AMG Advanced Metallurgical Group N.V.

Good day, everyone, and welcome to today's AMG Q3 2025 earnings conference call. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. Please note this call is being recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Thomas Svoboda. Please go ahead, sir.

Yeah, thank you, Jen, and good afternoon, everyone. Welcome to IMG's third quarter 2025 earnings call. Joining me on this call are Dr. Heinz Schimmelbusch, the chairman of the management board and chief exec officer, Mr. Jackson Dunkel, the CFO, and Mike Connor, the Chief Corporate Development Officer. We published our third quarter 2025 earnings press release yesterday, along with a presentation for investors, both of which you can find on our website. They include our disclaimers about forward-looking data. Today's call will begin with a review of the third quarter 2025 business highlights, By Dr. Schimmelbusch, Mr. Conner will comment on strategy and Mr. Danko will comment on IMG's financial results. At the completion of Ms. Danko's remarks, Dr. Schimmelbusch will comment on outlook. We will then open the line to take your questions. I now pass the floor to Dr. Schimmelbusch, IMG's Chairman of the Management Board and Chief Executive Officer.

Thank you, Thomas. Our Q3 adjusted EBITDA of $64 million represents a 58% increase versus Q3 last year, driven by continued momentum in AMG technologies with AMG Engineering's order backlog as well as profitability in AMG Antimony. On top of that, we benefited from a $5 million compensation settlement at AMG Venedium for an equipment failure related to our gross investment in Saintsville. We remain focused on the elements within our control, executing operationally, strengthening our balance sheet and streamlining our portfolio. The divestment of our natural graphite business represents a key step in this strategy, and we expect the transaction to close later this year. While our two main products, lithium and vanadium, continue to face low pricing constraints for profitability and cash generation in the near term, AMG is actively advancing expansion projects across our portfolio. These initiatives are closely aligned with governmental efforts to onshore strategic materials production and strengthen domestic supply lines in the United States. Construction of our chromium metal plant in Newcastle, Pennsylvania is progressing on schedule with a startup targeted for Q2 26. completion, it will be the only chrome metal facility in the country, reinforcing AMG's role as a key enabler of national material security. We also expand our U.S. titanium alloys capacity at the same facility to keep up with our customers' increasing demand for aerospace applications. We are evaluating the establishment of a tantalum and niobium metal plant in the U.S., leveraging our long-standing experience in both metals in Brazil and our unique backward integration into engineering processing technology. This project, if executed, significantly enhances our position in the aerospace sector in North America and globally. Similarly, we are assessing the construction of an antimony trioxide production facility in the United States, the first of its kind in North America, with a final investment decision expected in the first half of 26. Leveraging AMG's unique positioning and technical expertise, we are confident in our ability to execute this project efficiently and with limited capital investment financing from ongoing operating cash flow now. So it generated from our ongoing cash flow. Together, this initiative, combined with the expected recovery of the lithium and vanadium markets down the road, positioned AMG for sustained long-term value creation. We look forward to providing further updates as these projects progress in the coming quarters. Let me now hand over this to Mike Connor. Mike?

Thank you, Nines. Good day, everyone. I will now provide an update on AMG's strategic position, highlighting key developments and progress made over the past quarter. In October, we signed a definitive agreement with Asbury Carbons for the sale of our graphite case. This transaction reflects our commitment to active portfolio management, and we will use the proceeds from this transaction to strengthen our balance sheet. and focus on our core growth businesses. AMG is uniquely positioned across its portfolio to strengthen Western critical materials supply chains. As governments in the Americas, EU, and GAAP states intensify efforts to secure access to strategic raw materials, our diversified platform stands out as both uniquely positioned and increasingly attractive to partners and policymakers alike. Control of critical materials today is often determined less by ownership of raw material resources and more by mastery, processing infrastructure, technology know-how, and the ability to scale refining capabilities. This processing know-how defines the modern geopolitical landscape of material supply. AMG's integrated approach of combining advanced processing technology and regionally distributed production directly addresses this challenge. Our multi-regional, multi-material footprint not only reduces supply vulnerability, but also positions AMG as a unique enabler of critical material independence for Western economies. In October, AMG Lithium signed an MOU with Beijing eSpring for the supply and offtake of battery-grade lithium hydroxide. Both companies' investments in Europe underline the joint commitment to a localized battery supply chain. As a first step, we are collaborating closely with eSpring to ensure a successful qualification of AMG's lithium plant while negotiating a binding offtake agreement. Our partnership with eSpring underscores that the European battery value chain is rapidly materializing. This tangible progress is an encouraging indicator of the region's growing capability to build a competitive and self-sustaining energy ecosystem. And after successful commissioning our BitterFoam lithium hydroxide refinery in May, and having produced material and specification, we are making progress on the ramp-up of the plant and the qualification progress with customers as planned. We are now producing multi-ton batches from raw materials of mixed origin according to specification. This marks a significant step on our way to commercial production. Finally, in Saudi Arabia, we remain on schedule with our Julie Ventures Supercenter project in the detailed engineering phase. The EPC contract has been awarded on a full notice, perceived basis, and pre-construction works are expected to begin very soon. This project exemplifies AMG's global execution capabilities and underscores how we combine deep technical expertise with alignment to local industrial policies. advancing long-term economic diversification and resource transformation. I will now pass the floor to Jackson Dunkel, AMG CFL. Jackson?

