AMG Advanced Metallurgical Group N.V. Reports Second Quarter 2019 Results and Updates Full Year 2019 Guidance

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Algemeen advies 01/08/2019 08:25
Financial Highlights
Revenue decreased by 8% to $303.6 million in the second quarter 2019 from $329.3 million in the second quarter 2018
EBITDA(2) was $23.8 million in the second quarter 2019, a 53% decrease over the same period in 2018
Annualized return on capital employed was 19.0% in the second quarter 2019, as compared to 30.6% in the second quarter 2018
AMG has returned $81 million to shareholders in 2019 through its share repurchase program and dividend payments
AMG declares an interim dividend of €0.20 per ordinary share, unchanged from the interim dividend in the prior year

Amsterdam, 31 July 2019 (Regulated Information) — AMG Advanced Metallurgical Group N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) reported second quarter 2019 revenue of $303.6 million, an 8% decrease from $329.3 million in the second quarter 2018. EBITDA for the second quarter 2019 was $23.8 million, a 53% decrease from $50.7 million in the second quarter 2018, largely due to lower vanadium prices versus the second quarter of last year. EBIT decreased 68% to $13.7 million in the second quarter 2019 from $42.8 million in the second quarter 2018.

Revenue was relatively stable with an 8% drop in the second quarter 2019. The 53% decrease in EBITDA to $23.8 million was largely due to the Critical Materials segment, which achieved an EBITDA of $12.4 million in the second quarter 2019. That drop is almost entirely explained by prices of ferrovanadium, as well as chrome metal prices and additional ramp-up costs of the lithium concentrate plant. Actual production in June averaged 85% of capacity for the month.

AMG Technologies achieved an EBITDA of $11.4 million, a 20% decrease from the second quarter of 2018, due to lower profitability in Titanium Alloys and Coatings and timing effects in the Engineering business.

Second quarter net income, adjusted for the non-cash impairments, was $6.0 million. The 2019 interim dividend of €0.20 per ordinary share is unchanged from the interim dividend of €0.20 per ordinary share in the prior year.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, “We obviously had a disappointing quarter. Profitability was negatively impacted by deteriorating market prices as current spot prices across all of AMG’s portfolio are significantly below the prices which we experienced in the first quarter of 2019.

The second quarter of 2019 was particularly impacted by an unusual market price development in vanadium over the past several quarters. Market prices climbed consistently from the beginning of 2018 into the first quarter of 2019 and then plunged in a very short period beginning late in the first quarter of 2019 until present. We have seen spikes and crashes in the vanadium market before, however, this pattern is unique in the history of the metal. Traditionally, vanadium prices follow a consistent pattern – a short spike followed by a swift decline. This parallel pattern has a minimal effect on our inventory position as we build only a limited volume of high-priced inventory in the short spike period. In contrast, the sustained period of price acceleration in 2018 and into 2019 resulted in the buildup of a significant volume of high-priced vanadium inventory. This unusual pattern resulted in a substantial impact to our profitability as our inventory position experienced cost adjustments due to the sudden and severe decline in market price which eliminate the profitability on sales for the entire working capital cycle.

Despite the decline in price, if you exclude the transitional implications of the higher cost inventory on profitability, AMG’s vanadium business is robust and very profitable at the current market price. Additionally, we believe that the profitability associated with catalyst recycling will benefit dramatically over the next several years from the various macro trends impacting the industry.”

Key Figures

In 000’s US dollar
Q2 ‘19 Q2 ‘18 Change
Revenue $303,612 $329,321 (8%)
Gross (loss) profit (4,159) 79,161 N/A
Gross margin (1.4%) 24.0%

Operating (loss) profit (37,885) 42,019 N/A
Operating margin (12.5%) 12.8%

Net (loss) income attributable to shareholders (31,096) 17,309 N/A
Adjusted net income 5,953 16,546 (64%)

EPS – Fully diluted (1.02) 0.54 N/A

EBIT (1) 13,660 42,751 (68%)
EBITDA (2) 23,791 50,749 (53%)
EBITDA margin 7.8% 15.4%

Cash (used in) operating activities (11,027) (1,197) N/M

EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring, asset impairment and equity-settled share-based payments and includes foreign currency gains or losses.
EBITDA is defined as EBIT adjusted for depreciation and amortization.

Operational Review
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tijd 09.12
AMG EUR 22,34 -3,76 vol. 257.000

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