2009-11-11 08:35:06 -
London, November , 11, 2009
Key Highlights
* Revenue was $205.4 million in Q3 2009; YTD 2009 revenue was
$636.1 million
* EBITDA[1] was $18.6 million in Q3 2009; YTD 2009 EBITDA was $56.7
million
* EPS on a fully diluted basis was ($0.76) in Q3 2009
* Advanced Materials Division performance improved, generating
revenue of $110.1 million and EBITDA of $5.0 million, in Q3 2009
* Engineering Systems Division was impacted by the global slowdown,
generating revenue of $61.6 million and EBITDA of $11.0 million,
in Q3 2009
* Graphit Kropfmühl revenues and EBITDA improved to $33.7 million
and $2.6 million, respectively in Q3 2009
* Timminco was deconsolidated during the quarter as AMG's ownership
dropped below 50% due to Timminco's issuance of additional shares
* As of September 30, 2009 cash on hand was $124.4 million, net
debt was $77.9 million; Q3 2009 free cash flow[2] was $8.8
million
[1] EBITDA is defined as earnings before interest, tax, depreciation
and amortization and excludes nonrecurring items
[2] Free cash flow is defined as EBITDA less change in working
capital and maintenance capital expenditures
Amsterdam, 11 November 2009 (Regulated Information) --- AMG Advanced
Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported
third quarter 2009 revenue of $205.4 million, a decrease 45% from
$371.0 million in the third quarter 2008.
Net loss attributable to shareholders for the third quarter 2009 was
($20.3) million, or ($0.76) per fully diluted share, compared to net
income of $20.8 million or $0.75 per fully diluted share for the
third quarter 2008. EBITDA declined 71% to $18.6 million in the
third quarter 2009 from $63.7 million in the third quarter 2008.
In commenting on results, Dr. Heinz Schimmelbusch, Chairman of the
Management Board and CEO, said, "The decline in market conditions
moderated during the third quarter 2009. During the quarter,
Advanced Materials prices and volumes increased slightly from the
lows of the second quarter 2009, but both volumes and prices remain
adversely affected by the unprecedented slowdown in global industrial
activity. The Engineering Systems Division's financial performance
was significantly impacted by the low levels of order intake and
seasonal slowdowns. Graphit Kropfmühl improved profitability during
the quarter due to a slight rebound in silicon metal prices. Despite
the apparent bottoming of economic activity, the recovery process may
be slow and uneven. AMG continues to limit capital investment and is
reducing costs to preserve free cash flow."
Accounting Note
AMG owned less than 50% (47.9%) of Timminco as of September 30, 2009,
and therefore going forward AMG will account for Timminco under the
IFRS equity method of accounting. For purposes of this release, this
accounting treatment requires AMG to deconsolidate its investment in
Timminco and include Timminco's quarterly and year to date financial
results as one line item - "discontinued operations" on the profit
and loss statement. The carrying value of AMG's investment in
Timminco is included as an "Investment in Associate" on the asset
portion of AMG's balance sheet. As such, the Key Figures below
except for net income attributable to shareholders exclude the
financial performance of Timminco during the period and all prior
year figures have been restated to exclude Timminco.
While AMG no longer owns more than 50% of Timminco, Timminco remains
a strategic asset of AMG.
Key Figures
In 000's US Dollar
Q3'09 Q3'08 Change
Revenue $205,406 $370,982 (45%)
Gross profit 39,949 82,805 (52%)
Gross margin 19.4% 22.3%
Operating income (110) 45,609 N/A
Operating margin (0.0%) 12.3%
Net Income attributable to shareholders
(20,302) 20,769 N/A
EPS- Fully diluted (0.76) 0.75 N/A
Adjusted EPS- Continuing Operations Fully
diluted (1) (0.30) 0.99 N/A
EBITDA (2) 18,602 63,725 (71%)
EBITDA margin 9.1% 17.2%
Notes:
(1) Adjusted for non-recurring, restructuring charges and equity
accounting treatment for AMG's investment in Timminco
(2) EBITDA is defined as earnings before interest, tax, depreciation
and amortization and excludes nonrecurring items
Operational Review
Advanced Materials Division
Q3'09 Q3'08 Change
Revenue $110,143 $199,396 (45%)
Gross profit 15,736 42,702 (63%)
Operating income (8,444) 22,620 N/A
EBITDA 5,012 25,427 (80%)
Capital expenditures 1,937 7,643 (75%)
The Advanced Materials division's third quarter 2009 financial
results were impacted by continued weak demand for the majority of
its products, most notably in the steel, superalloy and titanium
markets. Third quarter revenue decreased 45% to $110.1 million from
the third quarter 2008.
