Key Highlights
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EBITDA(2) was $21.2 million in the first quarter 2016, a 4% increase over the same period in 2015
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Net income attributable to shareholders increased to $12.0 million in the first quarter 2016 from $2.7 million in the first quarter 2015
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EPS, on a fully diluted basis, increased to $0.42 in the first quarter 2016, from $0.10 in the same period in 2015
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Annualized return on capital employed increased to 14.7% in the first quarter 2016, as compared to 12.7% in the first quarter 2015
Amsterdam, 4 May 2016 (Regulated Information) — AMG Advanced Metallurgical Group N.V. („AMG“, EURONEXT AMSTERDAM: „AMG“) reported EBITDA for the first quarter 2016 of $21.2 million, a 4% increase from $20.4 million in the first quarter 2015. Net income attributable to shareholders increased to $12.0 million in the first quarter 2016 from $2.7 million in the first quarter 2015.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, „AMG earnings for the first quarter were strong despite continued year-over-year weakness in metal prices. AMG did experience a modest improvement in select metal prices compared to the fourth quarter 2015. AMG’s focus on operational excellence and price risk management has resulted in solid financial results under difficult market conditions.
AMG Engineering achieved EBITDA of $4.6 million during the first quarter 2016, a 49% increase from $3.1 million in the first quarter of 2015. The Engineering division continues to experience strong demand in the areas of plasma remelting furnaces for the aerospace market and induction furnaces for powder metallurgy applications. First quarter 2016 order intake and advanced payments were adversely impacted by the postponement of several orders into the second quarter of 2016.
AMG Critical Materials generated EBITDA of $16.5 million during the first quarter 2016, a 4% decrease compared to the first quarter of 2015. Year-over-year double-digit declines in average quarterly prices for all key products resulted in a 13% reduction in revenues in the first quarter 2016 compared to the first quarter 2015.
Cash flows used in operating activities of $4.3 million in the first quarter 2016 were adversely impacted by an increase in working capital, following low levels at the end of the fourth quarter 2015, and a temporary decrease in advanced payments at AMG Engineering.“
Key Figures
| In 000’s US Dollar | |||
| Q1 ’16 | Q1 ’15 | Change | |
| Revenue | $237,399 | $256,991 | (8%) |
| Gross profit | 44,291 | 43,302 | 2% |
| Gross margin | 18.7% | 16.8% | |
| Operating profit | 12,933 | 11,553 | 12% |
| Operating margin | 5.4% | 4.5% | |
| Net income attributable to shareholders | 11,974 | 2,676 | 347% |
| EPS – Fully diluted | 0.42 | 0.10 | 320% |
| EBIT (1) | 13,815 | 13,207 | 5% |
| EBITDA (2) | 21,189 | 20,388 | 4% |
| EBITDA margin | 8.9% | 7.9% | |
| Cash flows (used in) from operating activities | (4,320) | 3,797 | N/A |
Note:
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EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring and equity-settled share-based payments and includes foreign currency gains or losses.
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EBITDA is defined as EBIT adjusted for depreciation and amortization.
Operational Review
AMG Critical Materials
| Q1 ’16 | Q1 ’15 | Change | |
| Revenue | $176,555 | $202,288 | (13%) |
| Gross profit | * 30,476 | 31,206 | (2%) |
| Operating profit | 10,478 | 10,656 | (2%) |
| EBITDA | 16,545 | 17,273 | (4%) |
* Includes $1.5 million non-cash benefit related to reversal of previously expensed vanadium, nickel and molybdenum inventory adjustments
AMG Critical Materials continues to be impacted by weak metal prices, and as a result, revenue decreased by 13%, to $176.6 million.
Double-digit declines in average quarterly prices for AMG Critical Materials‘ key products negatively affected revenue in the first quarter of 2016 compared to the first quarter of 2015.
Gross profit in the first quarter 2016 benefited from a $1.5 million reversal of previously recorded inventory adjustment expenses, due to improving vanadium, nickel and molybdenum prices in March 2016.
