AMG Advanced Metallurgical Group N.V. Reports Third Quarter 2013 Results
(Thomson Reuters ONE) -
Key Highlights
* Revenue was $286.4 million in the third quarter 2013, a 4% decrease from the
same period in 2012
* EBITDA(()[1]()) was $17.7 million in the third quarter 2013, an 11% decrease
from the same period in 2012
* EPS on a fully diluted basis was $0.05 in the third quarter 2013 compared to
$0.18 in the same period in 2012
* Cash flows from operating activities were $24.7 million in the third quarter
2013, compared to $30.4 million in the same period in 2012
* AMG Processing generated revenue of $138.1 million and EBITDA of $4.6
million in the third quarter 2013
* AMG Engineering generated revenue of $66.1 million and EBITDA of $4.2
million in the third quarter 2013
* AMG Mining generated revenue of $82.3 million and EBITDA of $8.9 million in
the third quarter 2013
* As of September 30, 2013, cash on the balance sheet was $116.3 million; net
debt was $163.6 million, a reduction of $16.4 million during the third
quarter 2013
Amsterdam, 8 November 2013 (Regulated Information) --- AMG Advanced
Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported third
quarter 2013 revenue of $286.4 million, a 4% decrease from $296.9 million in the
third quarter 2012.
EBITDA decreased 11% to $17.7 million in the third quarter 2013 from $19.8
million in the third quarter 2012. Net income attributable to shareholders for
the third quarter 2013 was $1.4 million, or $0.05 per fully diluted share,
compared to net income of $5.0 million, or earnings attributable to shareholders
of $0.18 in the third quarter 2012.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "The
specialty metals industry experienced double digit price declines during the
third quarter 2013. These declines, from already low 2012 market price levels
were most significant in chrome metal, antimony, and vanadium. We have begun to
see the benefits of restructuring efforts in AMG Engineering and AMG Mining.
Management's comprehensive actions resulted in strong cash flows from operating
activities and a significant reduction in net debt. As a result of low prices
and lower capacity utilization, we are implementing fixed cost reduction
measures at AMG Processing to right size the business for current market
conditions. Strategically, we are focusing on the core strengths of our product
portfolio and streamlining activities."
Key Figures
In 000's US Dollar
Q3 '13 Q3 '12 Change
Revenue $286,415 $296,851 (4%)
----------------------------------------------------------------------------
Gross profit 39,792 47,537 (16%)
Gross margin 13.9% 16.0%
----------------------------------------------------------------------------
Operating profit 7,275 11,124 (35%)
Operating margin 2.5% 3.7%
Net income attributable to 1,407 5,006 (72%)
shareholders
----------------------------------------------------------------------------
EPS- Fully diluted 0.05 0.18 (72%)
EBIT ((1)) 9,623 12,714 (24%)
EBITDA ((2)) 17,701 19,814 (11%)
EBITDA margin 6.2% 6.7%
Cash flows from operating activities 24,687 30,374 (19%)
----------------------------------------------------------------------------
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
AMG Processing
Q3 '13 Q3 '12 Change
-----------------------------------------------------
Revenue $138,068 $146,886 (6%)
Gross profit 13,008 19,451 (33%)
Operating profit 814 5,000 (84%)
EBITDA 4,629 9,086 (49%)
Capital expenditures 3,074 5,309 (42%)
AMG Processing's third quarter 2013 revenue decreased $8.8 million, or 6%, to
$138.1 million. AMG Aluminum revenue increased 2% compared to the third quarter
2012, despite slightly lower aluminum prices. This improvement was more than
offset by significant price declines in vanadium and titanium alloys, which
resulted in 28% and 6% decreases in AMG Vanadium and AMG Titanium Alloys &
Coatings revenue, respectively.
The third quarter 2013 gross margin decreased to 9% from 13% in the third
quarter 2012, as declining metal prices significantly affected AMG Processing's
margins. Specifically, an unfavorable product mix resulted in a 71% decline in
AMG Superalloys gross margins. In addition, significant declines in solar
coatings and titanium alloy revenue resulted in a 38% decline in AMG Titanium
Alloys & Coatings gross margins. These impacts more than offset a 79% increase
in AMG Aluminum gross margins, which was the result of the rationalization of
lower margin products and productivity improvements.
