Distribution of company announcements to the professional platforms, finance portals and syndication of important corporate news to a wide variety of news aggregators and financial news systems.
AMG Advanced Metallurgical Group N.V. (AMS:AMG) Key Highlights
* Revenue increased 48% in the second quarter 2008 compared to the second quarter 2007 (YTD Increase 35%) * EBITDA increased 97% in the second quarter 2008 when compared to the second quarter 2007 (YTD Increase 87%) * EPS on a fully diluted basis increased 114% compared to the second quarter 2007 to $0.92, EPS, excluding non-recurring charges, increased 170% compared to the second quarter 2007 to $1.16 * Advanced Materials and Engineering Systems experienced robust revenue and EBITDA growth during second quarter 2008, driven primarily by improved pricing in metals and alloys and continuing demand for solar silicon DSS furnaces * Timminco's second quarter revenue and EBITDA improved by 63% and over 600% compared to the second quarter of 2007 * Timminco shipments of solar grade silicon more than doubled to 221 MT in the second quarter * Graphit Kropfmühl contributed $24.6 million to revenue and $3.0 million to EBITDA since the completion of its acquisition on 22 April 2008
Amsterdam, 12 August 2008 --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") today announced its second quarter 2008 results. The Company's revenue increased to $413.0 million in the quarter ended 30 June 2008 from $279.0 million in the second quarter 2007, a 48% increase.
Net income attributable to shareholders for the second quarter 2008 was $25.3 million, or $0.92 per fully diluted share. Excluding AMG's 50.5% portion of the non- recurring restructuring expenses at Timminco, net income attributable to shareholders for the second quarter 2008 was $31.9 million, or $1.16 per fully diluted share. This represents an increase of 170% compared to net income of $11.8 million or $0.43 per fully diluted share for the second quarter 2007. EBITDA rose 97% to $63.4 million in the second quarter 2008 compared with $32.1 million in the second quarter 2007.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, commented: "I am pleased to report record earnings for the second quarter and the first half of 2008. We had strong performances in both our Advanced Materials and Engineering Systems businesses. Both divisions increased revenue and earnings due to growth in the solar, steel and superalloy end markets. AMG's majority owned subsidiary, Timminco Limited, improved the quality and more than doubled the shipments of solar grade silicon during the second quarter as compared to the first quarter 2008, despite typical challenges associated with a ramp up of a new facility."
Notes: (1) Q2 2007 Revenue has been restated due to an adjustment at Timminco (2) Adjusted for non-recurring, restructuring charges at Timminco (3) EBITDA is defined as earnings before interest, tax, depreciation and amortization and excludes nonrecurring items
The Advanced Materials division's second quarter 2008 financial results were driven by continued strong pricing and solid volumes in ferrovanadium, chromium and certain other key products. Revenue increased by $53.0 million or 30.6% to $226.5 million. Gross profit improved by $16.4 million or 53.9% to $46.9 million. SG&A expenses increased marginally because of additional corporate infrastructure. EBITDA increased by $13.8 million, an 82% improvement over the second quarter 2007 to $30.5 million.
Gross margins expanded from 17.6% in the second quarter of 2007 to 20.7% in second quarter of 2008. The division's secure raw material supply enabled it to increase gross margins at a faster pace than revenue. The most notable price increases over second quarter 2007 were in ferrovanadium and chromium metal, with ferrovanadium prices increasing by 88% and chromium metal prices increasing by 42%. Coating materials for thin film solar applications, vanadium chemicals and antimony products also delivered strong margins in the period. One area of pricing weakness was in ferronickel-molybdenum as London Metal Exchange nickel prices fell approximately 47% from the same period in the prior year.
Operating income for the second quarter 2008 improved 100% to $26.9 million, up from $13.4 million for the comparable period in 2007. This was primarily due to the increase in gross profit offset by a marginal increase in selling, general and administrative expenses that was attributable to a build-up in corporate infrastructure.
Capital expenditures were $6.0 million for the quarter, 67.6% higher than the comparable period in 2007, as previously announced capacity expansion initiatives in ferrovanadium, tantalum and hydropower continue to be on schedule. The division has recently approved a $2 million capacity expansion for the production of coating materials for thin film solar applications.
The Engineering Systems division continued its dynamic growth during the second quarter 2008. Order backlog of $444 million as of 30 June 2008 increased 76% compared to order backlog of $252 million as of 31 December 2007. The backlog primarily consists of solar silicon DSS furnaces and melting and remelting systems for the aerospace industry. The increase in the backlog is driven by a strong demand for solar silicon DSS furnaces.
Second quarter 2008 revenue and EBITDA increased $32.1 million, or 48%, and $8.9 million, or 62%, respectively, over the same period in 2007.
Sales in solar silicon melting and crystallization furnaces for the photovoltaic industry increased 75 % in the second quarter 2008 compared to the same period a year ago. In addition to the sales of single crucible furnaces to 18 solar customers worldwide, the division entered into a $90 million contract with a long-term customer, the largest order ever received in the Engineering Systems division's history.
Significant capacity expansion in the Berlin production facility was essential to meet the growing global demand for solar silicon DSS furnaces. As of the end of the second quarter 2008, four furnaces per week were produced, compared to one furnace per week at the end of the fourth quarter 2007. Engineering Systems expects to produce eight furnaces per week by the fourth quarter 2008 to meet customer delivery schedules. During the quarter, the Engineering Systems division also continued to improve the efficiency of its solar furnaces by optimizing the production of ingots made from solar grade silicon at its research facility in Freiberg, Germany.
Revenue from remelting systems primarily for the aerospace, electronics, and specialty steel industries remained on the strong growth trajectory as the first quarter. Geographically, sales to the Asia Pacific region and Europe drove revenue growth. Almost all product lines achieved strong margins on increased volumes.
The EBITDA margin improved to 24% during the second quarter 2008 compared to 22% for the same period in 2007. This improved margin is a result of increased sales of vacuum furnace systems based on the division's proprietary technology and increased economies of scale. The division continues to focus on reducing lead times for key product lines in order to meet customer demands while generating margins at levels slightly in excess of 2007.
During the quarter ended 30 June 2008, capital expenditures increased to $6.7 million, from $3.1 million for the second quarter of 2007. The expansion of the DSS production facility as well as the building and expansion of the Mexican Own and Operate facility were the primary causes for the increase in capital spending.
Timminco's revenue for the second quarter 2008 was $62.7 million compared with $38.5 million in the second quarter 2007, an increase of 63%. The increase is primarily attributable to the record sales of Timminco's solar grade silicon and silicon metal products. Gross profit also achieved record levels within the silicon product line due to the increased volume of solar grade silicon and higher average selling prices for silicon metal. Silicon gross profit for the second quarter 2008 was $8.6 million or 19.3% of sales compared to a gross profit loss of $1.1 million in the second quarter of 2007. Timminco sold 221 metric tons of solar grade silicon during the second quarter 2008 at an average price of $65/kg. The main contributor to the increase in margin was the increase in sales of solar grade silicon. Included in cost of sales are $2.1 million of incremental production costs incurred in the quarter due to the continuing ramp up of the solar grade silicon facility. Magnesium gross profit for the second quarter 2008 was $2.2 million or 12.5% of sales compared to $2.1 million or 13.3% of sales in the second quarter of 2007.
Timminco had an operating loss in the quarter which is attributable to the one-time restructuring charge of $13.1 million associated with the closure of the Haley, Ontario Magnesium facility. The closure of this facility is expected to result in annual cost savings of approximately $5.0 million. Excluding this charge, operating income was $4.8 million in the second quarter of 2008 due to higher gross profit which was partially offset by increased selling, general and administrative expenses. Higher professional fees and travel related to various strategic initiatives resulted in an increase in SG&A.
In the quarter ended 30 June 2008, Timminco began the construction of an expansion to its solar grade silicon production capacity. This expansion is expected to bring the annual solar grade silicon production capacity to 14,400 metric tons. Sources of funding for this expansion include cash on hand, cash flow from operations, the Company's existing credit facilities and customer deposits. Customer deposits totalled $7.6 million in the second quarter of 2008. Continued growth in solar silicon revenues and gross margin improvement are expected for the balance of 2008.
Graphit Kropfmühl
Since ownership Revenue $24,624 Gross profit 3,849 Operating income 2,342 EBITDA 2,988 Capital expenditures 1,952
Since its acquisition on 22 April 2008, Graphit Kropfmühl ("GK") has generated $24.6 million in revenue and $3.8 million in gross profit. The EBITDA margin for the Company was a healthy 12.1%. GK has spent nearly $2.0 million on projects to improve their production capabilities in both their graphite and silicon operations since the acquisition.
AMG had a net debt position of $106.5 million as of 30 June 2008. The increase in the Company's net debt is primarily a result of the acquisition of Graphit Kropfmühl, which used $62.9 million of cash and included the assumption of $27.3 million of debt. In addition, Timminco's $25.9 million investment in a solar grade silicon expansion and an increased investment in working capital across all segments of the business also impacted liquidity.
Cash Flow
Six months ended 30 June 2008 30 June 2007
Cash flows from operations $8,250 $31,642 Capital expenditures (56,504) (18,174) Acquisitions, net of cash (62,854) (836) Cash flows from other investing 3,078 724 Cash flows used in investing (116,280) (18,286) activities Cash flows generated from (used 43,444 8,009 in) financing activities Effect of exchange rates on cash 5,390 1,402 held Net (decrease) increase in cash (59,196) 22,767 and cash equivalents
Cash flows from operations were $8.3 million in the year-to-date period ended 30 June 2008 as compared to $31.6 million for the comparable period in 2007. The $28.6 million increase in net income for the six months ended 30 June 2008, when compared to the period ended 30 June 2007, was offset by a working capital increase in all areas of the business. The working capital increase is the result of higher raw material prices for the Advanced Materials division's products, increased work in process inventory of solar silicon DSS furnaces required to meet increased demand in the Engineering Systems division and a build-up of inventory at Timminco to support the ramp-up of solar silicon production.
Cash used in investing activities was $116.3 million for the six months ended 30 June 2008. This amount was significantly higher than the $18.3 million spent in the comparable period in 2007. The increase is primarily related to two items; $25.9 million in costs related to the expansion of the solar silicon production facility at Timminco and $62.9 million for the purchase of approximately 79.5% of Graphit Kropfmühl.
Cash from financing activities was $43.4 million, an increase of $35.4 million from the same period in 2007. This increase was primarily the result of two factors, $20.0 million borrowed on the credit facility for the acquisition of approximately 79.5% of Graphit Kropfmühl and borrowings to fund the working capital increases in Advanced Materials and Timminco.
Outlook
In the context of commenting on the first quarter 2008 results, AMG stated that the EBITDA growth 2007 versus 2006 of 65% would be achieved or exceeded for full year 2008 versus 2007. We are pleased to confirm that statement.