Despite strong sales of vanadium, tantalum and silicon metal in the first quarter, gross profit decreased $0.7 million, or 2%, to $30.5 million, due primarily to lower average vanadium, nickel and molybdenum prices when compared to the first quarter of 2015.
First quarter 2016 EBITDA margin increased to 9.4% from 8.5% in the first quarter 2015.
AMG Engineering
| Q1 ’16 | Q1 ’15 | Change | |
| Revenue | $60,844 | $54,703 | 11% |
| Gross profit | 13,815 | 12,096 | 14% |
| Operating profit | 2,455 | 897 | 174% |
| EBITDA | 4,644 | 3,115 | 49% |
AMG Engineering signed $50.5 million in new orders during the first quarter of 2016, representing a 0.83x book to bill ratio. Order backlog was $135.6 million as of March 31, 2016, a decrease of 4% from December 31, 2015. Order intake was adversely impacted by orders postponed into the second quarter of 2016.
AMG Engineering’s first quarter 2016 revenue increased $6.1 million, or 11%, to $60.8 million, due to strong sales of plasma remelting furnaces for the aerospace market and induction furnaces for powder metallurgy applications.
First quarter 2016 gross margin increased to 23% from 22% in the first quarter of 2015 due to higher revenue, product mix effects and improved project cost management.
EBITDA increased by $1.5 million, to $4.6 million, in the first quarter of 2016, the second highest quarterly EBITDA in eleven quarters, due to higher levels of gross profit.
Financial Review
Tax
AMG recorded an income tax expense of $0.3 million in the first quarter of 2016 as compared to a tax expense of $5.5 million in the same period in 2015. The tax expense in the quarter was positively impacted by the currency effect of the Brazilian Real on deferred taxes.
AMG paid taxes of $1.9 million in the first quarter of 2016 as compared to tax payments of $0.6 million in the same period in 2015. For the first quarter of 2016, AMG’s effective cash tax rate was 15%.
Liquidity
| March 31, 2016 | December 31, 2015 | Change | |
| Total debt | $128,836 | $126,743 | 2% |
| Cash and cash equivalents | 111,618 | 127,778 | (13%) |
| Net debt (cash) | 17,218 | (1,035) | N/A |
AMG had a net debt position of $17.2 million as of March 31, 2016. Net debt and gross debt increased $18.3 million and $2.1 million, respectively, from December 31, 2015.
Cash flows used in operating activities were $4.3 million in the first quarter of 2016 primarily due to an increase in working capital following low levels of working capital at the end of the fourth quarter 2015, and a temporary decline in advanced payments due to timing of AMG Engineering orders.
Cash flow used in investing activities increased to $11.5 million in the first three months of 2016 compared to $5.5 million in the same period in 2015, due to higher levels of capital expenditures and the acquisition of the remaining 50% share of ALD-Holcroft Co. Inc. from AFC-Holcroft LLC.
Capital expenditures increased to $6.9 million in the first quarter of 2016 compared to $3.8 million in the same period in 2015. Capital spending in the first quarter of 2016 included $3.9 million of maintenance capital. The largest expansion capital project was for AMG’s Ancuabe graphite mine project.
Including the $111.6 million of cash, AMG had $254.8 million of total liquidity as of March 31, 2016.
SG&A
AMG’s first quarter 2016 SG&A expenses were $31.3 million compared to $30.1 million in the first quarter of 2015, an increase of 4%. This was primarily due to higher personnel costs.
Outlook
In this challenging market environment, AMG’s management target is to continue to generate strong operating cash flow and maintain 2015 levels of profitability in 2016.
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated income statement | ||
| For the quarter ended March 31 | ||
| In thousands of US Dollars | 2016 | 2015 |
| Unaudited | Unaudited | |
| Continuing operations | ||
| Revenue | 237,399 | 256,991 |
| Cost of sales | 193,108 | 213,689 |
| Gross profit | 44,291 | 43,302 |
| Selling, general and administrative expenses | 31,298 | 30,143 |
| Restructuring expense | 68 | 1,694 |
| Other income, net | (8) | (88) |
| Operating profit | 12,933 | 11,553 |
| Finance income | (115) | (338) |
| Finance expense | 2,090 | 3,672 |
| Foreign exchange (gain) loss | (146) | 172 |
| Net finance costs | 1,829 | 3,506 |
| Share of profit of associates and joint ventures | 1,450 | 75 |
| Profit before income tax | 12,554 | 8,122 |
| Income tax expense | 283 | 5,465 |
| Profit for the period | 12,271 | 2,657 |
| Attributable to: | ||
| Shareholders of the Company | 11,974 | 2,676 |
| Non-controlling interests | 297 | (19) |
| Profit for the period | 12,271 | 2,657 |
| Earnings per share | ||
| Basic earnings per share | 0.43 | 0.10 |
| Diluted earnings per share | 0.42 | 0.10 |
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated statement of financial position | ||
| March 31, | December 31, | |
| In thousands of US Dollars | 2016 | 2015 |
| Unaudited | ||
| Assets | ||
| Property, plant and equipment | 215,126 | 215,833 |
| Goodwill | 23,716 | 18,676 |
| Intangible assets | 10,765 | 10,246 |
| Investments in associates and joint ventures | – | 2,230 |
| Other investments | 14,000 | 14,000 |
| Deferred tax assets | 31,360 | 31,551 |
| Restricted cash | 2,512 | 2,527 |
| Other assets | 20,355 | 19,883 |
| Total non-current assets | 317,834 | 314,946 |
| Inventories | 125,846 | 126,389 |
| Trade and other receivables | 146,062 | 124,270 |
| Derivative financial instruments | 1,293 | 978 |
| Other assets | 30,785 | 27,648 |
| Assets held for sale | 3,495 | 673 |
| Cash and cash equivalents | 111,618 | 127,778 |
| Total current assets | 419,099 | 407,736 |
| Total assets | 736,933 | 722,682 |
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated statement of financial position | ||
| (continued) | ||
| March 31, | December 31, | |
| In thousands of US Dollars | 2016 | 2015 |
| Unaudited | ||
| Equity | ||
| Issued capital | 745 | 745 |
| Share premium | 382,978 | 382,978 |
| Other reserves | (43,406) | (49,500) |
| Retained earnings (deficit) | (194,046) | (205,662) |
| Equity attributable to shareholders of the Company | 146,271 | 128,561 |
| Non-controlling interests | 25,825 | 25,006 |
| Total equity | 172,096 | 153,567 |
| Liabilities | ||
| Loans and borrowings | 115,669 | 112,217 |
| Employee benefits | 142,353 | 137,853 |
| Provisions | 29,951 | 29,617 |
| Deferred revenue | 9,096 | 13,539 |
| Government grants | 527 | 536 |
| Other liabilities | 10,219 | 8,821 |
| Derivative financial instruments | 2,680 | 5,642 |
| Deferred tax liabilities | 12,901 | 11,691 |
| Total non-current liabilities | 323,396 | 319,916 |
| Loans and borrowings | 3,327 | 3,222 |
| Short term bank debt | 9,840 | 11,304 |
| Government grants | 102 | 99 |
| Liabilities associated with assets held for sale | 1,459 | 423 |
| Other liabilities | 44,911 | 42,872 |
| Trade and other payables | 118,826 | 108,019 |
| Derivative financial instruments | 4,728 | 8,379 |
| Advance payments | 27,913 | 44,184 |
| Deferred revenue | 15,889 | 16,124 |
| Current taxes payable | 3,220 | 3,093 |
| Provisions | 11,226 | 11,480 |
| Total current liabilities | 241,441 | 249,199 |
| Total liabilities | 564,837 | 569,115 |
| Total equity and liabilities | 736,933 | 722,682 |
| AMG Advanced Metallurgical Group N.V. | ||
| Condensed interim consolidated statement of cash flows | ||
| For the quarter ended March 31 |
||
| In thousands of US Dollars | 2016 | 2015 |
| Unaudited | Unaudited | |
| Cash flows (used in) from operating activities | ||
| Profit for the year | 12,271 | 2,657 |
