McEwen Mining Inc. Price & Performance (MUX)

Thank you very much. And a very warm welcome to our earnings call Q3 2024. In this quite interesting times, having a new President in the U. S, last night, the demission of the government here in the country surrendered what we like in Munich a lot, a win of Bayern in the Champions League. So let us go through quickly a reminder of what we do, how we do, how we have developed. Then I would go to the highlights of Q3 and already having a little look in [indiscernible] Before I hand over to Marc for the financials of the Q3 I will close then with the outlook again. Our business model is unchanged. We are operating in 13 countries with 14 offices, with a main focus on Europe. Having added international footprints in Chicago, Shanghai and Mumbai, where I will be next week, in order to further stabilize and further also accelerate the growth. We are operating in 4 segments: Automotive segment, the Engineering Technology segment, the Goods and Service segment, and the Retail [indiscernible] food segment, Back on track. Sorry, we lost here, I think, the stability of the presentation. And then those 3 segments, stands for us for 2 things.

So it stands for a risk mitigation within the portfolio. Secondly for having a chance at any time to buy and having a chance at any time [indiscernible] Companies we are looking at has a size of typically above 1000000 SEK 200,000,000 to SEK 400,000,000 is our sweet spot when it comes to platform investment. Based on the fact that we look for the absolute value, the absolute euros, on holding level. And that is much easier on larger scale. And then the turnaround here, We have a lot of times asked what type of transactions we do. And the main type of transactions we do and the only type of transaction we do is where we have an operational improvement potential and where we do see an operational improvement potential. With our consultants we have on the payroll. We are separating in 4 phases our lifecycle. So the acquisition part is the part where we buy the companies. And we have filled up the pipeline again. We have transacted significantly also in Q3 on the buy side but also on the sell side. And we will continue to do that. Just today, have announced another transaction in the Polish market for us a newly developed market just over a year and we are very happy that we have conducted today or yesterday night the signing of Natura a retailer a very well known retailer in Poland.

On the acquisition side, we have to invest and we invested in our portfolio companies throughout the lifecycle. There are basically 3 types of investments we do. 1 the very, very first type of investments is buy construct. From the seller we are forced and obliged to put skin in the game. To invest in the business we are buying. Or to invest in a purchase price when we strategically buy an add on. So by contract, we invest into our company. Secondly, There is an investment in building up the groups. In building up groups like Amaneos and building up groups like Ferronite, and building up groups like NEM, in order to bring that at the end of the day to a larger exit. So on purpose, we invest there. Into the existing portfolio by purchase price or we invest by manpower by our consultants or we directly invest. And the 3rd investment, which is a case to case decision, is if things are not going as planned, we are we take the freedom to divest to invest, sorry, before divesting into a portfolio. In order to reduce or eliminate the impact on the rest. Given an easy example, invest that a company survives when it's not going according to plan or things happening on the geopolitical side in order to not harm the rest of the portfolios to not harm any stakeholders who pays us the bad things back on the other portfolio.

So it's a case by case decision. Those are 3 types of investments we do on the acquisition side. Realignment, this is where I started my career. This is hardcore restructuring. This is bringing a minus €30,000,000 business to a breakeven scenario. This is where you go to the customer base, where you go to the supplier base. And you really change the company. This is the spirit. This is our core USP. We are putting day to day our heart and soul on the line. To make it happen. The optimization phase done is the creation of the new setup, the creation of and the stability of the business we are having. And at the end of the day, the harvesting phase is the one where we preparing for divestment. I'll come to that in the outlook later on. And last but not least, also divest. We have started to invest lot in the business. We have a typical holding period of 3 to 6 years. And we have already seen in the last year this year that it kicks in our cross paths. It kicks in when we have divested S and P. It kicks in when we have divested Frigos Gagne.

And the gross strategy kicks in when we have done the listing of Steyr Motors.

