AMG reports third quarter 2011 results
(Thomson Reuters ONE) -
Key Highlights
* Revenue was $356.4 million in the third quarter 2011, a 48% increase over
the same period in 2010
* Operating profit was $19.6 million in the third quarter 2011, an 88%
increase over the same period in 2010
* EBITDA[1] was $27.7 million in the third quarter 2011, a 48% increase over
the same period in 2010
* EPS on a fully diluted basis was $0.29 compared to ($0.41) in the third
quarter 2010; excluding Timminco and loss on extinguishment of debt, EPS was
$0.33 in the third quarter 2011, compared to $0.11 in the third quarter 2010
* The Advanced Materials Division generated revenue of $226.8 million and
EBITDA of $12.3 million in the third quarter 2011
* The Engineering Systems Division generated revenue of $86.3 million and
EBITDA of $9.3 million in the third quarter 2011
* Graphit Kropfmühl generated revenue of $43.3 million and EBITDA of $6.2
million in the third quarter 2011
* As of September 30, 2011 cash on hand was $71.3 million; net debt was $203.6
million
Amsterdam, 9 November 2011 (Regulated Information) --- AMG Advanced
Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported third
quarter 2011 revenue of $356.4 million, a 48% increase from $240.4 million in
the third quarter 2010.
EBITDA increased 48% to $27.7 million in the third quarter 2011 from $18.8
million in the third quarter 2010. Net profit attributable to shareholders for
the third quarter 2011 was $8.0 million, or $0.29 per fully diluted share. This
was up from a loss attributable to shareholders of $11.2 million, or ($0.41) per
fully diluted share, in the third quarter 2010. Excluding AMG's share of
Timminco's net loss in the third quarter, AMG's net profit attributable to
shareholders for the third quarter 2011 was $9.2 million, or $0.33 per fully
diluted share compared to $0.11 in the third quarter 2010.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "The
business continued to perform well in the third quarter 2011. Demand,
particularly in critical materials for the aerospace and energy markets,
remained high during the quarter. Pricing also remained strong for products
including antimony trioxide, chromium metal and tantalum. The Engineering
Systems' revenues increased and it generated a slight improvement in order
intake compared to third quarter 2010, despite the challenging 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
Q3'11 Q3'10 Change
Revenue $356,415 $240,427 48%
Gross profit 58,688 42,102 39%
Gross margin 16.5% 17.5%
Operating profit 19,565 10,433 88%
Operating margin 5.5% 4.3%
Net profit (loss) attributable to shareholders
8,034 (11,170) N/A
EPS- Fully diluted 0.29 (0.41) N/A
Adjusted EPS- Fully diluted [1] 0.33 0.11 200%
EBIT [2] 20,412 13,098 56%
EBITDA [3] 27,748 18,756 48%
EBITDA margin 7.8% 7.8%
Note:
[1] Adjusted to exclude equity losses from Timminco, which accounted for ($0.52)
and ($0.04) in Q3 2010 and Q3 2011, respectively
[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
Q3'11[1] Q3'10 Change
Revenue $226,800 $154,888 46%
Gross profit 29,603 21,999 35%
Operating profit 8,485 4,491 89%
EBITDA 12,254 9,424 30%
Capital expenditures 6,576 5,595 18%
[1] 2011 includes the KB Alloys LLC acquisition
The Advanced Materials Division's third quarter 2011 financial results were
positively impacted by the acquisition of KB Alloys LLC, improvements in
titanium master alloys volumes and increases in chromium metal, tantalum and
antimony prices. Revenue increased by $71.9 million or 46% to $226.8 million.
The increase in revenue was specifically the result of $20.7 million of revenue
from KB Alloys LLC, which was acquired in February 2011, and a 101%, 46%, and
41% increase in tantalum, antimony revenue and titanium master alloys and
chemicals, respectively.
The third quarter 2011 gross margin of 13% of revenue, declined from 14% of
revenue from the third quarter of 2010. Increased economies of scale were more
than offset by unfavourable changes in product mix, specifically a 69% increase
in low margin aluminium products revenue and higher raw materials costs,
resulting in lower gross margins.
The third quarter 2011 EBITDA increased by $2.8 million to 5% of revenue. This
was a slight decrease from 6% of revenue in the third quarter 2010. The
increase in EBITDA was the result of the $7.6 million increase in gross profit,
slightly offset by a 30% increase in SG&A, primarily due to a $1.3 million of
SG&A related to KB Alloys and an increase in compensation expenses of $2.0
million due to the increase in headcount.
Capital expenditures were $6.6 million for the quarter, 18% more than the third
quarter 2010. Significant growth capital investments made in the third quarter
include $2.4 million in the Brazilian tantalum mine and $1.8 million to expand
aerospace titanium master alloy production.
