Earnings call transcript Q4 2022

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Operator

Hello. And welcome to today’s Constellium Fourth Quarter and Full Year 2022 Results Call. My name is Bailey, and I will be the moderator for today’s call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions]

to Investor conference Relations. like Hershiser, to, now of Head would pass over the Jason I Please ahead. go

Jason Hershiser

Thank you, earnings Bailey. to our I would like quarter full to and year XXXX call. fourth welcome everyone

have On the our Financial Chief Peter Officer, Chief our Officer, and Guo, Officer Jean-Marc Chief Jack our Matt; Financial call Germain; Executive we today, designated.

being presentation, of on for is presentation is available the our today’s we at recorded. today’s have and Q&A a will the slide After session. copy constellium.com website A call call

begin, a recent we and to to visit the everyone Before I’d encourage look like company’s website filings. take our at

Today’s events call of the XXXX. statements expectations, known involve and and the risks the Act Private include statements meaning financial statements regarding and uncertainties. may may of include unknown forward-looking Such company’s and Reform future Securities and performance, Litigation anticipated within operating

For results of XX-F. in the the cause Risk the factors to expressed that statements, heading differ factors please a could in specific on Form those to annual report refer under forward-looking from summary risk presented our materially Factors

information of of undertake new as We future of presentation. update a otherwise, the obligation or as required as this except law. in events to statements the revise no presentation or information, date result by any All forward-looking is

which addition, presentation, reconciliations supplement measures. information our of In today’s disclosures. in regarding the slide includes IFRS financial Please non-GAAP attached see presentation certain non-GAAP today’s financial measures

to Jean-Marc. Without further ado, to I’d like over call the turn

Jean-Marc Germain

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

worked. Safety number recordable performance priority reducing pleased am pillar on delivered that each we on our by for hours key X.X the relentless thanking again, our of our best-in-class slide for our strategy. in to one safety. safety of rate employees begin million five. to year report per sustainability their start to XXXX, case I a Let’s XX,XXX focus and want I is

performance. would recognize for their like safety sites several specifically our excellent I to of

a hours X without the XXXX. Shoals, million case. in completed completed recordable Muscle Singen venture a Our Changchun recordable China Neuf million case Brisach, without X hours all joint and operations, Ravenswood, in Valais

XXXX Finally, completed sites XX of zero our recordable with cases.

is remain safety we all on We case to though, journey need achieving fully day. this safety per to to focused committed priority rate critical never reduce our every million our Our by remain X.X targets to hours recordable XXXX. and complete,

by let’s from our quarter as performance. Now X% discuss billion down highlights were of compared increased of €X.X Revenue six Shipments by quarter shipments. offset XXX,XXX prices slide turn revenues to which Remember, metal the are to to exposure business lower the model, risk. price our and operate prices, X% our fourth a tons, XXXX. result a fourth partially mix, metal lower and pass-through and minimizes price metal while affected improved changes to in we

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

Our million net to fourth income the quarter income XXXX. quarter, the in million net €X of of in compares €XX of

guidance. in million, quarter. As fourth Also, was line with consistent free the we right, generation the cash the bridge XXXX EBITDA €XX quarter prior and the our see million in on of you slightly €XXX our adjusted can record extended with track of in flow above

with year the demand around very were shipments year, quarter to to and large makers driving challenges in experienced in channel shortage strong down in inventory our and were compared up part launches shipments a most row. quarter, operators. XX% across adjustments third discussed last was shipments of aerospace end which, plants Packaging can our to at Muscle were Shoals, engineers at new across double with versus due Automotive last our quarter in operating growth. as quarter platform last in Looking the due the we markets, up the a for digits

across weakness by our significant performed of signs power team pressures industrial our The business detail. execution inflationary pricing of in seeing certain are in later more will our and well. improved drove solid we overall industrial mix, Peter results, which discuss overcoming combination markets, While strong

Now to seven full let’s the year highlights. for slide turn

full million Revenue tons to to higher year, primarily or was X.X billion. XXXX. the mix. were up For compared and due shipments improved and €X.X XX% slightly to prices metal This increased price

net Our million, of income million €XXX in XXXX. €XXX net to compares income of

and year. XXXX, a Adjusted performance also EBITDA up or for the was €XXX flow for of last was with our record our a We free compared of to and consecutive fourth a AS&I delivered record A&T company. the in million which This cash segment. total record €XXX XX% million for year positive is company a

began As or of we you at our would year. Day, and capital update on ROIC return end calendar reporting at Analyst year invested recall, the of many in ROIC, our said our each last we April

of an basis XXXX. up For X.X% ROIC XX%, XXX XXXX, we achieved points from in

demonstrated As right to of at or the of X.X year X.X our can continuing on bottom deleveraging, the commitment down times we from you see ending the slide, times end the XXXX.

and I adjusted We free XXXX by and very Overall, EBITDA proud pricing fourth demonstrated year record our cash in flow our inflationary of despite power full am significant quarter XXXX performance. pressures. record delivering

details on I With performance. financial to hand that, for the now our call will Peter over Peter? further

