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AMG Advanced Metallurgical Group N.V. Reports First Quarter 2017 Results
04 May 2017

Key Highlights

  • Revenue increased by 9% to $258.0 million in the first quarter 2017 from $237.4 million in the first quarter 2016
  • EBITDA(2) was $33.0 million in the first quarter 2017, a 56% increase over the same period in 2016
  • AMG ended the first quarter 2017 net debt free, with net cash of $0.5 million
  • Net income attributable to shareholders increased by 30% to $15.6 million in the first quarter 2017 from $12.0 million in the first quarter 2016
  • Operating cash flow was $17.8 million in the first quarter 2017, an increase of $22.2 million over the same period in 2016
  • Annualized return on capital employed increased to 25.5% in the first quarter 2017, as compared to 14.7% in the first quarter 2016

 

Amsterdam, 4 May 2017 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported first quarter 2017 revenue of $258.0 million, a 9% increase from $237.4 million in the first quarter 2016. EBITDA for the first quarter 2017 was $33.0 million, a 56% increase from $21.2 million in the first quarter 2016. Net income attributable to shareholders increased to $15.6 million in the first quarter 2017 from $12.0 million in the first quarter 2016.

 

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "AMG's focus on operational excellence once again resulted in solid financial results in the first quarter 2017.

 

AMG Engineering achieved EBITDA of $7.3 million during the first quarter 2017, a 57% increase from $4.6 million in the first quarter 2016. AMG Engineering signed $81.8 million in new orders during the first quarter 2017, representing a 1.29x book to bill ratio. The Engineering segment continues to experience strong demand for turbine blade coating and plasma remelting furnaces for the aerospace market and heat treatment furnaces for the automotive market. Order backlog was $154.3 million as of March 31, 2017, an increase of 14% 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 $25.7 million during the first quarter 2017, thanks to strong financial performance in vanadium, titanium alloys, and chrome, as well as the recognition of additional tantalum deferred revenue.

 

AMG generated cash from operating activities of $17.8 million during the first quarter 2017, an increase of $22.2 million compared to the same period in 2016. This strong cash flow generation enabled AMG to end the first quarter net debt free, with net cash of $0.5 million."

 

 

Key Figures

 

In 000's US Dollar

 

 

 

 

Q1 '17

Q1 '16

Change

Revenue

$257,969

$237,399

9%

Gross profit

52,503

44,223

19%

Gross margin

20.4%

18.6%

 

 

 

 

 

Operating profit

21,028

12,933

63%

Operating margin

8.2%

5.4%

 

 

 

 

 

Net income attributable to shareholders

15,566

11,974

30%

 

 

 

 

EPS - Fully diluted

0.50

0.42

19%

 

 

 

 

EBIT (1)

25,721

13,815

86%

EBITDA (2) 

32,966

21,189

56%

EBITDA margin

12.8%

8.9%

 

 

 

 

 

Cash from (used in) operating activities

17,830

(4,320)

N/A

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

 

Q1 '17

Q1 '16

Change

Revenue

$194,506

$176,555

10%

Gross profit

 36,268

 30,479

19%

Operating profit

15,610

10,478

49%

EBITDA

25,668

16,545

55%

 

 

 

 

 

AMG Critical Materials revenue in the first quarter increased by $18.0 million, or 10%, to $194.5 million, driven by improved vanadium, molybdenum, nickel, aluminum and antimony prices, and higher sales volumes of chrome, antimony and titanium products.  

 

Gross profit in the first quarter increased by $5.8 million, or 19%, to $36.3 million. Strong financial performance in vanadium, titanium alloys and chrome was partially offset by lower gross profit in silicon. In addition, AMG Critical Materials incurred 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. AMG is insured for the damage sustained and the business interruption, and in accordance with IFRS, will recognize the insurance proceeds once recovery amounts are virtually certain.

 

Following the early cancellation of AMG Mineração's long term tantalum supply contract, deferred revenue recognized in the first quarter 2017 increased by $6.8 million, compared to the first quarter 2016, resulting in additional tantalum revenue and profitability.

 

SG&A expenses in the first quarter 2017 increased by $0.7 million, or 3%, compared to the same period in the prior year, due to an increase in the allowance for doubtful accounts associated with AMG's tantalum business.

 

First quarter 2017 EBITDA margin increased to 13%, compared to 9% in the first quarter 2016, due primarily to the improvement in gross profit in the quarter.

 

 

AMG Engineering

 

Q1 '17

Q1 '16

Change

Revenue

$63,463

$60,844

4%

Gross profit

16,235

13,744

18%

Operating profit

5,418

2,455

121%

EBITDA

7,298

4,644

57%

 

 

 

 

 

AMG Engineering signed $81.8 million in new orders during the first quarter 2017, representing a 1.29x book to bill ratio. Order backlog was $154.3 million as of March 31, 2017, an increase of 14% from December 31, 2016.

 

AMG Engineering's first quarter 2017 revenue increased $2.6 million, or 4%, to $63.5 million, due to strong sales of turbine blade coating and induction furnaces for the aerospace market and heat treatment furnaces for the automotive market.