Gross margin percentage decreased from 21% of revenue in the third
quarter of 2008 to 14% in the third quarter of 2009. This was caused
by a sharp decline in end product prices and lower volumes,
particularly in ferrovanadium, from the third quarter of 2008. The
decrease in revenue and margins was primarily caused by
ferrovanadium, with reference prices decreasing by 59% and volumes
declining by 42% over the third quarter 2008. Titanium master
alloys, vanadium chemicals, ferronickel-molybdenum and ferrotitanium
products were also impacted by falling end market prices. Even more
significant were the decreased volumes as the result of decreased
global demand. Aluminium master alloys volumes decreased 43% and
titanium master alloys volumes declined by 77% during the third
quarter 2009 compared to the third quarter 2008. The global
recession continued to impact industrial production across all
markets, although less so than in the second quarter of 2009.
The Division's working capital increased slightly during the third
quarter 2009, after decreasing by over $18 million since December 31,
2008. To mitigate the decrease in revenue, the Advanced Materials
Division has reduced SG&A expenses by approximately 21% from the
third quarter 2008.
The third quarter 2009 EBITDA decreased by $20.4 million to $5.0
million, compared to the same period in 2008. This was the result of
the decrease in revenue and gross margin, which were slightly offset
by a decline in SG&A. Sequentially, third quarter 2009 EBITDA
improved by $7.0 million over the second quarter 2009 driven by cost
saving measures.
Capital expenditures were $1.9 million for the third quarter 2009,
75% less than the comparable period in 2008. The Division was only
performing maintenance capital investment during the quarter because
of the cost containment measures.
Engineering Systems Division
Q3'09 Q3'08 Change
Revenue $61,598 $135,155 (54%)
Gross profit 20,637 44,326 (53%)
Operating income 7,132 30,836 (77%)
EBITDA 11,036 34,241 (68%)
Capital expenditures 1,239 4,392 (72%)
The Engineering Systems division's order intake was significantly
affected by the global economic slowdown as customers continued to
defer investment decisions during third quarter 2009 because of the
weak credit markets and a slow recovery in their end market demand.
Order backlog was at $204 million on September 30, 2009, down 9%
from $223 million on June 30, 2009. The decrease was primarily due
to a significant reduction in orders for solar furnace systems to
$16.7 million during the quarter. Overall, order intake was $44.2
million during the third quarter 2009, down from $53.5 in the second
quarter 2009. The backlog consists primarily of melting and
remelting systems for the titanium and specialty steel industries and
solar silicon DSS furnaces.
Third quarter 2009 revenue decreased by $73.6 million or 54%. Sales
of solar silicon DSS melting furnaces for the photovoltaic industry
decreased 66% in the third quarter 2009 compared to the same period a
year ago. During the third quarter 2009, 39% of revenue was
generated by sales of solar silicon and melting furnaces, down from
51% in the same period 2008. Revenue from remelting systems,
primarily for the aerospace and specialty steel industries, decreased
by 59% during the third quarter 2009. The recently implemented
nuclear business contributed $1.8 million in revenue during the third
quarter.
Despite these challenging markets, the Engineering Systems division
was able to stabilize gross margin at 34% of revenue in the third
quarter 2009 up from 33% in the same period in 2008. The stable
gross margin was due to constant prices per unit and a slight
decrease in raw material prices.
Third quarter 2009 EBITDA was $11.0 million, a 68% decrease over the
same period in 2008. The EBITDA margin decreased to 18% during the
third quarter 2009 compared to 25% for the same period in 2008. The
EBITDA margin decrease was attributable to the economy of scale
impact of lower revenue as well as one-time research and development
expenses.
Capital expenditures decreased to $1.2 million for the third quarter
2009, 72% less than the comparable period in 2008. This decrease was
a result of the completion of the expansion of the Berlin facility
during 2008 and the focus on minimizing capital investment during the
third quarter 2009.
Graphit Kropfmühl
Q3'09 Q3'08 Change
Revenue $33,665 $36,431 (8%)
Gross profit 3,576 (4,223) N/A
Operating income 1,202 (7,847) N/A
EBITDA 2,554 4,057 (37%)
Capital expenditures 385 1,727 (78%)
Graphit Kropfmühl ("GK") was impacted by the decline in global
economic activity during the third quarter 2009, particularly in the
natural graphite division. Third quarter 2009 revenue decreased by
$2.8 million or 8% primarily due to a 30% reduction in natural
graphite revenues.
