AMG Advanced Metallurgical Group N.V. Reports Third Quarter 2016 Results

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Algemeen advies 03/11/2016 07:05
Key Highlights
AMG ended the third quarter 2016 net debt free, with net cash of $1.9 million
EBITDA(2) was $23.4 million in the third quarter 2016, a 15% increase over the same period in 2015
Net income attributable to shareholders increased by 5% to $5.2 million in the third quarter 2016 from $4.9 million in the third quarter 2015
EPS, on a fully diluted basis, was $0.18 in the third quarter 2016, unchanged from third quarter 2015
Annualized return on capital employed increased to 18.0% in the third quarter 2016, as compared to 14.7% in the third quarter 2015

Amsterdam, 3 November 2016 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported third quarter 2016 revenue of $247.5 million, a 2% increase from $241.9 million in the third quarter 2015. EBITDA for the third quarter 2016 was $23.4 million, a 15% increase from $20.4 million in the third quarter 2015. Net income attributable to shareholders increased to $5.2 million in the third quarter 2016 from $4.9 million in the third quarter 2015. On a year to date basis, EBITDA increased by 7% to $70.6 million, from $65.9 million in the prior year, despite an increase in AMG's Performance Share Unit ("PSU") plan costs of $8.7 million, compared to the same period in 2015, driven by AMG's strong share price performance.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "AMG's focus on operational excellence and price risk management resulted in solid financial results in the third quarter 2016. We are particularly pleased with the impact new innovations have had on the results of AMG Engineering, such as: our industry leading SyncroTherm® heat treatment furnaces; powder metallurgy furnaces related to additive manufacturing; titanium re-melting furnaces; and turbine blade coating plants. These innovative product offerings drove a significant portion of third quarter 2016 sales.

AMG Engineering achieved EBITDA of $8.9 million during the third quarter 2016, an 83% increase from $4.9 million in the third quarter of 2015. AMG Engineering signed $68.1 million in new orders during the third quarter of 2016, representing a 0.97x book to bill ratio. The Engineering division continues to experience strong demand for plasma remelting and induction furnaces for the aerospace market and heat treatment furnaces for the automotive market. Order backlog was $158.1 million as of September 30, 2016, consistent with June 30, 2016.

AMG Critical Materials generated EBITDA of $14.5 million during the third quarter 2016. Year-over-year double-digit declines in average quarterly prices of Chrome, Graphite, and Silicon negatively affected revenue in the third quarter of 2016 compared to the third quarter of 2015.

On a year to date basis, AMG generated cash flows from operating activities of $40.7 million, a decrease of 5% from $42.8 million in the same period in 2015. The year to date operating cash flows of $40.7 million includes voluntary cash contributions to the Company's pension plans of $20.6 million made in the second quarter of 2016. This strong cash flow generation enabled AMG to end the third quarter net debt free, with net cash of $1.9 million."

Financial Review
Tax
AMG recorded an income tax expense of $4.1 million in the third quarter of 2016 as compared to a tax expense of $4.7 million in the same period in 2015. AMG paid taxes of $1.1 million in the third quarter of 2016 as compared to tax payments of $1.5 million in the same period in 2015. For the third quarter of 2016, AMG's effective cash tax rate was 12%, compared to 15% in the same period in 2015.

Liquidity
September 30, 2016 December 31, 2015 Change
Total debt $172,222 $126,743 36%
Cash and cash equivalents 174,077 127,778 36%
Net debt (cash) (1,855) (1,035) 79%

AMG had a net cash position of $1.9 million as of September 30, 2016. Net debt decreased by $0.8 million from December 31, 2015, while gross debt increased by $45.5 million, driven by the increased term loan associated with the new debt facility.

Cash flows from operating activities decreased to $20.7 million in the third quarter 2016 from $27.7 million in the third quarter 2015.

Capital expenditures increased to $8.3 million in the third quarter of 2016 compared to $5.2 million in the same period in 2015. Capital spending in the third quarter of 2016 included $4.2 million of maintenance capital. The largest expansion capital project was for AMG's Ancuabe graphite mine project.

Including the $174 million of cash, AMG had $350 million of total liquidity as of September 30, 2016. AMG successfully enlarged and extended its syndicated credit facility during the quarter. AMG incurred additional one-time financing costs of $4.0 million related to the new facility.

Net Finance Costs
AMG's third quarter 2016 net finance costs were $6.8 million compared to net finance income of $1.5 million in the third quarter of 2015. The increase was primarily due to the write-off of $4.0 million of costs associated with the previous credit facility, following the refinancing exercise completed in July 2016. Furthermore, in the third quarter 2015, net finance expenses benefited from the reversal of $2.1 million of accrued finance expenses.

SG&A
AMG's third quarter 2016 SG&A expenses were $34.7 million compared to $28.9 million in the third quarter of 2015, an increase of 20%. This increase was primarily due to higher costs associated with the PSU plan as a result of recent increases in the Company's share price compared to the defined peer group.

On a year to date basis, the PSU plan costs increased by $8.7 million, compared to the same period in 2015.

Outlook
Without exception, throughout 2016, AMG has delivered quarter-over-quarter improvements in EBITDA relative to the prior year. We expect to continue this performance in the fourth quarter 2016.

In 2017, AMG expects to continue its strong financial performance.

While we remain focused on operating cash flow and return on capital employed, management's priority in 2017 is to execute our transformational lithium project.

AMG Advanced Metallurgical Group N.V.

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tijd 09.19
AMG EUR 17,11 -68ct vol. 60.000




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