C Si Ni Cr V Ti Ta Sc Li Sr Zr Fe Cu Zn Sn B Al Ce U Mn Mo Nb Sb

The Advanced Materials Division’s financial
performance rebounded strongly from the
recession of late 2008 and a very weak 2009.
2010 revenue increased by 44% to $616.3 million, gross margins increased
by 98% to $94.7 million and EBITDA increased from break even in 2009 to
$39.8 million. SG&A increased by 4% from 2009, and was flat compared to 2008.
The division invested in product innovation, positioning our businesses more
profitably in the value chain, securing strategic sources of raw materials and, in
some cases, industry consolidation during 2010 and early 2011. A key indicator of
the strength of our business is gross margin return on working capital investment.
This improved to 71%, from a depressed 42% in 2009, as gross margins
and working capital turns both increased. This metric combines our pricing and
sourcing power, operating efficiency and effective use of working capital.
These significantly improved results across all of the division’s major business
segments over 2009 are a reflection of the initiative and commitment of our
people as the cost reductions and productivity improvements made in 2008
and 2009 resulted in increased financial leverage as the business environment
improved. The division also executed a number of the strategic projects which we
expect will position us for higher base level financial performance and, in some
cases, reduce the volatility of earnings.
End Markets
The Advanced Materials Division produces and supplies specialty metals, alloys,
chemicals, coatings, powders and ceramic materials that are used in high performance
environments. The majority of these materials are the basis of critical
components used in aerospace, infrastructure, energy and specialty metal and
chemical applications. We use management estimates and consistent assumptions
in making the following segmental end market comments.
Aerospace
AMD produces a multitude of critical metals and alloys for titanium and super
alloy customers in the aerospace market. AMD’s master alloys are used in the
titanium and super alloy industries as alloying elements to improve mechanical
properties such as anti-corrosion and high temperature heat resistance. There
are a very limited number of companies, globally, with the certification to supply
these materials for aerospace applications. AMD’s 2010 sales to this segment
increased from $84.1 million to $105.1 million and margins improved by
Advanced Materials
429.1
616.3
09 10
Revenue
47.9
94.7
09 10
-
09 10
Gross Profit EBITDA
39.8
Accomplishments
Acquired antimony mining rights
and metal smelter in Turkey
Acquired aluminum master alloy
producer KB Alloys (1Q2011),
with production facilities in
North America and China
Expanded spent catalyst handling
capacity and diversification
of spent catalyst sourcing in
North America
Signed long-term sales contracts
for tantalum concentrate
in early 2011
Completed lithium mineral
(spodumene) pilot plant in Brazil—
moving to feasibility study
Acquired established
commercial operation in India
Report of the Management Board | Business Review: Advanced Materials Division 23