Gross margin improved to 11% of revenue in the third quarter 2009.
The third quarter 2008 gross profit of negative $4.2 million was a
result of purchase accounting adjustments related to the acquisition
of GK by AMG.
Third quarter 2009 EBITDA was $2.6 million, a 37% decrease compared
to the third quarter 2008. The EBITDA margin decreased to 8% during
the third quarter 2009 compared to 11% in the same period 2008. The
EBITDA margin decrease was attributable to lower selling prices and
volumes in both silicon and graphite, which were slightly offset by a
decrease in SG&A expenses.
Capital expenditures decreased to $0.4 million for the third quarter
2009, 78% less than the same period 2008. The decrease in capital
expenditures was a result of the completion of the expansion of the
silicon metal facilities in 2008.
Timminco
AMG's ownership in Timminco decreased as the result of issuance of
shares by Timminco. Following the decrease in AMG's common equity
ownership of Timminco to 47.9% as of Septermber 30, 2009, AMG now
accounts for its investment in Timminco via the equity accounting
method. Timminco's net loss is included on its own line item on
AMG's income statement and the carrying value of AMG's investment in
Timminco of $41.8 million is listed as an asset on AMG's balance
sheet. Additional information on Timminco and its third quarter 2009
financial statements can be found at www.Timminco.com.
Financial Review
Tax
AMG recorded a tax expense of $5.7 million in the quarter ended
September 30, 2009 as compared to a tax expense of $11.9 million in
the quarter ended September 30, 2008. A tax benefit for the pre-tax
losses was not booked in the third quarter 2009 due to the losses
being generated in jurisdictions where AMG already has significant
net operating losses.
Liquidity
Q3'09 Q4'08 (1) Change
Total debt $202,332 $183,352 10%
Cash & cash equivalents 124,391 139,786 (11%)
Net debt 77,941 43,566 79%
Notes:
(1) Restated to account for Timminco under IFRS equity accounting
method.
AMG had a net debt position of $77.9 million as of September 30,
2009. The Company's liquidity position decreased by $34.4 million,
due to $20.8 million of capital investments and $23.8 million of
capital infusions in Timminco, offset by positive operating cash
flows from continuing operations.
Cash Flow
Nine Months Ended
September '09 September '08
Cash Flows (used in) / from $(6,033) $76,038
Operations
Capital expenditures (20,755) (42,060)
Acquisitions, net of cash - (66,484)
Other investing (31,964) (50,211)
Cash Flows used in Investing (52,719) (158,755)
Activities
Cash Flows generated from 35,415 73,124
Financing Activities
The significant decline in net income was partially offset by lower
investments in working capital and lower tax payments during the nine
months ended September 30, 2009 resulting in negative cash flows from
operations totaling $6.0 million, down from positive operating cash
flows of $76.0 million in the first nine months 2008. The lower
level of cash flows from operations is primarily due to the operating
loss from the Advanced Materials Division, and a decline in the
operating income from the Engineering Systems Division offset by
improvements in inventory and accounts receivable balances of
approximately $40.0 million.
Cash flows used in investing activities of $52.7 million for the nine
months ended September 30, 2009 decreased from $158.8 million in the
first nine months of 2008. This is due to the $21.3 million decrease
in capital investments, primarily in Advanced Materials and
Engineering Systems, and the $62.9 million cost for the purchase of
approximately 79.5% of Graphit Kropfmühl in April 2008.
Cash flows from financing activities were $35.4 million, a decrease
of $37.7 million in the same period of 2008. This decrease was
primarily the result of two factors, $20.0 million borrowed on the
credit facility for the acquisition of approximately 79.5% of Graphit
Kropfmühl in April 2008, and borrowings to fund the working capital
increases in Advanced Materials during 2008, offset in the first nine
months 2009 by a net draw down from various credit facilities.
Outlook
The markets continue to be challenging. Although signs of an ongoing
bottoming of the severe drop in demand are evident, it is still
undetermined if the markets are improving. Demand and prices remain
fragile and are both subject to near term economic swings.
Engineering Systems' order intake continues to be sluggish as
companies delay investment decisions into the new year. Advanced
Materials prices have rebounded from historic lows, but demand and
pricing increases have moderated and they continue to be far below
normal market conditions. AMG continues to address this situation by
adjusting production levels, limiting capital investment and cost
reduction programs. These actions position AMG to take advantage of
opportunities as markets improve.
