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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
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AMG Advanced Metallurgical Group N.V.
Listed: NYSE-Euronext Amsterdam: AMG
Founded: 2006
Revenues: $951.1M TTM
Employees: 2,500
Facilities: Netherlands, Germany, UK, USA, Brazil, France, Turkey, Czech Republic, China, Mexico, Belgium, Sri Lanka
Market cap: €364.1M
Shares outstanding:
27.5M
52 week range: €6.25–€13.74
Recent share price:
€13.24 (February 10, 2011) Sustainable Metals Technology Products: High purity raw materials, metals and complex
metal products Vacuum furnaces used to produce high purity
metals
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■ AMG participates in the macro economic trend of:■ Growing demand for natural resources in
context of CO2 reduction and sustainable environmental demands for:
■ Responsible energy production and use■ Emerging market infrastructure■ Aerospace and light weight materials■ Specialty metals and chemicals
Macroeconomic Trends and Markets
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The EU identified 14 critical raw materials(1) to the European economy – focusing on two determinants – economic importance and supply risk
AMG currently produces 4 of those elements
Critical Raw Materials
“Critical” raw
materials
(1) European Commission Annex V to the Report of the Ad-hoc Working Group on defining critical raw materials
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Advanced Materials
High-value alloys Essential raw materials
Engineering Systems
Capital equipment for high purity materials
Products & Markets
InfrastructureAerospaceEnergySpecialty Metals &
Chemicals
7
Graphite
Primary producers of critical raw materials
Critical Raw Materials
Antimony GraphiteLithium
MagnesiumSilicon Titanium
Vanadium
TantalumNiobium
Chromium
Vanadium
Tantalum
Tantalum
TitaniumVanadiumMagnesiu
m
TitaniumMagnesiu
m Titanium
LithiumTantalum
Antimony
Graphite
Chromium
Magnesium
AMG raw material mines
8
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.
Evraz Group S.A. (Stratcor)
Evraz Group S.A. (Highveld Steel & Vanadium)
Eramet S.A. (Gulf Chemical & Metallurgical Corporation
Evraz Group S.A. (Stratcor)
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
9
Advanced Materials - Specialty metals pricing
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2008
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2010
2011
2011
2011
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Ferro Vanadium Molybdenum
Pri
ce /
Po
un
d –
V,
Mo,
Ni
AMG IPO
Increase from 2009 lows:
FeV: 59%Mo: 117%Ni: 142%
Prices are still below pre-crisis levels; tied to demand for carbon and stainless steel
10
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 2005 – Introduced single crucible furnaces
2005 –2009 – >$172 mm in revenue, 2nd largest market participant
2010 – Introduced SCU 600+ DSS system
2010 – Market Share leader in Ti remelting in China, the fastest growing Ti market
2010 – Leading market share in turbine blade coating
Secured first nuclear engineering contract with DOE, through Shaw-Areva
Two strategic acquisitions completed to expand product portfolio
Sample Customers
11
Financial Overview
12
Markets & Products – by the Numbers
YTD 2010 Revenue by Product
YTD 2010 Revenue by End Market
Aerospace 26%
Energy - Solar & Nuclear 22%
Infrastructure 16%
Specialty Metals & Chemicals
36%
Vacuum Furnaces
25%
Al Master Alloys 14%
Ti Master Alloys and Coat-ings16%
Si Metal 9%
FeV & FeN-iMo 8%
Antimony 11%
Chromium Metal 8%
Tantalum & Niobium
4%Graphite 5%
13
Financial Highlights – YTD September 2010
2010 YTD Revenue $719.8
2010 YTD EBITDA $64.7
Europe
56%
North Amer-ica
21%Asia18%
South Amer-ica4%
ROW1%
Revenue by Geography
Revenue and EBITDA in millions
447.4
178.0
94.4
Advanced MaterialsEngineering SystemsGraphit Kropfmühl
32.1 27.5
5.1
Advanced MaterialsEngineering SystemsGraphit Kropfmühl
14
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
$18.6
$12.4
$22.0 $23.9$18.8
0 0 00 0 0
<tags><tag n=“" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags>
Financial Highlights
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
$205.4
$231.4 $235.8 $243.5 $240.4
<tags><tag n="Aped" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags>
(in millions)
(in millions)
Q3 Revenue: $240.4 million Up 17% from Q3 2009
Q3 EBITDA: $18.8 million Up 1% from Q3 2009
Q3 EPS: $0.11 Up from ($0.50) in Q3 2009
YTD Revenue: $719.8 million Up 13% from YTD 2009
YTD EBITDA: $64.7 million Up 14% from YTD 2009
YTD EPS: $0.42 (1) Up from ($0.65) YTD 2009
(1)
HighlightsRevenue
EBITDA
(1) Excluding the equity losses from AMG’s 42.5% ownership in Timminco Limited
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Advanced Materials
Financial Summary Highlights( in millions)
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
$5.0 $5.3 $8.5 $14.2 $9.4
$95.9
$124.3
$140.5
$152.0 $154.9
Revenue EBITDA<tags><tag n="AppId" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags><tags><tag n="AppId" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags> ■ Infrastructure - ferrovanadium