Engineering Systems Division
Q3'11 Q3'10 Change
Revenue $86,280 $53,155 62%
Gross profit 20,782 16,927 23%
Operating profit 6,379 5,128 24%
EBITDA 9,270 7,362 26%
Capital expenditures 2,569 819 214%
The Engineering Systems Division's third quarter 2011 revenue increased by $33.1
million, or 62%, to $86.3 million. Sales of solar silicon DSS furnaces
increased 50% in the third quarter 2011 compared to the same period in 2010,
accounting for 24% of revenue in the third quarter 2011. Revenues from heat
treatment furnaces for the production of light weight automotive components
increased 132% to $19.6 million, while sales of remelting furnaces, primarily
for the aerospace and specialty steel industries, increased 40% to $11.7
million.
The order backlog decreased 14% to $172.8 million as of September 30, 2011, from
$200.6 million as of June 30, 2011. The division generated order intake of
$68.5 million in the third quarter 2011, a 0.79x book to bill ratio, and a 2%
increase compared to the third quarter 2010. Order intake for remelting and
nuclear sintering furnaces accounted for 31% and 23% of total order intake,
respectively.
The third quarter 2011 gross margin of 24% of revenue decreased from 32% of
revenue in the third quarter 2010 as a result of increased end market pricing
pressure and unfavourable product mix, slightly offset by increased economies of
scale.
Third quarter 2011 EBITDA increased by $1.9 million to 11% of revenue. This
declined from 14% of revenue in the third quarter 2010. The $1.9 million
increase in EBITDA was a result of the $3.9 million increase in gross profit,
offset by a $2.6 million, or 22% increase in SG&A. The increase in SG&A was
primarily the result of $0.7 million increase in compensation expenses due to
the increase in headcount at the growing Own and Operate business and AMG
Idealcast Solar, and $0.4 million increase in research and development expenses
Capital expenditures were $2.6 million, 214% more than the third quarter of
2010. The increase in capital investments is primarily related to additional
capacity for the U.S. Own and Operate facility.
Graphit Kropfmühl
Q3'11 Q3'10 Change
Revenue $43,335 $32,384 34%
Gross profit 8,303 3,176 161%
Operating profit 4,701 814 478%
EBITDA 6,224 1,970 216%
Capital expenditures 2,683 687 291%
Graphit Kropfmühl's third quarter 2011 revenue increased by $11.0 million, or
34%, to $43.3 million. Natural graphite revenue increased $3.7 million, or
31%, driven by an increase in prices, despite lower volumes. Silicon metal
revenue increased by $7.3 million or 35%, primarily as a result of higher
silicon metal prices and increased volumes of silicon by products.
The third quarter 2011 gross margin increased to 19% of revenue from 10% of
revenue in the third quarter of 2010. The increase in gross margin was
primarily the result of higher sales prices for silicon metal and natural
graphite products.
Third quarter 2011 EBITDA increased by $4.3 million to 14% of revenue. This
improved from 6% of revenue in the third quarter 2010. The EBITDA margin
increase was attributable to the increased gross margins for silicon metal and
natural graphite, slightly offset by a 42% increase in SG&A due to increases in
personnel costs.
Capital expenditures increased to $2.7 million in the third quarter 2011, 291%
more than the third 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 September
30, 2011. AMG accounts for its investment in Timminco via the equity accounting
method. Timminco's loss for the third quarter 2011 of $1.1 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 $10.3 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 $3.8 million in the third quarter 2011 compared to
a tax expense of $0.3 million in the third 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 29% in the third
quarter 2011. For the first nine months of 2011, excluding share of loss of
associates, AMG's effective tax rate is 38%.
SG&A
AMG's SG&A expenses were $40.6 million in the third quarter 2011, compared to
$31.7 million in the third quarter 2010. The $8.9 million change in SG&A
expenses was primarily due to a $2.4 million increase in personnel costs from
growth based hiring, primarily at the operating level, $2.3 million in bad debt
expense and an additional $1.6 million in 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 appreciation in the
value of the US dollar as of September 30, 2011 compared to June 30, 2011,
resulted in a decrease in the assets and liabilities on the balance sheet of
$38.8 million and $27.2 million, respectively. The net result of the
depreciation in the value of the US dollar in the third quarter 2011 compared to
the third quarter 2010, resulted in an increase in revenue and EBITDA of $18.3
million and $2.3 million, respectively in the third quarter 2011.
