2. Cautionary Note
THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG
ADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER
DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY
WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS.
This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to
buy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basis
of, or be relied on in connection with, any contract or commitment whatsoever.
This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunction
herewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. This
presentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, or
dispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities for
sale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation nor
anything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. The information
contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no
reliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company and
its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law,
none of the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.
Certain statements in this presentation constitute forward-looking statements, including statements regarding the Company's financial
position, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe,”
“expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should” and similar expressions, reflect the beliefs and
expectations of the management board of directors of the Company and are subject to risks and uncertainties that may cause actual results
to differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability,
growth, cost and synergy of the Company’s recent acquisitions, the timely development and acceptance of new products, the impact of
competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions.
These and other factors could adversely affect the outcome and financial effects of the plans and events described herein.
Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend,
update or revise any of the forward-looking statements contained in this presentation.
The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without
notice.
This document has not been approved by any competent regulatory or supervisory authority.
2
3. Overview
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
LTM Revenues: $1,149.6M
LTM EBITDA: $81.6M
Employees: 3,145
Facilities: Netherlands, Germany, France, Czech Republic, Poland,
UK, USA, Brazil, Mexico, China, India, Sri Lanka,
Turkey, Zimbabwe, Mozambique
Market Cap: €243M ($305M)
Enterprise Value: €312M ($470M)
Shares outstanding: 27.6M
52 week range: €5.88–€8.35
Recent share price: €8.11 (November 7, 2013)
Global provider of high value added specialty metals and related engineering systems
for growing end markets, including energy, aerospace, infrastructure, and specialty
metals and chemicals
3
4. Business Units, Products and Markets
AMG Processing
AMG Mining
AMG Engineering
AMG’s conversion and
recycling based businesses
Integrated AMG’s mine
based businesses
AMG’s vacuum systems and
services business
High-value metals & alloys
Coating materials
Critical raw materials
Capital equipment & service
for high purity materials
Serving the Technology Trends in Energy, Aerospace, Infrastructure,
and Specialty Metals & Chemicals
Energy
4
Aerospace
Infrastructure
Specialty Metals
& Chemicals
5. Critical Raw Materials
The EU identified 14 critical raw materials* to the European economy – focusing
on two determinants – economic importance and supply risk
Materials mined or processed by
AMG, or treated in AMG vacuum
systems
REE
Materials treated by AMG
vacuum systems
Nb
Sb
C
Ta
Li
Ti
V
Mo
Si
F
e
5
Note: *European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials
Al
Ni
Cr
6. Business Units – AMG Processing
AMG Processing – conversion and recycling operations
Value Proposition
Aluminum grain refiners
and master alloys for high
performance materials in
aerospace, automotive and
infrastructure applications
Ferrovanadium for high
strength, low alloy steels
for infrastructure;
ferronickel-molybdenum
for stainless steel
Titanium master alloys for
high performance ,light
weight aerospace engine
and frame, and coating
materials for aerospace
turbines
Tantalum and niobium
6
superalloys and chrome
metal for aerospace
engine and industrial gas
turbines
Key Products
Major Applications
7. Business Units – AMG Mining
AMG Mining – mine based value chains
Value Proposition
Antimony trioxide and
master batches for flame
retardant on electronics,
paints, and plastics
Conflict-free tantalum
concentrate for tantalum
capacitors used on
portable electronics
Natural graphite for building
insulation materials, energy
storage, li-ion batteries for
electrical vehicle, and
lubricants
Silicon metal for aluminum
production and solar panel
materials
7
Key Products
Major Applications
8. Business Units – AMG Engineering
AMG Engineering – vacuum systems and services
Value Proposition
Vacuum melting and re-
melting furnaces for highperformance titanium, steel
and alloys, and purification
of rare metals and alloys
Vacuum heat treatment
furnaces and services for
high-performance materials
of aerospace and
automotive applications
Vacuum coating furnace for
aerospace turbine blade
coatings
Vacuum sintering and
annealing furnaces for
nuclear fuel productions
8
Key Products
Major Applications
9. Recent Developments – Operations Update
AMG is improving operational performance and cash flow
2013 Objectives
Reduce SG&A
by 5%
Improve Gross
Margin
Increase
Operating
Cash Flow
Reduce Net
Debt
9
Progress Update
■
YTD Q3‘13 SG&A reduced by 7.9%, or $8.8M, compared to YTD
Q3’12, in excess of the 2013 target
■
YTD Q3’13 Gross Margin 15.6%, down 0.8% compared to YTD
Q3’12
■
Significant decline in metal prices impacted margins
■
YTD Q3’13 Operating cash flow $57.3M, up $23.8M or 71%,
compared to YTD Q3’12
■
Sep.30, 2013 Working Capital reduced $27.4M, compared to Dec.