Peter Matt

fourth VAR joining now revenue in same or the and call to for today. Jean-Marc, year. XX% million up the turn you, €XXX thank slide everyone compared was nine. quarter, the quarter Thank to Value-added last Please you

a million tied of dollar. to quarter, each was improved to fourth lower to FX mix million of million Looking in a stronger increase Volume price at headwind €XX this due of the in increase shipments U.S. due segments. due €XX PARP. this was was our translation of to €XXX favorable

headwind costs quarter. our €XX were such as and as elements and the million more a input Finally, hardeners alloying metal scrap of inflation impacts in offset performance than

revenue and grew full XX% the biggest similar, the was There first, to is compared power. of value-add and by and takeaways volume, increment to last we mix year-over-year our were specifically to offset of us second, and helped slide; XXXX, continue year; For Price positive our variance year important price pressures. have inflationary pricing contributor. are for drivers this a which except VAR two from we

Now turn our the of lower a million to on to Adjusted products. €XX €XX higher in rolled quarter segment in compared Volume automotive shipments PARP XX headwind million and of EBITDA shipments of performance. than was packaging by with let’s fourth decreased XXXX. specialty focus and XX% offset more slide

America began Automotive our adjustments can appeared at the shipments year challenges the platforms Europe, Packaging production and generally quarter increased quarter sheet year new demand in XX% North last customers Muscle in ramp and last up versus decreased from short-term in shipments XX% stronger. inventory Shoals. versus as to due to and both

a result €XX was on inflation Costs of were related previously. mix shortage to experienced to and higher Muscle costs PARP due €XX million, Jean-Marc engineers that of and higher Price as the a operators pass-throughs. including Shoals improved inflation-related tailwind million and maintenance at operating of headwind of mentioned across primarily contract costs pricing, a

Our but of quarter Muscle Shoals will team dollar. the translation, to are time. this take is €X U.S. hard and highly due a was FX new we dedicated hires, working million which some recruit train tailwind a stronger in to non-cash, and is

year compared adjusted For of million, to of to full those performance EBITDA decrease the €XXX of were the PARP the quarter. year full XXXX. similar in X% fourth generated The drivers XXXX, a

of XX% shipments. the Adjusted let’s Now million Volume aerospace lower higher compared A&T tailwind EBITDA offsetting segment. fourth increased quarter was the turn €XX shipments of on TID million with to to XXXX. slide XX of and focus €X a

strong versus year, Aerospace in shipments were in semiconductors. demand up last TID recovery down markets, were as by XX% markets reflecting continues. the XX% in year industrial slowdown Shipments last versus certain and in offset defense aerospace partially a

Price price Costs in inflation-related million and volume a XXXX on fourth and due payment €X and improved mix million bucket more contractual inflation. €XX a were costs higher a related the of quarter contract a pricing, of to The mix pass-throughs mix headwind a of operating to million stronger with aerospace. was included tailwind commitment. customer €XX on of including

in €XXX year the to the adjusted drivers A&T those of of compared record the similar an to quarter. XX% fourth performance For full increase The year XXXX. XXXX, of million, were full EBITDA generated

As bucket full of price included payments related volume to and year contractual for mix a €XX million commitments. reminder, the the customer

the have to on be for contractual in One performance €XXX Based our of past, per per €XXX. to EBITDA last be range. point the ton the we €XXX the €XXX on and A&T, EBITDA ton in positions said should segment expect business, the to now we

a Now €X higher the shipments. turn million of offset compared and was slide with EBITDA segment. of by let’s XX to focus the industry Adjusted on tailwind, flat €XX automotive, was Volume lower XXXX. quarter partially in shipments fourth AS&I million to

a the higher pass-throughs. improvement X% €XX on experienced Automotive operating in a improved mix the last shipments contract we Costs year. versus in quarter tailwind, were mainly as of including increased were activity last inflation-related to down due year, Price and million primarily €XX quarter was headwind pricing, costs, some levels. to inflation. Industry due versus million shipments in X%

full performance fourth year to of the of were AS&I in generated similar XXXX. the an full compared record XXXX, quarter. For increase €XXX X% EBITDA million, drivers adjusted The year of those the to

I provide a of due and the a in the Holdings on quarter, In and and adjustments Corporate not of is It Holdings Corporate. was mainly quick want quarter. the to €X slide, was The headwind result to million. but one-off a number on comment timing

at expense expect we was Holdings Corporate full year and and to the run per For and to approximately €XX million Holdings Corporate expense XXXX, annum. our €XX continue million,

where with Now throughout are this slide and Throughout continue the update control inflationary and our want to faced an these and environment to broad-based to on current significant XX, cost offset facing we turn we currently inflationary were pressures. and pressures to I XXXX. XXXX, we pricing give expect on focus

this the operate supply our XXXX to so XXXX, to and go Labor model, into We supply resource also input. in price needs today be tight That aluminum, European I are in metal in and alloy energy. again we non-metal and a costs. disruptions. a more moment. will were particularly business but will changes able again expect given in incremental we and smelter not other costs shutdowns detail just said, to we materially do know, you higher at energy but currently year, exposed remains cost of on pass-through largest our As

