Constellium(CSTM) - 2024 Q1 - Quarterly Report

Executive Summary & Key Highlights Constellium reported mixed Q4 and strong FY2023 results, including record Adjusted EBITDA, robust Free Cash Flow, and a new share repurchase program Fourth Quarter 2023 Highlights Constellium reported mixed Q4 2023 results with declining shipments and revenue, but significant Adjusted EBITDA growth and decreased net income Fourth Quarter 2023 Highlights | Metric | Q4 2023 | Q4 2022 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | | Shipments (k metric tons) | 336 | 368 | -9% | | Revenue (€ billion) | 1.6 | 1.8 | -13% | | Value-Added Revenue (VAR) (€ million) | 681 | 696 | -2% | | Net income (€ million) | 11 | 30 | -63.3% | | Adjusted EBITDA (€ million) | 171 | 148 | +15% | | Cash from Operations (€ million) | 185 | N/A | N/A | | Free Cash Flow (€ million) | 58 | N/A | N/A | Full Year 2023 Highlights Constellium achieved record Adjusted EBITDA and strong Free Cash Flow in FY 2023, despite declining shipments and revenue, while improving Adjusted Return on Invested Capital Full Year 2023 Highlights | Metric | FY 2023 | FY 2022 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | | Shipments (k metric tons) | 1,500 | 1,580 | -6% | | Revenue (€ billion) | 7.2 | 8.1 | -11% | | Value-Added Revenue (VAR) (€ billion) | 2.9 | 2.7 | +7% | | Net income (€ million) | 129 | 308 | -58.1% | | Adjusted EBITDA (€ million) | 713 | 673 | +6% | | Cash from Operations (€ million) | 506 | N/A | N/A | | Free Cash Flow (€ million) | 170 | N/A | N/A | | Adjusted ROIC | 11.3% | 11.0% | +30 bps | | Net debt / LTM Adjusted EBITDA | 2.3x | N/A | N/A | CEO Commentary & 2024 Outlook CEO Jean-Marc Germain highlighted strong 2023 results and provided a 2024 outlook anticipating varied market demands and continued inflationary pressures, along with 2024 guidance and a 2025 target - Constellium achieved record Adjusted EBITDA of €713 million in 2023, including record results in the A&T segment, and generated strong Free Cash Flow of €170 million, reducing leverage to 2.3x[6] - Looking ahead to 2024, the company expects strong aerospace demand, modest growth in packaging canstock, healthy automotive demand despite some deceleration, and continued weakness in most industrial markets[6] 2024 Guidance and 2025 Target | Metric | 2024 Guidance | 2025 Target | | :-------------------------- | :-------------- | :------------ | | Adjusted EBITDA (excluding metal price lag) | €740 million to €770 million | Over €800 million | | Free Cash Flow | In excess of €130 million | N/A | Share Repurchase Program Announcement Constellium announced a new three-year share repurchase program of up to $300 million to enhance shareholder value and fulfill employee equity obligations - The Board of Directors authorized a three-year share repurchase program of up to $300 million, expiring on December 31, 2026[4][28] - The company intends to use a portion of the repurchased shares to satisfy employee equity obligations, thereby limiting future dilution for shareholders[30] Group Financial Performance This section overviews Constellium's consolidated financial performance, covering revenue, profitability, cash flow, and liquidity for Q4 and FY2023 Overall Performance Summary Constellium's Q4 and FY 2023 group performance saw declining shipments and revenue, offset by increased Adjusted EBITDA driven by A&T and P&ARP segments Group Summary Financials | Metric | Q4 2023 | Q4 2022 | Q4 Var. (%) | FY 2023 | FY 2022 | FY Var. (%) | | :-------------------------- | :------ | :------ | :---------- | :------ | :------ | :---------- | | Shipments (k metric tons) | 336 | 368 | (9)% | 1,492 | 1,580 | (6)% | | Revenue (€ millions) | 1,613 | 1,844 | (13)% | 7,239 | 8,120 | (11)% | | VAR (€ millions) | 681 | 696 | (2)% | 2,924 | 2,725 | 7% | | Net income (€ millions) | 11 | 30 | n.m. | 129 | 308 | n.m. | | Adjusted EBITDA (€ millions) | 171 | 148 | 15% | 713 | 673 | 6% | | Adjusted EBITDA per metric