income tax benefit
(413)
(13,474)
Net finance cost*
5,802
6,578
Equity-settled share-based payment transactions
1,254
1,611
Restructuring expense
370
144
Inventory cost adjustment
1,093
44,796
Asset impairment expense
81
5,224
Strategic project expense
1,166
–
Others
352
(34)
EBIT
(2,901)
13,660
Depreciation and amortization
10,657
10,131
EBITDA
7,756
23,791
*Excludes foreign exchange expense.
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Income Statement
For the quarter ended June 30
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Continuing operations
Revenue
207,610
303,612
Cost of sales
187,069
307,771
Gross profit (loss)
20,541
(4,159)
Selling, general and administrative expenses
27,209
33,818
Net other operating expense (income)
22
(92)
Operating loss
(6,690)
(37,885)
Finance income
(419)
(1,389)
Finance cost
6,748
8,163
Net finance cost
6,329
6,774
Loss before income tax
(13,019)
(44,659)
Income tax benefit
(413)
(13,474)
Loss for the period
(12,606)
(31,185)
Loss attributable to:
Shareholders of the Company
(12,510)
(31,096)
Non-controlling interests
(96)
(89)
Loss for the period
(12,606)
(31,185)
Loss per share
Basic loss per share
(0.44)
(1.02)
Diluted loss per share
(0.44)
(1.02)
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Income Statement
For the six months ended June 30
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Continuing operations
Revenue
485,900
650,135
Cost of sales
422,199
587,174
Gross profit
63,701
62,961
Selling, general and administrative expenses
62,096
71,175
Net other operating income
31
125
Operating profit (loss)
1,636
(8,089)
Finance income
(1,291)
(2,360)
Finance cost
13,028
18,351
Net finance cost
11,737
15,991
Loss before income tax
(10,101)
(24,080)
Income tax expense (benefit)
16,102
(7,598)
Loss for the period
(26,203)
(16,482)
Loss attributable to:
Shareholders of the Company
(26,078)
(16,269)
Non-controlling interests
(125)
(213)
Loss for the period
(26,203)
(16,482)
Loss per share
Loss earnings per share
(0.92)
(0.54)
Loss earnings per share
(0.92)
(0.54)
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Financial Position
In thousands of US dollars
June 30, 2020 Unaudited
December 31, 2019
Assets
Property, plant and equipment
466,570
429,993
Goodwill and other intangible assets
41,265
41,923
Derivative financial instruments
19
922
Other investments
23,074
23,565
Deferred tax assets
53,605
60,945
Restricted cash
272,327
309,581
Other assets
7,953
11,072
Total non-current assets
864,813
878,001
Inventories
178,219
204,152
Derivative financial instruments
295
2,693
Trade and other receivables
106,264
119,052
Other assets
43,157
33,860
Current tax assets
3,452
7,980
Cash and cash equivalents
220,311
226,218
Total current assets
551,698
593,955
Total assets
1,416,511
1,471,956
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Financial Position
(continued)
In thousands of US dollars
June 30, 2020 Unaudited
December 31, 2019
Equity
Issued capital
831
831
Share premium
489,546
489,546
Treasury shares
(80,584)
(83,880)
Other reserves
(133,325)
(116,358)
Retained earnings (deficit)
(163,690)
(129,626)
Equity attributable to shareholders of the Company
112,778
160,513
Non-controlling interests
23,936
23,893
Total equity
136,714
184,406
Liabilities Loans and borrowings
664,403
669,497
Lease liabilities
43,672
46,490
Employee benefits
175,972
175,870
Provisions
14,749
28,984
Other liabilities
7,479
3,629
Derivative financial instruments
5,218
4,289
Deferred tax liabilities
5,885
4,300
Total non-current liabilities
917,378
933,059
Loans and borrowings
29,873
21,740
Lease liabilities
4,177
4,227
Short-term bank debt
7,652
7,500
Other liabilities
61,129
61,479
Trade and other payables
159,497
157,108
Derivative financial instruments
16,233
4,037
Advance payments
38,194
57,650
Current tax liability
18,497
18,299
Provisions
27,167
22,451
Total current liabilities
362,419
354,491
Total liabilities
1,279,797
1,287,550
Total equity and liabilities
1,416,511
1,471,956
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
2020
2019
Unaudited
Unaudited
Cash from (used in) operating activities
Loss for the period
(26,203)
(16,482)
Adjustments to reconcile net loss to net cash flows:
Non-cash:
Income tax expense (benefit)
16,102
(7,598)
Depreciation and amortization
21,135
20,166
Asset impairments
98
5,224
Net finance cost
11,737
15,991
Loss (gain) on sale or disposal of property, plant and equipment
114
(102)
Equity-settled share-based payment transactions
2,744
2,729
Movement in provisions, pensions, and government grants
(6,432)
(4,168)
Working capital and deferred revenue adjustments
4,724
3,018
Cash generated from operating activities
24,019
18,778
Finance costs paid, net
(8,826)
(12,752)
Income tax received (paid), net
1,461
(10,118)
Net cash from (used in) operating activities
16,654
(4,092)
Cash used in investing activities
Proceeds from sale of property, plant and equipment
6
295
Acquisition of property, plant and equipment and intangibles
(46,480)
(25,111)
Investments in associates and joint ventures
(1,000)
–
Change in restricted cash
37,254
808
Capitalized borrowing cost
(6,350)
–
Other
3
8
Net cash used in investing activities
(16,567)
(24,000)
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
2020
2019
Unaudited
Unaudited
Cash used in financing activities
Proceeds from issuance of debt
6,370
–
Repayment of borrowings
(2,281)
(1,750)
Proceeds from issuance of common shares
–
3,100
Net repurchase of common shares
(638)
(71,033)
Dividends paid
(6,167)
(10,335)
Payment of lease liabilities
(2,167)
(1,914)
Contributions by non-controlling interests
368
–
Net cash used in financing activities
(4,515)
(81,932)
Net decrease in cash and cash equivalents
(4,428)
(110,024)
Cash and cash equivalents at January 1
226,218
381,900
Effect of exchange rate fluctuations on cash held
(1,479)
(144)
Cash and cash equivalents at June 30
220,311
271,732
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; designs, engineers, and produces advanced vacuum furnace systems; and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,100 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, 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. +1 610 975 4979 Michele Fischer mfischer@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.
