Cash from operating activities was
In 000’s US dollars | Q3 ‘23 | Q3 ‘22 | Change | YTD Sept ‘23 | YTD Sept ‘22 | Change |
Revenue | (13%) | —% | ||||
EBITDA (1) | 53,785 | 102,603 | (48%) | 279,349 | 238,489 | 17% |
Cash from operating activities | 24,926 | 74,747 | (67%) | 178,296 | 110,598 | 61% |
Return on Capital Employed | 28.4% | 29.5% |
Note:
(1) EBITDA is defined as EBIT adjusted for depreciation and amortization.
Dr.
We ended the third quarter in a
AMG Engineering signed
Strategic Highlights
The Supervisory Board has authorized the implementation of a new corporate structure, which will be operational
Dr.
This updated structure will enable AMG to realize strategic, operational, and risk management synergies that will improve decision making, as well as strengthen the resiliency of the organization. This new structure will decrease the potential for overreliance on individual executives, improve succession planning, and improve collaboration throughout the organization. Additionally, the new structure will create strategic flexibility for various forms of equity diversification.”
Lithium
- In
Brazil , the lithium concentrate plant shutdown to facilitate the expansion from 90,000 tons to 130,000 tons will take place in the first quarter of 2024 due to delivery delays of electronic components for processing automation. This will negatively impact second quarter sales volumes. We expect to produce at full run rate capacity, which is 130,000 tons per year, starting in the third quarter of 2024. - AMG Brazil’s project with Grupo Lagoa will begin basic engineering in
December 2023 . From present data, we conclude that the plant will confirm the main assumptions for the construction of a 150,000-ton lithium concentrate plant at the site. - AMG’s lithium hydroxide refinery’s first 20,000-ton module in Bitterfeld,
Germany , is in the initial phases of commissioning and the ramp-up and the qualification process is planned for the second and third quarters of 2024. We expect to produce approximately 7,000 tons of qualified battery-grade lithium hydroxide in 2024 which is not included in our EBITDA guidance for 2024. We expect to produce and sell a full 20,000 tons in 2025.
Vanadium
- The spent catalyst roasting facility in
Zanesville, Ohio operated at full capacity for the third quarter and outperformed our roasting facility inCambridge, Ohio . TheZanesville melt shop has operated at full capacity utilization and the Vanadium team is focused on increasing operational availability, optimizing cycle time and increasing yield. - AMG’s innovative lithium vanadium battery (“LIVA”) projects are integral for industrial power management applications and accelerate the industrial energy transition. The batteries are currently under various stages of bidding and development. One is operational, three are under construction, and 13 are in bidding and development stages, with a total megawatt hour (MWh) capacity of 379 MWh.
- The vanadium electrolyte plant at AMG Titanium in Nuremberg,
Germany is under construction. The target capacity is 6,000 m³ vanadium electrolyte, the equivalent of approximately 100 MWh, which will serve the electricity storage market, including a vertical integration into LIVA batteries. Production is expected to start in the first quarter of 2024. - Applying a newly developed process technology, AMG Titanium in Nuremberg,
Germany has started to process spent roasted catalyst to V2O5. - Shell & AMG Recycling’s (“SARBV”) project development of a closed loop circular recycling facility in the
Middle East is progressing. Phase I of the “Supercenter” project, a hydrometallurgical facility to process vanadium-containing gasification ash, is under a long-term contract withAramco . The gasification ash will be processed into vanadium oxide and then to vanadium electrolytes for use in batteries in theKingdom of Saudi Arabia . Phase I is expected to reach FEL3 status by the end of the year. The “Supercenter” concept also includes spent catalyst recycling projects, fresh catalyst production, and the manufacturing of vanadium batteries. The Phase I facility will also produce 6,000 m³ of electrolyte, which will support 100 MWh of vanadium redox flow battery capacity annually. In addition, a LIVA Hybrid Energy Storage System and a Fresh Catalyst R&D facility will be part of Phase 1.