Having a quick look on the portfolio and Mark will go into very much detail. I wanted to mention on the automotive side, the Ameren Essen Ferro Group. Where we have heavily invested to be too big to fail. To be a significant player in the automotive supplier market, And what we see today is that we are recognized such a significant player in the market. The last transactions we've done for example, which went into Moneos Group, which was SMR, was a we provided a solution for a large, large German OEM approached us in order to take over the business and say, please provide me solution I'm going to pay for it. And at the end, it's a win win scenario. So the Amineos and Ferro group, I'm absolutely convinced will pay off in the years to come. We have created 2 large groups, over a 1,000,000,000 of turnover, global footprint, and we are perceived from all the OEMs as significant players in the plastic market for Amaneus and in the metal and aluminum market for Beryl United. Engineering Technology, a quick word on Budheus Edelos, Edelos a very well known brand here in the country. [indiscernible] an acquisition we have lately conducted with First Alpin It's a factory providing roughly a little bit more than EUR 300,000,000 and this is a typical Mutares case.

This is a case where we understand a bit where we understand the market, where we know what we want to do with the business. And we will confirm that once we have conducted a closing, which is expected latest beginning of Q1, there's still a good chance that we can close the deal even this year. But this is a very significant step also bringing the engineering technology forward. The next one and I come to that also late, quickly, but I want to confirm what has been can want to confirm what was already out in the market on the merger market. It was already said. So Connexus is a deal we did in the past in Italy. We developed a business. We made it profitable, and now we are bringing it to the market up for sale. And last but not least, Natura transaction we signed last night with the Polish team in Warsaw. So a great, great achievement there to be in the market and have conducted this transaction in the retail cosmetics business, a €100,000,000 very, very well known brand. [indiscernible] [indiscernible] Coming quickly to the key highlights. [indiscernible] Q3 and Q4 So we conducted buy sites acquisitions on the signing and on the closing of the transactions.

And what you see on the left side, the closing of the transaction which were 2 add ons for the Farrell United Group, which was one add on for the Terrenar Group and which Maticon, which is previously Fisher Automotive. We have conducted strategic advance for the Faroe Group and for the Terronor Group. In order to create more value later on when we exit the business. You see €300,000,000 roughly is the purchase revenue. And we have invested €17,000,000 The signed transactions We are now believing we have built the groups as large as we want them to be. As significant as we want them to be. The newly signed transactions, they were predominantly platform transaction, except of the one on the bottom, which was the one where a German OEM asked us provide a solution for him. [indiscernible] And what you clearly see is that the relation between the turnover we acquired and the investments we did on a deal side significantly goes down. And that is the strategy going forward. We have built up the groups like we want to build them up. We have invested in the business. Which we firmly believe will pay off Now what you see is you see more exits and you see less investments from the very beginning in a deal.

On the exit sides, we have divested 2 things in Q3, Q4. One was Repartim, which we sold to a large French strategic and Mobilitas, which we sold also to a local strategic, which was part of the Ariba acquisition which we did from Deutsche Bahn AG.

Few more highlights from the Capital Markets side.

We have placed successfully [indiscernible] of €135,000,000 in September 2024, a Nordic bond next to the existing instrument.

And we have several times and we are fully standing behind and repeated, we have now confirmed the guidance for 2024. The latest Capital Markets transaction we have done and Capital Market events we have done is the The listing of Steyr Motors, we have decided for a listing here a difficult market environment because we believe in the company. We have done a great turnaround in a very short period of time.

Carve out situation from Thales in France. And we have put the company on a stable crosspass and on a stable profitability pass. Obviously, the market helped us here also to further accelerate. And then last week, it was successfully placed with a share price of €14,000,000 is a successful placement of roughly 30% of the shares. We still hold 71 percent of the shares because we believe in the success of Strymotors in the future. We want to hold it and we want to sell it at a later stage. There will be a full sell down, but not immediate at all there is a gross pass of 50% in revenues and in profitability, but we, as Matthijs, want to benefit and we believe that's the biggest and maximization of shareholder value creation, what we could do with Strymotors. And let me use, as a final word on this Steyr Motors, IPO, to thank the team of Steyr Motors, to thank the peaking guiding by Julian Kasuti, the CEO of the business. We did a fantastic job in making Strayer Mutares successful. But also IPO ing the business. Very well done. We are very proud that we are still the majority owner of this business.