Liquidity
September 30, 2011 December 31, 2010 Change
Total debt $274,890 $237,089 16%
Cash & short-term investments 71,253 89,311 (20%)
Net debt 203,637 147,778 38%
AMG had a net debt position of $203.6 million as of September 30, 2011. AMG's
net debt position increased $55.9 million since December 31, 2010 primarily the
result of a $55.0 million increase in working capital due to increasing material
costs, $31.7 million in capital investments, $25.9 million of cash tax payments,
the $24.3 million acquisition of KB Alloys LLC and $5.5 million of cash
interest paid, reduced by EBITDA of $85.4 million. Including the $71.3 million
of cash, AMG had $115.9 million of total liquidity as of September 30, 2011.
During the fourth quarter, AMG exercised the accordion feature of its primary
credit facility and secured approximately $15 million in incremental credit from
Fifth Third Bank. The total credit facility is now approximately $315 million
and it matures in April 2016.
Cash Flow
For the nine months ended
September 30 September 30
2011 2010
Net cash flows from (used in) $10,361 $(13,903)
operations
Capital expenditures (31,741) (19,054)
Acquisitions, net of cash (24,703) (17,287)
Investment in associates - (10,755)
Cash flows (used in) from other (1,569) 1,420
investing
Net cash flows used in investing (58,013) (45,676)
activities
Cash flows generated from financing 28,013 36,812
activities
Cash flows from operations were $10.4 million in the nine months ended September
30, 2011 compared to cash flows used in operations of $13.9 million in the same
period 2010. The cash flows from operations in the first nine months of 2011
are primarily the result of $85.4 million in EBITDA less $25.9 million in cash
tax payments and a $55.0 million increase in working capital. 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 $58.0 million in the first nine months of
2011. This $12.3 million increase compared to the first nine months 2010 is
composed of a $12.7 million increase in capital investments and a $7.4 million
increase in acquisitions, slightly offset by a $10.8 million decrease in cash
flows due to investment in associates. In 2011, AMG acquired KB Alloys LLC for
$24.3 million while in 2010 AMG acquired an antimony mine in Turkey for $17.3
million.
Cash generated from financing activities was $28.0 million in the first nine
months of 2011, an $8.8 million decrease from the first nine months of 2010.
This decrease was primarily attributable to $10.6 million in payments for
transaction costs related to debt issuance, offset by $2.0 million increase in
net draws on revolving lines of credit. The draws on the revolving lines of
credit were used to fund the acquisition of KB Alloys LLC and the related
transaction costs.
Outlook
Despite the uncertainty in the financial markets, AMG's business remains
healthy. The Advanced Materials Division continues to experience demand and
reasonable pricing for antimony trioxide, tantalum, titanium aerospace alloys
and chromium metal. The Engineering Systems Division's order intake remains
adversely impacted by the current economic environment, with solar particularly
affected, leading to potential delays in new orders. Demand and pricing for
Graphit Kropfmühl's natural graphite and silicon metal products should remain
stable for the balance of 2011. AMG expects to generate approximately 30%
EBITDA growth in 2011.
Given the potential spread of the financial turmoil to the general economy, as a
cautionary measure, AMG is selectively limiting new capital investments and
personnel expansion plans, and intends not to exceed current working capital
levels in 2012. We have started an initial mining and smelting operation on a
commercial level at our antimony property in Turkey. We are undertaking an
extensive drilling program, which will be the basis for developing a mining plan
for large-scale mining operations.
The current economic uncertainty makes providing specific guidance for 2012
difficult; however, AMG is well positioned to deliver revenue and EBITDA growth
subject to general economic conditions which are extraordinarily difficult to
predict.
