AMG Reports Full Year and Fourth Quarter 2015 Results; Ends Year Net Debt Free -- Ready for Growth

Key Highlights

• AMG ended the year net debt free, reducing net debt by $88.9 million in 2015, or $3.22 per ordinary share
• Fourth quarter 2015 cash flows from operating activities were $33.6 million, a 48% increase over the same period in 2014
• EBITDA⁽³⁾ was $75.6 million in 2015, $85.7 million when adjusted for foreign currency translation effects⁽⁴⁾
• Full year profit before income tax increased by 38% to $28.6 million in 2015 from $20.7 million in 2014
• Total 2015 dividend proposed of €0.21 per ordinary share, including the interim dividend of €0.10, paid on September 16, 2015
• AMG provides strategy update, including growth plan to pursue organic and acquisition opportunities

Amsterdam, 11 March 2016 (Regulated Information) --- AMG Advanced Metallurgical Group N.V. ("AMG", EURONEXT AMSTERDAM: "AMG") reported a net debt reduction of $88.9 million in 2015, ending the year net debt free with net cash of $1.0 million. The EBITDA for 2015 amounted to $75.6 million, a 12% decrease from $85.7 million in 2014. Fourth quarter EBITDA decreased to $9.7 million from $21.9 million in 2014.

Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "AMG cash flow for the fourth quarter was strong thanks to the pro-active steps taken by management to mitigate price risk and reduce cost. AMG ended the year free of net debt, exceeding management's deleveraging target by a considerable margin.

AMG Engineering achieved EBITDA of $2.6 million during the quarter, in line with 2014. Strong demand in the areas of heat treatment furnaces for the automotive market, plasma remelting furnaces for the aerospace market and induction furnaces for powder metallurgy applications resulted in an improvement in year ending order backlog of 10%, compared to December 31, 2014.

AMG Critical Materials profitability was adversely affected by non-cash expenses related to vanadium inventory adjustments of $4.4 million during the fourth quarter 2015. Despite double-digit declines in market pricing for all key products in 2015, AMG's continuing focus on operating performance resulted in solid financial results in all eight Critical Materials business units on a full year basis.

Despite the severe headwinds in the market, AMG generated free cash flow of $55.8 million during 2015, the second highest free cash flow in the company's history. We are pleased to be able to propose a full year dividend of €0.21 to our shareholders.

Growth strategy update

Following three years of intense focus on cash flow optimization and debt reduction, we now find ourselves with significant available capital and a unique opportunity to grow both organically as well as through select acquisitions.

AMG's organic growth strategy is focused on certain critical materials within our portfolio that are marked by strong demand growth or supply limitations. We have a number of projects which we have continued to develop during our austerity period which we are now beginning to progress.

Our acquisition strategy is very selective. We have developed a list of acquisition targets, each of which would be synergistic with our current businesses, and provide incremental technology or market share growth. AMG is the result of an acquisition strategy and we are fundamentally value buyers. We would expect every acquisition we undertake to be accretive to our earnings per share."

Key Figures

In 000's US Dollar
	Q4 '15	Q4 '14	Change	FY '15	FY '14	Change
Revenue	$220,842	$260,378	(15%)	$977,143	$1,093,889	(11%)
Gross profit	32,385	44,918	(28%)	159,960	184,292	(13%)
Gross margin	14.7%	17.3%		16.4%	16.8%
Operating profit	4,191	3,698	13%	36,163	40,632	(11%)
Operating margin	1.9%	1.4%		3.7%	3.7%
Profit before income tax	2,275	(2,237)	N/A	28,568	20,676	38%
Net (loss) income attributable to shareholders	(337)	7,310	N/A	11,080	21,910	(49%)
Net (loss) income attributable to shareholders, adjusted for  one-time refinancing costs	(337)	7,310	N/A	16,452	21,910	(25%)
EPS - Fully diluted	(0.01)	0.26	N/A	0.40	0.79	(49%)
EPS - Fully diluted, adjusted for one-time refinancing costs	(0.01)	0.26	N/A	0.59	0.79	(25%)
EBIT (2)	2,043	13,813	(85%)	46,032	53,238	(14%)
EBITDA (3)	9,676	21,858	(56%)	75,622	85,732	(12%)
EBITDA margin	4.4%	8.4%		7.7%	7.8%
Cash flows from operating activities	33,550	22,664	48%	76,308	95,114	(20%)

Notes: 

1. Free cash flow is defined as cash flows from operating activities less cash flows used in investing activities.
2. EBIT is defined as earnings before interest and income taxes. EBIT excludes restructuring and equity-settled share-based payments and includes foreign currency gains or losses.
3. EBITDA is defined as EBIT adjusted for depreciation and amortization.
4. EBITDA adjusted for foreign currency translation effects is explained under 'Currency Fluctuations'.

Operational Review

AMG Critical Materials

	Q4 '15	Q4 '14	Change	FY '15	FY '14	Change
Revenue	$166,275	$199,501	(17%)	$757,492	873,439	(13%)
Gross profit	* 20,733	33,846	(39%)	** 111,153	142,479	(22%)
Operating profit	2,559	10,840	(76%)	31,630	53,831	(41%)
EBITDA	7,039	19,169	(63%)	60,798	82,605	(26%)

* Includes $4.4 million non-cash expense related to vanadium, nickel and molybdenum inventory adjustments in the fourth quarter 2015

** Includes $6.5 million non-cash expense related to vanadium, nickel and molybdenum inventory adjustments in the full year 2015

AMG Critical Materials continues to be impacted by unfavorable Euro to US Dollar currency translation effects and lower metal prices, and as a result, fourth quarter 2015 revenue decreased by 17%, to $166.3 million.

The reduction in market prices of antimony, vanadium, molybdenum, nickel and aluminum of 38%, 47%, 48%, 40% and 24%, respectively, negatively affected revenue in the fourth quarter of 2015 compared to the fourth quarter of 2014.

Gross profit in the fourth quarter decreased $13.1 million, or 39%, to $20.7 million,  driven primarily by a non-cash inventory adjustment expense of $4.4 incurred due to rapidly falling vanadium, nickel and molybdenum prices, foreign currency translation effects and lower sales volumes.

Full year 2015 sales volumes were largely in line with 2014, with the exception of Aluminum, which decreased due to a planned reduction in capacity, and Titanium Master Alloys, which decreased due to product mix optimization.

AMG Engineering

	Q4 '15	Q4 '14	Change	FY '15	FY '14	Change
Revenue	$54,567	$60,877	(10%)	$219,651	$220,450	-
Gross profit	11,652	11,072	5%	48,807	41,813	17%
Operating profit (loss)	1,632	(7,142)	N/A	4,533	(13,199)	N/A
EBITDA	2,637	2,689	(2%)	14,824	3,127	374%

AMG Engineering signed $48.0 million in new orders during the fourth quarter of 2015, representing a 0.88x book to bill ratio. Order backlog was $140.9 million as of December 31, 2015, a 10% increase from $128.3 million as of December 31, 2014.

AMG Engineering's fourth quarter 2015 revenue decreased $6.3 million, or 10%, to $54.6 million, as an increase in local currency revenues was more than offset by foreign currency translation effects. Revenue generated from heat treatment furnaces, remelting furnaces and heat treatment services increased in the fourth quarter of 2015 compared to the fourth quarter of 2014.

Fourth quarter 2015 gross margin increased to 21% from 18% in the fourth quarter of 2014 due to higher revenue in local currency, product mix effects and improved project cost management.

EBITDA of $2.6 million in the fourth quarter of 2015 was in line with the same period in 2014.

Financial Review

Tax

AMG recorded an income tax expense of $18.7 million in 2015 as compared to a tax benefit of $1.0 million in 2014. The largest driver of this variance relates to the one-time recognition of US tax benefits in 2014.

The effective tax rate of 65% in 2015 was negatively impacted by the currency effect of the Brazilian Real on deferred taxes and refinancing costs of $5.4 million in the second quarter of 2015, for which no tax benefit could be recognized.

AMG paid taxes of $5.7 million in 2015 as compared to tax payments of $6.3 million in 2014. AMG's effective cash tax rate was 20% in 2015, as compared to 30% in 2014.

SG&A

AMG's fourth quarter 2015 SG&A expenses were $30.4 million, down slightly from $31.2 million in the fourth quarter 2014. A reduction in professional fees of $2.0 million between the fourth quarter 2015 and the fourth quarter 2014 was partially offset by an increase in project related costs.

Full year 2015 SG&A expenses were $122.3 million, an 8% reduction from $133.5 million in 2014.

Non-Recurring Items

AMG's fourth quarter 2015 operating profit of $4.2 million includes non-recurring items, which are not included in the calculation of EBITDA.

A summary of non-recurring items in the fourth quarter 2015 and 2014 are below:

Non-recurring items included in operating profit

	Q4 '15	Q4 '14			Change
Restructuring expense	($3,011)	$3,059			N/A
Asset impairment expense	-	1,867			N/A
Environmental	1,529	5,544			(72%)
Total non-recurring items included in operating profit	(1,482)		10,470	N/A

Net income in the fourth quarter 2015 was positively impacted by the revision of a restructuring plan related to cost reduction initiatives as well as the release of a value-added tax provision.

During the fourth quarter 2015, AMG recorded non-recurring environmental accrual of $1.5 million related to its Newfield, NJ site.

Liquidity

	December 31, 2015	December 31, 2014	Change
Total debt	$126,743	$195,878	(35%)
Cash and cash equivalents	127,778	108,029	18%
Net (cash) debt	(1,035)	87,849	N/A

AMG had a net cash position of $1.0 million as of December 31, 2015.  Net debt and gross debt decreased $88.9 million and $69.1 million, respectively, from December 31, 2014.

Cash flows from operating activities were $76.3 million in 2015 compared to $95.1 million in 2014.

Capital expenditures decreased to $23.3 million in 2015 compared to $24.0 million in 2014. Capital spending in 2015 included $13.1 million of maintenance capital. The largest expansion capital project was for AMG's titanium aluminides business.

Including the $127.8 million of cash, AMG had $282.7 million of total liquidity as of December 31, 2015.

Currency Fluctuations

AMG's financial statements are prepared in US Dollars, so fluctuations in the exchange rate between the US Dollar and other currencies, primarily the Euro and Brazilian Real, have an effect on the results of operations and on the reported value of assets and liabilities as measured in US Dollars.

The appreciation of the US Dollar as of December 31, 2015 compared to December 31, 2014, resulted in a decrease of $47 million and $36 million in assets and liabilities on the balance sheet, respectively. The appreciation of the US Dollar compared to the Euro in the fourth quarter of 2015 in relation to the fourth quarter of 2014, resulted in a reduction in revenue and EBITDA of $24 million and $2 million, respectively. On a full year basis, the appreciation of the US Dollar compared to the Euro resulted in a reduction in revenue and EBITDA of $109 million and $10 million, respectively, compared to the prior year.

EBITDA adjusted for Euro foreign currency translation effects is therefore $85.7 million for full year 2015.

Divestment

On February 29, 2016, AMG sold its 100% ownership interest in Intellifast, GmbH to Aero Products Invest GmbH of Augsburg, Germany.

Final Dividend Proposed

AMG intends to declare a dividend of €0.21 per ordinary share over the financial year 2015. The interim dividend of €0.10, paid on September 16, 2015, will be deducted from the amount to be distributed to shareholders. The proposed final dividend per ordinary share therefore amounts to €0.11.

A proposal to resolve upon the final dividend distribution will be included on the agenda for the annual general meeting to be held on May 4, 2016.

Outlook

In this challenging market environment, AMG's management target is to continue to generate strong operating cash flow and maintain 2015 levels of profitability in 2016.

AMG Advanced Metallurgical Group N.V.
Consolidated Income Statement
For the quarter ended December 31
In thousands of US Dollars	2015	2014
	Unaudited	Unaudited
Continuing operations
Revenue	220,842	260,378
Cost of sales	188,457	215,460
Gross profit	32,385	44,918
Selling, general and administrative expenses	30,400	31,241
Restructuring expense	(3,011)	3,059
Asset impairment expense	-	1,867
Environmental	1,529	5,544
Other income, net	(724)	(491)
Operating profit	4,191	3,698
Finance income	(786)	(386)
Finance expense	2,219	5,846
Foreign exchange gain	865	537
Net finance costs	2,298	5,997
Share of profit of associates and joint ventures	382	62
Profit (loss) before income tax	2,275	(2,237)
Income tax expense (benefit)	4,416	(9,884)
(Loss) profit for the period	(2,141)	7,647
Attributable to:
Shareholders of the Company	(337)	7,310
Non-controlling interests	(1,804)	337
(Loss) profit for the period	(2,141)	7,647
Earnings per share
Basic earnings per share	(0.01)	0.26
Diluted earnings per share	(0.01)	0.26

AMG Advanced Metallurgical Group N.V.
Consolidated Income Statement
For the year ended December 31
In thousands of US Dollars	2015	2014
	Unaudited
Continuing operations
Revenue	977,143	1,093,889
Cost of sales	817,183	909,597
Gross profit	159,960	184,292
Selling, general and administrative expenses	122,331	133,500
Restructuring expense	3,103	4,870
Asset impairment expense	-	1,867
Environmental	(757)	5,544
Other income, net	(880)	(2,121)
Operating profit	36,163	40,632
Finance income	(1,328)	(924)
Finance expense	11,267	19,944
Foreign exchange (gain) loss	(1,712)	529
Net finance costs	8,227	19,549
Share of gain (loss) of associates and joint ventures	632	(407)
Profit before income tax	28,568	20,676
Income tax expense (benefit)	18,651	(972)
Profit for the year	9,917	21,648
Attributable to:
Shareholders of the Company	11,080	21,910
Non-controlling interests	(1,163)	(262)
Profit for the year	9,917	21,648
Earnings per share
Basic earnings per share	0.40	0.79
Diluted earnings per share	0.40	0.79

AMG Advanced Metallurgical Group N.V.
Consolidated Statement of Financial Position
As at December 31
In thousands of US Dollars	2015	2014
	Unaudited
Assets
Property, plant and equipment	215,833	237,418
Goodwill	18,676	20,618
Intangible assets	10,246	11,116
Investments in associates and joint ventures	2,230	1,450
Other investments	14,000	-
Deferred tax assets	31,551	37,903
Restricted cash	2,527	7,582
Other assets	19,883	21,987
Total non-current assets	314,946	338,074
Inventories	126,389	145,418
Trade and other receivables	124,270	135,293
Derivative financial instruments	978	1,997
Other assets	27,648	47,055
Assets held for sale	673	2,553
Cash and cash equivalents	127,778	108,029
Total current assets	407,736	440,345
Total assets	722,682	778,419

AMG Advanced Metallurgical Group N.V.
Consolidated Statement of Financial Position
(continued)
As at December 31
In thousands of US Dollars	2015	2014
	Unaudited
Equity
Issued capital	745	745
Share premium	382,978	382,978
Other reserves	(49,500)	(59,728)
Retained earnings (deficit)	(205,662)	(225,843)
Equity attributable to shareholders of the Company	128,561	98,152
Non-controlling interests	25,006	2,825
Total equity	153,567	100,977
Liabilities
Loans and borrowings	112,217	167,990
Employee benefits	137,853	159,672
Provisions	29,617	37,056
Deferred revenue	13,539	8,950
Government grants	536	666
Other liabilities	8,821	8,885
Derivative financial instruments	5,642	5,056
Deferred tax liabilities	11,691	8,261
Total non-current liabilities	319,916	396,536
Loans and borrowings	3,222	6,562
Short term bank debt	11,304	21,326
Government grants	99	88
Liabilities associated with assets held for sale	423	248
Other liabilities	42,872	53,257
Trade and other payables	108,019	134,373
Derivative financial instruments	8,379	9,104
Advance payments	44,184	31,689
Deferred revenue	16,124	8,414
Current taxes payable	3,093	671
Provisions	11,480	15,174
Total current liabilities	249,199	280,906
Total liabilities	569,115	677,442
Total equity and liabilities	722,682	778,419

