Constellium(CSTM)2023-02-22 19:43Financial 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]