Thanks, Mike. I'll be referring to the third quarter 2025 investor presentation posted yesterday on the website. Page three shows our strategic announcements, including the sale of our graphite business. I'm pleased to report that the net cash proceeds for the sale will be approximately $55 million. Starting on page four of the presentation, I'd like to emphasize Heintz's comments about the strength of AMG's portfolio. AMG's Q3-25 adjusted EBITDA increased 58% since the same period last year, despite the continued low lithium and vanadium prices. On page five, you can see the price and volume movements for our key products represented by arrows, which underscore our segmental results. I will cover these volume and price movements in the individual segment comments. AMG lithium results are shown on page seven. In the top left, you can see that Q3 25 revenues decreased 33% versus the prior year, driven by an 8% reduction in lithium market prices, a 32% decrease in lithium concentrate sales volumes, and a 64% decrease in tantalum sales volumes caused by shipping delays that will be reversed in Q4. These impacts are partially offset by higher average tantalum sales prices versus Q3 of last year. In Brazil, we are currently running at an annualized production rate of 110,000 tons due to the continued effect of the failure during Q2-25 of one piece of equipment associated with our expansion project. As noted in yesterday's release, we are addressing this issue. Despite the decrease in lithium market prices and the depressed volumes, we remain profitable and low-cost due to our multi-product mining operation. B&G vanadium results are shown on page 8. Revenue for the quarter increased by 2% compared with Q3 24 due largely to the increased sales prices in ferrovanadium and chrome metal partially offset by lower volumes of ferrovanadium driven by production issues from our refinery suppliers. Q3 25 adjusted EBITDA of 19 million for our vanadium segment was 81% higher than Q3 of last year. This increase was primarily due to the higher sales prices as well as the Zanesville compensation payment of $5 million. The results for AMG Technologies as shown on page nine. The Q3 25 revenue increased by 92 million, or 59% versus Q3 24. This improvement was driven primarily by higher antimony sales prices and stronger sales volumes of turbine blade coating furnaces in the current period. Adjusted EBTA of 41 million, during Q3 was more than double the same period last year. This increase was due to the higher profitability in AMG Antimony and AMG Engineering. Page 10 of the presentation shows our main income statement items. The key change on this page is regarding our tax expense, which was $7 million in the current quarter compared to $2 million during Q3 24. The Q3 25 expense was primarily driven by strong profitability in the quarter, as well as tax expense from unabsorbed losses, partially offset by a Brazilian deferred tax benefit related to the appreciation of the Brazilian real. Page 11 of the presentation shows our cash flow metrics. Our Q3 25 return on capital employed was 14.4% compared to 7.4% in the same period last year. Our free cash flow generation remained negative in the third quarter. The inventory buildup for our production ramp-up in Bitterfeld and adverse shipping schedules in Tantalum have held back our free cash flow generation during the current quarter. We are optimistic about delivering positive free cash flow in the fourth quarter of this year. AMG ended the quarter with $544 million of net debt, and as of September 30th, 2025, we had $220 million in unrestricted cash and $199 million available on a revolving credit facility. The resulting $419 million of total liquidity at the end of the quarter demonstrates our ability to fully fund all approved capital expenditure projects. Also, in July, we executed a maturity extension on a $200 million revolving credit facility to preserve our liquidity and reduce financing risk. The revolver maturity date was extended from November 26 to August 2028, with terms similar to the original agreement. Our term loan maturity date of November 2028 remains unchanged. We continue to expect capital expenditures to be 75 to 100 million for 2025. And that concludes my remarks. Dr. Silvers.

Thank you, Jackson. Our AMG technology sequence continues to perform particularly well, driven by a very high order backlog in AMG engineering and high profitability in AMG antimony. We update our estimates. but a temporary tailwind from selling low-price anti-money inventories of more than 50 million to more than 70 million for the full year of 2025. We therefore increase our adjusted EBITDA outlook from 200 million or more to 220 million or more in 2025. Over the last few years, we have provided you with financial guidance for the following year at the time of the QC results. Based on your feedback, we have decided to push forward our guidance publication for the full year results in line with our peers. We trust that this change will lead to improved guidance accuracy. Operator, we would now like to open the line for discussions.

Thank you. If you would like to ask a question, please send a signal by pressing star and 1 on your telephone keypad, and you'll be placed into the queue in the order received. You may remove yourself from the queue at any time by pressing pound and 1. Once again, to ask a question, press star 1 on your phone now. And our first question will come from Sten DeMister with ING.

Yes, good morning. Thanks for taking my questions. I have three and lost them one by one, if that's okay. First one is on the guidance. The low end of your 220 million EBITDA guidance suggests an earnings slowdown in Q4 to a level of around 28 million, roughly half the level that you achieved in Q4, if you treat on an underlying basis. Is this driven by your usual conservatism? or do you actually see elements that would justify such a slowdown, such as the recent downtrend in anti-money prices or other elements? That's the first question I have.

Well, I bought a chance for being boring answering these questions referring to limited visibility. Now, in this particular case, we just experienced to give you an example, the announcement of export restrictions lifting by the Chinese government following the meeting with the United States on a presidential level. Then this announcement was followed by another announcement by China to point out that there will be procedures which then will be developed to channel, to use to use goods in a particular way. We don't know these procedures. There will be, as I have used, clarifications coming, and then the visibility will slowly reappear of what that all means. Given those things, and in particular the antimony example, we are living in rather corrupt patterns, and Therefore, we are sitting together as a management board and discussing solely such statements about guidance. And they are not optimistic or conservative. They are just based on data which has to be analyzed, and then we come to that conclusion. This is a very thorough process.

Understood. Understood. Thank you. Second question is on the graphite divestment. My perception was, or other divestments, my perception was in the past that several units within technologies that are not engineering could be considered as non-core. Is this still valid for AMG Antimony, or has the recently changed market dynamics changed your view on that front?

Very clearly, antimony was never a non-core business in AMG, but always a very contributive study and part of our portfolio. And based on technology leadership and our market position in the global trade of antimony. And that market position and that technology leadership has enabled us to materialize opportunities as they were related to the export restrictions. We were happy about that. It was a highly profitable period, and we continue to experience satisfactory results, which are distinctly better than what the average results were in the long past. We also want to point out that we just announced I just announced in my introduction a remark that we intend to build we intend to it's in an early stage because we are invisibility studies but that will be very quickly materializing that we have a petition to build an antimony dioxide plant in the United States it would be the only material plant of that kind no, the only plant of that kind and it would be It would be joining the other one and only plants which we have in the United States in critical materials as we build our position as partnering United States industries and government.

Understood. Thank you. Then the last question for now is on the cash flow. I believe the working capital further increased throughout the quarter. Can you maybe give some color on this increase? Is it structural or should we count on unwind in Q4?

It should unwind in Q4. So some of it was due to shipping delays, as we said. Some of it is due to increased working capital in our lithium and vanadium businesses. But you should see unwinding in Q4. As we often do, the fourth quarter is very strong from an operating cash flow basis.

Okay, understood. That's it for now. I'll put myself back in the queue. Thank you.

And we'll take our next question from Michael Kuhn with Deutsche Bank.

Good morning. Thanks for taking my questions. I'll also ask them one by one. Starting with your portfolio and recent discussions about raw material supplies, obviously rare earth is not a part of your portfolio as of now. Would that be something you would consider to add, and what would be, let's say, the timeline and, let's say, the implementation steps that would be needed for such an expansion?

Excellent. very interesting question because it was asked, we were asked as a broadly based, rarely early in the market, critical materials company running a fairly vast portfolio in critical materials. We consider ourselves to be in the group of industry leaders in this. So we were asked many times, so what about the RRs? And so the question is very relevant. Now, you might please take notice that we are in rare earths, not in resource, presently resources of rare earths, but in processing technology of rare earths. In the rare earth downstream flow sheet, you meet several applications material which involve metals and therefore are being treated as high purity is necessary for magnetics, for example, are treated in vacuum furnaces. Since ALD is the world leader in vacuum furnaces, our AMG Engineering star, we are deeply involved in the downstream industry of rare earths. since a very long time. Now, it is tempting, it was always tempting for us to combine our downstream know-how with a resource acquisition. As regard to resource acquisitions, we are particularly careful. We presently, as regard to resources, we operate a highly successful large-scale lithium tantalum mine in Brazil. So we are in resources. So in this streaming process of opportunities to add resource capabilities to our downstream know-how, we are involved in this. And I would say this is a very thorough process.

academic it's real but i would say stay tuned would be a too aggressive statement um so thank you but uh i guess let's say especially among the u.s government is such a high interest that um there could be scenarios imaginable where let's say some kind of of um support schemes could be enacted to let's say support such development

Yes, of course, and we are in contact with that world. You are finding us here. This conference call is happening in Pittsburgh, Pennsylvania, indicating just visiting one of our expansion sites in the United States, which is our focus right now in expanding our portfolio. and deepening our portfolio in line with what we see is necessary in the United States in on-shoring and in improving the domestic value chains. And that includes, of course, the IRS. And you could see a business model which combines magnetics capabilities, production capabilities, with a resource which is a tailor-advised resource. you know, adding such a thing and have a uniquely vertically integrated operation.

Very interesting. Thank you. Then one more question on portfolio consolidation. I think you were very clear in the context of anti-money. Is there any other part in the portfolio that might be up for disposal which you would regard rather as non-core?

Our portfolio is fairly elaborate, and it is not really totally visible. So there are many parts which are very difficult to explain and very special. But surprisingly, there are corners here as the company develops, and that's our focus is increasingly pointed to to products where we are clearly in the leadership group, non-core opportunities or opportunities to somehow stream that our portfolio occur. Now, the last thing we want to do is to say what it is, because that would be sort of, you know, when you think about negotiating strategies, that would be not optimal. I have... Mike, do you want to add to this?

No, I think that's pretty clear. We constantly evaluate the portfolio, and if we identify opportunities to dispose of assets that we would consider to be integral to the key trends that we're working towards, we will dispose if we can get the right price in the right space, for sure. So we constantly work on that and maintain our portfolio as aggressively as possible.

Understood. Thank you. And then last question on cash flow and potential expansion projects. You mentioned you signed an EPC contract in Saudi Arabia now for this joint venture. It would be interesting to know, let's say, what that would imply for the cash flow and for potential cash injections into that entity. And also regarding the potential U.S. expansions, Obviously, your chrome plant, you mentioned that repeatedly will have a pretty short payback period. For the other projects potentially underway, would those be similarly short? And, yeah, what kind of capex thinking should you plan, let's say, for the next two years generally?

So let me start with ACMC, which is our Saudi Arabian plant. As we've said in the past, we are focused on non-recourse project financing. We own one-third of that plant, and so our equity contribution would in turn be one-third. And you would expect to see 70% of it financed by debt. So if you put all those numbers through, you know, CapEx estimates, it comes to quite a small number, which will not strain our balance sheet in any shape or form. And as we have more information, we'll share that with you. But we're in the beginnings of the project financing for that. In terms of other projects, the number that we told everybody for Chrome was roughly $15 million. I will say that the incremental projects that we're considering are in that order of magnitude or less and have similar paybacks because of being located in the United States, which is chronically short of such critical materials. And therefore, we expect very strong paybacks as well. And then in terms of 26 and, you know, a longer look on capital expenditures, we'll cover that in February. But hopefully that gives you some guidance that we're not looking at big projects here or big expenditures.

That was very clear. Thank you very much.

And as a reminder, if you'd like to ask a question, you can signal by pressing star 1 on your touchtone phone. And we'll take our next question from Martin Vendriver with ABN.

Yes, thank you, operator, and thanks for taking my questions. I have a couple. I'll take them one by one as well. My first question is about testimony. Have you now fully utilized the low-price inventory that you had? or will there still be tailwinds in Q4 and possibly even into 2026?

No, we would expect that to have fully been utilized. So no further inventory tailwinds in 2026.

And then my second question is on lithium. And you mentioned in the press release that the plan is producing specification using raw materials from mixed origin. Can you elaborate a little bit on that mixed supply and what percentage of that raw material is off-spec material versus technical grade lithium hydroxides from China? And can this percentage of off-spec material go up? And equally important, what is the price difference of this off-spec material versus the supply from China? Just to get a better understanding of the impact.

The qualification process is not based on off-spec material. The qualification process is is based on virtual material in our inventory. So later on, strategies imply that we benefit from off-spec materials as the opportunities occur and our procurement network can identify such off-spec materials. Right now, this is not what we are doing. Right now, we are doing standard material, and we turn standard material into in-specification results, and that process is fairly advanced and as expected.

Any additional color on when that off-spec material could become part of the supply chain?

Right now. We want to modify the material. That means that the next step will be large-scale samples to be audited or after audits to be given to our customers, and then we will start production Understood.

Then moving on to vanadium and the supply issues, could you elaborate a little bit on when you assume a normalization of that supply? And once that supply normalizes, how should we think about profitability given that the mix will also include spent catalysts from the Middle East?

It's a very good question, Martin. Thank you. Our refinery supply customers continue to struggle, and we don't expect to see any resolution of that through Q1 slash starting in Q2. The incremental purchasing that we've done in the Middle East will be available also starting in Q2. So you should see significant volume improvements starting in Q2 and improving in Q3 and Q4.

That's clear. Thank you very much. And then, forgive me for asking, but I looked a little bit into the silicon operations and with regards to that portfolio management question before. If you add the adjustments to gross profit in the last eight quarters that has been you know, almost $10 million, which means that the MDA losses are slightly higher. What do you intend to do with the silicon operation, since it's not likely that energy prices in Europe will come down?

Our silicon metal operation is presently on partly shutdown. We're operating on a minimum level, and it is, for the last three years, has been suffering tremendously under the energy price situation in Germany. And by the way, all competition in other European countries to a much lesser extent also are suffering under those things. And as we experience consistent problems with German energy supply, it is not likely that we will shortly reappear as a silicon metal producer. So this is an ongoing, keeping it alive, life, you see, intensity care operation, and our options are very limited.

Just on the numbers, the gross profit adjustment you see is a negative. Right? So we are taking profitability out of our gross profit, i.e., the silicon plant is making money, albeit not very much, but it is making money.

Okay, good. And then my final question is just a bookkeeping question. The $5 million from the compensation settlement, has that been received or is it in receivables?

It has received.

Interesting. Okay. Thank you very much.

Thank you.

And our next question will come from Martin V. Beek with AMG.

Hi, it's Martin Beek of DID. A couple of questions from my side, maybe some clarification on the previous answer you mentioned, concerning those three CAPEX plans you plan to execute, and you mentioned for the chrome metal that was some 15 million. For the other two, was it also 15 million each or combined 15 million?

We're still in pre-feasibility states, so we're finalizing numbers at this point, but I think what Jackson was trying to give you is a sense of scale. So we believe that they're of that size of nature, but we don't have exact figures now as we're working through that. I mean, really, what we're trying to get across is that we're looking to capitalize on our existing footprint in the United States, leveraging our processing capabilities globally, to use those existing assets as a footprint for a platform for expansion into the United States into other materials using our key technologies. And we can do that very cost-effectively because of our experience gained from our operations in other locations.

Okay, thanks. And concerning the Supercenter in the Middle East, I think you will be starting to construct shortly. How long will this take? Will this take a year and a half, two years before completion?

It'll be about two years.

Okay. And then lastly, you have sold your graphite business and you will receive $55 million in net proceeds. Obviously, you still have a liability to Altera because you bought 40% of them and you will pay them back in cash or in shares. When will that happen or can you simply hold on to that amount for the next three years and then pay them?

Yes. It will happen, but we will not be able at this moment to comment on whether we pay in cash or in shares. Okay.

But we have an additional two and a half years, as you know.

Yeah. Okay. Thank you so much.

And once again, if you'd like to ask a question, please signal by pressing star 1 at this time. And we'll pause for just a moment to allow everyone an opportunity to signal. And it appears there are no further questions at this time. Mr. Swoboda, I will turn the conference back to you.

Thank you, Jen. Thank you, everyone, for this very dynamic conference call. I hope we were able to answer all your questions. We are looking forward to see some of you on our investor marketing activities in Europe and U.K. And please stay in touch. Thank you so much.

And this does conclude today's AMG E3 2025 Earnings Conference Call. Thank you for your participation. You may now disconnect.