31, 2012 – Working Capital Days reduced by 16 days
■
Sep. 30, 2013 Net Debt reduced by $30.6M, compared to Dec. 31,
2012; $16.4M reduction in Q3 2013
10. Recent Developments – Operations Update
AMG Processing
■ AMG Aluminum
■ Improved product mixed and reduced costs, resulting improved margins
■ AMG Superalloys and AMG Titanium Alloys & Coatings
■ Implementing fixed cost reduction programs
■ AMG Vanadium
■ Expansion ramp up on schedule, increasing volumes
AMG Engineering
■ Reduced headcount by 16%, moving past the solar market downturn
■ Simplifying the reporting structure
AMG Mining
■ AMG Antimony
■ Substantially lowered costs and reduced working capital
■ Drilling and geology campaign continue at mine
■ AMG Graphite
■ Optimizing current raw material supply chains
10
13. Capital Base
Cash and Debt
( in USD millions)
Cash
$315.8
Debt
Net Debt
$279.9
$268.6
$237.1
$194.2
$189.0
■ Net debt: $163.6M
■ A reduction of $16.4 million in Q3’13
■ Debt to capitalization: 0.67x
■ Net Debt to LTM EBITDA: 2.01x
■ Revolver availability: $73.7M
■ Total liquidity: $190.0M
$163.6
$147.2
$121.6
$89.9
$116.3
$79.6
Dec-10
Dec-11
Dec-12
Sep. 2013
Cash Flow from Operations – First 9 months
■ AMG’s primary debt facility is a $370
million term loan and revolving credit
facility
■ 5 year term – until 2016
■ Obtained waiver for tangible net
worth covenant as of June 30, 2013
■ Currently in compliance with all debt
covenants
( in USD millions)
$57.3
$33.5
-$13.9
13
$10.4
-
-
-
2010
2011
2012
2013
■ YTD Q3’13 $57.3M Cash Flows from
Operations, up 71% compared to YTD
Q3’12
14. Financial Highlights
Revenue
Gross Margin
YTD September 2013 Revenue: $874.4
(in USD millions)
YTD September 2013 Gross Margin: 15.6%
24.6%
AMG Engineering
$193.2
15.7%
11.6%
AMG Mining
AMG Processing
$245.5
$435.7
AMG Processing
EBITDA
AMG Mining
AMG Processing
14
AMG Engineering
Capital Expenditure
YTD September 2013 EBITDA: $62.1
AMG Engineering
AMG Mining
$18.2
$22.5
$21.3
(in USD millions)
YTD September 2013 CAPEX: $22.5
AMG Engineering
AMG Mining
AMG Processing
$1.4
$7.3
$13.9
(in USD millions)
16. End Markets
Revenue
Gross Profit
( in USD millions)
YTD September 2013: $874.4
( in USD millions)
YTD September 2013: $136.7
Aerospace
45.4%
Aerospace
40.7%
Energy
18.1%
Infrastructure
12.2%
Energy
17.2%
Infrastructure
9.8%
Specialty Metals
& Chemicals
29.0%
Aerospace - 9%
vs. YTD Sep. 2012
16
Specialty Metals
& Chemicals
27.6
Aerospace - 2%
vs. YTD Sep. 2012
Titanium alloys and
Chrome metal revenue
decreased
Focusing on higher
margin products for
Aerospace
17. AMG Processing
Financial Summary
$180.0 Revenue
$160.0
EBITDA
$146.9
$140.0
( in USD millions)
$138.1
$16.0
$120.0
$100.0
$80.0
$11.0
$9.1
$60.0
$4.6
$40.0
$6.0
$20.0
$-
$1.0
Q3 12
Q3 13
Capital Expenditure
( in USD millions)
$5.3
$3.1
-
Q3 12
17
■ Q3’13 revenue down 6% from Q3’12
■ AMG Aluminium up 2%
■ Significant price declines in vanadium
and titanium alloy products
■ AMG Vanadium down 28%
-
Q3 13
■ Q3’13 gross margin 9% of revenue, down
from 13% in Q3’12
■ Metal price declines impacted margins
■ AMG Superalloys margins down 71% unfavorable product mix
■ AMG Aluminum margins up 79% product rationalization
■ Q3’13 EBITDA margin 3% of revenue,
compared to 6% in Q3’12
■ $2.0M decrease in personnel costs
■ Q3’13 CAPEX $3.1M
■ $2.2M for maintenance
18. AMG Mining
Financial Summary
$100.0 Revenue
$78.8
Q3’13 gross margin 16% of revenue, down
from 17% in Q3’12
Lower average prices for the higher
volume products
Q3’13 EBITDA 11% of revenue, up from
6% in Q3’12
■ $1.5M decrease in environmental costs
( in USD millions)
$82.3
$70.0
$11.0
$8.9
$60.0
$50.0
$40.0
$30.0
Q3’13 revenue up 4% from Q3’12
Volumes increased for most products
Prices were mixed – Tantalum up 12%,
Graphite up 5%, Antimony down 11%,
and Silicon metal down 9%
$90.0
$80.0
EBITDA
$4.9
$6.0
$20.0
$10.0
$-
$1.0
Q3 12
Q3 13
Capital Expenditure
( in USD millions)
$3.8
$2.8
-
Q3 12
18
-
Q3 13
■ Q3’13 CAPEX $2.8M
$1.0M for silicon metal furnace
efficiency upgrade
$1.1M for maintenance
19. AMG Engineering
Financial Summary
$80.0
Revenue
Q3’13 revenue down 7% from Q3’12