Financial Highlights
- Cash from operating activities was
$25 million in the third quarter of 2023, and$178 million on a year-to-date basis, compared to$111 million for the first nine months of 2022. - AMG’s liquidity as of
September 30, 2023 was$542 million , with$347 million of unrestricted cash and$195 million of revolving credit availability. - Annualized return on capital employed was 28.4% for the first nine months of 2023, compared to 29.5% for the same period in 2022.
- AMG Engineering’s order backlog of
$341 million as ofSeptember 30, 2023 , the highest in AMG’s history, was driven primarily by the aerospace industry.
In 000’s US dollars | ||||||
Q3 ‘23 | Q3 ‘22 | Change | YTD Sept ‘23 | YTD Sept ‘22 | Change | |
Revenue | (13%) | —% | ||||
Gross profit | 66,803 | 112,071 | (40%) | 334,179 | 289,505 | 15% |
Gross margin | 18.1% | 26.4% | 26.6% | 23.1% | ||
Operating profit | 24,059 | 121,680 | (80%) | 202,249 | 224,740 | (10%) |
Operating margin | 6.5% | 28.6% | 16.1% | 17.9% | ||
Net income attributable to shareholders | 163 | 68,146 | N/A | 99,147 | 126,892 | (22%) |
EPS - Fully diluted | 0.00 | 2.09 | N/A | 3.04 | 3.91 | (22%) |
EBIT (1) | 40,225 | 91,536 | (56%) | 239,149 | 205,532 | 16% |
EBITDA (2) | 53,785 | 102,603 | (48%) | 279,349 | 238,489 | 17% |
EBITDA margin | 14.6% | 24.2% | 22.2% | 19.0% | ||
Cash from operating activities | 24,926 | 74,747 | (67%) | 178,296 | 110,598 | 61% |
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 and other exceptional items, equity-settled share-based payments, and strategic expenses.
(2) EBITDA is defined as EBIT adjusted for depreciation and amortization.
Operational Review
AMG Clean Energy Materials
Q3 ‘23 | Q3 ‘22 | Change | |
Revenue | (25%) | ||
Gross profit | 34,333 | 86,454 | (60%) |
Operating profit | 18,712 | 74,888 | (75%) |
EBITDA | 39,155 | 83,674 | (53%) |
AMG Clean Energy Materials’ revenue decreased 25% compared to the third quarter of 2022, to
Gross profit for the quarter decreased 60% compared to the same period in the prior year, primarily due to the lower sales prices. The primary driver is the lithium price decline. Also, vanadium gross profit was lower due to fixed price inventory being processed from global sources. All other existing contracts are under indexed prices. We are working towards long-term contracts similar to our
SG&A expenses in the third quarter of 2023 were higher than the same period in 2022 at
The third quarter 2023 EBITDA decreased 53%, to
During the third quarter of 2023, a total of 16,012 dry metric tons (“dmt”) of lithium concentrates was sold. The third quarter experienced lower sales volumes due to shipping schedule variances noted in the second quarter. The average realized sales price was
In 2024, we anticipate the cost per ton to rise due to unabsorbed costs during the ramp-up as well as lower relative tantalum sales volumes offsetting higher spodumene production. It is important to note that AMG is one of the lowest cost mines in the world and we plan to maintain that position.
AMG Critical Minerals
Q3 ‘23 | Q3 ‘22 | Change | |
Revenue | (38%) | ||
Gross profit | 6,887 | 674 | 922% |
Operating (loss) profit | (269) | 40,301 | N/A |
EBITDA | 1,247 | 7,327 | (83%) |
AMG Critical Minerals’ revenue for the third quarter of 2023 decreased by 38%, to
Gross profit of
SG&A expenses in the third quarter of 2023 of
The third quarter 2023 EBITDA decreased 83% compared to the same period in 2022, to
AMG Silicon operated one of four furnaces throughout the third quarter and plans to operate one furnace for the remainder of 2023. 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 financial impact of the business will be excluded from EBITDA during this period of abnormal operations. However, AMG Silicon generated
AMG Critical Materials Technologies
Q3 ‘23 | Q3 ‘22 | Change | |
Revenue | 16% | ||
Gross profit | 25,583 | 24,943 | 3% |
Operating profit | 5,616 | 6,491 | (13%) |
EBITDA | 13,383 | 11,602 | 15% |
AMG Critical Materials Technologies' third quarter 2023 revenue increased by
SG&A expenses increased by 10% in the third quarter of 2023 compared to the same period in 2022, due to additional personnel at AMG Engineering and
AMG Critical Materials Technologies’ EBITDA was
AMG Engineering signed
AMG Engineering has been selected by PCC’s TIMET to supply the vacuum melting and re-melting furnaces for their new, state-of-the-art Titanium melt facility in
Financial Review
Tax
AMG recorded an income tax expense of
AMG paid taxes of
Exceptional Items
AMG’s third quarter 2023 gross profit includes exceptional items, which are not included in the calculation of EBITDA.
