AMG Critical Materials N.V. ($AMG)

Good morning, everyone, and welcome to today's AMG First Quarter 2026 Earnings Conference Call. [Operator Instructions] 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.

Yes. Good day, everyone, and welcome to our first quarter 2026 earnings call. As usual, joining me on this call is the entire AMG Management Board, namely Dr. Heinz Schimmelbusch, the Chairman of the Management Board and Chief Executive Officer; Mr. Jackson Dunckel, the Chief Financial Officer; and Mr. Michael Connor, the Chief Corporate Development Officer. We published our first quarter 2026 earnings press release yesterday, along with the presentation for investors, both of which you can find on our website. They include our disclaimers about forward-looking statements. Today's call will begin with a review of the first quarter 2026 business by 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 open the line to take your questions, thereafter. 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. Ladies and gentlemen, our focus on a broad portfolio of critical materials and technologies for the energy transition is increasingly paying off. In Q1, we achieved an adjusted EBITDA of $44 million, a 2% improvement compared to $43 million in Q4 '25. This is a better than expected initially driven by the consolidation of AURA beginning January 1, 2026. Beyond circular molybdenum, AURA brought recycled tungsten into our critical materials portfolio and the tungsten price performance helped their results. On April 9, we increased our capital by 10%, successfully placing shares at EUR 34 per share. The capital increase was oversubscribed 4x. The proceeds of $127 million will be used to finance expansions into lithium, high-purity molybdenum and vanadium. These projects have low capital requirement, short implementation times and quick payback. We are laying the groundwork to play a key role in achieving energy and Critical Materials sovereignty in Europe and the U.S. The capital increase makes sure that we can implement the earlier mentioned projects in any given geopolitical environment. I will now hand over to Mike Connor. Mike?

Thank you, Heinz. Good morning, everyone. In the first quarter, our markets have remained resilient despite the conflict in the Middle East. While we may see some limited impact from higher energy costs, particularly in Europe and potential volatility in vanadium feedstock later in the year, the broader effect has been to reinforce the key structural trends already underway, electrification, energy security, supply chain localization and recycling. AMG is uniquely positioned to capitalize on these trends, which remain central to our strategy, and we will continue to aggressively pursue growth opportunities. Pricing across many of our key materials, including lithium, tantalum and vanadium, improved during the quarter. These gains are supported by structural tailwinds from global trends, underpinning a more resilient and constructive pricing environment over the longer term. In Lithium, Brazil delivered production in line with guidance, and we entered the second quarter -- as we entered the second quarter. Higher realized prices and volumes are expected to drive meaningful step-up in profitability. At Bitterfeld, we are ramping on plan, consistently producing battery-grade lithium hydroxide within specification and generating initial sales and gross profit and early validation as we move toward full commercial production. We are also advancing a carbonate to hydroxide conversion plant to process additional recycled feedstock, improving our cost efficiency and flexibility, supported by a German government grant as previously announced. In vanadium, fundamentals remain supported by steel demand and growing interest in grid-scale energy storage, particularly for long-duration applications. Our recycling and upgrading capabilities position us as a differentiated and sustainable supplier. Strategically, we continue to expand our global footprint. In the Kingdom of Saudi Arabia, our Supercenter project with Shell is progressing on schedule with engineering complete and key equipment deliveries planned for later this year, positioning us to play a central role in the Kingdom's industrial and energy transition strategy. In parallel, AMG's LIVA hybrid energy storage system deployment for Aramco further supports the development of an integrated vanadium value chain in the region. In the United States, we are opening our chrome metal facility in Newcastle, Pennsylvania, creating domestic production of material designated as critical for aerospace, defense and energy applications. The AURA acquisition performed ahead of expectations in the first quarter, driven by strong performance in tungsten markets. This early outperformance highlights the quality and resilience of the business and reinforces the strategic rationale for the acquisition. In addition, AURA provides a strong platform for our expansion into high-purity molybdenum, where we see clear opportunities to leverage our existing recycling and processing expertise to drive further growth and value creation over time. During the quarter, we also strengthened our balance sheet through an equity raise and now expect to close the graphite divestiture in the second quarter, sharpening our focus on core energy transition materials. Overall, the first quarter reflected solid execution and building momentum. We entered the second quarter with improving market conditions, expanding capacity, a clear strategic vision and continued focus on disciplined execution and long-term value creation. I will now pass the floor to Jackson Dunckel. Jackson?

