amg investor presentation q2 2010

AMG Advanced Metallurgical Group N.V.

Investor Presentation

2nd Quarter 2010

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2AMG ADVANCED METALLURGICAL GROUP N.V.

Disclaimer

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.


Listed on NYSE-Euronext Amsterdam (Euronext: AMG)

Products

High purity metals and complex metal products

Vacuum furnaces used to produce high purity metals

2010 Q1 2010 March 31

Revenues - $235.8 million

EBITDA - $22.0 million

Net debt - $104.1 million

Capital Investment - $5.1 million

Global presence

Europe, North America, South America and Asia

2,300 employees

Sustainable Metals Technology

Introduction


■ Revenue: $235.8 million

■ EBITDA: $22.0 million, 9.3% EBITDA margin■ Increases in Advanced Materials sales prices

■ Advanced Materials profitability improved substantially in Q4

■ Engineering Systems order intake remained low

■ EPS, excluding Timminco and restructuring charges, of $0.11

■ Capital investment of $5.1 million in Q1 2010

■ Cash: $98.9 million and debt of $203.0 million

■ Net debt of $104.1 million

Financial Highlights - First Quarter 2010


■ AMG participates in the macro economic trend of:

■ Growing demand for natural resources in context of the need for

sustainable environmental demands including:

■ CO2 reduction

■ Emerging market infrastructure

■ Aerospace and light weight materials

■ Specialty metals and chemicals

Macroeconomic Trends and Markets


Advanced Materials

High-value alloys

Essential raw materials

Vacuum Furnaces

Capital equipment for high purity

materials

Products & End Markets

AerospaceEnergy InfrastructureSpecialty Metals &

Chemicals


End Markets


Aerospace Infrastructure EnergySpecialty Metals &

Chemicals

Titanium Alloys Structural Steel Solar Vacuum Furnaces Silicones

Superalloys Specialty Steel Superalloys Paints & Pigments

Turbine Coatings Building Materials Solar - Silicon Metal Glass, Tools & Optics

Vacuum Furnaces Nuclear Fuel Vaccum Furnaces Capacitors

Energy Storage Technologies


End Products

Vacuum furnaces for solar ingot

production

Stackable

Graphite

Blocks

Energy – Solar & Nuclear

Tantalum based capacitor Paints and pigments

Specialty Metals & Chemicals

High purity stainless steel

Infrastructure – Recycling

Typical aerospace jet engine

SuperalloysTi alloys

(includes VAl)

Aerospace


Q1 2010 Revenue by End

Market

Markets & Products

Q1 2010 Revenue by

Product

Energy - Solar & Nuclear 26%

Aerospace 26%

Infrastructure -Recycling 14%

Specialty Metals &

Chemicals 34%

Vacuum Furnaces

28%

Ti Master Alloys and Coatings

18%

Al Master Alloys14%

Si metal11%

FeV & FeNiMo5%

Antimony10%

Chromium Metal

8%

Tantalum & Niobium

3%

Graphite4%


Note: This chart is a simplified depiction of AMG‟s organisational structure.

(1) Timminco Limited is listed on the Toronto stock exchange (TIM CN / TIM.TO).

(2) Graphit Kropfmühl AG (“GK”) is listed on the Frankfurt stock exchange (GKRG.DE / GKR GR).

42.5%(1)

AMG Advanced Metallurgical Group N.V. (Netherlands)

Upgraded metallurgical silicon

Silicon metal

Canada

Timminco

79.5(2)

USGermany Brazil France

Ferrovanadium Ferronickel-

molybdenum

Aluminium master alloys

Chromium metal

Ferrotitanium Metals-based

powders

Tantalum oxide Niobium oxide Aluminium

master alloys

Antimony trioxide

Advanced Materials Division

Specialty alloys for titanium and superalloys

Coating materials

Vanadium chemicals

Metals-based powders

UK

Silicon metal Natural

graphite

Graphit Kropfmühl

GermanyGermany

Engineering Systems Division

US/Mexico

Heat treatment facilities

Vacuum furnace systems

Own & Operate heat treatment facilities

2009 Revenue by Geography

Global Operations

Europe56%

North America

21%

Asia18%

South America

4%ROW

1%


Financial Highlights - by Business Unit

2010 Q1 Revenues 2010 Q1 EBITDA

2010 Q1 Free Cash Flow

In USD millions

$140.5

$65 .3

$30.0

Advanced Materials Engineering Systems GK

$8.5

$12.0

$1.5


($2.5)

$25.7($19.1)


$ in millions Q1 2010

Adjusted EBITDA 22.0

+ / - Change in working

capital (16.5)

- Maintenance capital (1.4)

Free Cash Flow 4.1

$140.5

$65 .3

$30.0



- -- -

$15.9

$22.2$18.6

$12.4

$22.0

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

Financial Highlights

$215.7 $214.9$205.4

$231.4 $235.8

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

($ in millions)

($ in millions)

Q1 Revenue: $235.8 million

Up 9% from Q1 2009

Q1 EBITDA: $22.0 million

Up 39% from Q1 2009

Balance sheet highlights at Mar 31, 2010

Cash: $98.9 million

Debt: $203.0 million

Net debt: $104.1 million

Total liquidity: $190.9 million

HighlightsRevenue

EBITDA


Advanced Materials - Market, Products and Customers

Products

Aerospace

Specialty alloys for titanium

Coatings for wear

resistance

Infrastructure - FeV

Ferro-vanadium

Ferro-nickel molybdenum

Specialty Metals

Competitors Reading Alloys Inc.

Strategic Minerals

Corporation

Highveld Steel & Vanadium

Gulf Chemical &

Metallurgical Corporation

Strategic Minerals

Corporation

Xstrata plc

Chengde Vanadium &

Titanium Stock Co. Ltd.

KBM Affilips B.V.

KB Alloys, Inc.

Delachaux S.A.

Campine S.A.

Chemtura Corporation

Sample Customers

Chromium Metals

Tantalum

Antimony

Aluminium master alloys

http://en.wikipedia.org/wiki/File:Logo_of_Hindlaco.png


Infrastructure - Pricing

Significant price trends – 10 years

$0

$50

$100

$150

$200

$250

$0

$10

$20

$30

$40

$50

$60

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Pri

ce /

Po

un

d –

V,

Mo

, N

i

Ferro Vanadium Molybdenum Nickel

Prices are still below pre-crisis levels

2010


Advanced Materials

Financial Summary Highlights

( in millions)

-$1.3 -$0.5$5.0

$5.3 $8.5

$95.9 $96.5

$110.1

$124.3

$140.5

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

Revenue EBITDA

- - -

$2.5 $2.1 $1.9

$5.0

$3.3

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

CAPEX

■ Infrastructure - ferrovanadium

■ Reference prices increased 18% v. Q1 „09

■ Volumes declined 12% v. Q1 ‟09

■ Aerospace – master alloys volumes declined

51% compared to Q4 2009

■ Year over year reduction in personnel expenses

improved EBITDA margins

■ CAPEX limited to maintenance activities and

expansion of ferrovanadium operations in the

United States


Engineering Systems - Market, Products and Customers

Products

Energy - Solar

Solar silicon melting and

crystallisation systems

(DSS furnaces)

Aerospace

Vacuum Melting and Re-

melting Systems

Precision Casting and

Coating Systems

Heat Treatment with high

pressure gas quenching

Energy - Nuclear

Vacuum Sintering

Systems

Notable Successes 2001 – Secured furnace

exclusivity with REC

2005 – Introduced single

crucible furnaces

2009 – >$172 mm in

revenue, 2nd largest

market participant

2009 – Market Share leader

in Ti remelting in China, the

fastest growing Ti market

2009 – 80% market share in

turbine blade coating

July 2008 – Secured first

nuclear engineering contract

with DOE, through Shaw-

Areva

Two strategic acquisitions

completed to expand product

portfolio

Sample Customers

http://www.solarpowerindustries.com/index.html

http://www.qcells.de/cmadmin_2_474_0.html


Engineering Systems


( in millions)

- - -

$23.4 $22.5$11.0 $5.9 $12.1

$96.2$91.2

$61.6$73.8 $65.3

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

Revenue EBITDA

- - - -

$0.8

$1.7$1.2

$3.0

$0.8

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

CAPEX

Revenue: $65.3 million, 30% decrease QoQ

Solar silicon DSS furnace revenues

decreased 47% in Q1 „10 v. Q1 „09

EBITDA: $12 million

Backlog declined from $162 million at

December 31 2009 to $127 million at March

31, 2010

Order backlog is now primarily

comprised of furnaces for aerospace

end market

2010 EBITDA is expected to be lower than

2009 due to the decline in backlog


Graphit Kropfmühl


( in millions)

- - - -$0.8 $1.7 $2.6 $1.2 $1.5

$23.6

$27.3

$33.7$33.3

$29.9

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

Revenue EBITDA

- - - -

$4.7

$1.4$0.4 $0.8 $1.0

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

CAPEX

Revenue: $29.9 million; 27% increase QoQ

increases in natural graphite revenue

EBITDA: $1.5 million

Improved from Q1 „09 due to cost

containment measures in graphite and

increased revenue

CAPEX only for graphite milling expansion

Silicon metal prices have rebounded from

Q1 ‟09.


Capital Base

■ Cash: $98.9 million

■ Total debt: $203.0 million

■ Net debt: $104.1 million

■ Revolver availability: $92.0 million

■ Total liquidity $190.9 million

31 December 2008

Note: Cash includes short term investments

$117.5

$108.8

$124.4$117.0

$98.9

$180.3

$193.9$202.3 $203.8 $203.0

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

Cash Debt

Cash and Debt

( in millions)

Highlights – March 31 2010


Outlook

■ Advanced Materials

■ Prices have rebounded from historic lows and demand is beginning to improve; 2010 revenues and EBITDA will improve significantly

■ Engineering Systems

■ Order intake continues to be sluggish;

■ Lower order backlog will result in lower 2010 revenues and EBITDA

■ Graphit Kropfmühl

■ Natural graphite demand and pricing is improving

■ Timminco

■ AMG owns 42.3% of Timminco; AMG supports Timminco‟s focus on its core silicon metal business


Appendix


Consolidated Balance Sheet

$ in thousands December 31, 2009 March 31, 2010

Fixed Assets 211,022 204,977

Goodwill and Intangibles 28,253 26,351

Other Non-current Assets 78,209 67,526

Inventories 193,378 180,630

Receivables 147,787 175,078

Other Current Assets 35,313 37,182

Cash 117,016 98,857

TOTAL ASSETS 810,978 790,601

TOTAL EQUITY 228,423 224,147

Long-term Debt 168,319 159,800

Pension Liabilities 91,358 86,917

Other Long-term Liabilities 51,249 37,507

Current Debt 35,477 43,179

Accounts Payable 69,791 80,658

Advance Payments 54,764 39,807

Unearned Revenue - -

Accruals 46,179 43,843

Other Current Liabilities 65,418 74,743

TOTAL LIABILITIES 582,555 566,454

TOTAL LIABILITIES AND EQUITY 810,978 790,601


Consolidated Income Statement

$ in thousands Q1 2009 Q1 2010

Revenue 215,719 235,793

Cost of sales 181,859 193,209

Gross profit 33,860 42,584

Selling, general and admin. 29,039 30,614

Asset impairment and restructuring 198 7

Environmental 5 257

Other income (1,691) (81)

Operating profit 6,309 11,787

Net finance costs 2,831 3,609

Share of loss of associates 787 4,395

Profit before income taxes 2,691 3,783

Income tax expense 7,938 3,867

Loss for the year from continuing operations (5,247) (84)

Loss after tax for the year from discontinued operations (18,487) -

Loss for the year (23,734) (84)

Attributable to:

Shareholders of the Company (15,394) (64)

Minority interest (8,340) (20)


Consolidated Cash Flows

$ in thousands Q1 2009 Q1 2010

Cash Flows from Operations (1,062) (14,921)

Capital Expenditures (11,967) (5,146)

Other Investing Activities (25,982) (791)

Cash Flows from Investing Activities (37,949) (5,937)

Cash Flows from Financing Activities 24,437 7,643

Net increase (decrease) in cash (14,574) (13,215)

Beginning Cash 143,473 117,016

Effects of exchange rates on cash (6,126) (4,944)

Ending Cash 122,773 98,857

Approximate availability under AMG lines of credit 71,000 92,040

Total Liquidity 193,773 190,897


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