A summary of exceptional items included in gross profit in the third quarters of 2023 and 2022 are below:
Exceptional items included in gross profit
Q3 ‘23 | Q3 ‘22 | Change | |
Gross profit | (40%) | ||
Inventory cost adjustment | 1,388 | — | N/A |
Restructuring expense | 2,745 | 11 | N/A |
Asset impairment expense | — | 11,587 | N/A |
Strategic project expense | 4,924 | 1,241 | 297% |
Gross profit excluding exceptional items | 75,860 | 124,910 | (39%) |
AMG Vanadium had a
SG&A
AMG’s third quarter 2023 SG&A expenses were
Liquidity
Change | |||
Senior secured debt | (3%) | ||
Cash & cash equivalents | 347,293 | 346,043 | —% |
Senior secured net (cash) debt | (9,341) | 2,579 | N/A |
Other debt | 12,170 | 14,959 | (19%) |
Net debt excluding municipal bond | 2,829 | 17,538 | (84%) |
Municipal bond debt | 319,064 | 319,244 | —% |
Restricted cash | 1,428 | 6,920 | (79%) |
Net debt | 320,465 | 329,862 | (3%) |
AMG continued to maintain a strong balance sheet and adequate sources of liquidity during the third quarter. As of
Net Finance Costs
AMG’s third quarter 2023 net finance cost was
Outlook
Since the end of July when we issued the previous 2023 EBITDA guidance of between
Considering the ramp-up of the strategic projects explained above, as well as the volatility of our key material prices, specifically lithium, it is challenging to provide firm guidance for 2024. The recent fall in lithium prices has surprised every industry participant. Establishing the cause of the fall in prices and projecting future movements involves analyzing both the Chinese lithium industry as well as broader macroeconomic factors in
Given the difficulty of this analysis, and despite certain signs that the lithium supply and demand picture remains strong, there is high uncertainty with regard to near-term pricing dynamics. Therefore, utilizing today’s depressed price levels, AMG’s EBITDA will be approximately
Profit for the period to adjusted EBITDA reconciliation
Q3 ‘23 | Q3 ‘22 | |
Profit for the period | ||
Income tax expense | 12,565 | 38,603 |
Net finance cost | 9,295 | 13,988 |
Equity-settled share-based payment transactions | 1,392 | 1,386 |
Restructuring expense | 2,745 | 11 |
Net contract settlements | — | (46,407) |
Silicon’s partial closure | (739) | — |
Inventory cost adjustment | 1,388 | — |
Asset impairment expense | — | 11,587 |
Strategic project expense (1) | 11,196 | 3,282 |
Share of loss of associates | 1,197 | 750 |
Others | 184 | (3) |
EBIT | 40,225 | 91,536 |
Depreciation and amortization | 13,560 | 11,067 |
EBITDA | 53,785 | 102,603 |
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
Condensed Interim Consolidated Income Statement | ||
For the quarter ended | ||
In thousands of US dollars | 2023 | 2022 |
Unaudited | Unaudited | |
Continuing operations | ||
Revenue | 368,717 | 424,813 |
Cost of sales | (301,914) | (312,742) |
Gross profit | 66,803 | 112,071 |
Selling, general and administrative expenses | (42,800) | (36,888) |
Other income, net | 56 | 46,497 |
Net other operating income | 56 | 46,497 |
Operating profit | 24,059 | 121,680 |
Finance income | 5,676 | 1,222 |
Finance cost | (14,971) | (15,210) |
Net finance cost | (9,295) | (13,988) |
Share of loss of associates and joint ventures | (1,197) | (750) |
Profit before income tax | 13,567 | 106,942 |
Income tax expense | (12,565) | (38,603) |
Profit for the period | 1,002 | 68,339 |
Profit attributable to: | ||