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

cost strong delivered we in XXXX our on continue performance businesses relentless Our XXXX. and focus in cost

Across we our increase the is Vision ‘XX reduce inputs expensive company, announced fixed helping. costs. are recently of lower efficiency, our to working our and initiative consumption Our

contracts mechanisms, not, of On surcharge customers the commercial to them. have working with side, as our include PPI inflators such do inflationary our or and they are where protections, many we

range a mentioned impact, where and costs, our are provide we of inflation mechanisms typically lag mechanism As have they range in the of but effective signing can these inflationary are coming have pricing a an they protections. contracts, recoup we do through at better we a past, and -- with surcharge which new

As were you in on in being priced mix, see bridge the we can and pressures. very successful the increment offsetting inflationary price XXXX, right, in the largest with

challenging was cost pressures challenging standpoint to XXXX -- of close ran inflationary very a was the year very €XXX from million. that

comparable this to we XXXX expect to year, pressures in inflationary the forward XXXX. Looking be to

We and combination noted of the continue to guidance most actions this to rest in other impact be focus are and The control. and XXXX of periods relentless inflation to in the taking XXXX. cost offset tools for able them will of included increases we we our that a our in pressure and are future on believe we cost net cost offset with

update an Now I give to to XX, turn on energy. slide where want

XXXX the around XXXX. in Our we were million In XXXX total annum. and total be per energy materially over costs expect higher €XXX costs our period energy to million costs around energy to XXXX, €XXX averaged total

forward smooth to us we basis, in As costs. which energy cost the has of and out previously multiyear some the energy mitigate helped steep noted, us to pressures of rolling on purchased helped some increases a

higher largely at As of prices. average costs XXXX are our today, energy secured, but

or but see you the chart remain prices their Europe As X on historical have side in XXXX forward the and of slide, times more at the still come right peaks, in electricity averages. gas from both can down

through passing our previously end we in with made all on of are dialogue markets. active have As costs across our very and these good progress we noted, customers

a During result, an initiated am our to call XXXX, numerous our have happy own entire organization, and that uncovered as opportunities action to to we consumption. energy we across I say reduce

eligibility energy discussed bring at that are governments is still in offset have some stage, under recently, difficult initiatives quantify. potential several higher is relief initiatives development, and potential any to help More could benefit to prices. These and uncertain this Europe

natural existing Longer term, renewable energy including place sources, source for others, we, increased gas, of that should imports solutions for like of sources. markets European countries alternative see LNG be structural by restoration energy use the XXXX, energy and in

on costs. and energy offset impacting our ability We total higher will recover costs developments these you or to our continue update to

Let’s including We flow fourth and flow. in XX million cash now €XXX free €XX record cash turn discuss of the million free to slide generated our quarter. in XXXX,

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

we million half. flow for excess at the free to this €XXX cash weighted expect generate XXXX, year, towards will be Looking the in more full of second though

expect moments. and which talk growth million includes on €XXX We projects be a year, that about CapEx higher Jean-Marc cost will million savings this to €XXX between in few more spending and

rates. approximately cash interest which million, of interest expect includes We impact higher the €XXX of

to a million. approximately we and second source a half of And of our of use expect current cash half capital be and on first roughly the the working taxes forecast, neutral cash in full for expect We based the year. lastly, in cash €XX

compared Now was the partially discuss the our dollar. as sheet the cash debt non-cash declined let’s €X.X XX offset the end fourth by to generation slide of translation slightly end billion of to of million unfavorable turn balance our U.S. XXXX and €XX of position. net strengthening with FX and flow quarter, of free the liquidity At

target multiyear range times of to times versus target times our times leverage down our end to We of times. committed long-term Our low of XXXX. remain X.X X.X end X.X and of leverage XXXX achieving a at the maintaining reached X.X the X.X or of leverage

As bond strong in and our liquidity no until have see as we you maturities million remained summary, our of the can €XXX debt of XXXX at XXXX. end

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

back now I hand the to will call Jean-Marc.

Jean-Marc Germain

Peter. you, Thank

both packaging, and have this but America believe largely discuss starting some slide half complete the current experienced be would first turn we inventory year. can in to North market XX In adjustments and end at Europe, with short-term outlook, Let’s our packaging. makers the during we of

increased both recent market, in cans, for maker long-term regions, investments on additions in of the in The we this North America. sustainability greenfield aluminum focus demand given is driving as as are here outlook can infinitely for capacity confident announcements and recyclable end well

Day we in We in this at our will last participate and year. as growth announced both America North Analyst Europe

we have the is been stabilizing noted, Peter Shoals, Muscle As end of take advantage company on dynamics. the can highly focused experiencing at operating challenges these that so we market

shortages Our plant issues have at the stem primarily from read labor you the about.

to course confident We are the plant’s our over ability profitability very XXXX. in of restore the

a to Turning of and shortage with pre-COVID challenges. a now low continuing still automotive. as and are numbers production at compared levels, supply base OEM to result semiconductor other uncertainty globally chain the sales

for on in this AS&I increased demand we However, very positive and market remain us both gives reason and PARP optimism.

