AMG reports first quarter 2010 results
(Thomson Reuters ONE) -
Key Highlights
* Q1 2010 revenue was $235.8 million, an increase of 9% compared to Q1 2009
* Q1 2010 EBITDA[1] was 22.0 million, an increase of 39% compared to Q1 2009
* EPS on a fully diluted basis was breakeven compared to Q1 2009 of ($0.57)
EPS. Adjusted EPS, excluding non-recurring charges, on a fully diluted
basis was $0.11 in the first quarter 2010
* The Advanced Materials Division continued its recovery; first quarter 2010
revenue was $140.5 million; EBITDA was $8.5 million
* The Engineering Systems Division's first quarter 2010 revenue was $65.3
million; EBITDA was $12.1 million
* Graphit Kropfmühl's first quarter revenue was $29.9 million; EBITDA was $1.5
million
* As of March 31, 2010 cash on hand was $98.9 million, net debt was $104.1
million; Q1 2010 free cash flow[2] was $4.1 million
[1] EBITDA is defined as earnings before interest, tax, depreciation and
amortization and excludes nonrecurring items
[2] Free cash flow is defined as EBITDA less change in working capital and
maintenance capital expenditures
Amsterdam, 12 May 2010 (Regulated Information) --- AMG Advanced Metallurgical
Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported first quarter 2010
revenue increased 9% to $235.8 million from $215.7 million in the first quarter
2009.
Net income attributable to shareholders for the first quarter 2010 was
breakeven, compared to net loss of ($15.4) million or ($0.57) per fully diluted
share for the first quarter 2009. Excluding non-recurring charges and Timminco,
which was deconsolidated as of September 30, 2009, AMG's net income attributable
to shareholders for the first quarter 2010 was $3.1 million, or $0.11 per fully
diluted share. EBITDA increased 39% to $22.0 million in the first quarter 2010
compared with $15.9 million in the first quarter 2009.
In commenting on results, Dr. Heinz Schimmelbusch, Chairman of the Management
Board and CEO, said, "The first quarter 2010 continued the upward trend that
began in late 2009. Demand has begun to return in Advanced Materials, as both
volumes and prices increased. Engineering Systems remained challenged by low
levels of order intake; however, requests for quotes have increased. Graphit
Kropfmühl increased revenues and earnings, driven by end market demand. AMG is
guardedly optimistic that the global economy will continue to improve, and our
portfolio of metals technologies is well positioned to benefit from this trend
in 2010."
Key Figures
In 000's US Dollar
Q1'10 Q1'09 Change
Revenue $235,793 $215,719 9%
Gross profit 42,584 33,860 26%
Gross margin 18.1% 15.7%
Operating income 11,787 6,310 87%
Operating margin 5.0% 2.9%
Net loss attributable to shareholders
(64) (15,394) N/A
EPS- Fully diluted 0.00 (0.57) N/A
Adjusted EPS- Fully diluted[1]() 0.11 (0.22) N/A
EBIT[1] 15,866 10,963 45%
EBITDA[1][2] 22,047 15,892 39%
EBITDA margin 9.4% 7.4%
Note:
[1] Adjusted for discontinued operations and equity accounting treatment for
AMG's investment in Timminco
[2] EBITDA is defined as earnings before interest, tax, depreciation and
amortization and excludes nonrecurring items
Operational Review
Advanced Materials Division
Q1'10 Q1'09 Change
Revenue $140,534 $98,160 43%
Gross margin 21,136 2,891 631%
Operating income (loss) 4,301 (12,990) N/A
EBITDA 8,499 (8,371) N/A
Capital expenditures 3,321 4,860 (32%)
Demand improved for most of the Advanced Materials specialty metals during the
first quarter 2010. Prices for ferrovanadium, and specialty alloys for
aerospace both increased substantially during the first quarter. Revenue
increased by $42.4 million or 43%, while gross margin increased by $18.2 million
or 631%.
