AMG REPORTS THIRD QUARTER 2012 RESULTS
(Thomson Reuters ONE) -
Key Highlights
* Revenue was $296.9 million in the third quarter 2012, a 17% decrease from
the same period in 2011
* EBITDA(()[1]()) was $21.6 million in the third quarter 2012, a 22% decrease
from the same period in 2011
* EPS on a fully diluted basis was $0.18 in the third quarter 2012, a 38%
decrease from $0.29 in same period in 2011
* The Advanced Materials Division generated revenue of $189.2 million and
EBITDA of $12.1 million in the third quarter 2012
* The Engineering Systems Division generated revenue of $71.1 million and
EBITDA of $5.3 million in the third quarter 2012
* Graphit Kropfmühl generated revenue of $36.5 million and EBITDA of $4.2
million in the third quarter 2012
* As of September 30, 2012, cash on the balance sheet was $111.4 million; net
debt was $198.5 million
Amsterdam, 14 November 2012 (Regulated Information) --- AMG Advanced
Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported third
quarter 2012 revenue of $296.9 million, a 17% decrease from $356.4 million in
the third quarter 2011.
EBITDA decreased 22% to $21.6 million in the third quarter 2012 from $27.7
million in the third quarter 2011. Net profit attributable to shareholders for
the third quarter 2012 was $5.1 million, or $0.18 per fully diluted share, down
from a net profit attributable to shareholders of $8.0 million, or $0.29 per
fully diluted share, in the third quarter 2011.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "In
this environment of slow economic activity we have reorganized our management
structure with a clear focus on improving efficiencies, reducing operating costs
and working capital levels and selective capital expenditures. These actions
have begun to produce results. In the third quarter AMG generated $30 million
of operating cash flow and reduced SG&A by 9% compared to the second quarter
2012."
Key Figures
In 000's US Dollar
Q3'12 Q3'11 Change
Revenue $296,851 $356,415 (17%)
---------------------------------------------------------------------------
Gross profit 47,663 58,688 (19%)
Gross margin 16.1% 16.5%
---------------------------------------------------------------------------
Operating profit 11,199 19,565 (43%)
Operating margin 3.8% 5.5%
Net profit attributable to shareholders
5,064 8,034 (37%)
---------------------------------------------------------------------------
EPS- Fully diluted 0.18 0.29 (38%)
EBIT ((1)) 14,499 20,412 (29%)
EBITDA ((2)) 21,600 27,748 (22%)
EBITDA margin 7.3% 7.8%
---------------------------------------------------------------------------
Note:
1. EBIT is defined as earnings before interest, tax and excludes non-recurring
items
2. EBITDA is defined as earnings before interest, tax, depreciation and
amortization and excludes non-recurring items
Operational Review
Advanced Materials Division
Q3'12 Q3'11 Change
--------------------------------------------------------------------
Revenue $189,161 $226,800 (17%)
Gross profit 26,694 29,603 (10%)
Operating profit 5,551 8,485 (35%)
EBITDA 12,097 12,254 (1%)
Capital expenditures 7,005 6,576 7%
The Advanced Materials Division's third quarter 2012 revenue decreased $37.6
million, or 17%, to $189.2 million. The decrease in revenue was primarily the
result of 33% and 22% decreases in antimony revenue and aluminum products
revenue, respectively, partially offset by a 28% increase in tantalum revenue,
compared to the third quarter 2011.
The third quarter 2012 gross margin improved to 14% from 13% in the third
quarter 2011. The improvement in gross margin was driven by improvements in
product mix for titanium master alloys, ferrovanadium and ferronickel-molybdenum
and an increase in tantalum pricing.
The third quarter 2012 EBITDA was 6% of revenue, and improvement from the 5% of
revenue level achieved in the third quarter 2011. The $0.2 million decrease in
total EBITDA was the result of the $2.9 million decrease in gross profit
slightly offset by a $2.7 million, or 12% decrease in operating expenses. This
decline was the result of a reduction in personnel expenses.
Capital expenditures were $7.0 million for the third quarter 2012, 7% more than
the third quarter 2011. Significant growth capital investments made in the
third quarter included a $2.6 million investment in the expansion of the spent
catalyst recycling facility for ferrovanadium production, and $0.7 million
related to expansion of the Brazilian tantalum mine. Maintenance expenditures
were $1.9 million.
