ozgurdonmaz Introduction This is our third article about Constellium SE (NYSE:CSTM) for these reasons: (1) to preview Q4-23 earnings and (2) to update our investment thesis. In our view, Constellium is an exceptionally well-managed "specialty metals" company that is often overlooked by investors and/or misconstrued as a "basic materials" company. In reality, Constellium is a specialist in higher-margin, value-added aluminum structures for various industries. As a refresher, readers can access our prior arti ...

Constellium SE (NYSE:CSTM) Q3 2023 Earnings Conference Call October 25, 2023 10:00 AM ET Company Participants Jason Hershiser - Director, IR Jean-Marc Germain - CEO Jack Guo - CFO Conference Call Participants Katja Jancic - BMO Capital Markets Bill Peterson - JPMorgan Corinne Blanchard - Deutsche Bank Josh Sullivan - The Benchmark Company Sean Wondrack - Deutsche Bank Operator Hello, everyone, and welcome to the Constellium Third Quarter 2023 Results. My name is Nadia, and I'll be coordinating the call toda ...

[Performance Highlights](index=1&type=section&id=Performance%20Highlights) Constellium achieved a record Q3 Adjusted EBITDA of €168 million, a 5% YoY increase, driven by the A&T segment, while reducing leverage to 2.5x despite market headwinds | Metric | Q3 2023 | Q3 2022 | Change | YTD 2023 | YTD 2022 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shipments (k tons) | 369 | 387 | -5% | 1,156 | 1,212 | -5% | | Revenue (€M) | 1,720 | 2,022 | -15% | 5,626 | 6,276 | -10% | | VAR (€M) | 704 | 673 | +5% | 2,243 | 2,029 | +11% | | Net Income (€M) | 64 | 131 | -51% | 118 | 278 | -58% | | Adjusted EBITDA (€M) | 168 | 160 | +5% | 542 | 525 | +3% | | Free Cash Flow (€M) | 78 | 74 | +5% | 112 | 160 | -30% | - Market demand varied by segment: aerospace demand remains strong, automotive demand decelerated but is above prior year levels, packaging demand appears to have stabilized after destocking, and most industrial markets, especially in Europe, remain weak[4](index=4&type=chunk) - The company achieved a record third quarter Adjusted EBITDA of **€168 million**, which included a record performance by the A&T segment[4](index=4&type=chunk) - Leverage, measured as Net debt / LTM Adjusted EBITDA, was reduced to **2.5x** as of September 30, 2023[4](index=4&type=chunk)[5](index=5&type=chunk) [Group Financial Performance](index=2&type=section&id=Group%20Financial%20Performance) Group shipments and revenue declined in Q3 2023, but Value-Added Revenue and Adjusted EBITDA each grew by 5% due to improved price and mix, with A&T offsetting other segments | Group Summary | Q3 2023 | Q3 2022 | Var. | YTD 2023 | YTD 2022 | Var. | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shipments (k metric tons) | 369 | 387 | (5)% | 1,156 | 1,212 | (5)% | | Revenue (€ millions) | 1,720 | 2,022 | (15)% | 5,626 | 6,276 | (10)% | | VAR (€ millions) | 704 | 673 | 5% | 2,243 | 2,029 | 11% | | Net income (€ millions) | 64 | 131 | n.m. | 118 | 278 | n.m. | | Adjusted EBITDA (€ millions) | 168 | 160 | 5% | 542 | 525 | 3% | | Adjusted EBITDA per metric ton (€) | 453 | 412 | 10% | 469 | 433 | 8% | - The **15% decrease in Q3 revenue** was primarily due to lower shipments and lower metal prices, partially offset by improved price and mix[8](index=8&type=chunk) - Q3 Adjusted EBITDA increased by **5% to €168 million**, reflecting stronger A&T segment results partially offset by weaker P&ARP and AS&I segments[8](index=8&type=chunk) [Results by Segment](index=3&type=section&id=Results%20by%20Segment) Q3 2023 segment performance was mixed, with A&T Adjusted EBITDA surging 76%, while P&ARP and AS&I segments experienced declines due to lower shipments and higher costs [Packaging & Automotive Rolled Products (P&ARP)](index=3&type=section&id=Packaging%20%26%20Automotive%20Rolled%20Products%20(P%26ARP)) P&ARP segment Adjusted EBITDA decreased by **14% to €67 million** in Q3 2023, driven by lower shipments, higher operating costs, and operational challenges | P&ARP | Q3 2023 | Q3 2022 | Var. | YTD 2023 | YTD 2022 | Var. | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shipments (k tons) | 261 | 267 | (2)% | 792 | 835 | (5)% | | Revenue (€M) | 954 | 1,140 | (16)% | 3,033 | 3,656 | (17)% | | Adjusted EBITDA (€M) | 67 | 78 | (14)% | 201 | 