AMG reports second quarter 2011 results
(Thomson Reuters ONE) -
Key Highlights
* Revenue was $368.3 million in the second quarter 2011, a 51% increase over
the same period in 2010
* Operating profit was $22.8 million in the second quarter 2011, a 55%
increase over the same period in 2010
* EBITDA[1] was $31.4 million in the second quarter 2011, a 32% increase over
the same period in 2010
* EPS on a fully diluted basis was $0.12 compared to $0.04 in the second
quarter 2010; excluding Timminco and loss on extinguishment of debt, EPS was
$0.29 in the second quarter 2011, compared to $0.20 in the second quarter
2010
* The Advanced Materials Division generated revenue of $235.6 million and
EBITDA of $17.5 million in the second quarter 2011
* The Engineering Systems Division generated revenue of $89.8 million and
EBITDA of $7.7 million in the second quarter 2011
* Graphit Kropfmühl generated revenue of $42.9 million and EBITDA of $6.2
million in the second quarter 2011
* As of June 30, 2011 cash on hand was $61.1 million; net debt was $217.3
million
Amsterdam, 10 August 2011 (Regulated Information) --- AMG Advanced Metallurgical
Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported second quarter 2011
revenue of $368.3 million, a 51% increase from $243.5 million in the second
quarter 2010.
EBITDA increased 32% to $31.4 million in the second quarter 2011 from $23.9
million in the second quarter 2010. Net profit attributable to shareholders for
the second quarter 2011 was $3.4 million, or $0.12 per fully diluted share.
This was up from $1.2 million, or $0.04 per fully diluted share, in the second
quarter 2010. Excluding AMG's share of Timminco's net loss in the second
quarter and loss on extinguishment of debt, AMG's net profit attributable to
shareholders for the second quarter 2011 was $8.0 million, or $0.29 per fully
diluted share compared to $0.20 in the second quarter 2010.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "The
business performed well in the second quarter 2011. Demand, particularly in
critical materials for the aerospace and energy markets, remained high during
the quarter. Pricing materials remained strong including antimony trioxide,
chromium metal and tantalum. The integration of KB Alloys is proceeding on
plan. The Engineering Systems' order intake increased 35% from the first
quarter 2011, despite the challenging solar capital goods market. Graphit
Kropfmühl's silicon metal and natural graphite products continued to experience
strong demand and pricing."
[1] EBITDA is defined as earnings before interest, tax, depreciation and
amortization and excludes nonrecurring items
Key Figures
In 000's US Dollar
Q2'11 Q2'10 Change
Revenue $368,318 $243,544 51%
----------------------------------------------------------------
Gross profit 68,993 44,490 55%
Gross margin 18.7% 18.3%
----------------------------------------------------------------
Operating profit 22,787 14,713 55%
Operating margin 6.2% 6.0%
Net profit attributable to
shareholders 3,351 1,164 188%
----------------------------------------------------------------
EPS- Fully diluted 0.12 0.04 200%
Adjusted EPS- Fully diluted (1) 0.29 0.20 45%
EBIT (2) 24,592 17,986 37%
EBITDA (3) 31,447 23,902 32%
EBITDA margin 8.5% 9.8%
----------------------------------------------------------------
Note:
(1) Adjusted to exclude equity losses from Timminco, and the loss on
extinguishment of debt of $0.07 and $0.10, respectively, in Q2 2011
(2) EBIT is defined as earnings before interest, tax and excludes nonrecurring
items
(3) EBITDA is defined as earnings before interest, tax, depreciation and
amortization and excludes nonrecurring items
Operational Review
Advanced Materials Division
Q2'11(1) Q2'10 Change
-----------------------------------------------------
Revenue $235,580 $151,982 55%
Gross profit 37,747 27,350 38%
Operating profit 12,865 10,452 23%
EBITDA 17,534 14,165 24%
Capital expenditures 6,194 4,247 46%
(1) 2011 includes the KB Alloys LLC acquisition
The Advanced Materials Division's second quarter 2011 financial results were
positively impacted by the acquisition of KB Alloys LLC, improvements in
aerospace alloys volumes and increases in chromium metal, tantalum and antimony
prices. Revenue increased by $83.6 million or 55% to $235.6 million. The
increase in revenue was specifically the result of $25.0 million of revenue from
KB Alloys LLC, which was acquired in February 2011, and 55%, 53%, and 38%
increase in aerospace master alloys and chemicals, tantalum and antimony
revenue, respectively.
