AMG Critical Materials N.V.

Yes. Good morning, everyone, and welcome to AMG's second quarter 2025 earnings call.

Joining me on this call is Dr. Heinz Schimmelbusch, the Chairman of the Board and Chief Executive Officer; Mr.

Jackson Dunckel, the Chief Financial Officer; and Mr. Michael Connor, the Chief Corporate Development Officer.

AMG's second quarter earnings press release issued yesterday is on AMG's website. Today's call will begin with a review of the second quarter 2025 business highlights by Dr.

Schimmelbusch. Mr.

Conner will comment on strategy and Mr. Dunckel will comment on AMG's financial results.

At the completion of Mr. Dunkel's remarks, Dr.

Schimmelbusch will comment on outlook. We will then open the line to take your questions.

Before I pass the call to Dr. Schimmelbusch, I would like to expressly refer you to our statement on forward-looking statements and the meaning thereof as we have used at all previous occasions and we use at this earnings call and which explanatory statement has been published as part of our financial presentation and on our website or in connection with this earnings call.

I will now pass the floor to Dr. Schimmelbusch, AMG's Chairman of the Management Board and Chief Executive Officer.

Dr. Schimmelbusch?

Thank you, Thomas. I'm pleased to report our highest quarterly adjusted EBITDA since Q4 '23.

Current quarter represents a 79% increase versus Q2 last year. AMG Technologies drove this exceptional [indiscernible] with an adjusted EBITDA of $53 million almost 3x the $18 million achieved by the segment in the same quarter last year.

The strength of our performance continues to demonstrate the value of our diversified critical materials portfolio with AMG Engineering's ongoing high order backlog and the high profitability from AMG Antimony [indiscernible] AMG Technologies result compared to last year. We are not experiencing any negative effects to date on the tariff situation and the analysis of our fourth quarter flows that we expect that this will continue.

Michael?

Thank you, Heinz. Good morning, everyone.

I'd like to provide an update on AMG's strategic positioning, highlighting key developments and progress made over the past quarter. As announced in April, we've taken an important step towards strengthening critical materials production in the United States by approving the expansion of our existing facilities in Newcastle, Pennsylvania to include the refining of chrome metal for high-purity applications.

Chrome is classified as a critical material by the United States government that domestic production remains extremely [indiscernible]. While this represents only a small step, AMG is actively contributing narrowing a vital supply gap and supporting the long-term resilience, downstream industries such as aerospace, energy and [indiscernible].

This initiative is fully aligned with U.S. industrial policy and reinforces our long-standing commitment to resilient regionally anchored supply chains.

More broadly, AMG is uniquely positioned across its portfolio to strengthen Western critical material supply chain as governments in the U.S., EU and Gulf states accelerate efforts to secure access to strategic raw materials. Our diversified platform provides distinct structural advantage.

We operate across upstream, midstream and refining and are able to offer localized, reliable solutions tailored to the demand of today's geopolitical and regulatory environments. This multiregional, multi-material footprint continues to be a key competitive differentiator.

The lithium market has shown early signs of stabilization following the steep decline earlier this year. Supply curves, finding inventories and steady demand growth and [indiscernible] in energy storage are beginning to rebalance the market with prices appearing strength heading into the second half of 2025.

In Europe, we are establishing a comprehensive lithium platform that integrates resource access and refining, creating a robust foundation to meet the accelerating needs in [indiscernible] electric vehicle and energy storage sectors. As you may recall in April, we signed an exclusive agreement with [Indiscernible] to establish 5 new concentrators, which will provide an additional long-term regional feedstock option for [indiscernible] refinery in Germany.

The current ramp-up remains on track. In addition, we recently participated in equity raises for [indiscernible] further supporting 2 of the region's most promising lithium mining developments.

These moves are squarely aligned with the EU's Critical Raw Materials Act and reinforces AMG's role in enabling regional self-sufficiency battery grade. Despite some short-term operational challenges, AMG's Brazilian mining operations remain a cornerstone of our global resource platform.

The assets continue to demonstrate strong long-term potential and the ongoing process improvements by an experienced and committed operational team. These operations are strategically important for our lithium [indiscernible] and are well positioned to deliver the same value and performance [indiscernible].

Meanwhile, Saudi Arabia continued to make substantial progress on our joint venture [indiscernible]. This initiative reflects AMG's global execution capability and its alignment with strategic national goals.

[indiscernible] is a powerful example of how we integrate technical expertise, local industrial policies for long-term economic diversification and resource transformation. I will now pass the floor to Jack Dunckel, AMG's Chief Financial Officer.

Jack?

Thank you, Mike. I'll be referring to the second quarter 2025 investor presentation posted yesterday on the website.

Starting on Page 5 of the presentation, I'd like to emphasize Heinz's comments about the strength of AMG's portfolio. AMG delivered the highest quarterly EBITDA since the fourth quarter of 2023 despite the continued low lithium and vanadium prices.

On Page 6, you can see the price and volume movements for our key products represented by arrows, which underscore our segmental results. As you'll hear in our divisional results, despite the number of volume arrows pointing down, we are, by and large, not experiencing a drop in demand across our business units.

AMG Lithium results are shown on Page 8. On the top left, you can see that Q2 ' 25 revenues decreased 3% versus the prior year.

This variance was driven mainly by both a decline in lithium prices as well as a decrease in lithium concentrate volumes, partially offset by tantalum sales price increases. In Brazil, we are currently running at an annualized production rate of 110,000 tonnes due to the failure 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 depressed volumes, we remain profitable.

Adjusted EBITDA for the segment in Q2 '25 increased 66% compared with the second quarter of last year, primarily due to the low cost per tonne in the current quarter. AMG Vanadium results are shown on Page 9.

Revenue for the quarter decreased by 4% compared to Q2 '24 due mainly to lower volumes of ferrovanadium and titanium alloys. The ferrovanadium decline was driven by production issues from our refinery suppliers and the titanium alloy decline was due to downstream aerospace production issues.

The lower volumes were partially offset by increased sales prices in ferrovanadium and chrome metal. Q2 '25 adjusted EBITDA of $15 million for our Vanadium division was 23% below Q2 of last year.

This decrease was primarily due to lower sales volumes. While EBITDA decreased compared to Q2 '24, AMG Vanadium does continue to benefit from Section 45X production credits.

AMG Vanadium is increasing its presence in Saudi Arabia and the Middle East. And in the context of this effort, we are successful in bidding for significant quantities of spent catalysts in the region.

Although this increase in working capital had a significant negative effect on our operating cash flow in the current quarter, this incremental inventory will help AMG Vanadium reduce the volatility of spent catalyst supply deliveries. The results for AMG Technologies are shown on Page 10.

The Q2 '25 revenue increased by $83 million or 53% versus Q2 '24. This improvement was driven by higher antimony sales prices in the current period.

Adjusted EBITDA of $53 million during Q2 was almost triple the same period last year. This increase was also due to higher profitability in AMG Antimony.

Page 11 of the presentation shows our main income statement items. The key change on this page is regarding our tax expense, which is $7 million in the current quarter compared to $11 million during Q2 '24.

The Q2 '25 expense was primarily driven by strong profitability in the quarter as well as tax expense from unabsorbed losses, but these were partially offset by Brazilian deferred tax benefit related to the appreciation of the Brazilian real. Page 12 of the presentation shows our cash flow metrics.

The key item on the page is our Q2 '25 return on capital employed of 14.9% in the current period, which was higher than in any quarter since Q4 '23. AMG ended the quarter with $502 million of net debt.

And as of June 30, we had $262 million of unrestricted cash and $200 million available on our revolving credit facility. The resulting $462 million of total liquidity at the end of the quarter demonstrates our ability to fully fund all approved capital expenditure projects.

We continue to expect capital expenditures to be in the $75 million to $100 million range for 2025. That concludes my remarks.

Dr. Schimmelbusch?

Thank you, Jackson. Adjusted EBITDA of $129 million represents a very strong first half of 2025 despite low lithium and vanadium prices.

Our AMG Technologies segment continues to perform particularly well, driven by a very high order backlog in AMG Engineering and by high profitability in AMG Antimony driven by that. From today’s perspective, we estimate the temporary tailwind from selling low-priced antimony inventories at more than [indiscernible] $23 million for the full year 2025.

Based on that and considering uncertain economic and market conditions globally, we increase our adjusted EBITDA outlook from $170 million, or more, in 2025 to $200 million, or more, in 2025. Operator, we would now like to open the line for questions.

I have 3 questions, please, and I'll take them one by one. My first question is with regards to the operational issue in AMG Lithium and the faulty part, if you will, in the expansion program.

Can you help us understand when you think you will have solved that issue so when we can go back to the 130,000 metric tonnes?

Yes. So it is a discrete equipment issue.

So a single piece of equipment, which we are in the process of fixing, and we do believe is eminently fixable. As to when we're going to be able to deliver that, you will see -- we will report that as soon as it happens.

We are producing presently 110,00 tonnes annualized that is in between the 90,000 tonnes of the previous capacity and 130,000 tonnes of the intended capacity, and we are closing that gap when this equipment issues are solved, which we are working on.

So I shouldn't assume anything more than 1 quarter of the required time to get back to normal. Is that the right way to think about it?

We are -- if we had a time frame, we would give it to you, and we're not giving it to you. So I'm afraid that's a little aggressive.

No, I mean it is [indiscernible] issue to do this in this quarter. I mean you would not expect us to expect particular equipment issues are being solved a little bit detail here.

Yes. In a running plant.

Yes, [indiscernible].

My second question is with regards to vanadium. Now that you have purchased inventory from the Middle East, do you think you are able to get to a stable vanadium content?

And in relation to that, given that new supply situation, would you be able to help us in understanding what the new EBITDA profitability level would be for Cambridge I and II given this change in the supply situation?

Well, our flow of catalysts internationally is increasing, not only in Middle East, extremely happy to know that our plant -- our twin plant in Ohio [indiscernible] the Middle East [indiscernible] of such biddings. This is being dealt into a regular big flow, they are also investing, updating the facility [indiscernible] which will be easing our [indiscernible] other than that we're also entering phase of additional spent catalyst capacity in our phase 2 of the Supercenter project in Saudi Arabia, so that is an added physical well positioned development.

We are very happy about that because it increases our value position development in the vanadium industry as a leading -- as the leading [indiscernible] for continuously. So I hope that answers your question.

Well, the line is quite bad. So I'm not sure that I caught everything, but I'll take that offline.

And my third question is on antimony. It's very helpful that you have quantified the one-off effect of selling the low-priced antimony.

But can you help us understand if we assume a steady price at this level, what the new normal EBITDA contribution would be for antimony given the higher price level? It used to be a $10 million EBITDA unit, roughly speaking.

What would be the new contribution, assuming steady prices?

But as you obviously will understand, this is a market which is very dynamic circumstances. And so to predict what the new operational earnings level is the strategy I would safely that is say that is significantly higher than traditional earnings levels.

Any way that you can help us quantify that a bit? Is it double?

Is it triple? Significantly higher, I understand, but that doesn't help us much really.

I'm sorry to say.

It's not prudent to do such predictions in commodity markets in such circumstances. It's simply not prudent.

A few questions from my side. I would start with the free cash flow, which was, let's say, strongly supported from a profit perspective, but burdened by outflows through the working capital.

Can we maybe expect a, let's say, normalization or improving situation on the working capital side in H2? And is there still a chance for you to reach free cash flow breakeven for FY '25?

The answer is in terms of normalization, I'm sensitive to saying that our quarterly operating cash flows and free cash flows won't continue to be volatile given the number of outflows and inflows that we experience. That being said, we have significantly higher cash flow in the second half, and we do have a chance to get to free cash flow breakeven for the full year.

Then on your chrome plant in the U.S., maybe a quick update on how you're progressing? And in that context, do you see, let's say, sufficient demand?

Or would there be any risk of, let's say, cannibalization versus your existing capacities?

So our chrome metal plant project in Pennsylvania, in the neighborhood of Pittsburgh is on plan, it's executed as expected. We therefore expect the [indiscernible] in '26.

And there is no cannibalization [indiscernible] sold out.

Sold out. Sounds good.

On the U.S., one more question. Obviously, we're seeing very significant efforts by the U.S.

government to improve independence in the area of critical materials. And you're obviously a player in that area.

Beyond chrome, is there any discussions going on with the U.S. government in terms of further investments or, let's say, how your company could help achieving a better level of independence in the area of critical materials?

The simple answer is yes. I mean [indiscernible].

And given the quick answer, I would ask one last question on Bitterfeld, which you commissioned in the second quarter. Have there been, let's say, recent discussions with potential clients or with clients where you have signed contracts already?

And what would you expect from today's perspective in terms of the ramp, the capacity utilization and when you might be able to achieve, let's say, utilization that would make this plant breakeven?

The design capacity is covered by the contracts. In order to reach the design capacity, there is a ramp-up schedule and we are on schedule.

This ramp-up schedule is called qualification process, that the qualification happens customer by customer under respective contracts with individual customer. That's what's happening, and we are on track.

It's [ Michael Baker ] for The Idea. A couple of questions from my side, please.

Firstly, due to this single piece of equipment which failed, you have now a nameplate capacity of 110. However, that should suggest more or less 27,500 per quarter.

However, the volume at this stage is still 50% of that level. I do believe that the first quarter, you mentioned that you did some maintenance.

But how should we see that in the upcoming quarters? What kind of volume do you expect to ship?

We prefer to answer in terms of the second half. And you should see in the second half, we will be at 110,000 tonnes of capacity, i.e., 55,000 tonnes in the second half.

That being said, it will likely be backwards weighted to the fourth quarter.

Secondly, you gave an explanation for the increase in inventories, which went up by some $50 million. Is that purely due to the spent catalyst bidding?

Or is it also partly due to lithium inventory?

No, it's partly due to vanadium as well as antimony because as we continue to buy inventory at higher prices, it has increased our inventory value.

So the bidding of the spent catalyst did not have an impact on your working capital?

No, we did, both. What I'm saying is it's both vanadium as well as antimony.

Sorry. I misunderstood you.

And what's the -- what will you -- will you be continue bidding for spent catalysts in quarters ahead?

Well, we will decide that as the biddings come up. But presently, we expect that the working capital associated with the successful biddings will work down over time.

And to get back to a previous question with a very modest answer from you with respect to the cooperation with the U.S. support on critical materials.

Could you elaborate a bit more on these talks?

So I think it's important to highlight that we have ongoing conversations in all the areas we operate. As you can see, U.S.

industrial policy as well as the EU Critical Materials Act, our operations in the Gulf states are all of strong interest to the government. And we have ongoing conversations across our portfolio of materials, across our geographic locations.

And that's not new, but obviously, there has been an increased focus in both government interest as far as supporting regulations across the globe. So I don't think we want to give any specific conversations, but we'll say that obviously, across our portfolio and across our geographies, we're seeing a lot of interest in support for our existing operations as well as potential expansion opportunities.

And lastly, your OpEx was also hit by a one-off executive retirement benefit expense, $3.3 million, which is in my view, quite a lot. Could you give some color to that as well?

Yes. That's related to retirements in our U.S.

offices.

Yes. Thank you very much for the interest in AMG.

We will see you on the road, and that concludes our call today. Thank you so much.