Gross margin percentage increased from 3% of revenue in the first quarter of
2009 to 15% in first quarter of 2010. This was due to a sharp increase in end
product prices, particularly in ferrovanadium. Ferrovanadium reference prices
increased 18%, with most of the increase coming at the end of the quarter, while
volumes were essentially unchanged compared to the first quarter 2009. Vanadium
chemicals, ferronickel-molybdenum, ferrotitanium and antimony products also
benefitted from increasing end market prices. AMG benefitted from a $3.6
million mark to market write up in inventory during the first quarter 2010
compared to a $3.9 million mark to market write down in inventory in the same
period in the prior year. Even more significant was the general improvement in
volumes during the quarter.
The first quarter 2010 EBITDA increased by $16.9 million due to the increase in
revenue and gross margin, which were slightly offset by a 5% increase in SG&A.
Capital expenditures were $3.3 million for the quarter, 32% less than the
comparable period in 2009. The primary growth capital investment made in the
first quarter was for the expansion of the ferrovanadium logistics facility.
Engineering Systems Division
Q1'10 Q1'09 Change
Revenue $65,313 $93,943 (30%)
Gross margin 18,303 28,595 (36%)
Operating income 7,169 19,411 (63%)
EBITDA 12,079 23,443 (48%)
Capital expenditures 845 2,379 (64%)
The Engineering Systems division is still impacted by the global economic
slowdown as customers continued to defer investment decisions. Order-backlog
was $127 million on March 31, 2010, down 22% from $162 million on December
31, 2009. Order intake for the solar industry continues to be challenging,
while some encouraging signs were seen in the nuclear and titanium markets. The
backlog consists primarily of melting and remelting systems for the titanium and
specialty steel industries.
First quarter 2010 revenue decreased by $28.6 million or 30%. Sales of solar
silicon DSS melting furnaces for the photovoltaic industry decreased 47% in the
first quarter 2010 compared to the same period in 2009. During the first
quarter 2010, 45% of revenue was generated from sales of solar silicon and
melting furnaces, down from 60% in the same period 2009. Revenue from remelting
systems, primarily for the aerospace and specialty steel industries, decreased
by 10% in the first quarter 2010.
Gross margin decreased 2% to 28% of revenue in the first quarter 2010 from the
first quarter 2009. The decrease was due to changes in product mix and lower
capacity utilization.
First quarter 2010 EBITDA was $12.1 million, a 48% decrease over the same period
in 2009. The EBITDA margin decreased to 18% in the first quarter 2010 compared
to 25% for the same period in 2009. The EBITDA margin decrease was attributable
to the lower revenue and increases in research and development.
In the quarter ended March 31, 2010, capital expenditures were $0.8 million,
64% less than the first quarter of 2009. The division continued to focus on
minimizing capital investment during quarter.
Graphit Kropfmühl
Q1 '10 Q1 '09 Change
Revenue $29,946 $23,616 27%
Gross profit 3,145 2,374 32%
Operating income (loss) 317 (111) N/A
EBITDA 1,469 820 79%
Capital expenditures 980 4,728 (79%)
Graphit Kropfmühl's ("GK") first quarter 2010 revenue increased by 27% primarily
due to a 36% increase in natural graphite revenues as both prices and volumes
increased over the first quarter 2009.
Gross margin improved to 11% of revenue in the first quarter 2010 from 10% of
revenues in the first quarter 2009. The first quarter 2010 operating income was
$0.3 million generated by the increase in revenue, slightly offset by higher
SG&A costs.
First quarter 2010 EBITDA was $1.5 million, a 79% increase compared to the first
quarter 2009. The EBITDA margin increased to 5% during the fourth quarter 2009
compared to 3% in the same period 2009. The EBITDA margin increase was largely
attributable to the increase in revenue from natural graphite, offset by lower
gross margin on silicon metal due to an increase in silicon metal production
costs.
Capital expenditures decreased to $1.0 million for the first quarter 2010, 79%
less than the same period 2009. The decrease in capital expenditures was a
result of the completion of the expansion of the silicon metal facilities in
early 2009.