Engineering Systems Division
Q3'12 Q3'11 Change
-------------------------------------------------------------------
Revenue $71,147 $86,280 (18%)
Gross profit 14,755 20,782 (29%)
Operating profit 2,605 6,379 (59%)
EBITDA 5,327 9,270 (43%)
Capital expenditures 1,262 2,569 (51%)
The Engineering Systems Division's third quarter 2012 revenue decreased $15.1
million, or 18%, to $71.1 million. Revenue from casting and sintering furnace
systems increased 47% to $16.7 million and revenue from remelting furnaces,
primarily for the aerospace industry, increased 34% to $15.7 million. These
increases were more than offset by 92% and 51% decreases in solar silicon and
nuclear furnace revenue, respectively, compared to the third quarter 2011.
Order backlog increased 8% to $162.2 million as of September 30, 2012, from
$150.0 million as of June 30, 2012. The division generated order intake of
$79.7 million in the third quarter 2012, which represents a 16% increase
compared to the third quarter 2011 and a 1.12x book to bill ratio. Order intake
for heat treatment systems accounted for 24% of total order intake.
The third quarter 2012 gross margin decreased to 21% from 24% in the third
quarter 2011. Unfavorable product mix and lower revenues, resulting in a
decline in the economies of scale, were the primary drivers of the decrease in
gross margin.
The third quarter 2012 EBITDA decreased $3.9 million, to 7% of revenue. EBITDA
declined from 11% of revenue in the third quarter 2011. The EBITDA decrease was
the result of the $6.0 million decrease in gross profit slightly offset by a
$2.4 million, or 16% decrease in SG&A. The SG&A decline was the result of a
reduction in personnel costs and a slowdown in R&D investment due to current
economic conditions.
Capital expenditures were $1.3 million, 51% less than the third quarter of
2011. Capital investments in the third quarter were primarily maintenance and
expansion capital expenditures for the Heat Treatment Services business.
Graphit Kropfmühl
Q3'12 Q3'11 Change
----------------------------------------------------
Revenue $36,543 $43,335 (16%)
Gross profit 6,214 8,303 (25%)
Operating profit 3,043 4,701 (35%)
EBITDA 4,176 6,224 (33%)
Capital expenditures 2,166 2,683 (19%)
Graphit Kropfmühl's third quarter 2012 revenue decreased $6.8 million, or 16%,
to $36.5 million. Natural graphite revenue decreased $2.1 million, or 13%,
primarily due to unfavorable product mix, resulting in lower average pricing,
and a slight decline in volumes. Silicon metal revenue decreased $4.7 million,
or 17%, as an unfavorable product mix and production issues offset an increase
in volumes.
The third quarter 2012 gross margin decreased to 17% from 19% in the third
quarter of 2011. The decrease in gross margin was primarily the result of the
aforementioned product mix for both silicon metal and graphite.
The third quarter 2012 EBITDA declined $2.0 million to 11% of revenue. This was
a decrease from 14% of revenue in the third quarter 2011. The EBITDA decrease
was the result of the $2.1 million decrease in gross profit slightly offset by a
$0.5 million, or 13% decrease in SG&A. The SG&A decline was the result of a
reduction in personnel costs.
Capital expenditures were $2.2 million in the third quarter 2012, 19% less than
the third quarter 2011. Significant capital investments during the quarter
included upgrading the electric arc furnaces in the silicon metal operation.
Financial Review
Tax
AMG recorded a tax expense of $2.1 million, or a 30% effective tax rate, in the
third quarter 2012, compared to a tax expense of $3.8 million, or a 30%
effective tax rate, in the third quarter 2011. AMG's effective tax rate is 65%
for the nine months ended September 2012 due to the reversal of previously
recognized deferred tax assets in several jurisdictions, including Brazil during
the second quarter. In addition, a significant portion of the restructuring and
asset impairment expense in the second quarter related to entities for which a
tax benefit cannot be booked. The expected full year effective tax rate is
expected to improve due to German tax planning which will create a positive
benefit from the squeeze-out of the minority shareholders at GK.
SG&A
AMG's third quarter 2012 SG&A expenses were $34.5 million, a 15% decrease from
$40.6 million in the third quarter 2011. The $6.2 million decrease in SG&A
expenses was due to lower personnel expenses and external consulting costs.
Non-Recurring Items
AMG's third quarter 2012 operating profit of $11.2 million includes non-
recurring items, which are not included in the calculation of EBITDA. These
items are comprised of income and expense items that, in the view of management,
do not arise in the normal course of business and items that, because of their
nature and/or size, should be presented separately to enable more accurate
analysis of the results. AMG incurred $2.2 million of non-recurring expense in
the third quarter 2012, consisting of $1.7 million in environmental costs and
$0.5 million management restructuring. Environmental costs were primarily
related to our Brazilian mining operation while restructuring costs are part of
AMG's commitment to cost cutting. AMG incurred $0.9 million of non-recurring
income in the third quarter 2011, primarily related to a write up of acquired
assets of KB Alloys.
