Constellium Reports Third Quarter 2021 Results
Constellium SE (CSTM) reported strong Q3 2021 results, with shipments of 395k metric tons up 12% YoY and revenues of €1.6 billion, a 35% increase from Q3 2020. Net income surged to €99 million compared to €20 million a year prior. Adjusted EBITDA rose 14% to €143 million. In YTD 2021, shipments totaled 1.2 million metric tons, with revenue reaching €4.4 billion, a 22% rise. Management projects 2021 Adjusted EBITDA of €550-560 million and positive Free Cash Flow over €125 million.
- Revenue increased 35% to €1.6 billion in Q3 2021.
- Net income rose to €99 million from €20 million YoY.
- Adjusted EBITDA improved by 14% to €143 million.
- Free Cash Flow reached €40 million in Q3 2021.
- Automotive demand continues to be impacted by semiconductor shortages.
- Aerospace demand remains subdued as expected.
PARIS, Oct. 27, 2021 (GLOBE NEWSWIRE) -- Constellium SE (NYSE: CSTM) today reported results for the third quarter ended September 30, 2021.
Third quarter 2021 highlights:
- Shipments of 395 thousand metric tons, up
12% compared to Q3 2020 - Revenue of
€1.6 billion , up35% compared to Q3 2020 - Net income of
€99 million compared to a net income of€20 million in Q3 2020 - Adjusted EBITDA of
€143 million , up14% compared to Q3 2020 - Cash from Operations of
€91 million and Free Cash Flow of€40 million - Investigating an increase in total planned European recycling center capacity to ~130kt
- Redeeming
$200 million of5.875% Senior Notes due 2026 in November
Nine months ended September 30, 2021 highlights:
- Shipments of 1.2 million metric tons, up
12% compared to YTD 2020 - Revenue of
€4.4 billion , up22% compared to YTD 2020 - Net income of
€255 million compared to a net loss of€43 million in YTD 2020 - Adjusted EBITDA of
€434 million , up23% compared to YTD 2020 - Cash from Operations of
€239 million and Free Cash Flow of€121 million - Net debt / LTM Adjusted EBITDA of 3.6x at September 30, 2021
Jean-Marc Germain, Constellium’s Chief Executive Officer said, “Constellium delivered solid results in the third quarter. Demand remained strong across our packaging and industrial end markets, while automotive demand continued to be hindered by the semiconductor shortage and aerospace demand remained subdued as expected. P&ARP matched the record Adjusted EBITDA of the second quarter supported by strong operational performance. A&T benefited from robust TID shipments and continued to demonstrate good cost control. AS&I also performed well with strong Industry shipments and solid cost control, which mitigated much of the weakness in automotive demand. Importantly, we continued to generate Free Cash Flow and further reduced our leverage in the third quarter."
"I want to commend the entire Constellium team for maintaining its focus especially in the face of continuing supply chain challenges and increasing inflationary pressures. This focus on execution leaves us well positioned to deliver long-term Adjusted EBITDA growth and meet our balance sheet leverage target. I remain confident in our trajectory and the substantial shareholder value creation opportunity in front of us," Mr. Germain continued.
Mr. Germain concluded, "We expect recent demand trends in our markets to continue through the remainder of 2021. Based on our current outlook, we now expect Adjusted EBITDA of
Group Summary
| Q3 2021 | Q3 2020 | Var. | YTD 2021 | YTD 2020 | Var. | ||||
| Shipments (k metric tons) | 395 | 354 | 12 | % | 1,186 | 1,057 | 12 | % | |
| Revenue (€ millions) | 1,587 | 1,172 | 35 | % | 4,446 | 3,640 | 22 | % | |
| Net income / (loss) (€ millions) | 99 | 20 | n.m. | 255 | (43 | ) | n.m. | ||
| Adjusted EBITDA (€ millions) | 143 | 126 | 14 | % | 434 | 354 | 23 | % | |
| Adjusted EBITDA per metric ton (€) | 362 | 355 | 2 | % | 366 | 335 | 9 | % | |
The difference between the sum of reported segment revenue and total group revenue includes revenue from certain non-core activities and inter-segment eliminations. The difference between the sum of reported segment Adjusted EBITDA and the Group Adjusted EBITDA is related to Holdings and Corporate.