Timminco
AMG owned 38.6% of Timminco's common equity as of March 31, 2010. AMG accounts
for its investment in Timminco via the equity accounting method. Timminco's net
loss for the first quarter 2010 is included in share of loss from associates on
AMG's income statement and the carrying value of AMG's investment in Timminco of
$16.4 million is listed as an asset on AMG's balance sheet. Additional
information on Timminco and its first quarter 2010 financial statements can be
found at www.Timminco.com
Financial Review
Tax
AMG recorded tax expense of $3.9 million in the quarter ended March 31, 2010 as
compared to tax expense of $7.9 million in the quarter ended March 31, 2009.
During the first quarter 2009, AMG was unable to book certain tax benefits due
to some losses being generated in jurisdictions where AMG already had
significant net operating losses. The mix of jurisdictional profitability in
the first quarter 2010 allowed the Company to recognize certain benefits of
those net operating losses, but the effective tax rate is still affected by
losses in jurisdictions where benefits are unable to be booked.
Liquidity
March 31, 2010 December 31, 2009 Change
Total debt 202,979 $203,796 (0%)
Cash & short-term Investments 98,857 117,016 (16%)
Net debt 104,122 86,780 20%
AMG has a net debt position of $104.1 million as of March 31, 2010.
Cash Flow
Q1'10 Q1'09
Operating cash flows from continuing operations ($14,921) 2,034
Operating cash flows from discontinued operations - (3,096)
Net cash flows used in operations $(14,921) $(1,062)
Capital expenditures (5,146) (11,967)
Acquisitions, net of cash (600) -
Cash flows used in discontinued operations - (15,480)
Cash flows used in other investing (191) (10,502)
Net cash flows used in investing activities (5,937) (37,949)
Financing cash flows from continuing operations 7,643 3,717
Financing cash flows from discontinued operations - 20,720
Cash flows generated from financing activities 7,643 24,437
Cash flows used in operations were ($14.9) million for the first quarter 2010 as
compared to ($1.1) million in 2009. First quarter 2010 cash flows used in
operations increased significantly as a result of $12.1 million in tax payments
made as well as a $14.9 million increase in working capital. These were offset
by an improvement in overall profitability.
Cash used in investing activities was $5.9 million during the first quarter
2010. This decrease of $32.0 million from 2009 was primarily related to the
$6.8 million decrease in capital investments, an $11.5 million decrease in
investments in associates and a $15.5 million decrease in cash flows used by
Timminco, which was classified as a discontinued operation, in the same period
in 2009.
First quarter 2010 cash generated from financing activities was $7.6 million, a
decrease of $16.8 million from the same period in 2009. This decrease was most
notably attributable to cash flows from discontinued operations recognized in
2009 that are not applicable in 2010.
Outlook
The measures taken to reduce our cost structure in 2009 have positively impacted
the results in the first quarter 2010. The market is showing signs of gradual
improvement from the recession of 2008-2009. These signs of strength, while
uneven, are encouraging. The Advanced Materials division is currently
benefitting from increases in specialty metals prices and demand as the global
economy is restocking, increasing inventory levels. Requests for new orders in
Engineering Systems are slowly increasing; however these will take additional
time to convert into firm orders, which should result in a slight improvement in
order backlog in the second half of 2010. Graphit Kropfmühl's end markets are
also improving, particularly natural graphite demand. AMG's focus on its core
markets of aerospace, energy, infrastructure and specialty metals and chemicals
will drive long term growth. In 2010, AMG expects that its portfolio of metals
based technologies will produce improved results over 2009 levels.