AMG Advanced Metallurgical Group N.V.
Consolidated Statement of Cash Flows
For the year ended December 31
In thousands of US Dollars	2015	2014
	Unaudited
Cash flows from operating activities
Profit for the year	9,917	21,648
Adjustments to reconcile net profit to net cash flows:
Non-cash:
Income tax expense	18,651	(972)
Depreciation and amortization	29,590	32,494
Asset impairment expense	-	1,867
Net finance costs	8,227	19,549
Share of (profit) loss of associates and joint ventures	(632)	407
Loss on sale or disposal of property, plant and equipment	2	297
Equity-settled share-based payment transactions	5,041	854
Movement in provisions, pensions and government grants	1,062	44
Working capital and deferred revenue adjustments	21,551	38,991
Cash flows from operating activities	93,409	115,179
Finance costs paid, net	(11,394)	(13,813)
Income tax paid, net	(5,707)	(6,252)
Net cash flows from operating activities	76,308	95,114
Cash flows used in investing activities
Proceeds from sale of property, plant and equipment	709	493
Proceeds from sale of subsidiaries (net of cash divested of $1,384 in 2015 (2014:nil))	(1,567)	354
Acquisition of property, plant and equipment and intangibles	(23,264)	(23,957)
Change in restricted cash	4,812	(105)
Acquisition of other non-current asset investments	(1,200)	-
Other	(16)	184
Net cash flows used in investing activities	(20,526)	(23,031)

AMG Advanced Metallurgical Group N.V.
Condensed interim consolidated statement of cash flows
(continued)
For the year ended December 31
In thousands of US Dollars	2015	2014
	Unaudited
Cash flows used in financing activities
Proceeds from issuance of debt	188,890	2,691
Payment of transaction costs related to debt issuance	(5,081)	-
Repayment of borrowings	(248,490)	(60,649)
Change in non-controlling interests	38,740	28
Dividends paid	(3,134)	-
Other	(34)	5
Net cash flows used in financing activities	(29,109)	(57,925)
Net increase in cash and cash equivalents	26,673	14,158
Cash and cash equivalents at January 1	108,029	103,067
Effect of exchange rate fluctuations on cash held	(6,924)	(9,196)
Cash and cash equivalents at December 31	127,778	108,029

About AMG

AMG is a global critical materials company at the forefront of CO₂ reduction trends. AMG produces highly engineered specialty metals and mineral products and provides related vacuum furnace systems and services to the transportation, infrastructure, energy, and specialty metals & chemicals end markets.

AMG Critical Materials produces aluminum master alloys and powders, titanium alloys and coatings, ferrovanadium, natural graphite, chromium metal, antimony, tantalum, niobium and silicon metal. AMG Engineering designs, engineers, and produces advanced vacuum furnace systems and operates vacuum heat treatment facilities, primarily for the transportation and energy industries.

With approximately 3,000 employees, AMG operates globally with production facilities in Germany, the United Kingdom, France, Czech Republic, the United States, China, Mexico, Brazil and Sri Lanka, and has sales and customer service offices in Russia and Japan (www.amg-nv.com).  

For further information, please contact:
AMG Advanced Metallurgical Group N.V.         +1 610 293 5804
Steve Daniels
Senior Vice President
sdaniels@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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