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AMG Advanced Metallurgical Group N.V. Reports Record Full Year and Fourth Quarter 2017 Results

Key Highlights

  • Revenue increased by 18% to $280.7 million in the fourth quarter 2017 from $237.9 million in the fourth quarter 2016
  • EBITDA(2) was $33.0 million in the fourth quarter 2017, a 10% increase over the same period in 2016
  • On a full year basis, EBITDA in 2017 increased by 25% to $125.5 million, from $100.7 million in the prior year
  • EPS, on a fully diluted basis, increased by 41% to $0.45 in the fourth quarter 2017 from $0.32 in the fourth quarter 2016
  • Record high annual net income and EPS, on a fully diluted basis, in Company history
  • Return on capital employed increased to 21.2% in 2017, as compared to 18.8% in 2016
  • Total 2017 dividend proposed of €0.28 per ordinary share, including the interim dividend of €0.14, paid on August 15, 2017

Amsterdam, 8 March 2018 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported fourth quarter 2017 revenue of $280.7 million, an 18% increase from $237.9 million in the fourth quarter 2016. EBITDA for the fourth quarter 2017 was $33.0 million, a 10% increase from $30.0 million in the fourth quarter 2016. On a full year basis, EBITDA increased by 25% to $125.5 million, from $100.7 million in the prior year.

Net income attributable to shareholders increased to $14.3 million in the fourth quarter 2017 from $10.0 million in the fourth quarter 2016, and EPS, on a fully diluted basis, increased by 41% to $0.45 in the fourth quarter 2017 from $0.32 in the fourth quarter 2016. On a full year basis, net income attributable to shareholders increased by 40% to $57.0 million in 2017 from $40.6 million in 2016, and EPS, on a fully diluted basis, increased by 36% to $1.80 in 2017 from $1.32 in 2016.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "Very strong financial results in the fourth quarter 2017 resulted in the highest annual net income and earnings per share in the Company's history. Furthermore, an exceptionally strong order intake in AMG Engineering of $91.0 million in the fourth quarter resulted in the highest level of order backlog in over 8 years.

AMG Critical Materials generated EBITDA of $26.9 million during the fourth quarter 2017, an increase of 22% from $22.1 million in the fourth quarter of 2016, due to a combination of higher vanadium prices, improved product mix and strong sales volumes.

AMG Engineering signed $91.0 million in new orders during the fourth quarter of 2017, representing a 1.36x book to bill ratio, due to strong orders of turbine blade coating and nuclear waste treatment furnaces. Order backlog was $207.0 million as of December 31, 2017, a 53% increase from $135.5 million as of December 31, 2016. AMG Engineering achieved EBITDA of $6.1 million during the fourth quarter 2017, a decrease of $1.8 million compared to the fourth quarter of 2016, due primarily to higher SG&A costs in the quarter.

In the fourth quarter of 2017, AMG generated cash from operating activities of $33.3 million, an increase of $17.7 million, or 114%, over the same period in 2016. On a full year basis, AMG generated cash from operating activities of $78.5 million in 2017, an increase of $22.3 million, or 40%, compared to the same period in 2016.

As regards to guidance, in our annual general meeting in May 2017, we introduced our new 'Strategic Framework', and our long-term goal to increase EBITDA to $200 million or more, in 5 years or less, through the execution of a combination of well-developed, highly accretive growth projects, including AMG's entrance into the lithium market.

This statement of long term strategy has to be amended in light of what we achieved and learned in 2017, and to date in 2018. We now believe we can achieve our goals earlier than previously expected and can commit to turning the present EBITDA level into $200 million, or more, in the fiscal year ending December 31, 2020."