Interim consolidated balance sheet at 30 June 2008
In thousands of US Dollars 30 June 31 December 2008 2007 Unaudited Audited
Property, plant and 249,444 155,763 equipment Intangible assets 98,468 50,291 Investments in associates 22,030 15,145 Derivative financial 1,625 194 instruments Deferred tax assets 37,724 34,537 Restricted cash 23,182 14,582 Notes receivable 4,590 7,068 Other assets 5,993 5,087 Total non-current assets 443,056 282,667 Inventories 290,996 186,410 Trade and other receivables 256,628 187,243 Derivative financial 8,725 3,582 instruments Prepayments and other 62,023 48,754 current assets Short term investments 89 15,333 Cash and cash equivalents 113,362 172,558 Total current assets 731,823 613,880 Total assets 1,174,879 896,547
Equity Issued capital 722 722 Share premium 376,319 392,304 Other reserves 13,882 (9,923) Retained earnings (deficit) (89,783) (137,439) Equity attributable to 301,140 245,664 shareholders of the Company
Minority interests 69,749 64,133
Total equity 370,889 309,797
Liabilities Loans and borrowings 157,457 115,726 Employee benefits 128,941 102,809 Provisions 17,357 12,011 Government grants 5,058 8,585 Other liabilities 9,722 9,087 Derivative financial 39 77 instruments Deferred tax liabilities 47,658 32,112 Total non-current liabilities 366,232 280,407 Loans and borrowings 3,403 1,102 Short-term bank debt 52,214 16,202 Related party debt 6,912 7,752 Government grants 9,458 7,927 Other Liabilities 46,794 42,356 Trade and other payables 181,741 126,827 Deferred revenue 7,504 - Derivative financial 9,995 4,994 instruments Advance payments 87,001 74,731 Current taxes payable 16,092 11,496 Provisions 16,644 12,956 Total current liabilities 437,758 306,343 Total liabilities 803,990 586,750 Total equity and liabilities 1,174,879 896,547
Interim consolidated income statement for the six months ended 30 June 2008
For the six months ended 30 June In thousands of US Dollars 2008 2007 Unaudited Unaudited Continuing operations Revenue 739,153 545,838 Cost of sales 579,941 447,657 Gross profit 159,212 98,181
Selling, general and administrative expenses 72,601 53,406 Restructuring and asset impairment expenses 13,245 30 Environmental expense 94 202 Other expenses 81 287 Other income (3,097) (1,469) Operating profit 76,288 45,725
Interest expense 9,763 17,926 Interest income (3,416) (2,028) Foreign exchange (gain)/loss 1,538 (1,531) Net finance costs 7,885 14,367
Share of profit of associates 718 (1,085) Profit before income tax 69,121 30,273
Income tax expense 22,793 11,639 Profit for the period 46,328 18,634
Attributable to: Shareholders of the Company 47,782 19,158 Minority interests (1,454) (524) 46,328 18,634
Earnings per share Basic earnings per share 1.78 0.71 Diluted earnings per share 1.74 0.71
Interim consolidated income statement for the three months ended 30 June 2008
For the three months ended 30 June In thousands of US Dollars 2008 2007 Unaudited Unaudited Continuing operations Revenue 413,005 279,008 Cost of sales 321,003 225,930 Gross profit 92,002 53,078
Selling, general and administrative expenses 39,632 27,769 Restructuring and asset impairment expenses 13,118 23 Environmental expense 10 82 Other expenses 81 287 Other income (1,718) (216) Operating profit 40,879 25,133
Interest expense 5,795 8,909 Interest income (1,410) (1,062) Foreign exchange (gain)/loss 202 (1,895) Net finance costs 4,587 5,952
Share of profit of associates 617 (955) Profit before income tax 36,909 18,226
Income tax expense 14,112 6,597 Profit for the period 22,797 11,629
Attributable to: Shareholders of the Company 25,273 11,758 Minority interests (2,476) (129) 22,797 11,629
Earnings per share Basic earnings per share 0.94 0.43 Diluted earnings per share 0.92 0.43
Interim condensed consolidated cash flow statement for the six months ended 30 June
For the six months ended 30 June In thousands of US Dollars 2008 2007 Unaudited Unaudited Cash flows from operating activities Profit for the period 46,328 18,634 Adjustments to reconcile profit to net cash flows: Non-cash Depreciation and amortization 12,570 9,278 Restructuring expense and impairment 13,245 30 losses Environmental expense 94 82 Net finance costs 7,885 14,277 Share of (profit) loss of associates (718) 1,085 Equity-settled share-based payment 5,365 transactions Income tax expense 22,793 11,639 Change in working capital (75,319) 4 Other (11,368) (1,865)
Interest received/(paid) (3,468) (11,823) Income tax paid (9,660) (5,494) Cash paid for dividends 503 (4,205) Net cash flows from operating activities 8,250 31,642
Cash flows used in investing activities
Proceeds from sale of property, plant and 24 698 equipment Acquisitions of property, plant and (56,504) (18,174) equipment and intangibles Acquisitions, net of cash (62,854) (836) Related party loans (3,668) - Change in short-term investments 14,958 - Change in restricted cash (7,716) - Other (520) 26 Net cash flows used in investing activities (116,280) (18,286)
Cash flows from financing activities Proceeds from issuance of debt 22,402 688 Repayment of borrowings 20,897 (19,278) Capital infusion (39) 26,599 Other 184 - Net cash flows from financing activities 43,444 8,009
Net (decrease) increase in cash and cash (64,586) 21,365 equivalents Cash and cash equivalents at 1 January 172,558 54,610 Effect of exchange rate fluctuations on cash 5,390 1,402 held Cash and cash equivalents at 30 June 113,362 77,377
About AMG AMG, incorporated in the Netherlands, is a global leader in the production of highly engineered specialty metal products and advanced vacuum furnace systems. AMG serves growing industries worldwide with its unique combination of metallurgical engineering expertise and production know-how. AMG is a market leader in many of its products and systems, which are critical to the production of key components for the aerospace, energy (including solar and nuclear), electronics, optics, chemicals, construction and transportation industries. AMG has two operating divisions of businesses, Advanced Materials and Engineering Systems, and owns majority interests in publicly-listed companies Timminco Limited (TSX: "TIM") and Graphit Kropfmühl AG (Deutsche Börse: GKR.DE).