Currency Fluctuations
AMG transacts business in many currencies other than the U.S. dollar, the
Company's reporting currency. AMG's financial statements are prepared in U.S.
dollars, so fluctuations in the exchange rates between the U.S. dollar and other
currencies have an effect both on the results of operations and on the reported
value of assets and liabilities as measured in U.S. dollars. The depreciation
in the value of the U.S. dollar as of September 30, 2012 compared to June
30, 2012, resulted in an increase in the assets and liabilities on the balance
sheet of $20.0 million and $13.7 million, respectively. The net result of the
appreciation in the value of the U.S. dollar in the third quarter 2012 compared
to the third quarter 2011, resulted in a decrease in revenue and EBITDA of $21.9
million and $1.9 million, respectively.
Liquidity
September 30, 2012 December 31, 2011 Change
--------------------------------------------------------------------------
Total debt $309,846 $268,621 15%
Cash & short-term investments 111,386 79,571 40%
--------------------------------------------------------------------------
Net debt 198,460 189,050 5%
AMG had a net debt position of $198.5 million as of September 30, 2012. AMG's
net debt position increased $9.4 million since December 31, 2011 primarily due
to $33.9 million in capital investments, $11.6 million of cash tax payments,
$10.0 million of cash interest payments, $7.1 million in Graphit Kropfmühl share
purchases, and a $12.6 million increase in working capital and provisions
reduced by EBITDA of $67.1 million. Including the $111.4 million of cash, AMG
had $167.3 million of total liquidity as of September 30, 2012.
Cash Flow For the nine months ended
September 30, 2012 September 30, 2011
-------------------------------------------------------------------------------
Net cash flows from operations $33,508 $10,361
-------------------------------------------------------------------------------
Capital expenditures (33,875) (31,741)
Acquisitions, net of cash (594) (24,703)
Cash flows from (used in) other 425 (1,569)
investing
-------------------------------------------------------------------------------
Net cash flows used in (34,044) (58,013)
investing activities
-------------------------------------------------------------------------------
Cash flows generated from 32,260 28,013
financing activities
-------------------------------------------------------------------------------
Cash flows from operations were $33.5 million in the nine months ended September
30, 2012 compared to cash flows from operations of $10.4 million in the nine
months ended September 30, 2011. Cash flows from operations in the nine months
ended September 30, 2012 are primarily the result of $67.1 million in EBITDA
less a $12.6 million increase in working capital and provisions, $11.6 million
in cash tax payments and $10.0 million in cash interest payments.
Cash used in investing activities was $34.0 million in the nine months ended
September 30, 2012. The $24.0 million decrease compared to the nine months
ended September 30, 2011 is composed of a $24.1 million decrease in cash used in
acquisitions and a $1.5 million decrease in restricted cash for project work in
the Engineering Systems Division, slightly offset by a $2.1 million increase in
capital investments.
Cash from financing activities was $32.3 million in the nine months ended
September 30, 2012, a $4.2 million increase from the nine months ended September
30, 2011. This increase was primarily attributable to an increase of $0.8
million in net proceeds from issuance of debt and repayment of borrowings and
$10.6 million decrease in transaction costs related to debt issuance in 2011,
less $7.1 million for the acquisition of 5.5%, including related costs, of
Graphit Kropfmühl's outstanding common shares during the nine months ended
September 2012. The increase in the credit facility during the nine months
ended September 30, 2012 was used to fund the Brazilian mine expansion and the
acquisition of Graphit Kropfmühl shares as well as to retire Graphit Kropfmühl's
external debt.
Outlook
We expect the economic environment to remain challenging in the near term. The
downturn in global economic activity currently shows no signs of abating. The
Advanced Materials Division's businesses, particularly antimony and other non-
aerospace businesses are being impacted by the slowdown. The Engineering
Systems Division is generating consistent order intake, but at a subdued level.
The completion of the GK acquisition should result in cost reductions in 2013;
however, moderating industrial production is adversely affecting natural
graphite demand. In this environment, our targets are to produce stable
results. We expect to achieve these targets.
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the three months ended September 30
In thousands of US Dollars 2012 2011
Unaudited Unaudited
Continuing operations
Revenue 296,851 356,415
Cost of sales 249,188 297,727
Gross profit 47,663 58,688
Selling, general and administrative
expenses 34,462 40,613
Restructuring and asset impairment expense 476 37
Environmental expense 1,712 136
Other income, net (186) (1,663)
Operating profit 11,199 19,565
Finance expense 5,270 8,583
Finance income (243) (1,335)
Foreign exchange income (699) (757)
Net finance costs 4,328 6,491
Share of profit (loss) of associates 208 (680)
Profit before income tax 7,079 12,394
Income tax expense 2,118 3,755
Profit for the period 4,961 8,639
Attributable to:
Shareholders of the Company 5,064 8,034
Non-controlling interests (103) 605
4,961 8,639
Earnings per share
Basic earnings per share 0.19 0.29
Diluted earnings per share 0.18 0.29
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the nine months ended September 30
In thousands of US Dollars 2012 2011
Unaudited Unaudited
Continuing operations
Revenue 940,426 1,042,732
Cost of sales 785,356 855,271
Gross profit 155,070 187,461
Selling, general and administrative expenses 111,558 128,315
Restructuring and asset impairment expense 11,140 2,496
Environmental expense 3,000 382
Other income, net (888) (3,490)
Operating profit 30,260 59,758
Finance expense 18,211 19,503
Finance income (855) (3,993)
Foreign exchange (income) loss (190) 528
Net finance costs 17,166 16,038
Share of profit (loss) of associates 457 (6,751)
Profit before income tax 13,551 36,969
Income tax expense 8,814 16,547
Profit for the period 4,737 20,422
Attributable to:
Shareholders of the Company 5,920 18,357
Non-controlling interests (1,183) 2,065
4,737 20,422
Earnings per share
Basic earnings per share 0.22 0.66
Diluted earnings per share 0.21 0.66
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement
of financial position
In thousands of US Dollars
September December
30, 2012 31, 2011
Unaudited Audited
Assets
Property, plant and equipment 278,146 263,586
Goodwill 24,435 23,535
Intangible assets 16,446 14,557
Investments in associates and joint
ventures 5,341 5,085
Derivative financial instruments 368 1
Deferred tax assets 30,200 29,142
Restricted cash 10, 917 11,074
Notes receivable 127 250
Other assets 18,504 17,866
Total non-current assets 384,484 365,096
Inventories 218,622 228,887
Trade and other receivables 201,292 188,103
Derivative financial instruments 2,672 3,956
Other assets 47,647 35,184
Cash and cash equivalents 111,386 79,571
Total current assets 581,619 535,701
Total assets 966,103 900,797
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial position
(continued)
In thousands of US Dollars
September 30, 2012 December 31, 2011
Unaudited Audited
Equity
Issued capital 742 742
Share premium 377,245 381,921
Other reserves 19,289 14,157
Retained earnings (deficit) (185,447) (191,362)
Equity attributable to shareholders of the
Company 211,829 205,458
Non-controlling interests 11,062 15,160
Total equity 222,891 220,618
Liabilities
Loans and borrowings 266,962 210,448
Employee benefits 90,943 90,078
Provisions 29,281 27,019
Government grants 476 732
Other liabilities 5,949 9,276
Derivative financial instruments 12,048 8,122
Deferred tax liabilities 27,942 26,434
Total non-current liabilities 433,601 372,109
Loans and borrowings 8,521 17,436
Short term bank debt 34,363 40,737
Government grants 54 34
Other liabilities 58,342 51,673
Trade and other payables 139,247 128,493
Derivative financial instruments 5,255 10,661
Advance payments 34,297 30,204
Current taxes payable 13,523 14,468
Provisions 16,009 14,364
Total current liabilities 309,611 308,070
Total liabilities 743,212 680,179
Total equity and liabilities 966,103 900,797
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 2012 2011
Unaudited Unaudited
Cash flows from operating activities
Profit for the period 4,737 20,422
Adjustments to reconcile profit to net cash flows:
Non-cash:
Depreciation and amortization 21,252 21,504
Restructuring expense 4,807 2,496
Asset impairment expense 6,333 -
Environmental expense 3,000 382
Net finance costs 17,166 16,038
Share of (profit) loss of associates (457) 6,751
Equity-settled share-based payment transactions 1,268 2,820
Income tax expense 8,814 16,547
Change in working capital and provisions (12,572) (53,993)
Other 809 8,764
Finance costs paid, net (10,030) (5,478)
Income tax paid, net (11,619) (25,892)
Net cash flows from operating activities 33,508 10,361
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment 226 87
Acquisition of property, plant and equipment and
intangibles (33,875) (31,741)
Acquisition of subsidiaries (net of cash acquired of
$139 and $3,860, respectively) (594) (24,703)
Related party loans - (4,924)
Change in restricted cash 144 1,604
Other 55 1,664
Net cash flows used in investing activities (34,044) (58,013)
Cash flows from financing activities
Proceeds from the issuance of debt 67,185 227,526
Payment of transaction costs related to debt issuance - (10,592)
Repayment of borrowings (27,791) (188,931)
Acquisition of non-controlling interests (7,128) -
Other (6) 10
Net cash flows from financing activities 32,260 28,013
Net increase (decrease) in cash and cash equivalents 31,724 (19,639)
Cash and cash equivalents at January 1 79,571 89,311
Effect of exchange rate fluctuations on cash 91 1,581
Cash and cash equivalents at September 30 111,386 71,253
About AMG
AMG creates and applies innovative metallurgical solutions to the global trend
of sustainable development of natural resources and CO(2) reduction. AMG
produces highly engineered specialty metal products and advanced vacuum furnace
systems for the Energy, Aerospace, Infrastructure and Specialty Metals and
Chemicals end markets.
