AMG Advanced Metallurgical Group N.V. Reports Second Quarter 2017 Results
(Thomson Reuters ONE) -
Key Highlights
* Revenue increased by 6% to $262.0 million in the second quarter 2017 from
$248.3 million in the second quarter 2016
* EBITDA((2)) was $31.9 million in the second quarter 2017, a 22% increase
over the same period in 2016
* Operating profit increased by 19% to $22.6 million in the second quarter
2017 from $19.0 million in the second quarter 2016
* Cash from operating activities on a year to date basis was $28.5 million, an
increase of $8.5 million over the same period in 2016
* Annualized return on capital employed increased to 23.9% in the second
quarter 2017, as compared to 17.8% in the second quarter 2016
Amsterdam, 3 August 2017 (Regulated Information) --- AMG Advanced Metallurgical
Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported second quarter 2017
revenue of $262.0 million, a 6% increase from $248.3 million in the second
quarter 2016. EBITDA for the second quarter 2017 was $31.9 million, a 22%
increase from $26.0 million in the second quarter 2016. Net income attributable
to shareholders slightly decreased to $13.1 million in the second quarter 2017
from $13.4 million in the second quarter 2016.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "We are
very pleased that AMG's strong cash flow generation for the first six months of
2017 enabled the Company to end the quarter with net debt in line with the prior
year end, despite substantial capital investments in the first half of 2017 in
AMG's lithium project in Brazil, and titanium aluminide expansion in Germany.
AMG's lithium project continues to progress in line with our expectations and we
intend to make a formal investment decision regarding our targeted expansion to
180,000 tons of lithium concentrate production capacity before the end of the
year.
AMG Engineering achieved EBITDA of $8.0 million during the second quarter 2017,
a 43% increase from $5.6 million in the second quarter 2016. AMG Engineering
signed $76.9 million in new orders during the second quarter 2017, representing
a 1.29x book to bill ratio. The Engineering segment continues to experience
strong demand for turbine blade coating, powder metallurgy and plasma remelting
furnaces for the aerospace market and heat treatment furnaces for the automotive
market. Order backlog was $183.3 million as of June 30, 2017, an increase of
35% compared to December 31, 2016. The strong results in AMG Engineering reflect
our efforts to diversify our product offerings in recent years, including the
introduction of powder metallurgy and SyncroTherm in-line heat treatment
furnaces.
AMG Critical Materials generated EBITDA of $23.9 million during the second
quarter 2017, thanks to strong financial performance in vanadium and titanium
alloys, and the recognition of $3.0 million in business interruption insurance,
following the fire at the Mibra mine in Brazil.
In the second quarter of 2017, AMG generated cash from operating activities of
$10.6 million, a decrease of $13.7 million over the same period in 2016. On a
year to date basis, AMG generated cash from operating activities of $28.5
million in 2017, an increase of $8.5 million compared to the same period in
2016."
Key Figures
In 000's US Dollar
Q2 '17 Q2 '16 Change
Revenue $262,042 $248,349 6%
-------------------------------------------------------------------------
Gross profit 54,344 53,302 2%
Gross margin 20.7% 21.5%
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Operating profit 22,577 18,967 19%
Operating margin 8.6% 7.6%
Net income attributable to shareholders 13,115 13,447 (2%)
-------------------------------------------------------------------------
EPS - Fully diluted 0.42 0.48 (13%)
EBIT ((1)) 24,369 18,585 31%
EBITDA ((2)) 31,866 26,049 22%
EBITDA margin 12.2% 10.5%
Cash from operating activities 10,633 24,315 (56%)
-------------------------------------------------------------------------
Note:
1. 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.
2. EBITDA is defined as EBIT adjusted for depreciation and amortization.
Operational Review
AMG Critical Materials
Q2 '17 Q2 '16 Change
--------------------------------------------------
Revenue $202,625 $181,619 12%
Gross profit 37,583 * 37,953 (1%)
Operating profit 16,896 15,016 13%
EBITDA 23,883 20,485 17%
* Includes $3.6 million non-cash benefit related to reversal of previously
expensed vanadium, nickel and molybdenum inventory adjustments
AMG Critical Materials' revenue in the second quarter increased by $21.0
million, or 12%, to $202.6 million, driven by improved vanadium, molybdenum,
nickel, aluminum, titanium and antimony prices, and higher sales volumes of
chrome, antimony, silicon, niobium and titanium products.
