Amsterdam, 6 November 2024 (Regulated Information) --- AMG Critical Materials N.V. ("AMG”, EURONEXT AMSTERDAM: "AMG”) reports third quarter 2024 revenue of $356 million, a 3% decrease versus the third quarter of 2023. AMG achieved an adjusted EBITDA of $40 million, supported by an exceptionally strong performance by the AMG Technologies segment showing an increase of 112% compared to the same period in 2023.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, "EBITDA continued on a steady growth trend in the third quarter of 2024, during which we achieved $40 million of EBITDA. AMG Technologies delivered a strong performance compared to the third quarter last year with excellent results in a growing market. AMG Engineering secured $131 million in order intake and had a record high order backlog as of September 30, 2024 of $367 million. This result continues to demonstrate the earnings power of our diversified portfolio despite the challenging market conditions and depressed price levels in both AMG Lithium and AMG Vanadium.
In terms of our growth projects, our major lithium capital expenditures are substantially complete. Our Brazilian mine expansion is ramping up and on September 18, 2024, AMG hosted the grand opening of Europe's first lithium hydroxide refinery in Bitterfeld, Germany. The refinery has finalized construction and has transitioned to commissioning, ramp-up and customer qualification. Both projects strengthen our low-cost position in the lithium market. AMG is approaching the end of a period of significant capital intensity that positions us for strong profitability as market prices improve.
I am also pleased to report that we have significant liquidity. With $272 million in cash on hand and $200 million available under our revolving credit facility, AMG has a total liquidity of $472 million.”
Lithium
Our lithium concentrate plant expansion from 90,000 tons to 130,000 tons per year is ramping up and we expect to produce at full 130,000-ton annualized capacity by the end of the fourth quarter of 2024.
On September 18, 2024 in Bitterfeld, Germany, AMG hosted the grand opening of Europe's first lithium hydroxide refinery.
Vanadium
Construction of the vanadium electrolyte plant at AMG Titanium in Nuremberg, Germany is complete, and we are producing qualification batches for our customers.
SARBV's "Supercenter” phase 1 project in Saudi Arabia is beginning detailed engineering and permitting. Several licenses and permits have already been obtained, including the Industrial Investment License from the Ministry of Industrial and Mineral Resources.
Technologies
AMG Engineering achieved $367 million in order backlog as of September 30, 2024, the highest in AMG's history. Order intake of $131 million during the third quarter of 2024 was 63% higher than the same period in 2023, driven largely by strong orders of remelting furnaces.
AMG LIVA's first third-party commercial Hybrid Energy Storage System, integrating Lithium-Ion and Vanadium Redox Flow batteries with AI-driven efficiency, is now operational at Wipotec GmbH, enhancing the facility's power system.
Financial Highlights
AMG's liquidity as of September 30, 2024 was $472 million, with $272 million of unrestricted cash and $200 million of revolving credit availability.
EBITDA continued on a steady growth trend in the third quarter of 2024, during which AMG achieved $40 million of EBITDA despite significant declines in lithium and vanadium prices.
Key Figures
In 000's US dollars Q3 '24Q3 '23ChangeRevenue$356,003$368,717 (3%)Gross profit46,09866,803 (31%)Gross margin 12.9% 18.1% Operating (loss) profit(1,252)24,059N/AOperating margin (0.4%) 6.5% Net (loss) income attributable to shareholders(13,353)163N/A EPS - Fully diluted(0.41)0.00N/A EBIT (1)25,40840,225 (37%)Adjusted EBITDA (2)40,26653,785 (25%)Adjusted EBITDA margin 11.3% 14.6% Cash (used in) from operating activities(1,822)24,926N/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
Q3 '24Q3 '23ChangeRevenue$48,600$62,346 (22%)Gross (loss) profit(781)26,769N/AOperating (loss) profit(12,647)16,390N/AAdjusted EBITDA10,24929,638 (65%) AMG Lithium's revenue decreased 22% compared to the third quarter of 2023. This variance was largely driven by the 67% decline in lithium market prices versus the third quarter of 2023, offset by a 42% increase in volume.
SG&A expenses of $12 million in the third quarter of 2024 were 16% higher than in the same period last year, mainly driven by the increase in headcount related to the German lithium expansion project and higher professional fees.