With that, I would like to hand over to Marc for the financials of the group. Thanks, Johannes.

So I have some players to talk about the financials Q3, which is [indiscernible] Months, including here with August and starting with the overview of the financials, it pretty much sticks out that the group had a setback in adjusted EBITDA, which is quite normal. Because we have August July in the Nordics that are a bit weaker And in addition, we see that the new acquisitions caked in, which is our business model quite normal, they contribute negatively in the beginning. We reached almost $4,000,000,000 in revenues, quite okay terms of what we want to achieve step by step at €1,000,000,000 pretty much a year. And are here on track also in 20 24. Looking at the Mutares Holding, you see that revenue is a bit lower in Q3. Because we have, in August, approximately €3,000,000 less revenues. Due to the summer break. Profitability quite flat We had some one offs in the quarter due to the bond issues, but I will go into more detail here on the next page because we have now included couple of more slides that we already presented in 4 weeks ago in the call on the 4th October. Starting with the P and L of Sir Holding, that we all the time present on a quarterly basis.

We'll release this quite soon. And here you see that revenue is up a bit, and we are quite on track to be way higher than last year. And you see here quite prominent because it states out that we have an other operating income of almost SEK 7,000,000 and the SEK 7,000,000 is quite the majority of it is a release of a provision that was connected to a that we did. We had a deposit at a bank. And this is not necessary anymore. And that's why we were able to release the provision and cash the beginning of [indiscernible] So on the other hand, you see that personal expenses are flat and this only includes the personnel expenses of the holding. And the personal expenses or other expenses that we have with our global expansion and also with our offices across Europe are included in what we call here expenses for purchase services. We have the other operating expenses where we have a setback and or positive decrease, not a setback, positive decrease compared to last year. That is across pretty much all kind of expenses in line items. You see here on the right, M and A Services, Legal, Travel, Admin costs all went or decreased a bit and in combination with the increased revenue, we see that the EBITDA improved substantially And we also believe that this going forward will be the case.

And that's exactly in line with what we said 4 weeks ago. That we heard steered into the right direction and that quarter by quarter, will also see this in the financial reporting. Couple of more slides regarding Distribution of our risk and starting with the one that we also showed here, already. So we have a distribution or we have invested approximately €650,000,000 and that you see here in Equity Loans and Receivables. And at the bottom, we also included here the distribution across the different life cycles and you can see here that realignment already is quite low and it will remain low due to what Johannes said what you saw in terms of investments investments in the M and A phase, which are coming down quite substantially. And to see that in optimization, we have currently the majority of investments, and that is mainly attributable to the big groups The big groups that we want to have at some point here, and Ferrell that combine approximately 200,000,000 we have a cover of other big assets in here also [indiscernible] that would contribute substantially to the amount in the middle. Clustering this again in a different view in segments.

And here, we said that some in some of our portfolio companies are obviously in these days more eligible for an exit. Schleier was a good example. KneXis is another good example. And we will also harvest in the Automotive and Mobility segment, in the Engineering and Technology segment, where we also have promising assets and where we want to get back obviously much more than our investments and want to do this when the time is right. Coming to the quarterly [indiscernible] segments here again. And despite some closings, you see that Q3 was not at [indiscernible] some would expect. You see here less revenues in goods and services and in Retail and Food.

Compared to the segment the months before and as slight increase in Automotive and Mobility with the closing of Matti Korn On the other hand, also in the automotive industry, this is a month or quarter that is Yes, having low activity and therefore, we have also here the adjusted EBITDA That is quite negative compared to the quarters before. Different portfolio groups. And here, you see that we have in the Automotive and Mobility segment, which is the biggest one, only a handful of assets where we have the big ones Amanios and Ferro, where we clearly focus on the footprint optimization and the increase in utilization of existing facilities that we have the transaction that we hear too for some of the or one of the big OEMs is a good example that is included in Emanuees Group or CSFC Group, which is part of the Emanuees. And in addition, we still look for opportunities to acquire business for like existing portfolio and as we continue throughout the next couple of quarters. Next segment Engineering Technology by Nature, quite a diverse segment. And [indiscernible] assets in here that have entered the group recently. Namely Softinter and also actually FSEC.