 

First quarter 2017 gross profit increased by $2.5 million, or 18%, to $16.2 million due to higher revenues and product mix effects. Gross Margin increased slightly to 26% from 23% in the first quarter 2016 due to product mix effects.

 

SG&A expenses decreased slightly by $0.4 million, or 4%, compared to the prior year due to lower personnel costs.

 

EBITDA increased by $2.7 million to $7.3 million in the first quarter 2017, driven by higher gross profit and lower SG&A costs.

 

 

Financial Review

 

Tax

 

AMG recorded an income tax expense of $3.5 million in the first quarter 2017 as compared to a tax expense of $0.3 million in the same period in 2016. AMG paid taxes of $1.5 million in the first quarter 2017 as compared to tax payments of $1.9 million in the same period in 2016. For the first quarter 2017, AMG's effective cash tax rate was 8%, compared to 15% in the same period in 2016.

 

 

Non-Recurring Items

 

AMG's first quarter 2017 gross profit of $52.5 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 first quarters of 2017 and 2016 are below:

 

 

 

Non-recurring items included in gross profit

 

 

Q1 '17

Q1 '16

Change

Gross profit

$52,503

$44,223

19%

Restructuring expense

467

68

587%

Asset impairment expense

2,217

-

N/A

Gross profit before non-

  recurring items

55,187

44,291

25%

 

 

 

Gross profit before non-recurring items by reporting segment

 

 

Q1 '17

Q1 '16

Change

AMG Critical Materials

$38,885

$30,476

28%

AMG Engineering

16,302

13,815

18%

Gross profit before non-

  recurring items

55,187

44,291

25%

 

AMG Critical Materials gross profit in the first quarter 2017 was negatively impacted by asset impairment expenses of $2.2 million related to the Mibra mine in Brazil.

 

The Company decided to modify its income statement presentation in order to take into consideration ESMA's latest recommendations. This new presentation results in the reclassification of restructuring expenses and asset impairment expenses into expenses by function, and consequently gross profit. Accordingly, the comparative figures of the 2017 consolidated financial statements have been restated to comply with IFRS requirements.

 

Liquidity

 

March 31, 2017

December 31, 2016

Change

Total debt

$165,951

$168,080

(1%)

Cash and cash equivalents

166,456

160,744

4%

Net (cash) debt

(505)

7,336

N/A

 

AMG had a net cash position of $0.5 million as of March 31, 2017. Net debt decreased by $7.8 million and total debt decreased by $2.1 million from December 31, 2016.

 

Cash from operating activities increased by $22.2 million to $17.8 million in the first quarter 2017.

 

Capital expenditures increased to $10.9 million in the first quarter 2017 compared to $6.9 million in the same period in 2016. Capital spending in the first quarter 2017 included $4.8 million of maintenance capital. The largest expansion capital projects were AMG's lithium project in Brazil, and titanium aluminide expansion in Germany.

 

Including the $166.5 million of cash, AMG had $354 million of total liquidity as of March 31, 2017.

 

Net Finance Costs

 

AMG's first quarter 2017 net finance costs slightly increased to $2.0 million compared to $1.8 million in the first quarter 2016.

 

 

 

SG&A

 

AMG's first quarter 2017 SG&A expenses were $31.6 million compared to $31.3 million in the first quarter 2016, primarily due to an increase in the allowance for doubtful accounts during the period.

 

Outlook

 

AMG expects full year 2017 profitability to be in-line with 2016 levels, assuming that the business interruption insurance claim related to the fire in Brazil is received in the current financial year.

 

AMG's management team is focused on delivering our highly accretive lithium project and executing our long-term lithium strategy. In addition, we will continue to pursue other acquisition opportunities and organic growth projects in order to generate long term value for our shareholders.

 

 


 

AMG Advanced Metallurgical Group N.V.

 

 

Condensed Interim Consolidated Income Statement

 

 

 

 

 

For the quarter ended March 31

 

 

In thousands of US Dollars

2017

2016

 

Unaudited

Unaudited

Continuing operations

 

 

Revenue

257,969

237,399

Cost of sales

205,466

193,176

Gross profit

52,503

44,223

 

 

 

Selling, general and administrative expenses

31,580

31,298

 

 

 

Other income, net

(105)

(8)

Net other operating income

(105)

(8)

 

 

 

Operating profit

21,028

12,933

 

 

 

Finance income

(176)

(115)

Finance expense

1,994

2,090

Foreign exchange loss (gain)

167

(146)

Net finance costs

1,985

1,829

 

 

 

Share of gain of associates and joint ventures, net of tax

-

1,450

 

 

 

Profit before income tax

19,043

12,554

 

 

 

Income tax expense 

3,477

283

 

 

 

Profit for the period

15,566

12,271

 

 

 

Attributable to:

 

 

Shareholders of the Company

15,566

11,974

Non-controlling interests

-

297

Profit for the period

15,566

12,271

 

 

 

Earnings per share

 

 

Basic earnings per share

0.55

0.43

Diluted earnings per share

0.50

0.42


 

 

AMG Advanced Metallurgical Group N.V.