255 | (21)% | - The decrease in Adjusted EBITDA was a result of lower shipments, higher operating costs (inflation), operating challenges at the Muscle Shoals facility, unfavorable metal costs, and unfavorable foreign exchange translation[11](index=11&type=chunk) [Aerospace & Transportation (A&T)](index=4&type=section&id=Aerospace%20%26%20Transportation%20(A%26T)) A&T segment Adjusted EBITDA surged **76% to €79 million** in Q3 2023, primarily driven by improved price and mix, despite lower shipments and higher operating costs | A&T | Q3 2023 | Q3 2022 | Var. | YTD 2023 | YTD 2022 | Var. | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shipments (k tons) | 53 | 55 | (3)% | 171 | 170 | 1% | | Revenue (€M) | 404 | 432 | (6)% | 1,320 | 1,278 | 3% | | Adjusted EBITDA (€M) | 79 | 45 | 76% | 248 | 161 | 55% | - The **76% increase in Adjusted EBITDA** was primarily driven by improved price and mix, which offset lower shipments and higher operating costs[14](index=14&type=chunk) [Automotive Structures & Industry (AS&I)](index=4&type=section&id=Automotive%20Structures%20%26%20Industry%20(AS%26I)) AS&I segment Adjusted EBITDA fell **27% to €26 million** in Q3 2023, primarily due to a **15% drop in shipments** and higher operating costs from inflation | AS&I | Q3 2023 | Q3 2022 | Var. | YTD 2023 | YTD 2022 | Var. | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shipments (k tons) | 55 | 65 | (15)% | 193 | 207 | (7)% | | Revenue (€M) | 370 | 473 | (22)% | 1,296 | 1,433 | (10)% | | Adjusted EBITDA (€M) | 26 | 35 | (27)% | 108 | 118 | (8)% | - The decrease in Adjusted EBITDA was primarily due to lower shipments and higher operating costs from inflation, partially offset by improved price and mix[16](index=16&type=chunk) [Financial Position and Cash Flow](index=5&type=section&id=Financial%20Position%20and%20Cash%20Flow) Q3 2023 net income was €64 million, impacted by a prior-year deferred tax asset recognition, while the company generated strong Free Cash Flow and reduced net debt to €1.75 billion [Net Income](index=5&type=section&id=Net%20Income) Q3 2023 net income was **€64 million**, a decrease from **€131 million** in Q3 2022, primarily due to a **€142 million** deferred tax asset recognition in the prior year - Q3 2023 net income was **€64 million**, compared to **€131 million** in Q3 2022; year-to-date net income was **€118 million** in 2023 versus **€278 million** in 2022[19](index=19&type=chunk)[20](index=20&type=chunk) - The primary reason for the decrease in net income was the recognition of **€142 million** in previously unrecognized deferred tax assets in the prior year[19](index=19&type=chunk)[20](index=20&type=chunk) [Cash Flow](index=5&type=section&id=Cash%20Flow) Year-to-date Free Cash Flow decreased to **€112 million** due to higher capital expenditures and interest, despite stable cash from operations at **€321 million** - Free Cash Flow was **€112 million** in the first nine months of 2023, a decrease from **€160 million** in the prior year period, primarily due to increased capital expenditures and higher cash interest[21](index=21&type=chunk) - Cash flows from operating activities were stable at **€321 million** for the first nine months of 2023, compared to **€323 million** in the prior year[21](index=21&type=chunk) - Investing activities included **€47 million** of net proceeds from the sale of Constellium Extrusion Deutschland GmbH in September 2023[22](index=22&type=chunk) [Liquidity and Net Debt](index=6&type=section&id=Liquidity%20and%20Net%20Debt) As of September 30, 2023, total liquidity stood at **€746 million**, with net debt reduced to **€1.75 billion** from **€1.891 billion** at year-end 2022 - Total liquidity was **€746 million**, comprised of **€159 million** in cash and **€587 million** available under committed facilities[24](index=24&type=chunk) - Net debt stood at **€1,750 million** at September 30, 2023, a reduction from **€1,891 million** at December 31, 2022[25](index=25&type=chunk) [Outlook](index=2&type=section&id=Outlook) Constellium reaffirmed its full-year 2023 guidance, projecting Adjusted EBITDA between **€700 million** and **€720 million** and Free Cash Flow exceeding **€150 million**, while targeting over **€800 million** Adjusted EBITDA by 2025 - The company expects