CSTM - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen thank you for standing by, and welcome to the Constellium First Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. [Operator Instructions] It is now my pleasure to introduce Director of Investor Relations, Jason Hershiser.

Jason Hershiser

Thank you, operator. welcome our to earnings quarter like call. would everyone first to XXXX I

today, Chief is call After have Germain; the presentation and session. we On call today’s the of our our will a Chief slide website Officer, A constellium.com, copy we today’s and Financial recorded. Executive on Peter is presentation, Matt. call being the for have Q&A available our Jean-Marc Officer, at

Securities look company’s uncertainties. Private and I’d within statements begin, operating of and everyone to and Such our financial regarding events website call future statements known and Today’s and like a expectations Litigation include Act the Reform the performance, statements may the anticipated and we Before to the may take encourage risks company’s involve at of XXXX. forward-looking unknown filings. recent visit include meaning

under that For cause the in forward-looking risk statements, could please those XX-F. in on results Form to presented information information, heading a specific to expressed summary materially except law. from as as date our Annual result the the We of new refer Report the presentation. forward-looking Risk or Factors events to factors of differ no by revise a is in obligation this of undertake statements update of the as or All required otherwise, future presentation any factors

I of disclosures. financial attached IFRS in measures In addition, presentation, call now today’s see supplement over presentation includes hand information the our regarding non-GAAP Jean-Marc. Please the today’s certain non-GAAP like financial reconciliations to measures. which to slide would

Jean-Marc Germain

you Constellium. and afternoon, Thank your for interest morning, good Jason you, good Thank in everyone.

our million like one performance with one to sorry never In plants case. I the We years X.X this excellent quarter, million But milestones of journey several first X want the remain anniversary worked. from had Slide performance. without of delivered best-in-class safety, all focused for this to first complete X.X all case our sites quarter per from recordable with – seven and number highlight safety to priority. on priority. our Let’s need number we congratulate critical with quarter first recordable of of the would results. up achieve I safety start a hours rate we to to a safety employees in on turn a discuss and our is

excellent, While our quarter can performance. performance It our granted. always on be for in improving taken the maintaining are was and focused we never safety

A&T. Remember, up first primarily Turning to due our model to tons, financial to operate €X are of increased This business billion. pass metal Revenue higher the and was to quarter to exposure through shipments results, which X% metal price risk. we to higher in our prices. due metal XXXX affected by minimizes a while our XXX,XXX were XX% PARP in prices, revenues compared shipments changes

Our sales the the was value-added revenue, quarter of metal excluding first our cost compared million, to year. €XXX of reflects which up XX% last

quarter €XXX income net Our compared first of €XX million XXXX. the of in to million,

we in demand very PARP and was ahead inflationary are was the year. and for current more million, but as As packaging and to adjusted continued cost well by the Underlying of solid on strong EBITDA will pressures new our detail, quarter discuss which thanks of this from prior industrial managing in cost experiencing This A&T a us adjusted our as EBITDA demand performance, pricing rebound power, work performance significant well. top the see you adjusted protections million the bridge expectations with environment the customers our the on Peter by are who contractual quarter. first and was aerospace in costs, versus the €XXX and can XX% record right, quarter XXXX above for performance first million increasing €XX €XX EBITDA in increasing a

free now in extended free the flow, track quarter. cash €XX with Moving we million of our flow record to generation consistent cash

we down committed to to of pressures. We the the first quarter you very the our bottom Overall, of right remain times significant deleveraging our target free demonstrated performance. end our X.X achieving delivered X.X medium-term the adjusted commitment quarter times. or generation X.X times year. on and deleveraging of EBITDA, first can from further first solid last proud and despite see of As slide, quarter leverage am I We flow strong inflationary cash ended at the

Looking with presentation. the war forward, on front and later macroeconomic there in back uncertainties in to the the geopolitical which will come on are front Ukraine, the clearly I

we note, successfully positive to we and ability current a pressures. our inflationary demonstrating business on through our demonstrated the the to manage ability have However, are challenging times offset

a are of order our we businesses. most in seeing addition, In strong book

As to million. guidance we of to raising optimistic prospects million consequence, remainder and this previous €XXX the increases million are XXXX are range EBITDA €XXX guidance a of for about beyond adjusted we That to €XXX year a million. our our our and €XXX

recent set free million flow expect that excess now in underpinned of improving company presented we €XXX our greater profitability addition, XXXX guidance €XXX and we Day, million. includes volume growth long-term cash returns the of previous megatrends, the our Analyst for increases At that sustainability In than in and an targets. by of ambitious sustainability-driven vision

our over our I of increasing performance. long-term shareholder call and €XXX EBITDA strategy, for on details focused targets, the With achieving on now of adjusted delivering to financial million will executing guidance Peter XXXX by greater further hand than highly are our on value. We ESG our that,