Amsterdam, 6 May 2020 (Regulated Information)— AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) is pleased to announce that during the Annual General Meeting, held on May 6, 2020, AMG’s shareholders approved the payment of a dividend of €0.40 per ordinary share over the financial year 2019. The interim dividend of €0.20, paid on August 15, 2019, was deducted from the amount distributed to shareholders. The final dividend per ordinary share therefore amounts to €0.20.
Payment of the final dividend will be completed on May 14, 2020, to shareholders of record on May 11, 2020. The ex-dividend date is May 8, 2020. Dutch withholding tax will be deducted from the dividend at a rate of 15%.
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; designs, engineers, and produces advanced vacuum furnace systems; and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,200 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, 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. +1 610 975 4979 Michele Fischer Vice President Investor Relations mfischer@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.
As of today, we are grateful to report that we have no active confirmed coronavirus cases globally. AMG had one of its employees test positive for COVID-19. The employee fully recovered and has since returned to work. This event did not result in a facility closure or operational interruption. To protect the health and safety of its employees, AMG continues to implement preventive measures such as practicing social distancing, remote working when possible, and restrictions on travel.
The majority of our production facilities are operating and our major expansion projects in vanadium and lithium are continuing on schedule.
Strategic Highlights
AMG and Shell Catalysts & Technologies received all regulatory consents necessary for the formation of the Shell and AMG Recycling B.V. joint venture, and has commenced operations.
AMG continued basic engineering for its lithium project in Zeitz, Germany, and in Zanesville, Ohio, AMG has committed $140 million as of March 31, 2020 in construction and engineering contracts for investment in a second ferrovanadium plant.
AMG Engineering successfully completed the installation of the first ceramic matrix composite (“CMC”) vacuum furnace and passed the Final Acceptance Test at its customer’s location; this customer acceptance represents a significant milestone in AMG Engineering’s ongoing new product development program.
In light of ongoing demand uncertainty in the global aerospace market due to the effect of COVID-19, AMG has put the IPO of AMG Technologies on hold.
Financial Highlights
EBITDA(2) was $22.3 million in the first quarter of 2020 as the Company’s segments provided balanced earnings
SG&A declined 7% in the first quarter of 2020 to $34.9 million compared to $37.4 million in the first quarter of 2019 due to lower personnel costs and initial steps on cost reduction
AMG Technologies’ order backlog increased 9% to $242.2 million as of March 31, 2020, compared to $222.6 million as of December 31, 2019
AMG’s liquidity as of March 31, 2020 was $372.2 million and the Company has maintained its final 2019 declared dividend of €0.20 to be paid in the second quarter 2020
Amsterdam, 5 May 2020 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) reported first quarter 2020 revenue of $278.3 million, a 20% decrease from $346.5 million in the first quarter of 2019. EBITDA for the first quarter of 2020 was $22.3 million, a 56% decrease from $50.4 million in the first quarter of 2019, largely due to lower ferrovanadium prices and lower titanium alloy sales versus the first quarter of last year. EBIT decreased 71% to $11.9 million in the first quarter of 2020 from $40.4 million in the first quarter of 2019.
Revenue dropped 20% in the first quarter of 2020, driven by a significant metal price decline across AMG’s entire portfolio. The 56% decrease in EBITDA to $22.3 million was largely due to the Critical Materials segment, which achieved an EBITDA of $9.7 million in the first quarter of 2020. The decline was primarily driven by lower prices for ferrovanadium and chrome metal. AMG Technologies achieved an EBITDA of $12.7 million, a 34% decrease from the first quarter of 2019, due to lower titanium alloy sales and lower profitability associated with metal price declines for the Titanium Alloys and Coatings business.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, “I am pleased to report that out of our 3,200 total AMG employees in 33 sites in 15 countries, AMG has only had one employee test positive for COVID-19. The employee has since fully recovered and has returned to work.
However, as a result of the Coronavirus crisis, some of our production facilities are operating below capacity, reflecting reduced demand levels. Our financial results reflect the “lowest price” environment we are experiencing, and we continue to operate in an austerity mode and focus on things we can control, such as operational efficiency, capital expenditures and overhead costs. This focus on expenditures will help to preserve our solid liquidity position.
Despite our intense focus on cash flow, we continue to progress our key strategic programs: the construction of the plant in Zanesville, Ohio, which will essentially double our recycling capacity for refinery residues, is proceeding as planned, utilizing the funds raised from our municipal bond. Basic engineering of the new lithium hydroxide production facility in Germany is expected to be completed by year end. Shell & AMG Recycling B.V. has started to operate and will pursue refinery residue recycling opportunities globally.
Despite our excellent order intake in 2019 of $249 million and of $104 million in the first quarter of 2020, representing a strong 1.3x book to bill ratio, foreseeable depressed conditions in the aerospace industry has forced us to postpone the pursuit of a public offering of AMG Technologies.”
Key Figures
In 000’s US dollars
Q1 ‘20
Q1 ‘19
Change
Revenue
$278,290
$346,523
(20%)
Gross profit
43,160
67,120
(36%)
Gross margin
15.5%
19.4%
Operating profit
8,326
29,796
(72%)
Operating margin
3.0%
8.6%
Net (loss) income attributable to shareholders
(13,568)
14,827
N/A
EPS – Fully diluted
(0.48)
0.47
N/A
EBIT (1)
11,851
40,388
(71%)
EBITDA (2)
22,329
50,423
(56%)
EBITDA margin
8.0%
14.6%
Cash (used in) from operating activities
(3,679)
6,935
N/A
Note:
EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring, asset impairment, inventory cost adjustments, environmental provisions, exceptional legal expenses, equity-settled share-based payments, strategic expenses and includes foreign currency gains or losses.