COX and Automotive sustainability to vehicle inventories recycled lightweighting electrification low remains for content. and consumer are high, trends demand the increase continue low, demand will

in The third rate aerospace. Major further with in in more versus desire the field confident increases long-term in still remain announced XX% demand that quarter well traffic pre-COVID greater fundamentals intact, the the last the for OEMs driving including the aerospace aircraft. growing new, We for medium-term. short-term the and up shipments row, year to now below passenger demand fuel-efficient quarter, and recovery though increases remain in for have turn levels. Let’s a aerospace continued

jet defense addition, is the in In regional markets as demand segment, strong business well. space and

page each our on said revenue. the we our these three of LTM I of fundamentals left chart hand. as represent We and like core these like side a markets XX% end previously, As in have the the markets, highlights, of

other Turning specialties. to lastly

engineering of segments and region. remains like North in building other XXXX general early demand each do in health upon America general, end in markets. plate In the and Europe. see resilient specialties we the dependent some these many construction, are economies our has more in While in solid weakness Demand been industrial of markets than

also note remains and of and demand as like our transportation here extrusions, America. in is in North TID supporting and much still well markets strong in many In semiconductors core play It are strong very that other solar products, demand specialties. sectors is sustainability growth industry trends in in of the rolled rail. In markets like in at defense

continue of like end and we for the summary, diversification for we that our strongly end prospects the to is serve In the an asset markets company. believe markets the

Let’s XX, future. where provide our slide turn organically in invest plans want to more to our I to details on

next and growth for previously, return cost years our outlined increasing the to we in As invest CapEx projects. savings we a are strategic, growth highly few high

roughly attractive around before, million our year includes €XXX mentioned Peter total €XXX CapEx these this million be should investments. and for growth As

the strong to give us across varying business financial years performance investing. confidence position continue our several Our with last conditions, over coupled today,

We cash to strategic target this to by are investment €XXX expect flow investments we XXXX. The of over cycle. through are EBITDA contributors today free strong to continue making generate million adjusted important our

Lastly, to pace that I deteriorating could the of be mention a environment, investment sharply in slowed. want

planning the for the this necessary we these not monitor to and While of adjustments we timing continue outcome investments. any today, to are will make situation

to turn Peter, March I like for be Let’s thank Peter. will Metals. miss slide an end you, I Constellium now would at who But exciting to up, XX. before of Commercial at I opportunity will leaving the wrap

congratulate We a on partner have promotion Jack Chief good Guo been President and and Senior very Officer. also Financial to to his I want Vice

building a company recently Jack. the for able a made team were to running been tremendous done partner been which promote contributions with six to function. strong significant over we most has has has a and Peter our company, including great and our years from strategy has Jack job

the banking of of intelligence, exceptional It and set decades and two a strong brings well-rounded finance. to industry, finance the experience and already had included he role operational knowledge this, investment to the company Prior very have I with Jack closely you, on projects this closely and into with and Jack. look role, to worked even forward working experiences. numerous welcome am very I new more excited to finance that of in I

to back Constellium. Turning

achieved adjusted Our and a of very team of million record flow €XXX free delivered million. performance record in EBITDA €XXX strong We XXXX. cash

performance deleveraged challenges, further solid very inflationary our our balance has cost am pressures. a control also number we low times. entire to a strong Importantly, I of multiyear proud operational significant of delivered team sheet including X.X despite of and

it. we will XXXX forward, inflationary given pressures facing, challenging Looking but are to year, be extraordinary another the used are we

experienced As XXXX, and the Peter XXXX to in noted, remain current ability rest to in we for are free of are we those we targeting in these XXXX €XXX million €XXX cash we of future pass-through confident costs but our currently on of inflationary €XXX in outlook in comparable our pressures and expecting periods. flow to in excess Based million million. adjusted XXXX, EBITDA most

be our We in business, quarter packaging, we timing expect Muscle impacts inflationary but do quarterly than and the given same free give to in destocking expectations cash that quarter. the challenges not These just first the do last XXXX EBITDA are the weaker in of I in period guidance obviously and flow year full our negative to on the adjusted provided. operating included guidance, be the in Shoals of year

we stronger subside, As believe company. will even inflationary we pressures an emerge

to and for profitability substantial believe a and business Our enhance we success business provides strong opportunities model we returns. long-term foundation and grow our have

The range and to do am transportation trends, automotive has a as of sustainability demonstrated we and for its and driven infinitely portfolio consumer to conditions lightweighting will end I recyclable so. will of a resilience continue execute growth have advantage fleet. us across confident different and We preference such to team market aluminum in market diversified electrification cans, Constellium enable ability secular take our of the positioning the

today. excess long-term leverage based is have, by I our me to guidance XXXX forward million higher the let energy this we want times. of target also and X.X our reiterate adjusted in €XXX And range times EBITDA of prices energy X.X current add, of to as on positions of that including guidance

shareholder operational cash free future. on very optimistic generating remain value We In I our our and creation. strategy, our executing remain performance, ESG driving objectives flow, focused about conclusion, achieving

the open session. with Bailey, we will that, Q&A And

Operator

line Thank go question Instructions] Please today The you. the of Goldman Sachs. Emily first from comes [Operator Chieng from ahead.

is line now Your open.