Shareholders of the Company | 163 | 68,146 |
Non-controlling interests | 839 | 193 |
Profit for the period | 1,002 | 68,339 |
Basic earnings per share | ||
Basic earnings per share | 0.01 | 2.13 |
Diluted earnings per share | 0.00 | 2.09 |
Condensed Interim Consolidated Income Statement | ||
For the nine months ended | ||
In thousands of US dollars | 2023 | 2022 |
Unaudited | Unaudited | |
Continuing operations | ||
Revenue | 1,258,626 | 1,252,770 |
Cost of sales | (924,447) | (963,265) |
Gross profit | 334,179 | 289,505 |
Selling, general and administrative expenses | (132,580) | (111,384) |
Other income, net | 650 | 46,619 |
Net other operating income | 650 | 46,619 |
Operating profit | 202,249 | 224,740 |
Finance income | 14,843 | 3,602 |
Finance cost | (38,037) | (38,720) |
Net finance cost | (23,194) | (35,118) |
Share of loss of associates and joint ventures | (2,989) | (1,250) |
Profit before income tax | 176,066 | 188,372 |
Income tax expense | (75,044) | (60,270) |
Profit for the period | 101,022 | 128,102 |
Profit attributable to: | ||
Shareholders of the Company | 99,147 | 126,892 |
Non-controlling interests | 1,875 | 1,210 |
Profit for the period | 101,022 | 128,102 |
Earnings per share | ||
Basic earnings per share | 3.08 | 3.97 |
Diluted earnings per share | 3.04 | 3.91 |
Condensed Interim Consolidated Statement of Financial Position | ||
In thousands of US dollars | ||
Assets | ||
Property, plant and equipment | 878,166 | 797,611 |
40,113 | 41,404 | |
Derivative financial instruments | 32,532 | 33,042 |
Equity-accounted investees | 16,950 | — |
Other investments | 31,095 | 29,324 |
Deferred tax assets | 38,524 | 37,181 |
Restricted cash | 370 | 5,875 |
Other assets | 10,989 | 8,612 |
Total non-current assets | 1,048,739 | 953,049 |
Inventories | 262,763 | 277,311 |
Derivative financial instruments | 2,065 | 3,516 |
Trade and other receivables | 173,506 | 162,548 |
Other assets | 107,668 | 121,834 |
Current tax assets | 6,792 | 7,289 |
Restricted cash | 1,058 | 1,045 |
Cash and cash equivalents | 347,293 | 346,043 |
Total current assets | 901,145 | 919,586 |
Total assets | 1,949,884 | 1,872,635 |
Condensed Interim Consolidated Statement of Financial Position | ||
(continued) | ||
In thousands of US dollars | ||
Equity | ||
Issued capital | 853 | 853 |
Share premium | 553,715 | 553,715 |
(10,730) | (14,685) | |
Other reserves | (45,148) | (44,869) |
Retained earnings (deficit) | 77,610 | (4,461) |
Equity attributable to shareholders of the Company | 576,300 | 490,553 |
Non-controlling interests | 35,213 | 27,296 |
Total equity | 611,513 | 517,849 |
Liabilities | ||
Loans and borrowings | 657,544 | 661,270 |
Lease liabilities | 43,548 | 44,224 |
Employee benefits | 124,819 | 117,160 |
Provisions | 12,847 | 12,361 |
Deferred revenue | 17,246 | 20,000 |
Other liabilities | 3,801 | 15,009 |
Derivative financial instruments | 224 | 284 |
Deferred tax liabilities | 15,974 | 27,269 |
Total non-current liabilities | 876,003 | 897,577 |
Loans and borrowings | 5,497 | 15,164 |
Lease liabilities | 5,149 | 4,710 |
Short-term bank debt | 6,145 | 6,391 |
Deferred revenue | 23,294 | 28,277 |
Other liabilities | 73,064 | 69,917 |
Trade and other payables | 249,598 | 240,101 |
Derivative financial instruments | 3,986 | 7,746 |
Advance payments from customers | 60,181 | 51,054 |
Current tax liability | 20,569 | 23,548 |
Provisions | 14,885 | 10,301 |
Total current liabilities | 462,368 | 457,209 |
Total liabilities | 1,338,371 | 1,354,786 |
Total equity and liabilities | 1,949,884 | 1,872,635 |
Condensed Interim Consolidated Statement of Cash Flows | ||
For the nine months ended | ||
In thousands of US dollars | 2023 | 2022 |
Unaudited | Unaudited | |
Cash from operating activities | ||
Profit for the period | 101,022 | 128,102 |
Adjustments to reconcile net profit to net cash flows: | ||
Non-cash: | ||
Income tax expense | 75,044 | 60,270 |
Depreciation and amortization | 40,200 | 32,957 |
Asset impairment (reversal) expense | (767) | 11,587 |
Net finance cost | 23,194 | 35,118 |
Share of loss of associates and joint ventures | 2,989 | 1,250 |
Loss on sale or disposal of property, plant and equipment | 33 | 12 |
Equity-settled share-based payment transactions | 4,356 | 4,138 |
Movement in provisions, pensions, and government grants | 8,470 | (7,532) |
Working capital and deferred revenue adjustments | 31,609 | (113,601) |
Cash generated from operating activities | 286,150 | 152,301 |
Finance costs paid, net | (19,163) | (19,014) |
Income tax paid | (88,691) | (22,689) |
Net cash from operating activities | 178,296 | 110,598 |
Cash used in investing activities | ||
Proceeds from sale of property, plant and equipment | 34 | 151 |
Acquisition of property, plant and equipment and intangibles | (109,540) | (134,244) |
Investments in associates and joint ventures | (19,939) | (1,250) |
Use of restricted cash | 5,492 | 76,365 |
Interest received on restricted cash | 30 | 179 |
Capitalized borrowing cost paid | (11,583) | (15,307) |
Other | 4 | 12 |
Net cash used in investing activities | (135,502) | (74,094) |
Condensed Interim Consolidated Statement of Cash Flows | ||
(continued) | ||
For the nine months ended | ||
In thousands of US dollars | 2023 | 2022 |
Unaudited | Unaudited | |
Cash used in financing activities | ||
Proceeds from issuance of debt | 57 | 83 |
Repayment of borrowings | (14,355) | (23,948) |
Net repurchase of common shares | (6,960) | (1,523) |
Dividends paid | (28,212) | (19,885) |
Payment of lease liabilities | (4,098) | (3,738) |
Contributions by non-controlling interests | 14,000 | — |
Net cash used in financing activities | (39,568) | (49,011) |
Net increase (decrease) in cash and cash equivalents | 3,226 | (12,507) |
Cash and cash equivalents at | 346,043 | 337,877 |
Effect of exchange rate fluctuations on cash held | (1,976) | (18,954) |
Cash and cash equivalents at | 347,293 | 306,416 |
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 Clean Energy Materials segment combines AMG’s recycling and mining operations, producing materials for infrastructure and energy storage solutions while reducing the CO2 footprint of both suppliers and customers. AMG Clean Energy Materials segment spans the vanadium, lithium, and tantalum value chains. AMG Critical Materials Technologies segment combines AMG’s leading vacuum furnace technology line with high-purity materials serving global leaders in the aerospace sector. AMG Critical Minerals segment consists of AMG’s mineral processing operations in antimony, graphite, and silicon metal.
With approximately 3,600 employees, AMG operates globally with production facilities in
For further information, please contact:
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.
Attachment
- Third Quarter 2023 Earnings Press Release
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