full-year 2023 Adjusted EBITDA to be in the range of **€700 million to €720 million**[6](index=6&type=chunk)[26](index=26&type=chunk) - Full-year 2023 Free Cash Flow is expected to be in excess of **€150 million**[6](index=6&type=chunk)[26](index=26&type=chunk) - Constellium remains confident in its ability to deliver on its long-term target of Adjusted EBITDA over **€800 million** in 2025[6](index=6&type=chunk) - The company expects some impact from the United Auto Workers union strike in the fourth quarter, which is factored into the current guidance[26](index=26&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q3 and year-to-date September 30, 2023, including the Income Statement, Financial Position, and Cash Flows [Consolidated Income Statement](index=8&type=section&id=CONSOLIDATED%20INCOME%20STATEMENT%20(UNAUDITED)) Q3 2023 revenue was **€1.72 billion** and net income **€64 million**, with year-to-date figures at **€5.63 billion** revenue and **€118 million** net income, both down YoY | (in millions of Euros) | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,720 | 2,022 | 5,626 | 6,276 | | Gross profit | 158 | 133 | 532 | 565 | | Income from operations | 118 | 30 | 259 | 274 | | Net income | 64 | 131 | 118 | 278 | | Diluted EPS (€) | 0.43 | 0.88 | 0.77 | 1.86 | [Consolidated Statement of Financial Position](index=10&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20FINANCIAL%20POSITION%20(UNAUDITED)) As of September 30, 2023, total assets were **€4.80 billion**, total liabilities **€3.88 billion**, and total equity **€911 million**, with assets and liabilities decreasing and equity increasing YoY | (in millions of Euros) | At Sep 30, 2023 | At Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | 4,795 | 4,941 | | Total Liabilities | 3,884 | 4,189 | | Total Equity | 911 | 752 | [Consolidated Statement of Cash Flows](index=12&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS%20(UNAUDITED)) For the nine months ended September 30, 2023, net cash from operating activities was **€321 million**, with net cash used in investing and financing activities leading to a **€7 million** net decrease in cash | (in millions of Euros) | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | | Net cash flows from operating activities | 321 | 323 | | Net cash flows used in investing activities | (161) | (163) | | Net cash flows used in financing activities | (167) | (141) | | Net (decrease) / increase in cash | (7) | 19 | [Supplemental Data](index=13&type=section&id=Supplemental%20Data) This section provides detailed breakdowns of Adjusted EBITDA by segment and shipments and revenue by product line, offering granular insights into performance metrics [Segment Adjusted EBITDA](index=13&type=section&id=SEGMENT%20ADJUSTED%20EBITDA) In Q3 2023, A&T was the largest Adjusted EBITDA contributor at **€79 million**, followed by P&ARP at **€67 million** and AS&I at **€26 million** | (in millions of Euros) | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | P&ARP | 67 | 78 | 201 | 255 | | A&T | 79 | 45 | 248 | 161 | | AS&I | 26 | 35 | 108 | 118 | | Holdings and Corporate | (4) | 2 | (15) | (9) | | **Total** | **168** | **160** | **542** | **525** | [Shipments and Revenue by Product Line](index=13&type=section&id=SHIPMENTS%20AND%20REVENUE%20BY%20PRODUCT%20LINE) Q3 2023 saw Packaging rolled products as the largest category by shipments (**187k metric tons**) and revenue (**€630 million**), with automotive rolled products shipments increasing YoY | Shipments (k metric tons) | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Packaging rolled products | 187 | 196 | | Automotive rolled products | 68 | 64 | | Aerospace rolled products | 23 | 19 | | Automotive extruded products | 27 | 29 | | **Total shipments** | **369** | **387** | | Revenue (in millions of Euros) | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Packaging rolled products | 630 | 792 | | Automotive rolled products | 286 | 308 | | Aerospace rolled products | 234 | 184 | | Automotive extruded products | 213 | 248 | | **Total revenue** | **1,720** | **2,022** | [Non-GAAP Financial Measures](index=14&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles and defines key non-GAAP measures like VAR, Adjusted EBITDA, Free Cash Flow, and Net Debt, used