AMG AMG Critical Materials NV

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 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

In 000’s US dollars
	Q2 ‘24	Q2 ‘23	Change
Revenue	$364,311	$439,319	(17%)
Gross profit	55,336	127,534	(57%)
Gross margin	15.2%	29.0%
Operating profit	10,332	78,167	(87%)
Operating margin	2.8%	17.8%
Net (loss) income attributable to shareholders	(11,002)	42,763	N/A
EPS - Fully diluted	(0.34)	1.28	N/A
EBIT (1)	25,091	93,780	(73%)
Adjusted EBITDA (2)	39,495	107,453	(63%)
Adjusted EBITDA margin	10.8%	24.5%
Cash (used in) from operating activities	(9,271)	59,975	N/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 ‘24	Q2 ‘23	Change
Revenue	$38,250	$133,473	(71%)
Gross profit	3,770	90,006	(96%)
Operating (loss) profit	(7,128)	79,904	N/A
Adjusted EBITDA	1,704	86,345	(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 ‘24	Q2 ‘23	Change
Revenue	$168,022	$180,870	(7%)
Gross profit	19,769	17,227	15%
Operating profit (loss)	6,003	(3,217)	N/A
Adjusted EBITDA	19,971	15,693	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 ‘24	Q2 ‘23	Change
Revenue	$158,039	$124,976	26%
Gross profit	31,797	20,301	57%
Operating profit	11,457	1,480	674%
Adjusted EBITDA	17,820	5,415	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 ‘24	Q2 ‘23	Change
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 items	60,698	130,772	(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, 2024	December 31, 2023	Change
Senior secured debt	$433,170	$337,402	28%
Cash & cash equivalents	307,525	345,308	(11%)
Senior secured net debt (cash)	125,645	(7,906)	N/A
Other debt	10,035	13,105	(23%)
Net debt excluding municipal bond	135,680	5,199	N/A
Municipal bond debt	318,876	319,002	—%
Restricted cash	1,418	1,451	(2%)
Net debt	453,138	322,750	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 ‘24	Q2 ‘23
(Loss) profit for the period	($9,332)	$43,573
Income tax expense	11,080	26,552
Net finance cost	7,522	7,282
Equity-settled share-based payment transactions	1,586	1,495
Restructuring expense	2,073	626
Brazil's SP1+ expansion and commissioning	26	—
Pension adjustment	—	6,700
Silicon’s partial closure	(730)	(362)
Inventory cost adjustment	3,010	3,678
Strategic project expense (1)	8,778	3,476
Share of loss of associates	1,062	760
Others	16	—
EBIT	25,091	93,780
Depreciation and amortization	14,404	13,673
Adjusted EBITDA	39,495	107,453

_{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 dollars	2024	2023
	Unaudited	Unaudited
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 dollars	2024	2023
	Unaudited	Unaudited
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 dollars	June 30, 2024 Unaudited	December 31, 2023
Assets
Property, plant and equipment	944,188	921,178
Goodwill and other intangible assets	54,080	40,313
Derivative financial instruments	22,889	22,847
Equity-accounted investees	37,890	18,266
Other investments	44,082	38,160
Deferred tax assets	28,516	26,882
Restricted cash	375	387
Other assets	14,395	12,060
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 dollars	June 30, 2024 Unaudited	December 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 dollars	2024	2023
	Unaudited	Unaudited
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 dollars	2024	2023
	Unaudited	Unaudited
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.

Attachment

• Second Quarter 2024 Earnings Press Release