Gross profit in the second quarter decreased by $0.4 million, or 1%, to $37.6
million. Strong financial performance in vanadium and titanium alloys in the
quarter was offset by lower gross profit in tantalum. The reduction in tantalum
gross profit was driven by lower sales volumes, due to the temporary shutdown in
one of AMG's two tantalum production lines, and lower sales prices, following
the termination of AMG's long term supply agreement.
AMG is insured for the interruption to the tantalum business as a result of the
fire, and has recorded insurance proceeds of $3.0 million during the second
quarter 2017, which is included within gross profit and EBITDA.
In addition, AMG Critical Materials' gross profit was positively impacted by the
partial recovery of asset impairment expenses recorded in the first quarter
2017. AMG recorded an asset impairment expense of $2.2 million in the first
quarter 2017 as a result of fire damage sustained at the Mibra mine in Brazil,
and subsequently recorded a $1.4 million partial recovery in the second quarter
2017, following the receipt of insurance proceeds.
Additional insurance proceeds, in respect of both business interruption and
property damage, are expected to be recorded in the second half of 2017. In
accordance with IFRS, AMG is recognizing the insurance proceeds as recovery
amounts are finalized.
SG&A expenses in the second quarter 2017 decreased by $2.4 million, or 10%,
compared to the same period in the prior year, primarily due to a reduction in
share-based compensation expenses.
Second quarter 2017 EBITDA margin increased slightly to 12%, compared to 11% in
the second quarter 2016.
AMG Engineering
Q2 '17 Q2 '16 Change
------------------------------------------------
Revenue $59,417 $66,730 (11%)
Gross profit 16,761 15,349 9%
Operating profit 5,681 3,951 44%
EBITDA 7,983 5,564 43%
AMG Engineering signed $76.9 million in new orders during the second quarter
2017, representing a 1.29x book to bill ratio. Order backlog was $183.3 million
as of June 30, 2017, an increase of 35% from December 31, 2016.
AMG Engineering's second quarter 2017 revenue decreased $7.3 million, or 11%, to
$59.4 million, due to lower revenue from plasma remelting furnaces for the
aerospace market and heat treatment services for the automotive market.
Second quarter 2017 gross profit increased by $1.4 million, or 9%, to $16.8
million and gross margin increased to 28% from 23%, due to a greater proportion
of revenue being generated from high margin, aerospace market facing products in
the quarter.
SG&A expenses decreased by $0.4 million, or 3%, compared to the prior year,
primarily due to lower share-based compensation expenses.
EBITDA increased by $2.4 million to $8.0 million in the second quarter 2017,
driven largely by higher gross profit and lower SG&A costs.
Financial Review
Tax
AMG recorded an income tax expense of $7.7 million in the second quarter 2017 as
compared to a tax expense of $2.8 million in the same period in 2016. The lower
tax expense in second quarter 2016 was primarily due to a drop in the Brazilian
Real, which reduced income tax expense.
Due to the volatile nature of the Company's deferred tax balances caused by
items such as the Brazil currency fluctuations, AMG focuses on cash tax
payments. AMG paid taxes of $3.4 million in the second quarter 2017 as compared
to tax payments of $1.8 million in the same period in 2016. For the second
quarter 2017, AMG's effective cash tax rate was 16%, compared to 11% in the same
period in 2016. The increase is due to higher profitability in countries where
the Company does not have tax losses carried forward to reduce tax liabilities.
Non-Recurring Items
AMG's second quarter 2017 gross profit of $54.3 million includes non-recurring
items, which are not included in the calculation of EBITDA.
A summary of non-recurring items included in gross profit in the second quarters
of 2017 and 2016 are below:
Non-recurring items included in gross profit
Q2 '17 Q2 '16 Change
-------------------------------------------------------------------
Gross profit $54,344 $53,302 2%
Restructuring expense 956 454 111%
Asset impairment (reversal) expense (1,305) - N/A
-------------------------------------------------------------------
Gross profit before non- 53,995 53,756 -
recurring items
Gross profit before non-recurring items by reporting segment
Q2 '17 Q2 '16 Change
--------------------------------------------------------
AMG Critical Materials $36,954 $38,230 (3%)
AMG Engineering 17,041 15,526 10%
--------------------------------------------------------
Gross profit before non- 53,995 53,756 -
recurring items
AMG Critical Materials' gross profit was positively impacted by the partial
recovery of asset impairment expenses recorded in the first quarter 2017. AMG
recorded an asset impairment expense of $2.2 million in the first quarter 2017
as a result of fire damage sustained at the Mibra mine in Brazil, and
subsequently recorded a $1.4 million partial recovery in the second quarter
2017, following the receipt of insurance proceeds.
As noted in AMG's 2016 financial statements, the Company modified its income
statement presentation in order to take into consideration ESMA's latest
recommendations. This resulted in the reclassification of restructuring expenses
and asset impairment expenses into expenses by function, and consequently gross
profit.
Liquidity
June 30, 2017 December 31, 2016 Change
-------------------------------------------------------------------------
Total debt $176,164 $168,080 5%
Cash and cash equivalents 168,853 160,744 5%
-------------------------------------------------------------------------
Net debt 7,311 7,336 -
AMG had a net debt position of $7.3 million as of June 30, 2017. Total debt
increased by $8.1 million and net debt was unchanged from December 31, 2016.
Cash from operating activities decreased by $13.7 million to $10.6 million in
the second quarter 2017, due to an $11.0 million increase in working capital
during the quarter which was largely driven by an increase in accounts
receivable.
Capital expenditures increased to $18.6 million in the second quarter 2017
compared to $7.5 million in the same period in 2016. Capital spending in the
second quarter 2017 included $5.6 million of maintenance capital. The largest
expansion capital projects were AMG's lithium project in Brazil, and titanium
aluminide expansion in Germany.
Including the $168.9 million of cash, AMG had $350 million of total liquidity as
of June 30, 2017.
Net Finance Costs
AMG's second quarter 2017 net finance costs decreased to $1.8 million from $3.3
million in the second quarter 2016, due to lower foreign exchange impacts.
SG&A
AMG's second quarter 2017 SG&A expenses were $32.0 million compared to $34.8
million in the second quarter 2016, primarily due to a decrease in share-based
compensation expenses of $1.6 million and lower pension expenses of $0.3
million, as a result of pension contributions made during 2016.
Interim Dividend
AMG has announced an interim dividend of ?0.14 per ordinary share in respect of
the period from January 1, 2017, to June 30, 2017.
Outlook
AMG expects full year 2017 profitability to improve relative to 2016.
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Income Statement
For the quarter ended June 30
In thousands of US Dollars 2017 2016
Unaudited Unaudited
--------------------
Continuing operations
Revenue 262,042 248,349
Cost of sales 207,698 195,047
Gross profit 54,344 53,302
Selling, general and administrative expenses 31,972 34,762
Net other operating income (205) (427)
Operating profit 22,577 18,967
Finance income (245) (179)
Finance expense 2,310 2,423
Foreign exchange (gain) loss (250) 1,082
Net finance costs 1,815 3,326
Share of loss of associates and joint ventures, net of tax - (14)
Profit before income tax 20,762 15,627
Income tax expense 7,717 2,802
Profit for the period 13,045 12,825
Attributable to:
Shareholders of the Company 13,115 13,447
Non-controlling interests (70) (622)
Profit for the period 13,045 12,825
Earnings per share
Basic earnings per share 0.45 0.48
Diluted earnings per share 0.42 0.48
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Income Statement
For the six months ended June 30
In thousands of US Dollars 2017 2016
Unaudited Unaudited
--------------------
Continuing operations
Revenue 520,011 485,748
Cost of sales 413,164 388,223
Gross profit 106,847 97,525
Selling, general and administrative expenses 63,552 66,060
Net other operating income (310) (435)
Operating profit 43,605 31,900
Finance income (421) (294)
Finance expense 4,304 4,513
Foreign exchange (gain) loss (83) 936
Net finance costs 3,800 5,155
Share of gain of associates and joint ventures, net of tax - 1,436
Profit before income tax 39,805 28,181
Income tax expense 11,194 3,085
Profit for the period 28,611 25,096
Attributable to:
Shareholders of the Company 28,681 25,421
Non-controlling interests (70) (325)
Profit for the period 28,611 25,096
Earnings per share
Basic earnings per share 1.00 0.91
Diluted earnings per share 0.91 0.90
AMG Advanced Metallurgical Group
N.V.