Key Figures

In 000's US Dollar            
  Q4 '17 Q4 '16 Change FY '17 FY '16 Change
Revenue $280,699 $237,874 18% $1,059,651 $971,148 9%
Gross profit 56,507 42,985 31% 214,627 186,808 15%
Gross margin 20.1% 18.1%   20.3% 19.2%  
             
Operating profit 18,391 11,858 55% 79,752 59,868 33%
Operating margin 6.6% 5.0%   7.5% 6.2%  
             
Net income attributable to shareholders 14,331 9,956 44% 56,965 40,558 40%
             
EPS - Fully diluted 0.45 0.32 41% 1.80 1.32 36%
             
EBIT (1) 24,629 22,180 11% 94,598 70,811 34%
EBITDA (2)  33,027 30,011 10% 125,497 100,652 25%
EBITDA margin 11.8% 12.6%   11.8% 10.4%  
             
Cash from operating activities 33,272 15,553 114% 78,525 56,225 40%

Notes: 

  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

  Q4 '17 Q4 '16 Change FY '17 FY '16 Change
Revenue $213,963 $165,970 29% $814,446 $701,634 16%
Gross profit  39,325  29,628 33%  149,871  129,991 15%
Gross profit before non-recurring items 40,113 31,802 26%  152,825  132,533 15%
Operating profit 14,350 9,762 47% 62,608 44,362 41%
EBITDA 26,907 22,121 22% 99,967 73,618 36%
         

AMG Critical Materials' revenue in the fourth quarter increased by $48.0 million, or 29%, to $214.0 million, driven by improved vanadium, aluminum, titanium master alloys, antimony, silicon and graphite prices, and higher sales volumes of chrome, titanium, antimony, and silicon products.

Gross profit before non-recurring items in the fourth quarter increased by $8.3 million, or 26%, to $40.1 million. Strong financial performances in vanadium, aluminum, titanium alloys and silicon metal in the quarter were partially offset by lower gross profit in tantalum. The reduction in tantalum gross profit was driven by lower prices during the fourth quarter 2017, compared to the same period in the prior year.

SG&A expenses in the fourth quarter 2017 increased by $3.1 million, or 16%, compared to the same period in the prior year, due to higher personnel costs and professional fees.

EBITDA increased by $4.8 million, or 22%, to $26.9 million in the fourth quarter of 2017 due to higher levels of gross profit, partially offset by an increase in SG&A expenses.

AMG Engineering

  Q4 '17 Q4 '16 Change FY '17 FY '16 Change
Revenue $66,736 $71,904 (7%) $245,205 $269,514 (9%)
Gross profit 17,182 13,357 29% 64,756 56,817 14%
Gross profit before non-
 recurring items
17,514 16,625 5% 65,509 60,473 8%
Operating profit 4,041 2,096 93% 17,144 15,506 11%
EBITDA 6,120 7,890 (22%) 25,530 27,034 (6%)

AMG Engineering signed $91.0 million in new orders during the fourth quarter of 2017, representing a 1.36x book to bill ratio, due to strong orders of turbine blade coating and nuclear waste treatment furnaces. Order backlog was $207.0 million as of December 31, 2017, a 53% increase from $135.5 million as of December 31, 2016. On a full year basis, AMG Engineering signed $290.4 million in new orders, representing a 1.18x book to bill ratio.

AMG Engineering's fourth quarter 2017 revenue decreased by $5.2 million, or 7%, to $66.7 million, due to lower sales of remelting, vacuum induction and heat treatment furnaces, partially offset by higher sales of turbine blade coating furnaces.

Fourth quarter 2017 gross profit before non-recurring items increased by $0.9 million, or 5%, to $17.5 million, and gross margin before non-recurring items improved to 26% from 23% in the fourth quarter of 2016, due to product mix effects.

SG&A expenses increased by $1.9 million in the fourth quarter 2017 due to higher employee related expenses and research & development costs.

EBITDA decreased by $1.8 million to $6.1 million in the fourth quarter of 2017, due to higher SG&A expenses, partially offset by higher levels of gross profit before non-recurring items.

On a full year basis, EBITDA in 2017 reduced by 6% from $27.0 million in 2016 to $25.5 million. However, EBITDA in the prior year benefited from the sale of an unused production facility in Berlin during the third quarter 2016, which contributed $4.3 million in EBITDA. Excluding this benefit in 2016, EBITDA in 2017 increased by 27%, compared to the prior year.

Financial Review

Tax

AMG recorded an income tax expense of $13.9 million in 2017 as compared to $8.1 million in 2016. The increase in income tax expense was driven by higher levels of profitability in 2017, compared to the prior year.