ton (€) | 509 | 403 | 26% | 478 | 426 | 12% | - Q4 2023 shipments decreased 9% due to lower shipments across all segments. Revenue decreased 13% primarily due to lower shipments and metal prices. VAR decreased 2% due to lower shipments, unfavorable metal impacts, the sale of CED, and unfavorable foreign exchange, partially offset by improved price and mix[8] - Full year 2023 shipments decreased 6% mainly due to lower shipments in P&ARP and AS&I. Revenue decreased 11% due to lower shipments and metal prices. VAR increased 7% due to improved price and mix, partially offset by lower shipments, unfavorable metal impacts, and unfavorable foreign exchange[9] Net Income Analysis Net income significantly decreased in Q4 and FY 2023, primarily due to the absence of prior-year one-time gains and higher tax expenses - Q4 2023 net income of €11 million decreased from €30 million in Q4 2022, mainly due to gains on OPEB and pension plan amendments recorded in 2022 and higher tax expense, partially offset by higher gross profit[19] - Full year 2023 net income of €129 million decreased from €308 million in 2022, primarily due to the recognition of €154 million in previously unrecognized deferred tax assets and OPEB/pension plan amendment gains in 2022, higher selling and administrative expenses, and higher tax expense, partially offset by higher gross profit and a gain from the sale of CED[20] Cash Flow Analysis Free Cash Flow slightly decreased in FY 2023 due to higher capital expenditures, despite increased operating cash flows, while investing and financing cash flows also increased Full Year Cash Flow Summary | Metric | FY 2023 (€ millions) | FY 2022 (€ millions) | Change (€ millions) | | :-------------------------- | :------------------- | :------------------- | :------------------ | | Free Cash Flow | 170 | 182 | (12) | | Cash from Operating Activities | 506 | 451 | 55 | | Cash used in Investing Activities | 288 | 270 | 18 | | Cash used in Financing Activities | 182 | 163 | 19 | - The increase in cash flows from operating activities was more than offset by increased capital expenditures, as the company continues to invest in its manufacturing asset base, including recycling and casting investments[21] - Cash flows used in investing activities in 2023 included €47 million of net proceeds from the sale of Constellium Extrusions Deutschland GmbH (CED)[22] - In 2023, Constellium used cash to reduce short-term borrowings and redeem $50 million of its 5.875% Senior Notes due 2026[23] Liquidity and Net Debt Constellium maintained strong liquidity and successfully reduced net debt as of December 31, 2023 Liquidity and Net Debt as of December 31, 2023 | Metric | Amount (€ millions) | | :---------------- | :------------------ | | Liquidity | 737 | | Cash & Cash Equivalents | 202 | | Available Committed Lending Facilities & Factoring | 535 | | Net Debt | 1,664 | - Net debt decreased to €1,664 million at December 31, 2023, from €1,891 million at December 31, 2022[25] Segment Performance This section details the Q4 and FY2023 financial performance of Constellium's key operating segments: P&ARP, A&T, and AS&I Packaging & Automotive Rolled Products (P&ARP) The P&ARP segment saw declining shipments and revenue, with Q4 Adjusted EBITDA increasing due to price and mix, but full-year Adjusted EBITDA decreasing from lower shipments and higher costs P&ARP Segment Performance | Metric | Q4 2023 | Q4 2022 | Q4 Var. (%) | FY 2023 | FY 2022 | FY Var. (%) | | :-------------------------- | :------ | :------ | :---------- | :------ | :------ | :---------- | | Shipments (k metric tons) | 238 | 254 | (6)% | 1,030 | 1,089 | (5)% | | Revenue (€ millions) | 865 | 1,008 | (14)% | 3,898 | 4,664 | (16)% | | Adjusted EBITDA (€ millions) | 82 | 71 | 16% | 283 | 326 | (13)% | | Adjusted EBITDA per metric ton (€) | 345 | 278 | 24% | 274 | 299 | (8)% | - Q4 2023 Adjusted EBITDA increased 16% due to improved price and mix and overall cost improvements, despite lower shipments. Higher operating costs were offset by favorable metal costs and government grants[11] - Full year 2023 Adjusted EBITDA decreased 13% due to lower shipments, higher operating costs (inflation, Muscle Shoals challenges), and unfavorable metal costs, partially offset by improved price and mix[12] Aerospace & Transportation (A&T) The A&T segment achieved strong Adjusted EBITDA growth and record full-year results, driven by improved price and mix, despite slight declines in shipments and revenue A&T Segment Performance | Metric | Q4 2023 | Q4 2022 | Q4 Var. (%) | FY 2023 | FY 2022 | FY Var. (%) | | :-------------------------- | :------ | :------ | :---------- | :------ | :------ | :---------- | | Shipments (k metric tons) | 48 | 53 | (9)% | 219 | 223 | (2)% | | Revenue (€ millions) | 408 | 422 | (3)% | 1,728 | 1,700 | 2% | | Adjusted EBITDA (€ millions) | 76 | 56 | 36% | 324 | 217 | 50% | | Adjusted EBITDA per metric ton (€) | 1,583 | 1,079 | 47% | 1,475 | 976 | 51% | - Q4 2023 Adjusted EBITDA increased 36% due to improved price and mix, partially offset by lower shipments (driven by lower transportation, industry, and defense rolled products) and higher operating costs[14] - Full year 2023 Adjusted EBITDA increased 50% primarily due to improved price and mix, partially offset by higher operating costs due to inflation and increased activity levels. Shipments decreased 2% due to lower TID rolled products, despite higher aerospace rolled products[15] Automotive Structures & Industry (AS&I) The AS&I segment experienced declines in shipments, revenue, and Adjusted EBITDA for Q4 and FY 2023, primarily due to lower shipments and higher operating costs AS&I Segment Performance | Metric | Q4 2023 | Q4 2022 | Q4 Var. (%) | FY 2023 | FY 2022 | FY Var. (%) | | :-------------------------- | :------ | :------ | :---------- | :------ | :------ | :---------- | | Shipments (k metric tons) | 50 | 61 | (17)% | 243 | 268 | (9)% | | Revenue (€ millions) | 334 | 428 | (22)% | 1,630 | 1,861 | (12)% | | Adjusted EBITDA (€ millions) | 25 | 31 | (22)% | 133 | 149 | (11)% | | Adjusted EBITDA per metric ton (€) | 500 | 514 | (3)% | 545 | 557 | (2)% | - Q4 2023 Adjusted EBITDA decreased 22% due to lower shipments (including the impact from the sale of CED) and higher costs, partially offset by improved price and mix[16] - Full year 2023 Adjusted EBITDA decreased 11% primarily due to lower shipments (including CED sale impact) and higher operating costs (inflation), partially offset by improved price and mix[17] Changes to Non-GAAP Financial Measures This section outlines changes in Constellium's non-GAAP reporting, including VAR discontinuation and a revised Adjusted EBITDA definition Discontinuation of VAR Reporting Constellium will discontinue reporting Value-Added Revenue (VAR) as a non-GAAP financial measure, effective Q1 2024, following discussions with the SEC - Constellium will no longer report VAR, a Non-GAAP financial measure, starting with the first quarter 2024 earnings release[32] Revised Adjusted EBITDA Definition Constellium revised its Adjusted EBITDA definition to include metal price lag for consolidated reporting, while retaining its exclusion for segment performance, and maintaining current guidance and leverage calculation methods - The definition of Adjusted EBITDA will be revised to no longer exclude the non-cash impact of metal price lag from consolidated Adjusted EBITDA[33] - Constellium will continue to exclude the non-cash impact of metal price lag from its Segment Adjusted EBITDA, which is used for evaluating operating segment performance[33] - The company will continue to provide Adjusted EBITDA guidance excluding the non-cash impact of metal price lag, and leverage will still be calculated as Net debt divided by Adjusted EBITDA, excluding metal price lag[33] Adjusted EBITDA Reconciliation (Current vs. Future) Reconciliation tables illustrate the impact of the revised Adjusted EBITDA definition, specifically