The Advanced Materials Division develops and produces specialty metals, alloys
and high performance materials. AMG is a significant producer of specialty
metals, such as ferrovanadium, ferronickel-molybdenum, aluminum master alloys
and additives, chromium metal and ferrotitanium, for Energy, Aerospace,
Infrastructure and Specialty Metal and Chemicals applications. Other key
products include specialty alloys for titanium and superalloys, coating
materials and vanadium chemicals.
The Engineering Systems Division designs, engineers and produces advanced vacuum
furnace systems and operates vacuum heat treatment facilities, primarily for the
Aerospace and Energy (including solar and nuclear) industries. Furnace systems
produced by AMG include vacuum remelting, solar silicon melting and
crystallization, vacuum induction melting, vacuum heat treatment and high
pressure gas quenching, turbine blade coating and sintering. AMG also provides
vacuum case-hardening heat treatment services on a tolling basis.
AMG Mining AG (formerly Graphit Kropfmühl AG) produces critical materials
utilizing its secure raw material sources in Africa, Asia and Europe. AMG
Mining produces critical materials such as high purity natural graphite and
silicon metal. These materials are of significant importance to the global
economy and are available in limited supply. End markets for these materials
include electronics, energy efficiency, green energy and infrastructure.
With over 3,000 employees, AMG operates globally with production facilities in
Germany, the United Kingdom, France, Czech Republic, United States, China,
Mexico, Brazil, Turkey, Poland, India and Sri Lanka and has sales and customer
service offices in Belgium, Russia and Japan (www.amg-nv.com).
For further information, please contact:
AMG Advanced Metallurgical Group N.V. +1 610 975 4901
Jonathan Costello
Vice President of Corporate Development and Corporate Communications
jcostello(at)amg-nv.com
Disclaimer
Certain statements in this press release are not historical facts and are
"forward looking." Forward looking statements include statements concerning
AMG's plans, expectations, projections, objectives, targets, goals, strategies,
future events, future revenues or performance, capital expenditures, financing
needs, plans and intentions relating to acquisitions, AMG's competitive
strengths and weaknesses, plans or goals relating to forecasted production,
reserves, financial position and future operations and development, AMG's
business strategy and the trends AMG anticipates in the industries and the
political and legal environment in which it operates and other information that
is not historical information. When used in this press release, the words
"expects," "believes," "anticipates," "plans," "may," "will," "should," and
similar expressions, and the negatives thereof, are intended to identify forward
looking statements. By their very nature, forward looking statements involve
inherent risks and uncertainties, both general and specific, and risks exist
that the predictions, forecasts, projections and other forward looking
statements will not be achieved. These forward looking statements speak only as
of the date of this press release. AMG expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward looking
statement contained herein to reflect any change in AMG's expectations with
regard thereto or any change in events, conditions, or circumstances on which
any forward looking statement is based.
1. EBITDA is defined as earnings before interest, tax, depreciation and
amortization and excludes nonrecurring items
AMG Q3 2012:
http://hugin.info/138060/R/1657670/536222.pdf
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Source: AMG Advanced Metallurgical Group N.V. via Thomson Reuters ONE
[HUG#1657670]
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Datum: 14.11.2012 - 07:01 Uhr
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