to clarify core operating performance by excluding non-operational items [Reconciliation of Non-GAAP Measures](index=14&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section details the reconciliation of IFRS figures to non-GAAP metrics, including Revenue to VAR, Net Income to Adjusted EBITDA, and cash flows to Free Cash Flow and Net Debt - Q3 2023 VAR of **€704 million** is reconciled from Revenue of **€1,720 million** by adjusting for hedged metal costs, incidental revenue, and metal price lag[39](index=39&type=chunk) - Q3 2023 Adjusted EBITDA of **€168 million** is reconciled from Net Income of **€64 million** by adding back taxes, finance costs, D&A, and other adjustments like metal price lag and unrealized derivative gains/losses[40](index=40&type=chunk) - Q3 2023 Free Cash Flow of **€78 million** is calculated by subtracting purchases of property, plant, and equipment (**€76 million**) from net cash from operating activities (**€154 million**)[42](index=42&type=chunk) [Definitions of Non-GAAP Measures](index=16&type=section&id=Definitions%20of%20Non-GAAP%20Measures) This section defines key non-GAAP measures: Value-Added Revenue (VAR) excludes metal costs, Adjusted EBITDA measures core profitability, Free Cash Flow indicates cash generation after capex, and Net Debt assesses indebtedness - **Value-Added Revenue (VAR):** Defined as revenue excluding incidental activities, minus the cost of metal, to eliminate the impact of metal price fluctuations not under the company's control[45](index=45&type=chunk) - **Adjusted EBITDA:** Defined as income before taxes, finance costs, D&A, adjusted for items like restructuring costs, unrealized derivative gains/losses, metal price lag, and share-based compensation, serving as a primary measure of profitability[46](index=46&type=chunk)[48](index=48&type=chunk) - **Free Cash Flow:** Defined as net cash flow from operating activities less capital expenditures, considered a useful measure of net cash generated by the business[51](index=51&type=chunk) - **Net debt:** Defined as borrowings plus/minus fair value of certain derivatives, less cash and cash equivalents, used to measure the company's indebtedness[52](index=52&type=chunk)

Constellium SE (NYSE:CSTM) Q2 2023 Earnings Conference Call July 26, 2023 10:00 AM ET Company Participants Jason Hershiser - Director, Investor Relations Jean-Marc Germain - Chief Executive Officer Jack Guo - Chief Financial Officer Conference Call Participants Katja Jannick - BMO Bill Peterson - JPMorgan Curt Woodworth - Credit Suisse Timna Tanners - Wolfe Research Corinne Blanchard - Deutsche Bank Josh Sullivan - The Benchmark Company Sean Wondrack - Deutsche Bank Operator Hello, and welcome to today's Co ...

We are directly impacted by the economic conditions that affect our customers and the markets in which they operate. General economic conditions such as the level of disposable income, the level of inflation, the rate of economic growth, the rate of unemployment, exchange rates and currency devaluation or revaluation influence consumer confidence and consumer purchasing power. These factors, in turn, influence the demand for our products in terms of total volumes and prices that can be charged. We attempt t ...

Forward-Looking Statements First Quarter 2023 – Earnings Call Non-GAAP Measures We are not able to provide a reconciliation of Adjusted EBITDA guidance to net income, the comparable GAAP measure, because certain items that are excluded from Adjusted EBITDA cannot be reasonably predicted or are not in our control. In particular, we are unable to forecast the timing or magnitude of realized and unrealized gains and losses on derivative instruments, metal lag, impairment or restructuring charges, or taxes with ...

Constellium SE (NYSE:CSTM) Q1 2023 Earnings Conference Call April 26, 2023 10:00 AM ET Company Participants Jason Hershiser - Director, Investor Relations Jean-Marc Germain - Chief Executive Officer Jack Guo - Chief Financial Officer Conference Call Participants Emily Chieng - Goldman Sachs Curt Woodworth - Credit Suisse Timna Tanners - Wolfe Research Corinne Blanchard - Deutsche Bank Josh Sullivan - The Benchmark Company Katja Jancic - BMO Capital Markets Operator Hello and welcome to the Constellium First ...