The second quarter 2011 gross margin of 16% of revenue, declined from 18% of
revenue from the second quarter of 2010. Increased economies of scale were more
than offset by unfavourable changes in product mix, specifically an 87% increase
in lower margin aluminium products revenue and higher raw materials costs,
resulting in lower gross margins.
The second quarter 2011 EBITDA increased by $3.4 million to 7% of revenue from
9% of revenue in 2010 due to the increase in gross profit, but this was offset
by a 42% increase in SG&A due to the acquisition of KB Alloys and long-term
incentive expenses of $1.6 million.
Capital expenditures were $6.2 million for the quarter, 46% more than the second
quarter 2010. Significant growth capital investments made in the second quarter
include $1.6 million in the Brazilian tantalum mine and $1.0 million to expand
aerospace master alloy production.
Engineering Systems Division
Q2'11 Q2'10 Change
---------------------------------------------------
Revenue $89,812 $59,507 51%
Gross profit 22,661 13,942 63%
Operating profit 5,047 3,578 41%
EBITDA 7,671 8,047 (5%)
Capital expenditures 2,984 1,301 129%
The Engineering Systems Division's second quarter 2011 revenue increased by
$30.3 million, or 51%, to $89.8 million. Sales of solar silicon DSS furnaces
increased 43% in the second quarter 2011 compared to the same period in 2010,
accounting for 29% of revenue in the second quarter 2011. Own and Operate
revenue increased by 55% to $10.8 million, more than offsetting the 28% decline
to $12.4 million in revenue from remelting systems, primarily for the aerospace
and specialty steel industries.
The order backlog increased 2% to $200.6 million as of June 30, 2011, from
$195.9 million as of March 31, 2011. The division generated order intake of
$88.6 million in the second quarter 2011, a 0.99x book to bill ratio and a 31%
increase compared to the second quarter 2010. Order intake for heat treatment
furnaces and nuclear sintering furnaces accounted for 45% and 15% of total order
intake, respectively.
The second quarter 2011 gross margin of 25% of revenue increased from 23% of
revenue in the second quarter 2010 due to increased economies of scale, lower
costs in the MOX nuclear furnace business and increased capacity utilization at
the Own and Operate business.
Second quarter 2011 EBITDA decreased by $0.4 million to 9% of revenue from 14%
of revenue in the second quarter 2010. This was caused by a 62% increase in
SG&A due to long-term incentive expenses, research and development expenses and
costs associated with Mono(2(TM) )technology at AMG Idealcast Solar.
Capital expenditures were $3.0 million, 129% more than the second quarter of
2010. This increase in capital investments is primarily related to additional
capacity for the U.S. Own and Operate facility.
Graphit Kropfmühl
Q2'11 Q2'10 Change
---------------------------------------------------
Revenue $42,926 $32,055 34%
Gross profit 8,585 3,198 168%
Operating profit 4,875 683 614%
EBITDA 6,242 1,690 269%
Capital expenditures 2,486 1,259 97%
Graphit Kropfmühl's second quarter 2011 revenue increased by $10.9 million, or
34%, to $42.9 million. Natural graphite revenue increased $3.3 million, or
28%, driven by an increase in prices, despite lower volumes. Silicon metal
revenue increased by $7.6 million or 37%, primarily as a result of higher
silicon metal prices and increased volumes of silicon by products.
The second quarter 2011 gross margin increased to 20% of revenue from 10% of
revenue in the second quarter of 2010. Increased economies of scale resulting
in lower per unit production costs of natural graphite and higher sales prices
for silicon metal resulted in a significant increase in gross margins.