Emily Chieng

changed and provided is Jean-Marc Peter. XXXX, Has an the was My see to been help back you might there? quarter’s versus helping there. bit flowing at versus the the have morning, year think, the more below €XXX EBITDA the on was maybe, been Jean-Marc, through little Good down you end side out? guidance that I bridge, new of could if anything call. the XXXX last talked a Congratulations down only opportunity prior has that that coming into from for million, guidance I just quarter cost improvement But think energy to you levels, the question that’s around there this your slightly what of €XXX expectations first million which is

Jean-Marc Germain

your Yeah. for Emily, back The feel reasons of comfortable what number that are for brighter that than now yes, we our be we thanks Good in true believe would October. prospects morning, so, there’s -- is and and they believe question. more a we and it

is, that through obviously book for season in in we of for are we order much pricing. we terms Number one, clarity halfway have two, also it. year. In kind more have the of October, the There’s in clarity reason our contract fall. a The more number

are we complete. Now

better on year. much the visibility So got our pricing for have we

as down a They bit winter mild with as lucky three, in so pointed came out, a number And that’s you little energy got Europe, well. we helping with prices.

and So October. again, feel, are back we comfortable we helping today these than in three giving guidance us we of that today are towards range more converge did

Emily Chieng

mentioned could that operating the could environment. there. capital adverse you what and there, environment -- follow-up, could little very of some a with have a I if adverse help some of bit the that be also be spending? pace Great. CapEx you support and capital some that will a like growth additional in what of That’s would on helpful, define may. I about But Jean-Marc. Perhaps slowed flex that, spent talked know look the operations be to more you And

Jean-Marc Germain

Sure.

million, possibility, COVID is €XXX in highlight €XXX have launched, we of we I by when flex in So, and bit there of want flex in brought So CapEx demonstrated remote and COVID a million but clearly, a year. the already we in got a our to have are it hit quite reduce that we and our of to able ability times while XXXX, projects by to expenditures capital really capital despite the March right? this, down lot expenditures already are it’s

that So gives a bit of if an how I little flex by of and can XX longer. there think months reduce you €XXX you million idea out, more it’s is, much for then possibly even

But our stable. I in demonstrated COVID more a to is times mean business generates think right? have cash free is I what and the -- what the demand we reduction when in This is in very is substantial consistent we when a like a pickup is strong thrive environments, in that business ability When there a past sharp different there flow.

allows continue And to in to why -- we we extent business want balance the to it think our we the the strong can future and invest the we and that’s sheet business. are are of fundamentals our of

the change in Again, to would opportunity, is see around ahead plans CapEx we that make long it of are significant run the for across to very corner take us. our downturn us to regarding opportunities nearly we So the and the and able many for XXXX have economy want -- deployment. in it the we a we sure are

same our in making Neuf planet. France are free we or independent some quarter primary and talking especially in flow to going are suppliers. those investments investments from are And more about, water, say. add these Brisach, high recycling, us in to our are first the lot at for cash do investments of that shallow they time We It’s contribute from the as I things finally, we margins, better the defensive they would the will negative a expand are the make I to that want

Emily Chieng

clear. Understood. very Thank That’s you.

Jean-Marc Germain

you. Thank

Operator

Thank the Please of from Curt question you. Suisse. Credit today line ahead. The Woodworth next go comes from

line is now Your open.

Curt Woodworth

Good and the Peter, role. new Yeah. Jean-Marc congratulations Thank you. Peter. for morning,

Peter Matt

you. Thank

Jean-Marc Germain

Curt. morning, Good

Curt Woodworth

Hi.

the could a you I guidance So wondering unpack bit. was little if

think past, other you I I million and million, you inflation. And consumable at still of are expecting energy €XXX of related of think over did the labor I think, least you say inflation. noted €XXX in sort

So in a do what much then year you assuming could you have view are as well? or also of cost how for achieve you delta of and productivity cost terms down the price

Peter Matt

in at order Curt, So to what inflation full we last prepared year we that XXXX remarks the be in €XXX for expected we the look saw as sorry, we year it in similar -- the was said that million. year, what to of and and or, this was

are expecting of magnitude. that we So order

million-ish add supplies that’s costs, increase. it costs the includes, of in then up as that you XXXX a that higher will up higher include energy includes noted, costs. cost, metal labor roughly And higher labor kind is and really than alloying general to and does in €XXX It that And was more across portfolio. all of

we energy that’s to through more have said that, this contract with are as are to end customers most very we said, been right I to be around and had able the things in conservative power. prepared Jean-Marc the pass-through Emily’s question on have believe of success the pricing gratifying And one good we going are We that of why October, we discussion the of front and in in season. we remarks,