The third quarter 2013 EBITDA decreased $4.5 million to 3% of revenue from 6% of
revenue in the third quarter 2012. The EBITDA decrease was the result of the
$6.4 million decline in gross profit offset by a $2.0 million decrease in SG&A
personnel expenses.
Capital expenditures were $3.1 million for the third quarter 2013, a 42%
decrease from the third quarter 2012. Capital investments made in the third
quarter included $2.2 million of maintenance expenditures.
AMG Engineering
Q3 '13 Q3 '12 Change
---------------------------------------------------
Revenue $66,093 $71,209 (7%)
Gross profit 13,979 14,813 (6%)
Operating profit 475 3,213 (85%)
EBITDA 4,179 5,787 (28%)
Capital expenditures 487 1,345 (64%)
AMG Engineering's third quarter 2013 revenue decreased $5.1 million, or 7%, to
$66.1 million. Revenue from nuclear furnaces increased 55% to $7.8 million and
turbine blade coating furnace revenue increased 843% to $7.2 million, the result
of one significant order. These increases were mitigated by a 51% and 32%
decrease in revenue from sintering furnaces and remelting furnaces,
respectively, compared to the third quarter 2012.
Order backlog decreased 8% to $133.5 million at September 30, 2013 from $145.2
million at June 30, 2013. AMG Engineering generated order intake of $48.4
million in the third quarter 2013, a 39% decrease compared to the third quarter
2012 and a 0.73x book to bill ratio. Remelting furnaces were the largest
portion of the order intake, accounting for 28% of the total.
The third quarter 2013 gross margin was 21%, consistent with the third quarter
2012. Improved profitability on certain large projects and an increased focus
on cost control resulted in a consistent margin, despite the decline in revenue.
The third quarter 2013 EBITDA decreased $1.6 million, to 6% of revenue from 8%
of revenue in the third quarter 2012. The EBITDA decrease was the result of the
$0.8 million decrease in gross profit and the $0.6 million increase in SG&A.
The increase in SG&A was the result of incentive compensation related to the
increase in the AMG share price.
Capital expenditures were $0.5 million in the third quarter 2013, 64% less than
the third quarter 2012. Capital investments in the third quarter were primarily
maintenance capital expenditures for the heat treatment services business.
AMG Mining
Q3 '13 Q3 '12 Change
---------------------------------------------------
Revenue $82,254 $78,756 4%
Gross profit 12,805 13,273 (4%)
Operating profit 5,986 2,911 106%
EBITDA 8,893 4,941 80%
Capital expenditures 2,754 3,778 (27%)
AMG Mining's third quarter 2013 revenue increased $3.5 million, or 4%, to $82.3
million. Volumes for most products increased, while prices were mixed. Prices
increased 12% and 5% for AMG Mineração's tantalum and AMG Graphite products,
respectively, while AMG Antimony and AMG Silicon product prices decreased 11%
and 9%, respectively, compared to the third quarter 2012.
The third quarter 2013 gross margin decreased to 16%, from 17% in the third
quarter 2012. The gross margin decrease was primarily the result of lower
average prices for the higher volume products at AMG Silicon and AMG Antimony.
The third quarter 2013 EBITDA increased $4.0 million, to 11% of revenue from 6%
of revenue in the third quarter 2012. The EBITDA increase was the result of
$1.5 million and $0.5 million decreases in environmental expenses and SG&A
professional fees, respectively, and a $1.5 million increase in other income
from the sale of land. These improvements were slightly offset by the $0.5
million decrease in gross profit.
Capital expenditures were $2.8 million in the third quarter 2013, 27% less than
the third quarter 2012. Capital expenditures were primarily composed of $1.0
million for a silicon metal furnace efficiency upgrade and $1.1 million for
maintenance expenditures.