| Adjustments to reconcile net profit to net cash flows: | ||
| Non-cash: | ||
| Income tax expense | 283 | 5,465 |
| Depreciation and amortization | 7,374 | 7,181 |
| Net finance costs | 1,829 | 3,506 |
| Share of profit of associates and joint ventures | (1,450) | (75) |
| Loss (gain) on sale or disposal of property, plant and equipment | 171 | (45) |
| Equity-settled share-based payment transactions | 668 | 132 |
| Movement in provisions, pensions and government grants | (23) | 312 |
| Working capital and deferred revenue adjustments | (22,222) | (14,422) |
| Cash flows (used in) from operating activities | (1,099) | 4,711 |
| Finance costs paid, net | (1,301) | (353) |
| Income tax paid, net | (1,920) | (561) |
| Net cash flows (used in) from operating activities | (4,320) | 3,797 |
| Cash flows used in investing activities | ||
| Proceeds from sale of property, plant and equipment | 254 | 151 |
| Proceeds from sale of subsidiaries (net of cash divested of $1,347 in 2015) | – | (550) |
| Acquisition of property, plant and equipment and intangibles | (6,917) | (3,788) |
| Acquisition of subsidiaries (net of cash acquired of $35 in 2016) | (4,961) | – |
| Change in restricted cash | 110 | (1,304) |
| Other | 12 | 11 |
| Net cash flows used in investing activities | (11,502) | (5,480) |
| 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 | 2016 | 2015 |
| Unaudited | Unaudited | |
| Cash flows used in financing activities | ||
| Repayment of borrowings | (1,414) | (1,724) |
| Change in non-controlling interests | – | 1,167 |
| Net cash flows used in financing activities | (1,414) | (557) |
| Net decrease in cash and cash equivalents | (17,236) | (2,240) |
| Cash and cash equivalents at January 1 | 127,778 | 108,029 |
| Effect of exchange rate fluctuations on cash held | 1,076 | (6,474) |
| Cash and cash equivalents at March 31 | 111,618 | 99,315 |
About AMG
AMG is a global critical materials company at the forefront of CO2 reduction trends. AMG produces highly engineered specialty metals and mineral products and provides related vacuum furnace systems and services to the transportation, infrastructure, energy, and specialty metals & chemicals end markets.
AMG Critical Materials produces aluminum master alloys and powders, titanium alloys and coatings, ferrovanadium, natural graphite, chromium metal, antimony, tantalum, niobium and silicon metal. AMG Engineering designs, engineers, and produces advanced vacuum furnace systems and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.
With approximately 3,000 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, the United States, China, Mexico, Brazil and Sri Lanka, and has sales and customer service offices in Russia and Japan (www.amg-nv.com).
For further information, please contact:
AMG Advanced Metallurgical Group N.V. +1 610 293 5804
Steve Daniels
Senior Vice President
sdaniels@amg-nv.com
Disclaimer
Certain statements in this press release are not historical facts and are „forward looking.“ Forward looking statements include statements concerning AMG’s plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans and intentions relating to acquisitions, AMG’s competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, AMG’s business strategy and the trends AMG anticipates in the industries and the political and legal environment in which it operates and other information that is not historical information. When used in this press release, the words „expects,“ „believes,“ „anticipates,“ „plans,“ „may,“ „will,“ „should,“ and similar expressions, and the negatives thereof, are intended to identify forward looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. These forward-looking statements speak only as of the date of this press release. AMG expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in AMG’s expectations with regard thereto or any change in events, conditions, or circumstances on which any forward-looking statement is based.