For the third quarter of 2021, shipments of 395 thousand metric tons increased
For the first nine months of 2021, shipments of 1.2 million metric tons increased
Results by Segment
Packaging & Automotive Rolled Products (P&ARP)
| Q3 2021 | Q3 2020 | Var. | YTD 2021 | YTD 2020 | Var. | |||
| Shipments (k metric tons) | 281 | 258 | 9 | % | 832 | 748 | 11 | % |
| Revenue (€ millions) | 988 | 672 | 47 | % | 2,661 | 1,989 | 34 | % |
| Adjusted EBITDA (€ millions) | 94 | 85 | 10 | % | 256 | 209 | 22 | % |
| Adjusted EBITDA per metric ton (€) | 335 | 332 | 1 | % | 308 | 280 | 10 | % |
For the third quarter of 2021, Adjusted EBITDA increased
For the first nine months of 2021, Adjusted EBITDA of
Aerospace & Transportation (A&T)
| Q3 2021 | Q3 2020 | Var. | YTD 2021 | YTD 2020 | Var. | |||
| Shipments (k metric tons) | 52 | 36 | 45 | % | 153 | 140 | 9 | % |
| Revenue (€ millions) | 289 | 202 | 43 | % | 821 | 811 | 1 | % |
| Adjusted EBITDA (€ millions) | 20 | 10 | 91 | % | 81 | 93 | (14 | )% |
| Adjusted EBITDA per metric ton (€) | 362 | 275 | 32 | % | 525 | 666 | (21 | )% |
For the third quarter of 2021, Adjusted EBITDA increased
For the first nine months of 2021, Adjusted EBITDA of
Automotive Structures & Industry (AS&I)
| Q3 2021 | Q3 2020 | Var. | YTD 2021 | YTD 2020 | Var. | |||
| Shipments (k metric tons) | 62 | 60 | 4 | % | 201 | 169 | 19 | % |
| Revenue (€ millions) | 326 | 304 | 7 | % | 1,021 | 868 | 18 | % |
| Adjusted EBITDA (€ millions) | 32 | 33 | (0 | )% | 111 | 66 | 69 | % |
| Adjusted EBITDA per metric ton (€) | 528 | 551 | (4 | )% | 553 | 389 | 42 | % |
For the third quarter of 2021, Adjusted EBITDA decreased by
For the first nine months of 2021, Adjusted EBITDA of
Net Income
For the third quarter of 2021, net income of
For the first nine months of 2021, net income of
Cash Flow
Free Cash Flow was
Cash flows from operating activities were
Cash flows used in investing activities were
Cash flows used in financing activities were
Liquidity and Net Debt
Liquidity at September 30, 2021 was
Net debt was
Outlook
Based on our current outlook, we expect Adjusted EBITDA in a range of
We are not able to provide a reconciliation of this Adjusted EBITDA guidance to net income, the comparable GAAP measure, because certain items that are excluded from Adjusted EBITDA cannot be reasonably predicted or are not in our control. In particular, we are unable to forecast the timing or magnitude of realized and unrealized gains and losses on derivative instruments, metal lag, impairment or restructuring charges, or taxes without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, net income in the future.
Recent Developments
On October 26, 2021, Constellium announced the intention to redeem
Forward-looking statements
Certain statements contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may contain “forward-looking statements” with respect to our business, results of operations and financial condition, and our expectations or beliefs concerning future events and conditions. You can identify forward-looking statements because they contain words such as, but not limited to, “believes,” “expects,” “may,” “should,” “approximately,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” likely,” “will,” “would,” “could” and similar expressions (or the negative of these terminologies or expressions). All forward-looking statements involve risks and uncertainties. Many risks and uncertainties are inherent in our industry and markets, while others are more specific to our business and operations. These risks and uncertainties include, but are not limited to: market competition; economic downturn; disruption to business operations, including the length and magnitude of disruption resulting from the global COVID-19 pandemic; the inability to meet customer demand and quality requirements; the loss of key customers, suppliers or other business relationships; the capacity and effectiveness of our hedging policy activities; the loss of key employees; levels of indebtedness which could limit our operating flexibility and opportunities; and other risk factors set forth under the heading “Risk Factors” in our Annual Report on Form 20-F, and as described from time to time in subsequent reports filed with the U.S. Securities and Exchange Commission. The occurrence of the events described and the achievement of the expected results depend on many events, some or all of which are not predictable or within our control. Consequently, actual results may differ materially from the forward-looking statements contained in this press release. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.