I that to the need suppliers think us because material. be and becomes customers, they they are reliable And want our we what clear their is

they with so, willing on us this. are And therefore, to work

or right? the we There to are have we we case. expect XXXX to in that of we a said XXXX, some beyond, most so success there’s in customers that had and pass-through our where And did remains instances as good lag and

we Muscle do some to I that. of costs would temporary. grind we costs our but continue where think, to I the be, that’s In there, continue our relative cost, to down our challenges clearly elevated think of terms are In will they with and Shoals,

programs we lead we a position. that in have productivity in are like us place cost place, feel targets going have to improvement the And we the to very competitive

and will we Day, maybe -- to just talked on as costs. about €XX conclude, see very we on the continue cost that we we viable. So to a opportunity work continue Analyst And million to

Curt Woodworth

above And respect And I to the it in the sense. follow-up, weaker and packaging and year, of believe, XXX have auto XXX a Makes moving the had the up margins to think, metric that than half Okay. thought the XXX past, and of we more to came profitability of back roughly, guess, contract definitely with PARP I level kind with anticipated in I in in resets definitely I is profitability, then kind discussed ton. XXX. we

what you a can like kind little year think up what’s part, more you great margin if unpack going obviously, per in just the it’s million. you But could on bit? to So €XXX look a of you normalized that to could talk margin curious this A&T on target PARP see basis, by take in ton

Jean-Marc Germain

I start Peter and will will Sure. continue.

on auto in right happening comfortable that’s side, the we now. are in So discussed past -- what’s very the PARP, level we of with margin the the and

So we good are there.

following the which shortfall, as side, have works, pointed to But pressures. But mainly Shoals, The had I to is in where comes your terms been A packaging lag from a side. pass-through increase that at year last we has we packaging, on you have There the way at the that prior year. the of ability and with have also is discussed. the we to lot difficulties look in you the price do PPI packaging inflationary squeezed of remember our Muscle year.

being the couple And last only implemented also, this only sorry, only partially. a surcharges years partially year, but started year, of discussed as alloy -- ago, but we

two been also allowing has in margin of there those cost squeeze packaging PPI a and So the factors, fundamentals. because

have we year. in PPI largely the working resolved. that Shoals That the on to XXXX Muscle and and are operating restore still pass-through what pass-through alloys is said, at should we performance the XXXX, forward, Looking are in inflation lag the are and be this

As at I and should experience be end because of mentioned, lack and PPI, XXXX, the three restore And that it’s of believe those over the to labor alloys Muscle inexperienced by the the resolved of course right, mostly we the of [ph], that in XXXX. and Changchun resources will Shoals we and takes therefore, packaging. and build causes, time profitability

Peter Matt

this the about going can our to correction packaging among the imagine inventory that, our with add And unit, is I’d fixed that’s across in remember, thing The that leverage the reduces costs. on across only talked you tonnage reduction it business our ability customers. we to

Curt Woodworth

a about, that say €XXX think, think talked division or but more you right think level normalized fully update now? on what difficult you closer to could in past, you I margin do you to it too what is? look And have us more I for the like million, think level is would economic a

Peter Matt

certainly, million, think able should so, should be to of million. of we I €XXX be maybe So north -- we north €XXX

in something €XXX would million if have the good then place maybe to €XXX maybe it some we full a there of But I start. there’s that. is you to pulling opportunity order beyond for leave million think strength, And at now. automotive

Curt Woodworth

Okay. Got guys. you, Thank it.

Jean-Marc Germain

Curt. you, Thank

Operator

from The line today next Please from the you. Blanchard comes question of Thank Corinne go ahead. Deutsche Bank.

now Your line is open.

Corinne Blanchard

Good morning, Jean-Marc and Peter.

First question from me…

Jean-Marc Germain

Hi, Corinne.

Corinne Blanchard

XQ XQ maybe care? because be and -- expect be year, on going you packaging happen of especially hi into in seasonality private EBITDA -- guidance. Do would …would this versus to higher a

Peter Matt

that Well, expect see and it what weaker are contrary see. QX that should should so than be seasonality to QX, we quarters first to back QX Yeah. recover so are QX hopefully, and our going track. is obviously, would QX usually in Usually, is is weaker a on the we and two strongest the usually see then, and that be we to you

Jean-Marc Germain

very typically, take often And Xst the remember, adjustments of April. PPI place on

of will still So last inflation year, the that pricing start some yet not the but are reflect, spike April. prices do segments, we they yet in but in in

Corinne Blanchard

Thank you. maybe two quick then And follow-ups.

The just can you unpack like I think on, can €XXX to like you million for Is to aerospace that €XXX you color give transportation TID bit million. truly or impact margins, first is previous cementing little if a question, also if mentioned, from so the on or coming or that? more one it aerospace

Jean-Marc Germain

Yeah.

very it’s I performance is pricing essentially TID as aerospace the well it’s drifting plants on we lower in than bit it around, better and of think the but is at a is And a TID a and at little drifting strong our securing right? lower. bottom rest the based is So up. time way if better and across strong, other it’s aerospace look when cycle, and

Corinne Blanchard

you of is the last and can on kind me, cost much And just the remind would it the energy us you Okay. that Thank is in one Most export from September, of exposed? lock XX%, contract. of energy you. renegotiate Is October. XX%? How

Peter Matt

What much that? is? was How

Jean-Marc Germain

Yeah.

We to sure not am answer. I So the understood question. we try fully

basis, we today, XX%. split the over XXXX of into it going are renew we of through our And locked as or in, course three-year and do XX%, So for the needs about supply the derivatives XX% XX% and some rolling well. XX% hedges our essentially to of of on year a have XX% energy roughly, then hedged, okay, contracts, since needs physically

Corinne Blanchard

Okay. Great. Thank you.

Operator

from The next Research. Wolfe go from ahead. Tanners you. comes today Please Thank of Timna the question line

line Your open. is now

Timna Tanners

adjustments, morning this dumb opportunity. on what wanted will a Good mean? question, terms congrats in talk but something is more Do you color context? Peter to Is of on packaging ask inventory love that more Great. seems a to like the euphemism is just on the that some of to just onerous the a Like -- on underlying that couple maybe side? protection side. exactly something? does it for other you get One, I Hey. from have demand? and questions. not that I’d

Jean-Marc Germain

this I Yeah. will Timna. Hi, Yeah. take one.

so compared there inventory there’s of beverage typically reasons of So then chain is like the and the stock which There’s people cans companies, of up doesn’t down. supply to and happen, the that, system that demand. and number then it for to activities promotion in in coils lack the excess start a summer, slows the

being after also years been XX a of flat. markets essentially of period growth There’s high

plus you that have following years got a product, expect X%. spend expect less is You the less be buy that you war, have got year have plus three a promotions, going People inflation, money, to don’t also you have people X% you at have promotions.

sudden, metal resolve of supply it all chain and gets takes time the that. full with to So a

tons, will around the plus into some it X%, a not Our XX%. I of X%, fixed details, variation contracts is go XX% typically minus for specific or provide but amount and there but let’s say, plus

it and of obviously, within demand and below, creates course have everybody the is when big and materializes can of swing over say, over pulling happens is then a but the that that is, months, six year, still contracts. So course in -- their people that one what are variance you

is in are that’s with cans, we reasonably And -- our our resolve in So reasonably customers, also, year, empty what half not are believe and that’s confirming fundamentally, will floor we that warehouses first cans back space shelves that seeing. why that’s by a of have so the discussions or much through this we or think will full things to of that, it be stable normal. I our why the on market. There end quickly the the to this is

Timna Tanners

this guess mean, a strong outlook? packaging see sign slower I maybe more That’s demand just helpful. cans, there’s do growth itself greater and adoption of get wondering activity. adopt the very obviously, anything maybe am No. slowing needs after the Just if of weaker I a and you in outlook? of ahead structurally is cans I market COVID but to

Jean-Marc Germain

you and surprise excited spike outlook, to mean, don’t got or good it. growth have plastic revise that’s But us, everybody too and Well, displays. start that, and more amount the categories consumption because your I for I to more people a bit the see if but know in you took sign I a I about moving cans. and store a by maybe travel, of little water noticed fundamentally, very see the COVID wouldn’t -- think grocery there’s you your flat tremendous to going bottles in in cans

the when in metal So do I believe it’s stay linear, grow, -- plastic many, that are things going of for years. to trends for many many, favor never but against growth on

Peter Matt

is one to just maybe saying. Timna, Jean-Marc And add to what

it’s range look we XXXX, at for digits, in right thing of X% I in we us. to of zero expect longer in and as can our which packaging of low-single It’s is forecast grow demand way going type to with to going probably term, are think, X% the are that to to right makers bracket of saying, grow. the it the somewhere line X% kind feels range. we is then to what type -- of at kind So probably, And

Timna Tanners

is Europe of Thank great. well and would great? And were if asking kind locked recover are see what be your am squeeze visibility Okay. That’s to color you start how on Europe? would when one more it, could on to I more in to are there, in you. just I how in, start of, things if kind you good seeing you

Jean-Marc Germain

Yeah.

take weeks a times our six time a So, take lead I that time mean, the long months, depending to to products, right, make. aerospace, there’s six to in that long some are on products

I our think XX% we of have business got XXXX for pretty good for there. visibility over

as than is pretty those pretty aerospace mentioned, And we corrections to I a encouraging. are of last Automotive, think first year. it’s mean, because locked going packaging, the the not I mean the are even longer I quite half in. decent inventory signs have visibility, flattish, though Peter got really

know if decent we think I I our XX% Europe visibility So I got in for don’t perfect. business am of have answering…

Timna Tanners

Okay. Great.

Jean-Marc Germain

… your to question, feel if up, not... free follow

Timna Tanners

you you the timeframe? -- full say -- when XXXX what mean No. visibility, decent That’s for

Jean-Marc Germain

Correct. Yeah.