About AMG
AMG, incorporated in the Netherlands, is a global leader in the
production of highly engineered specialty metal products and advanced
vacuum furnace systems. AMG serves growing industries worldwide with
its unique combination of metallurgical engineering expertise and
production know-how. AMG is a market leader in many of its products
and systems, which are critical to the production of key components
for the aerospace, energy (including solar and nuclear), electronics,
optics, chemicals, construction and transportation industries. AMG
has 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 niche specialty
metals and complex metals products, many of which are used in
demanding, safety-critical, high-stress environments. AMG is one of
a limited number of significant producers globally of niche specialty
metals, such as ferrovanadium, ferronickel-molybdenum, aluminum
master alloys and additives, chromium metal and ferrotitanium, used
by steel, aluminum, chemical and superalloy producers for aerospace,
automotive, energy, electronics, optics, chemicals, construction and
other applications. Other key products produced by AMG 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. AMG is a global leader in supplying
technologically-advanced vacuum furnace systems to customers in the
aerospace, energy (including solar and nuclear), transportation,
electronics, superalloys and specialty steel industries. Examples of
furnace systems produced by AMG include vacuum remelting, solar
silicon melting and crystallization, vacuum induction melting, vacuum
heat treatment and high pressure gas quenching, vacuum precision
casting, turbine blade coating and sintering. AMG also provides
vacuum case-hardening heat treatment services on a tolling basis to
customers through facilities equipped with vacuum heat treatment
furnaces.
Graphit Kropfmühl AG is a majority controlled, publicly listed
subsidiary of AMG. Based on its secure raw material sources in
Africa, China 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 associate of AMG. Timminco is
a leader in the production of upgraded metallurgical silicon for the
rapidly growing solar photovoltaic energy industry. Timminco also
produces silicon metal for use in a broad range of industrial
applications.
AMG operates globally with production facilities in Germany, the
United Kingdom, France, Czech Republic, the United States, Canada,
Mexico, Brazil, Sri Lanka and Australia and also has sales and
customer service offices in Belgium, Russia, China and Japan
(website: 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@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 Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of income
For the three months ended
September 30
In thousands of US Dollars 2009 2008
Unaudited Unaudited*
Continuing operations
Revenue 205,406 370,982
Cost of sales 165,457 288,177
Gross profit 39,949 82,805
Selling, general and
administrative expenses 31,876 39,069
Restructuring expense 5,302 -
Environmental expense 4,075 10
Other income, net (1,194) (1,883)
Operating (loss) profit (110) 45,609
Interest expense 6,109 5,771
Interest income (617) (1,611)
Foreign exchange (gain) / loss (27) 1,272
Net finance costs 5,465 5,432
Share of (loss) profit of
associates (1,285) 24
(Loss) profit before income tax (6,860) 40,201
Income tax expense 5,694 11,921
(Loss) profit for the period from
continuing operations (12,554) 28,280
Loss after tax for the period from
discontinued operations (14,240) (12,956)
(Loss) profit for the period (26,794) 15,324
Attributable to:
Shareholders of the
Company (20,302) 20,769
Minority interests (6,492) (5,445)
(26,794) 15,324
(Loss)/Earnings per share
Basic (loss) earnings per share (0.76) 0.77
Diluted (loss) earnings per share (0.76) 0.75
(Loss)/Earnings per share from
continuing operations
Basic (loss) earnings per share
from continuing operations (0.50) 1.02
Diluted (loss) earnings per share
from continuing operations (0.50) 0.99
*Restated
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of income
For the nine months ended September 30
In thousands of US Dollars 2009 2008
Unaudited Unaudited*
Continuing operations
Revenue 636,059 1,000,045
Cost of sales 516,825 773,347
Gross profit 119,234 226,698
Selling, general and administrative
expenses 94,932 101,473
Restructuring expense 5,696 129
Environmental expense 4,162 31
Other income, net (4,277) (4,896)
Operating profit 18,721 129,961
Interest expense 15,880 16,376
Interest income (2,617) (5,027)
Foreign exchange (gain) / loss (176) 2,095
Net finance costs 13,087 13,444
Share of loss of associates (2,685) 581
Profit before income tax 2,949 117,098
Income tax expense 17,642 33,092
(Loss) profit for the period from
continuing operations (14,693) 84,006
Loss after tax for the period from
discontinued operations (54,580) (22,356)
(Loss) profit for the period (69,273) 61,650
Attributable to:
Shareholders of the Company (45,415) 68,548
Minority interests (23,858) (6,898)
(69,273) 61,650
(Loss)/Earnings per share
Basic (loss) earnings per share (1.69) 2.56
Diluted (loss) earnings per share (1.69) 2.49
(Loss)/Earnings per share from
continuing operations
Basic (loss) earnings per share from
continuing operations (0.65) 2.98
Diluted (loss) earnings per share from
continuing operations (0.65) 2.90
*Restated
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statements of
financial position
In thousands of US Dollars
September 30,
2009 December 31, 2008
Unaudited Audited
Assets
Property, plant and equipment 220,308 313,470
Intangible assets 27,877 47,060
Investments in associates 55,269 15,700
Deferred tax assets 22,797 29,181
Restricted cash 13,578 15,889
Notes receivable 2,221 2,132
Derivative financial
instruments 57 -
Other assets 12,481 11,612
Total non-current assets 354,588 435,044
Inventories 197,886 318,793
Trade and other receivables 149,277 173,422
Derivative financial
instruments 5,821 6,393
Other assets 35,293 52,804
Short term investments - 95
Cash and cash equivalents 124,391 143,473
Total current assets 512,668 694,980
Total assets 867,256 1,130,024
AMG Advanced Metallurgical Group
N.V.