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the three months ended September 30
In thousands of US Dollars 2011 2010
Unaudited Unaudited
Continuing operations
Revenue 356,415 240,427
Cost of sales 297,727 198,325
Gross profit 58,688 42,102
Selling, general and administrative
expenses 40,613 31,682
Restructuring expense 37 -
Environmental expense 136 257
Other income, net (1,663) (270)
Operating profit 19,565 10,433
Finance expense 8,583 4,840
Finance income (1,335) (1,341)
Foreign exchange gain (757) (578)
Net finance costs 6,491 2,921
Share of loss of associates 680 17,554
Profit (loss) before income tax 12,394 (10,042)
Income tax expense 3,755 325
Profit (loss) for the period 8,639 (10,367)
Attributable to:
Shareholders of the Company 8,034 (11,170)
Non-controlling interests 605 803
8,639 (10,367)
Earnings per share
Basic earnings per share 0.29 (0.41)
Diluted earnings per share 0.29 (0.41)
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the nine months ended September 30
In thousands of US Dollars 2011 2010
Unaudited Unaudited
Continuing operations
Revenue 1,042,732 719,764
Cost of sales 855,271 590,588
Gross profit 187,461 129,176
Selling, general and administrative
expenses 128,315 92,169
Restructuring expense 2,496 6
Environmental expense 382 763
Other income, net (3,490) (698)
Operating profit 59,758 36,936
Loss on early extinguishment of debt 3,902 -
Finance expense 15,601 15,761
Finance income (3,993) (2,970)
Foreign exchange loss (gain) 528 (4,334)
Net finance costs 16,038 8,457
Share of loss of associates 6,751 26,974
Profit before income tax 36,969 1,505
Income tax expense 16,547 11,317
Profit (loss) for the period 20,422 (9,812)
Attributable to:
Shareholders of the Company 18,357 (10,067)
Non-controlling interests 2,065 255
20,422 (9,812)
Earnings per share
Basic earnings per share 0.66 (0.37)
Diluted earnings per share 0.66 (0.37)
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial position
In thousands of US Dollars
September
30, December 31,
2011 2010
Unaudited Audited
Assets
Property, plant and equipment 257,172 228,612
Goodwill 25,014 21,704
Intangible assets 9,283 5,298
Investments in associates and joint ventures 18,779 25,186
Derivative financial instruments 1,475 5,199
Deferred tax assets 27,022 22,107
Restricted cash 11,167 12,528
Notes receivable 1,555 322
Other assets 15,283 15,372
Total non-current assets 366,750 336,328
Inventories 247,617 207,204
Trade and other receivables 219,087 175,421
Derivative financial instruments 3,459 5,731
Other assets 40,143 41,080
Cash and cash equivalents 71,253 89,311
Total current assets 581,559 518,747
Total assets 948,309 855,075
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial position (continued)
In thousands of US Dollars
September 30, 2011 December 31, 2010
Unaudited Audited
Equity
Issued capital 741 741
Share premium 381,636 381,636
Other reserves 19,256 36,158
Retained earnings (deficit) (178,168) (196,481)
Equity attributable to shareholders of the
Company 223,465 222,054
Non-controlling interests 14,896 11,911
Total equity 238,361 233,965
Liabilities
Loans and borrowings 223,529 187,813
Employee benefits 94,016 88,372
Provisions 19,951 20,607
Government grants 168 642
Other liabilities 8,373 5,517
Derivative financial instruments 1,069 698
Deferred tax liabilities 31,609 25,436
Total non-current liabilities 378,715 329,085
Loans and borrowings 4,793 4,254
Short term bank debt 46,568 45,022
Government grants 48 175
Other liabilities 61,342 43,287
Trade and other payables 129,635 102,253
Derivative financial instruments 17,519 1,754
Advance payments 33,584 49,597
Current taxes payable 16,030 24,979
Provisions 21,714 20,704
Total current liabilities 331,233 292,025
Total liabilities 709,948 621,110
Total equity and liabilities 948,309 855,075
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 2011 2010
Unaudited Unaudited
Cash flows used in operating activities
Profit for the period 20,422 (9,812)
Adjustments to reconcile profit to net cash flows:
Non-cash:
Depreciation and amortization 21,504 17,755
Restructuring expense 2,496 6
Environmental expense 382 763
Net finance costs 16,038 8,457
Share of loss of associates 6,751 26,974
Equity-settled share-based payment transactions 2,820 4,911
Income tax expense 16,547 11,317
Change in working capital and provisions (53,993) (38,238)
Other 8,764 2,312
Finance costs paid, net (5,478) (9,191)
Income tax paid, net (25,892) (29,157)
Net cash flows from (used in) operating activities 10,361 (13,903)
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment 87 1,046
Acquisition of associates and joint ventures - (10,755)
Acquisition of subsidiaries (net of cash acquired of
$3,860) (24,703) (17,287)
Acquisition of property, plant and equipment and
intangibles (31,741) (19,054)
Related party loans (4,924) -
Change in restricted cash 1,604 427
Other 1,664 (53)
Net cash flows used in investing activities (58,013) (45,676)
Cash flows from financing activities
Proceeds from the issuance of debt 227,526 36,636
Payment of transaction costs related to debt issuance (10,592) -
Repayment of long term borrowings (188,931) -
Other 10 176
Net cash flows from financing activities 28,013 36,812
Net decrease in cash and cash equivalents (19,639) (22,767)
Cash and cash equivalents at January 1 89,311 117,016
Effect of exchange rate fluctuations on cash 1,581 (4,036)
Cash and cash equivalents at September 30 71,253 90,213
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.
AMG reports third quarter 2011 results
This announcement is distributed by Thomson Reuters on behalf of
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originality of the information contained therein.
Source: AMG Advanced Metallurgical Group N.V. via Thomson Reuters ONE
[HUG#1562160]
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Datum: 09.11.2011 - 07:00 Uhr
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