Financial Review
For purposes of this release, AMG restated the December 31, 2012 statement of
financial position and 2012 income statement to comply with new IFRS standards
and interpretations. IAS 19 Employee Benefits (Revised 2011) (IAS 19R) and
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine were
effective for periods beginning after January 1, 2013 and require restatement
for comparability.
Tax
AMG recorded an income tax expense of $0.5 million in the third quarter 2013 or
a 28% effective tax rate. The income tax expense in the third quarter 2012 was
$2.1 million, or a 30% effective tax rate. The third quarter 2013 effective tax
rate was consistent with AMG's long-term tax rate expectations of 30-35% per
annum.
SG&A
AMG's third quarter 2013 SG&A expenses were $32.3 million, compared to $34.4
million in the third quarter 2012, a decrease of 6%. The $2.1 million decrease
in SG&A expenses was primarily due to a $2.3 million decrease in variable
compensation expense.
Non-Recurring Items
AMG's third quarter 2013 $7.3 million operating profit 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 better analysis of the
results.
A summary of non-recurring items in the third quarter 2013 and 2012 are below:
For the three months ended
September September
2013 2012
----------------------------------------------------------------------------
Non-recurring items included in operating profit:
Restructuring expense $1,753 $476
----------------------------------------------------------------------------
Total non-recurring items included in operating 1,753 476
profit
----------------------------------------------------------------------------
AMG incurred $1.8 million of non-recurring restructuring items in the third
quarter 2013, consisting primarily of $1.3 million and $0.3 million related to
AMG Engineering and AMG Mining restructuring, respectively. These restructuring
expenses are part of the Company's ongoing cost reduction efforts and the
process to simplify the corporate structure.
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, 2013 compared to June
30, 2013, resulted in an increase in the assets and liabilities on the balance
sheet of $20.9 million and $14.6 million, respectively. The net result of the
depreciation in the value of the U.S. dollar in the third quarter 2013 compared
to the third quarter 2012, resulted in an increase in revenue and EBITDA of $9.3
million and $0.8 million, respectively.
Liquidity
September 30, 2013 December 31, 2012
Change
------------------------------------------------------------------------------
Total debt $279,894 $315,844 (11%)
Cash and cash equivalents 116,278 121,639 (4%)
------------------------------------------------------------------------------
Net debt 163,616 194,205 (16%)
AMG had a net debt position of $163.6 million as of September 30, 2013. AMG's
net debt position decreased $30.6 million since December 31, 2012 primarily due
to $62.1 million of EBITDA and a $27.4 million decrease in working capital and
deferred revenue. These cash generation activities were offset by $22.5 million
in capital investments, $11.5 million of cash tax payments, $11.3 million of net
cash interest payments, and restructuring costs and pension payments in excess
of expense of $7.0 million. Including the $116.3 million of cash, AMG had
$190.0 million of total liquidity as of September 30, 2013.
Cash Flow
For the nine months ended
September 30
2013 2012
--------------------------------------------------------------------------------
Net cash flows from operating activities $57,318 $33,508
--------------------------------------------------------------------------------
Capital expenditures (22,534) (33,875)
Cash flows from (used in) other investing 436 (169)
activities
--------------------------------------------------------------------------------
Net cash flows used in investing activities (22,098) (34,044)
--------------------------------------------------------------------------------
Net cash flows (used in) from financing (42,596) 32,260
activities
--------------------------------------------------------------------------------
Cash flows from operating activities were $57.3 million for the nine months
ended September 30, 2013 compared to cash flows from operating activities of
$33.5 million in the same period in 2012. Net cash flows from operating
activities are comprised of $62.1 million in EBITDA and $27.4 million decrease
in working capital and deferred revenue, slightly offset by $11.5 million in
cash tax payments and $11.3 million in cash interest payments.
Cash flows used in investing activities were $22.1 million for the nine months
ended September 30, 2013. The $11.9 million decrease compared to the same
period in 2012 is primarily composed of an $11.3 million decrease in capital
investments. This reduction in capital investments reflects management's cash
control initiatives and more stringent return metrics.