Nuclear furnaces up 55%
Turbine blade coating furnaces up
843%
Sintering furnaces down 51%
Remelting furnaces down 32%
Q3’13 gross margin 21% of revenue,
consistent with Q3’12
Improved profitability on certain large
projects
Increased focus on cost control
Q3’13 EBITDA 6% of revenue, down from
8% of revenue in Q3’12
Order backlog down 8% to $133.5M at
Sep. 30, 2013, from June 30, 2013
Order intake $48.4M in Q3 ‘13
0.73x book to bill ratio
$8.0
EBITDA
( in USD millions)
$71.2
$70.0
$66.1
$60.0
$5.8
$50.0
$40.0
$30.0
$4.2
$20.0
$10.0
$-
$3.0
Q3 12
Q3 13
Order Intake
( in USD millions)
$79.7
$76.4
$67.8
$48.4
$30.9
-
Q3 12
19
-
Q4 12
-
Q1 13
-
Q2 13
-
Q3 13
21. Outlook
AMG Processing
AMG Mining
Continued significant
declines in metal prices are
impacting revenues and
profitability
Implementing cost reduction
programs through mid-2014
The aerospace market
destocking may continue into
2014
Improved margins through
cost reductions
Natural graphite volume is
expected to be above 2012
Declining prices on antimony
and graphite delaying mine
development
AMG Engineering
Order Intake is expected to
improve in Q4
Continued investment in new
technologies; introduced the
next generation plasma
melting furnace for Ti alloy
industry
Full year 2013 EBITDA
consistent with 2012
■ Market conditions continue to be extremely weak, resulting in lower EBITDA in 2013 than in 2012
■ Positive Operating Cash Flow during Q4 2013
■ AMG announces Q4 2013 financial results on March 19, 2014
21
23. Consolidated Balance Sheet
Balance Sheet ($’000)
As of
Fixed assets
Goodwill and intangibles
Other non-current assets
Actual
31-December-12*
30-September-13
(restated)
288,269
258,211
38,722
36,539
77,710
78,178
Inventories
Receivables
Other current assets
Cash
TOTAL ASSETS
185,569
161,310
36,496
116,278
872,581
TOTAL EQUITY
175,263
139,972
Long-term debt
Pension liabilities
Other long-term liabilities
265,553
137,957
78,940
244,658
132,981
84,157
Current debt
Accounts payable
Advance payments
Accruals
Other current liabilities
TOTAL LIABILITIES
TOTAL LIABILITIES & EQUITY
23
211,531
177,232
33,667
121,639
948,770
50,291
125,342
26,989
58,934
29,501
773,507
948,770
35,236
123,272
26,878
53,562
31,865
732,609
872,581
* AMG restated the December 31, 2012 statement of financial position and 2012 income statement to comply with new IFRS
standards and interpretations.
24. Consolidated Income Statement
Income Statement ($’000)
For the three months ended
Revenue
Cost of sales
Gross profit
Selling, general & admin.
Asset impairment & restructuring
Environmental
Other income, net
Operating profit
Actual
30-September-12*
30-September-13
(restated)
296,851
286,415
249,314
246,623
47,537
39,792
34,411
476
1,712
(186)
11,124
32,343
1,753
48
(1,627)
7,275
Net finance costs
Share of profit of associates
Profit before income taxes
4,328
208
7,004
5,665
26
1,636
Income tax expense
Profit for the period
2,101
4,903
459
1,177
Shareholders of the Company
Non-controlling interest
5,006
(103)
1,407
(230)
Adjusted EBITDA
24
19,814
17,701
* AMG restated the December 31, 2012 statement of financial position and 2012 income statement to comply with new IFRS
standards and interpretations.
25. Consolidated Statement of Cash Flows
Cash Flow Statement ($’000)
For the nine months ended
EBITDA
Actual
30-September-12*
(restated)
30-September-13
64,286
62,084
+/- Change in operating assets/liabilities
(10,773)
27,369
-Interest paid, net
(10,030)
(11,331)
Other operating cash flow
1,644
(9,260)
Cash flows from operations before taxes
45,127
68,862
Income tax paid
(11,619)
(11,544)
Total cash flows from operations
33,508
57,318
(33,875)
(22,534)
(169)
436
(34,044)
(22,098)
Cash flows from (used in) financing activities
32,260
(42,596)
Net increase (decrease) in cash
31,724
(7,376)
Beginning cash
79,571
121,639
91
2,015
111,386
116,278
Capital expenditures
Other investing activities
Cash flows (used in) investing activities
Effects of exchange rates on cash
Ending cash
25
* AMG restated the December 31, 2012 statement of financial position and 2012 income statement to comply with new IFRS
standards and interpretations.