Due to the volatile nature of the company's deferred tax balances, AMG believes that the cash tax rate is a more meaningful metric. AMG paid taxes of $10.3 million in 2017 as compared to $6.6 million in 2016. For 2017, AMG's effective cash tax rate was 14%, as compared to 13% in 2016.

Non-Recurring Items

AMG's fourth quarter 2017 and full year 2017 gross profit include non-recurring items, which are not included in the calculation of EBITDA.

A summary of non-recurring items in 2017 and 2016 are below:

Non-recurring items included in gross profit

  Q4 '17 Q4 '16 Change FY '17 FY '16 Change
Gross profit $56,507 $42,985 31% $214,627 $186,808 15%
Restructuring expense 771 3,466 (78%) 2,547 4,222 (40%)
Asset impairment expense 349 1,976 (82%) 1,160 1,976 (41%)
Gross profit before non-recurring items 57,627 48,427 19% 218,334 193,006 13%

Gross profit before non-recurring items by reporting segment

  Q4 '17 Q4 '16 Change FY '17 FY '16 Change
AMG Critical Materials $40,113 $31,802 26% $152,825 $132,533 15%
AMG Engineering 17,514 16,625 5% 65,509 60,473 8%
Gross profit before non-recurring items 57,627 48,427 19% 218,334 193,006 13%

AMG Critical Materials and AMG Engineering gross profit in the fourth quarter 2017 was negatively impacted by restructuring costs related to cost reduction initiatives in Germany. In addition, AMG Critical Materials incurred asset impairment expenses in both the USA and Germany during the quarter.

Environmental expense

  Q4 '17 Q4 '16 Change FY '17 FY '16 Change
Environmental 3,092 1,828 69% 3,092 1,873 65%
of which non-recurring 3,092 1,277 142% 3,092 1,277 142%

During the fourth quarter 2017, AMG recorded a non-recurring environmental expense of $3.1 million related to its Newfield, NJ site, which is not included in the calculation of EBITDA.

Liquidity

  December 31, 2017 December 31, 2016 Change
Total debt $189,108 $168,080 13%
Cash and cash equivalents 178,800 160,744 11%
Net debt 10,308 7,336 41%

AMG had a net debt position of $10.3 million as of December 31, 2017. Net debt increased by $3.0 million from December 31, 2016, while gross debt increased by $21.0 million.

Cash from operating activities increased to $78.5 million in 2017 from $56.2 million in 2016. In the prior year, the Company made $23.1 million of discretionary pension contributions, which reduced cash from operating activities.

Capital expenditures increased to $80.9 million in 2017 compared to $44.1 million in 2016. Capital spending in 2017 included $32.0 million of maintenance capital, compared to $18.4 million in 2016. The largest expansion capital projects in 2017 were AMG's lithium project in Brazil and the titanium aluminide expansion in Germany.

Including the $178.8 million of cash, AMG had $329.4 million of total liquidity as of December 31, 2017.

Net Finance Costs

AMG's fourth quarter 2017 net finance costs were $2.3 million compared to less than $0.1 million in the fourth quarter of 2016. The increase was primarily due to currency gains associated with the Mozambique Metical in the fourth quarter 2016.

SG&A

AMG's fourth quarter 2017 SG&A expenses were $35.0 million, an increase of 17% from the same period in the prior year.

Full year 2017 SG&A expenses were $132.3 million, a 1% increase from $130.8 million in 2016, primarily due to an increase in research & development costs and professional fees.

Final Dividend Proposed

AMG intends to declare a dividend of €0.28 per ordinary share over the financial year 2017. The interim dividend of €0.14, paid on August 15, 2017, will be deducted from the amount to be distributed to shareholders. The proposed final dividend per ordinary share therefore amounts to €0.14.

A proposal to resolve upon the final dividend distribution will be included on the agenda for the Annual General Meeting to be held on May 2, 2018.

Lithium Project Update

AMG's lithium project is progressing in-line with expectations, and production is expected to commence mid-2018.

On December 12, 2017, AMG announced that the Supervisory Board of AMG had approved the construction of a second lithium concentrate plant at the Mibra mine in Brazil, with an annual production capacity of 90,000 tons.