Second quarter 2011 EBITDA was $6.2 million, a 269% increase compared to the
second quarter 2010. The EBITDA margin increased to 15% in the second quarter
2011, up significantly from 5% in the same period 2010. The EBITDA margin
increase was attributable to the increase gross margins for silicon metal and
natural graphite, slightly offset by a 51% increase in SG&A due to increases in
personnel costs.
Capital expenditures increased to $2.5 million in the second quarter 2011, 97%
more than the second quarter 2010. The increase in capital expenditures was a
result of upgrading the electrodes at the silicon metal operation and adding
milling capacity in natural graphite.
Timminco
AMG's ownership in Timminco Limited ("Timminco") was 41.9% as of June 30, 2011.
AMG accounts for its investment in Timminco via the equity accounting method.
Timminco's loss for the second quarter 2011 of $1.9 million is included in share
of loss of associates on AMG's income statement and the carrying value of AMG's
investment in Timminco of $11.4 million is listed as an asset on AMG's balance
sheet. Additional information on Timminco can be found at www.Timminco.com.
Financial Review
Tax
AMG recorded a tax expense of $7.8 million in the second quarter 2011 compared
to a tax expense of $7.1 million in the second quarter 2010. Excluding share of
loss of associates, for which AMG cannot recognize a tax benefit since these
companies are not consolidated, AMG's effective tax rate was 57% in the second
quarter 2011. For the first half of 2011, excluding share of loss of
associates, AMG's effective tax rate is 42%.
SG&A
AMG's SG&A expenses were $44.8 million in the second quarter 2011, compared to
$29.9 million in the second quarter 2010. The $14.9 million change in SG&A
expenses was primarily due to a $5.0 million increase in personnel costs,
primarily at the operating level, $2.6 increase in long-term incentive expenses,
$2.3 million in bad debt expense as well as the additional $1.6 SG&A expenses
incurred by AMG Idealcast Solar, and KB Alloys LLC.
Currency Fluctuations
AMG transacts business in many currencies other than the US dollar, our
reporting currency. As our financial statements are prepared in US dollars,
fluctuations in the exchange rates between the US dollar and other currencies
have an effect both on our results of operations and on the reported value of
our assets and liabilities as measured in US dollars. The decline in the value
of the US dollar as of June 30, 2011 compared to March 31, 2011, resulted in an
increase in the assets and liabilities on the balance sheet of $13.5 million and
$9.9 million, respectively. The net result of the depreciation in the value of
the US dollar quarter over quarter resulted in an increase in revenue and EBITDA
of $23.6 million and $3.3 million, respectively in the second quarter 2011.
Liquidity
June 30, 2011 December 31, 2010 Change
----------------------------------------------------------------------------
Total debt $278,473 $237,089 17%
Cash & short-term investments 61,136 89,311 (32%)
----------------------------------------------------------------------------
Net debt 217,337 147,778 47%
AMG had a net debt position of $217.3 million as of June 30, 2011. AMG's net
debt position increased $69.6 million since December 31, 2010 primarily due to
$21.6 million of cash tax payments, $19.9 million in capital investments, the
$24.3 million acquisition of KB Alloys LLC, and a $46.7 million increase in
working capital due to increasing material costs, reduced by EBITDA of $57.6
million.
During the second quarter, AMG refinanced its primary credit facility and
secured a $300 million credit facility composed of a Euro denominated, U.S.
dollar equivalent, $100 million term loan and a $200 million revolving credit
facility. This facility has a five-year term and matures in April 2016.
Cash Flow
H1'11 H1'10
------------------------------------------------------------------------
Net cash flows used in operations $(12,080) $(20,295)
------------------------------------------------------------------------
Capital expenditures (19,913) (11,953)
Acquisitions, net of cash (26,816) -
Investment in associates - (10,322)
Cash flows used in other investing 2,844 246
------------------------------------------------------------------------
Net cash flows used in investing activities (43,885) (22,029)
------------------------------------------------------------------------
Cash flows generated from financing activities 23,899 21,207
------------------------------------------------------------------------
Cash flows used in operations were $12.1 million in the first half of 2011 as
compared to $20.3 million in the first half of 2010. The cash flows used in
operations in the first half of 2011 are a result of $21.6 million in cash tax
payments as well as a $46.7 million increase in working capital and provisions,
offset by $57.6 million in EBITDA. The substantial cash tax payments are
partially due to the difference between IFRS percentage of completion accounting
as compared to completed contract methodology for tax payments in the
Engineering Systems division.
