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AMG Advanced Metallurgical Group N.V. Reports First Quarter 2015 Results

Key Highlights

  • Revenue was $257.0 million in the first quarter 2015, a 6% decrease from the same period in 2014
  • EBITDA([1]) was $20.4 million in the first quarter 2015, a 2% increase from the same period in 2014
  • EPS on a fully diluted basis was $0.10 in the first quarter 2015, a 29% decrease from the same period in 2014
  • Annualized return on capital employed increased to 12.7% in the first quarter 2015, from 9.7% in the same period in 2014
  • Cash flows from operating activities were $3.8 million in the first quarter 2015, compared to $5.7 million in the same period in 2014
  • As of March 31, 2015, cash on the balance sheet was $99.3 million; net debt was $86.8 million, a reduction of $1.1 million in the first quarter of 2015

AMSTERDAM, Netherlands, May 7, 2015 (GLOBE NEWSWIRE) -- (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported first quarter 2015 revenue of $257.0 million, a 6% decrease from $274.9 million in the first quarter 2014. Net income attributable to shareholders for the first quarter 2015 was $2.7 million, or $0.10 per fully diluted share, a 32% decrease from $3.9 million, or $0.14 in the first quarter 2014. EBITDA increased 2% to $20.4 million in the first quarter 2015 from $20.1 million in the first quarter 2014.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "Despite weakening metals prices and the unfavorable translation impact of foreign currency on reported earnings during the quarter, AMG's efforts to reduce cost and optimize our product portfolio have resulted in improved year over year EBITDA. Annualized return on capital employed also improved to 12.7% in the first quarter of 2015 from 9.7% in the first quarter of 2014.

In the first quarter, AMG Critical Materials successfully maintained year over year gross margins, despite falling metals prices, through improved sales volumes and a continued focus on providing higher value added products. AMG Engineering improved EBITDA by 104% compared to the same period in 2014 due to improving revenues and lower SG&A costs.

As previously announced, AMG completed the sale of a 40% equity stake in AMG Graphit Kropfmühl GmbH. This transaction will result in a substantial reduction in net debt in the second quarter of 2015."

Key Figures

In 000's US Dollar
Q1 '15 Q1 '14 Change
Revenue $256,991 $274,852 (6%)
Gross profit 43,302 46,352 (7%)
Gross margin 16.8% 16.9%
Operating profit 11,553 10,811 7%
Operating margin 4.5% 3.9%
Net income attributable to shareholders 2,676 3,919 (32%)
EPS- Fully diluted 0.10 0.14 (29%)
EBIT (1) 13,207 11,919 11%
EBITDA (2) 20,388 20,068 2%
EBITDA margin 7.9% 7.3%
Cash flows from operating activities 3,797 5,659 (33%)

Note:

  1. EBIT is defined as earnings before interest, tax and excludes non-recurring items
  2. EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes non-recurring items

Operational Review

AMG Critical Materials

Q1 '15 Q1 '14 Change
Revenue $202,288 $226,087 (11%)
Gross profit 31,206 33,580 (7%)
Operating profit 10,656 11,724 (9%)
EBITDA 17,273 18,538 (7%)

AMG Critical Materials' first quarter 2015 revenue decreased $23.8 million, or 11%, to $202.3 million. The decline was primarily the result of unfavorable Euro to US Dollar currency translation effects, lower metal prices and product portfolio optimization.

Despite increased sales volume, the impact of lower antimony metal prices compared to the first quarter of 2014 and a reduction in low margin products at AMG Superalloys and AMG Aluminum, due to product mix optimization initiatives, negatively impacted revenues.

Gross profit decreased $2.4 million, or 7%, to $31.2 million, primarily due to foreign currency translation effects. However, AMG Critical Materials' first quarter 2015 gross margin remained consistent at 15% compared to the same period in 2014.

First quarter 2015 EBITDA margin was 9%, up 1% from the first quarter of 2014. Consistent gross margins and SG&A reductions of 8%, due to currency effects and cost cutting measures, resulted in an improved EBITDA margin.