■ Reference prices increased 18% v. Q3 2009
■ Volumes improved 32% v. Q3 2009
■ Ferronickel-molybdenum demand decreased 43% v. Q3 2009
■ Aerospace – master alloys prices declined 23% v. Q3 2009; volumes improved 165%
■ CAPEX ■ Expansion of ferrovanadium
operations in the United States
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 - - - - -
$1.9
$5.0$3.3
$4.2$5.6
Series2<tags><tag n="AppId" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags>
16
Engineering Systems
Financial Summary Highlights( in millions)
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 - - - - -
$11.0 $5.9 $12.1 $8.0 $7.4
$61.6$73.8 $65.3
$59.5$53.2
Revenue EBITDA
<tags><tag n="AppId" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags>
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 - - - - -
$1.2
$3.0
$0.8$1.3
$0.8
Series2<tags><tag n="AppId" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags>
Q3 revenue decreased 14% v. Q3 2009
Solar silicon DSS furnace revenues decreased 44% in Q3 2010 v. Q3 2009
Q3 EBITDA decreased 33% v. Q3 2009
September 30, 2010 Backlog improved to $147.1 million from $121 million at June 30, 2010
Order intake $66.9 million in Q3 2010
1.26x book to bill ratio Diversified backlog - solar,
aerospace and transportation
17
Graphit Kropfmühl
Financial Summary Highlights( in millions)
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 - - - - -
$2.6 $1.2 $1.5 $1.7 $2.0
$33.7$33.3
$29.9$32.1 $32.4
Revenue EBITDA
<tags><tag n="AppId" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags>
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 - - - - -
$0.4
$0.8$1.0
$1.3
$0.7
Series2<tags><tag n="AppId" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags>
Q3 revenue decreased 4% v. Q3 2009
Decrease in silicon metal revenues due to production issues
Silicon metal down 7% Natural graphite up 37%
Q3 EBITDA decreased 23% v. Q3 2009
Lower revenues and higher costs in silicon metal
Silicon metal down $1.0 million Natural graphite up $0.5
million CAPEX for graphite milling
expansion
18
Capital Base
■ Cash: $90.2 million
■ Total debt: $234.8 million
■ Net debt: $144.6 million
■ Revolver availability: $61.3 million
■ Total liquidity $151.5 million
Note: Cash includes short term investments
Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
$124.4
$117.0
$98.9
$84.6
$90.2
$202.3 $203.8 $203.0 $204.3
$234.8
Cash Debt
<tags><tag n="AppId" v="1" /><tag n="Type" v="0" /><tag n="Id" v="2" /><tag n="Palette" v="1" /></tags>
( in millions)
Cash and Debt – September 30, 2010 Summary
19
Outlook■ Advanced Materials■ Markets are improving■ Antimony, tantalum and titanium alloys and coatings will
drive growth in 2011■ Engineering Systems
■ Backlog is increasing; renewed interest in solar silicon furnaces
■ Order intake driven by titanium, solar and specialty steel markets
■ Graphit Kropfmühl ■ AMG owns 88% of GK■ Silicon metal pricing is improving
■ Timminco ■ AMG owns 42.5% of Timminco; not consolidated■ Timminco sold 49% of its silicon metal operations for C$40.3
million; up to C$10.0 million more based upon meeting performance metrics
20
Appendix
21
Consolidated Balance Sheet
December 31, 2009 September 30, 2010
Fixed assets 211,022 212,440Goodwill and intangibles 28,253 38,924Other non-current assets 78,209 54,848
Inventories 193,378 202,318Receivables 147,787 177,586Other current assets 35,313 48,903Cash 117,016 90,213TOTAL ASSETS 810,978 825,232
TOTAL EQUITY 228,423 219,427
Long-term debt 168,319 184,499Pension liabilities 91,358 88,500Other long-term liabilities 51,249 34,896
Current debt 35,477 50,295Accounts payable 69,791 84,450Advance payments 54,764 44,556Accruals 46,179 48,061Other current liabilities 65,418 70,548TOTAL LIABILITIES 582,555 605,805
TOTAL LIABILITIES AND EQUITY 810,978 825,232
in thousands
22
Consolidated Income StatementQ3 2009 Q3 2010
Revenue 205,406 240,427Cost of sales 165,457 198,325Gross profit 39,949 42,102
Selling, general and admin. 31,876 31,682Asset impairment and restructuring 5,302 -Environmental 4,075 257Other income (1,194) (270)
Operating profit (110) 10,433
Net finance costs 5,465 2,921
Share of loss of associates (1,285) (17,554)
Profit before income taxes (6,860) (10,042)
Income tax expense 5,694 325
Profit for the year from continuing operations (12,554) (10,367)
Loss after tax for the year from discontinued operations (14,240) -
Loss for the year (26,794) (10,367)
Attributable to:Shareholders of the Company (20,302) (11,170)Minority interest (6,492) 803 in thousands
23
Consolidated Cash Flows
Nine months ended September 30, 2009
Nine months ended September 30, 2010
Cash Flows from Operations (6,033) (13,903)
Capital Expenditures (20,755) (19,054)
Other Investing Activities (55,796) (26,622)
Cash Flows from Investing Activities (76,551) (45,676)
Cash Flows from Financing Activities 59,247 36,812
Net increase (decrease) in cash (23,337) (22,767)
Beginning Cash 143,473 117,016
Effects of exchange rates on cash 4,255 (4,036)
Ending Cash 124,391 90,213
Approximate availability under AMG lines of credit 97,708 61,300
Total Liquidity 222,099 151,513
in thousands
