Industria
AMG Reports First Quarter 2024 Results: Lithium Projects on Schedule
Amsterdam, 7 May 2024 (Regulated Information) --- AMG Critical Materials N.V. (“AMG”, EURONEXT AMSTERDAM: “AMG”) reports first quarter 2024 revenue of $358 million, a 21% decrease versus the first quarter of 2023. First quarter 2024 adjusted EBITDA of $31 million decreased largely due to the decline in global metal prices compared to the prior period.
Dr. Heinz Schimmelbusch, Chairman of the Management Board and CEO, said, “The first quarter 2024 adjusted EBITDA of $31 million is in line with our guidance for the year. We are pleased to announce that our major lithium expansions continue on-schedule. Our Brazilian mine expansion and the ramp-up of our lithium conversion plant in Germany place us in an enviable position for when prices recover. The lithium market is volatile and will remain so for the foreseeable future. Long-term demand trends are encouraging, and additional supply prospects are confronting challenging constraints throughout the industry. Our low-cost position allows us to endure the current market conditions and prosper considerably at more normalized price levels.
Market prices for all products in our portfolio weakened during the first quarter of 2024 compared to the first quarter of 2023. The decrease in adjusted EBITDA compared to the first quarter of 2023 was predominantly driven by the global decline in lithium and vanadium prices. The average quarterly prices of lithium carbonate and ferrovanadium, the material prices that most significantly impact our financial results, decreased 76% and 33%, respectively, versus the average pricing in the first quarter of 2023.
Despite these market conditions, our lithium expansion strategy remains on track, and we have significant liquidity to support our growth opportunities. Including our $100 million term loan expansion, which occurred after the end of the first quarter, AMG has close to $600 million of total liquidity.”
Lithium
Vanadium
Technologies
Financial Highlights
Key Figures
Operational Review
AMG Lithium
AMG Lithium's revenue and gross profit decreased 68% and 94%, respectively, compared to the first quarter of 2023. These variances were largely driven by the decline in lithium market prices, since the first quarter of 2023, as well as the unabsorbed fixed costs incurred during construction of the spodumene expansion project in Brazil in the current quarter.
SG&A expenses of $11 million in the first quarter of 2024 were 26% 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 first quarter 2024 adjusted EBITDA decreased 94%, to $6 million, from $90 million in the first quarter of 2023, due to the decline in metal prices as noted above.
During the first quarter of 2024, a total of 15,652 dry metric tons (“dmt”) of lithium concentrates were sold, 24% lower than the 20,509 dmt in the first quarter of 2023 due to shipping variances in 2023. Volumes were negatively impacted by shipments that arrived in the fourth quarter of 2023 to the detriment of our first quarter 2024 volumes. The average realized sales price was $1,163/dmt CIF China for the quarter. The average cost per ton for the quarter was $616/dmt CIF China.
Our lithium concentrate plant is currently ramping to 130,000 tons and shipping volumes will be impacted in the second quarter. The cost per ton will rise relative to historical costs due to unabsorbed costs during the ramp-up, as well as lower relative tantalum sales volumes offsetting higher spodumene production. 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 that position.
AMG Vanadium
AMG Vanadium's revenue for the first quarter of 2024 decreased by 15%, to $165 million, due primarily to lower sales prices in vanadium and chrome metal partially offset by increased volumes in vanadium.
Gross profit in the first quarter of 2024 was $9 million lower compared to the same period in 2023, largely due to lower prices noted above.
SG&A expenses in the first quarter of 2024 of $14 million were 4% higher than in the first quarter of 2023 related to an increase in research and development costs during the current quarter.
The first quarter 2024 adjusted EBITDA decreased 29% compared to the same period in 2023, to $14 million, largely driven by the decline in metal prices noted above.
AMG Technologies
AMG Technologies' first quarter 2024 revenue increased by $26 million, or 21%, compared to the same period in 2023. This improvement was driven by strong revenues in our engineering unit, as well as higher sales volumes of silicon. Despite challenging overall market conditions for AMG, the AMG Technologies segment is delivering strong financial results, evidencing the strength of our portfolio to succeed in a varied set of market conditions.
SG&A expenses increased by 9% in the first quarter of 2024 compared to the same period in 2023, due to additional personnel at AMG Engineering and AMG LIVA corresponding to the increased order backlog and business development, respectively.
AMG Technologies' adjusted EBITDA was $11 million during the first quarter, 33% higher than in the first three months of 2023. The increase was primarily due to higher profitability in Engineering driven by remelting and induction furnace sales as well as the after sales and service division.
AMG Engineering signed $82 million in new orders during the first quarter of 2024, 8% higher than the same period in 2023, representing a 1.03x book to bill ratio. The first quarter 2024 order intake was driven by strong orders of remelting and turbine blade coating furnaces, as well as the spare parts and services division. Order backlog was $300 million as of March 31, 2024.
AMG Silicon began operating two of its four furnaces in March 2024. We plan to run two of four 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 $3 million in the first quarter of 2024, compared to $36 million in the first quarter of 2023. This variance was due to lower profitability in the current quarter relative to the same period in the prior year, marginally offset by non-cash deferred tax expenses related to the derecognition of certain tax assets. These tax assets were associated with interest expense carryforwards in our US business as well as loss carryforwards in our German and Dutch entities.
AMG paid taxes of $8 million in the first quarter of 2024, compared to tax payments of $21 million in the first quarter of 2023. The reduced cash payments in the current period were largely a result of the decrease in profitability year-over-year, offset by tax payments due in Brazil related to positive results in the fourth quarter of 2023.
Exceptional Items
AMG's first 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 first quarters of 2024 and 2023 are below:
Exceptional items included in gross profit
AMG had $3 million non-cash expense during the first quarter of 2024 mainly driven by Vanadium's inventory cost adjustment due to lower vanadium prices, and $2 million of costs associated with AMG Brazil's lithium concentrate expansion, which have been excluded from the calculation of adjusted EBITDA.
SG&A
AMG's first quarter 2024 SG&A expenses were $45 million compared to $40 million in the first quarter of 2023, with the increase largely due to higher personnel costs driven by increased hiring in our Lithium, Engineering, and LIVA businesses.
Liquidity
AMG continued to maintain a strong balance sheet and adequate sources of liquidity during the first quarter. As of March 31, 2024, the Company had $285 million in unrestricted cash and cash equivalents and $200 million available on its revolving credit facility. As such, AMG had $485 million of total liquidity as of March 31, 2024. These figures do not include the term loan expansion previously noted, as it occurred after the end of the quarter.
Net Finance Costs
AMG's first quarter 2024 net finance cost was $15 million compared to $7 million in the first quarter of 2023. This variance was largely driven by non-cash, intercompany foreign exchange losses of $7 million during the current quarter, compared to $2 million in foreign exchange gains in the prior period.
Outlook
Regarding 2024 outlook, low prices continue for both lithium and vanadium. Utilizing today's price levels, we reiterate that AMG's 2024 adjusted EBITDA will be approximately $130 million.
AMG's lithium projects are progressing on schedule and we expect that they will have a substantially positive impact as market conditions improve.
Regarding AMG's 5-year guidance, utilizing a variety of price and quantity assumptions with a lithium carbonate equivalent price of $25,000, we guide to an EBITDA of $500 million or more in five years or earlier.
(Loss) profit for the period to adjusted EBITDA reconciliation
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 CO in aerospace engines, as well as critical materials addressing CO reduction in a variety of other end use markets.
AMG's Lithium segment spans the lithium value chain, reducing the CO 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, Sri Lanka, and Mozambique, 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.
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