amg investor presentation march 2012

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Investor Presentation March 2012

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Page 1: Amg   investor presentation march 2012

Investor Presentation

March 2012

Page 2: Amg   investor presentation march 2012

2

THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG ADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS.

This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever.

This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunction herewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. This presentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, or dispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities for sale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, any

offer or commitment whatsoever. The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, none of the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.

Certain statements in this presentation constitute forward-looking statements, including statements regarding the Company's financial position, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should” and similar expressions, reflect the beliefs and expectations of the management board of directors of the

Company and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability, growth, cost and synergy of the Company’s recent acquisitions, the timely development and acceptance of new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein.

Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation.

The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice.

This document has not been approved by any competent regulatory or supervisory authority.

Cautionary Note

Page 3: Amg   investor presentation march 2012

3

Overview

Listed: NYSE-Euronext Amsterdam: AMG

Founded: 2006

2011 Revenues: $1,351.3M

2011 EBITDA: $110.1M

Employees: 3,154

Facilities: Netherlands, Germany, UK, USA, Brazil, France, China,

Belgium, Turkey, Poland, India, Sri Lanka, Czech Republic

Market cap: €245M ($320M)

Shares outstanding: 27.5M

52 week range: €6.79–€16.92

Recent share price: €8.89 (March 13, 2012)

Serve growing end markets with high value-added specialty metal alloys and

engineering solutions, related to CO2 reduction and conservation of natural resources

Page 4: Amg   investor presentation march 2012

4

Antimony and tantalum High-value alloys

Critical raw materials

Capital equipment for high

purity materials

Silicon metal

Natural graphite

Advanced Materials Engineering Systems

Business Units, Products, and End Markets

Infrastructure Aerospace Energy

Graphit Kropfmühl

Specialty Metals & Chemicals

AMG Mining

65% of 2011 revenue

46% of EBITDA

23% of 2011 revenue

31% of EBITDA

12% of 2011 revenue

23% of EBITDA

Creating new reporting

segment in 2012

Page 5: Amg   investor presentation march 2012

5

Increase Shareholder

Value

Increase Capital

Efficiency

Invest in Vertical

Integration

Drive Organic Growth

Why Invest in AMG

Revenue

2009 – 2011

24.8%

CAGR

2011

$ 1,351.3 million

+ 36% over 2010

EBITDA

EPS

2009 – 2011

26.2%

CAGR

2011

$ 110.1 million

+ 30% over 2010

Strong growth in

2011

Adjusted 2011 EPS

$1.34

+ 76% over 2010

ROCE

2009 – 2011

19.9%

CAGR

2011

15.1%

+ 27% over 2010

Page 6: Amg   investor presentation march 2012

6

Critical Raw Materials Matrix

■ USA, Germany, UK and EU have each identified critical materials – common factors include supply

risks, economic importance and technology demand

■ AMG currently has raw material sources for 4 of those elements

Page 7: Amg   investor presentation march 2012

7

Advanced Materials

Input & Critical

Raw Materials

Key

Products

Conversion

Recycling

Material

Science

Aerospace

Infrastructure

Specialty

Metals &

Chemicals

Specialty alloys

for titanium

Coatings for

wear resistance

Everyday

Applications

Sample

Customers

Recycling Ferrovanadium

Ferro-nickel

molybdenum

Mining

Conversion

Tantalum

concentrate

and powder

Antimony

trioxide

Chromium

metals

Aluminium

master alloys

End

Markets

Surface

Coating

Property

Modification

Property

Modification

Surface

Coating

Property

Modification

FeV is added

into higher-

strength

light-weight

steel adopted

by the

Shanghai

World

Financial

Center²

A Boeing 787

Dreamliner contains

~250,000 lb titanium,

17% increased fuel

efficiencies compared

to Boeing 737¹

An iPhone

installed

~469

tantalum

capacitors³

¹ Titanium Metal Industry Primer, by J.P. Morgan research on January 23, 2012

² Resource Revolution: Meeting the world’s energy, materials, food, and water needs, by McKinsey in November 2011

