Constellium(US:CSTM)2023-04-26 19:32Financial Data and Key Metrics Changes - Shipments decreased by 3% to 389,000 tons compared to Q1 2022, primarily due to lower shipments in the PARP segment [49] - Revenue was €2 billion, a decrease of 1% year-over-year, as improved pricing and mix were offset by lower metal prices [49] - Value-added revenue increased by 16% to €754 million compared to the same period last year [49][52] - Net income for the quarter was €22 million, down from €179 million in Q1 2022 [49] - Adjusted EBITDA was €166 million, slightly below the first quarter of 2022 [56] - Free cash flow was negative €34 million, but the company expects to generate positive free cash flow exceeding €125 million for the year [50][65] Business Line Data and Key Metrics Changes - A&T segment adjusted EBITDA increased by 37% to €73 million, driven by higher aerospace shipments [67] - PARP segment adjusted EBITDA decreased by 33% to €55 million, with automotive shipments up 19% but packaging shipments down 11% [66] - AS&I segment adjusted EBITDA increased by 17% to €43 million, with automotive shipments up 13% [62] Market Data and Key Metrics Changes - Aerospace demand was strong, with shipments up over 50% compared to last year [57][72] - Automotive shipments in both rolled and extruded products were up double digits compared to last year [57] - Packaging shipments decreased due to inventory adjustments and lower end demand, with expectations for low to mid-single-digit growth in the long term [77] Company Strategy and Development Direction - The company aims for adjusted EBITDA in excess of €800 million by 2025, with a leverage target of 1.5 to 2.5x [2] - Focus on sustainability-driven growth trends, including consumer preference for recyclable aluminum cans and lightweighting in transportation [2][74] - Continued investment in recycling capabilities, with a recycling center expected to ramp up by 2025 [80] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the end-market positioning despite uncertainties in the macroeconomic environment [58] - The company is confident in its ability to pass through inflationary cost pressures and maintain pricing power [64][86] - Management acknowledges challenges in the packaging market due to destocking and demand weakness but expects long-term growth [88][90] Other Important Information - The company reported a recordable case rate of 1.6 accidents per million hours worked, highlighting a commitment to safety [47] - Net debt at the end of Q1 was €1.9 billion, with leverage at 2.8x, down 0.4x from the previous year [75] Q&A Session Summary Question: What is the current status of the packaging market? - Management remains confident in achieving internal targets but acknowledges challenges due to inflation and lack of promotional activity affecting demand [88] Question: How has the company managed inflationary pressures? - The company has successfully negotiated with customers to pass through most inflationary costs, resulting in a better position than previously expected [90] Question: What are the expectations for the automotive market? - The automotive market is expected to see continued demand, with low inventories and high consumer demand driving growth [78] Question: How does the company view competition and capacity expansions? - The company believes that additional capacity is needed in North America due to growth in can and automotive markets, and it is well-positioned with contracts running through 2028 [22]