Constellium(US:CSTM)2024-02-21 18:34Financial Data and Key Metrics Changes - Shipments decreased by 9% to 336,000 tons in Q4 2023 compared to Q4 2022, with revenue of €1.6 billion down 13% year-over-year due to lower shipments and metal prices [13][14] - Value-added revenue was €681 million in Q4 2023, down 2% from the previous year, while net income fell to €11 million from €30 million [14][37] - Adjusted EBITDA increased by 15% to €171 million in Q4 2023, marking a record performance for the company [15][38] - For the full year 2023, adjusted EBITDA reached €713 million, up 6% from 2022, with free cash flow totaling €170 million [38][58] Business Line Data and Key Metrics Changes - In the P&ARP segment, adjusted EBITDA was €82 million, up 16% year-over-year, driven by improved contract pricing and a stronger mix [33][42] - The AS&I segment saw adjusted EBITDA decrease by 22% to €25 million, impacted by lower shipments in the industrial market [35][44] - The A&T segment reported adjusted EBITDA of €76 million, a 36% increase, with aerospace shipments up around 10% [43][34] Market Data and Key Metrics Changes - The European market is currently weaker, particularly affecting German OEMs, while North America shows stronger demand in automotive [23][68] - The packaging market is expected to grow low to mid-single digits in both North America and Europe, with canstock demand stabilizing [54][66] - The aerospace market remains strong, with major OEMs focused on increasing build rates for aircraft [76][65] Company Strategy and Development Direction - The company plans to return a significant portion of free cash flow towards share repurchases while maintaining financial flexibility for potential M&A opportunities [16][30] - Investments in recycling operations are prioritized to increase recycling content and capacity [24][60] - The company aims to achieve a record adjusted EBITDA of over €800 million by 2025, supported by the startup of the recycling center in Neuf-Brisach [71][82] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about 2024 despite uncertainties in the macroeconomic environment, targeting adjusted EBITDA between €740 million and €770 million [71][30] - The company is focused on cost control and pricing strategies to mitigate inflationary pressures, with expectations for moderated inflation in 2024 [47][36] - The automotive sector is expected to remain strong in North America, while Europe faces challenges [68][105] Other Important Information - The company has authorized a share repurchase program of up to $300 million, expected to begin in the first half of 2024 [30][60] - Net debt decreased to €1.7 billion, with leverage at a multiyear low of 2.3x, within the target range [49][61] - Changes to the presentation of non-GAAP financial measures will be implemented, particularly regarding the treatment of metal price lag [62][50] Q&A Session Summary Question: Timing of the general meeting - The general meeting is scheduled for early May [73] Question: Share buybacks and dilution offset - Management confirmed that share buybacks will initially offset dilution, with potential for more aggressive repurchases post-general meeting [74] Question: Margin expectations for A&T business - Management indicated that margins for the A&T business are expected to remain strong, with a recovery in TID contributing positively [87][88] Question: Impact of weather on Muscle Shoals operations - Management acknowledged that extreme weather impacted operations, leading to potential shipment losses in Q1 [104][105] Question: Supply of scrap in the market - Management expressed confidence in the availability of scrap to meet growing demand, emphasizing the importance of domestic recycling [98][116] Question: Future capacity and production timelines - Management noted that while there are shifts in production timelines, demand remains strong, and capacity expansion is being considered [134][136]