Constellium(US:CSTM)2024-07-23 17:51Financial Data and Key Metrics Changes - Shipments decreased by 5% year-over-year to 378,000 tons, primarily due to lower shipments in P&ARP and AS&I segments [11] - Revenue declined by 8% to €1.8 billion, attributed to lower shipments and unfavorable price and mix, partially offset by higher metal prices [11] - Net income increased to €71 million from €32 million in the same quarter last year [12] - Adjusted EBITDA was €214 million, including a positive non-cash impact from metal price lag of €42 million; excluding this impact, adjusted EBITDA was €172 million, down from €209 million last year [12] Business Line Data and Key Metrics Changes - P&ARP Segment: Adjusted EBITDA decreased by 19% to €64 million, with packaging shipments down 4% and automotive shipments down 3% [15][16] - A&T Segment: Adjusted EBITDA decreased by 14% to €83 million, with stable shipments; aerospace demand remained strong while TID showed weakness [17] - AS&I Segment: Adjusted EBITDA decreased by 19% to €32 million, with automotive shipments down 13% and industry shipments down 20% [18] Market Data and Key Metrics Changes - Aerospace demand remained strong, with robust commercial aircraft backlogs; however, automotive demand weakened in Europe while remaining stable in North America [13][31] - Packaging demand continued to improve, with expectations for growth in Canstock in 2024 [33] - Industrial and specialty markets remained weak, particularly in Europe, impacted by higher interest rates [36] Company Strategy and Development Direction - The company is focused on sustainability-driven markets, emphasizing aluminum's role as a lightweight and recyclable material [23] - Planned capital expenditures for 2024 are around €370 million, including investments in a recycling and casting center [25] - The company is committed to maintaining a leverage range of 1.5 to 2.5 times and has a strong liquidity position of €869 million [27] Management's Comments on Operating Environment and Future Outlook - Management noted that inflationary pressures have eased but labor and non-metal costs remain high; energy costs for 2024 are secured at more favorable levels [24] - The company expects to generate over €100 million in free cash flow for 2024, excluding the impact of flooding in Valais [21][50] - Management expressed confidence in achieving adjusted EBITDA of over €800 million in 2025, driven by operational improvements and new projects [56][92] Other Important Information - The company experienced significant flooding in Valais, Switzerland, leading to operational suspensions and an estimated gross damage of €135 million [42][46] - The company is working on mitigation plans and has received some governmental assistance; however, guidance for 2024 has been paused due to uncertainties [49] Q&A Session Summary Question: 2025 EBITDA outlook and growth drivers - Management expects a €90 million to €100 million increase to reach over €800 million in EBITDA, driven by operational normalization and new projects [56][92] Question: Flooding impact and production adjustments - Management confirmed that some production is being shifted to other facilities to meet customer needs while planning to restart operations in Valais [64][70] Question: Competition and tariffs - Management acknowledged new competition in the US market but expressed confidence in their ability to meet demand; the impact of potential tariffs remains uncertain [74][77] Question: Valais site contribution to EBITDA - Management indicated that the Valais site is not a significant contributor to overall earnings, and most of its impact will be restored by 2025 [85][86]