ADG AMG Critical Materials NV

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 30^th 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

_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

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

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

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

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

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        

_{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.}

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.

Attachment

• Second Quarter 2024 Earnings Press Release

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