Peter Matt

thank disclosing metric our everyone Added Day Revenue the joining this earlier Value business at We our Thank for you, Jean-Marc, or VAR today. to Analyst new Please month. now and call for began turn X. you, a Slide

revenue reminder, cost our of a is minus VAR As metal. the gross effectively

a to this due improved this was metric quarter. in due year. related takeaways of mix. are There the each price €XX FX favorable €XX to a in to million million commitment to compared of we the includes this revenue added balance higher first was will The volumes was XX% slide. contractual A&T, of bucket from due The forward, a in two report €XXX A&T. up mix and XXXX, and change Going was Value important and stronger customer increase dollar. quarter tied to price U.S. volume the million translation PARP to €XXmillion prior payment

in business Jean-Marc top-line noted, favorable. are strongly as the our dynamics First,

Second, we €XXX adjusted EBITDA have of the million value quarter, the on was in in revenue added margin XX.X%. our quarter

roll than tailwind headwind was mix including on continued shipments semiconductor first of the X were was on increased of improved million inflation-related XXXX. a million operating from inflation versus to and favorable a as throughs Costs Adjusted price Now, and in million, shipments demand, Slide specialty in FX turn of a of more to due €XX which cost Price the Volume to higher tailwind quarter shipments on automotive higher million products. quarter performance. in X% cost. of shortage. €XX focus mix. as PARP due decreased translation, stronger was strong U.S. XX% segment X% our year million dollar. shipments €XX impacts roll to of let’s on increased the compared non-cash offset products €X a stronger is automotive offset last lower year pass last and Packaging packaging continued metal and tailwind versus EBITDA a €X packaging a

increased of first the €XX and TID focus XX%. shipments to inflation-related price was stronger was TID segment. million more with and and quarter improved increased XX% X pass better aerospace Price and on a Adjusted a and XXXX. tailwind million. €XX Slide increased €XX shipments Volume XXX%, of EBITDA A&T of million mix. on including mix let’s tailwind to throughs Aerospace of turn the Now, mix compared a

of a due and to VAR, million Costs the was in FX million related tailwind As bucket quarter I costs the a operating on due were the of mentioned of higher customer U.S. inflation €X price production commitment. stronger of volume to discussion payment €XX to contractual and a increases. the million quarter before included in first a a in mix dollar. headwind €XX

to shipments €X semiconductor price and on to tailwind increased €XX XX% decreased mix. of of resulting and stronger strong headwind industry shortage. million to by segment. and demand AS&I was focus first X% a inflation. turn shipments broad due decreased Volume based cost on the improved Slide pass-throughs a the EBITDA higher from demand, was Now, while million compared €XX tailwind million XX XX% XXXX. operating let’s €XX automotive quarter as million the inflation-related industry a were Price due of including Adjusted on Costs reduced mix on to

facing Now are and update current turn cost are control on to pressures. to focused give want I environment Slide XX to these inflationary we offset on an where the

we the pressures significant First, more previous business war of which the the experienced quarter, Ukraine. many first than as across in in were exacerbated by expected, quarters, in inflationary

all of to year. supply tactically changes most labor, noted, quarters strategically cost higher what alloying significantly and input. higher last the metal actions tight to on the basis, cost pressures. are we to like The With manage some supply. operate taken we and disruptions model, supplies through to this to magnesium supply our so are previously of us of elements due rolling we it not a has compared exposed like transportation said, know, secure and aluminum, you significant business current can a which As to have and inputs. materially year forward we are carefully as to mitigate recent today we cost price energy, helped and metal respect pass in energy, Non-metal equipment cost we purchase are maintenance That remains the doing our in

increases. cost will Europe given price energy this energy our the in particularly extraordinary higher However, year, run materially

let these Now we offset to inflationary the pressures. tools me discuss various have

focus again to the performance and continued cost has strong business in Our quarter. cost on control delivered

will many and rising XXXX initiative, help combat announced recently the operating which XXXX fixed costs horizon future. vision in continue projects the around metal, of us cost will excellence Our

commercial such the have side, of inflationary many inflators contracts protection existing mechanisms. as or our On surcharge PPI

price pricing new protections. customer better notable signing We also had good protection contracts with have very To in success example, magnesium one across our are provide base. we inflationary adding mechanisms and

is we While impact it in The manageable actions XXXX. largely cost inflation it inflation are by included it offset and to we are be taking of improved relentless the guidance will XXXX, net offset and pricing focus our for our on will be revised significant control. believe in and

and the Slide We of on cash flow. metal strong working adjusted to €XX our free prices. capital discuss Now, higher EBITDA free and cash activity increased let’s and XX lower build despite in quarter generated turn cash with associated interest flow first million

see to left have cash deliver to on free commitment slide, continued the As we we flow. beginning of on free Since XXXX, of over strong generated our the €XXX million generate consistent, you cash of have bottom can the flow.

flow generate Looking of in expect we excess at to XXXX, million. free now cash €XXX

€XXX €XXX CapEx and to between million. million be We expect

have we taken €XXX We the cash reduce for expect million, of company debt milestone interest and and to cash actions a represents the reflects approximately which interest. significant

We expect million. taxes of million €XX to €XX cash

turn flat translation first Slide unfavorable end non-cash generated and our to At is by Slide end our let’s to quarter €X liquidity of million of roughly balance This €XX of U.S. was the Now, compared XXXX of XX quarter, as the discuss net the was billion. in debt the sheet turn and position. and free the dollar. cash offset flow mostly the to FX with strengthening XX

X.X first of multi-year down end quarter at Our of quarter the the of the of or first leverage XXXX. times low a X.X end reached versus the times

and leverage deleveraging three the XXXX committed Given our for times EBITDA expect revised of targets. cash our leverage free below remain and guidance X.X end we to achieving flow, we adjusted and by times XXXX

debt our bond As until we in XXXX. you can have see summary, maturities no

our of of that the structure we are progress financial are We on have capital the flexibility made we building. proud and

Jean-Marc. Our to at likely we of $XXX us, liquidity first million we of the quarter. the behind added end reduce the strong I’ll COVID-XX as With now back pandemic the largely to call the over coming liquidity quarters. extra are hand hopefully the was during

Jean-Marc Germain

Thank you, Peter.

impact want to it start in Before and limited XX. Constellium. its is situation address for I it Thus by as creating. prices. Ukraine Slide totally recognizing to to Constellium crisis This broader horrible need and war unnecessary. I a has war the had humanitarian tragedy of far updating this on Ukraine commodity a beyond Please on conflict on the our relates impact to end-markets, turn is the the

or Russia of We buy have in limited a from We Russia. amount no and operations do either de minimis sales metal Ukraine.

materially portion from not natural Europe, the also, To-date, get operations Russia. We our have rest a of of our gas affected. like

We very closely. are situation obviously the monitoring

end-markets. turn current to and discuss Let’s our Slide the for now XX outlook

are message who serve. you in markets our of is the participate recent very strong those consistent. For able Day, remain generally Demand in to remains that Analyst the we

the in represented portfolio packaging, transportation, preference a last is Constellium positioned for is preference infinitely secular as underpinned over aluminum plastics balance is with as or diverse Starting demand well growth. light and for cans, consumer recyclable economy. growth by other Aluminum our both versus and We months. for electrification for our them cans packaging aluminum Constellium in the strong fleets. are The benefiting of The the market is glass. and understood XX% sustainable the sustainability-driven, to making capture with XX trends core a from automotive cans and infinitely circular and the in such most are in cans today growth container this well weighting America recyclable such packaging alternatives North market revenue packaging participant beverage of consumer Europe.

lines exemplified can by which and can is expansion mid-single-digit can announcements supported capacity by We of adding in by two existing as both an the of additions in expect another demand medium new line Europe. regions recent plant in maker the growth term,

our announced come shareholders. in XXX,XXX best capacity the of with by XXXX. our returns of needs recently projects tons North of another will to XXX,XXX Brownfield market Europe These both a and expand to our We America doing XXXX very this capacity and our by are growing and tons projects attractive to series meet customers. We unlock serve for

of Now in represented in to the revenue both let’s XX% move their choice light automotive last positioned XX sheet makes of to secular range auto enclosures. need structural aluminum the well extrusions components, benefit and the for management material crash fleet. to shift Constellium months. and vehicles the systems, to automotive. aluminum from automotive is body of logical to sheet our electrification and battery which the objectives, Automotive over Electric meet be

continues OEMs again increased combustion societal engine We improved internal focus also demand be the production to regulation vehicles safety the to stoppages term, expect experienced meet automotive shortage. Near continued of sustainability performance. first hindered by light-weighting and on for and to in demand quarter. semiconductor

second to this in end-market end-market of luxury in very We we and an the potential quarter in of remains half. and demand underlying vehicles the expect this for remain we year inventories low From light strong, Constellium where and however, positive perspective has greater these continue second believe modestly and exposure. dealer improve trucks, demand especially consumer growth its remain very SUVs

the aerospace. quarter. Let’s to for first to us turn now returned Aerospace in year-over-year growth

OEMs path XX% build is translate near-term represented our announced the XXXX X% rates we seeing are in revenue, increasing that Over full gradual. still XX the aerospace recovery last months, and of we in which into orders down now to expect from Major pre-COVID. be to have the this increased customer

new the Over fuel-efficient and passenger demand longer remain demand driving remain for fundamentals that term, aerospace including confident traffic intact growing more greater the aircrafts. we

represented Turning XX% last of our over Specialties lastly revenue months. XX specialties. the to

also health general, North note are of of the world niche secular our on range our execute of upon as products sustainability-driven is dependent to industrial expanding continued well. are diversified impacting trends in many which very in Europe at other much the markets. here We of play In strategy a markets and in growth America, of markets these economies the that

and For rail, is aluminum light example, driving for weighting in boats. applications increased trucks

addition, is America. Specialties In Europe today investments in demand extruded increased increasing our are generally markets in renewable North for products. both and energy strong

through strong. very across to EBITDA XXXX guidance. key operational chain strong pressures first cost supply XX, of the solid our and inflationary €XXX in financial our face messages Turning of business. and and We Constellium’s was in performance quarter adjusted record other significant Slide control of detail challenges the we performance delivered million

also debt a adjusted of to balance track X.X deleveraged to sheet EBITDA. cash further multi-year further generation net our extended free of flow times we our low Importantly, record and

beyond. most Looking seeing a end-markets are the trends to well growth are sustainability-driven strong strong remains demand XXXX believe the positioned deliver our strongly performance and in forward, Demand I we across them. across of durable mega given is end-markets. our secular behind we growth

inflationary by pressures its remain profitability enhance and control. to ability focus business excited and the offset We our grow our to improved confident the execution and in opportunities we focused cost on returns. pricing and on our are current We relentless with are

For XXXX, and of cash targeting we million €XXX of are excess €XXX EBITDA to €XXX free flow in adjusted now million million.

conditions cash open We Our please. session free the achievement flow I of are are control, cost XXXX. generation, our million objectives the guidance EBITDA ESG remain adjusted as value now they on in am today. excess €XXX performance, With business Long-term, of roughly remain assumes operational targeting about we by will we and very creation. optimistic shareholder operator, future. that, Q&A the focused

Operator

of Sachs. comes And Instructions] from question with Goldman Chieng Emily first the line [Operator our

Emily Chieng

is question. in taking there. around and Good guidance guidance quarters. stronger your believe seeing the are morning, flow QX historically one thanks I my have cash the EBITDA QX been historically some My and EBITDA profile first you for and free and updated seasonality

this So, that confidence be in your increased seen I is or was caused control performance to visibility guess, that the robust increased up? raising trap on given guidance in QX, cost it is for what’s driving

Jean-Marc Germain

Emily, that morning, QX, you our thanks to question. right and stronger, is Well, tend business the QX for to and be QX tends in Good are Yes. be both, weaker. seasonality there

to very inflation are ability our We to results through seeing that’s customers. pressures good on our pass

raise results we with in visibility element is quite to the the of We aerospace firming has saw markets book order managing good do very recently the in And are of future. and our a terms for This rest and a lot up it year seeing this and and costs. the order book executing the has our the for to with. grown also our plans is of substantial guidance in good

So, guidance driving the that’s what’s update.

Emily Chieng

a at taking point this Any in holds headlines from early a customer or different my Understood around your like news sense. to we follow-up seen Europe of at impacts own can there Russia have your and that route operations Europe. you delivery couple some point? foresee to countries just to base makes this and gas is, that And in

Jean-Marc Germain

Yes.

they that, there. that You point yesterday in start to Poland are announced and have deliveries as right operations they Bulgaria. We would don’t

the countries So that And that recent. them. some I do It’s it have as have impact on rest for the don’t very as and us. have that on to our in we customers, our of a have clearly, have are to should would concerned, don’t know. and I impact of customers other situation are we the the monitoring operations and any well. could material some closely, company. it operations be doesn’t think customers the involves effect situation detrimental very But operations on that But Poland because

Emily Chieng

Thank Understood. you.

Operator

Thank you. Credit our comes next of question the with Curt Suisse. And from line Woodworth

Curt Woodworth

on good Congrats morning, Peter. start. Yeah, Mark, Tom, the and

Peter Matt

Thanks.

Jean-Marc Germain

Thank Curt. Good you. morning,

Curt Woodworth

First was certainly better it expected significantly aerospace like last you mix the within just question seems A&T than within segment, and quarter. volume maybe

the of you within just between in benefit is a typically XQ? out into price in trending So one-time you I are to that leverage could was is number? if fixed? the the Was pricing and €XX million side the see aerospace €XX included you the you bit little then, Thank parse the margins seeing A&T. you. can And in that because the out wondering caught and business And you TID pricing volume on pricing, segment, million understanding benefit fairly color aerospace what provide on more how aero my versus just,

Jean-Marc Germain

Peter Curt. help start me, I’ll Sure. will and

a and of reason down to I about down where cycle back bull chain throughout not effect when material for months that we’ve And useful were a mean timing and they in at because as in our as We right. much as couple much in for a back going for through was holding is aero, up takes going the it now until happen know to what’s crisis. a you never experience while the would you destocking compared of bit what very what they would of happen and and by were past could we when rates time, build The it’s before point inventories cash is it were happening know seen some the unclear, go XX% people the depleting actually ago chain commented the sales the So, supply aero as knew supply give always was to start typically color quickly. in you happening. to

it whether So but of that’s we was book now that with got has again, the quarter for what order – and strong happened durable that’s our durable, very know whether why initially quite the didn’t rest been we in and strong and year. first we are seeing visibility the

is spot lot outside throughout this up short-term the what market wanting in and creating major that or to industry typically happening contracts. have of would excess get the what their of is we of like to in volumes this the contracts they these a on excitement customers is, So, And and ramped therefore creates ready. buy all

had that enough the would made it year we the fortunate bet are snap back. that was when We XXXX

as we of and A&T you back and up why some to in make well brought resources the our seeing customers. some are So meet that’s ramp cost we increased demands sure

being in of So looking we year a the progressively and strong the place we at as are good stronger. and are getting rest

it So think When we are on to €XX one-off is – good the question I thing. million pricing, included your that’s showing. payment a yes, the million €XX in comes

comments? add So you to and Peter, that’s a clearly do maybe, a one-off want few

Peter Matt

said the tons. again, aerospace thing the very that, we say so, very, the in enumerative I’d past, tons as Well, is only are they

very So to on good. be the tend margins those

we – We on do kind we are aerospace the are of contracts in tons. – long-term

pass-throughs. I contracts renegotiated able and a say we But we are strong are the context in would of So the TID margins currently including and this we contracts negotiated some those a also to of the higher haven’t of number lot TID prices period. of contracts get and inflationary aerospace that in very have

that are bucket. effect that too in you price seeing So

Curt Woodworth

very within the and could supply and you visibility chain on between terms and how just Thanks of compare comment Europe maybe end are in you there U.S. then, the what kind much. the can seeing you of second seeing evolve quarter? if you the And are automotive, contrast Okay. trends in of

Jean-Marc Germain

second disruptions some at notice and different the the the year short we with stoppages very supply that maybe state improvement continue seeing in of At of in so, we half, come XX% rest XXXX, an half running that with what the the us of OEMs, is still typically second I and below XX%, full expect to for we which also in moment, production hoping flex Yeah, are a but chain didn’t we capacity the which it improvement for ago are think are year for the materialize. utilization. means

So believe the at that gives some margin and us the this We will got grow point. normalize some to we out contracts to outlines. fill

we point, are it situation in for this So this be we hope guidance, resolves – at not expecting revised but our itself some have not year. we to resolved

Peter Matt

only the segment for packaging industry packaging, in business, we tons the thing structures the ability tons in again the have being AS&I supplement tons benefit the to auto we of have add supplement kind to is of have that, we for – and tons. auto Yeah, able in PARP our I’d incremental

€X we be kind a still that of per at ZIP fourth a We’ve that the other improvement not million in about gives So, words, in what offset. And from quarter calibrated somewhere saw some that In runrate. major we’d quarter. code.

Curt Woodworth

Okay. Thank you.

Peter Matt

Thank you.

Operator

And our Capital David line Markets. comes from BMO with question Thank the Gagliano of you. next

David Gagliano

just Thanks the commentary. my on questions couple of clarification a taking have I for some questions. of

the margin we €XXX million per it’s First tons simply back €XXX? business, reasonable of down forward per a Euro, $XXX about on €XXX go we all, A&T in ton. margin the XX,XXX gets that basis divided Is that take Should right? of to business? that by assumption ton which XX If sorry moving a the $XXX a margins out – or forward Is benefit. A&T sorry for

Peter Matt

I for adjustment per Well, XXX we’ve one-time would to business. to and guided that back XXX definitely ton out then, the

back, into then get but would range, adjustment. Now the definitely they that should one-time all make I comes as we

David Gagliano

is straight Okay. straight, divided it the margin, million And tons, to right? right, by that’s XX just XX,XXX

Peter Matt

that’s Yes, right. exactly

David Gagliano

Okay.

natural obviously just implications you outside the then direct exposure more things if raw than it’s Poland other gas through materials. you talk to Can exposure And you change? there? how mentioned gas And Russia, exposure the much to natural quantify Russia for Okay. can the material on

Jean-Marc Germain

Sure.

you So, of guidance and in consider rest terms we natural in price, the in the the prices gas – we have we year. gave locked of locked essentially have we for that

don’t Russia buy down So if have if availability it. we have varying shut the decides to gas could from exposure. degrees or decides Russia, a really exposure Europe to We an price of not

Now plants in are average sorry, we Germany, our biggest their on gas of our of users than is France, dependent less supply. less the Europe most are which – gas – dependent Russian for

industrial Now, impossible what don’t right, is to – to it deliveries the case of is them, consumer what reason, where what are a in place gas to curtailment because get there the know have to happens sectors, priorities to we private governments given going you be by for consumers. versus whatever to what

that to tell. So, I makes because venture to wouldn’t to remotes trying into – assess scenarios different they the are – impossible

David Gagliano

the there. But operations your for in give what Or from natural complex comes can Understood. you Yeah. of us supplies situation Russia? – just your percentage it’s Okay. gas extremely Europe

Peter Matt

by depends country It it’s… and

Jean-Marc Germain

And we don’t buy…

Peter Matt

Overall.

Jean-Marc Germain

get mean, think your where from utilities utilities get are mandate a exposure right, we buy place the local and and that gas to We don’t is allocated you Russia. to war where from governments comes XX% be you upon I a rationed, you that work. get and decide or for have just don’t France them instance, depending of what from on getting the utilities is do needs natural gas gas to will the buy We a French to I if in - tell economy, government now left going Russia a French becomes will the to to XXX% who Russia theoretical then thing. of the

no is way tell. there to So

no because on question think, I So to this at the knows am I not trying venture that answer anybody stage.

David Gagliano

appreciate color. Thanks. additional that’s the I Now helpful.

Jean-Marc Germain

Sure, David.

Operator

Thank our Research. from with Tanners next of you. comes Wolfe the line Timna And question

Timna Tanners

again better just guidance little being kind year, that of and in we if morning. annualize, volumes a expecting out rest also seem kind it I QX half just understood the aerospace. good back one-time do for on like perhaps but more the up maybe a of on then steady you starts the does to Hey, improving to it take the and steadily second Wanted story item is the of are

So, offset is some by we guidance is volumes costs there that higher will higher or I be the interpret missing saying there? somewhat am

Peter Matt

No, we I good hopefully have continuing through the aerospace we think year. with summary. that’s – improve a I mean, to reasonably again,

are Our other strong. businesses generally

in We a change big are a improvement half that maybe on is the year. back auto, not assuming there of slight the

and about So, go we higher mentioned prepared big we as as then through the remarks. we in – aerospace have will there. year probably energy been mover And we’ve the has talked as in costs our particular

I that’s a think So, Timna. summary, fair

Timna Tanners

Okay.

expansion margin So, say in this – have fair to it is that bit not Is just are assuming that in volume embedded volume? guidance we not is much now or seen expansion margins end for recovery. you just in but past, a a of the – opportunity

Jean-Marc Germain

are year. upside assuming upside some of the auto rest that are we Yeah, be margins back And aerospace again, the relatively that. be to staying could that could some this If there to stronger, comes constant quicker, over comes that.

going backdrop and front. on again, the is call benefits, potential some have but it’s year on particularly to you and early and some of the macroeconomic things these of the in – geopolitical craziness there hard with the So, it’s when

Timna Tanners

Thanks again. that. Appreciate Sure.

Jean-Marc Germain

Yeah.

Operator

Bank. Thank you. of question with comes line from Deutsche next Corinne Blanchard the our And

Corinne Blanchard

Hey. Good morning, Jean-Marc and Peter.

Jean-Marc Germain

Corinne. Hi,

Corinne Blanchard

can are but little seeing the think Most in just mix I understand to bit the questions trend that trying packaging pricing just side, been the of between packaging a has and backlog on improvement of my some maybe view you from in segment? but us answered, also give you

Jean-Marc Germain

Yes. Sure.

bit in ability over renewals in improvement It’s this customers. terms the a is we will pass pressures. an see it and our but inflationary to and to do Automotive – little we we pricing. see on the inflation And through occasion of that packaging, expect pushing trickier of contract time. continuous So, in normalize

So, as of bridges us Peter expect when versus which further just is a to automotive. net bit very PARP at for ability in in not you to have packaging of packaging. differentiated shared look as AS&I be XXXX. And increase neutral automotive. you that prepared in favorable a cost of time, But over in the is more flavor kind gives happening price that quickly bit that see I to pricing quite is in a – able is the It’s the there you his in and increasing and and automotive prices remarks, exposed of in we in

Peter Matt

to the in business right? and ultimately and experienced opportunities are in we’ll turn there. is we contracts have we be going story These you the like and just believe it’s that relationship have tell our packaging the to and long-term favor patient, to going demand Yeah, supply

Corinne Blanchard

cadence that [Indiscernible] are maybe just flow facing Great. throughout rest on one working guidance year on Thank and can free if And you. the you the more the caps of the you comment cash

Peter Matt

so, trade tied a capital, in Yes, really capital a working on we to of couple quarter and that’s have working things. build the first did trade

got You’ve some seasonality there.

metal got impact you some also have from recovery You’ve the higher prices. and aerospace

with more should the do CapEx, do So, be of back-end weighted we year. we expect that working And in to time our – part then, to the will rest CapEx later to modest the of CapEx capital use the – year. fact a a of are kind we has be on that for maybe and the spend to our and when that the basis that shutdown tends is customers best tend

But have back the from that the – each equally two improve in improve or would of likely half our takes QX strongest first and typically more of the get with quarter. remember the I second quarter to little in the first EBITDA, There less a to less good free over to is puts from distributed to flow a we kind or year. expect be QX the And quarters of EBITDA, and quarter. overall the obviously, will more or bit lighter. kind being the cash or be also So, XXX, in quarter, are it distributed equally some tends

Corinne Blanchard

Great. Thank helpful. comments. you. That’s Fair

Operator

question Josh you. Thank our the of from with Company. comes Benchmark Sullivan And line next

Josh Sullivan

good morning. Very

Jean-Marc Germain

Josh. Morning,

Peter Matt

Hey, Josh.

Josh Sullivan

at longer clearly, at that trend? Just maybe some a to that’s term. Raytheon these looking are constraints in here. in you some But follow-up looking against XXX, strong to issues longer backdrop telegraphed that on Are were picking factored distributors these outlook? How the aerospace, the timeframes, have overall market, XXXX destocking

Jean-Marc Germain

outlook. side Yeah, the so, our lot on of not we wide good XXXX in are news in Josh, expecting body

we pool that’s increased So are body markets for and for really the aircraft. seeing single what aisle narrow

will where and and we back wide for for bodies XXXX, XXXX by pre-COVID So be place that’s are a our seeing where guidance, we normalize in the they what have to long-term we’ll were think large.

we both in the that’s outlook So, short-term embedded our have what’s and guidance. long-term

Peter Matt

Yeah, a XXXX and you like see, as don’t called we don’t titanium out titanium, we issue. see

Josh Sullivan

Alright.

impacts to as does power some Are maybe aerospace more a of is just that And Okay, thought bit pricing extra you pick then able little okay. TID out – aerospace, capacity? your get as supply? of TID here, does up you that how then,

Jean-Marc Germain

typically, are as pricing aerospace absolutely pools TID when you so, Yeah, right, improves.

back keep expect are about and that the its all plants debottlenecking we Ingrid challenge have to capacity. focus in more potential that’s we when The continue. goes the volumes have and we talking TID Ingrid some was So at and our on investments to was talking the the for Joerg why Analyst full us will we aerospace making to be adding Day,

aerospace our So even pricing our TID and enjoy power, benefits better that of maintain volumes, power. grow the we pricing better can

Josh Sullivan

you. Thank

Jean-Marc Germain

Sure.

Operator

[Operator Thank the Karl Blunden from question line you. Our Goldman comes Instructions] of Sachs. next with

Karl Blunden

Hi, strong results. good and congrats on the morning

Jean-Marc Germain

Karl. Thanks,

Karl Blunden

we in the one into your for clarification volatility you commentary – price the timing higher energy two Just, just region? for items, structure appreciate are European that I change was particularly that in looking seeing, the there Is flows and contract around through. that are counter to any volatility example the

Peter Matt

Yeah, it’s question. a good

price said, at supplier typically energy local our We far we the are as the do buy fixing and for are energy Jean-Marc do always supplier. kind are looking better how buying on and the answer most then from are them, from what our limitations can there do forward and of with we you ways right? when it we some buy the the you part, is, So, to – we this

bit opportunities use the to so further a are buy markets And to financial out. potentially little there

are prices lock energy to find couple short-term, in to we the opportunities investigating next of So, the manageable in years. are over some trying but we that, the of that are of kind

are the quite backward So, and dated. curves

in opportunities So there despite prices energy elevated lock prices. are longer term the current now to

Jean-Marc Germain

want elevated price the of in is sure on the factor the side, that into energy. contracts make custom we we to And our commercial enter

with So side. that the sure to that’s also exposure are the left make energy big a on us topic for we not

Karl Blunden

sense. That makes

you and but resources aero, you investment has to step there another CapEx, for already on volumes that been there can a discussion the trends? higher anticipated Just kind investing business? in in and need much is with are you before volumes that little feel sense support through a in of see change - growth much a you some with and some how prepared comfortable for shipment current how quite you Do the of

Jean-Marc Germain

to discussed that We Day comfortable shipments the the and company. pre-COVID back Analyst trends higher at TID can a investments and levels with feel with quite few we believe the just weeks we for current maintain the that the the overall go ago we

do So, in a work but it’s get we mean, a there, it. to execution we strong feel lot can are take place. I we we good going of to and feel

Karl Blunden

the time. Thanks for

Jean-Marc Germain

Sure.

Operator

questions. am I no showing you. Thank further

Germain, remarks. I’ll CEO turn the over for closing call any that, of So to with back Jean-Marc Constellium

Jean-Marc Germain

thank for everyone much, your Well, very participation you today.

outlook pleased and for very we our the now As with are performance our year. can see, you

see of able showing navigate we to very think but challenging and we that troubled lots that are times are these I are waters. we uncertainties again

pass and as day. a Bye, the as at the We future optimism with bye. look continuing so pressures. through inflationary We circumstances. demand is Thank have you able are to we given see much, products possible good for our and much

Operator

Ladies you participating today’s Thank and conference and disconnect. you concludes may gentlemen, for call. now this

Constellium SE (CSTM) 27 Apr 222022 Q1 Earnings call transcript