the inclusion of metal price lag, on annual and quarterly figures for comparability Adjusted EBITDA Reconciliation (Annual) | (in millions of Euros) | 2023 | 2022 | 2021 | 2020 | 2019 | | :--------------------- | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA (current) | 713 | 673 | 581 | 465 | 562 | | less: Metal price lag | (86) | (29) | 187 | (8) | (46) | | Adjusted EBITDA (future) | 627 | 644 | 768 | 457 | 516 | Adjusted EBITDA Reconciliation (Quarterly) | (in millions of Euros) | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :--------------------- | :----------- | :----------- | :----------- | :----------- | | Adjusted EBITDA (current) | 171 | 168 | 209 | 166 | | less: Metal price lag | (14) | (27) | (30) | (16) | | Adjusted EBITDA (future) | 157 | 141 | 179 | 150 | Financial Statements (Unaudited) This section presents unaudited consolidated financial statements: income, comprehensive income, financial position, equity changes, and cash flows Consolidated Income Statement The unaudited consolidated income statement shows decreased revenue and net income for Q4 and FY 2023, despite increased full-year gross profit Consolidated Income Statement Highlights | (in millions of Euros) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | :------ | :------ | | Revenue | 1,613 | 1,844 | 7,239 | 8,120 | | Gross profit | 178 | 107 | 710 | 672 | | Income from operations | 78 | 60 | 337 | 334 | | Net income | 11 | 30 | 129 | 308 | | Basic EPS (€) | 0.07 | 0.20 | 0.85 | 2.10 | | Diluted EPS (€) | 0.07 | 0.20 | 0.84 | 2.06 | Consolidated Statement of Comprehensive Income / (Loss) The unaudited consolidated statement of comprehensive income/(loss) shows a Q4 2023 comprehensive loss but full-year comprehensive income, influenced by post-employment benefit remeasurements and currency translation Consolidated Statement of Comprehensive Income / (Loss) Highlights | (in millions of Euros) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | :------ | :------ | | Net income | 11 | 30 | 129 | 308 | | Other comprehensive (loss) / income | (62) | (74) | (34) | 137 | | Total comprehensive (loss) / income | (51) | (44) | 95 | 445 | Consolidated Statement of Financial Position The unaudited consolidated statement of financial position shows decreased total assets and liabilities, with increased total equity, as of December 31, 2023 Consolidated Statement of Financial Position Highlights | (in millions of Euros) | Dec 31, 2023 | Dec 31, 2022 | | :--------------------- | :----------- | :----------- | | Total Assets | 4,661 | 4,941 | | Total Liabilities | 3,797 | 4,189 | | Total Equity | 864 | 752 | Consolidated Statement of Changes in Equity The unaudited consolidated statement of changes in equity reflects an increase in total equity for FY 2023, primarily driven by net income despite other comprehensive losses Consolidated Statement of Changes in Equity Highlights | (in millions of Euros) | At Jan 1, 2023 | Net income | Other comprehensive (loss) / income | Share-based compensation | Other | Transactions with non-controlling interests | At Dec 31, 2023 | | :--------------------- | :------------- | :--------- | :---------------------------------- | :----------------------- | :---- | :---------------------------------------- | :-------------- | | Total equity | 752 | 129 | (34) | 20 | 0 | (3) | 864 | Consolidated Statement of Cash Flows The unaudited consolidated statement of cash flows shows increased net cash from operating activities for Q4 and FY 2023, alongside increased cash used in investing and financing activities Consolidated Statement of Cash Flows Highlights | (in millions of Euros) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | :------ | :------ | | Net cash flows from operating activities | 185 | 128 | 506 | 451 | | Net cash flows used in investing activities | (127) | (107) | (288) | (270) | | Net cash flows used in financing activities | (15) | (22) | (182) | (163) | | Net increase / (decrease) in