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the three months ended March 31
In thousands of US Dollars 2010 2009
Unaudited Unaudited
Continuing operations *Restated
Revenue 235,793 215,719
Cost of sales 193,209 181,859
Gross profit 42,584 33,860
Selling, general and administrative expenses 30,614 29,039
Restructuring expense 7 198
Environmental expense 257 5
Other income, net (81) (1,691)
Operating profit 11,787 6,309
Finance expense 6,320 4,541
Finance income (547) (613)
Foreign exchange gain (2,164) (1,097)
Net finance costs 3,609 2,831
Share of loss of associates 4,395 787
Profit before income tax 3,783 2,691
Income tax expense 3,867 7,938
Loss for the period from continuing operations (84) (5,247)
Loss after tax for the period from discontinued operations - (18,487)
Loss for the year (84) (23,734)
Attributable to:
Shareholders of the Company (64) (15,394)
Minority interests (20) (8,340)
(84) (23,734)
Earnings (loss) per share
Basic earnings (loss) per share 0.00 (0.57)
Diluted earnings (loss) per share 0.00 (0.57)
Earnings (loss) per share for continuing operations
Basic earnings (loss) per share from continuing operations 0.00 (0.22)
Diluted earnings (loss) per share from continuing
operations 0.00 (0.22)
*The prior year comparative information in the consolidated income statement and
consolidated statement of cash flows has been restated to reflect a change in
ownership of Timminco. See AMG's annual financial statements for more
information.
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of
financial position
In thousands of US Dollars
March
31, 2010 December 31, 2009
Unaudited Audited
Assets
Property, plant and equipment 204,977 211,022
Intangible assets 26,351 28,253
Investments in associates 30,225 34,794
Deferred tax assets 9,688 10,912
Restricted cash 12,985 13,263
Notes receivable 2,328 5,542
Derivative financial instruments - 1,718
Other assets 12,300 11,980
Total non-current assets 298,854 317,484
Inventories 180,630 193,378
Trade and other receivables 175,078 147,787
Derivative financial instruments 4,561 4,954
Other assets 32,621 30,359
Cash and cash equivalents 98,857 117,016
Total current assets 491,747 493,494
Total assets 790,601 810,978
Equity
Issued capital 725 725
Share premium 379,518 379,518
Other reserves 27,858 31,284
Retained earnings (deficit) (198,961) (198,897)
Equity attributable to shareholders of the Company 209,140 212,630
Minority interests 15,007 15,793
Total equity 224,147 228,423
Liabilities
Loans and borrowings 159,800 168,319
Employee benefits 86,917 91,358
Provisions 14,646 14,862
Government grants 588 669
Other liabilities 8,051 7,984
Derivative financial instruments 970 1,339
Deferred tax liabilities 13,252 26,395
Total non-current liabilities 284,224 310,926
Loans and borrowings 3,547 3,464
Short term bank debt 39,632 32,013
Government grants 205 234
Other liabilities 43,843 46,179
Trade and other payables 80,658 69,791
Derivative financial instruments 7,212 6,048
Advance payments 39,807 54,764
Current taxes payable 40,314 36,050
Provisions 27,012 23,086
Total current liabilities 282,230 271,629
Total liabilities 566,454 582,555
Total equity and liabilities 790,601 810,978
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of cash flows
For the three months ended March 31
In thousands of US Dollars 2010 2009
Unaudited Unaudited
Cash flows used in operating activities *Restated
Loss for the period from continuing operations (84) (5,247)
Loss for the period from discontinued operations - (18,487)
Loss for the period (84) (23,734)
Adjustments to reconcile profit (loss) to net cash flows:
Non-cash:
Depreciation and amortization 6,181 4,929
Restructuring expense 7 198
Environmental expense 257 5
Net finance costs 3,610 2,830
Share of loss of associates 4,395 787
Equity-settled share-based payment transactions 1,650 3,353
Cash-settled share-based payment transactions (309) -
Income tax expense 3,867 7,938
Change in working capital and provisions (23,210) (9,180)
Other 2,410 (474)
Interest paid, net (1,616) (1,189)
Income tax paid, net (12,079) (1,916)
Cash flows from discontinued operations - 15,391
Net cash flows used in operating activities (14,921) (1,062)
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment 17 -
Acquisition of associates (600) -
Acquisition of property, plant and equipment and
intangibles (5,146) (11,967)
Investments in associates - (11,519)
Change in restricted cash (208) 1,005
Other - 12
Cash flows used in discontinued operations - (15,480)
Net cash flows used in investing activities (5,937) (37,949)
Cash flows from financing activities
Net proceeds from issuance of debt 7,582 3,639
Other 61 78
Cash flows from discontinued operations - 20,720
Net cash flows from financing activities 7,643 24,437
Net decrease in cash and cash equivalents (13,215) (14,574)
Cash and cash equivalents at January 1 117,016 143,473
Effect of exchange rate fluctuations and consolidation
changes on cash (4,944) (6,126)
Cash and cash equivalents at March 31 98,857 122,773
*The prior year comparative information in the consolidated income statement,
and consolidated statement of cash flows has been restated to reflect a change
in ownership of Timminco. See AMG's annual financial statements for more
information.
