News Column

AMG Advanced Metallurgical Group N.V. Reports Second Quarter 2014 Results

August 5, 2014

Key Highlights * Revenue was $278.9 million in the second quarter 2014, a 4% decrease from the same period in 2013 * EBITDA[1] was $20.4 million in the second quarter 2014, an 8% decrease from the same period in 2013 * EPS on a fully diluted basis was $0.27 in the second quarter 2014, compared to ($1.53) in the same period in 2013 * Cash flows from operating activities were $19.1 million in the second quarter 2014, compared to $32.0 million in the same period in 2013 * As of June 30, 2014, cash on the balance sheet was $114.9 million; net debt was $147.8 million, a reduction of $12.7 million during the year Amsterdam, 6 August 2014 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported second quarter 2014 revenue of $278.9 million, a 4% decrease from $291.5 million in the second quarter 2013.  Net income attributable to shareholders for the second quarter 2014 was $7.4 million, or $0.27 per fully diluted share, compared to a loss of $42.2 million, or ($1.53) in the second quarter 2013.  EBITDA decreased 8% to $20.4 million in the second quarter 2014.  However, the EBITDA was consistent with the first quarter 2014 EBITDA of $20.1 million. Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "AMG continued to deliver on its objective of improving operational performance, and reducing gross and net debt.  Despite a low metal price environment, market demand was stable during the second quarter 2014.  AMG Processing benefited from cost reduction and restructuring efforts, while AMG Mining improved gross margins due to its focus on higher value-added products.  AMG Engineering had a disappointing quarter in terms of profitability, the result of weak order intake in the second half of 2013, but generated significant order intake during the quarter, which should result in improved earnings in the second half of the year." Key Figures In 000's US Dollar   Q2 '14 Q2 '13 Change Revenue $278,941$291,528 (4%) --------------------------------------------------------------------------- Gross profit 44,963 48,618 (8%) Gross margin 16.1% 16.7% --------------------------------------------------------------------------- Operating profit (loss) 11,124 (40,222) N/M Operating margin 4.0% (13.8%) Net income (loss) attributable to 7,445      (42,230)          N/M shareholders --------------------------------------------------------------------------- EPS- Fully diluted 0.27 (1.53) N/M EBIT ((1)) 12,221 14,140 (14%) EBITDA ((2))     20,392 22,184 (8%) EBITDA margin 7.3% 7.6% Cash flows from operating activities 19,129 31,966 (40%) --------------------------------------------------------------------------- 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 Processing   Q2 '14 Q2 '13 Change -------------------------------------------------- Revenue $144,508$144,603 0% Gross profit 20,757 17,718 17% Operating profit 6,650 4,322 54% EBITDA 11,158 7,992 40% AMG Processing's second quarter 2014 revenue was consistent with prior year while gross profit improved by 17%.   A 103% increase in ferrovanadium volumes was offset by lower demand in certain aerospace end markets.  Improved production efficiencies and lower cost structures at AMG Vanadium and AMG Superalloys were the primary reasons for the improved gross margins.  The consistency of metal prices, improved production efficiencies and the impacts of previous restructuring efforts all contributed to the 2% increase in gross margin.  The increase in gross margins led to the 40% improvement in EBITDA. AMG Engineering   Q2 '14 Q2 '13 Change ----------------------------------------------- Revenue $49,676$66,618 (25%) Gross profit 7,485 18,189 (59%) Operating loss (3,760) (12,420) (70%) EBITDA (1,801) 8,443 N/M AMG Engineering's second quarter 2014 revenue decreased $16.9 million, or 25%, to $49.7 million.  Low order intake in the second half of 2013 caused the decline in revenue during the quarter.  The second quarter 2014 gross margin decreased to 15%, from 27% in the second quarter 2013 due to reduced volumes and pricing pressure.  The $10.7 million decline in gross profit directly impacted EBITDA. Order backlog increased 9% to $148.0 million at June 30, 2014 from $135.8 million at March 31, 2014, as delayed orders began to be realized.   $62.3 million in new orders were signed in the second quarter 2014, a 1.25x book to bill ratio. Turbine blade coating systems accounted for approximately 33% of the order intake. AMG Mining   Q2 '14 Q2 '13 Change -------------------------------------------------------- Revenue $84,757$80,307 6% Gross profit 16,721 12,711 32% Operating profit (loss) 8,234 (32,124) N/M EBITDA 11,035 5,749 92% AMG Mining's second quarter 2014 revenue increased $4.5 million, or 6%, to $84.8 million, with tantalum and graphite recording the biggest improvements.  AMG Tantalum's revenue increased due to a 54% increase in volumes, and price improvements related to a long-term contract, while AMG Graphite revenues improved primarily due to a 21% increase in volumes.  The focus on operational efficiencies and increased sales of higher margin graphite products for the energy efficiency market improved AMG Graphite's gross margin to 20% from 16%. The EBITDA increased 92% to 13% of revenue, primarily due to the 32% improvement in gross profit. Financial Review SG&A AMG's second quarter 2014 SG&A expenses were $34.1 million, consistent with $34.0 million in the second quarter 2013.  SG&A expenses were stable, despite incurring approximately $1.1 million in costs related to specific strategic initiatives. Non-Recurring Items AMG's second quarter 2014 operating profit of $11.1 million includes non- recurring items, which are not included in the calculation of EBITDA. A summary of non-recurring items in the second quarter 2014 and 2013 are below:               For the three months ended                 June           June               2014          2013 ------------------------------------------------------------------------------- Non-recurring items included in operating profit (loss): Restructuring expense $1,034$5,399 Asset impairment expense - 49,703 ------------------------------------------------------------------------------- Total non-recurring items included in operating profit 1,034 55,102 (loss) ------------------------------------------------------------------------------- AMG Processing incurred $1.0 million during the second quarter 2014 to right size the workforce to current market realities.  This is a substantial reduction from $55.1 million of restructuring and asset impairment expenses recorded in 2013 related to the Company's solar operations and non-developed mining assets. Liquidity   June 30, 2014 December 31, 2013 Change ------------------------------------------------------------------------ Total debt $262,743$263,580 (0%) Cash & short-term investments 114,940 103,067 12% ------------------------------------------------------------------------ Net debt 147,803 160,513 (8%) AMG had a net debt position of $147.8 million as of June 30, 2014.  This decreased $12.7 million since December 31, 2013 due to strong cash flow from operations and lower capital spending. Cash flows from operating activities were $24.8 million in the first half of 2014 compared to $32.6 million in the first half of 2013.  The decline is primarily attributable to a $15.0 million long-term contract prepayment received in the first half of 2013 that did not recur in 2014. Capital expenditures declined $5.7 million in the first half of 2014 as compared to the first half of 2013.  The $10.5 million of capital spending incurred in the first half of 2014 included $6.1 million of maintenance capital.  The largest capital projects were for AMG TAC's titanium aluminide expansion, AMG Silicon efficiency improvements, and capacity expansion of higher value-added graphite products. Including the $114.9 million of cash, AMG had $172.7 million of total liquidity as of June 30, 2014. On May 27, 2014, AMG amended its revolving credit facility.  The amendment extended the modified tangible net worth covenant through April 2016, the remainder of the term of the credit facility.  Outlook The specialty metals markets are relatively stable as the global economy is slowly improving.  In this low growth environment, AMG is rationalizing production, limiting capital investments, and continuing cost reduction programs.  These actions are the primary factors behind the improved AMG Processing and AMG Mining margins.  