cash and cash equivalent | 43 | (1) | 36 | 18 | | Cash and cash equivalents - end of year | 202 | 166 | 202 | 166 | Supplemental Financial Data This section provides supplemental financial data, including segment Adjusted EBITDA and detailed shipments and revenue by product line Segment Adjusted EBITDA Segment Adjusted EBITDA shows strong A&T performance, Q4 growth but full-year decline for P&ARP, and declines for AS&I in both Q4 and FY 2023 Segment Adjusted EBITDA | (in millions of Euros) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | :------ | :------ | | P&ARP | 82 | 71 | 283 | 326 | | A&T | 76 | 56 | 324 | 217 | | AS&I | 25 | 31 | 133 | 149 | | Holdings and Corporate | (12) | (10) | (27) | (19) | | Total | 171 | 148 | 713 | 673 | Shipments and Revenue by Product Line Shipments and revenue by product line generally declined in Q4 and FY 2023, with aerospace rolled products being a notable exception showing increased full-year revenue Shipments by Product Line (k metric tons) | Product Line | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Packaging rolled products | 172 | 186 | 736 | 809 | | Automotive rolled products | 62 | 61 | 271 | 245 | | Specialty and other thin-rolled products | 4 | 7 | 23 | 35 | | Aerospace rolled products | 22 | 21 | 96 | 76 | | Transportation, industry, defense and other rolled products | 26 | 32 | 123 | 147 | | Automotive extruded products | 28 | 28 | 121 | 117 | | Other extruded products | 22 | 33 | 122 | 151 | | Total shipments | 336 | 368 | 1,492 | 1,580 | Revenue by Product Line (€ millions) | Product Line | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Packaging rolled products | 582 | 697 | 2,596 | 3,326 | | Automotive rolled products | 254 | 275 | 1,156 | 1,154 | | Specialty and other thin-rolled products | 29 | 35 | 146 | 183 | | Aerospace rolled products | 264 | 218 | 1,022 | 728 | | Transportation, industry, defense and other rolled products | 144 | 204 | 706 | 972 | | Automotive extruded products | 211 | 228 | 934 | 949 | | Other extruded products | 123 | 200 | 696 | 912 | | Other and inter-segment eliminations | 6 | (13) | (17) | (104) | | Total revenue | 1,613 | 1,844 | 7,239 | 8,120 | Non-GAAP Measures Reconciliations & Definitions This section provides reconciliations of non-GAAP financial measures to IFRS and detailed definitions for each non-GAAP metric Reconciliation of Revenue to VAR This section reconciles IFRS Revenue to the non-GAAP Value-Added Revenue (VAR), detailing adjustments for metal costs and metal price lag for quarterly and annual periods Reconciliation of Revenue to VAR | (in millions of Euros) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | :------ | :------ | | Revenue | 1,613 | 1,844 | 7,239 | 8,120 | | Hedged cost of alloyed metal | (939) | (1,212) | (4,374) | (5,403) | | Revenue from incidental activities | (7) | (5) | (27) | (21) | | Metal price lag | 14 | 69 | 86 | 29 | | VAR | 681 | 696 | 2,924 | 2,725 | Reconciliation of Net Income to Adjusted EBITDA This section reconciles IFRS Net Income to the non-GAAP Adjusted EBITDA, detailing adjustments for depreciation, finance costs, and non-recurring items for quarterly and annual periods Reconciliation of Net Income to Adjusted EBITDA | (in millions of Euros) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | :------ | :------ | | Net income | 11 | 30 | 129 | 308 | | Income tax expense / (benefit) | 32 | (3) | 67 | (105) | | Finance costs - net | 35 | 33 | 141 | 131 | | Income from operations | 78 | 60 | 337 | 334 | | Depreciation and amortization | 73 | 78 | 294 | 287 | | Restructuring costs | — | 1 | — | 1 | | Unrealized (gains) / losses on derivatives | (2) | (19) | 3 | 46 | | Unrealized exchange losses / (gains) from the remeasurement of monetary assets and liabilities – net | 2 | (1) | 2 | 1 | | Losses / (gains) on pension plan amendments | — | (47) | — | (47) | | Share based compensation costs | 5 | 5 | 20 | 18 | | (Gains) / losses on disposal | 1 | 2 | (29) | 