Earnings call transcript: AMG Q4 2024 earnings beat forecasts, stock dips

Published 27/02/2025, 17:56
 Earnings call transcript: AMG Q4 2024 earnings beat forecasts, stock dips

Affiliated Managers Group Inc . (NYSE:AMG) reported its fourth-quarter 2024 earnings on February 6, 2025, surpassing analyst expectations with an earnings per share (EPS) of $6.86 compared to the forecasted $6.02. Despite this earnings beat, the company’s revenue fell short of projections, coming in at $502.7 million against an anticipated $531.53 million. Following the earnings release, AMG’s stock experienced a pre-market decline of 2.09%, closing at $178.60 compared to the previous close of $182.42. According to InvestingPro analysis, AMG maintains a strong financial health score of 2.72 (rated as GOOD), with particularly robust cash flow and profitability metrics. The stock currently appears undervalued based on InvestingPro’s Fair Value analysis.

Key Takeaways

  • AMG’s Q4 2024 EPS of $6.86 exceeded expectations, but revenue missed forecasts.
  • The company achieved its highest quarterly EBITDA for the year.
  • AMG’s stock declined by 2.09% in pre-market trading despite the earnings beat.
  • The company revised its 2025 adjusted EBITDA outlook upwards to $150 million.
  • Significant expansion projects in lithium and vanadium are underway.

Company Performance

AMG reported strong performance in the fourth quarter of 2024, achieving its highest quarterly EBITDA of the year. The company managed to navigate challenging market conditions, with full-year EBITDA reaching $168 million, the highest since 2018. Despite the drop in lithium and vanadium prices by 23% and 65%, respectively, AMG maintained a solid competitive position as a low-cost producer in these segments.

Financial Highlights

  • Revenue: $502.7 million, below the forecast of $531.53 million.
  • Earnings per share: $6.86, exceeding the forecast of $6.02.
  • Full Year 2024 EBITDA: $168 million, the highest since 2018.
  • Net Debt: $468 million.
  • Total (EPA:TTEF) Liquidity: $494 million.

Earnings vs. Forecast

AMG’s EPS of $6.86 outperformed the forecast of $6.02 by approximately 13.95%, marking a significant earnings surprise. However, the revenue of $502.7 million represented a shortfall of about 5.4% from the expected $531.53 million. This mixed performance reflects challenges in revenue generation despite cost management successes.

Market Reaction

Following the earnings announcement, AMG’s stock price fell by 2.09% in pre-market trading, closing at $178.60. This decline occurred despite the EPS beat, likely due to the revenue miss and broader market trends. The stock remains within its 52-week range, with a high of $199.52 and a low of $147.13.

Outlook & Guidance

AMG has revised its 2025 adjusted EBITDA outlook upwards to a range of $130 million to $150 million. The company is preparing to invest in significant projects in the lithium and vanadium sectors, including a vanadium project in Saudi Arabia and a potential spodumene conversion plant in Brazil. AMG anticipates a turnaround in the lithium market by 2026.

Executive Commentary

CEO Dr. Hein Schimmelbusch remarked, "We delivered a strong EBITDA of $168 million for the full year in ’twenty four despite exceptionally low lithium and vanadium prices." Chief Corporate Development Officer Michael Connor highlighted the shift towards renewable energy and electric vehicles. COO Eric Jackson emphasized AMG’s commitment to being the lowest cost and most environmentally responsible producer.

Risks and Challenges

  • Fluctuating commodity prices, particularly for lithium and vanadium, pose a risk to revenue.
  • Potential supply chain disruptions could impact project timelines.
  • Economic conditions in key markets, such as China, may affect demand for AMG’s products.
  • Regulatory changes in the mining and metals industry could increase operational costs.

Q&A

During the earnings call, analysts inquired about the impact of the 45X tax credit, which has increased to $20 million annually. Executives also addressed the company’s focus on expanding domestic value chains and strategic project expansions in the lithium and vanadium sectors.

Full transcript - Affiliated Managers Group Inc (AMG) Q4 2024:

Conference Operator: Good day, everyone, and welcome to today’s AMG Q4 and Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session. 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 Michelle Fisher.

Please go ahead.

Michelle Fisher, Earnings Call Moderator, AMG: Welcome to AMG’s fourth quarter twenty twenty four earnings call. Joining me on this call are Doctor. Hein Schimmelbusch, the Chairman of the Management Board and Chief Executive Officer Mr. Jackson Dunkel, the Chief Financial Officer Mr. Eric Jackson, the Chief Operating Officer and Mr.

Michael Connor, the Chief Corporate Development Officer. AMG’s fourth quarter twenty twenty four earnings press release issued yesterday is on AMG’s website. Today’s call will begin with a review of the fourth quarter twenty twenty four business highlights by Doctor. Schimmelbusch, Mr. Connor will comment on strategy, Mr.

Dunkel will comment on AMG’s financial results and Mr. Jackson will discuss operations. At the completion of Mr. Jackson’s remarks, Doctor. Schimmelbusch will comment on outlook.

We will then open the line to take your questions. Before I pass the call to Doctor. Schimmelbusch, I would like to expressly refer you to our statements on forward looking statements and the meaning thereof as we have used at all previous occasions and we will use at this earnings call, and which explanatory statement has been published as part of our financial presentation and on our website, all in connection with this earnings call. I will now pass the floor to Doctor. Schimmelbusch, AMG’s Chairman of the Management Board and Chief Executive Officer.

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Thank you, Michelle. We delivered a strong EBITDA of $168,000,000 for the full year in ’twenty four despite exceptionally low lithium and vanadium prices. The lithium and vanadium prices dropped 6523% respectively. This is AMG’s this of 168 is AMG’s highest EBITDA apart from the 2018 peak in vanadium prices and the 2022 and 2023 peak in lithium pricing. AMG Technologies performance was exceptionally strong in 2024 with adjusted full year EBITDA of $68,000,000 more than double that of twenty three million dollars AMG Engineering secured a record breaking $380,000,000 order intake during 2024 and their order backlog stands at $374,000,000 at the end of twenty twenty four.

The results of the year ’twenty four illustrate the value of our portfolio where the downturn of key prices is partly compensated by strong performance by other portfolio constituents and in this case, particularly AMG Technologies. I will now hand it over to Mike to speak about our growth initiatives. Mike?

Mike Connor, Chief Corporate Development Officer, AMG: Thank you, Heinz.

Michael Connor, Chief Corporate Development Officer, AMG: Regarding our transformational growth projects, our new vanadium plant in Zanesville, Ohio has operated successfully this year. And the expansion of our lithium operation in Brazil is now complete, solidifying our position as one of the lowest cost lithium concentrate producers globally. Meanwhile, module one of our lithium hydroxide refinery in Bitterfeld, Germany is progressing through commissioning and ramp up as planned. Despite temporary challenges facing the lithium industry, we are confident in our current position and remain optimistic about the opportunities arising from the evolving market dynamics. The shift towards renewable energy and electric vehicles is becoming increasingly evident.

In 2024, the global EV market grew by more than 25% year over year with double digit growth in China, partially offset by slower growth in The U. S. And Europe. In 2025, this growth trend is expected to continue, driven by strong demand in China and Europe, fueled by EU CO2 emissions reduction targets. Additionally, the market for energy storage systems is experiencing rapid expansion, driven by the increasing demand for reliable renewable energy solutions, advancements in battery technologies and growing investments in grid stability.

We have successfully implemented transformational growth initiatives across our critical materials portfolio, continuing to operate as a low cost producer. Our diversified portfolio reduces the risk associated with market volatility, positioning us strategically to capitalize on the expected outcomes of the global energy transition. I will now pass the floor to Jackson Dunkel, AMD (NASDAQ:AMD)’s Chief Financial Officer. Jackson?

Jackson Dunkel, Chief Financial Officer, AMG: Thank you, Mike. I will be referring to the fourth quarter twenty twenty four investor presentation posted yesterday on our website. Starting on Page five of the presentation, I’d like to underscore Heinz’s comments about the strength of the EBITDA performance this quarter given the low lithium and vanadium prices. Despite these low prices, the rest of AMG’s portfolio demonstrated significant strength, delivering the highest quarterly EBITDA of 2024 in the fourth quarter.

: As you look at the comparison to Q4 twenty twenty three EBITDA, please keep

Jackson Dunkel, Chief Financial Officer, AMG: in mind that we enjoyed a $10,000,000 dividend from an equity investment last year. Excluding that amount, which shows 6% decrease in Q4 twenty twenty four EBITDA versus last year. On Page six, you can see the price and volume movements for our key products represented by ARROWS, which underscore our segmental results. On Page seven, you’ll see our return on capital and valuation metrics year over year. It’s important to note that we’ve invested over $650,000,000 over the last four years for our lithium and vinadium expansion projects, which has impacted the return on capital metrics.

AMG Lithium is shown on Page eight. On the top left, you can see that Q4 ’twenty four revenues decreased 35% versus the prior year. This decrease was driven mainly by the 44% decline in lithium market prices and was offset by a 13% increase in volume. Adjusted lithium EBITDA for the fourth quarter of twenty twenty four came in at $6,000,000 down 79% from Q4 of last year

: due

Jackson Dunkel, Chief Financial Officer, AMG: to the decline in lithium prices. AMG vanadium is shown on Page nine. Revenue for the quarter decreased 10% compared to Q4 ’twenty three due mainly to lower volumes of ferro vanadium, partially offset by increased sales prices and volumes in chrome metal. Q4 ’twenty four adjusted vanadium EBITDA of $31,000,000 increased 6% compared to Q4 ’twenty three. This was primarily driven by the higher profitability in CHROME in the current quarter as well as the ongoing benefit of the production credit known as 45x for domestic manufacturing of critical materials for which AMG Vanadium qualified based on the Inflation Reduction Act of 2022.

The IRS ruled that raw materials could be included for our process and this increased our annual benefit from Section 45X to approximately $20,000,000 per year, an increase of $10,000,000 versus the previous ruling. This annual benefit confirms that our vanadium production facilities are globally low cost and will continue to be profitable in low price environments. AMG Technologies is shown on Page 10. Q4 20 20 four revenue increased 32% versus Q4 twenty twenty three. This improvement was driven by higher sales prices of antimony and higher sales volumes of silicon, which is included in our sales figures, although it is excluded in EBITDA.

Adjusted EBITDA of $20,000,000 during the fourth quarter was 83% higher than the same period in 2023. The increase was primarily due to higher profitability in antimony and graphite. Page 11 of the presentation shows our main income statement items. The key change on the page is net finance costs, which was $13,000,000 in this quarter compared to a $2,000,000 net finance income last year. This shift is largely due to higher non cash intercompany foreign exchange gains in the prior period.

Page 12 of the presentation shows our cash flow metrics. The key item on this page is the working capital days, which declined to 10 on hand, driven by our extremely strong advanced payments coming from AMG Engineering. AMG ended the quarter with $468,000,000 of net debt. And as of 12/31/2024, we had $294,000,000 in unrestricted cash and $200,000,000 available on our revolving credit facility. The resulting $494,000,000 of total liquidity at the end of the year demonstrates our ability to fully fund all approved capital expansion projects.

And on that point, we continue to expect capital expenditures to be between $75,000,000 to $100,000,000 for 2025. That concludes my remarks.

Eric Jackson, Chief Operating Officer, AMG: Eric? Thank you, Jackson. Lithium and vanadium prices weakened quarter over quarter. However, due to our low cost position in both segments, AMG Lithium and AMG Vanadium both delivered positive EBITDA in the fourth quarter twenty twenty four. And AMG Technologies reported exceptional results, driven by our market leading position in our engineering business and very strong results in our diversified mineral operations.

Our Brazil lithium operation delivered more than 33,000 metric tons, CIF China, of lithium concentrate in the fourth quarter. The average realized sales price was $680 per metric tonne and the average cost of production was $290 per metric tonne, again, CIF China. The low cost of production for the quarter was driven by higher lithium concentrate production, the weaker Brazilian real versus the U. S. Dollar and ongoing high tantalum sales volumes.

Production consistently increased during the quarter as our lithium concentrate expansion moved up to full expanded capacity. During 2024, a total of 88,966 metric tons of lithium concentrates were sold, and the average realized sales price was $854 per metric tonne, SIF China. The average cost per tonne for the year was $458 per metric tonne, Ziff China, compared to $475 for 2023. Although we experienced quarterly volatility in our cost per ton, the annual figures represent our long term target. AMG Vanadium’s Zanesville and Cambridge spent catalyst processing facilities lead the industry in terms of cost structure and environmental performance.

Our vanadium results were, however, negatively impacted by ferrovanadium prices being lower by 23% quarter over quarter. Vanadium results were also negatively impacted by lower than normalized run rate volumes due to delivery timing and lower prices for our co product ferronickel molybdenum. It’s worth noting, however, that the relevant ferrovanadium index price has increased by more than 7% since year end. AMG Titanium’s master alloys production, mainly vanadium aluminum, was on a stable production level both in Q4 and during 2024 overall. Both of our plants, Newcastle in The United States and Nuremberg in Germany, are preparing to deliver higher volumes supporting the ramp ups at Boeing (NYSE:BA) and Airbus.

In our Technologies segment, AMG Engineering signed 77,000,000 in new orders during the quarter and $380,000,000 during 2024. The record high full year order intake was driven by very strong orders for remelting and induction furnaces. And as mentioned, we have an order backlog of $374,000,000 as of the end of the year. Our other operating units under the AMG Technologies umbrella, especially Antimony, also performed extremely well in the quarter and made a significant contribution to the $9,000,000 quarter over quarter increase in AMG Technologies EBITDA. The increase in electricity prices to between and per megawatt hour has forced AMG Silicon to cease operations in the first quarter of twenty twenty five.

Maintenance work is currently underway as we implement a temporary shutdown. We plan to begin operating one furnace again in the second quarter of the year. We anticipate maintaining a stable headcount in 2025 as our expansion projects in Germany and Brazil are at or near completion. Our overriding operational objectives are to be the lowest cost, highest quality and most environmentally responsible producer of all of our products. This enables us to deliver strong financial performance even in the trough of the commodity cycle as many of our direct competitors report significant losses.

I would now like to pass the floor to Doctor. Sollenkopfji.

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Thank you, Eric. I’m pleased to report that 2025 is off to a strong start. This particularly strong performance across our portfolio, including our antimony, chrome, tantalum, vanadium aluminum and engineering businesses. Therefore, we increased our adjusted EBITDA outlook from $130,000,000 or more in ’twenty five million dollars to $150,000,000 or more in ’twenty five. We are presently updating our five year forecast, which we traditionally issue at the annual general meeting.

Operator, we would now like to open the line for questions.

Conference Operator: Thank you, sir. At this time, we will open the question and answer session. And our first question comes from Regent Deniester of ING.

Regent Deniester, Analyst, ING: Yes. Good afternoon. Thanks for taking my question. My questions, I have a couple and we’ll ask them one by one, if that’s okay for you. The first one is on the 45x impact on vanadium’s EBITDA in Q4.

Can you quantify the absolute amount of this 45x credit and specify whether there is a retroactive element in this amount?

Jackson Dunkel, Chief Financial Officer, AMG: Yes. So as you know, we are very pleased that the IRS decided to include raw materials in the calculation of total cost. So, it is 10% of total costs. And I think we are guiding you to assume that that $20,000,000 of lower costs is going forward in our numbers.

Regent Deniester, Analyst, ING: Maybe additional question here. Is there so the increased benefits due to the IRS ruling, is that driving part of the guidance uplift from the 01/1930 to the 150 for 2025 or was that already taken into account in November?

Jackson Dunkel, Chief Financial Officer, AMG: That was already taken into account in November. We weren’t certain of the total quantum, but we knew it would approximately the $20,000,000 Understood.

Regent Deniester, Analyst, ING: Now maybe the underlying concern is that Fortivex gets revoked. What is your message here on that concern?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: I don’t think we want to comment on that. There are no indications at the moment that there is any change, but we are not in the government.

Regent Deniester, Analyst, ING: Understood. And maybe further on vanadium, can you a bit clarify to the market your market position in The U. S. Market? Is it still the case that you’re the sole U.

S. Based domestic producer in a market that is largely dependent on imports? And as such, are you hopeful that the recently announced tariffs are potentially a key benefit from your for your business going forward?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Yes, yes, all the way. We are the sole producer of ferro vanadium in The United States. United States is a net importer. So the rest of the ferro vanadium consumption in The United States is imported. And that gives us, of course, a very interesting position competitively.

And we don’t see any reason to believe that that will change. And if tariffs occur, they occur and will benefit us.

Regent Deniester, Analyst, ING: Understood. Do you believe that it’s already visible in the recent price recovery that you see in U. S. Markets and also decoupling from international markets for vanadium prices?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: We look very carefully, but we don’t see when you see visible.

Regent Deniester, Analyst, ING: Understood. Then maybe switching back to lithium and biter felt. Can you maybe give further color on the commissioning process? And also how the qualification process is evolving?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Yes. As stated, the qualification process is a very sophisticated timed, very clearly timed process with sending of larger and larger samples from interim production to be then feedbacked as regard to qualification. So it’s a process which is a traditional very disciplined sequence and we are in that sequence and we have no indication whatsoever that we will not reach our target as stated.

Regent Deniester, Analyst, ING: Understood. And commissioning is complete?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Well, the commission is a stepwise process. Each production step is commissioning in a certain sequence. And as I said, that’s all in plan. That’s in no deviation from plan.

Regent Deniester, Analyst, ING: Understood. What is your current message on to reassure investors on the profitability of Bitterfeld in the current low price environment?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Well, the profitability of the refinery is dependent on the spread, on the difference between the materials you input and the materials you output. Yes. And this spread is dependent on the prices of the various products on the various stages of production. And we see no difference to our plant factor right now. We planned on this.

The spread is fairly average. We are benefiting from the fact that we have food into the refinery, which is distressed feed from other refineries. And that is a low cost material, which might benefit us. But that’s a question of when those materials are available, but it’s a good upside for

Regent Deniester, Analyst, ING: Understood. That’s reassuring. Now final question, if I may. What price assumption has changed versus November that impacted 25% guidance, in particular to antimony? In November, you were not banking on the current prices to sustain.

Actually in Q1, we’ve seen further price increases for antimony. So is that partly driving the guidance upgrade or is it more a general strength of the business?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Yes, we are pleased to say that Antimony is more and more becoming our core business here. And we are very much in favor of this market and the business and the performance. And we of course have put this in consideration when we put the upgrade of our guidance. We have said it is however a more broad event which led to the guidance. We are also in good performance in other sectors in the other mineral businesses and in vanadium aluminum, for example, and in engineering.

So

Regent Deniester, Analyst, ING: it’s not one dimensional. Okay, understood. Thank you. That’s it for me and congratulations, Eric, on your retirement results.

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Thank you.

Conference Operator: Our next question comes from Frank Claassen, an investor.

Mike Connor, Chief Corporate Development Officer, AMG: Yes. Good afternoon and good morning to you. Frank Claassen of Degroof Petercam. Two questions. I’ll ask them one by one.

Just to be clear on your outlook, how much did you bake in for Bitterfeld? Is that no contribution at all or some contribution on EBITDA? Bitterfeld. Okay. That’s clear.

And then coming back on the vanadium business, there was indeed quite a strong performance in Q4 despite the low vanadium prices. You mentioned, of course, the Section forty eight forty five X. X. Is it fair to assume on the $20,000,000 annually that it was roughly $5,000,000 in Q4? Is that the way line of thinking?

Or was it more for bigger in Q4, the 45

Jackson Dunkel, Chief Financial Officer, AMG: Well, we guided to $10,000,000 in June and now we’re guiding to $20,000,000 So obviously, there was a rule change, which meant we captured more value. Going forward, but going forward, it is 5.25%, you’re correct.

Mike Connor, Chief Corporate Development Officer, AMG: Okay. I see. And you also mentioned the chrome business. Can you elaborate on this? Is this sustainable?

Or was it a one off, the chrome business?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: No. CHROME is a very steady business, very profitable and steady business. CHROME METAL is just to comment on the market. Core metal is geared towards the aerospace market, to the aerospace engine market as raw metal is an unsubstitutable element of high performance steel, which is the basic material for turbine blades as an example. And therefore,

Jackson Dunkel, Chief Financial Officer, AMG: our

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: highway, so to speak, sales highways from UK where we produce to The U. S, where the aerospace engine producers are cast at. These are very stable relationships. It’s very solid margins and has a big future because the aerospace industry is expanding and the high quality, the highest vacuum gas higher quality core metal is an increasing ingredient in the high performance steel industry. So that’s a growth.

It’s a moderate growth, but a steady growth. And we are planning to implement a production of core metal in The United States, which would be the first such production in The United States. Presently, The United States is 100% importer. And as we all know, domestic value chains are valuable around the world and we follow that trend. And it is very fortunate that our acquisition a few years ago of facilities in Pittsburgh have room for or have a very good infrastructure for that expansion, so that this is not a greenfield situation.

So it’s all systems on green in chrome metal.

Mike Connor, Chief Corporate Development Officer, AMG: Yes, that sounds good. Okay. Thank you very much.

Conference Operator: Our next question comes from Ed from Ravi, Citigroup (NYSE:C).

: Thank you. A few questions, so I’ll take them one by one as well. Firstly, can I just clarify that all your feedstock in terms of spent catalyst for your plants come domestically from The U? S? Or is there something that comes from Canada or other countries?

Or is it 100 local supply chain?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Well, of course, it’s a North American situation where we service practically all North American refineries when they have spent catalysts, and that includes Canada. And as you know, the sequence is that we take possession of such materials at our facility and we receive fees. So the material incoming is valued very low because it is fee oriented. So if your question indirectly relates to if you try to trap me into a statement about sanctions, then you’ve missed the point because that material the value of that material crossing the border is practically zero.

: Okay, that’s clear. Thank you.

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: And the question is for TILOR also. Yes.

: And again, just on a macro point as well, I mean, there’s been lots of metals that has been now put on the like the restricted list or license list in China, including Tantalum, obviously, then tungsten as well. Are you kind of well positioned to kind of take advantage of the price spikes on this? For tungsten, I suppose it’s an input for you, but Tantalum you mine, so it’s a bit

Eric Jackson, Chief Operating Officer, AMG: conflict from an outside of

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: In general, we are a critical materials company and we are based on an extensive literally one hundred year know how how to get those materials from complicated sources into our processing plant. That’s a general remark. We know how to get those materials. So we are relatively secure in our supplies, irrespective of what’s happening in political circumstances. So in Tungsten, we have no relation to Tungsten.

We have a relation to tungsten indirectly because we are very active in all the ingredients of high performance steel. And tungsten is an ingredient in high performance steel. But we don’t produce tungsten and we don’t we are not involved in the tungsten business. In Tantalum, we are a heavy producer of conflict free Tantalum. In Brazil.

We meet all available and thinkable environmental standards. And of course, you have been informed about the turbulences in Africa, in Congo and where the borders change and the Tantanum production is rather volatile. So we are a steady producer. We actually benefit from the strength of the tantalum market right now and we expand our production. You have seen that our production is our production in lithium is rising now at the plateau of 130,000.

But that Eric mentioned that we sold 33,000,000 in the last quarter. So times four, that’s more than so that’s all good. And now we expand the Tantalum extraction part of the process in Brazil. So we are increasingly an increasingly important part of the global Tantalum world. 100 of our production in Tantanum is sold to a joint venture partner located in Japan.

: Just on the financials. Firstly, the 1.1 times book to bill in the Technologies business, is that specifically for the old AMG Engineering kind of vacuum furnace business or does that include?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Yes, it’s 1.27.

: Okay, sorry.

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: 1.27. And it is for engineering, our global world leading furnace business, which is solidifying its world leadership continuously.

: Okay. So that’s an engineering number, not an overall technologies number. And then lastly, the $75,000,000 to $100,000,000 CapEx, that broadly takes you down to maintenance CapEx. That’s the kind of level you were in back in 2017 and 2018. If like there are price spikes in The U.

S. And it makes sense to or there are incentives to build new plants there. Would that kind of constrain you from kind of this whole CapEx guidance, would that kind of constrain you from that process or the capital expenditure? No. Lever

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: is much lower and it is below $50,000,000 significantly below $50,000,000 really. So it’s nothing to do with that. So we are now at the end of a CapEx intensive cycle, so to speak. However and we are spending our time in preparing new investments, especially in lithium and of course also in vanadium in Saudi Arabia, among other things. So we are spending our time in preparing those projects.

In Saudi Arabia, it’s now close to water dispensing. And therefore, the begin of heavy construction is now visible. So there we don’t wait. And there will be announcements on that matter as days go by.

Conference Operator: And our next question comes from Martin Dendreier of ABM AMRO.

Frank Claassen, Analyst, Degroof Petercam: Yes. Thank you, operator. Good morning and good afternoon, gentlemen. Thank you for taking my questions. I still have a few left.

The first one is for Erik on the Tantalum. Is it the case that you will get to that targeted nameplate capacity already in the first half or will it take

: a little bit longer

Frank Claassen, Analyst, Degroof Petercam: to get to that? What was it, 370,000 pounds? Question one.

Eric Jackson, Chief Operating Officer, AMG: You’re talking about our expansion of tantalum production. Is that what you’re questioning? Correct. Our expansion of tantalum production will be by the end of the year 2025. And that has actually always been our target.

Our Tantalum production today, however, I don’t think we give numbers out, but is substantially higher than we have because of improved recovery of part of the implementation of the expansion is better than it has historically been. We also noticed tantalum prices have improved. And as Heinz mentioned and you see in our net spodumene cost, it’s very, very beneficial to our Brazilian operation.

Frank Claassen, Analyst, Degroof Petercam: Yes. Thank you for that clarification. And then just coming back to that, the CHROME business, Forgive me, Doctor. Schimmobuch, but I think you mentioned it’s moving from The U. K.

To The U. S, where there’s the cluster of aerospace engine manufacturers. I wasn’t quite clear. If the Trump administration issues duties, import duties, wouldn’t that impact that business? Or have I misunderstood?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: Yes, several, I think several misunderstandings. First of all, we don’t move a plant from UK to we have a very beautiful plant in The UK. And in addition to that, we are building a facility in The United States. Secondly, I never heard about initiative to do an import duty for chrome. I’m always skeptical about import duties in general because of an economic background.

But a country which is 100% importing a particular material is unlikely to impose an import duty.

Frank Claassen, Analyst, Degroof Petercam: Fair. And then my third question, the strategic projects expense in 2024 amounted to $27,000,000 which is a significant amount but understandable. Would you be able to help us understand what level of strategic project expense we should take into account for 2025, maybe a range?

Jackson Dunkel, Chief Financial Officer, AMG: It’s a good question. The problem that we have in answering it is exactly when we have bitter felt commercial production. So, when that happens, we switch they switch from strategic project expense to cost of goods sold, right? So that will have a dramatic effect on the number since they form Bitterfeld forms the majority of that strategic project expense. So guidance is a little frankly, it’s a little hard.

It should go down, I will tell you, and it should go down significantly. When and how much, it’s hard for me to say.

Frank Claassen, Analyst, Degroof Petercam: Clear. I understand. And then my final question again for Doctor. Schimmelbus. Any update on the engineering and your thinking about the Brazilian conversion plant?

Any update on discussions or developments in Portugal or Zimbalch in Germany?

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: You want me to update you on those projects?

Frank Claassen, Analyst, Degroof Petercam: If there is an update to be given, if not, then that’s the answer to it.

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: No, no. We continue to prepare a conversion plant in Brazil to convert spodumene into technical trade chemicals for the feed of Germany, replacing the detour presently happening in form of conversion agreements with Chinese partners. That is a very active procedure and we also are very active in Portugal as a partner for Savanna, as a supporting partner of Savanna. That support is based on an equity participation on off date agreements and on project financing arrangements, which we do for the company. And in Synvert, we are in discussion with, of course, with management and seeking the optimal production route for the very prospective resource there.

We are not in a rush of spending money right now. We are focused because we want to have clarity about the turnaround of the lithium price like everybody else. So we are focused on perfecting our preparation for investment decisions in high end feasibility studies, high end, I mean, FEL3 kind of feasibility studies and getting ready to invest the turn becomes more solidly visible, which we believe will at least be in ’twenty six.

Frank Claassen, Analyst, Degroof Petercam: Clear. Clear. And then one final one for Jackson, if I may. On the Shell (LON:SHEL) and AMG project in Saudi Arabia, once that project gets FID’d, there may be an equity injection required by AMG. Is that going to be a material amount?

Should we take that is that included possibly in the CapEx guidance? How should we think about that?

Jackson Dunkel, Chief Financial Officer, AMG: It’s not a material amount because we’re one third of what we would hope to be 20% to 30% of the total CapEx. So, you go through those numbers and you come up with a relatively small investment by ourselves.

Frank Claassen, Analyst, Degroof Petercam: Got you. These were all my questions. Thank you, gentlemen.

Dr. Hein Schimmelbusch, Chairman of Management Board and CEO, AMG: I just want to add something here because to avoid misunderstandings. What we are preparing right now is an investment in a Phase one of our Saudi Arabian concept. Phase one is the translation of or the extraction of vanadium in form of V2O5 or vanadium oxide from the Jason gasification ash, which is one of the richest resource, vanadium resources in the world or maybe the richest resource in the world. And that is vanadium oxide. And the project guides into the production of vanadium electrolytes for batteries, for vanadium batteries and one of its batteries is already under construction in Saudi Arabia.

So it’s when Jackson is talking about the project, it is the first phase. And by the way, all of that is Phase one to other phases, which contemplating the recycling of spent catalysts at the later stage from refineries in Saudi Arabia, but we are presently busy in Phase one. One.

Conference Operator: And it appears that we have no further questions at this time. I will now turn the program back to our presenters for closing remarks.

Michelle Fisher, Earnings Call Moderator, AMG: Thank you everyone for joining the call. This concludes AMG’s fourth quarter twenty twenty four earnings call.

Conference Operator: Thank you. This does conclude today’s AMG Q4 and full year twenty twenty four earnings conference call. Thank you for your participation. You may disconnect at any time.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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