AMAG 4Q 19 - Upstream-driven earnings beat and sound FCF

Higher than expected earnings were fuelled by a combination of valuation effects and better underlying performance of the upstream divisions and lower Service costs. The FCF generation exceeded estimates, not least due to lower investments. Overall, very solid results.

Initial thoughts on 4Q: AMAG reported higher than expected 4Q EBITDA of EUR 33.8 mn (up 62% yoy from comps that were burdened by negative valuation effects of some EUR 6-7 mn). Revenues were 12% lower at approx. EUR 245 mn on the back of 5% lower external shipments (+2% in FY 19). The 22% earnings beat vs. RCBe (35% above consensus) was driven by the Metal segment but also by a lower loss in the Service division. The gap trickled down to the bottom line, resulting in an clear EPS beat (EUR 0.24 vs. estimate of EUR 0.13). Metal EBITDA of EUR 16.5 mn contained valuation effects (related to hedging instruments) of ca. EUR 3 mn but also the underlying figure was better than our estimate of EUR 12 mn. The deviation in the Service unit was EUR 1.6 mn (EUR -1.4 mn vs. RCBe EUR -3 mn). The upstream divisions were fully in line. Casting EBITDA came in at EUR 1.2 mn amid a double-digit volume decline and almost 30% lower revenues. Rolling EBITDA of EUR 17.4 mn was about flat yoy when 4Q 18 adjusted for valuation effects on the back of a 7% volume decline (sales -13%). FY 19 EBITDA amounted to EUR 143 mn (FY 18 EUR 141 mn) which, adjusted for the aforementioned one-offs, implies that AMAG reached the (though twice reduced) upper end of the guidance range of EUR 125-140 mn. Our forecast stood at EUR 137 mn. EPS dropped by 13% to EUR 1.10 from EUR 1.26.