The Advanced Materials Division develops and produces niche specialty metals and complex metals products, many of which are used in demanding, safety-critical, high-stress environments. AMG is one of a limited number of significant producers globally of niche specialty metals, such as ferrovanadium, ferronickel-molybdenum, aluminium master alloys and additives, chromium metal and ferrotitanium, used by steel, aluminium, chemical and superalloy producers for aerospace, automotive, energy, electronics, optics, chemicals, construction and other applications. Other key products produced by AMG include specialty alloys for titanium and superalloys, coating materials, tantalum and niobium oxides, vanadium chemicals and antimony trioxide.
The Engineering Systems Division designs, engineers and produces advanced vacuum furnace systems and operates vacuum heat treatment facilities. AMG is a global leader in supplying technologically-advanced vacuum furnace systems to customers in the aerospace, energy (including solar and nuclear), transportation, electronics, superalloys and specialty steel industries. Examples of furnace systems produced by AMG include vacuum remelting, solar silicon melting and crystallization, vacuum induction melting, vacuum heat treatment and high pressure gas quenching, vacuum precision casting, turbine blade coating and sintering. AMG also provides vacuum case-hardening heat treatment services on a tolling basis to customers through facilities equipped with vacuum heat treatment furnaces.
Timminco Limited is a majority controlled, publicly listed subsidiary of AMG. Timminco is a leader in the production of upgraded metallurgical silicon for the rapidly growing solar photovoltaic energy industry. Timminco also produces silicon metal and magnesium products for use in a broad range of industrial applications.
Graphit Kropfmühl AG is a majority controlled, publicly listed subsidiary of AMG. Based on its secure raw material sources in Africa, China and Europe, Graphit Kropfmühl is a specialist in the production of silicon metal and the extraction, processing and refining of natural crystalline graphite for a wide range of energy saving industrial applications.
AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, the United States, Canada, Mexico, Brazil, Sri Lanka and Australia and also has sales and customer service offices in Belgium, Russia, China and Japan (website: www.amg-nv.com).
For further information please contact:
AMG Advanced Metallurgical Group N.V. +1 610 975 4901 Jonathan Costello Director of Corporate Communications jcostello@amg-nv.com
€ Disclaimer
Certain statements in this press release are not historical facts and are "forward looking". Forward looking statements include statements concerning AMG's plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans and intentions relating to acquisitions, AMG's competitive strengths and weaknesses, plans or goals relating to forecasted production, reserves, financial position and future operations and development, AMG's business strategy and the trends AMG anticipates in the industries and the political and legal environment in which it operates and other information that is not historical information. When used in this press release, the words "expects," "believes," "anticipates," "plans," "may," "will," "should," and similar expressions, and the negatives thereof, are intended to identify forward looking statements. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved. These forward looking statements speak only as of the date of this press release. AMG expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statement contained herein to reflect any change in AMG's expectations with regard thereto or any change in events, conditions or circumstances on which any forward looking statement is based.
The full press release including tables can be downloaded from the following link:
