CSTM - Earnings call transcript Q2 2022

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Operator

Hello and welcome to today's Constellium Second Quarter 2022 Results. My name is Elliot and I'll be coordinating your calls today. [Operator Instructions] I would now like to hand over to Jason Hershiser from Director of Investor Relations. The floor is yours, please go ahead.

Jason Hershiser

Thank you Elliot. welcome our to earnings quarter like call. would everyone second 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. Good everyone, thank your for interest good afternoon Jason. you, morning, Thank in and

to set. like one quarter to very rate we best-in-class of the a for our always After X.X million second year. X constantly the humbling for worked from is slide a take strong deliver safety that performance, first task leading while seriously. the to a never-ending our case focus one per ambitious rate and to is on and number company highlights to of safety priority. our safety maintain Let's we strive a with need quarter recordable in achieve we quarter It have would half results. we I start the hours second our that our to climb first This performance, reminder targets turn discuss

Turning in prices, quarter result price metal XXX,XXX up a each to increased and results. financial our higher higher tons, to increased compared billion €X.X Shipments shipments XX% segments. X% our the improved XXXX volumes. were mix of to due of second to Revenue as of and

our business in while affected operate metal minimizes a risk. changes to our we metal previously, said are revenues have price by we prices pass-through As model, which exposure

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

income to hedging net of primarily to net quarter related Our million million XXXX. quarter the in losses the a in of compares unfavorable a to second position. million €XX €XXX derivatives, mostly and in income on unrealized of is related change gains €XXX decrease our in metal The loss net

Peter by a €XXX million, end supply was aerospace and more will in US team P&ARP and As the demand, other in above new of Demand execution pricing This and shortage a later year-over-year in quarter. pressures, the the EBITDA be and results chain results continues bridge of quarter recovery XXXX. discuss XX% our with sequentially. strong strong impacted includes power, by AS&I. challenges. stronger company right, cost it the stronger The across combination detail. semiconductor drove significant Automotive better despite dollar remains is see during notably solid both continued you for the to second growth the the in both top which the and on can And the most record adjusted quarter record markets

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

deleveraging, bottom second XXXX. As target our X.X end and the see slide, right or of we quarter times to leverage I commitment continuing can of demonstrated committed X.X from of X.X on target range our quarter the the down at very times. long-term our leverage the almost ending of times you X.X X.X to achieving to remain We proud am our of performance. times Overall, second maintaining

end affected war core well. geopolitical demand for signs we by Ukraine. business and And elevated. Despite in in our experiencing material inputs and to reduction some our more not especially risks the in macroeconomic continued pressures has remain are continue, in forward, regions like inflationary ongoing we markets energy, expect warning perform Looking directly a to

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

to continue we million expect free excess addition, In in of XXXX. in cash flow €XXX

it topic and in to handing the I to address prices we, X, on want know availability over focused slide all so to you I Turning is and Peter, directly before gas natural I are Europe. are and which

an natural includes below risk reduce Russian This plan Europe. XX% than demand Commission's and and stream end noted, at sources is gradually its address for when believe It plan case generally, used Europe risk there an to finding Russia. broader impacts. we if comes may standpoint. to further dependence service flow facilities is flow at return well the affected of potential flow recent demand level European our good As stops been this of from increased rate -- Europe reduction to portion to Russia We moving to this gas our for point. any To-date lower Russia availability a or is gas though have from operations To Europe offer, in the gas gas There is that the know, alternative future. gas, to quickly not the natural difficult limit reduces the clearly plan in is one capacity. a of pre-maintenance to or some on of a logic

all varies dependence know, by you Europe. widely Russian across country gas As

we in dependent. in some Europe EBITDA countries that amount While with generated of less exposure have do our Russian heavily on is gas substantial in depend a countries

defense addition, we reduction XX% lead most a impact believe our supply food and in production our COVID, a same were limit exposure reduction necessary, the Also, as in deemed where a is much scenario gas rationing markets such would our reminder, In pharmaceuticals. our during plants and gas XX% aerospace, we could operations. given as packaging, of afforded the in than less on it are capacity. treatment a If in critical to

development. situation we'll and the monitoring closely, you continue obviously are We very on to update

guidance Peter provided to ago moment natural that at performance. that, I a available the elevated albeit, now our For details With gas continue assumes will further will on call the the I for to financial avoidance Peter? of over hand be doubt, prices.