Cash flows used in financing activities were $42.6 million for the nine months
ended September 30, 2013 as the Company repaid $42.6 million of borrowings. In
the same period in 2012, AMG generated $32.3 million from financing activities
primarily to fund the Brazilian mine expansion and the acquisition of Graphit
Kropfmühl shares.
Outlook
The specialty metals markets continue to be weak, specifically due to destocking
in the global aerospace value chain, continued stagnation for high performance
steel, and slowing growth in China. These conditions are affecting prices and
volumes for many of AMG's products. AMG has rationalized production levels in
AMG Mining and AMG Engineering and is currently implementing plans to reduce the
fixed cost structure and decrease capital expenditures in AMG Processing. AMG
expects that it will generate positive operating cash flow during the fourth
quarter. Overall, AMG's full year 2013 EBITDA will decline compared to 2012.
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the three months ended September 30
In thousands of US Dollars 2013 2012
Unaudited Unaudited[2]
Continuing operations
Revenue 286,415 296,851
Cost of sales 246,623 249,314
Gross profit 39,792 47,537
Selling, general and administrative
expenses 32,343 34,411
Restructuring expense 1,753 476
Environmental expense 48 1,712
Other income, net (1,627) (186)
Operating profit 7,275 11,124
Finance expense 6,347 5,270
Finance income (324) (243)
Foreign exchange gain (358) (699)
Net finance costs 5,665 4,328
Share of profit of associates 26 208
Profit before income tax 1,636 7,004
Income tax expense 459 2,101
Profit for the period 1,177 4,903
Attributable to:
Shareholders of the Company 1,407 5,006
Non-controlling interests (230) (103)
Profit for the period 1,177 4,903
Earnings per share
Basic earnings per share 0.05 0.18
Diluted earnings per share 0.05 0.18
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the nine months ended September 30
In thousands of US Dollars 2013 2012
Unaudited Unaudited[3]
Continuing operations
Revenue 874,421 940,426
Cost of sales 737,753 785,555
Gross profit 136,668 154,871
Selling, general and administrative
expenses 102,354 111,185
Asset impairment expense 49,703 6,333
Restructuring expense 8,488 4,807
Environmental expense 125 3,000
Other income, net (2,095) (888)
Operating (loss) profit (21,907) 30,434
Finance expense 17,384 18,211
Finance income (640) (855)
Foreign exchange gain (313) (190)
Net finance costs 16,431 17,166
Share of (loss) profit of associates (530) 457
(Loss) profit before income tax (38,868) 13,725
Income tax expense 2,383 8,782
(Loss) profit for the period (41,251) 4,943
Attributable to:
Shareholders of the Company (38,363) 6,126
Non-controlling interests (2,888) (1,183)
(Loss) profit for the period (41,251) 4,943
(Loss) earnings per share
Basic (loss) earnings per share (1.39) 0.22
Diluted (loss) earnings per share (1.39) 0.22
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated
statement of financial position
In thousands of US Dollars
Sept
30, 2013 Dec 31,2012[4]
Unaudited
Assets
Property, plant and equipment 258,211 288,269
Goodwill 25,080 24,751
Intangible assets 11,459 13,971
Investments in associates and joint
ventures 6,313 7,351
Derivative financial instruments 200 527
Deferred tax assets 37,064 35,455
Restricted cash 9,944 11,888
Notes receivable 251 227
Other assets 24,406 22,262
Total non-current assets 372,928 404,701
Inventories 185,569 211,531
Trade and other receivables 161,310 177,232
Derivative financial instruments 4,196 3,229
Other assets 32,300 30,438
Cash and cash equivalents 116,278 121,639
Total current assets 499,653 544,069
Total assets 872,581 948,770
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of
financial position (continued)
In thousands of US Dollars
Dec
Sept 30, 2013 31, 2012[5]
Unaudited
Equity
Issued capital 743 743
Share premium 382,176 382,176
Other reserves (5,540) (10,190)
Retained earnings (deficit) (241,022) (204,284)
Equity attributable to shareholders of the Company 136,357 168,445
Non-controlling interests 3,615 6,818
Total equity 139,972 175,263
Liabilities
Loans and borrowings 244,658 265,553
Employee benefits 132,981 137,957
Provisions 31,754 31,852
Deferred revenue 13,572 2,724
Government grants 903 472
Other liabilities 6,299 6,690
Derivative financial
instruments 9,082 11,082
Deferred tax liabilities 22,547 26,120
Total non-current liabilities 461,796 482,450
Loans and borrowings 14,797 20,333
Short term bank debt 20,439 29,958
Government grants 56 55
Other liabilities 53,562 58,934
Trade and other payables 123,272 125,342
Derivative financial
instruments 5,588 3,900
Advance payments 26,878 26,989
Deferred revenue 5,251 2,533
Current taxes payable 2,076 8,623
Provisions 18,894 14,390
Total current liabilities 270,813 291,057
Total liabilities 732,609 773,507
Total equity and liabilities 872,581 948,770
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 2013 2012
Unaudited Unaudited[6]
Cash flows from operating activities
(Loss) profit for the period (41,251) 4,943
Adjustments to reconcile net (loss) profit to net
cash flows:
Non-cash:
Income tax expense 2,383 8,782
Depreciation and amortization 24,822 21,252
Asset impairment expense 49,703 6,333
Net finance costs 16,431 17,166
Share of loss (profit) of associates and joint
ventures 530 (457)
(Gain) loss on sale or disposal of property, plant
and equipment (1,429) 210
Equity-settled share-based payment transactions 666 1,268
Movement in provisions, pensions and government
grants 969 6,433
Change in working capital and deferred revenue 27,369 (10,773)
-----------------------
Cash flows from operating activities 80,193 55,157
Finance costs paid, net (11,331) (10,030)
Income tax paid, net (11,544) (11,619)
-----------------------
Net cash flows from operating activities 57,318 33,508
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment 1,821 226
Proceeds from sale of investment in associate 650 -
Acquisition of property, plant and equipment and
intangibles (22,534) (33,875)
Acquisition of subsidiaries (net of cash acquired of
$139) - (594)
Acquisition of other non-current asset investments (4,000) -
Change in restricted cash 1,952 144
Other 13 55
-----------------------
Net cash flows used in investing activities (22,098) (34,044)
Cash flows (used in) from financing activities
Proceeds from issuance of debt 38 67,185
Repayment of borrowings (42,572) (27,791)
Change in non-controlling interests (69) (7,128)
Other 7 (6)
-----------------------
Net cash flows (used in) from financing activities (42,596) 32,260
Net (decrease) increase in cash and cash equivalents (7,376) 31,724
Cash and cash equivalents at January 1 121,639 79,571
Effect of exchange rate fluctuations on cash held 2,015 91
Cash and cash equivalents at September 30 116,278 111,386
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.
AMG Processing 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.
AMG Engineering 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 produces critical materials utilizing its secure raw material sources
in Africa, Asia, Europe, and South America. AMG Mining produces critical
materials such as high purity natural graphite, tantalum, antimony 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 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 non-recurring items
[2]1 AMG restated the December 31, 2012 statement of financial position and
2012 income statement to comply with new IFRS standards and interpretations.
[3] AMG restated the December 31, 2012 statement of financial position and 2012
income statement to comply with new IFRS standards and interpretations.
[4] AMG restated the December 31, 2012 statement of financial position and 2012
income statement to comply with new IFRS standards and interpretations.
[5] AMG restated the December 31, 2012 statement of financial position and 2012
income statement to comply with new IFRS standards and interpretations.
[6] AMG restated the December 31, 2012 statement of financial position and 2012
income statement to comply with new IFRS standards and interpretations.
8 November 2013:
http://hugin.info/138060/R/1741629/585212.pdf
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originality of the information contained therein.
Source: AMG Advanced Metallurgical Group N.V. via Thomson Reuters ONE
[HUG#1741629]
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