The third quarter 2024 adjusted EBITDA decreased 65%, to $10 million, from $30 million in the third quarter of 2023, due to the decline in lithium prices as noted above.
During the third quarter of 2024, a total of 22,731 dry metric tons ("dmt”) of lithium concentrates were sold, 42% higher than the 16,012 dmt in the third quarter of 2023. The average realized sales price was $870/dmt CIF China for the quarter. The average cost per ton for the quarter was $450/dmt CIF China, driven by higher lithium concentrate production, lower costs from the weakening Brazilian Real, and ongoing high tantalum sales volumes which lower the cost of production.
Our lithium concentrate plant is currently ramping to 130,000 tons and shipping volumes were therefore impacted in the third quarter of 2024. 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
Q3 '24Q3 '23ChangeRevenue$150,972$174,436 (13%)Gross profit11,28217,182 (34%)Operating (loss) profit(2,573)3,539N/AAdjusted EBITDA10,76215,067 (29%) AMG Vanadium's revenue for the third quarter of 2024 decreased by 13%, to $151 million, due primarily to lower sales prices across the segment and lower volumes of ferrovanadium, partially offset by increased volumes in chrome metal.
Gross profit of $11 million in the third quarter of 2024 was 34% lower compared to the same period in 2023, largely due to the decline in revenues noted above.
SG&A expenses in the third quarter of 2024 of $14 million were materially in line with the comparable prior period.
The third quarter of 2024 adjusted EBITDA of $11 million was 29% below the same period in 2023. This was primarily driven by the 21% decrease in market prices for ferrovanadium compared to the third quarter of 2023.
AMG Technologies
Q3 '24Q3 '23ChangeRevenue$156,431$131,935 19%Gross profit35,59722,852 56%Operating profit13,9684,130 238%Adjusted EBITDA19,2559,080 112% AMG Technologies' third quarter 2024 revenue increased by $24 million, or 19%, compared to the same period in 2023. This improvement was driven by higher sales volumes of antimony and silicon, and higher sales prices of antimony.
SG&A expenses increased by 13% in the third 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 professional fees and research and development costs.
AMG Technologies' adjusted EBITDA was $19 million during the third quarter, more than double the same period in 2023. The increase was primarily due to higher profitability in antimony and graphite.
AMG Engineering signed $131 million in new orders during the third quarter of 2024, representing a 1.82x book to bill ratio. The third quarter 2024 order intake was driven by exceptionally strong orders of remelting furnaces. Order backlog was the highest in AMG's history at $367 million as of September 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 $2 million in the third quarter of 2024. This expense was mainly due to $7 million of deferred tax expenses in our German businesses related to losses that do not qualify for recognition as deferred tax assets. This expense is offset by the $3 million tax benefit related to the statutory tax rates applied to AMG's negative profit before tax. In addition, there was a $2 million deferred tax benefit related to a favorable foreign exchange impact on our Brazilian tax positions.
AMG paid taxes of $5 million in the third quarter of 2024, compared to tax payments of $33 million in the third 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 third 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 third quarters of 2024 and 2023 are below:
Exceptional items included in gross profit
Q3 '24Q3 '23ChangeGross profit$46,098$66,803 (31%)Inventory cost adjustment 18,258 7,283 151%Restructuring expense 102 2,745 (96%)Silicon's partial closure (1,224) (1,483) 17%Strategic project expense 441 512 (14%)Gross profit excluding exceptional items63,67575,860 (16%) AMG had $18 million non-cash expense during the third quarter of 2024 mainly driven by AMG Lithium due to the decline in lithium prices, which has been excluded from the calculation of adjusted EBITDA.
SG&A
AMG's third quarter 2024 SG&A expenses were $47 million compared to $43 million in the third quarter of 2023. The increase was largely driven by the increase in headcount in our Lithium, Engineering, and LIVA businesses associated with our strategic expansion projects and higher professional fees relating to additional regulatory requirements.
Liquidity
September 30, 2024December 31, 2023 ChangeSenior secured debt$432,562$337,402 28%Cash & cash equivalents271,599345,308 (21%)Senior secured net debt (cash)160,963 (7,906)N/AOther debt11,80713,105 (10%)Net debt excluding municipal bond172,7705,199N/AMunicipal bond debt318,812319,002 - %Restricted cash1,4391,451 (1%)Net debt490,143322,750 52% AMG continued to maintain a strong balance sheet and adequate sources of liquidity during the third quarter. As of September 30, 2024, the Company had $272 million in unrestricted cash and cash equivalents and $200 million available on its revolving credit facility. As such, AMG had $472 million of total liquidity as of September 30, 2024.
Net Finance Costs
AMG's third quarter 2024 net finance cost was $8 million compared to $9 million in the third quarter of 2023. This is due to higher non-cash intercompany foreign exchange gains compared to the same period in 2023, partially offset by increased interest costs associated with the new $100 million incremental term loan issued in April 2024.
Outlook
Due to the strong operating results to date including exceptional results from our Antimony operation, we are increasing our EBITDA guidance for 2024 from "exceed $130 million EBITDA” to "exceed $150 million EBITDA.”
As the lithium prices have weakened further and AMG Antimony's contributions normalize, we expect AMG's adjusted EBITDA to exceed $130 million in 2025. Due to the uncertainty related to the commissioning and ramp-up process as well as the impact of the write-downs in the value of our inventory to the current low market prices, we have excluded any expected contribution from our lithium hydroxide refinery in Bitterfeld, Germany from our 2025 guidance.
(Loss) profit for the period to adjusted EBITDA reconciliation
Q3 '24Q3 '23(Loss) profit for the period($11,708)$1,002Income tax expense1,67612,565Net finance cost7,8139,295Equity-settled share-based payment transactions1,5241,392Restructuring expense1022,745Silicon's partial closure(346)(739)Inventory cost adjustment18,2587,283Strategic project expense (1)7,1275,301Share of loss of associates9671,197Others(5)184EBIT25,40840,225Depreciation and amortization14,81813,560Adjusted EBITDA40,22653,785 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. Condensed Interim Consolidated Income Statement For the quarter ended September 30 In thousands of US dollars20242023 UnauditedUnauditedContinuing operations Revenue 356,003 368,717Cost of sales (309,905) (301,914)Gross profit 46,098 66,803 Selling, general and administrative expenses (47,446) (42,800) Other income, net 96 56Net other operating income 96 56 Operating (loss) profit (1,252) 24,059 Finance income 5,160 5,676Finance cost (12,973) (14,971)Net finance cost (7,813) (9,295) Share of loss of associates and joint ventures (967) (1,197) (Loss) profit before income tax (10,032) 13,567 Income tax expense (1,676) (12,565) (Loss) profit for the period (11,708) 1,002 (Loss) profit attributable to: Shareholders of the Company (13,353) 163Non-controlling interests 1,645 839(Loss) profit for the period (11,708) 1,002 (Loss) earnings per share Basic (loss) earnings per share (0.41)0.01Diluted (loss) earnings per share (0.41)0.00
AMG Critical Materials N.V. Condensed Interim Consolidated Income Statement For the nine months ended September 30 In thousands of US dollars20242023 UnauditedUnauditedContinuing operations Revenue 1,078,473 1,258,626Cost of sales (929,717) (924,447)Gross profit 148,756 334,179 Selling, general and administrative expenses (137,234) (132,580) Other income, net 236 650Net other operating income 236 650 Operating profit 11,758 202,249 Finance income 15,127 14,843Finance cost (45,010) (38,037)Net finance cost (29,883) (23,194) Share of loss of associates and joint ventures (2,706) (2,989) (Loss) profit before income tax (20,831) 176,066 Income tax expense (15,504) (75,044) (Loss) profit for the period (36,335) 101,022 (Loss) profit attributable to: Shareholders of the Company (40,615) 99,147Non-controlling interests 4,280 1,875(Loss) Profit for the period (36,335) 101,022 (Loss) earnings per share Basic (loss) earnings per share (1.26) 3.08Diluted (loss) earnings per share (1.26) 3.04
AMG Critical Materials N.V. Condensed Interim Consolidated Statement of Financial Position In thousands of US dollarsSeptember 30, 2024 UnauditedDecember 31, 2023Assets Property, plant and equipment970,058921,178Goodwill and other intangible assets53,73540,313Derivative financial instruments