AMG expects to complete the planned expansion by the end of 2019, and the total capital investment is approximately $110 million. Once completed, total annual production capacity from AMG's Mibra mine will increase to 180,000 tons of lithium concentrate and 600,000 lbs of tantalum concentrate. As part of the investment, AMG will also expand and develop the existing mining infrastructure to support the expanded lithium and tantalum operations.

Outlook and Strategy

As regards to guidance, in our annual general meeting in May 2017, we introduced our new 'Strategic Framework', and our long-term goal to increase EBITDA to $200 million or more, in 5 years or less, through the execution of a combination of well-developed, highly accretive growth projects, including AMG's entrance into the lithium market.

This statement of long term strategy has to be amended in light of what we achieved and learned in 2017, and to date in 2018. We now believe we can achieve our goals earlier than previously expected and can commit to turning the present EBITDA level into $200 million, or more, in the fiscal year ending December 31, 2020.

2018 has started very well. For the year, we expect our financial performance to show significant improvement compared to 2017, on route to this long term strategic guidance.



AMG Advanced Metallurgical Group N.V.    
Condensed Consolidated Income Statement    
     
For the quarter ended December 31    
In thousands of US Dollars 2017 2016
  Unaudited Unaudited
Continuing operations    
Revenue 280,699 237,874
Cost of sales 224,192 194,889
Gross profit 56,507 42,985
     
Selling, general and administrative expenses 34,955 29,989
     
Environmental expense 3,092 1,828
Other expense (income), net 69 (690)
Net other operating expense 3,161 1,138
     
Operating profit 18,391 11,858
     
Finance income (1,116) (2,847)
Finance cost 3,444 2,861
Net finance costs 2,328 14
     
Profit before income tax 16,063 11,844
     
Income tax expense  980 879
     
Profit for the period 15,083 10,965
     
Attributable to:    
Shareholders of the Company 14,331 9,956
Non-controlling interests 752 1,009
Profit for the period 15,083 10,965
     
Earnings per share    
Basic earnings per share 0.48 0.35
Diluted earnings per share 0.45 0.32
 

 

 

 

 

 

 

 

 

AMG Advanced Metallurgical Group N.V.
   
Condensed Consolidated Income Statement    
     
For the year ended December 31    
In thousands of US Dollars 2017 2016
  Unaudited  
Continuing operations    
Revenue 1,059,651 971,148
Cost of sales 845,024 784,340
Gross profit 214,627 186,808
     
Selling, general and administrative expenses 132,294 130,750
     
Environmental expense 3,092 1,873
Other income, net (511) (5,683)
Net other operating expense (income) 2,581 (3,810)
     
Operating profit 79,752 59,868
     
Finance income (1,766) (1,662)
Finance cost 10,160 13,667
Net finance costs 8,394 12,005
     
Share of gain of associates and joint ventures, net of tax - 1,804
     
Profit before income tax 71,358 49,667
     
Income tax expense  13,905 8,096
     
Profit for the period 57,453 41,571
     
Attributable to:    
Shareholders of the Company 56,965 40,558
Non-controlling interests 488 1,013
Profit for the period 57,453 41,571
     
Earnings per share    
Basic earnings per share 1.95 1.45
Diluted earnings per share 1.80 1.32


 

 

 

 

 

 

 

AMG Advanced Metallurgical Group N.V.
   
Consolidated Statement of Financial Position     
     
     
In thousands of US Dollars    December 31, 2017
Unaudited
December 31, 2016
Assets    
Property, plant and equipment 298,540 226,098
Goodwill and other intangible assets 38,110 33,215
Derivative financial instruments 636 740
Other investments 30,562 29,930
Deferred tax assets 40,108 41,285
Restricted cash 829 2,526
Non-current tax asset 2,488 -
Other assets 17,729 17,207
Total non-current assets 429,002 351,001
Inventories 162,505 143,593
Derivative financial instruments 6,372 4,007
Trade and other receivables 137,174 129,220
Other assets 37,547 26,341
Current tax assets 3,147 5,257
Cash and cash equivalents 178,800 160,744
Assets held for sale 2,056 149
Total current assets 527,601 469,311
Total assets 956,603 820,312




AMG Advanced Metallurgical Group N.V.   
Consolidated Statement of Financial Position     
(continued)   
    
