31.07.2024 18:03:05

AMG’s Critical Materials’ Portfolio Delivers Strong Quarterly Results

Amsterdam, 31 July 2024 (Regulated Information) --- AMG Critical Materials N.V. ("AMG”, EURONEXT AMSTERDAM: "AMG”) reports second quarter 2024 revenue of $364 million, a 17% decrease versus the second quarter of 2023. Despite significant declines in lithium and vanadium prices compared to the same period in 2023, AMG achieved an adjusted EBITDA of $39 million by leveraging its diversified portfolio. AMG continued to experience robust structural demand for its critical materials which is a testament to the strategic positioning of our businesses and the low-cost position of all of our operations.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "The second quarter 2024 adjusted EBITDA of $39 million reflects the success of our strategic positioning and diversified business model, enabling us to navigate market volatility effectively. Aerospace continues to be a source of growth, with AMG Engineering securing $90 million in order intake in the second quarter, and a June 30th order backlog of $310 million. Additionally, AMG Chrome, AMG Graphite and AMG Antimony all performed well compared to the second quarter last year, and it is noteworthy that every operating unit at AMG was profitable in the second quarter of 2024.

In terms of our growth initiatives, our major lithium projects continue on-schedule, with our Brazilian mine expansion and our lithium conversion plant ramp-up in Germany. Both projects strengthen our position in the lithium market. In June 2024, we took an additional step to expand our lithium resource portfolio with the capital investment in Savannah Resources, Europe’s largest spodumene lithium deposit. With current low price levels, AMG has been able to increase its control over lithium resources with minimal capital outlays. Additionally, our low-cost operations in Brazil are delivering continued profitability in lithium concentrate and are ramping up production ahead of schedule.

Our vanadium business demonstrated strong volume growth of 23% in the second quarter of 2024 versus the second quarter of last year, helping to offset a 29% decline in price. Our operations in Ohio continue to be the low-cost global producer of ferrovanadium, significantly outperforming primary mining operations.

I am also pleased to report that we have significant liquidity to support our many growth opportunities. With $308 million in cash on hand and $200 million available under our revolving credit facility, AMG has a total liquidity of over $500 million.”

Lithium

  • AMG Lithium B.V. invested GBP 16 million (approximately USD 20 million) in Savannah Resources Plc, the developer of the Barroso Lithium Project in Portugal, Europe’s largest spodumene lithium deposit. This investment gives AMG a 15.77% ownership stake, making AMG the largest shareholder of record.

  • Our lithium concentrate plant expansion from 90,000 tons to 130,000 tons per year is ramping up and we expect to produce at 110,000-ton annualized capacity in the third quarter and at full 130,000-ton annualized capacity in the fourth quarter.

  • In Bitterfeld, Germany, AMG’s first 20,000-ton module of its lithium hydroxide refinery is on schedule and the qualification process is underway. The production batches are expected to ship in the third quarter of 2024.

Vanadium

  • AMG Vanadium’s Zanesville, Ohio facility continued to perform well and exceeded target production volumes in the first half of 2024.

  • AMG Vanadium completed a 5-year contract extension with a key, long-term refinery partner for processing their spent catalyst. AMG Vanadium will continue to provide full metals reclamation on this material, fully eliminating any environmental risks for this refinery.

  • The vanadium electrolyte plant at AMG Titanium in Nuremberg, Germany is in the final stages of completion. We expect to have nameplate capacity available by the fourth quarter of 2024 as part of the vertical integration into LIVA batteries.

  • In May 2024, AMG Titanium signed a new multi-year contract extension with SAFRAN to supply titanium aluminides ("TiAl”) for production of low-pressure turbine blades for the CFM International LEAP engine. The technology and equipment to produce this material was jointly developed with AMG Engineering (ALD Vacuum Technologies).

  • SARBV’s "Supercenter” phase 1 project in Saudi Arabia has completed the FEL3 basic engineering phase. Technical and commercial evaluations of the long lead equipment packages are progressing and expected to be complete by the end of the third quarter of 2024.

Technologies

  • AMG LIVA is executing several battery projects to optimize energy management for industrial plants and integrate renewable energy sources and EV charging. A hybrid energy storage system with a 4.5 MWh capacity is currently in service, integrating wind and solar energy for a major industrial client and enabling 80% self-sufficiency.

  • AMG Graphit Kropfmühl and BASF have entered into an innovative agreement to reduce their product carbon footprint.

Financial Highlights

  • In April 2024, AMG entered into a new $100 million incremental term loan, structured as a fungible add-on to the existing $350 million senior secured term loan. The $100 million incremental term loan has the same pricing, terms and 2028 maturity as the existing $350 million term loan. AMG will use the proceeds of the new incremental term loan for general corporate purposes and lithium resource development.

  • AMG’s liquidity as of June 30, 2024 was $508 million, with $308 million of unrestricted cash and $200 million of revolving credit availability.

  • AMG declares an interim dividend of €0.20 per ordinary share, to be paid in the third quarter of 2024.

Key Figures

In 000’s US dollars   
 Q2 ‘24Q2 ‘23Change
Revenue$364,311$439,319        (17%)
Gross profit55,336127,534        (57%)
Gross margin        15.2%        29.0% 
    
Operating profit10,33278,167        (87%)
Operating margin        2.8%        17.8% 
    
Net (loss) income attributable to shareholders(11,002)42,763N/A
    
EPS - Fully diluted(0.34)1.28N/A
    
EBIT (1)25,09193,780        (73%)
Adjusted EBITDA (2)39,495107,453        (63%)
Adjusted EBITDA margin        10.8%        24.5% 
    
Cash (used in) from operating activities(9,271)59,975N/A

Notes:

(1)   EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring, asset impairment, inventory cost adjustments, environmental provisions, exceptional legal expenses, equity-settled share-based payments, strategic expenses, and other exceptional items.
(2)   Adjusted EBITDA is defined as EBIT adjusted for depreciation and amortization.

Operational Review

AMG Lithium

 Q2 ‘24Q2 ‘23Change
Revenue$38,250$133,473        (71%)
Gross profit3,77090,006        (96%)
Operating (loss) profit(7,128)79,904N/A
Adjusted EBITDA1,70486,345        (98%)

AMG Lithium’s revenue and gross profit decreased 71% and 96%, respectively, compared to the second quarter of 2023. These variances were largely driven by the 59% decline in lithium market prices since the second quarter of 2023, as well as the decreased lithium concentrate volumes as a result of the ramp-up currently underway.

SG&A expenses of $11 million in the second quarter of 2024 were 10% higher than in the same period last year, mainly driven by the increase in headcount related to both the German and Brazilian lithium expansion projects, as well as higher employee benefit costs and professional fees.

The second quarter 2024 of adjusted EBITDA decreased 98%, to $2 million, from $86 million in the second quarter of 2023, due to the decline in metal prices as noted above.

During the second quarter of 2024, a total of 17,092 dry metric tons ("dmt”) of lithium concentrates were sold, 41% lower than the 28,870 dmt in the second quarter of 2023 due to the ramp-up currently underway at our lithium concentrate plant. The average realized sales price was $891/dmt CIF China for the quarter. The average cost per ton for the quarter was $543/dmt CIF China. Both total production and cost of production were ahead of plan.

Our lithium concentrate plant is currently ramping to 130,000 tons and shipping volumes were therefore impacted in the second quarter. We expect to reach design capacity production in the fourth quarter of 2024. AMG is one of the lowest-cost lithium concentrate mines in the world, and we plan to maintain this competitive advantage.

AMG Vanadium

 Q2 ‘24Q2 ‘23Change
Revenue$168,022$180,870        (7%)
Gross profit19,76917,227        15%
Operating profit (loss)6,003(3,217)N/A
Adjusted EBITDA19,97115,693        27%

AMG Vanadium’s revenue for the second quarter of 2024 decreased by 7%, to $168 million, due primarily to lower sales prices across the segment, partially offset by increased volumes in vanadium and chrome metal.

Gross profit of $20 million in the second quarter of 2024 was 15% higher compared to the same period in 2023, largely due to the increased volumes in vanadium and chrome metal.

SG&A expenses in the second quarter of 2024 of $14 million were 32% lower than the second quarter of 2023. The prior period was higher due to a one-time pension expense.

The second quarter of 2024 adjusted EBITDA of $20 million was 27% greater than the same period in 2023. This was primarily driven by the increased volumes in vanadium and chrome metal as well as the ongoing benefit of Section 45X, a production credit for domestic manufacturing of critical materials for which AMG Vanadium qualified based on the Inflation Reduction Act of 2022.

AMG Technologies

 Q2 ‘24Q2 ‘23Change
Revenue$158,039$124,976        26%
Gross profit31,79720,301        57%
Operating profit11,4571,480        674%
Adjusted EBITDA17,8205,415        229%

AMG Technologies' second quarter 2024 revenue increased by $33 million, or 26%, compared to the same period in 2023. This improvement was driven by strong revenues in Engineering, as well as higher sales volumes of silicon, graphite, and antimony, and higher sales prices of antimony.

SG&A expenses increased by 6% in the second quarter of 2024 compared to the same period in 2023, due to additional personnel at AMG LIVA and AMG Engineering corresponding to the increased business development, as well as increased research and development costs.

AMG Technologies’ adjusted EBITDA was $18 million during the second quarter, more than triple the same period in 2023. The increase was primarily due to higher profitability in Engineering as well as graphite and antimony.

AMG Engineering signed $90 million in new orders during the second quarter of 2024, representing a 1.15x book to bill ratio. The second quarter 2024 order intake was driven by strong orders of remelting and turbine blade coating furnaces. Order backlog was $310 million as of June 30, 2024.

AMG Silicon has been operating two of its four furnaces since March 2024, and we plan to run two furnaces for the remainder of 2024. The operational parameters of the silicon business will continue to be reviewed on an ongoing basis. Due to the noted interruptions in AMG Silicon’s operations, the profitability of the business is immaterial and excluded from adjusted EBITDA during this period of abnormal operations.

Financial Review

Tax

AMG recorded an income tax expense of $11 million in the second quarter of 2024, compared to $27 million in the second quarter of 2023. This variance was mainly due to lower profitability in the current quarter, but also due to a $7 million increased deferred tax expense related to the depreciation of the Brazilian real versus the US dollar. Fluctuations in the Brazilian real exchange rate impact the valuation of the Company’s net deferred tax positions in Brazil.

AMG paid taxes of $4 million in the second quarter of 2024, compared to tax payments of $35 million in the second quarter of 2023. The reduced cash payments in the current period were largely a result of the decrease in profitability year-over-year.

Exceptional Items

AMG’s second quarter 2024 gross profit includes exceptional items, which are not included in the calculation of adjusted EBITDA.

A summary of exceptional items included in gross profit in the second quarters of 2024 and 2023 are below:

Exceptional items included in gross profit

 Q2 ‘24Q2 ‘23Change
Gross profit$55,336$127,534        (57%)
Inventory cost adjustment        3,010        3,678        (18%)
Restructuring expense        2,073        626        231%
Brazil's SP1+ expansion and commissioning        26        —N/A
Silicon’s partial closure        (1,719)        (1,011)        (70%)
Strategic project expense (reversal)        1,972        (55)N/A
Gross profit excluding exceptional items60,698130,772        (54%)

AMG had $3 million non-cash expense during the second quarter of 2024 mainly driven by Vanadium’s inventory cost adjustment due to lower vanadium prices, which has been excluded from the calculation of adjusted EBITDA.

SG&A

AMG’s second quarter 2024 SG&A expenses were $45 million compared to $49 million in the second quarter of 2023. The decrease, as mentioned above in the Vanadium segmental review, was largely driven by a one-time pension expense related to employee benefit plans in the prior period, partially offset by the increase in headcount in our Lithium, Engineering, and LIVA businesses.

Liquidity

 June 30, 2024December 31, 2023Change
Senior secured debt$433,170$337,402        28%
Cash & cash equivalents307,525345,308        (11%)
Senior secured net debt (cash)125,645        (7,906)N/A
Other debt10,03513,105        (23%)
Net debt excluding municipal bond135,6805,199N/A
Municipal bond debt318,876319,002        —%
Restricted cash1,4181,451        (2%)
Net debt453,138322,750        40%

AMG continued to maintain a strong balance sheet and adequate sources of liquidity during the second quarter. As of June 30, 2024, the Company had $308 million in unrestricted cash and cash equivalents and $200 million available on its revolving credit facility. As such, AMG had $508 million of total liquidity as of June 30, 2024.

In April 2024, AMG entered into a new $100 million incremental term loan, structured as a fungible add-on to the existing $350 million senior secured term loan. The $100 million incremental term loan has the same pricing, terms and 2028 maturity as the existing $350 million term loan. AMG will use the proceeds of the new incremental term loan for general corporate purposes and lithium resource development.

Net Finance Costs

AMG’s second quarter 2024 net finance cost was $8 million, 3% higher than in the second quarter of 2023.

Outlook

Looking ahead, we remain focused on our lithium projects and anticipate improved market conditions. We expect our adjusted EBITDA to exceed $130 million for 2024.
(Loss) profit for the period to adjusted EBITDA reconciliation        

 Q2 ‘24Q2 ‘23
(Loss) profit for the period($9,332)$43,573
Income tax expense11,08026,552
Net finance cost7,5227,282
Equity-settled share-based payment transactions1,5861,495
Restructuring expense2,073626
Brazil's SP1+ expansion and commissioning26        —
Pension adjustment6,700
Silicon’s partial closure(730)(362)
Inventory cost adjustment3,0103,678
Strategic project expense (1)8,7783,476
Share of loss of associates1,062760
Others16
EBIT25,09193,780
Depreciation and amortization14,40413,673
Adjusted EBITDA39,495107,453

Notes:
(1)   The Company is in the initial development and ramp-up phases for several strategic expansion projects, including the joint venture with Shell, the LIVA Battery System, and the lithium expansion in Germany, which incurred project expenses during the quarter but are not yet operational. AMG is adjusting EBITDA for these exceptional charges.

AMG Critical Materials N.V.  
Consolidated Interim Income Statement  
For the quarter ended June 30  
In thousands of US dollars20242023
 UnauditedUnaudited
Continuing operations  
Revenue        364,311        439,319
Cost of sales        (308,975)        (311,785)
Gross profit        55,336        127,534
   
Selling, general and administrative expenses        (45,049)        (49,420)
   
Other income        45        53
Net other operating income         45        53
   
Operating profit        10,332        78,167
   
Finance income        5,212        5,550
Finance cost        (12,734)        (12,832)
Net finance cost        (7,522)        (7,282)
   
Share of loss of associates and joint ventures        (1,062)        (760)
   
Profit before income tax        1,748        70,125
   
Income tax expense        (11,080)        (26,552)
   
(Loss) profit for the period        (9,332)        43,573
   
(Loss) profit attributable to:  
Shareholders of the Company        (11,002)        42,763
Non-controlling interests        1,670        810
(Loss) profit for the period        (9,332)        43,573
   
Loss (earnings) per share  
Basic (loss) earnings per share        (0.34)        1.33
Diluted (loss) earnings per share        (0.34)        1.28


 


AMG Critical Materials N.V.  
Condensed Interim Consolidated Income Statement  
   
For the six months ended June 30  
In thousands of US dollars20242023
 UnauditedUnaudited
Continuing operations  
Revenue        722,470        889,909
Cost of sales        (619,812)        (622,533)
Gross profit        102,658        267,376
   
Selling, general and administrative expenses        (89,788)        (89,780)
   
Other income        140        594
Net other operating income        140        594
   
Operating profit        13,010        178,190
   
Finance income        9,967        11,026
Finance cost        (32,037)        (24,925)
Net finance cost        (22,070)        (13,899)
   
Share of loss of associates and joint ventures        (1,739)        (1,792)
   
(Loss) profit before income tax        (10,799)        162,499
   
Income tax expense        (13,828)        (62,479)
   
(Loss) profit for the period        (24,627)        100,020
   
(Loss) profit attributable to:  
Shareholders of the Company        (27,262)        98,984
Non-controlling interests        2,635        1,036
(Loss) Profit for the period        (24,627)        100,020
   
Loss (earnings) per share  
Basic (loss) earnings per share        (0.85)        3.08
Diluted (loss) earnings per share        (0.85)        3.01


AMG Critical Materials N.V.  
Condensed Interim Consolidated Statement of Financial Position 
   
In thousands of US dollarsJune 30, 2024 UnauditedDecember 31, 2023
Assets  
Property, plant and equipment944,188921,178
Goodwill and other intangible assets54,08040,313
Derivative financial instruments22,88922,847
Equity-accounted investees37,890        18,266
Other investments44,08238,160
Deferred tax assets28,51626,882
Restricted cash375387
Other assets14,39512,060
Total non-current assets        1,146,415        1,080,093
Inventories        305,046        260,945
Derivative financial instruments        1,608        3,397
Trade and other receivables        187,855        164,027
Other assets        85,335        100,128
Current tax assets        5,656        7,845
Restricted cash        1,043        1,064
Cash and cash equivalents        307,525        345,308
Total current assets        894,068        882,714
Total assets        2,040,483        1,962,807


AMG Critical Materials N.V.  
Condensed Interim Consolidated Statement of Financial Position 
(continued)  
   
In thousands of US dollarsJune 30, 2024 UnauditedDecember 31, 2023
Equity  
Issued capital        853        853
Share premium        553,715        553,715
Treasury shares        (9,558)        (10,593)
Other reserves        (48,772)        (52,269)
Retained earnings        36,798        70,077
Equity attributable to shareholders of the Company        533,036        561,783
   
Non-controlling interests        45,323        44,220
Total equity        578,359        606,003
   
Liabilities  
Loans and borrowings        750,359        656,265
Lease liabilities        44,754        46,629
Employee benefits        124,874        133,333
Provisions        16,795        17,951
Deferred revenue        11,910        17,836
Other liabilities        6,589        4,784
Derivative financial instruments        146        27
Deferred tax liabilities        15,265        6,664
Total non-current liabilities        970,692        883,489
Loans and borrowings        5,571        5,566
Lease liabilities        5,745        5,725
Short-term bank debt        6,151        7,678
Deferred revenue        13,162        14,083
Other liabilities        75,733        77,052
Trade and other payables        270,797        259,339
Derivative financial instruments        2,142        2,828
Advance payments from customers        83,718        60,561
Current tax liability        16,724        24,279
Provisions        11,689        16,204
Total current liabilities        491,432        473,315
Total liabilities        1,462,124        1,356,804
Total equity and liabilities        2,040,483        1,962,807


AMG Critical Materials N.V.  
Condensed Interim Consolidated Statement of Cash Flows  
For the six months ended June 30  
In thousands of US dollars20242023
 UnauditedUnaudited
Cash (used in) from operating activities  
(Loss) profit for the period        (24,627)        100,020
Adjustments to reconcile net profit to net cash flows:  
Non-cash:  
Income tax expense        13,828        62,479
Depreciation and amortization        28,119        26,640
Asset impairment reversal        —        (767)
Net finance cost        22,070        13,899
Share of loss of associates and joint ventures        1,739        1,792
Loss on sale or disposal of property, plant and equipment        54        35
Equity-settled share-based payment transactions        3,039        2,964
Movement in provisions, pensions, and government grants        (4,299)        8,104
Working capital and deferred revenue adjustments        (37,313)        3,901
Cash generated from operating activities        2,610        219,067
Finance costs paid, net        (14,670)        (9,716)
Income tax paid        (12,129)        (55,981)
Net cash (used in) from operating activities        (24,189)        153,370
   
Cash used in investing activities  
Proceeds from sale of property, plant and equipment        11        26
Acquisition of property, plant and equipment and intangibles        (59,235)        (69,291)
Investments in associates and joint ventures        (21,363)        (17,939)
Use of restricted cash        33        5,480
Interest received on restricted cash        —        30
Capitalized borrowing cost paid        (7,666)        (8,366)
Other        (14)        (1)
Net cash used in investing activities        (88,234)        (90,061)


AMG Critical Materials N.V.  
Condensed Interim Consolidated Statement of Cash Flows  
(continued)  
For the six months ended June 30  
In thousands of US dollars20242023
 UnauditedUnaudited
Cash from (used in) financing activities  
Proceeds from issuance of debt        100,000        2,041
Payment of transaction costs related to debt        (2,483)        —
Repayment of loans and borrowings        (4,591)        (12,755)
Net repurchase of common shares        (688)        (6,960)
Dividends paid        (8,006)        (14,087)
Payment of lease liabilities        (3,222)        (2,659)
Advanced contributions        —        14,000
Net cash from (used in) financing activities        81,010        (20,420)
   
Net (decrease) increase in cash and cash equivalents        (31,413)        42,889
   
Cash and cash equivalents at January 1        345,308        346,043
Effect of exchange rate fluctuations on cash held        (6,370)        2,319
Cash and cash equivalents at June 30        307,525        391,251

This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

This press release contains regulated information as defined in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).

About AMG

AMG's mission is to provide critical materials and related process technologies to advance a less carbon-intensive world. To this end, AMG is focused on the production and development of energy storage materials such as lithium, vanadium, and tantalum. In addition, AMG's products include highly engineered systems to reduce CO2 in aerospace engines, as well as critical materials addressing CO2 reduction in a variety of other end use markets.

AMG’s Lithium segment spans the lithium value chain, reducing the CO2 footprint of both suppliers and customers. AMG’s Vanadium segment is the world’s market leader in recycling vanadium from oil refining residues, spanning the Company’s vanadium, titanium, and chrome businesses. AMG’s Technologies segment is the established world market leader in advanced metallurgy and provides equipment engineering to the aerospace engine sector globally. It serves as the engineering home for the Company’s fast-growing LIVA batteries, and spans AMG’s mineral processing operations in graphite, antimony, and silicon metal.

With approximately 3,600 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, the United States, China, Mexico, Brazil, India, and Sri Lanka, and has sales and customer service offices in Japan (www.amg-nv.com).

For further information, please contact:
AMG Critical Materials N.V.        +1 610 975 4979
Michele Fischer
mfischer@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.

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