About Constellium
Constellium (NYSE: CSTM) is a global sector leader that develops innovative, value added aluminium products for a broad scope of markets and applications, including packaging, automotive and aerospace. Constellium generated
Constellium’s earnings materials for the third quarter ended September 30, 2021, are also available on the company’s website (www.constellium.com).
| Ryan Wentling – Investor Relations | Delphine Dahan-Kocher – Communications |
| Phone: +1 (443) 988-0600 | Phone: +1 (443) 420 7860 |
| investor-relations@constellium.com | delphine.dahan-kocher@constellium.com |
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in millions of Euros) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Revenue | 1,587 | 1,172 | 4,446 | 3,640 | ||||||||
| Cost of sales | (1,419 | ) | (1,043 | ) | (3,937 | ) | (3,284 | ) | ||||
| Gross profit | 168 | 129 | 509 | 356 | ||||||||
| Selling and administrative expenses | (60 | ) | (55 | ) | (187 | ) | (178 | ) | ||||
| Research and development expenses | (10 | ) | (9 | ) | (30 | ) | (29 | ) | ||||
| Other gains and losses - net | 55 | (1 | ) | 142 | (80 | ) | ||||||
| Income from operations | 153 | 64 | 434 | 69 | ||||||||
| Finance costs - net | (34 | ) | (37 | ) | (126 | ) | (124 | ) | ||||
| Income / (loss) before tax | 119 | 27 | 308 | (55 | ) | |||||||
| Income tax (expense) / benefit | (20 | ) | (7 | ) | (53 | ) | 12 | |||||
| Net income / (loss) | 99 | 20 | 255 | (43 | ) | |||||||
| Net income attributable to: | ||||||||||||
| Equity holders of Constellium | 97 | 19 | 250 | (45 | ) | |||||||
| Non-controlling interests | 2 | 1 | 5 | 2 | ||||||||
| Net income / (loss) | 99 | 20 | 255 | (43 | ) | |||||||
| Earnings per share attributable to the equity holders of Constellium, (in Euros) | |||||||||
| Basic | 0.68 | 0.13 | 1.77 | (0.33 | ) | ||||
| Diluted | 0.65 | 0.13 | 1.69 | (0.33 | ) | ||||
| Weighted average number of shares | |||||||||
| Basic | 141,677 | 139,209 | 140,765 | 139,032 | |||||
| Diluted | 147,148 | 143,002 | 147,148 | 139,032 | |||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS) (UNAUDITED)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in millions of Euros) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Net income / (loss) | 99 | 20 | 255 | (43 | ) | |||||||
| Other comprehensive income / (loss) | ||||||||||||
| Items that will not be reclassified subsequently to the interim income statement | ||||||||||||
| Remeasurement on post-employment benefit obligations | 5 | (12 | ) | 94 | (53 | ) | ||||||
| Income tax on remeasurement on post-employment benefit obligations | (3 | ) | 3 | (14 | ) | 12 | ||||||
| Items that may be reclassified subsequently to the interim income statement | ||||||||||||
| Cash flow hedges | (6 | ) | 12 | (14 | ) | 12 | ||||||
| Income tax on hedges | 1 | (4 | ) | 3 | (4 | ) | ||||||
| Currency translation differences | 10 | (8 | ) | 22 | (10 | ) | ||||||
| Other comprehensive income / (loss) | 7 | (9 | ) | 91 | (43 | ) | ||||||
| Total comprehensive income / (loss) | 106 | 11 | 346 | (86 | ) | |||||||
| Attributable to: | ||||||||||||
| Equity holders of Constellium | 104 | 10 | 340 | (88 | ) | |||||||
| Non-controlling interests | 2 | 1 | 6 | 2 | ||||||||
| Total comprehensive income / (loss) | 106 | 11 | 346 | (86 | ) | |||||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
| (in millions of Euros) | At September 30, 2021 | At December 31, 2020 | ||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | 323 | 439 | ||||
| Trade receivables and other | 689 | 406 | ||||
| Inventories | 935 | 582 | ||||
| Other financial assets | 88 | 39 | ||||
| 2,035 | 1,466 | |||||
| Non-current assets | ||||||
| Property, plant and equipment | 1,897 | 1,906 | ||||
| Goodwill | 441 | 417 | ||||
| Intangible assets | 62 | 61 | ||||
