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Earnings Call – 1Q16 Results
May 16th, 2016
The consolidated financial statements presented here are consistent with the criteria of international accounting standards - IFRS issued by the
International Accounting Standards Board – IASB, based on audited financial information. Non-financial information contained herein, as well
as other operational information, were not audited by independent auditors and may include forward-looking statements and reflects the
current views and perspectives of the management on the evolution of macro-economic environment, conditions of the mining and
refractories industries, company performance and financial results. Any statements, projections, expectations, estimates and plans contained
in this document that do not describe historical facts, and the factors or trends affecting financial condition, liquidity or results of operations,
are forward-looking statements and involve several risks and uncertainties.
This presentation should not be construed as legal, tax, investment or other advice. This presentation does not constitute an offer, or invitation,
or solicitation of an offer, to subscribe for or purchase any securities, and neither any part of this presentation nor any information or
statement contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Under no
circumstances, neither the Company nor its subsidiaries, directors, officers, agents or employees be liable to third parties (including investors)
for any investment decision based on information and statements in this presentation, or for any damages resulting therefrom, corresponding
or specific.
The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice. Magnesita
has no obligation to update it or revise it in light of new information and / or in face of future events, safeguard the current regulations which
we are submitted to. This presentation and its contents are proprietary information of the Company and may not be reproduced or circulated,
partially or completely, without the prior written consent of the Company.
Magnesita’s commercial transactions are in compliance with international trading sanctions rules
Disclaimer
2
Magnesita diversified substantially since 2013
Several geographies and segments developed over the past 3 years
Products being sold in more than 100 countries
Sales outside Established markets already account for ~25% of total sales (~10% in 2012)
Sales in BRL account for ~less than 20% of total sales
Pursuing long term growth opportunities in markets with adequate and sustainable margins
Countries where Magnesita has developed sustainable business with steel and cement industries
3
4
Crude Steel Production¹ (million tons) - Established Markets
Volume (‘000 tons)
Sales to Steel Segment
Revenues (US$ million)
4Q15 1Q16
189 199
1Q15
209
-9%
-5%
-15%
4Q15
166
1%
198 168
1Q15 1Q16
Refractory Solutions Sales - Steel
Sales by region (in US$)
-9%
LTM 1Q15 LTM 1Q16
802 878
-19%
LTM 1Q16
713
LTM 1Q15
885
32%
5% 23%
9% 31%
1Q16
29%
3% 39%
9%
21%
1Q15
Asia Pacific North America
MEA - CIS South America Europe
South America
Source: ¹WSA
USA & Canada Western Europe
9,5
-14%
1Q16 4Q15
10,7
1Q15
11,0
-11%
4Q15
21
1Q15
0%
1Q16
23 23
+8%
34 36
1Q15 1Q16 4Q15
-7%
38
+6%
LTM 1Q16
42
LTM 1Q15
-6%
45
99
LTM 1Q15
-8%
LTM 1Q16
91
LTM 1Q15
148 141
-4%
LTM 1Q16
MEA = Middle East and Africa CIS = Commonwealth of Independent States
5
Sales to Industrial Segment
Refractory Solutions Sales – Industrial Segment
Volume (‘000 tons) Revenues (US$ million)
-6%
1Q16
30
45 43
4Q15 1Q15
+42%
-16%
1Q16
41
4Q15
30
49
1Q15
+37%
LTM 1Q16
130
LTM 1Q15
152
-15%
132
175
-25%
LTM 1Q16 LTM 1Q15
31%
6% 35% 17%
11% 46%
28%
9%
11% 5%
South America
North America Asia Pacific
Europe MEA - CIS
1Q16 1Q15
Refractory Solutions Sales and Margin - Consolidated Volume (‘000 tons)
Revenues (US$ million)
Gross Profit and Margin (US$ million; %)
1Q16
+1%
229
-9%
4Q15
232
1Q15
254
84 7251
34.6% 26.2%
1Q15
34.1%
-14%
4Q15
+41%
1Q16
+7%
247
1Q16 4Q15 1Q15
-15%
196 209
-9%
LTM 1Q15 LTM 1Q16
932 1.030
-20%
845
LTM 1Q16 LTM 1Q15
1.060
LTM 1Q15
264 334
31.5%
-21%
31.2%
LTM 1Q16
6
32%
32%
7% 9%
21% 19%
4% 8%
29%
40%
Asia Pacific
MEA - CIS Europe South America
North America
1Q16 1Q15
19,7%
80,3%
19,9%
80,1%
1Q16 1Q15
Steel Industrial
Sales by region (in US$)
Sales by segment (in US$)
7
Revenues (US$ million) Gross Profit and Margin (US$ million; %)
Revenues (US$ million)
Minerals and Services Sales and Margin
-33%
11
4Q15
16
1Q15 1Q16
-32%
16
-19%
4Q15
18
-16%
14
1Q15 1Q16
17
5,1
33,4% 37,3%
1Q16
4,1
1Q15
-21%
-24%
4Q15
5,4
31,4%
-50%
-24%
1Q15
4,2
4Q15
2,1
14,7% 23,7%
1Q16
2,7
16,3%
Minerals
Services
LTM 1Q16
-7%
61
LTM 1Q15
66 +10%
LTM 1Q16
39.0%
LTM 1Q15
33.0%
22 24
LTM 1Q15
60
-16%
LTM 1Q16
71
15,2
LTM 1Q15
21,3%
-41%
LTM 1Q16
15,0%
9,0
Gross Profit and Margin (US$ million; %)
8
Consolidated Sales and Gross Profit
Por Segmento
229
1Q15
281
1Q16
+2%
-17%
234
4Q15
Gross Profit
Consolidated Revenue (US$ million)
966
1.196
LTM 1Q15
-19%
LTM 1Q16
+32%
4Q15
60 94
33.6%
-16%
1Q16
79
26.0%
1Q15
33.3%
371
296
-20%
30.7%
LTM 1Q15
31.0%
LTM 1Q16
4,7% 6,1%
89,3%
6,2% 5,8%
87,9%
1Q16 1Q15
Minerals Refractories Services
Gross Profit (US$ million)
9
SG&A expenses
Freight expenses (US$ million)
G&A
373643
-3%
-14%
1Q16
15.7% 15.6%
4Q15 1Q15
15.2%
Fixed SG&A
% of sales
157190
LTM 1Q16
15.9%
LTM 1Q15
-18%
16.3%
Fixed SG&A (US$ million)
131416
-4%
1Q15
-16%
1Q16
5.7% 6.0%
4Q15
5.6%
% of sales
Freight expenses 54
73
5.6% 6.1%
LTM 1Q15 LTM 1Q16
-25%
10
EBITDA
+70%
1Q15 4Q15
10.0%
1Q16
49
16.7%
23
17.6%
-21%
39
-19%
168
135
14.0% 14.0%
LTM 1Q15 LTM 1Q16
¹Excluding other income and expenses
G&A Adjusted EBITDA¹ (US$ million)
11
CAPEX and Working Capital
Working Capital
CAPEX (US$ million)
9
1Q15 4Q15
19
1Q16
-18%
11
-51%
-19%
63
LTM1Q15
78
LTM1Q16
Working Capital (US$ million)
289
29,3%
2Q15
314
30,6%
1Q15
300
26,7%
1Q16
255
27,2%
4Q15
225
24,6%
3Q15
Working capital WC/annualized quarterly sales
12
Capital Structure (US$ million)
Leverage (US$ million)
Net Debt per Currency
Leverage Excl. Perpetual (US$ million)
EUR
BRL
30%
57%
14%
USD
*EBITDA excluding other revenues/expenses
Total Excluding Perpetual Bond
*EBITDA excluding other revenues/expenses
Leverage ratio Leverage ratio ex-perpetual
4,1x
3,6x3,5x3,5x3,2x
135
548
1Q16 4Q15
168
3Q15
527
1Q15 2Q15
152 158
537 551
145
532
EBITDA Net Debt Net Debt / EBITDA¹
1,9x
1,7x
2,2x
277 152
298 168
3Q15
1,9x
145
4Q15
158
1Q15
135
1Q16
1,9x
287
2Q15
301 282
Net Debt / EBITDA¹ EBITDA Net Debt
Amortization Schedule
115 101 98
210
2019 2020
118
Perp.
250
58
2018 2017 2016 mar-16
Amortization Perpetual Bond Cash position
Amortization Schedule
118
2017 2016
210
Perp.
115 101
250
2019
58
98
2018 2020 mar-16
Amortization Cash position Perpetual Bond
Octavio Pereira Lopes CEO
Eduardo Gotilla CFO e IRO
Daniel Domiciano Silva IR Manager
Phone: +55 11 3152-3237/3241/3202 [email protected]
www.magnesita.com/ri
13
Investor Relations