³ iSuppli in August 2010

Page 8: Amg   investor presentation march 2012

8

Nearly 90 % of all

nuclear residues from

reprocessing of Pu are

processed into new

fuels with AMG’s

technology¹

Engineering Systems

Input & Critical

Raw Materials

Key

Products

Technology

Material

Science

Aerospace

Energy

– Solar

Energy

– Nuclear

Vacuum Melting

and Re-melting

Systems

Precision Casting

and Coating

Systems

Heat Treatment

with high pressure

gas quenching

Everyday

Applications

Sample

Customers

Technology Solar silicon

melting and

crystallisation

systems- DSS

furnaces

Mono2(TM)

technology

Technology Vacuum

Sintering

Systems for

nuclear fuel

Development

project for the

safe storage of

nuclear waste

End

Markets

Surface

Coating

Property

Modification

Property

Modification

Property

Modification

All modern turbine

engines use titanium

compressor blades and

discs to guarantee

high-performance and

light-weight thus low

CO2 emission¹

Solar power capacity

could become available

at around $1 per watt

by 2020, down from

$4 per watt in 2010²

¹ AMG Management

² Resource Revolution: Meeting the world’s energy, materials, food, and water needs, by McKinsey in November 2011

Page 9: Amg   investor presentation march 2012

9

Li-iron batteries for

electric vehicles (EV)

typically use graphite

as anode. One car

battery requires ~24

Kg graphite.³

Graphit Kropfmühl

Input & Critical

Raw Materials

Key

Products

Mining

Conversion

Material

Science

Infrastructure

Energy

– Solar

Specialty

Metals &

Chemicals

Natural graphite

for heat insulation

materials for

building

construction

Everyday

Applications

Sample

Customers

Conversion Silicon metal for

polycrystalline

for solar cells

Mining

Conversion

Natural

graphite for

transportation

and lithium-ion

batteries

Silicon metal

for aluminum

and silicones

End

Markets

Property

Modification

Property

Modification

Property

Modification

Improving energy

efficiency in buildings

could deliver ~19% of

the total benefits that

could accrue from

boosting resource

productivity¹

In 2010, ~ 87% of

solar cells are silicon-

based²

¹ Resource Revolution: Meeting the world’s energy, materials, food, and water needs, by McKinsey in November 2011

³ Solarbuzz

³ AMG Management

Page 10: Amg   investor presentation march 2012

10

■ AMG currently owns 88.16% of GK’s shares

■ Commenced the preparation of a voluntary public tender offer on February 29

■ Offering €31.75/share

■ Expected completion Q2 2012

■ Securing ~ $62 million in incremental credit from its banking consortium

■ AMG intends to initiate a squeeze out of the remaining minority shareholders with

a goal to own 100% of GK, upon getting above 90% ownership

■ Upon successful completion of the Voluntary Tender, AMG will begin segment

reporting of AMG Mining's financial results

Voluntary Tender Offering for Graphit Kropfmühl

Expand

AMG's mine

based

businesses

Simplify

AMG’s

corporate

structure

+

Increase Shareholder Value

Increase

operational

and financial

flexibility

+ Eliminate

redundancies +

Page 11: Amg   investor presentation march 2012

11

Financial Highlights

Page 12: Amg   investor presentation march 2012

12

Revenue

$20.2

$26.2

$31.4 $27.7

$24.8

Up 23% YoY

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Financial Highlights

$270.7

$318.0

$368.3 $356.4

$308.6

Up 14% YoY

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

■ Q4 2011 EPS: $0.26 (1)

■ Up 13% from Q4 2010 (1)

■ 2011 EPS: $1.34 (2)

■ Up 76% from 2010 (2)

Gross Profit

EBITDA

(1) Excluding Timminco Limited related charges

(2) Excluding Timminco Limited related charges and loss on debt extinguishment

(in USD millions)

EPS

- - - - - - - - - -

$49.4 $59.8

$69.0 $58.7

$50.5

Up 2% YoY

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

2011: $1,351.3

2011: $110.1

(in USD millions) 2011: $238.0

(in USD millions)

Page 13: Amg   investor presentation march 2012

13

10.5% 11.9%

15.1%

8.0% 0

2009 2010 2011

Capital Base

■ Net debt: $189.1 million ■ Debt to capitalization: 0.55x ■ Net Debt to 2011 EBITDA: 1.72x

■ Revolver availability: $79.6 million ■ Total liquidity: $138.6 million ■ AMG’s primary debt facility is a $315

million term loan and revolving credit facility ■ 5 year term ■ Securing an additional $62 million for

its credit facility in Q1 2012 in conjunction with the Voluntary Tender Offering to GK