Thank you, Mike. Starting on Page 4 of the presentation, you can see that Q1 '26 adjusted EBITDA decreased 24% versus the same period last year. This is primarily due to the exceptionally strong profitability from AMG Antimony in Q1 of last year. On the lower left, you can see our net income attributable to shareholders of $12 million during Q1 '26 was more than double the $5 million in the first 3 months of last year, aided by a write-up of our lithium inventories. On Page 5, you can see the price and volume movements for our key products represented by arrows, which underscore our segmental results. I will cover these price and volume movements for the individual segment comments. AMG Lithium results are shown on Page 7. On the top left, you can see that Q1 '26 revenues increased 89% versus the prior year, driven by the start-up of the Bitterfeld plant, which sold unqualified battery-grade lithium hydroxide as well as higher spodumene volumes and improving lithium and tantalum sales prices. Q1 '26 adjusted EBITDA was $4 million compared to $5 million in Q1 last year. Despite strong production in the current period, sales were impacted by shipping vessel availability and will be realized in the second quarter. Q1 '25 was also impacted by nonrecurring costs related to the start-up of our spodumene capacity expansion, which were added back to EBITDA. AMG Vanadium results are shown on Page 8. Revenue for the quarter increased by 18% compared to Q1 '25, due largely to increased volumes of chrome metal and ferrovanadium as well as higher sales prices in ferrovanadium. Q1 '26 adjusted EBITDA of $21 million for our Vanadium segment was 60% higher than the same period in 2025. This is primarily due to the increased volumes driven by improved spent catalyst availability from our North American suppliers and the higher sales prices in ferrovanadium, which I just noted. The results for AMG Technologies are shown on Page 9. The Q1 '26 revenue of $205 million was in line with the $202 million in the same period last year due to significantly higher sales at AMG Engineering, which were offset by lower sales at AMG Antimony. Adjusted EBITDA during Q1 '26 was $19 million compared to the $39 million in Q1 '25. The segment's adjusted EBITDA in the prior period was particularly strong due to high profitability in AMG Antimony and this quarter-on-quarter drop was offset in Q1 '26 by very strong results from 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 $4 million for Q1 '26, up from $1 million in the same period last year. The increase is largely attributable to an improvement in operating results, partially offset by a deferred tax benefit in Brazil, which resulted from the appreciation of the Brazilian real. Page 11 of the presentation shows our cash flow metrics. The drop in operating cash flow was driven by increased investment into working capital as both volumes and prices increased in all 3 of our divisions. We ended the quarter with $581 million of net debt. And as of March 31, 2026, we had $203 million in cash and cash equivalents and $200 million available on our revolving credit facility. The resulting $403 million of our total liquidity demonstrates that our balance sheet is in good shape. And crucially, we have no significant near-term debt maturities. $127 million in proceeds from last month's placement of 3.3 million newly issued ordinary shares will further strengthen our balance sheet. That concludes my remarks. Dr. Schimmelbusch?

Thank you, Jackson. Prices for many of our materials strengthened in early 2026, and the backlog in our Engineering business continues at historically high levels. However, as we noted last quarter, given the lag of the price effect on our profitability, we expect this tailwind to support our adjusted EBITDA in Q2 '26. We expect Q2 '26 to approach the level achieved in Q2 '25, aided by tantalum prices peaking and the very favorable phasing of shipments in AMG Lithium. Despite significantly increased geopolitical headwinds and hence, reduced visibility, we reiterate our adjusted EBITDA range for $210 million to $240 million for the full year '26. Operator, we would now open the line for questions.

[Operator Instructions] Our first question comes from Stijn Demeester with ING.

I have a couple of them, and I will ask them one by one, if that's okay. The first one is on AMG Lithium. Can you help us with the amount of spodumene volumes that were shifted from Q1 to Q2 in Brazil due to the shipping delays? Can you also update us on the operational issues in Libra and the targeted capacity for the full year as well as with the ramp-up over the coming quarters? That's the first question.

Yes. So we had about 12,000 tons that were on the order that we normally would have expected to arrive in the first quarter, which are now arriving in the second quarter. So obviously, that's a big volume shift from Q1 to Q2. So that will impact the profitability. And we tried to -- one of the reasons we gave the additional guidance on the second quarter earnings relative to the first quarter. In regards to the expansion, the expansion is on track for what we guided to previously, which is that we expect to be able to produce at 130,000 ton capacity by the end of the year.

Okay. Understood. If you missed our 12,000 tons, it means that today, you're already at around 100,000 to 110,000 ton capacity again.

Correct.

Okay. The next question is on Bitterfeld. In the press release, you mentioned revenue from unqualified battery-grade lithium hydroxide. It seems to have had a revenue contribution, but not an EBITDA contribution, is that correct?

Yes. And you can see in the EBITDA bridge that there was a positive impact regarding the impact of lithium prices on those sales. So you can see the number there, but we did not include that with our EBITDA. So it was a positive write-up of inventory due to improvement in lithium prices related to LCMs that we took last year for Bitterfeld due to the drop in prices in prior year.

But Stijn, accounting dictates that we include the sales in our results, but we have excluded the EBITDA, which we're allowed to do.

Yes. But the $21 million write-up is not entirely due to these volumes.

No, we sold about 20 -- it's unfortunately the exact same number. We sold about $21 million of revenue from Bitterfeld in Q1.

Okay. Understood. And then related to Bitterfeld, yes, can you update us on the several qualification processes that are currently ongoing? Because in most of your businesses, you have a guaranteed offtaker, for example, Glencore in vanadium, et cetera. But this doesn't seem the case for Bitterfeld. So how certain are you that you can sell those volumes, I assume in the second half when the facility ramps up.

We are qualifying with several customers. We're highly confident in our ability to sell the material at both -- the qualification will occur at different times for different customers, but we're continuing to move those along on schedule and are confident in our ability to place the material.

Okay. And any sort of quantum that you can commit to for the second half since you're already selling right now?

But it's a nature of the qualification process, but that shouldn't be done.

Yes. I mean we'll be producing in-spec material at full capacity by the end of the year.

Okay. Understood. Then last one from my end, and I'll put myself in the queue because I have some others. But on vanadium, do you see an impact of the conflict on the supply spend catalysts? And if so, is there any adverse impact on second half EBITDA? Or are you sufficiently supplied from the North America suppliers today.

Yes. I mean a majority of our feed comes from North America. We do have a certain amount of supply in the Middle East and other places internationally. Shipping globally, obviously, has been impacted. We do not see an impact right now on second quarter earnings. We're running at full capacity today. We can't guarantee that there won't be interruptions later in the year. But as I said, a majority of our feed does come from North America. So we're well positioned in that regard.

Okay. It means that the supply issues in North America are largely resolved today.

Yes.

Your next question comes from Michael Kuhn with Deutsche Bank.

I'll also ask them one by one. Starting with cash generation. I understood that there were some shipping delays in the quarter and obviously, working capital buildup still, I think '26 was meant to be a year of better cash generation. Does that still hold true? And when would you expect, let's say, working capital effects to normalize and then ideally cash generation to improve?

Yes. So Q1 is always seasonally low for cash generation. It was exacerbated by the very high volumes we produced across all 3 of our divisions and the increasing prices. So you can see in our cash flow statement that working capital cost us roughly $68 million in the first quarter. We would expect that to largely be resolved given that prices have flattened now and volumes have ramped such that we should be generating cash Q2, Q3 with a much larger percentage in Q4.