EBITDA is defined as EBIT adjusted for depreciation and amortization.
Operational Review
AMG Critical Materials
Q1 ‘20
Q1 ‘19
Change
Revenue
$159,191
$228,591
(30%)
Gross profit
20,646
37,638
(45%)
Gross profit excluding exceptional items
20,043
45,672
(56%)
Operating profit
1,909
16,192
(88%)
EBITDA
9,656
31,152
(69%)
AMG Critical Materials’ revenue in the first quarter decreased by $69.4 million, or 30%, to $159.2 million, driven largely by lower average prices across all seven business units during the quarter, partially offset by higher sales volumes of ferrovanadium, graphite and silicon metal.
Gross profit in the first quarter decreased by $17.0 million to $20.6 million. The reduction in gross profit was primarily driven by decreased profitability in our vanadium business offset by increased profitability in graphite and silicon.
SG&A expenses in the first quarter of 2020 were $18.8 million, $2.7 million lower than the first quarter 2019, primarily due to lower personnel costs, lower professional fees, and initial cost reduction efforts across the business.
The first quarter 2020 EBITDA margin was 6% due to lower profitability in the quarter noted above.
AMG Technologies
Q1 ‘20
Q1 ‘19
Change
Revenue
$119,099
$117,932
1%
Gross profit
22,514
29,482
(24%)
Gross profit excluding exceptional items
23,056
31,278
(26%)
Operating profit
6,417
13,604
(53%)
EBITDA
12,673
19,271
(34%)
Order backlog increased 9% versus December 31, 2019, resulting in a robust level of $242.2 million as of March 31, 2020 as the Company signed $104.4 million in new orders during the first quarter of 2020. This represents a 1.3x book to bill ratio. This higher book to bill ratio was largely driven by strong orders of turbine blade coating and remelting furnaces for the aerospace market.
AMG Technologies’ first quarter 2020 revenue increased due to the completion of Engineering’s first CMC vacuum furnace, which was offset by lower prices and volumes in the Titanium Alloys and Coatings business driven by lower metals prices as well as a decline in volume due to a slowdown in the aerospace sector. As a result, first quarter 2020 gross profit decreased by $7.0 million, or 24%, to $22.5 million, primarily driven by lower results from the Titanium Alloys and Coatings business.
SG&A expenses were essentially flat at $16.1 million in the first quarter, compared to $15.9 million in the same period in 2019 as initial cost reductions were offset by higher insurance costs and professional fees.
AMG Technologies’ first quarter EBITDA decreased by 34%, or $6.6 million, to $12.7 million from $19.3 million in the first quarter of 2019 due to lower profitability of the Titanium Alloys and Coatings business noted above.
Financial Review
Tax
AMG recorded an income tax expense of $16.5 million in the first quarter 2020, compared to $5.9 million in the same period in 2019. The increase was primarily due to significant devaluation of the Brazilian currency. Movements in the Brazilian real exchange rate impact the valuation of the Company’s net deferred tax assets. The devaluation of the real during the first quarter of 2020 resulted in an additional non-cash tax expense of $11.7 million. The appreciation of the real in the first quarter of 2019 resulted in a $1.9 million tax benefit.
AMG paid taxes of $0.9 million in the first quarter 2020, compared to tax payments of $3.9 million in the same period in 2019. The current quarter benefited from tax refunds from 2019 as well as the extensive relief due to international COVID-19 tax measures which enabled AMG to delay most of its of tax payments during the quarter.
Exceptional Items
AMG’s first quarter 2020 gross profit of $43.2 million includes exceptional items, which are not included in the calculation of EBITDA.
A summary of exceptional items included in gross profit in the first quarters of 2020 and 2019 are below:
Exceptional items included in gross profit
Q1 ‘20
Q1 ‘19
Change
Gross profit
$43,160
$67,120
(36%)
Inventory cost (reversal) adjustment
(1,901)
9,883
N/A
Restructuring expense (reversal)
428
(53)
N/A
Asset impairment expense
17
–
N/A
Strategic project expense
1,395
–
N/A
Gross profit excluding exceptional items
43,099
76,950
(44%)
As a result of an improvement in vanadium prices versus the fourth quarter of 2019, AMG had a $1.9 million reversal of an exceptional non-cash charge for vanadium inventory cost adjustments during the first quarter which has been adjusted in EBITDA. The Company is in the ramp-up phase for three significant strategic expansion projects, including the Zanesville vanadium expansion, the vanadium joint venture with Shell, and the lithium expansion in Germany, which incurred $1.4 million of project expenses during the quarter but are not yet operational. AMG is adjusting EBITDA for these exceptional charges.
Liquidity
March 31, 2020
December 31, 2019
Change
Senior secured debt
$366,168
$366,682
–
Cash & equivalents
208,944
226,218
(8%)
Senior secured net debt
157,224
140,464
12%
Other debt
10,784
12,144
(11%)
Net debt excluding municipal bond
168,008
152,608
10%
Municipal bond debt
319,860
319,911
–
Restricted cash
295,495
309,581
(5%)
Net debt
192,373
162,938
18%
AMG had a net debt position of $192.4 million as of March 31, 2020. This increase was mainly due to the significant investment in growth initiatives during the quarter, especially the vanadium expansion.
Cash used in operating activities of ($3.7) million in the first quarter of 2020 decreased by $10.6 million compared to the same period in 2019, primarily due to lower profitability.
Capital expenditures, including capitalized borrowing costs, increased to $21.9 million in the first quarter of 2020 compared to $12.8 million in the same period in 2019. Capital spending in the first quarter of 2020 included $5.5 million of maintenance capital. The remaining $16.4 million of capital spending is attributable to expansion projects at AMG’s vanadium, titanium aluminide, lithium and heat treatment service facilities.
As of March 31, 2020, AMG had $208.9 million of unrestricted cash and equivalents and total liquidity of $372.2 million.
Net Finance Costs
AMG’s first quarter 2020 net finance costs decreased to $5.4 million from $9.2 million in the first quarter of 2019. This decline is mainly driven by lower borrowing rates versus the prior period and favorable foreign exchange movements. Additionally, AMG capitalized $2.8 million of borrowing costs in the first quarter of 2020 driven by interest associated with the Company’s tax-exempt municipal bond supporting the vanadium expansion in Ohio.
SG&A
AMG’s first quarter 2020 SG&A expenses were $34.9 million compared to $37.4 million in the first quarter of 2019, primarily due to lower personnel costs, lower professional fees and initial cost reduction efforts across the business.
Outlook
AMG operates with practiced business resilience and we are acutely focused on safeguarding against the potential for future pandemic-related disruptions. Management continues to drive operational efficiency and manage for cash preservation in 2020 to ensure ongoing financial health and stability.
However, due to the speed with which the COVID-19 situation is developing, there is uncertainty around its ultimate impact; therefore, as previously announced, AMG has decided to withdraw its earnings guidance for 2020. A new target will be announced once the global industrial economy begins to stabilize.
Net (loss) income to EBITDA reconciliation
Q1 ‘20
Q1 ‘19
Net (loss) income
($13,597)
$14,703
Income tax expense
16,515
5,876
Net finance cost*
6,335
8,852
Equity-settled share-based payment transactions
1,490
1,118
Restructuring expense
428
(53)
Inventory cost adjustment
(1,901)
9,883
Strategic project expense
1,395
–
Exceptional legal expense
1,049
–
Others
137
9
EBIT
11,851
40,388
Depreciation and amortization
10,478
10,035
EBITDA
22,329
50,423
*Excludes foreign exchange expense (income).
AMG incurred $1.1 million of non-recurring legal expense related to a dispute with a former customer. This dispute was settled in the first quarter 2020 and will not impact the Company’s financial results going forward.
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Income Statement
For the quarter ended March 31
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Continuing operations
Revenue
278,290
346,523
Cost of sales
235,130
279,403
Gross profit
43,160
67,120
Selling, general and administrative expenses
34,887
37,357
Net other operating income
53
33
Operating profit
8,326
29,796
Finance income
(1,399)
(971)
Finance cost
6,807
10,188
Net finance cost
5,408
9,217
Profit before income tax
2,918
20,579
Income tax expense
16,515
5,876
(Loss) profit for the period
(13,597)
14,703
Attributable to:
Shareholders of the Company
(13,568)
14,827
Non-controlling interests
(29)
(124)
(Loss) profit for the period
(13,597)
14,703
(Loss) earnings per share
Basic (loss) earnings per share
(0.48)
0.48
Diluted (loss) earnings per share
(0.48)
0.47
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Financial Position
In thousands of US dollars
March 31, 2020 Unaudited
December 31, 2019
Assets
Property, plant and equipment
443,861
429,993
Goodwill and other intangible assets
41,305
41,923
Derivative financial instruments
–
922
Other investments
21,932
23,565
Deferred tax assets
51,320
60,945
Restricted cash
295,495
309,581
Other assets
9,389
11,072
Total non-current assets
863,302
878,001
Inventories
174,686
204,152
Derivative financial instruments
313
2,693
Trade and other receivables
144,503
119,052
Other assets
34,128
33,860
Current tax assets
6,756
7,980
Cash and cash equivalents
208,944
226,218
Total current assets
569,330
593,955
Total assets
1,432,632
1,471,956
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Financial Position
(continued)
In thousands of US dollars
March 31, 2020 Unaudited
December 31, 2019
Equity
Issued capital
831
831
Share premium
489,546
489,546
Treasury shares
(80,584)
(83,880)
Other reserves
(138,997)
(116,358)
Retained earnings (deficit)
(146,001)
(129,626)
Equity attributable to shareholders of the Company
124,795
160,513
Non-controlling interests
23,275
23,893
Total equity
148,070
184,406
Liabilities Loans and borrowings
667,850
669,497
Lease liabilities
44,929
46,490
Employee benefits
172,657
175,870
Provisions
24,525
28,984
Other liabilities
7,692
3,629
Derivative financial instruments
7,959
4,289
Deferred tax liabilities
5,293
4,300
Total non-current liabilities
930,905
933,059
Loans and borrowings
21,462
21,740
Lease liabilities
4,227
4,227
Short-term bank debt
7,500
7,500
Other liabilities
59,356
61,479
Trade and other payables
166,344
157,108
Derivative financial instruments
17,589
4,037
Advance payments
36,023
57,650
Current tax liability
19,194
18,299
Provisions
21,962
22,451
Total current liabilities
353,657
354,491
Total liabilities
1,284,562
1,287,550
Total equity and liabilities
1,432,632
1,471,956
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Cash Flows
For the quarter ended March 31
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Cash (used) from operating activities
(Loss) profit for the period
(13,597)
14,703
Adjustments to reconcile net (loss) profit to net cash flows:
Non-cash:
Income tax expense
16,515
5,876
Depreciation and amortization
10,478
10,035
Asset impairments
17
–
Net finance cost
5,408
9,217
Loss (gain) on sale or disposal of property, plant and equipment
112
(168)
Equity-settled share-based payment transactions
1,490
1,118
Movement in provisions, pensions, and government grants
(2,761)
1,708
Working capital and deferred revenue adjustments
(15,468)
(26,017)
Cash generated from operating activities
2,194
16,472
Finance costs paid, net
(4,951)
(5,680)
Income tax paid, net
(922)
(3,857)
Net cash (used) from operating activities
(3,679)
6,935
Cash used in investing activities
Proceeds from sale of property, plant and equipment
–
237
Acquisition of property, plant and equipment and intangibles
(15,500)
(12,759)
Change in restricted cash
14,086
334
Capitalized borrowing cost
(6,395)
–
Other
8
–
Net cash used in investing activities
(7,801)
(12,188)
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Cash Flows
(continued)
For the quarter ended March 31
In thousands of US dollars
2020
2019
Unaudited
Unaudited
Cash from used in financing activities
Repayment of borrowings
(1,257)
(875)
Net repurchase of common shares
(592)
(7,351)
Payment of lease liabilities
(1,057)
(936)
Net cash used in financing activities
(2,906)
(9,162)
Net decrease in cash and cash equivalents
(14,386)
(14,415)
Cash and cash equivalents at January 1
226,218
381,900
Effect of exchange rate fluctuations on cash held
(2,888)
(1,189)
Cash and cash equivalents at March 31
208,944
366,296
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; designs, engineers, and produces advanced vacuum furnace systems; and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,200 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, 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. +1 610 975 4979 Michele Fischer mfischer@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.
Amsterdam, 20 April 2020 (Regulated Information)— AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) provides an update on its 2020 earnings target and announces the First Quarter 2020 Earnings Call timing.
Given the difficulty of projecting earnings for the remainder of the year due to COVID-19 effects on our customers, AMG has decided to withdraw its earnings guidance for 2020. A new target will be announced once the global industrial economy begins to stabilize.
AMG’s operations remain robust, and its employee base is healthy, with only one reported case of COVID-19. Nonetheless, given the potential strains on our customer base, predicting demand fluctuations is difficult.
AMG’s balance sheet is sound and the Company enjoys significant liquidity. AMG has approximately $200 million in cash, $170 million of undrawn revolver capacity, and $300 million of cash reserved to finance its ferrovanadium expansion project in Ohio.
First Quarter Earnings Call and Annual General Meeting of Shareholders AMG will release results for its first quarter on Tuesday, May 5, 2020. It will hold a conference call the same day at 2:00 p.m. EDT (8:00 PM CEST) to discuss the results and the impact of the COVID-19 pandemic. In addition, AMG confirms that it will host its Annual General Meeting of Shareholders on May 6, 2020 and has invited shareholders to attend virtually. Details and more information about AMG’s Annual Meeting can be found at AMG’s website (amg-nv.com) which will continue to show any necessary updates up through the date of the Meeting.
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; designs, engineers, and produces advanced vacuum furnace systems; and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,300 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, 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. +1 610 975 4979 Michele Fischer Vice President Investor Relations mfischer@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.
AMG Technologies completed its acquisition of the assets of International Specialty Alloys Division (“ISA”) of Kennametal Inc.; ISA is a leading U.S. producer of titanium master alloys and other binary alloys for the aerospace market located in New Castle, PA
AMG signed a memorandum of understanding (MOU) subject to regulatory approval with the Saudi Arabian General Investment Authority (SAGIA) and Shell Overseas Services Ltd. (Shell) to explore the feasibility of building a world-class spent catalyst recycling facility outside North America
AMG Lithium GmbH commenced basic engineering for a battery grade lithium hydroxide facility in Germany
AMG Vanadium signed a new long-term, multi-year agreement to process and recycle spent catalysts from a major oil refinery operator in North America
Fourth Quarter Financial Highlights
Operating cash flow was $55.5 million in the fourth quarter of 2019, a 10% increase over the same period in 2018
Revenue decreased by 22% to $268.6 million in the fourth quarter of 2019 from $344.4 million in the fourth quarter of 2018
EBITDA(3) was $22.8 million in the fourth quarter of 2019, a 64% decrease compared to 2018
AMG returned over $100 million to shareholders in 2019 through its share repurchase program and dividend payments
Total 2019 dividend proposed of €0.40 per ordinary share, including the interim dividend of €0.20, paid on August 15, 2019
Amsterdam, 26 February 2020 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) reported fourth quarter 2019 revenue of $268.6 million, a 22% decrease from $344.4 million in the fourth quarter of 2018. EBITDA for the fourth quarter of 2019 was $22.8 million, a 64% decrease from $62.8 million in the fourth quarter of 2018. In the fourth quarter of 2019, AMG generated cash from operating activities of $55.5 million, an increase of $4.8 million, or 10%, over the same period in 2018 despite the lower profitability noted above.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, “AMG achieved EBITDA of $23 million in the fourth quarter resulting in total EBITDA of $121 million for 2019. AMG generated cash flows from operations of $56 million in the fourth quarter despite the unprecedented fall in critical materials prices across the AMG portfolio. As a result, AMG ends the year with strong liquidity and the ability to continue to invest in our growth projects.
As we face global macroeconomic challenges throughout our business, we continue to focus on the things we can control. Specifically, we have maintained an industry-leading working capital cycle of 21 days, which is down 17 days, or 45%, from the prior year ending balance. This is accomplished by constant management focus on investment effectiveness and increasing operating efficiency throughout the company. In addition, despite the poor market conditions, our status as a low-cost producer across all nine of AMG’s business units ensured that each one was EBITDA positive throughout 2019.
We have also made significant strategic achievements in the quarter. AMG Technologies completed its acquisition of the assets of International Specialty Alloys from Kennametal Inc. AMG Critical Materials signed an MOU, subject to regulatory approval, with SAGIA and Shell to explore the feasibility of building a spent catalyst recycling facility, based on AMG’s proprietary technology; commenced basic engineering for a battery grade lithium hydroxide facility in Germany; and signed a new long-term, multi-year agreement to process and recycle spent catalysts from a major oil refinery operator in North America.”
Key Figures
In 000’s US dollars
Q4 ‘19
Q4 ‘18
Change
FY ‘19
FY ‘18
Change
Revenue
$268,563
$344,448
(22%)
$1,188,571
$1,310,288
(9%)
Gross profit
30,422
86,341
(65%)
118,290
315,175
(62%)
Gross margin
11.3%
25.1%
10.0%
24.1%
Operating (loss) profit
(7,012)
42,461
N/A
(25,722)
163,261
N/A
Operating margin
(2.6%)
12.3%
(2.2%)
12.5%
Net (loss) income attributable to shareholders
(14,239)
28,980
N/A
(48,283)
94,616
N/A
Adjusted net (loss) income(1)
(5,813)
29,758
N/A
19,805
97,065
(80%)
EPS – Fully diluted
(0.50)
0.92
N/A
(1.64)
2.97
N/A
EBIT (2)
11,450
54,327
(79%)
79,415
184,099
(57%)
EBITDA (3)
22,772
62,788
(64%)
121,382
217,133
(44%)
EBITDA margin
8.5%
18.2%
10.2%
16.6%
Cash from operating activities
55,517
50,675
10%
46,573
97,422
(52%)
Notes:
Adjusted net income is adjusted for inventory cost adjustments and asset impairment expense, net of tax
EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring, asset impairment, inventory cost adjustments, environmental provisions, exceptional legal expenses and equity-settled share-based payments and includes foreign currency gains or losses.
EBITDA is defined as EBIT adjusted for depreciation and amortization.
Operational Review
AMG Critical Materials
Q4 ‘19
Q4 ‘18
Change
FY ‘19
FY ‘18
Change
Revenue
$170,152
$221,477
(23%)
$762,482
$873,440
(13%)
Gross profit
8,211
50,065
(84%)
19,343
198,474
(90%)
Gross profit before non-recurring items
21,653
50,219
(57%)
110,315
198,690
(44%)
Operating (loss) profit
(11,594)
25,923
N/A
(59,318)
114,494
N/A
EBITDA
13,061
41,512
(69%)
65,401
149,650
(56%)
AMG Critical Materials’ revenue in the fourth quarter decreased by $51.3 million, or 23%, to $170.2 million, driven largely by lower average prices across all seven business units during the quarter, partially offset by higher sales volumes of vanadium and chrome metal.
Gross profit before non-recurring items in the fourth quarter decreased by $28.6 million, or 57%, to $21.7 million. The reduction in gross profit was primarily driven by decreased profitability in our vanadium business, exacerbated by lower profitability across all seven business units.
SG&A expenses in the fourth quarter of 2019 increased by $3.7 million, or 23%, compared to the same period in the prior year, primarily due to an exceptional legal expense.
The fourth quarter 2019 EBITDA margin declined to 8% due to the lower price environment experienced in the quarter.
AMG Technologies
Q4 ‘19
Q4 ‘18
Change
FY ‘19
FY ‘18
Change
Revenue
$98,411
$122,971
(20%)
$426,089
$436,848
(2%)
Gross profit
22,211
36,276
(39%)
98,947
116,701
(15%)
Gross profit before non- recurring items
22,209
36,819
(40%)
103,551
121,870
(15%)
Operating profit
4,582
16,538
(72%)
33,596
48,767
(31%)
EBITDA
9,711
21,276
(54%)
55,981
67,483
(17%)
AMG Technologies’ fourth quarter 2019 revenue decreased by $24.6 million, or 20%, to $98.4 million, due to lower heat treatment services sales, lower metal prices impacting our Titanium Alloys and Coatings business, and a $7.5 million customer payment related to the early termination of a customer contract recorded in the fourth quarter of 2018. These declines were offset by higher revenue from after sales services as well as higher sales of vacuum furnaces such as turbine blade coaters and remelting furnaces.
Gross profit before non-recurring items in the fourth quarter decreased $14.6 million, or 40%, to $22.2 million, and gross margin was 23%, compared to 29% in the fourth quarter 2018 due to the revenue effects noted above, in particular the $7.5 million customer payment received in the fourth quarter of 2018.
SG&A expenses decreased by $1.6 million, or 9%, in the fourth quarter of 2019 compared to the fourth quarter of 2018, primarily due to lower variable compensation expense.
AMG Technologies’ fourth quarter EBITDA decreased by 54% to $9.7 million from $21.3 million in the fourth quarter of 2018 due to the decline in gross profit noted above.
Due to strong orders of remelting, turbine blade coating, engineering services and induction furnaces, the Company signed $80.5 million in new orders during the fourth quarter of 2019, representing a strong 1.2x book to bill ratio. Order backlog was $222.6 million as of December 31, 2019, a 10% increase from $202.6 million as of September 30, 2019. On a full year basis, the Company signed $249.4 million in new orders, representing a balanced 1.0x book to bill ratio. In January 2020, the Company’s strong order intake continued, mainly due to turbine blade coater sales, resulting in a robust backlog as of the end of the month.
Financial Review
Tax
AMG recorded an income tax benefit of $5.1 million in 2019 as compared to an expense of $45.0 million in 2018. The tax benefit is due primarily to losses in the United States related to the decline in vanadium profitability and vanadium inventory cost adjustments in the current year.
AMG paid taxes of $24.6 million in 2019, compared to tax payments of $21.3 million in 2018. As a result of the year-over-year volatility in income and the timing of cash tax payments, the present cash tax rate is not indicative of the current year performance as payments in the current year are reflective of the income in 2018 and not 2019. Once earnings have stabilized, we believe that the cash tax rate is the more meaningful metric with regards to AMG’s taxes due to the volatile nature of the company’s deferred tax balances.
Exceptional Items
AMG’s fourth quarter 2019 and full year 2019 gross profit includes exceptional items, which are not included in the calculation of EBITDA.
A summary of exceptional items included in gross profit in the 2019 and 2018 are below:
Exceptional items included in gross profit
Q4 ‘19
Q4 ‘18
Change
FY ‘19
FY ‘18
Change
Gross profit
$30,422
$86,341
(65%)
$118,290
$315,175
(62%)
Inventory cost adjustment
12,001
–
N/A
87,792
–
N/A
Restructuring expense
2,442
564
333%
3,265
2,052
59%
Asset impairment expense
(1,003)
133
N/A
4,519
3,333
36%
Gross profit excluding exceptional items
43,862
87,038
(50%)
213,866
320,560
(33%)
AMG had an $13.4 million exceptional non-cash expense during the fourth quarter of 2019, mainly driven by vanadium metal inventory cost adjustments as a result of the significant decline in price which impacted our inventory cost position and resulted in a non-cash balance sheet adjustment which has been adjusted in EBITDA.