$89.3 $66.1 $61.1 $71.3

$79.6

$237.1 $267.1 $278.5 $274.9

$268.6

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Cash Debt ( in USD millions)

Cash and Debt

ROCE

Page 14: Amg   investor presentation march 2012

14

Key Products

2011: $1,351.3

$-

$200

$400

$600

$800

$1,000

$1,200

YTD Q4 2010 YTD Q4 2011

Vacuum Furnaces Ti Master Alloys and Coatings

Al Master Alloys and Powders FeV & FeNiMo

Antimony Chromium Metal

Tantalum & Niobium Graphite

Si Metal

$-

$50

$100

$150

$200

YTD Q4 2010 YTD Q4 2011

Vacuum Furnaces Ti Master Alloys and Coatings

Al Master Alloys and Powders FeV & FeNiMo

Antimony Chromium Metal

Tantalum & Niobium Graphite

Si Metal

Revenue Gross Profit

2011: $238.0 ( in USD millions) ( in USD millions)

33% 36%

Page 15: Amg   investor presentation march 2012

15

End Markets

Aerospace + 48% Aerospace + 47%

Up 36% Up 33%

2011: $1,351.3

Revenue Gross Profit

2011: $238.0 ( in USD millions) ( in USD millions)

2010: $990.5 2010: $178.6

Aerospace

28.5%

Infrastructure

14.5% Energy

18.0%

Specialty Metals

& Chemicals

38.9%

Aerospace

26.1%

Infrastructure

16.4%

Specialty Metals

& Chemicals

36.1%

Energy

21.3%

Aerospace

33.5%

Energy

26.2%

Specialty Metals

& Chemicals

25.9%

Infrastructure

14.4%

Aerospace

30.4%

Infrastructure

19.5%

Specialty Metals

& Chemicals

23.7%

Energy

26.5%

Page 16: Amg   investor presentation march 2012

16

■ Q4 2011 revenue up 18% from Q4 2010

■ KB Alloys contributed $19.5 million

■ Titanium master alloys revenue up

458%

■ Tantalum revenue up 400%

■ Q4 2011 gross margin 10% of revenue

■ Q4 2011 EBITDA margin 3% of

revenue

$168.9

$210.8

$235.6 $226.8

$198.7

$7.7

$14.6

$17.5

$12.3

$6.0

$1.0

$6.0

$11.0

$16.0

$21.0

$-

$50.0

$100.0

$150.0

$200.0

$250.0

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Revenue EBITDA

Advanced Materials

Financial Summary

- - - - -

$7.3 $5.6 $6.2 $6.6

$10.7

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Capital Expenditure

( in USD millions)

( in USD millions)

■ Q4 2011 CAPEX $10.7 million

■ $2.6 million for tantalum mine

■ $1.2 million for aerospace coatings

and master alloy expansion

Page 17: Amg   investor presentation march 2012

17

Q4 2011 revenue up 8% from Q4 2010

Heat treatment revenue up 130%

Remelting systems revenue up 49%

Solar DSS revenue down 70%

Q4 2011 gross margin 30% of revenue

Increasing price pressure

Q4 2011 EBITDA up 18%

16% of revenue

$67.7 $64.9

$89.8 $86.3

$72.9

$10.0

$5.3

$7.7

$9.3

$11.8

$1.0

$6.0

$11.0

$16.0

$21.0

$(5.0)

$5.0

$15.0

$25.0

$35.0

$45.0

$55.0

$65.0

$75.0

$85.0

$95.0

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Revenue EBITDA

Engineering Systems

Financial Summary

- - - - -

$107.6

$65.7 $88.6

$68.5 $69.5

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Order Intake

( in USD millions)

( in USD millions)

Order backlog decreased 8% to $158.5

million at December 31, 2011

Order intake $69.5 million in Q4

2011

0.95x book to bill ratio

Page 18: Amg   investor presentation march 2012

18

Q4 2011 revenue up 8% from Q4 2010

Natural graphite revenue up 16%

Silicon metal revenue up 4%

Q4 2011 gross margin 26% of revenue

Higher sales prices for natural

graphite and silicon metal

Q4 2011 EBITDA up 183% over Q4

2010

19% of revenue

$34.2

$42.3 $42.9 $43.3

$37.0

$2.5

$6.3 $6.2 $6.2 $7.0

$1.0

$6.0

$11.0

$-

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

$45.0

$50.0

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Revenue EBITDA

Graphit Kropfmühl

Financial Summary

- - - - -

$1.7 $1.2

$2.5 $2.7 $3.2

Q4 10 Q1 11 Q2 11 Q3 11 Q4 11

Capital Expenditure

( in USD millions)