Condensed Interim Consolidated Statement of Financial
Position
June 30,
In thousands of US Dollars 2017 December 31, 2016
Unaudited
------------------------------------------
Assets
Property, plant and equipment 247,470 226,098
Goodwill 24,148 22,729
Intangible assets 11,974 10,486
Derivative financial instruments 890 740
Other investments 30,200 29,930
Deferred tax assets 37,626 41,285
Restricted cash 2,504 2,526
Other assets 12,108 17,207
Total non-current assets 366,920 351,001
Inventories 146,820 143,593
Derivative financial instruments 4,820 4,007
Trade and other receivables 153,022 129,220
Other assets 36,120 31,598
Cash and cash equivalents 168,853 160,744
Assets held for sale 1,972 149
Total current assets 511,607 469,311
Total assets 878,527 820,312
AMG Advanced Metallurgical Group N.V.
Condensed Interim Consolidated Statement of Financial
Position
(continued)
In thousands of US Dollars June 30, 2017 December 31, 2016*
Unaudited
---------------------------------
Equity
Issued capital 796 760
Share premium 432,844 389,066
Treasury shares (4,638) (570)
Other reserves (85,403) (97,085)
Retained earnings (deficit) (126,200) (116,457)
Equity attributable to shareholders of the 217,399 175,714
Company
Non-controlling interests 23,727 22,073
Total equity 241,126 197,787
Liabilities
Loans and borrowings 149,600 150,959
Employee benefits 150,381 141,588
Provisions 31,336 30,854
Deferred revenue - 2,822
Other liabilities 6,838 6,874
Derivative financial instruments - 887
Deferred tax liabilities 8,574 8,435
Total non-current liabilities 346,729 342,419
Loans and borrowings 11,064 9,621
Short term bank debt 15,500 7,500
Other liabilities 52,405 57,528
Trade and other payables 140,899 133,328
Derivative financial instruments 1,835 4,661
Advance payments 38,005 29,404
Deferred revenue 956 10,198
Current taxes payable 10,721 7,065
Provisions 19,287 20,801
Total current liabilities 290,672 280,106
Total liabilities 637,401 622,525
Total equity and liabilities 878,527 820,312
*Reclassified share reserves from other reserves to retained earnings (deficit)
for December 31, 2016
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 2017 2016
Unaudited Unaudited
--------------------
Cash from operating activities
Profit for the year 28,611 25,096
Adjustments to reconcile net profit to net cash flows:
Non-cash:
Income tax expense 11,194 3,085
Depreciation and amortization 14,742 14,838
Asset impairment expense 912 -
Net finance costs 3,800 5,155
Share of gain of associates and joint ventures - (1,436)
Gain on sale or disposal of property, plant and equipment (68) (80)
Equity-settled share-based payment transactions 4,418 914
Movement in provisions, pensions and government grants (3,023) (15,735)
Working capital and deferred revenue adjustments (22,930) (5,006)
Cash generated from operating activities 37,656 26,831
Finance costs paid, net (4,249) (3,162)
Income tax paid, net (4,944) (3,674)
Net cash from operating activities 28,463 19,995
Cash used in investing activities
Proceeds from sale of property, plant and equipment 96 368
Insurance proceeds on property, plant and equipment 1,415 -
Proceeds from sale of subsidiaries (net of cash divested
of $35 in 2016) - 675
Acquisition of property, plant and equipment and (29,452) (14,389)
intangibles
Acquisition of subsidiaries (net of cash acquired of $35 - (4,961)
in 2016)
Acquisition of other non-current investments - (1,000)
Change in restricted cash 210 19
Other 17 28
Net cash used in investing activities (27,714) (19,260)
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 2017 2016
Unaudited Unaudited
--------------------
Cash used in financing activities
Net proceeds from issuance of debt 2,889 1,573
Proceeds from issuance of common shares 14,370 -
Net repurchase of common shares (13,386) (1,785)
Dividend (4,417) (3,503)
Other - 1
Net cash used in financing activities (544) (3,714)
Net increase (decrease) in cash and cash equivalents 205 (2,979)
Cash and cash equivalents at January 1 160,744 127,778
Effect of exchange rate fluctuations on cash held 7,904 276
Cash and cash equivalents at June 30 168,853 125,075
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 CO(2) 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, 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. +1 610 293 5804
Steve Daniels
Senior Vice President
sdaniels(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.
Second Quarter 2017 FINAL:
http://hugin.info/138060/R/2125057/811014.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: AMG Advanced Metallurgical Group N.V. via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 03.08.2017 - 07:00 Uhr
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