 

 

Condensed Interim Consolidated Statement of Financial Position 

 

 

 

 

 

 

 

 

In thousands of US Dollars 

March 31,

2017

Unaudited

December 31, 2016

Assets

 

 

Property, plant and equipment

228,468

226,098

Goodwill

22,962

22,729

Intangible assets

11,190

10,486

Derivative financial instruments

884

740

Other investments

30,182

29,930

Deferred tax assets

41,352

41,285

Restricted cash

2,342

2,526

Other assets

14,518

17,207

Total non-current assets

351,898

351,001

Inventories

144,071

143,593

Derivative financial instruments

5,863

4,007

Trade and other receivables

128,641

129,220

Other assets

28,046

31,598

Cash and cash equivalents

166,456

160,744

Assets held for sale

155

149

Total current assets

473,232

469,311

Total assets

825,130

820,312

 

 

 


 

AMG Advanced Metallurgical Group N.V.

 

 

Condensed Interim Consolidated Statement of Financial Position 

 

 

(continued)

 

 

 

 

 

 

 

 

In thousands of US Dollars   

March 31, 2017

Unaudited

December 31, 2016

Equity

 

 

Issued capital

760

760

Share premium

389,066

389,066

Treasury shares

(277)

(570)

Other reserves

(28,700)

(35,950)

Retained earnings (deficit)

(162,206)

(177,592)

Equity attributable to shareholders of the Company

198,643

175,714

 

 

 

Non-controlling interests

22,322

22,073

Total equity

220,965

197,787

 

 

 

Liabilities

 

 

Loans and borrowings

148,454

150,959

Employee benefits

143,500

141,588

Provisions

30,232

30,854

Deferred revenue

-

2,822

Government grants

369

390

Other liabilities

7,591

6,484

Derivative financial instruments

472

887

Deferred tax liabilities

8,587

8,435

Total non-current liabilities

339,205

342,419

 

 

 

Loans and borrowings

9,997

9,621

Short term bank debt

7,500

7,500

Government grants

98

97

Other liabilities

55,335

57,431

Trade and other payables

133,179

133,328

Derivative financial instruments

2,258

4,661

Advance payments

25,781

29,404

Deferred revenue

1,514

10,198

Current taxes payable

8,860

7,065

Provisions

20,438

20,801

Total current liabilities

264,960

280,106

Total liabilities

604,165

622,525

Total equity and liabilities

825,130

820,312

 

 

 

 

AMG Advanced Metallurgical Group N.V.

 

 

Condensed Interim Consolidated Statement of Cash Flows

 

 

 

For the quarter ended March 31

 

 

In thousands of US Dollars

2017

2016

 

Unaudited

Unaudited

Cash from (used in) operating activities

 

 

Profit for the year

15,566

12,271

Adjustments to reconcile net profit to net cash flows:

 

 

Non-cash:

 

 

Income tax expense

3,477

283

Depreciation and amortization

7,245

7,374

Asset impairment expense

2,217

-

Net finance costs

1,985

1,829

Share of gain of associates and joint ventures

-

(1,450)

(Gain) loss on sale or disposal of property, plant and equipment

(61)

171

Equity-settled share-based payment transactions

2,176

668

Movement in provisions, pensions and government grants

293

(23)

Working capital and deferred revenue adjustments

(11,124)

(22,222)

Cash generated from (used in) operating activities

21,774

(1,099)

Finance costs paid, net

(2,400)

(1,301)

Income tax paid, net

(1,544)

(1,920)

Net cash from (used in) operating activities

17,830

(4,320)

 

 

 

Cash used in investing activities

 

 

Proceeds from sale of property, plant and equipment

66

254

Acquisition of property, plant and equipment and intangibles

(10,859)

(6,917)

Acquisition of subsidiaries (net of cash acquired of $35 in 2016)

-

(4,961)

Change in restricted cash

217

110

Other

16

12

Net cash used in investing activities

(10,560)

(11,502)

 

 


 

AMG Advanced Metallurgical Group N.V.

 

 

Condensed Interim Consolidated Statement of Cash Flows

 

 

(continued)

 

 

For the quarter ended March 31

 

 

In thousands of US Dollars

2017

2016

 

Unaudited

Unaudited

Cash used in financing activities

 

 

Repayment of borrowings

(3,050)

(1,414)

Issuance of treasury shares

151

-

Net cash used in financing activities

(2,899)

(1,414)

 

 

 

Net increase (decrease) in cash and cash equivalents

4,371

(17,236)

 

 

 

Cash and cash equivalents at January 1

160,744

127,778

Effect of exchange rate fluctuations on cash held

1,341

1,076

Cash and cash equivalents at March 31

166,456

111,618

 

 

 


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 CO2 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 and Sri Lanka, 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.

 

 

 

 

First Quarter 2017 PR FINAL