4 | | Metal price lag | 14 | 69 | 86 | 29 | | Adjusted EBITDA | 171 | 148 | 713 | 673 | Reconciliation of Net Cash Flows from Operating Activities to Free Cash Flow This section reconciles IFRS Net Cash Flows from Operating Activities to the non-GAAP Free Cash Flow by deducting capital expenditures net of grants received for quarterly and annual periods Reconciliation of Net Cash Flows from Operating Activities to Free Cash Flow | (in millions of Euros) | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | :------ | :------ | | Net cash flows from operating activities | 185 | 128 | 506 | 451 | | Purchases of property, plant and equipment, net of grants received | (127) | (106) | (336) | (269) | | Free Cash Flow | 58 | 22 | 170 | 182 | Reconciliation of Borrowings to Net Debt This section reconciles IFRS Borrowings to the non-GAAP Net Debt, adjusting for the fair value of derivatives and cash and cash equivalents Reconciliation of Borrowings to Net Debt | (in millions of Euros) | Dec 31, 2023 | Dec 31, 2022 | | :--------------------- | :----------- | :----------- | | Borrowings | 1,868 | 2,056 | | Fair value of net debt derivatives, net of margin calls | (2) | 1 | | Cash and cash equivalents | (202) | (166) | | Net debt | 1,664 | 1,891 | Reconciliation of Net Income to Adjusted NOPAT and Adjusted ROIC This section reconciles IFRS Net Income to Adjusted NOPAT and calculates Adjusted ROIC, demonstrating the company's capital allocation effectiveness Reconciliation of Net Income to Adjusted NOPAT and Adjusted ROIC | (in millions of Euros) | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | | Net income | 129 | 308 | | Income tax expense / (benefit) | 67 | (105) | | Income before tax | 196 | 203 | | Finance costs - net | 141 | 131 | | Income from operations | 337 | 334 | | Unrealized losses on derivatives | 3 | 46 | | Unrealized exchange losses from the remeasurement of monetary assets and liabilities - net | 2 | 1 | | Losses / (gains) on pension plan amendments | — | (47) | | Share based compensation costs | 20 | 18 | | Metal price lag | 86 | 29 | | (Gains) / losses on disposals | (29) | 4 | | Tax impact | (103) | (92) | | Adjusted NOPAT (A) | 316 | 293 | | Total Invested Capital (B) (as of Dec 31 of prior year) | 2,794 | 2,653 | | Adjusted ROIC (A)/(B) | 11.3% | 11.0% | Non-GAAP Measures Definitions This section provides detailed definitions for all non-GAAP financial measures used in the report, including VAR, Adjusted EBITDA, Free Cash Flow, Adjusted ROIC, and Net Debt - Value-Added Revenue (VAR) is defined as revenue, excluding revenue from incidental activities, minus cost of metal (adjusted for metal price lag, other alloying metals, freight out, and realized hedging gains/losses). It aims to reflect value-added elements by removing metal cost impact[54] - Adjusted EBITDA is defined as income/(loss) from continuing operations before income taxes, joint venture results, net finance costs, other expenses, and D&A, adjusted for restructuring, impairment, unrealized gains/losses on derivatives and foreign exchange, metal price lag, share-based compensation, and other non-recurring items. It is used by management to measure profitability and assess core operating performance[55][57][58] - Free Cash Flow is defined as net cash flow from operating activities less capital expenditure, net of grants received. It measures net cash generated or used by the business, considering operating activities and capital expenditure requirements[60] - Adjusted Return on Invested Capital (Adjusted ROIC) is defined as Adjusted Net Operating Profit after Tax (Adjusted NOPAT) divided by Invested Capital. It assesses the effectiveness of capital allocation[61] - Net debt is defined as borrowings plus or minus the fair value of cross currency basis swaps net of margin calls less cash and cash equivalents and cash pledged for guarantees. It provides a measure of indebtedness by considering both external debt and cash balances[63]