That's very clear. Then on engineering, you mentioned the order intake and the book-to-bill in the release. If I do the math, I end up with close to $90 million of sales in the first quarter, which I think is unusually high and above the run rate we have seen over recent years. Is that a sustainable level? Or should we expect some kind of normalization over upcoming quarters?

That is more or less a sustainable level. I mean this is the result of a full backlog that we're working through in 2026.

Okay, sustainable in '26, but not necessarily in the years beyond? Or is the, let's say, the client demand continuously high also in terms of, let's say, orders that you would expect?

Our inbound order intake has been extremely strong.

And our -- the basic fundamentals of the engineering business is exceptionally strong compared to some periods in the past. And it's an aerospace-related upswing, and we believe that to stay, obviously.

So we would consider today's operating results abnormal from a long-term operating perspective.

Okay. Understood. And maybe one more on antimony, although it has come down in terms of result contribution, I think it's still a bigger business than it used to be. I think you were always trying to get a decent premium versus, let's say, the Chinese prices. How is the situation evolving here? How do those premiums look like? And what should we expect in terms of results contribution from that business going forward?

It is very difficult to predict. However, we believe that the spike -- after the reversal of the spike has settled on a higher margin level related to additional demand drivers for antimony in the solar industry.

And that can be seen in a couple of ways, Michael. The price outside of China -- inside China have stabilized and equalized. So I think that's an important factor to look at when thinking about shipping restrictions, et cetera. And they've stabilized at a higher price because of the increased demand domestically in China related to new applications. So we believe that is a sustainable trend.

[Operator Instructions] Our next question comes from Frank Claassen with Degroof Petercam.

Most of my questions have already been asked, but one question left. Maybe on the equity issue you've done. Should we read into that, that for next year, CapEx levels will go up again? So maybe -- yes, could you elaborate what are the biggest pockets you think you're going to spend, let's say, the raised money on? Could you elaborate on that?

Yes, broadly, CapEx will increase in 2027. And again, the 3 main projects will be our lithium carbonate project, our high-purity molybdenum project and our -- and of course, SARBV. However, SARBV will likely be front-loaded in 2026. So that's included in the $70 million to $90 million estimate that we have. So hopefully, that helps you. But CapEx will be slightly higher in 2027 than it was in '26.

I think one important note there is that we will have continued strength in operating cash flows as a result of the other investments that we've made coming online to help fund those investments in addition to the equity raise. So we feel pretty comfortable with the relative cash flow generation overall of the company moving forward.

Your next question comes from Usama Tariq with ABN AMRO.

I have a few set of questions. So I will go one by one. Firstly, on AMG Vanadium. So the sales and EBITDA of vanadium was solid despite some disruption from the Middle East. So can we assume going forward that the vanadium is back to normal operation and can fully benefit from the increase in ferrovanadium prices going forward? So that would be my first question. It's more generalistic in nature, I would say.

Yes. The answer, I think we covered a little bit earlier, but to expand on it, yes, we're running at full capacity right now. We will see the benefits of the higher pricing in the second quarter. The pricing has tailed off a little bit towards the last few weeks. So that will impact later quarters in the year. But we've given some guidance in the second quarter that takes into account those full volumes and higher pricing.

And I'll move to the second question, if I may, that would be on lithium. So you did mention that some of the unqualified lithium hydroxide has been sold, assuming for instance for the traders. Can you help us understand the impact of such sales in Q1? And secondly, do you expect this to occur into the future given the qualification is not yet completed?

Yes. So I think Jackson quoted $20 million approximately for revenues in the first quarter for Bitterfeld. That number will continue to increase throughout the year as production reaches full commercial level.

Okay. There will be just one more question, if I may, then I'll go back into the queue, and that will be on technologies. So profitability was higher than expected. If you analyze the Q1 and deduct the $30 million in EBITDA from engineering, it suggests that the Antimony business is despite the 30% decline in price, generating annualized EBITDA of $45 million. Do I understand correctly from the previous questions that do you see this as more of a normal going forward? Or do you still think this is a little bit more optimistic?

