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

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 profit52,50344,22319%
Gross margin20.4%18.6% 
    
Operating profit21,02812,93363%
Operating margin8.2%5.4% 
    
Net income attributable to shareholders 15,566 11,974 30%
    
EPS - Fully diluted0.500.4219%
    
EBIT (1) 25,721 13,815 86%
EBITDA (2)   32,966 21,189 56%
EBITDA margin12.8%8.9% 
    
Cash from (used in) operating activities17,830(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$176,55510%
Gross profit 36,268 30,47919%
Operating profit15,61010,47849%
EBITDA25,66816,54555%
    

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$60,8444%
Gross profit16,23513,74418%
Operating profit5,4182,455121%
EBITDA7,2984,64457%
    

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$44,22319%
Restructuring expense46768587%
Asset impairment expense2,217-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$30,47628%
AMG Engineering16,30213,81518%
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 equivalents166,456160,7444%
Net (cash) debt(505)7,336N/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 20172016
  UnauditedUnaudited
Continuing operations   
Revenue257,969237,399
Cost of sales205,466193,176
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 expense1,9942,090
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 Company15,56611,974
Non-controlling interests-297
Profit for the period 15,566 12,271
    
Earnings per share   
Basic earnings per share0.550.43
Diluted earnings per share0.500.42


 

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 equipment228,468226,098
Goodwill22,96222,729
Intangible assets11,19010,486
Derivative financial instruments884740
Other investments30,18229,930
Deferred tax assets41,35241,285
Restricted cash2,3422,526
Other assets14,51817,207
Total non-current assets 351,898 351,001
Inventories144,071143,593
Derivative financial instruments5,8634,007
Trade and other receivables128,641129,220
Other assets28,04631,598
Cash and cash equivalents166,456160,744
Assets held for sale155149
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 capital760760
Share premium389,066389,066
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 interests22,32222,073
Total equity 220,965 197,787
   
Liabilities   
Loans and borrowings148,454150,959
Employee benefits143,500141,588
Provisions30,23230,854
Deferred revenue-2,822
Government grants369390
Other liabilities7,5916,484
Derivative financial instruments472887
Deferred tax liabilities8,5878,435
Total non-current liabilities 339,205 342,419
   
Loans and borrowings9,9979,621
Short term bank debt7,5007,500
Government grants9897
Other liabilities55,33557,431
Trade and other payables133,179133,328
Derivative financial instruments2,2584,661
Advance payments25,78129,404
Deferred revenue1,51410,198
Current taxes payable8,8607,065
Provisions20,43820,801
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 20172016
  UnauditedUnaudited
Cash from (used in) operating activities   
Profit for the year15,56612,271
Adjustments to reconcile net profit to net cash flows:  
Non-cash:   
Income tax expense3,477283
Depreciation and amortization7,2457,374
Asset impairment expense2,217-
Net finance costs1,9851,829
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 transactions2,176668
Movement in provisions, pensions and government grants293(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 equipment66254
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 cash217110
Other1612
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 20172016
  UnauditedUnaudited
Cash used in financing activities   
Repayment of borrowings(3,050)(1,414)
Issuance of treasury shares151-
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 1160,744127,778
Effect of exchange rate fluctuations on cash held1,3411,076
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 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 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@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



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Source: AMG Advanced Metallurgical Group N.V. via GlobeNewswire

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