Condensed interim consolidated
statements of financial
position (continued)
In thousands of US Dollars
Equity
Issued capital 724 724
Share premium 379,297 379,297
Other reserves 28,049 (2,215)
Retained earnings (deficit) (168,539) (123,110)
Equity attributable to shareholders of
the Company 239,531 254,696
Minority interests 19,627 57,115
Total equity 259,158 311,811
Liabilities
Loans and borrowings 165,367 138,990
Employee benefits 91,004 103,176
Provisions 11,986 12,841
Government grants 750 291
Other liabilities 10,221 9,245
Derivative financial instruments 6,318 3,530
Deferred tax liabilities 44,247 56,013
Total non-current liabilities 329,893 324,086
Loans and borrowings 3,204 3,021
Short term bank debt 33,761 83,566
Related party debt - 6,456
Government grants 2,330 8,360
Other liabilities 45,492 53,882
Trade and other payables 80,556 156,697
Derivative financial instruments 7,528 15,419
Advance payments 47,945 94,049
Unearned revenue - 35,624
Current taxes payable 35,769 14,708
Provisions 21,620 22,345
Total current liabilities 278,205 494,127
Total liabilities 608,098 818,213
Total equity and liabilities 867,256 1,130,024
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 2009 2008
Unaudited Unaudited*
Cash flows (used in) / from operating
activities
(Loss) / Profit for the period from continuing
operations (14,693) 84,006
(Loss) for the period from discontinued
operations (54,580) (22,356)
Profit for the period (69,273) 61,650
Adjustments to reconcile profit to net cash
flows:
Depreciation and amortization 17,491 18,271
Amortization of purchase accounting
adjustment to inventory - 8,178
Restructuring expense 5,696 129
Environmental expense 4,162 31
Net finance costs 13,087 13,444
Share of loss / (profit) of associates 2,685 (581)
Equity-settled share-based payment
transactions 10,451 7,439
Income tax expense 17,642 33,092
Change in working capital and provisions (35,117) (59,273)
Other 4,420 3,606
Interest paid, net (7,502) (4,663)
Income tax paid, net (6,101) (17,526)
Cash flows from discontinued operations 36,326 12,241
Net cash flows (used in) / from operating
activities (6,033) 76,038
Cash flows used in investing activities
Proceeds from asset sales - 90
Acquisition of associates, net of cash - (66,484)
Acquisition of property, plant and equipment
and intangibles (20,755) (42,060)
Change in short-term investments - (842)
Change in restricted cash 1,228 (3,866)
Other 16 (5,217)
Cash flow from discontinued operations (33,208) (40,376)
Net cash flows used in investing activities (52,719) (158,755)
Cash flows from financing activities
Proceeds from issuance of debt 19,255 48,984
Repayment of borrowings (8,171) -
Capital infusion (23,832) (180)
Other 439 379
Cash flow from discontinued operations 47,724 23,941
Net cash flows from financing activities 35,415 73,124
Net (decrease) in cash and cash equivalents (23,337) (9,593)
Cash and cash equivalents at January 1 143,473 172,558
Effect of exchange rate and consolidation
changes on cash held 4,255 (8,803)
Cash and cash equivalents at September 30 124,391 154,162
*Restated
The full press release including tables can be downloaded from the
following link:
hugin.info/138060/R/1354151/328212.pdf
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