Cash used in investing activities was $43.9 million in the first half of 2011.
This increase of $21.9 million from the first half of 2010 is composed of a
$26.8 million increase in acquisitions, primarily for KB Alloys LLC, and an $8.0
million increase in capital investments, slightly offset by a $10.3 million
decrease in cash flows for investment in associates. In Q2 2010, AMG made an
investment in Timminco as part of an equity offering.
Cash generated from financing activities was $23.9 million in the first half of
2011, a $2.7 million increase from the first half of 2010. This increase was
primarily attributable to $34.4 million in net draws on new and existing
revolving lines of credit, offset by $10.5 million in transaction costs related
to debt issuance. The draws on the revolving lines of credit were used to fund
the acquisition of KB Alloys LLC and the related transaction costs.
Outlook
The Advanced Materials Division should continue to generate strong revenues,
albeit at levels slightly below the second quarter 2011, for many of its
products including antimony trioxide, tantalum, titanium aerospace alloys and
chromium metal. In the second half of 2011, Advanced Materials' conversion
businesses will be impacted by higher raw material prices as lower cost
inventory stocks are depleted. As AMG enters the seasonally slow period in its
business, due to planned summer plant shutdowns of customers' and certain AMG
operations, AMG's is continuing to ramp up the tantalum and antimony mining
operations. Order Intake in Engineering Systems is stable but continues to be
adversely impacted by the current economic environment, with solar particularly
affected. Demand and pricing for Graphit Kropfmühl's natural graphite and
silicon metal products should remain strong for the balance of 2011. Management
will focus on reducing working capital and lowering net debt through cash from
operations in the second half of 2011. Provided the current macroeconomic
environment remains stable, AMG expects to generate in excess of 25% EBITDA
growth in 2011.
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the three months ended June 30
In thousands of US Dollars 2011 2010
Unaudited Unaudited
Continuing operations
Revenue 368,318 243,544
Cost of sales 299,325 199,054
Gross profit 68,993 44,490
Selling, general and administrative expenses 44,765 29,874
Restructuring expense 2,174 -
Environmental expense 141 249
Other income, net (874) (346)
Operating profit 22,787 14,713
Loss on early extinguishment of debt 3,902 -
Finance expense 5,013 4,600
Finance income (1,158) (1,082)
Foreign exchange loss (gain) 1,302 (1,592)
Net finance costs 9,059 1,926
Share of loss of associates 1,694 5,024
Profit before income tax 12,034 7,763
Income tax expense 7,828 7,126
Profit for the period 4,206 637
Attributable to:
Shareholders of the Company 3,351 1,164
Non-controlling interests 855 (527)
4,206 637
Earnings per share
Basic earnings per share 0.12 0.04
Diluted earnings per share 0.12 0.04
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the six months ended June 30
In thousands of US Dollars 2011 2010
Unaudited Unaudited
Continuing operations
Revenue 686,317 479,338
Cost of sales 557,544 392,264
Gross profit 128,773 87,074
Selling, general and administrative expenses 87,702 60,487
Restructuring expense 2,459 7
Environmental expense 246 506
Other income, net (1,827) (427)
Operating profit 40,193 26,501
Loss on early extinguishment of debt 3,902 -
Finance expense 7,018 10,921
Finance income (2,658) (1,629)
Foreign exchange loss (gain) 1,285 (3,756)
Net finance costs 9,547 5,536
Share of loss of associates 6,071 9,420
Profit before income tax 24,575 11,545
Income tax expense 12,792 10,993
Profit for the period 11,783 552
Attributable to:
Shareholders of the Company 10,323 1,099
Non-controlling interests 1,460 (547)
11,783 552
Earnings per share
Basic earnings per share 0.37 0.04
Diluted earnings per share 0.37 0.04
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial
position
In thousands of US Dollars
June December 31,
30, 2011 2010
Unaudited Audited
Assets
Property, plant and equipment 262,033 228,612
Intangible assets 33,556 27,002
Investments in associates and joint ventures 20,799 25,186