That both are on a good track. FSEC is approximately 12 months now in the group, so much more advanced. Compared to Softinta that entered the group just recently. We are here in both entities on a good way, but both in combination contribute substantially negative in the 1st 12 months when they enter the group. Here to the adjusted EBITDA in combination, it's approximately €15,000,000 of adjusted EBITDA that is negative but we are quite confident, especially with EFSEC, that this turns positive in 2025. On the other hand, we have companies in here that operate already quite well. Steyr Motors is now out and visible in the market. Also NIM is operating quite well also Qasquare. So we have here a handful of promising assets that are actually or part of them are actually also in the list that you will see here later on. In this call from Johannes, which is repetition of the slide that we showed. On the 4th October. Then coming to Goods and Services, which is a segment that you see it here constantly operates positively because we have a couple of entities here in the segment that are doing well, right, that includes [indiscernible] Is doing really well.

Connexus, as mentioned it, is [indiscernible] divestment currently co collective, something that is delivering month by month actually very good result, very positive results. And then we have seen new entries in the group here with Greenview and Etail that are something where we need to work on, especially with ETA, which is similar business to Connexus, are quite positive Coming to the last segment, Retail and Food. Retail and Food is still dominated by development of Lapeer. And the weak consumer climate in France is also impacting substantially Lapeyre. And that's what you see here in the financials. We We see that the team has done here a tremendous job in adapting the organization and also in initiating sales initiatives that are promising which need some time to deliver results and turn some orders into the bucket and then finally turn into revenue. But what we see here is that clearly we are on the right path turn around this company to something that is delivering positive results in 2025. In combination that's our assumption, With decrease in interest rates in Europe and therefore some pickup in activity in the construction business. Final slide from my side here. Current lifecycle, you see we have not changed this.

We would just add entities here in the progress quarter by quarter. And you see that obviously the realignment phase it becomes more negative. The more assets we include, we see the increase in revenue. Due to the closing of MultiKorn Soft and Down and so on. But that obviously contributes negative adjusted EBITDA. Then we have the substantial decrease or negative adjusted EBITDA in the optimization phase, so the mainly attributable to the big ones that I already mentioned. No a couple of times, Ferry United, Lapeer. Where we are in the middle of the transformation On the other hand, we have entities that do perform quite well in that bucket, Connexus, NEB. [indiscernible] where we have included the Stelzig, but because at the end of the quarter, we were still the owner and will also include this company due to our stake in the next couple of quarters. And you see that this is developing quite well with almost 10,000,000 of adjusted EBITDA with stable revenue.

And with this, I hand back to Johannes for the close Thank you so much, Marc. Let me give you a outlook on on what the plan is. And I would like to start with the investment summary, which I'm not reading through, but I would like to point out 3 points. So we continue to focus on growth. I believe [indiscernible] you stand still, you go backwards. And if you snooze, you lose. That's why we continue our growth path. And we continue the successful growth path, what we have started basically in 2019, 2020.

We are committed and we are fully on track with a successful proven track record based on the fact that first of all, I think we're extremely strong in making deals.

We are extremely strong in the operations of carving out businesses, in the operations of turning around businesses. And we are then again extremely strong in conducting an exit at the right moment in time for the right valuation. And last but not least, we are trying, and we will never do it to the best and full expected extent, to be as transparent as possible. But I can confirm you that we, as the management, we are fully committed to this [indiscernible] we're trying to take you on our journey like we did the past years. And how to achieve all of this the track record the growth where we have spoken about the acquisitions, I would like to give you a little insight, which was already shared on October 4, on the exit side. So we are currently working on those exits and the exits are in different phases. We have a phase where we prepare it. We have a phase where we've already started with the data collection. We have a phase where we already are out in the market like Connect which was published also by Merchant Market last week. Or we are in the phase of selecting adviser.