Well, I think as Mike said, we expect antimony profitability to remain where it is. In terms of how you got to your numbers, I think we'd like to take that offline with you.

Your next question is a follow-up from Stijn Demeester with ING.

Sorry, I was on mute. Apologies. My follow-up is on AURA. Can you help us understand the quantum of the contribution of this acquisition in the Q1 EBITDA? And what kind of EBITDA should we be looking at for the full year from this a bit of guidance maybe on capacities in molybdenum and tungsten would help.

Yes. The AURA acquisition, the big plus and benefit of it is as a platform for further expansion. As we described previously, it's going to be the platform for high-purity molybdenum production in the future, and that's an investment for us over the coming months. The contributions today are not hugely significant, but they did have a decent impact on the first quarter, but relatively small single digits.

And what kind of volumes are you currently generating?

Yes. We don't disclose the volumes. It's a little complex as far as the production, but it's a small level today.

Your next question is a follow-up from Usama Tariq with ABN AMRO.

Just 1 or 2 follow-up questions. So you mentioned that you've received R&D tax credits in Germany. I'm sorry if I missed it out, would you be able to quantify the magnitude of it? Was it low single digit or mid-single digit? Anything on that?

It is 20% of the total expenditure, which we have said is $50 million.

No, sorry. The tax credits.

Sorry, the tax credit is not the...

Low single digits. And please note that, that is not included in the EBITDA because it's for Bitterfeld. So that our EBITDA was not positively impacted by that number.

Your next question comes from Maarten Verbeek with WTE Idea.

It's Maarten Verbeek of The Idea. Firstly, your guide that your adjusted EBITDA of the second quarter will virtually match last year's. Could you more or less indicate what kind of profits of antimony you have to compensate to arrive at that level? Would it be some $25 million? Is it a fair assumption?

We're not -- I mean, we haven't given any guidance on antimony profitability up or down. So we can't really bridge you. I will say that the -- approaching last year's profitability will be largely driven by lithium and vanadium prices. So those are the 2 key items. But in terms of bridging the antimony gap, that's not really in our mind.

Okay. And then secondly, when presenting the full year results, you mentioned that the guidance -- you guided to between $210 million and $240 million. And the current price levels of the key products would indicate at the upper end. According to me, those have all edged up even a bit further. So what has hold you back to even sharpen your outlook guidance for the year.

We have scenario plannings routinely updated, and they come to the conclusion of that range. And we are assuming that you -- when you read that range, think that we are conservative. And so probably you tend towards the upper number of that range.

Maarten, I mean, there's certainly a good amount of geopolitical uncertainty in the world today, which limits visibility for the latter part of the year. And additionally, you noted prices have creeped up, but that's not true across the entire portfolio. So if you look at vanadium and tantalum, for example, in recent weeks have trended downward, vanadium in the United States, particularly. So it is a little bit of a mixed bag. Lithium continues to strengthen, obviously. But as Heinz said, we run multiple scenarios with multiple price environments and are confident in our current guidance.

But don't see that tantalum is downward trend. It's from a very high level to a less high level, which is an upward trend corrected to a less upward trend. So -- and it's interesting to note that in March, the tantalum price was $200 or higher. And in such a constellation, you get our lithium thing for free because the breakeven price for lithium at the consolidation of $200, tantalum is 0, which means that we are the lowest cost mine in the world scale.

At this time, it appears we have no further questions. I would like to turn the program back to Thomas Swoboda for closing remarks.

Yes. Thank you very much for your interest and all the questions. I'm sorry if we couldn't take all the follow-ups. We are heading to our AGM today, and we will be very busy being on the road. So hopefully, we can catch up with you in person soon. Morgan, thank you very much.

Thank you. This does conclude today's AMG First Quarter 2026 Earnings Conference Call. Thank you for your participation. You may now disconnect, and have a wonderful rest of your day. Goodbye.