Good day, everyone, and welcome to today's AMG Q2 2025 earnings conference call. At this time, all participants are in a listen-only mode. Later, you'll have an 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 one 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 Swoboda. Please go ahead, sir.
Yes. Good morning, everyone, and welcome to AMG 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 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. Connor will comment on strategy, and Mr. Dunckel will comment on AMG 's financial results. At the completion of Mr. Dunckel'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 with explanatory statements have 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, let's take a look.
I agree to report our high quarterly adjusted EBITDA rate since Q4 2023. Current quarter has descended by 79% compared to Q2 last year. AMG's equivalent is both the succession of the sites given just a few days of $53 million or $1,358 million achieved by the EBITDA in the same quarter last year. This strength of our performance continues to demonstrate the value of our diversified critical materials portfolio. This AMG Engineering's ongoing high order backlog and the high profitability from AMG Engineering are currently AMG's technologies the sites compared to last year. We are not experiencing any negative effects today on the challenges with the analysis of our hot water flow that we expect to see will continue.
Thanks, everyone. Good morning, everyone. Thank you for providing a look at AMG's strategic positioning and the key developments and progress made over the past month. As an outstanding role, we've taken an important step towards improving critical materials production in the United States. By funding the expansion of our existing facilities and new capital companies to include the refining and coal mill, I've heard from the credit provider in the critical materials by the United States government that the metric production remains reasonable. While this represents only a small step, AMG is actively contributing to garnering a budget supply gap and supporting a long-term resilience downstream industries such as aerospace, energy, and specialty gathering. We have committed to this fully aligned to keep our industrial policies and reinforcement of a long-standing commitment to resilient regional and anchored supply chains.
To the ground, AMG is uniquely positioned to foster a portfolio of strengthened Western critical materials supply chains. The power of the U.S., E.U, and all states tolerate efforts to secure access to strategic raw materials are diversified platforms to provide a distinct structural advantage. The operative costs upstream, midstream, and refinement are able to offer localized, reliable solutions tailored to the demands of today's geopolitical and regulatory environment. This multi-regional, multinational footprint continues to be a key competitive differentiator. The vision has shown early signs of stabilization amongst future declining growth in this field. The bypass of high-need inventories slowly beginning to rebound to life. To the growth, there is troubles in the comprehensive executive platform, delivering resource access and refinement, creating a robust foundation to meet the accelerating needs of the first-quarter stable and unrestored stocks.
You might recall, Neil, the kind of exclusive agreement we pulled out to establish a spiraling concentrated structure with a drive to additional on-time manual change stock options like the rest of the restorative clean rate and charge. It's part of our upcoming launch strategy. In addition, the region may participate in equity raids to the harvesting houses and Timberlake Lake, further supporting two of the regions most promising with the aligning costs. These moves are quarterly aligned with the E.U.'s critical raw material deck, a way to forces AMG growth and enabling regional cost efficiency without unforeseen risks. Despite the short-term operational challenge, AMG's resilient mining operations remain a strong strong stronghold of global resource planning. The architects continue to demonstrate strong long-term potential in the ongoing process improvements by ensuring and scaling operational needs.
These operations are strategically supported by existing pilots and a well-positioned delivery of the same dragons to the front and mobile platforms. Meanwhile, the funding raise continues to make substantial progress on our joint ventures in the center row. This initiative reflects AMG's global execution capability and is aligned with strategic national goals. The project is a powerful example of how we integrate technical expertise in local industrial policies toward long-term economic diversification and resource transformation. I will now pass the floor to Jackson Dunkel.
Thank you, Mike. I'll be reporting to the second quarter 2025 investor presentation posted yesterday on the website. Starting on page five 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 six, you can see the price and volume in this for our chief product 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 eight. On the top left, you can see that Q2 2025 revenues decreased 3% versus the prior year.
This variance is driven mainly by both a decline in lithium prices as well as a decrease in lithium concentrate volumes, partially offset by a tantalum in sales price increases. In Brazil, we are currently running at an annualized production rate of 110,000 tons due to the failure of one piece of equipment associated with our Spodumene project. As noted in yesterday's release, we are addressing this issue. Despite the decrease in lithium market prices and suppressed volumes, we remain profitable. Adjusted EBITDA for the segment in Q2 2025 increased 66% compared with the second quarter of last year, primarily due to the low cost per ton in the current quarter. AMG's remaining results are shown on page nine. Revenue for the quarter decreased by 4% compared to Q2 2024, due mainly to lower volumes of vanadium and titanium alloys.
The vanadium 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 vanadium and chrome metals. Q2 2025 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 2024, 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 were 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 delivery. The results for AMG Technologies are shown on page 10. The Q2 2025 revenue increased by $83 million, which is 53% versus Q2 2024. This improvement was driven by higher hands-on 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's hands-on. 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 2024.
The Q2 2025 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 benefits 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 2025 return on capital employed of 14.9% in the current period, which was higher than in any quarter since Q4 2023. AMG ended the quarter with $502 million of net debt, and as of June 30th, we had $263 million in unrestricted cash and $200 million available on a 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 to $100 million range for 2025. That concludes my remarks. Dr. Heiz?
As such, it seemed to be a permanent $29 million with the same advantage to all first class costs to 2035, price slowly to the negative plan. AMG's deployment sequence continues to perform particularly well, even by the very high quarter takeoff in AMG Engineering and very high opportunity to AMG Engineering. Driven by that, from today's perspective, the SCA, the temporary payment from selling low-priced engineering inventories, is more than $50 million for the two-year fixed price. Based on that, and considering uncertainty in economic environment conditions globally, the increase of our executive outlook from $107 million or more in 2025 to $200 million or more in 2025.
At this time, we'll open the question- and- answer session. If you would like to ask a question, please press star and one on your telephone keypads, 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 one. Once again, if you would like to ask a question, you press star and one on your phone now. Our first question comes from Martijn Den Drijver from ABN AMRO. Please go ahead, Martijn.
Yes, thank you, operator. Good morning, gentlemen. I have three 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 we can go back to the 130,000 metric tons?
It is a discrete equipment issue, 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 know, you will see we will report that as soon as it happens.
We are also looking for instances of under the 10,000 tons and realize that it's increased to $90,000 of the previous capacity and some of the $30,000 of the dependent capacity. We are noting that gap under the significant approach.
Great. Thank you. I shouldn't assume anything more than one quarter of the required time to get back to normal. Is that the right way to think about it?
If we had a time frame, we would give it to you, and we're not giving it to you. I'm afraid that's a little aggressive.
No, I mean, it is not a very operational thing. It is an issue to do the statistics to others. I mean, you will not expect us to speculate the people that are interested in something so a little bit detailed here.
Yeah, in a running plan.
Yeah.
Okay. I'll move on. 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 you a stable vanadium content? In relation to that, given that new supply situation, would you be able to get you to help us in understanding what the new EBITDA profitability level would be for payment one and two, given this change in the supply situation?
Our flow of purchase catalysts is actually decreasing, not only in the Middle East, but really to the north. Things are in the higher selling zone of China, not only that, but North America and the Philippines. Secondly, the United States and Asia-Pacific now. Such biddings seem to have been a bit slow. The safety of transit entering the space, the seasonal and weather capacities for space to compare the projected story area. That is a very safety-related position. If I was the executive about that, I can think about the better negotiation with the rest of the group as a leading and saving risk factor.
The line is quite bad, so I'm not sure that I caught everything. I'll take that offline. My third question is on antimony. It's very helpful that you have quantified the one-off effect of selling the low-priced antimony. 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?
As you obviously will understand, this is a market situation, very dynamic currency. To predict what the new operational antimony would be, I would safely say it would be significantly higher than the traditional antimony.
Any way that you can help us quantify that a bit? Is it double? Is it triple? Significantly higher, I understand, but that's a lot of butchering in certain cases.
It's not. Volume is in full track. The picture is to not divide it in tracks. It's simply not volume.
I understand. Those were my questions. Thank you very much.
Our next question comes from Michael Kuhn from Deutsche Bank. Please go ahead, Michael.
Good morning, gentlemen. Happy to join the call for the first time. 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 HQ? Is there still a chance for you to reach free cash flow break even for FY2025?
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 the chance to get free cash flow break even for the full year.
Excellent. Thank you for that. On your chrome plant in the U.S., maybe a quick update on how you're progressing. In that context, do you see, let's say, sufficient demand, or would there be any risk of, let's say, cannibalization where the store existing capacity?
Our most local plant purchase in Pennsylvania is a local purchase export. It's on plan. Therefore, I expect the ESG impact on the export price and ESG to be sold out.
Okay. Thank you for that. 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 investment or, let's say, how your company could help achieving a better level of independence in the area of critical materials?
I think the answer is yes. I mean, we have our right to know.
All right. Given the quick answer, I would ask one last question on Bitaphotes, which you commissioned in the second quarter. Has there been, let's say, recent discussions with potential clients or with clients where you have signed contracts already? 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 break even?
This is probably a practice which is covered by the contracts. As these clients have passed the ramp-up schedule, we are out of package. This ramp-up schedule is called qualification process. At the qualification, we have a customer per capita under the specific cost as individual capita. That's what's happening when we are out of pack.
Excellent. Thank you for that.
Once again, if you would like to ask a question, please press star and one on your phone now. We do have a question from Martin from IDEA . Please go ahead, Martin.
Good morning, gentlemen. It's Martin Baker for the IDEA. A couple of questions from my side. Due to this single piece of equipment which you have now, a nameplate capacity of 110. However, that should suggest more or less 27.5K 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. How should we see that in the upcoming quarter? What kind of volume do you expect to shift?
We'd prefer to answer in terms of the second half. You should see in the second half, we will be at 110,000 tons of capacity, i.e., 55,000 tons in the second half. That being said, it will likely be backwards weighted to the fourth quarter.
Okay. Thank you. Secondly, you give an explanation for the increase in the inventories, which went up by some $50 million. Is it purely due to the spent catalyst bidding, or is it also partially due to lithium inventory?
No, it's partly due to vanadium as well as antimony, because as we continue to buy in at very higher prices, it has increased our inventory value.
Did the bidding of these spent catalysts have an impact on your working capital?
No, it did, folks. What I'm saying is it both vanadium as well as antimony.
Okay. Great. Understood. Will you be continuing bidding for spent catalysts in quarters ahead?
If you would describe that, when asked if bidding starts, that will be the expectancy. The capital proceedings, the successful biddings will work out over time.
Okay. To get back to a previous question, there is a very important answer from you with respect to the cooperation with the U.S. headquarters on critical materials. Could you elaborate a bit more on these talks?
I think just from a highlight of we have ongoing conversations in all the areas we operate. As you can see, U.S. industrial policy, as well as the E.U. Critical Materials Act, our operations in the Gulf States are all of strong interest to the government. We have ongoing conversations across our portfolio of materials, across our geographical cases. That's not new, but obviously, there has been an increased focus in all government interests as far as supporting regulations across the globe. I wouldn't even want to give any specific conversations. I will say that drawing through across our portfolio and across our geographies, we're seeing a lot of interest in support for our bidding operations as well as potential expansion opportunities.
All right. Thank you. Lastly, your OpEx was also hit by a one-off executive retirement benefits expense, $3.3 million, which is, in my view, quite a loss. Could you give me a call to that as well?
Yeah, that's related to retirements in our U.S. offices.
Okay, thank you very much.
At this time, there are no further questions. I'll turn the call back over to Thomas to close out the call.
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.
This does conclude today's AMG Q2 2025 earnings conference call. Thank you for your participation. You may now disconnect.
The host has ended this call. Goodbye.