The $2.4 million restructuring expense in the fourth quarter was mainly due to headcount reductions in our Brazilian mining activities and AMG Technologies including reductions at our US heat treatment service center.
Liquidity
December 31, 2019
December 31, 2018
Change
Senior secured debt
$366,682
$368,757
(1%)
Cash & equivalents
226,218
381,900
(41%)
Senior secured net debt (cash)
140,464
(13,143)
N/A
Other debt
12,144
12,687
(4%)
Net debt excluding municipal bond
152,608
(456)
N/A
Municipal bond debt
319,911
–
N/A
Restricted cash
(309,581)
–
N/A
Net debt (cash)
162,938
(456)
N/A
In 2019, AMG maintained a strong balance sheet and adequate sources of liquidity. At December 31, 2019, the Company had $226.2 million in unrestricted cash and cash equivalents and $169.9 million available on its revolving credit facility, as such AMG had $396.1 million of total liquidity as of December 31, 2019. Changes in liquidity during the year were due primarily to AMG returning over $100 million to its shareholders through its dividend and share buyback program as well as investing in long-term expansion projects in lithium, vanadium and AMG Technologies.
Net Finance Costs
AMG’s fourth quarter 2019 net finance costs were $6.1 million compared to $6.9 million in the fourth quarter of 2018, driven by interest expense associated with the outstanding gross debt on AMG’s long-term credit facility. Additionally, AMG capitalized $2.8 million of interest costs in the fourth quarter of 2019 compared to nil in the prior year, driven by interest associated with the Company’s new tax-exempt municipal bond supporting the vanadium expansion in Ohio.
SG&A
AMG’s fourth quarter 2019 SG&A expenses were $37.2 million, an increase of 6% from the same period in the prior year, primarily due to an increase in exceptional legal fees.
Full year 2019 SG&A expenses were $143.5 million, in line with 2018.
Final Dividend Proposed
AMG intends to declare a dividend of €0.40 per ordinary share over the financial year 2019. The interim dividend of €0.20, paid on August 15, 2019, will be deducted from the amount to be distributed to shareholders. The proposed final dividend per ordinary share therefore amounts to €0.20.
A proposal to resolve upon the final dividend distribution will be included on the agenda for the Annual General Meeting to be held on May 6, 2020.
Outlook
It is extremely difficult to provide firm guidance for 2020. Temporary disruptions in the aerospace supply chain resulting from the Boeing 737 MAX issues and the uncertain impact of the coronavirus continue to infuse unpredictable variables into the current market. On the bright side, we note AMG Technologies’ backlog at the end of January 2020 is at its highest level in over a decade. In addition, critical material prices appear to have reached a bottom as early 2020 market pricing is showing signs of improvement from the depressed pricing experienced throughout 2019. Specifically, vanadium pricing is already up over 30% in the early part of 2020.
As a result of all these factors, our target for 2020 is unchanged: we expect to improve profitability relative to 2019.
Net (loss) income to EBITDA reconciliation
Q4 ‘19
Q4 ‘18
FY ‘19
FY ‘18
Net (loss) income
($14,083)
$29,671
($48,586)
$94,781
Income tax expense (benefit)
938
5,849
(5,119)
44,971
Net finance cost*
5,920
6,839
27,626
22,949
Equity-settled share-based payment transactions
1,422
2,889
5,514
7,499
Restructuring expense
2,442
564
3,265
2,052
Inventory cost adjustment
12,001
–
87,792
–
Asset impairment expense
(1,003)
133
4,519
3,333
Environmental provision
234
8,722
725
8,757
Exceptional legal expense
3,133
–
3,133
–
Others
446
(340)
546
(243)
EBIT
11,450
54,327
79,415
184,099
Depreciation and amortization
11,322
8,461
41,967
33,034
EBITDA
22,772
62,788
121,382
217,133
*Excludes foreign exchange expense (income).
Net (loss) income adjusted for non-cash impairments
Q4 ‘19
Q4 ‘18
FY ‘19
FY ‘18
Net (loss) income
($14,083)
$29,671
($48,586)
$94,781
Inventory cost adjustment, net of tax
8,966
–
65,442
–
Asset impairment expense, net of tax
(696)
87
2,949
2,284
Adjusted net (loss) income
(5,813)
29,758
19,805
97,065
AMG Advanced Metallurgical Group N.V.
Consolidated Income Statement
For the quarter ended December 31
In thousands of US dollars
2019
2018
Unaudited
Continuing operations
Revenue
268,563
344,448
Cost of sales
238,141
258,107
Gross profit
30,422
86,341
Selling, general and administrative expenses
37,209
35,131
Environmental expense
234
8,722
Other (income) expense, net
(9)
27
Net other operating expense
225
8,749
Operating (loss) profit
(7,012)
42,461
Finance income
(1,662)
(1,509)
Finance cost
7,795
8,450
Net finance cost
6,133
6,941
(Loss) profit before income tax
(13,145)
35,520
Income tax expense
938
5,849
(Loss) profit for the period
(14,083)
29,671
Attributable to:
Shareholders of the Company
(14,239)
28,980
Non-controlling interests
156
691
(Loss) profit for the period
(14,083)
29,671
(Loss) earnings per share
Basic (loss) earnings per share
(0.50)
0.95
Diluted (loss) earnings per share
(0.50)
0.92
AMG Advanced Metallurgical Group N.V.
Consolidated Income Statement
For the year ended December 31
In thousands of US dollars
2019
2018
Unaudited
Continuing operations
Revenue
1,188,571
1,310,288
Cost of sales
1,070,281
995,113
Gross profit
118,290
315,175
Selling, general and administrative expenses
143,451
143,581
Environmental expense
725
8,757
Other income, net
(164)
(424)
Net other operating expense
561
8,333
Operating (loss) profit
(25,722)
163,261
Finance income
(4,728)
(3,721)
Finance cost
32,711
27,230
Net finance cost
27,983
23,509
(Loss) profit before income tax
(53,705)
139,752
Income tax (benefit) expense
(5,119)
44,971
(Loss) profit for the year
(48,586)
94,781
Attributable to:
Shareholders of the Company
(48,283)
94,616
Non-controlling interests
(303)
165
(Loss) profit for the year
(48,586)
94,781
(Loss) earnings per share
Basic (loss) earnings per share
(1.64)
3.12
Diluted (loss) earnings per share
(1.64)
2.97
AMG Advanced Metallurgical Group N.V.