Market Competition and Economic Environment - The company operates in a highly competitive aluminium market, facing challenges from larger competitors with greater financial and technical resources [33]. - A significant portion of the company's revenue is derived from international operations, exposing it to risks from economic downturns and geopolitical conditions [36]. - The cyclical nature of the metals industry and end-use markets can lead to significant fluctuations in demand and pricing, adversely affecting financial performance [46]. - The ongoing impact of public health pandemics, such as COVID-19, has adversely affected operations and financial results, highlighting vulnerabilities in supply chains [42]. - The company is subject to various financial, political, and regulatory risks in connection with its global operations, which could negatively impact growth opportunities and financial results [37]. Cost and Pricing Challenges - The company has experienced price volatility in energy costs, which represent the fourth largest component of its cost of sales, following metal, labor, and depreciation [38]. - Raw material prices, particularly for aluminium, are subject to continuous volatility, impacting profitability if the company cannot pass through these costs to customers [40]. - The company may face increased production costs and demand impacts due to new climate change regulations, potentially affecting financial condition and cash flows [50]. Operational Risks and Challenges - The company may face challenges in executing and completing expected capital investments, which could hinder anticipated benefits and operational efficiency [47]. - Disruptions in IT systems or cyber-attacks could materially impact business operations and financial results, although no significant security incidents were reported in 2022 [52][53]. - The company relies on a limited number of customers for a substantial portion of sales, and failure to renew contracts could adversely affect financial condition and cash flows [56][57]. - The company is dependent on a limited number of suppliers for aluminium, and supply interruptions could disrupt production and negatively impact financial results [61]. - The availability of aluminium scrap is critical for operations, and a decrease in supply could adversely affect recycling capabilities and financial performance [62]. - The company faces risks related to labor disputes and collective bargaining agreements, which could disrupt operations and negatively impact financial results [67]. Financial Position and Governance - The company has a significant amount of indebtedness, which could limit cash flow available for operations and capital expenditures [71]. - Future operating performance and financial results are subject to factors beyond the company's control, including interest rates and general economic conditions [71]. - A deterioration in the company's financial position or a downgrade of credit ratings could adversely affect financing levels and access to capital markets [74]. - The company has provisions for environmental remediation costs amounting to €86 million as of December 31, 2022 [84]. - Legal proceedings and investigations could increase operating costs and adversely affect financial condition and results of operations [82]. - Changes in income tax rates or laws could materially adversely impact the company's financial results [79]. - The company is subject to ongoing reviews by tax authorities, which could impact financial position and results of operations [80]. - The company's corporate governance is governed by French law, which may differ from U.S. corporate governance standards [89]. Performance Metrics and Growth - For the year ended December 31, 2022, the company reported shipments of 1,580 kt, revenue of €8,120 million, net income of €308 million, and adjusted EBITDA of €673 million [120]. - The company’s revenue increased from €4,883 million in 2020 to €8,120 million in 2022, reflecting a significant growth trajectory [120]. - The company’s adjusted EBITDA grew from €465 million in 2020 to €673 million in 2022, indicating improved operational efficiency [120]. - The company’s net income improved from a loss of €17 million in 2020 to a profit of €308 million in 2022, showcasing a strong recovery [120]. - The company aims to meet the demand for lightweight, strong, and sustainable aluminium products while generating attractive returns for shareholders [122]. Strategic Investments and Innovations - The company is focused on investing in high-return opportunities and technologically advanced products to enhance competitiveness and profitability [48]. - The company has invested in various growth opportunities, including Auto Body Sheet capabilities and new Automotive Structures operations across multiple locations in the U.S., Mexico, and Europe [118]. - The company has invested in R&D and technological capabilities to develop high value-added and responsible product portfolios [124]. - The company operates joint ventures in Canada and China to enhance its production capabilities in automotive extruded profiles and aluminium crash management systems [155]. - The company collaborates with universities and third parties, occasionally obtaining royalty-bearing licenses for third-party technologies [217]. Market Trends and Demand Projections - Aluminium beverage cans accounted for approximately 23% of total European aluminium flat rolled demand and 38% of total North American flat rolled demand in 2022, with expected growth rates of 3.6% and 4.0% per year from 2022 to 2027, respectively [177]. - Light vehicle production in Europe and North America is projected to grow by approximately 6.3% per annum from 2022 to 2027, driving increased demand for aluminium in automotive applications [185]. - The compound annual growth rate (CAGR) for the flat rolled products market is expected to be 3.8% between 2022 and 2027 according to CRU [170]. - The automotive industry is expected to increase aluminium usage due to stringent EU and U.S. regulations, with EU targets aiming for a 37.5% reduction in carbon emissions by 2030 compared to 2021 levels [188]. - Aluminium demand in the aerospace rolled products market in North America and Europe is projected to grow by 11.0% annually from 2022 to 2027, driven by recovery from the COVID-19 downturn [192].