Peter Matt

Thank due our our inflation alloying and in and a million, hardeners improved €XX of in performance for price offset to Metal on than you, quarter now Jean-Marc the million each €XXX slide the was was of as segments. thank VAR XXXX, of quarter. €XX our of this Please €XX headwind quarter to year. and increase impact of of of volumes second to turn elements more Value-added each for higher mix due this million such last revenue also scrap increase same inputs you in million compared up segments. or as everyone the call was X. joining today. in XX% to the

of FX was to There million three U.S. €XX this tied important translation due a Finally, increase dollar. from the to page. are stronger takeaways favorable

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

our year our million was XX% €XXX adjusted the of to in the put this margin half on EBITDA on first adjusted of approximately XX.X%. to up VAR with first was half Second, EBITDA compared our quarter and in the of value-added XXXX points. performance context, XXX revenue was basis VAR up And third, in margin

continues was a demand the stronger levels semiconductor US €XX and favorable which overall costs pass-throughs. on due primarily than million, be dollar. contract headwind well operating mainly of supply of inflation-related shipments and tailwind the quarter shipments Now million was performance. Costs turn increased FX is of tailwind million, packaging on the the and due €X translation Volume to to XXXX. a began other €X in PARP higher Packaging Price challenges. to due million quarter mix last improved below continued €XX X% tailwind including increased new a of the to the Automotive in X% versus X segment -- higher for to new last versus Slide platforms as up, and record EBITDA million chain increased more as with on focus a noncash strong pricing second metal but year to X% inflation €XX shortage ramp automotive. year a pre-COVID of a PARP were quarter to demand. costs. offset shipments second of compared let's to Adjusted in was

stronger €XX Now compared year. the to €XX and mix of €XX turn Costs of Price a pass-throughs inflation-related on FX let's focus second a a including of improved XX more the €X million to was last ramp-up inflation million, US to million with aerospace. EBITDA headwind translation was aerospace on to up compared quarter Slide operating €XX as and dollar. increased pricing XXXX. tailwind better TID a a million and tailwind in Adjusted higher and A&T contract aerospace due Volume of a costs XX% to quarter were shipments of XX% the was tailwind production of on were mix. the segment. million and due a stronger in mix

level. record mix XX to for to increased a turn mainly tailwind, operating industry Volume higher quarter million X% EBITDA versus compared of €X But on new a higher be well demand million including with in the by €XX pricing and to contract tailwind to a and shipments Automotive were inflation-related increased for of as year headwind inflation. €XX Costs €XX noted versus automotive. second in strong quarter segment. continues below shipments million last improved costs continued Adjusted due Slide Industry primarily overall due the and Price PARP million AS&I pass-throughs. year. increased of on on a XXXX. Now demand. pre-COVID last XX% X% AS&I was to the let's shipments was focus

of otherwise to in across Slide which focus give cost we I performance. pressures inflationary control expected, are the to headwind to offset we exacerbated These pressures. you second significant and inflationary many In business war as Ukraine. quarter are our XX were current on facing significant on where want creating our update turn a cost environment by strong pressures Now an these the to experienced our the

As we pass-through a operate you business know, model.

supplier able changes significant smelters it's and shut to will are exposed to down. supply. a a with be cost secure price important is the of input. but we and to The purity We higher where we aluminum are high due aluminum of Magnesium lithium resource shutdown tight reduced elements currently year previously actions materially in US on our said, increasingly recently again remains took to higher supply, of pressure Most cost. disruptions our expect metal That of missing forcing pricing. smelter to in high put today significantly to not one production. and supply this like the suppliers supply at our the supply concern prices So, this magnesium most eliminates energy to Hawesville alloying an Century cost has

ability with need. worked other to not are our currently about have our we secure magnesium suppliers the concerned We and

cost expected. particularly European costs are magnesium will our However, this year, also than higher energy. Nonmetal higher be

has the which noted, basis previously of cost purchased some on mitigate a we As helped forward current energy pressures. rolling

our However, price costs increases. significantly the run Europe this energy given unprecedented year in higher particularly will energy

to total total annum. XXXX, expect XXXX. with we increases million costs costs in over €XXX per the additional to energy three last in years €XXX Our around million averaged closer Currently, energy be have

same other not While continue throughout experiencing XXXX. the the across we to pressures extent, balance significant expect cost categories, which are of we to most

a pressures, to cost across impact of fronts these Given mitigate their results. working on number we our are

and recently to company, business our continued costs. our working and increase inputs consumption Our our the announced beginning the we deliver expensive reduce to XXXX in Across performance and of efficiency to Vision is lower cost quarter strong fixed are help. our initiative

include inflationary for PPI an as energy or to such not, crisis, do European On energy mechanism. existing extraordinary we -- support in the mechanisms, surcharge them. for of energy commercial they contracts many customers protections increases for the prices, have The surcharge working side, are example, example need our with and European inflators where our

signing are pricing contracts also We inflationary better with and new protections.

incorporating in successful in We have, protections example, of for most been contracts. magnesium price our

net I them to revised cost be including and significant that other impact control. be it we and inflation While of the it's want taking cost largely we manageable are in on are focus and XXXX, XXXX. included actions in continues by to offset our for inflation offset relentless improved increases reiterate will believe the guidance to pricing energy magnesium and and our

free of generated let's Now, second bringing to our the discuss free our slide flow. quarter, We to flow turn total cash XX year-to-date cash and in €XX €XX million million.

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

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

We be guidance million, of €XXX €XXX stronger of a to expect and inflationary million, million from pressures between to and previous due CapEx a US to €XXX million €XXX our up combination dollar.

and taxes million of expect to interest million. €XX million €XX approximately We of cash cash €XXX

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

of low a of the of end down at X.X from almost quarter, reached multiyear were leverage second the times the Our XXXX. three end

below We X.X guidance XXXX of long-term end free Given X.X to remain maintaining to continue range to to our our of leverage achieving target and times cash revised we three committed flow, leverage of EBITDA our target fall X.X for adjusted times. year. decline leverage this the by and to times and expect

of we quarter. see in can quarter, summary, maturities to our €XXX first million, that It you the we of no second this, COVID-related liquidity increased financing. of is end bond our until have of debt note compared all XXXX. during As repaid the the our Despite

building. progress financial capital with made will very the that, on flexibility And and Jean-Marc. back of We proud our are of we are the hand have it I structure we to

Jean-Marc Germain

Peter. you, Thank

end slide market discuss and our current to XX, turn Let's outlook.

remains As markets serve. I generally demand the mentioned we strong in very before,

We portfolio trends light aluminum remains The domestic today automotive tight. with recyclable to of North as are and for America electrification fleet. our well such Constellium weighting and Europe, benefiting is the diverse infinitely growth in growth. market capture from packaging and secular both supply sustainability-driven balanced preference consumer in transportation the is strong positioned cans, and this

in hindered in with this attractive brownfield market. and other expand our both OEMs semiconductor of will North in mill. stoppages, again, growth can-maker demand of Europe, announced projects We for recently supported to announcements term, shortage automotive well a investments production expect in mid-single both shareholders. and to XXXX Near-term serve capacity as quarter. medium to of challenges. new already capacity as to unlock regions, which the our demand here We America greenfield recent is digit the XXX,XXX These series continues by chain come the build capacity tons projects the additions by very growing US be rolling aluminum by announced in supply second returns experienced and

end growth low the positive continue market, of on demand From this second continued We penetration aluminum. inventories, expect demand, this given and remain an electrification we year. perspective, potential however, of trends, very market half to high in and these its consumer in

We remains remain Let's rate have XX% the to confident up aircraft. intact, Aerospace in last aerospace growing OEMs year, greater announced for over turn the Major fundamentals more second increases. passenger new traffic now were fuel-efficient up driving quarter sequentially. aerospace. and build versus XX% that demand and demand treatments including

trends our here the markets much lastly very driven health that, Europe of is America. are impacting North secular markets core It of in growth economies of note general, dependent well. industrial also are these other the at to as Turning sustainability many play In the upon and specialties.

both to we weakness America signs today. end see While and have in strong begun markets, some certain in our preliminary of potential North are markets specialties still Europe

slide Let's XX. turn to

reiterate geopolitical why Before concluding, will acknowledge challenges front, succeed. the Constellium I to to but want macroeconomic face and the on of some we continue believe we

portfolio a of represent Automotive Together, build of Aerospace innings is diversified of XX% roughly range in growing. end below well are pent-up markets three a recovery. is resilient early multiyear base. revenue stable rates, markets serves our our operating positioned substantial well with today. is end and pre-COVID the demand. First, Packaging that these

our for trends is secular These demand trends. aluminum growth due the growing, foster to in Second, supply-demand market sustainability-driven dynamics. core durable healthy

cash to record Fourth, across Third, we most our maturity several our target flow. sheet track environments. demonstrated we a contracting to strong the our balance our and our in of and range no have And to have pricing to quarters Fifth, last and execution control approaching inflationary position. remain our cost power built free have leverage ability costs, over We rapidly expanding increases. confident ability business a our strong through with very and proven both near-term ability the generate of pass a we have consistent we succeed. demonstrated liquidity ability is we finally, bond have

our Constellium's let's before slide the of solid million XX we performance, our line the cost open free EBITDA cash second and adjusted record generation, through adjusted multiyear net We for pressures. was low. turn performance record Q&A. the XXXX delivered to and X.X flow times to a of of extended strong We EBITDA control wrap-up, is strong. of €XXX significant of face debt quarter operational inflationary track very in So to in

in deliver Looking to we full XXXX year beyond. forward, and positioned performance strong are well

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

I of X.X we today. excess targeting we remain We adjusted target in times a to conditions times. XXXX range and to business all roughly X.X assumes Q&A guidance remain despite EBITDA by future objectives million Our expect €XXX the our focused are they cost performance the our of are as leverage Long-term very maintain optimistic free about generation, ESG we shareholder value flow the achievement of Elliot, and operational out session. open creation. control, that, will turmoil there. With am on now cash

Operator

[Operator Instructions]. you. Thank

first question comes Credit today Suisse. Our from Woodworth Curt from

is open. go Please line Your ahead.

Curt Woodworth

Thank Yes. Good you. and morning Peter. Jean-Marc

Jean-Marc Germain

Good morning, Curt.

Peter Matt

Curt. morning, Good

Curt Woodworth

of question net mean, sheet it in forward. like I flow your getting where potential when thoughts just forward going your outlook, First to wanted kind it. and I free roughly is cash the going speaking look on get your capital leverage certainly return balance be want kind seems at to you you of

pivots as potential priority wondering of I you allocation move capital if was year. into So address kind could and next you

Peter Matt

Curt. Great Yes. question

So, one. on going this to consistent we're be

we the achieve the was said target to As at leverage is X.X. number thinking get one we to of past shareholder X.X and which about in for priority that of as And and then kind then framing now. rapidly more distributions approaching we're we're X.X kind a we options. that right become kind we'll But central reconsider our of will And focus are absolutely our once us. that

Curt Woodworth

you know sort Okay. I was give momentum seems about maybe I Price this And very quarter. is into guidance, of guess a sequential of A&T obviously kind upside but then good. don't and as in like -- progression big think we it mix quarterly obviously XQ,

would getting of a you. very the comment automotive guess And back up half can better, it the is on structures, seems then on automotive EBITDA like are maybe So what maybe scale mix question within year? for A&T. automotive strong. Thank obviously little be or continue I and assumptions but the XQ you your maybe like to bit Did is you ton the will per progression feel

Jean-Marc Germain

Peter help started me. will get I'll and Yes.

as So is sequentially. is And of so thinking half not first the about second it year typically the seasonality. of the remember half as there the strong year

see to continue strong in A&T. We demand

the up said was ton going number. second exceptionally per you of at €XXX. ton, very So end I the range. to think historically EBITDA over €XXX a is Maybe remember But be drifting solid to good we're higher we've look towards a you EBITDA half. €X,XXX. per strong the it's when QX

year. QX the all going much don't about to that of of performance So the anticipate through. in per auto, we OEM Talking ton through customers end expect of the a issues we the terms don't are supply continue change the EBITDA chain in

second and doing for seasonally year-over-year you the we're environment social automotive a if pleased stay in of them, are first continuation adjusted up a around half we think yes that with these expect overall And for how we'll levels shipments but environment. XXXX, half. to we the at look of we're We slightly

Peter Matt

demand. add ready, I Yes. only The that's very -- are I think running back, to when so great. well only that mean, we're auto is and we're our incremental I'd thing add I'd comes right? ready The lines thing absorb

Curt Woodworth

Okay. Maybe It's in three mean I have tons. we've X.X greenfield time. new just quick roughly plants million announced two being one. months' seen one

more function clearly XXXX. can't XXXX, -- I significant change capacity I lot growth some them, like ahead. So into just able you capacity those would be absorb kind that to it's that? you the pretty the got I Do on you coming beyond to suggests commitments that but know you. a comment think step speak view a of market was market wondering of for which feel of of Thank your can they've will capacity?

Jean-Marc Germain

Sure.

are of sure. growth by sold we during the sold -- end those significant the XXXX. decade. is contracts as So capacity we got in in Day, beyond decade. But That over Analyst we the given that you out this We essentially need go do market the that through the through and XXXX-XXXX the are we've out not believe dates commented the additional for

through of balance one we these lacking the imports equivalent we're think part overseas to supply-demand US. that these the come beside level a that imported or how of and ramps successfully ramp they certainly up, equation kind remember there's some very up fast the of create there's comes the that they and are the is supply-demand up if of on up and balance And because domestic excess But capacity how -- stream in in and very they needed how horizon. ultimately is of quickly equivalent they capacity quickly tight So today in yes ramp of from of we that ramp either everything supply quickly online XXXX-XXXX need greenfield up the as may US. think

Curt Woodworth

Great. Thank you.

Operator

next from Sachs. Emily Goldman Chieng question Our from

open. is line Your

Emily Chieng

And and potentially energy Jean-Marc earlier your morning, Good question comments cost perhaps and for you're XXXX. the around taking just expecting is My the But color some Peter. could time XXXX thanks contracts that the what you today. have increases first in in on maybe to have that you as Europe? give that cost place manageable additional hedging you share into particularly remains as you increase confidence it to the or do what that relates

Peter Matt

Well and all Yes. let -- we're that we've of me vis-à-vis XXXX so on first comment say energy. effectively our purchased XXXX

So that on we're effectively XXXX.

Moving into XXXX, the way we think about to this is that significant be we do expect increases. there

I as of need our However that also type the prepared increases we remarks, is mechanism. given now. there some working And think customers said surcharge right in the extraordinary that for a on we're energy with

it's hard of And now guidance because in we really are on a it. give effective so how lot through working we need XXXX see to aspect of that right to

in as year on So of able more cost. XXXX to color QX energy and QX into develops of that you kind lot a we'll and terms give early next be

Emily Chieng

from walk then is through those of costs sourcing as pricing on costs do are And follow-up supply passed they domestic MAG sources well. ultimately as you maybe US one-off just new get Understood. high similar through on new more a higher sources? But the around metal and or efficiencies, aluminum purity

Peter Matt

in in these will high have costs with and we will costs I on said them pass-through as absorb mechanisms are have through we've of Well absorbed magnesium the prepared PPI be that different the some so on purity of remarks, costs mechanisms put structure again of it we delay. in to the and place kind place in kind the so Magnesium forth. likely

too. get protected. of it's fully in we all along be in we But of that not So XXXX by comes will time And necessarily kind guidance should our XXXX. the

Emily Chieng

Great. Thank you.

Operator

from Corinne Bank. Our Deutsche from next question comes Blanchard

is open. line ahead. Please go Your

Corinne Blanchard

Hi. time Good us just you we can into expect the remind the just want back the you contract XXXX the packaging. to can Thank and on for maybe And on volume that be and morning, Peter. XXXX? renewed go and Jean-Marc to today. I

Jean-Marc Germain

of contracts. Well, quite we few a our have extended

of the Maybe most now. was five less three which XX%, you're thumb a renewing sometimes little of time it's of rule the so years volume. every historically bit XX% kind it's year years of So the

Corinne Blanchard

as you for XXXX to pricing Okay. the let's term, the try view say just mean, kind capacity do on upcoming And contracts like of then XXXX, how in medium that maybe negotiation on the market? well I given those

Jean-Marc Germain

Yeah.

of XXXX. have So in much we XXXX, anymore contracts anything to the already locked most period and really XXXX, for are our negotiate don't because agreed

much have that's mean, plenty contracts. we So done on extensions time to to current pretty work I of them.

we need have to XXXX, market today, to So XXXX. don't the ourselves get burning our XXXX. a for capacity sell and

Corinne Blanchard

Thank last FX interested But color second I just and see be impacted question could about Peter. this year? or the I impact more you maybe and can for you. like one the And looking provide maybe if some into from what was USD. sensitivity expected Euro, Can you that for the half of

Peter Matt

Yeah.

of the about in first million context the half, half, impact. do in is the So the and the in quarter had a €X first on €XX a year-over-year the a this basis, to maybe second quarter about right? in so had best -- impact the million way So we first we

FX we're the in So from and tailwind €XX quarter last relative year, a about million-ish to talking

Jean-Marc Germain

EBITDA.

Peter Matt

excuse on Thank EBITDA you. me. Sorry,

kind know on get on the which want debt, sheet the so gets balance impact modestly interest it really balance the despite flow is is on But why persistently flows dollar, reason think net billion, that first which benefit is the half around the million we our CapEx of making. our €X the I should EBITDA the of FX of -- and balance into then, the debt and probably been cash So €XX is magnitude on assume at right basis, if you for neutral absorbed year. expense is because negative, a maintained -- translation the US order like the the the kind it I our sheet, you our of forth. in to be strengthening of really side And to look we've is then repayments things positive the that and impact

So positive. modest it's a

Corinne Blanchard

helpful. you. Very Thank Great.

Peter Matt

You're welcome.

Operator

comes The from from Josh Our Company. next Benchmark question Sullivan

line open. Your is

Josh Sullivan

Hey, good morning.

Jean-Marc Germain

Good morning, Josh.

Josh Sullivan

strong couple gliders needs the engine see on for engines catch for Do aluminum to remain a you growth down has and scenario Just And but chain and slow need structure here, needs? aerospace there's gating OEM supply up Airbus a to built a already. deliveries. congrats where the of demand factor curious, as within any related

Jean-Marc Germain

Yeah.

much the aerospace it everybody than we're significant of telling asking aware lot is see can the If this mean is industry produce. any what most month, So down. us we're We bottleneck a the to that earlier in don't that of at anything, metal press. we engine moment part the our I of for just more gets customers slow in very [indiscernible]

chain. is so, supply And XX% industry build not mean very are were only guess need we I to we the a as remember well. there the XX% down rates than years of And by two rest what us, Josh, for less I at delivering replenish strong were. the and

So chain supply the continuing in is to into get more that scrambling there's see and aluminum really pausity of everybody we and aluminum XXXX.

Peter Matt

The might I only thing add

Josh Sullivan

And just…

Peter Matt

Sorry, go ahead.

Josh Sullivan

No, ahead go please.

Peter Matt

see see add companies risk a right? of they're this this build going in once as kind the frame I the change XXXX No, to down be that start think we So aerospace I to might rate don't say, is we going the that -- there thing was being we only don't XXXX, it, that a to slows to a don't time quick

Josh Sullivan

the they that AXXX given lithium for AXXX the given order an program uptick around the just have that and product. -- activity then Airbus might But seen that lithium ton supply. aluminum I just and reviewed aluminum thinking per at understand you in EBITDA prospects A&T program have then over took And the impressive the about demand? when

Jean-Marc Germain

but heavily mix mean, from nothing bit, little different dependent. the rest. I A it's

lithium of bit quite are is know experiencing wide-body which goes -- a than wide-bodies recovering bit a aluminum is slowly on not a alloys You our aircraft, AXXX, which narrow-body. that little more

So there's in but plenty very about prospects hardware. there, the of for factors remain optimistic we

Curt Woodworth

you time. Thank for the

Jean-Marc Germain

you. Thank Sure.

Operator

Our from Sachs. Goldman comes Blunden next from question Karl

go Your line is open. Please ahead.

Karl Blunden

your time. gas pass if given thoughts we've and energy A little to in volatility just morning. supply, Hi. for that on on. the lot to a Good comments Thanks environment. operating bit on in seen around of ability you supply that and more could wonder energy natural business the costs I the Europe comment

Jean-Marc Germain

and it's I it change. a bookend Sure. is, right? available bookends albeit where situation, gas of never to operate and it mean, the to saying very But operates it's at still fixed are much reduced for Well, they way one -- continues Karl, not at available current will two prices. I and us level, is I'm But high flow, at the think

bookend. one that's So

is, The rationing part prices the would demand a from Commission in which more which bookend even of gas reduction certainly XX% what Europe and as is a has published, scenario. expensive trigger other

ways. for reduction is, natural availability in unpredictable XX% [ph] in understand I of most that change think, important what's factors that would terms in other into less the likely of us gas peter-out may us, But a environment there's than plenty translates in happen to what that production. around

same than for So customers predict reduction the there's XX%. customers, usage, in we XX% packaging impacted The suppliers. Maybe aerospace our our more impact cannot if that a customers, natural our how less or our or would gas auto they're right?

place a is a Europe, widespread, terms less all a So reduction XX% in there's this activity pain then in us, the reduction. level, less our and is, across if the much equally geographies where share than kind in for uncertainty. segments is of, you're much all But of

So that's one point.

to supply. other not be it's overall exposure in countries Russian that to European that, Europe an note XX% it it's is depending is, to on different a gas. of Russian The regions different depending levels are whether the different and level on point to would And exposed number, clear gas their important

are the the see. sorry, But less, we'll the in remarks, so some to on Russian operated, dependency on mentioned where gas, help We well as that extent. would European is mostly us as prepared in I -- countries

is, with exercises finish we saying reactive. I'll very by are do to do we our teams how customers. how desktop if Z, happens our We've is done already our as operations, reduced what run by X, Y, Now what gas engage

not it ready. a looking but have we at very it's in a manageable. So extent we panicky I getting at we are all. we use reduction, are We don't are to hope And XX% ready it's to the contingency think our plans, and mode

Karl Blunden

That’s one Peter. this very be helpful. Maybe, might for more

on liquidity of the Just business. net and part the debt

more front a you the and down credit release paid be there to flexibility? this in and place need year, the on few facilities in in are on of on -- you come Is you you half to credit a provided quite You there facilities. updates regional you have substantial various your where now from feel liquidity the second or like do standpoint optimizing

Peter Matt

of I environment, of think, to what around, what and to a kind in start candidly think, don't in going we'll -- little position more more uncertainty once need some we reduce I -- We bit in our now, a great But we liquidity. down. see liquidity. then, be we're see think we the we we from that given stability, And stable that would we'll standpoint. a liquidity bring more a on Based gradually comes. patient right see we're

Karl Blunden

Peter. Thanks Yes.

Jean-Marc Germain

I a that think we've say opportunistic. to important position be ourselves put in we can it's where

Operator

Instructions]. [Operator

Wondrack next Sean Deutsche question Our Bank. from comes from

Please ahead. go Your line is open.

Sean Wondrack

Hi, congrats on of some its Jean-Marc Peter, guidance improved difficult and environment.

Jean-Marc Germain

Thanks, Sean.

Sean Wondrack

whether of if you first are my of your you inventory from curious I any seen on but potential metal And of side build allow question, time. ahead willingness you've energy –– guess clients inventory, on side. curtailments, the obviously, there to any to kind I for secure was on if any the not to the ahead opportunities

Jean-Marc Germain

Sean we you we Well, our to if free guidance best our again, believe where our We're our can options constrained our by guidance us – we decision inventory, able – job the the raised increase select where that a for not it's are. is flow we have be make. place put EBITDA but whole will and operating it retouched flexibility looking business we financial to to cash and company and are we've we maintain noted to our at certainly performance. right haven't to situation we want that or That's the in

So those choices we're sense. quite can happy they we make make if

Sean Wondrack

appreciate helpful issuer commenting around you past pent-up was Do No also ask of and of sort of had lot the over years that is being demand curious believe we if they – now depressed lot then And had but this my here. to been particularly see of that just there's second I out there. SAR right auto the that know game a very a it's theory I question, I sort Right. the auto another case? segment, two

Jean-Marc Germain

just and is you need And look yes. around that they issue drive it's the is, that to dealers' are in US at and think empty, an the there lots We right? there. I mean visible

believe organizing stopped but for We're it hoping pleasant So for earlier, it for wait we're so. when when as for for was Peter And yes, up but hoping ready We just anymore. we we we picks happens ourselves have it it. a saying are again not would surprise.

Sean Wondrack

you've then That given you. And it's outlined side. helpful allocation of on things option potentially of curious, your lastly, bonds trading of the just makes We're a Peter to there free a some Is It's bonds? number Thank lot today. capital very any flow out that repurchase a use are willingness there and go there an out to cash any of the at discount. sense. your

Peter Matt

of an and kind Potentially monitoring and my that on it's that absolutely that. made we're for of I to us comment Karl, option follows kind to

the fact market. We that are there's kind of the uncertainty also cognizant tremendous in of

liquidity And as to going term said, several done a a yes, one And can put I kind keep is really opportunistic. short to our company opportunistic. as we've position, to before, years we're the we've be said think where so we last the over of I think is continue as that nice But for Jean-Marc our of be strong. I the in things ourselves bias

that. to So we'll evaluate continue

Sean Wondrack

highlighting luck. Good the very Great. side And again on energy today. helpful. thanks It’s for

Jean-Marc Germain

Thank you, Sean.

Operator

no further final to hand questions. Constellium I'll have We of for now Jean-Marc CEO back remarks. Germain,

Jean-Marc Germain

today. you in the Well, thank everybody you for thank participating Elliot call and

to the markets As but long-term to benefits fundamentals. of be believe most side. well the on on positioned that We can of is that. We're further in And well position the our this a operating have plenty balance see, is of crisis, good uncertainties make situation. a we the there you interim very there, crisis the there very out side, approaching Constellium the reap with are positioned of strong should very sheet most

few noted activity arguably of as being quite a would our remarks VAR is than our mentioned in by evidenced it as level of despite segments today have Peter was pre-COVID, in You his a that still higher recession. the

of VAR operating where in COVID think make than or to Our at that's Constellium by turned testament good margin everybody before stronger and of and great place, is I a margin job work a to performance EBITDA terms situation is you being what can a on we in whatever we sure that be so control, that we company put most can the out. the opportunistic make

very look So to and lot with and we future again approach of you talking confidence, optimism. to October. the we Thank in a excitement forward much you you. Thank

Operator

We'd now for Today's concluded. your to you thank call has like participation.

now your disconnect lines. may You

Constellium SE (CSTM) 27 Jul 222022 Q2 Earnings call transcript