Consolidated Statement of Financial Position
In thousands of US dollars
December 31, 2019 Unaudited
December 31, 2018
Assets
Property, plant and equipment
429,993
327,951
Goodwill and other intangible assets
41,923
35,130
Derivative financial instruments
922
7,592
Other investments
23,565
21,452
Deferred tax assets
60,945
34,112
Restricted cash
309,581
1,715
Other assets
11,072
11,266
Total non-current assets
878,001
439,218
Inventories
204,152
316,715
Derivative financial instruments
2,693
1,335
Trade and other receivables
119,052
138,530
Other assets
33,860
39,570
Current tax assets
7,980
3,668
Cash and cash equivalents
226,218
381,900
Total current assets
593,955
881,718
Total assets
1,471,956
1,320,936
AMG Advanced Metallurgical Group N.V.
Consolidated Statement of Financial Position
(continued)
In thousands of US dollars
December 31, 2019 Unaudited
December 31, 2018
Equity
Issued capital
831
812
Share premium
489,546
462,891
Treasury shares
(83,880)
(347)
Other reserves
(116,358)
(104,274)
Retained earnings (deficit)
(129,626)
(39,158)
Equity attributable to shareholders of the Company
160,513
319,924
Non-controlling interests
23,893
24,119
Total equity
184,406
344,043
Liabilities Loans and borrowings
669,497
356,997
Lease liabilities *
46,490
–
Employee benefits
175,870
149,217
Provisions
28,984
32,527
Other liabilities
3,629
4,371
Derivative financial instruments
4,289
5,148
Deferred tax liabilities
4,300
7,930
Total non-current liabilities
933,059
556,190
Loans and borrowings
21,740
8,947
Lease liabilities *
4,227
–
Short-term bank debt
7,500
15,500
Other liabilities
61,479
61,120
Trade and other payables
157,108
230,939
Derivative financial instruments
4,037
8,267
Advance payments
57,650
50,210
Current tax liability
18,299
19,675
Provisions
22,451
26,045
Total current liabilities
354,491
420,703
Total liabilities
1,287,550
976,893
Total equity and liabilities
1,471,956
1,320,936
*The Company applied IFRS 16 (lease accounting) for the first time as of January 1, 2019. The Company recognized new assets and liabilities for its operating leases which are primarily comprised of buildings, equipment, machinery and automobiles. Right of use assets are included within property, plant and equipment and classified in the same manner as if the underlying assets were owned by the Company. The lease liabilities are presented as a separate line item on the consolidated statement of financial position. The nature and pattern of expense recognition in relation to these leases has changed. The Company recognizes depreciation on the right of use assets on a straight-line basis over the expected term of the lease. Interest expense related to the lease liabilities are recognized over the expected term of the lease using the effective interest method. Comparative figures have not been adjusted. Assets and liabilities increased per January 1, 2019 by $37 million.
AMG Advanced Metallurgical Group N.V.
Consolidated Statement of Cash Flows
For the year ended December 31
In thousands of US dollars
2019
2018
Unaudited
Cash from operating activities
(Loss) profit for the period
(48,586)
94,781
Adjustments to reconcile net (loss) profit to net cash flows:
Non-cash:
Income tax (benefit) expense
(5,119)
44,971
Depreciation and amortization
41,967
33,034
Asset impairments
4,519
3,333
Net finance cost
27,983
23,509
Gain on sale or disposal of property, plant and equipment
(69)
(720)
Equity-settled share-based payment transactions
5,514
7,499
Movement in provisions, pensions and government grants
(8,053)
3,724
Working capital and deferred revenue adjustments
76,169
(73,107)
Cash generated from operating activities
94,325
137,024
Finance costs paid, net
(23,152)
(18,273)
Income tax paid, net
(24,600)
(21,329)
Net cash from operating activities
46,573
97,422
Cash used in investing activities
Proceeds from sale of property, plant and equipment
421
1,660
Insurance proceeds on property, plant and equipment
–
1,300
Acquisition of property, plant and equipment and intangibles
(79,442)
(73,031)
Acquisitions of subsidiaries
(25,435)
–
Change in restricted cash
(307,866)
(923)
Capitalized borrowing cost
2,437
–
Other
6
(325)
Net cash used in investing activities
(409,879)
(71,319)
AMG Advanced Metallurgical Group N.V.
Consolidated Statement of Cash Flows
(continued)
For the year ended December 31
In thousands of US dollars
2019
2018
Unaudited
Cash from financing activities
Proceeds from issuance of debt
325,093
353,087
Payment of transaction costs related to the issuance of debt
(4,981)
(9,238)
Repayment of borrowings
(3,911)
(155,423)
Proceeds from issuance of common shares
2,915
15,923
Net repurchase of common shares
(89,881)
(9,558)
Dividends paid
(16,703)
(12,092)
Payment of lease liabilities
(3,829)
–
Net cash from financing activities
208,703
182,699
Net (decrease) increase in cash and cash equivalents
(154,603)
208,802
Cash and cash equivalents at January 1
381,900
178,800
Effect of exchange rate fluctuations on cash held
(1,079)
(5,702)
Cash and cash equivalents at December 31
226,218
381,900
This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).
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, ferrovanadium, natural graphite, chromium metal, antimony, lithium, tantalum, niobium and silicon metal. AMG Technologies produces titanium aluminides and titanium alloys for the aerospace market; designs, engineers, and produces advanced vacuum furnace systems; and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,300 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, 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. +1 610 975 4979 Michele Fischer Vice President Investor Relations mfischer@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.