Timna Tanners

you. Thank Great. Okay.

Jean-Marc Germain

you, Thank Timna.

Operator

from Goldman The you. the Sachs. next Karl Blunden line ahead. of from Thank question go comes today Please

Your open. now line is

Karl Blunden

I and going time the than over more the costs there longer roles. you I’d that Jack to new very challenging and confidence on giving Thanks and guidance on offsets wanted bit congratulations just when fair and presumably €XXX demand good say XXXX the expected then what come and Peter much those of it and love better is million. are that hear about in to perhaps talk Hi. challenging few guide what adopted. to guidance certainly more a for And term than was reiteration interested be a are? outlook the that to things energy the hear have Is initially to to hear can the

Jean-Marc Germain

Sure.

thought €XXX what million more last than of -- when to So, we Karl, if go guidance. April we that €X in I back year gave

bit XXXX, think can the now, anything, be is that if lower, challenged a much bit and think by a I but is pricing it don’t the is but better. volumes may I

even. can, it’s in I’d overall, So, say

under well plants higher. for and by in by better efficiencies am and moving progress like us offset us pricing are the as our we sure. quite lighting a get are prices making. increased to Energy I nothing early There’s definitely encouraged fire that We

recovery year. come automotive And there in steady on of and year. is XXXX last at really then projections were stronger. upside It’s guidance are beginning our the of of last -- in is aerospace, we to we compared Maybe the some aerospace

productivity thought good Finally, the because costs think confidence. our same time, at on they would progress mean, our XXXX our higher cost we of inflation, it’s much -- what side, Vision be. and are But us than we obviously, I the gives in

So think, some upside. our productivity the got I be pass-through and better, is we inflation since could

can be the all, productivity cost the place, same So, all on upside. side, in place, some may upside and aero the some same in automotive in maybe

Karl Blunden

Thanks. helpful. really That’s

Just a quick sheet. one on the balance

of and through We about the reduction EBITDA growth range. have is work done your leverage a notional think approaching in we we here? that primarily high deleveraging lot in of Constellium Should being end think of interested debt target or there good achieved target from should

Jean-Marc Germain

also. debt down pay to want We

Peter Matt

It both. to We both. be want will It reduce… will be

Karl Blunden

Okay.

Peter Matt

debt our gross grow, and is EBITDA … going to too.

Karl Blunden

Great. Thank you.

Operator

Thank of Bank. Our the Richard go Deutsche Phelan next ahead. you. from line Please Instructions] question today from comes [Operator

open. now Your line is

Richard Phelan

role. and good luck Thanks, new in the Yeah. Peter, Hello.

this You on touched have times here. multiple

QX. me but performance volumes, in think, packaging little you XX% the let going that’s just a to on clarification QX, the said, EBITDA to lower in I So, contribute lower

that declines think double-digit similarly end in volumes still continues segment? well in that sorts they into are as QX of that stand You terms and you today, where of

Peter Matt

Yeah.

on So I we QX, QX, as we think QX, it we should yes, get to so, recover. in starting lower think -- will be be then into and

are today. are we we kind somewhere around where So trough calling of the

Jean-Marc Germain

than We better think bit a year. same the maybe the should year full or about be last

Richard Phelan

It’s Great. specific labor, in a this, total. but million €XXX partially will -- allowing sort €XXX energy addressed between in spent expense million that that group year-on-year be about of above higher XXXX? material, the higher the mention component of the There roughly was then, And Thank €XXX breakdown energy figure energy, cost, though, you the the in one the or comprising that questions some say, already basket you of again, to largest supply to didn’t over €XXX million attach but of have million, still costs. fair the you.

Peter Matt

and -- energy piece is have our we fair. that’s of still That is a fair. And That open. remember, we

will hopefully, an to us. for So, opportunity that continue be

Richard Phelan

in related on at in metal, that terms to at of terms supply, this to And problems all no -- just of point? that Okay. access

Peter Matt

No.

are with We we... no access to I mean problem metal.

Jean-Marc Germain

are to We [ph]. work going

Peter Matt

It’s… Yeah.

Jean-Marc Germain

But so and so it’s we far don’t good see problem. a

Richard Phelan

you very Thank much. Understood.

Jean-Marc Germain

Yeah.

Operator

additional questions Thank waiting at this are There no time. you.

So to to go pass ahead when conference the ready. I’d like of back Please over CEO Constellium. you Germain, are Jean-Marc

Jean-Marc Germain

Bailey. you, Thank

and are of very not performance benefit we you look we you the we to presence Thank the far April. us, have perhaps, results his a -- happy QX of our progress of tell, have of our to our can a last confidence look luck want still lot updating a you We our at day As good Peter, end with with his quite with at good in when performance on and XXXX. forward XXXX wish forward for I weeks. from it. all. few release day to And to I

Operator

you today’s concludes Thank call. This for your all conference participation.

You your may disconnect now lines.

Constellium SE (CSTM) 22 Feb 232022 Q4 Earnings call transcript