But all of these we want to achieve in 2025 with exit proceeds of around NOK200 1,000,000 So we are working hard on all angles not only acquire companies, to not only turn around the companies, but also to sell the companies. And last but not least, I would like To confirm again, as I said before, the outlook, I would like to confirm the guidance of 20 [indiscernible] Screen is not working here. We continue our growth path. We continue to become to be the one with a €10,000,000,000 of group turnover and with a €200,000,000 of holding profit. It will continue and you will see that the investments, the original investment per case will be lower. We will continue that you see that also the exits will be larger and more because we have gone through the 3 to 6 years holding period where we have started a growth journey in 2020, and this will materialize as you seen on the slide before. A lot also in the year 2025 and the years to come. And last but not least, I want to reconfirm that management is still committed to the plan. Management is committed to what we do.

Is committed to the growth we have set out, which means we will keep working on this. We will keep achieving what we said. We will keep walking the talk And that will also means that you will see Mark and myself back in the Q1 results in 2025. So before we close the session, and hand over to Q and A, That's the first time this year I'm I'm saying this But I would like to close the session with wishing you all a lovely Christmas time. And a happy and successful Rockstar year 2025. So thank you very much for attending Q3. 2024 of Mutares in the name of Mark and myself and the entire management. It was lovely to have you the entire year. And we're up now for questions. You very much.

Thanks a lot. Dear ladies and gentlemen, if you are dialed into the conference call and would like to ask a question, Again, Raising questions is only possible in the conference call, so please dial in you wish to state a question. The combination to raising your question is 9. The first question is from Stefan Agustin Warburg Research. Over to you Stefan.

Yes. Thank you and hello. I have a question actually on the technicality How Steyr Motors will be valued going forward. Is it that you show in the financial result the full difference, let's say, do you value it market by market? And does that valuation fluctuate then from quarter to quarter? Or is it somewhere stable? [indiscernible] So at the end of Q3, it's obviously not included also not the partial divestment, it was not included. And going forward, we have not decided on your actually on your question on the outcome.

And is this something where We actually want to deliver on the slide that you saw with a couple of exits where Johannes said that we want to deliver them in 20 5. But we actually all the time set the this is until the end of 'twenty five. So we're constantly also working in 2024 and these exits and want to reach the target our target, reach 1 signing by the end of the year, and want to then look what we have there. So that's why we also hear and have repeated that we stick to our guidance we believe we are able to deliver one of these exits And then as an alternative, we can think about to revalue Steyr in the manner that you were just mentioning. Coming closer to the market price, it is a listed asset. That has a price tag. All the time, and therefore, everybody can see what we would do.

Okay. Thank you. Fully understood.

Thank you very much, Stefan. The next question is from Marie [indiscernible] Over to you. Good afternoon. A couple of questions from my side.

Is there any way we can get a a range of potential inflows from the [indiscernible] test and Connector maybe for all 3, if you understand, do not want to give the detail for each. In terms of expected holding net income contribution.

Marie, we're It's almost quite bad. So we're trying to guess your question.

Here a bit.

I'm sorry.

If I understand it correctly for the exits which we are planning this year and which has happened in Q3. Is that correct?

Yes. Sorry, I hope you understand me better. It's basically to get an idea of the net holding net income impact of the three acquisition sorry, the 3 divestitures you highlighted in the [indiscernible] What can how high can the impact be I mean, Repatim and Mobilities are done. So this is not a plan. Connexus is out in the market. It's not certain that this will be signed and closed this year. On the contrary, so there is something else which has to be signed. But the proceeds of the [indiscernible] And obviously, it's part of the negotiation, and we don't want to disclose the exact amounts. Is somewhere between €50,000,000 €100,000,000 On the 3, so Repati, Mobilitas and the 1 to come. [indiscernible] Okay. But that's that's higher than I would have anticipated. So $50,000,000 to $100,000,000 holding net income impact. [indiscernible] Maybe also the reason for my India trip next week.

I see. Okay. All right. Thank you very much.

Thank you very much also from my side. DL, ladies and gentlemen, final call.

I think we have said it all. Enjoy the Christmas [indiscernible] see you back in 2025. Thanks so much.

Gotcha. [indiscernible]