About AMG
AMG, incorporated in the Netherlands, is a global leader in the production of
highly engineered specialty metal products and advanced vacuum furnace systems.
AMG serves growing industries worldwide with its unique combination of
metallurgical engineering expertise and production know-how. AMG is a market
leader in many of its products and systems, which are critical to the production
of key components for the aerospace, energy (including solar and nuclear),
electronics, optics, chemicals, construction and transportation industries. AMG
has two operating divisions of businesses, Advanced Materials and Engineering
Systems, and owns interests in publicly-listed companies Graphit Kropfmühl AG
(Deutsche Börse: GKR.DE) and Timminco Limited (TSX: "TIM").
The Advanced Materials Division develops and produces niche specialty metals and
complex metals products, many of which are used in demanding, safety-critical,
high-stress environments. AMG is one of a limited number of significant
producers globally of niche specialty metals, such as ferrovanadium,
ferronickel-molybdenum, aluminum master alloys and additives, chromium metal and
ferrotitanium, used by steel, aluminum, chemical and superalloy producers for
aerospace, automotive, energy, electronics, optics, chemicals, construction and
other applications. Other key products produced by AMG include specialty alloys
for titanium and superalloys, coating materials, tantalum and niobium oxides,
vanadium chemicals and antimony trioxide.
The Engineering Systems Division designs, engineers and produces advanced vacuum
furnace systems and operates vacuum heat treatment facilities. AMG is a global
leader in supplying technologically-advanced vacuum furnace systems to customers
in the aerospace, energy (including solar and nuclear), transportation,
electronics, superalloys and specialty steel industries. Examples of furnace
systems produced by AMG include vacuum remelting, solar silicon melting and
crystallization, vacuum induction melting, vacuum heat treatment and high
pressure gas quenching, vacuum precision casting, turbine blade coating and
sintering. AMG also provides vacuum case-hardening heat treatment services on a
tolling basis to customers through facilities equipped with vacuum heat
treatment furnaces.
Graphit Kropfmühl AG is a majority controlled, publicly listed subsidiary of
AMG. Based on its secure raw material sources in Africa, China and Europe,
Graphit Kropfmühl is a specialist in the production of silicon metal and the
extraction, processing and refining of natural crystalline graphite for a wide
range of energy saving industrial applications.
Timminco Limited is a publicly listed affiliate of AMG. Timminco produces
silicon metal for the chemical, aluminum, electronic and solar industries.
Timminco also produces solar grade silicon, using its proprietary technology for
purifying silicon metal, for the solar energy industry.
AMG operates globally with production facilities in Germany, the United Kingdom,
France, Czech Republic, the United States, Canada, Mexico, Brazil, Sri Lanka and
Australia and also has sales and customer service offices in Belgium, Russia,
China and Japan (website: 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 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.
The full press release including tables can be downloaded from the following
link:
AMG reports first quarter 2010 results
[HUG#1415009]
Unternehmensinformation / Kurzprofil:
Datum: 12.05.2010 - 07:01 Uhr
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