     
In thousands of US Dollars    December 31, 2017
Unaudited
December 31, 2016*
Equity    
Issued capital 796 760
Share premium 432,844 389,066
Treasury shares (3,461) (570)
Other reserves (72,880) (97,085)
Retained earnings (deficit) (99,343) (116,457)
Equity attributable to shareholders of the Company 257,956 175,714
     
Non-controlling interests 24,633 22,073
Total equity 282,589 197,787
     
Liabilities    
Loans and borrowings 164,788 150,959
Employee benefits 156,193 141,588
Provisions 35,887 30,854
Deferred revenue - 2,822
Other liabilities 4,011 6,874
Derivative financial instruments - 887
Deferred tax liabilities 7,888 8,435
Total non-current liabilities 368,767 342,419
     
Loans and borrowings 8,820 9,621
Short term bank debt 15,500 7,500
Other liabilities 60,212 57,528
Trade and other payables 155,115 133,328
Derivative financial instruments 1,415 4,661
Advance payments 33,025 29,404
Deferred revenue 1,624 10,198
Current taxes payable 9,155 7,065
Provisions 20,381 20,801
Total current liabilities 305,247 280,106
Total liabilities 674,014 622,525
Total equity and liabilities 956,603 820,312

*Reclassified share reserves from other reserves to retained earnings (deficit) for December 31, 2016

 

 

 

AMG Advanced Metallurgical Group N.V.
   
Condensed Consolidated Statement of Cash Flows    
 

For the year ended December 31
   
In thousands of US Dollars 2017 2016
  Unaudited  
Cash from operating activities    
Profit for the year 57,453 41,571
Adjustments to reconcile net profit to net cash flows:    
Non-cash:    
Income tax expense 13,905 8,096
Depreciation and amortization 30,899 29,841
Asset impairment expense 1,160 1,976
Net finance costs 8,394 12,005
Share of profit of associates and joint ventures - (1,804)
Loss (gain) on sale or disposal of property, plant and equipment 75 (4,501)
Equity-settled share-based payment transactions 8,697 3,073
Movement in provisions, pensions and government grants (3,016) (13,000)
Working capital and deferred revenue adjustments (21,308) (7,737)
Cash generated from operating activities 96,259 69,520
Finance costs paid, net (7,443) (6,707)
Income tax paid, net (10,291) (6,588)
Net cash from operating activities 78,525 56,225
     
Cash used in investing activities    
Proceeds from sale of property, plant and equipment 254 1,546
Insurance proceeds on property, plant and equipment 1,516 -
Proceeds from sale of subsidiaries (net of cash divested of $1,820 in 2016) - 6,512
Acquisition of property, plant and equipment and intangibles (80,904) (44,086)
Acquisition of subsidiaries (net of cash acquired of $35 in 2016) - (4,961)
Change in restricted cash 1,911 (93)
Acquisition of other non-current investments - (1,000)
Other 3 (61)
Net cash used in investing activities (77,220) (42,143)


 

 

AMG Advanced Metallurgical Group N.V.
   
Condensed Consolidated Statement of Cash Flows    
(continued)    
For the year ended December 31    
In thousands of US Dollars 2017 2016
  Unaudited  
Cash from financing activities    
Proceeds from issuance of debt 30,000 163,190
Transaction costs related to the issuance of debt - (3,978)
Repayment of borrowings (17,153) (122,607)
Change in non-controlling interests - (5,600)
Proceeds from issuance of common shares 14,370 -
Net repurchase of common stock (12,434) (259)
Dividends paid (9,293) (7,558)
Other - 91
Net cash from financing activities 5,490 23,279
     
Net increase in cash and cash equivalents 6,795 37,361
     
Cash and cash equivalents at January 1 160,744 127,778
Effect of exchange rate fluctuations on cash held 11,261 (4,395)
Cash and cash equivalents at December 31 178,800 160,744


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, lithium, 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, the Czech Republic, the United States, China, Mexico, Brazil, India, Sri Lanka and Mozambique, 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
[email protected]

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.

Attachment:

http://www.globenewswire.com/NewsRoom/AttachmentNg/23e5fad7-9eda-48e1-bc60-d56a8f28ff7c

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