Financial Data and Key Metrics - Revenue increased 8% to €1.8 billion in Q4 2022, driven by improved price and mix, partially offset by lower metal prices and shipments [35] - Adjusted EBITDA reached a record €673 million in 2022, up 16% YoY, with a record free cash flow of €182 million [37] - Net income for Q4 2022 was €30 million, compared to €7 million in Q4 2021 [50] - Leverage ratio improved to 2.8x at the end of 2022, down from 3.4x in 2021, with a target range of 1.5x to 2.5x [16][77] Business Segment Performance - **Aerospace**: Shipments increased 50% YoY in Q4 2022, driven by strong demand for new, fuel-efficient aircraft and recovery in passenger traffic [36][89] - **Automotive**: Shipments increased 20% YoY in Q4 2022, supported by new platform launches and strong demand [41] - **Packaging**: Shipments decreased 12% YoY in Q4 2022 due to inventory adjustments and production challenges at Muscle Shoals [36][41] - **A&T Segment**: Adjusted EBITDA per ton is expected to be €800-€900, up from the previous range of €700-€800 [43] Market Performance - **Europe**: 75% of the business has decent visibility, with inventory corrections expected to resolve by the first half of 2023 [5] - **North America**: Demand remains resilient, particularly in aerospace and automotive, while packaging faces short-term inventory adjustments [124] Strategic Direction and Industry Competition - The company is investing in recycling, particularly in Neuf Brisach, France, to improve margins and reduce dependency on primary suppliers [7] - Vision '25 initiative focuses on efficiency improvements, cost reductions, and inflationary protections in contracts [54] - The company is targeting adjusted EBITDA of over €800 million by 2025, supported by strategic investments and strong end-market fundamentals [94][128] Management Commentary on Operating Environment and Outlook - Inflationary pressures in 2023 are expected to be comparable to 2022, with costs rising by approximately €300 million [61] - Energy costs are expected to remain high, with 90% of 2023 energy needs already secured at higher prices [45][174] - The company is confident in passing through most cost increases to customers, with some lag in packaging due to PPI adjustments [139][168] Other Important Information - The company achieved a recordable case rate of 1.8 per million hours worked in 2022, with 12 sites completing the year with zero recordable cases [34][74] - CapEx for 2023 is expected to be between €340 million and €350 million, including investments in cost savings and growth projects [62] Q&A Session Summary Question: What is the outlook for packaging demand in 2023? - Packaging demand is expected to grow at low-single digits (0-2%) in 2023, with long-term growth projected at 2-5% annually [143] Question: How is the company managing inflationary pressures? - The company is leveraging pricing power, cost control measures, and inflationary protections in contracts to offset €300 million in expected cost increases [61][102] Question: What is the visibility on Europe's recovery? - The company has good visibility for 75% of its business in Europe, with inventory corrections expected to resolve by the first half of 2023 [5][146] Question: What is the impact of energy costs on 2023 guidance? - Energy costs are expected to remain high, with 90% of 2023 needs already secured at higher prices, contributing to the €300 million inflationary pressure [45][174] Question: What is the normalized margin level for the PARP segment? - The company expects PARP margins to be in the range of €325-€350 million, with potential upside if automotive demand strengthens [167]

Fourth Quarter and Full Year 2022 Earnings Call February 22, 2023 Forward-Looking Statements Certain statements contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This presentation may contain "forward-looking statements" with respect to our business, results of operations and financial condition, and our expectations or beliefs concerning future events and conditions. You can identify forward- looking statemen ...