Derivative financial instruments 5,139 5,199
Deferred tax assets 26,552 22,107
Restricted cash 11,261 12,528
Notes receivable 1,144 322
Other assets 15,827 15,372
Total non-current assets 376,311 336,328
Inventories 258,198 207,204
Trade and other receivables 216,929 175,421
Derivative financial instruments 6,148 5,731
Other assets 46,998 41,080
Cash and cash equivalents 61,136 89,311
Total current assets 589,409 518,747
Total assets 965,720 855,075
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial position (continued)
In thousands of US Dollars
December 31,
June 30, 2011 2010
Unaudited Audited
Equity
Issued capital 741 741
Share premium 381,636 381,636
Other reserves 44,291 36,158
Retained earnings (deficit) (186,205) (196,481)
Equity attributable to shareholders of the Company 240,463 222,054
Non-controlling interests 13,888 11,911
Total equity 254,351 233,965
Liabilities
Loans and borrowings 219,761 187,813
Employee benefits 98,238 88,372
Provisions 21,021 20,607
Government grants 602 642
Other liabilities 9,733 5,517
Derivative financial instruments 548 698
Deferred tax liabilities 33,630 25,436
Total non-current liabilities 383,533 329,085
Loans and borrowings 4,981 4,254
Short term bank debt 53,731 45,022
Government grants 190 175
Other liabilities 56,996 43,287
Trade and other payables 117,472 102,253
Derivative financial instruments 5,189 1,754
Advance payments 45,715 49,597
Current taxes payable 19,649 24,979
Provisions 23,913 20,704
Total current liabilities 327,836 292,025
Total liabilities 711,369 621,110
Total equity and liabilities 965,720 855,075
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 2011 2010
Unaudited Unaudited
Cash flows used in operating activities
Profit for the period 11,783 552
Adjustments to reconcile profit to net cash flows:
Non-cash:
Depreciation and amortization 14,169 12,096
Restructuring expense 2,459 7
Environmental expense 246 506
Net finance costs 9,547 5,536
Share of loss of associates 6,071 9,420
Equity-settled share-based payment transactions 1,833 3,081
Income tax expense 12,791 10,993
Change in working capital and provisions (46,736) (35,719)
Other 2,529 2,119
Finance costs paid, net (5,136) (7,449)
Income tax paid, net (21,636) (21,437)
Net cash flows used in operating activities (12,080) (20,295)
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment 49 439
Acquisition of property, plant and equipment and
intangibles (19,913) (11,953)
Acquisition of associates and joint ventures - (10,322)
Acquisition of subsidiaries (net of cash acquired of $692) (26,816) -
Change in restricted cash 1,839 (181)
Other 956 (12)
Net cash flows used in investing activities (43,885) (22,029)
Cash flows from financing activities
Proceeds from the issuance of debt 221,626 22,512
Payment of transaction costs related to debt issuance (10,457) -
Repayment of long term borrowings (187,276) (1,420)
Other 6 115
Net cash flows from financing activities 23,899 21,207
Net decrease in cash and cash equivalents (32,066) (21,117)
Cash and cash equivalents at January 1 89,311 117,016
Effect of exchange rate fluctuations and consolidation
changes on cash 3,891 (11,325)
Cash and cash equivalents at June 30 61,136 84,574
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 consists of two operating divisions, 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 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, 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, 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.
Graphit Kropfmühl AG is a majority controlled, publicly listed subsidiary of
AMG. Based on its secure raw material sources in Africa, Asia 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.
With over 3,000 employees, AMG operates globally with production facilities in
Germany, the United Kingdom, France, Czech Republic, United States, China,
Canada, Mexico, Brazil, Turkey, Poland, India and Sri Lanka and also 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 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 second quarter 2011 results
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Source: AMG Advanced Metallurgical Group N.V. via Thomson Reuters ONE
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