AMG Engineering

Q1 '15 Q1 '14 Change
Revenue $54,703 $48,765 12%
Gross profit 12,096 12,772 (5%)
Operating profit (loss) 897 (913) N/A
EBITDA 3,115 1,530 104%

AMG Engineering's first quarter 2015 revenue increased $5.9 million, or 12%, to $54.7 million due to improved order backlog at the end of 2014, relative to the end of 2013.

First quarter 2015 gross margin decreased to 22% from 26% in the first quarter of 2014 due to product mix effects and cost overruns in certain long-term projects nearing completion.

EBITDA increased by $1.6 million, or 104%, to $3.1 million in the first quarter of 2015 due to lower SG&A costs.

AMG Engineering signed $51.9 million in new orders during the first quarter of 2015, a 0.95x book to bill ratio. Order backlog was $116.4 million as of March 31, 2015 and excluding the impact of currency, the backlog decreased 3% from December 31, 2014. Heat treatment and induction furnaces accounted for approximately 58% of the order intake.

Financial Review

SG&A

AMG's first quarter 2015 SG&A expenses were $30.1 million compared to $35.0 million in the first quarter of 2014, a decrease of 14%. This decline was due to lower employee expenses of $1.7 million and a reduction of $1.9 million in legal and professional fees. Foreign currency translation effects, cost cutting initiatives and lower transaction related legal and professional fees drove the improvement.

Non-Recurring Items

In the first quarter of 2015, AMG incurred $1.7 million in non-recurring charges compared to $0.8 million in the first quarter of 2014, which are not included in the calculation of EBITDA. These charges relate to the previously announced restructuring activities in AMG Engineering of $0.9 million and restructuring expenses incurred within AMG Critical Materials of $0.8 million, primarily associated with the divestiture of peripheral assets.

Liquidity

March 31, 2015 December 31, 2014 Change
Total debt $186,103 $195,878 (5%)
Cash and cash equivalents 99,315 108,029 (8%)
Net debt 86,788 87,849 (1%)

AMG had a net debt position of $86.8 million as of March 31, 2015. Net debt and gross debt decreased $1.1 million and $9.8 million, respectively, from December 31, 2014.

Cash flows from operating activities were $3.8 million in the first three months of 2015 compared to $5.7 million in the same period in 2014.

Capital expenditures declined $2.1 million in the first three months of 2015 compared to the same period in 2014. The $3.8 million of capital spending in the first three months of 2015 included $2.1 million of maintenance capital. The largest expansion capital project was for AMG's titanium aluminides business.

Including the $99.3 million of cash, AMG had $173.1 million of total liquidity as of March 31, 2015.

Currency Fluctuations

AMG's financial statements are prepared in US Dollars, so fluctuations in the exchange rate between the US Dollar and other currencies, primarily the Euro and Brazilian Real, have an effect on the results of operations and on the reported value of assets and liabilities as measured in US Dollars.

The appreciation of the US Dollar as of March 31, 2015 compared to December 31, 2014, resulted in a decrease of $58.5 and $46.4 million in assets and liabilities on the balance sheet, respectively. The appreciation of the US Dollar compared to the Euro in the first quarter of 2015 in relation to the first quarter of 2014, resulted in a reduction in revenue and EBITDA of $27.3 million and $2.3 million, respectively.

Outlook

In this challenging environment, AMG will continue to reduce cost, optimize its product portfolio and maintain a conservative balance sheet.

Despite weakening metals prices and the unfavorable translation impact of foreign currency on reported earnings, AMG expects to generate EBITDA in-line with prior year and improve its return on capital employed.

AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated income statement
For the quarter ended March 31
In thousands of US Dollars 2015 2014
Unaudited Unaudited
Revenue 256,991 274,852
Cost of sales 213,689 228,500
Gross profit 43,302 46,352
Selling, general and administrative expenses 30,143 35,036
Restructuring expense 1,694 758
Other income, net (88) (253)
Operating profit 11,553 10,811
Finance income (338) (203)
Finance expense 3,672 4,675
Foreign exchange loss (gain) 172 (185)
Net finance costs 3,506 4,287
Share of profit of associates and joint ventures 75 105
Profit before income tax 8,122 6,629
Income tax expense 5,465 3,274
Profit for the period 2,657 3,355
Attributable to:
Shareholders of the Company 2,676 3,919
Non-controlling interests (19) (564)
Profit for the period 2,657 3,355
Earnings per share
Basic earnings per share 0.10 0.14
Diluted earnings per share 0.10 0.14
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial position
March 31, December 31,
In thousands of US Dollars 2015 2014
Unaudited
Assets
Property, plant and equipment 220,925 237,418
Goodwill 18,638 20,618
Intangible assets 10,145 11,116
Investments in associates and joint ventures 1,367 1,450
Deferred tax assets 36,357 37,903
Restricted cash 8,644 7,582
Other assets 21,714 21,987
Total non-current assets 317,790 338,074
Inventories 135,651 145,418
Trade and other receivables 139,444 135,293
Derivative financial instruments 4,297 1,997
Other assets 75,960 47,055
Assets held for sale 561 2,553
Cash and cash equivalents 99,315 108,029
Total current assets 455,228 440,345
Total assets 773,018 778,419
AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of financial position
(continued)
March 31, December 31,
In thousands of US Dollars 2015 2014
Unaudited
Equity
Issued capital 745 745
Share premium 382,978 382,978
Other reserves (69,078) (59,728)
Retained earnings (deficit) (207,973) (225,843)
Equity attributable to shareholders of the 106,672 98,152
Company
Non-controlling interests 24,278 2,825
Total equity 130,950 100,977
Liabilities
Loans and borrowings 160,300 167,990
Employee benefits 147,833 159,672
Provisions 36,265 37,056
Deferred revenue 8,958 8,950
Government grants 572 666
Other liabilities 7,776 8,885
Derivative financial instruments 4,950 5,056
Deferred tax liabilities 7,777 8,261
Total non-current liabilities 374,431 396,536
Loans and borrowings 5,869 6,562
Short term bank debt 19,934 21,326
Government grants 99 88
Liabilities associated with assets held for sale - 248
Other liabilities 56,451 53,257
Trade and other payables 119,841 134,373
Derivative financial instruments 15,449 9,104
Advance payments 28,410 31,689
Deferred revenue 6,516 8,414
Current taxes payable 1,362 671
Provisions 13,706 15,174
Total current liabilities 267,637 280,906
Total liabilities 642,068 677,442
Total equity and liabilities 773,018 778,419


AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of cash flows
For the quarter ended March 31
In thousands of US Dollars 2015 2014
Unaudited Unaudited
Cash flows from operating activities
Profit for the period 2,657 3,355
Adjustments to reconcile net profit to net cash
flows:
Non-cash:
Income tax expense 5,465 3,274
Depreciation and amortization 7,181 8,149
Net finance costs 3,506 4,287
Share of gain of associates and joint ventures (75) (105)
Gain on sale or disposal of property, plant and equipment (45) (36)
Equity-settled share-based payment transactions 132 165
Movement in provisions, pensions and government grants 312 (4,003)
Working capital and deferred revenue adjustments (14,422) (7,198)
Cash flows from operating activities 4,711 7,888
Finance costs paid, net (353) (888)
Income tax paid, net (561) (1,341)
Net cash flows from operating activities 3,797 5,659
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment 151 118
Proceeds from sale of subsidiaries (net of cash divested of $1,347) (550) -
Acquisition of property, plant and equipment and (3,788) (5,851)
Intangibles
Change in restricted cash (1,304) (15)
Other 11 15
Net cash flows used in investing activities (5,480) (5,733)
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 2015 2014
Unaudited Unaudited
Cash flows used in financing activities
Repayment of borrowings (1,724) (5,166)
Contributions by non-controlling interests 1,167 28
Net cash flows used in financing activities (557) (5,138)
Net decrease in cash and cash (2,240) (5,212)
equivalents
Cash and cash equivalents at January 1 108,029 103,067
Effect of exchange rate fluctuations on cash held (6,474) 11
Cash and cash equivalents at March 31 99,315 97,866

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
Vice President of Investor Relations
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.

  1. EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes non-recurring items


May 7 2015 http://hugin.info/138060/R/1919511/687316.pdf

HUG#1919511

Source:AMG Advanced Metallurgical Group N.V.