The increase in AMG Engineering's backlog and the lower cost base in AMG Processing and AMG Mining, should position the Company for improved EBITDA and net income, and reduced debt levels, in the second half of 2014. AMG Advanced Metallurgical Group N.V. Condensed interim consolidated income statement For the quarter ended June 30 In thousands of US Dollars         2014           2013     Unaudited Unaudited Revenue   278,941 291,528 Cost of sales   233,978 242,910 Gross profit   44,963 48,618 Selling, general and administrative expenses   34,098 33,994 Asset impairment expense   - 49,703 Restructuring expense   1,034 5,399 Other income, net   (1,293) (256) Operating profit (loss)   11,124 (40,222) Finance expense   5,752 5,320 Finance income   (138) (173) Foreign exchange loss   199 964 Net finance costs   5,813 6,111 Share of profit of associates and joint ventures   678 156 Profit (loss) before income tax   5,989 (46,177) Income tax benefit   (1,463) (1,788) Profit (loss) for the period   7,452 (44,389) Attributable to:   Shareholders of the Company   7,445 (42,230)   Non-controlling interests   7 (2,159) Profit (loss) for the period   7,452 (44,389) Earnings (loss) per share Basic earnings (loss) per share   0.27 (1.53) Diluted earnings (loss) per share   0.27 (1.53) AMG Advanced Metallurgical Group N.V. Condensed interim consolidated income statement For the six months ended June 30 In thousands of US Dollars         2014           2013     Unaudited Unaudited Revenue   553,793 588,006 Cost of sales   462,478 491,130 Gross profit   91,315 96,876 Selling, general and administrative expenses   69,134 70,011 Asset impairment expense   - 49,703 Restructuring expense   1,792 6,735 Other income, net   (1,546) (391) Operating profit (loss)   21,935 (29,182) Finance expense   10,427 11,037 Finance income   (341) (316) Foreign exchange loss   14 45 Net finance costs   10,100 10,766 Share of profit (loss) of associates and joint ventures   783 (556) Profit (loss) before income tax   12,618 (40,504) Income tax expense   1,811 1,924 Profit (loss) for the period   10,807 (42,428) Attributable to:   Shareholders of the Company   11,364 (39,770)   Non-controlling interests   (557) (2,658) Profit (loss) for the period   10,807 (42,428) Earnings (loss) per share Basic earnings (loss) per share   0.41 (1.44) Diluted earnings (loss) per share   0.41 (1.44) AMG Advanced Metallurgical Group N.V. Condensed interim consolidated statement of financial position In thousands of US Dollars     June 30,  2014 December 31,  2013      Unaudited Assets   Property, plant and equipment   251,268 259,683   Goodwill   24,817 25,078   Intangible assets   11,346 12,116   Investments in associates and joint ventures   4,806 4,755   Derivative financial instruments   71 271   Deferred tax assets   34,336 27,003   Restricted cash   8,959 7,967   Other assets   24,558 25,519 Total non-current assets   360,161 362,392   Assets held for sale   689 -   Inventories   166,945 179,343   Trade and other receivables   174,425 150,807   Derivative financial instruments   2,675 2,177   Other assets   31,928 34,430   Cash and cash equivalents   114,940 103,067 Total current assets   491,602 469,824 Total assets   851,763 832,216   AMG Advanced Metallurgical Group N.V. Condensed interim consolidated statement of financial position (continued)   In thousands of US Dollars June 30,  December    2014 31,   2013       Unaudited Equity   Issued capital   744 744   Share premium   382,518 382,518   Other reserves   (9,450) (4,605)   Retained earnings (deficit)   (234,281) (246,304) Equity attributable to shareholders of the Company 139,531 132,353 Non-controlling interests 1,376 2,237 Total equity   140,907 134,590 Liabilities   Loans and borrowings   217,776 223,788   Employee benefits   148,904 138,009   Provisions   30,424 30,443   Deferred revenue   8,903 11,776   Government grants   781 883   Other liabilities   7,346 8,425   Derivative financial instruments   6,471 7,702   Deferred tax liabilities   4,329 3,121 Total non-current liabilities   424,934 424,147   Loans and borrowings   19,555 20,873   Short term bank debt   25,412 18,919   Government grants   95 74   Other liabilities   56,055 54,383   Trade and other payables   128,221 127,381   Derivative financial instruments   1,792 5,298   Advance payments   22,497 16,341   Deferred revenue   12,310 5,009   Current taxes payable   2,836 2,329   Employee benefits   200 1,350   Provisions   16,949 21,522 Total current liabilities   285,922 273,479 Total liabilities   710,856 697,626 Total equity and liabilities   851,763 832,216 AMG Advanced Metallurgical Group N.V. Condensed interim consolidated statement of cash flows For the six months ended June 30 In thousands of US Dollars         2014       2013     Unaudited Unaudited Cash flows from operating activities Profit (loss) for the period   10,807 (42,428) Adjustments to reconcile net profit to net cash flows: Non-cash:    Income tax expense   1,811 1,924    Depreciation and amortization   16,320 16,744    Asset impairment expense   - 49,703    Net finance costs   10,100 10,766    Share of (profit) loss of associates and joint ventures   (783) 556    Loss on sale or disposal of property, plant and equipment   134 30    Equity-settled share-based payment transactions   429 428    Movement in provisions, pensions and government grants   (5,240) 2,473 Change in working capital and deferred revenue   2,956 11,360 --------------------- Cash flows from operating activities   36,534 51,556 Finance costs paid, net   (7,921) (9,296) Income tax paid, net   (3,825) (9,629) --------------------- Net cash flows from operating activities   24,788 32,631 Cash flows used in investing activities Proceeds from sale of property, plant and equipment   220 356 Proceeds from sale of investment in associate   - 650 Acquisition of property, plant and equipment and intangibles   (10,478) (16,219) Change in restricted cash   (1,220) 523 Other   (5) (4,000) --------------------- Net cash flows used in investing activities   (11,483) (18,690) Cash flows used in financing activities Proceeds from issuance of debt   - 41 Repayment of borrowings   (857) (22,471) Change in non-controlling interests   28 (69) Other   - 5 --------------------- Net cash flows used in financing activities   (829) (22,494) Net increase (decrease) in cash and cash equivalents   12,476 (8,553) Cash and cash equivalents at January 1   103,067 121,639 Effect of exchange rate fluctuations on cash held   (603) (856) Cash and cash equivalents at June 30   114,940 112,230 About AMG AMG creates and applies innovative metallurgical solutions to the global trend of sustainable development of natural resources and CO(2) reduction.  AMG produces highly engineered specialty metal products and advanced vacuum furnace systems for the Energy, Aerospace, Infrastructure, and Specialty Metals and Chemicals end markets. AMG Processing develops and produces specialty metals, alloys, and high performance materials.  AMG is a significant producer of specialty metals, such as ferrovanadium, ferronickel-molybdenum, aluminum master alloys and additives, chromium metal and ferrotitanium, for Energy, Aerospace, Infrastructure and Specialty Metal and Chemicals applications.  Other key products include specialty alloys for titanium and superalloys, coating materials and vanadium chemicals. AMG Engineering designs and produces advanced vacuum furnace systems, and operates vacuum heat treatment facilities, primarily for the Aerospace and Energy industries.  Furnace systems produced by AMG include vacuum remelting, solar silicon melting and crystallization, vacuum induction melting, vacuum heat treatment and high pressure gas quenching, turbine blade coating and sintering. AMG also provides vacuum case-hardening heat treatment services on a tolling basis. AMG Mining produces critical materials utilizing its secure raw material sources in Africa, Asia, Europe, and South America.  AMG Mining produces critical materials such as high purity natural graphite, tantalum, antimony and silicon metal.  These materials are of significant importance to the global economy and are available in limited supply.  End markets for these materials include electronics, energy efficiency, green energy, and infrastructure. With over 3,000 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, United States, China, Mexico, Brazil, Turkey, Poland, India, 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.         +1 610 975 4901 Jonathan Costello Vice President of Corporate Development and Communicationsjcostello@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 August 5 2014 Q2: http://hugin.info/138060/R/1846774/643843.pdf This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: AMG Advanced Metallurgical Group N.V. via GlobeNewswire [HUG#1846774]


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Thomson Reuters ONE


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters