Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AMG Critical Materials NV (AMVMF, Financial) achieved $40 million in EBITDA for Q3 2024, continuing a steady growth trend.
- The company's engineering unit secured $131 million in order intake, with a record order backlog of $367 million as of September 30, 2024.
- AMG's Brazilian Lithium concentrate plant expansion is complete and ramping up, expected to reach full capacity by year-end.
- The aerospace sector's recovery and technological advancements are benefiting AMG's technology segment, leading to strong performance.
- AMG's diversified portfolio allows it to mitigate risks associated with market fluctuations, maintaining a low-cost production position.
Negative Points
- AMG reported a net loss of $13 million attributable to shareholders for Q3 2024, primarily due to an $18 million inventory cost adjustment in the lithium segment.
- Lithium and vanadium prices have weakened, impacting AMG's financial performance despite positive EBITDA.
- The commissioning and ramp-up of the lithium hydroxide refinery in Bitterfeld, Germany, face timing uncertainties, delaying full capacity expectations to the second half of 2025.
- AMG's vanadium segment experienced a 13% revenue decrease due to lower sales prices and volumes, with a 29% drop in adjusted EBITDA compared to Q3 2023.
- The company's guidance for 2025 EBITDA is cautious, reflecting uncertainties in lithium and vanadium markets and excluding potential contributions from the Bitterfeld refinery.
Q & A Highlights
Q: Can you give a sense of price sensitivity to earnings on antimony?
A: We have a stable antimony business with consistent free cash flow contributions. This year, due to significant rises in antimony prices, our EBITDA contribution more than doubled. However, this is expected to normalize in the future. It's a processing business, so we make a margin over what we buy it for, not a direct scale of price increase to profit.
Q: The engineering orders have increased substantially. Is this driven by the aerospace sector?
A: Yes, the increase is primarily driven by the aerospace sector, particularly the aerospace engine industry. The automotive sector plays a minor role, mainly in heat treatment services.
Q: Regarding the Bitterfeld expansion, is the step up from 20,000 tons to 100,000 tons on hold?
A: The expansion was never formally put on hold as no investment decision beyond the first 20,000 tons module was made. We are focused on completing the first module and will consider further expansion based on market demand.
Q: What has changed regarding the lithium hydroxide plant's commissioning and ramp-up process?
A: We are transitioning to the commissioning phase, which includes customer qualification and final ramp-up. We've adjusted the schedule to reach full capacity in the second half of 2025 due to typical start-up challenges and timing uncertainties.
Q: What are your current thoughts on the Brazilian conversion plant given the low lithium pricing environment?
A: We have advanced preparations for the Brazilian conversion plant, including feasibility studies and financing structures. However, we are not rushing into heavy investment as we optimize feasibility studies and consider market conditions.
Q: Will the Q4 performance for AMG Vanadium return to normal levels after maintenance outages?
A: Yes, we are running close to normal levels after planned maintenance. The Boeing strike affected titanium aluminide sales, but we expect to catch up.
Q: Can you clarify the rationale for not including Bitterfeld's contribution in the 2025 guidance?
A: The guidance excludes Bitterfeld's contribution due to the inventory write-downs from price drops. We won't see significant profitability from this inventory in 2025 despite the commissioning and ramp-up.
Q: What role do you see for AMG in the European battery supply chain given recent industry shifts?
A: We remain confident in our position as the only lithium refinery in Europe. Despite potential market corrections, our local presence offers advantages over imports, and we are prepared to adapt to market demands.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