( in USD millions)

■ Q4 2011 CAPEX – $3.2 million

Graphite milling expansion

Upgrading silicon metal facility

Page 19: Amg   investor presentation march 2012

Outlook

Page 20: Amg   investor presentation march 2012

20

Outlook

■ AMG expects Revenue and EBITDA growth in 2012

■ AMG announces Q1 2012 financial results on May 15, 2012

Antimony expansion

is progressing

Tantalum mine

impacted by Brazil

floods

Challenging start to

2012

Aerospace is strong

Financial market

uncertainty is

reducing visibility

Heat Treatment

Services business

providing more stable

recurring revenues

Aerospace and

nuclear is strong;

solar is challenging

Voluntary Tender

launched

Silicon metal prices

locked in for 2012

Graphite demand is

strong

Advanced Materials Engineering Systems Graphit Kropfmühl AMG Mining

Page 21: Amg   investor presentation march 2012

21

Appendix

Page 22: Amg   investor presentation march 2012

22

Consolidated Balance Sheet

in thousands

Balance Sheet Actual FYE in December 2010 2011

Fixed assets 228.6 263.6

Goodwill and intangibles 27.0 38.1

Other non-current assets 80.8 63.4

Inventories 207.2 228.9

Receivables 175.4 188.1

Other current assets 46.8 39.1

Cash 89.3 79.6

TOTAL ASSETS 855.1 900.8

TOTAL EQUITY 234.0 220.6

Long-term debt 187.8 210.4

Pension liabilities 88.4 90.1

Other long-term liabilities 52.9 71.6

Current debt 49.3 58.2

Accounts payable 102.3 128.5

Advance payments 49.6 30.2

Accruals 43.3 51.7

Other current liabilities 47.5 39.5

TOTAL LIABILITIES 621.1 680.2

TOTAL LIABILITIES & EQUITY 855.1 900.8

Page 23: Amg   investor presentation march 2012

23

Consolidated Income Statement

in thousands

Summary Financials Actual 2010 Actual 2011 Quarter to date December Q4 Q4

Revenue 270.7 308.6 Cost of sales 221.3 258.1

Gross profit 49.4 50.5

Selling, general & administrative 36.8 34.9

Timminco receivables write-off - 7.5 Asset impairment & restructuring 1.0 (1.9)

Environmental 5.7 5.5

Other income (0.4) (1.0)

One Time Expenses - (4.3)

Operating profit 6.3 9.8

Net finance costs 2.0 6.2

Share of income (loss) of associates 7.6 (13.5)

Profit (loss) before income taxes 11.9 (10.0)

Income tax (benefit) expense (0.1) 2.2

Profit (Loss) for the quarter 12.0 (12.1)

Attributable to:

Shareholders of the Company 12.5 (13.2)

Minority interest (0.5) 1.1

Adjusted EBITDA 20.2 24.8

Page 24: Amg   investor presentation march 2012

24

Consolidated Statement of Cash Flows

in thousands

Cash Flow Statement Actual FYE in December 2010 2011

EBITDA 84.9 110.1 +/- Change in operating assets/liabilities (45.2) (13.8) -Interest paid, net (13.8) (12.1) Other operating cash flow 7.9 (4.7) Dividend income (0.3)

Cash flows from operations before taxes 33.8 79.2 Income tax paid (35.4) (34.2)

Total cash flows from operations (1.6) 45.0

Capital expenditures (33.0) (51.9)

Acquisitions (20.2) (29.5)

Other investing activities (9.4) (1.4)

Cash flows from investing activities (62.6) (82.8)

Cash flows from financing activities 42.4 27.9

Net increase (decrease) in cash (21.8) (9.9)

Beginning cash 117.0 89.3

Effects of exchange rates on cash (5.9) 0.1

Ending cash 89.3 79.6

Ending Liquidity 138.6