| Deferred tax assets | 150 | 193 | ||||
| Trade receivables and other | 71 | 68 | ||||
| Other financial assets | 15 | 18 | ||||
| 2,636 | 2,663 | |||||
| Total Assets | 4,671 | 4,129 | ||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Trade payables and other | 1,332 | 905 | ||||
| Borrowings | 262 | 92 | ||||
| Other financial liabilities | 27 | 46 | ||||
| Income tax payable | 26 | 20 | ||||
| Provisions | 19 | 23 | ||||
| 1,666 | 1,086 | |||||
| Non-current liabilities | ||||||
| Trade payables and other | 35 | 32 | ||||
| Borrowings | 2,020 | 2,299 | ||||
| Other financial liabilities | 8 | 41 | ||||
| Pension and other post-employment benefit obligations | 579 | 664 | ||||
| Provisions | 96 | 98 | ||||
| Deferred tax liabilities | 13 | 10 | ||||
| 2,751 | 3,144 | |||||
| Total Liabilities | 4,417 | 4,230 | ||||
| Equity | ||||||
| Share capital | 3 | 3 | ||||
| Share premium | 420 | 420 | ||||
| Retained deficit and other reserves | (187 | ) | (538 | ) | ||
| Equity attributable to equity holders of Constellium | 236 | (115 | ) | |||
| Non-controlling interests | 18 | 14 | ||||
| Total Equity | 254 | (101 | ) | |||
| Total Equity and Liabilities | 4,671 | 4,129 | ||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
| (in millions of Euros) | Share capital | Share premium | Re- measurement | Cash flow hedges | Foreign currency translation reserve | Other reserves | Retained losses | Total | Non- controlling interests | Total equity | |||||||||||||||||
| At January 1, 2021 | 3 | 420 | (192 | ) | 9 | (13 | ) | 68 | (410 | ) | (115 | ) | 14 | (101 | ) | ||||||||||||
| Net income | — | — | — | — | — | — | 250 | 250 | 5 | 255 | |||||||||||||||||
| Other comprehensive income / (loss) | — | — | 80 | (11 | ) | 21 | — | — | 90 | 1 | 91 | ||||||||||||||||
| Total comprehensive income / (loss) | — | — | 80 | (11 | ) | 21 | — | 250 | 340 | 6 | 346 | ||||||||||||||||
| Share-based compensation | — | — | — | — | — | 11 | — | 11 | — | 11 | |||||||||||||||||
| Transactions with non-controlling interests | — | — | — | — | — | — | — | — | (2 | ) | (2 | ) | |||||||||||||||
| At September 30, 2021 | 3 | 420 | (112 | ) | (2 | ) | 8 | 79 | (160 | ) | 236 | 18 | 254 | ||||||||||||||
| (in millions of Euros) | Share capital | Share premium | Re- measurement | Cash flow hedges | Foreign currency translation reserve | Other reserves | Retained losses | Total | Non- controlling interests | Total equity | |||||||||||||||||
| At January 1, 2020 | 3 | 420 | (177 | ) | (10 | ) | 4 | 53 | (389 | ) | (96 | ) | 11 | (85 | ) | ||||||||||||
| Net (loss) / income | — | — | — | — | — | — | (45 | ) | (45 | ) | 2 | (43 | ) | ||||||||||||||
| Other comprehensive (loss) / income | — | — | (41 | ) | 8 | (10 | ) | — | — | (43 | ) | — | (43 | ) | |||||||||||||
| Total comprehensive (loss) / income | — | — | (41 | ) | 8 | (10 | ) | — | (45 | ) | (88 | ) | 2 | (86 | ) | ||||||||||||
| Share-based compensation | — | — | — | — | — | 11 | — | 11 | — | 11 | |||||||||||||||||
| Transactions with non-controlling interests | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||
| At September 30, 2020 | 3 | 420 | (218 | ) | (2 | ) | (6 | ) | 64 | (434 | ) | (173 | ) | 13 | (160 | ) | |||||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in millions of Euros) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Net income / (loss) | 99 | 20 | 255 | (43 | ) | |||||||
| Adjustments | ||||||||||||
| Depreciation and amortization | 67 | 64 | 195 | 196 | ||||||||
| Impairment of assets | — | 9 | — | 14 | ||||||||
| Pension and other post-employment benefits service costs | 8 | 9 | 25 | 26 | ||||||||
| Finance costs - net | 34 | 37 | 126 | 124 | ||||||||
| Income tax expense / (benefit) | 20 | 7 | 53 | (12 | ) | |||||||
| Unrealized gains on derivatives - net and from remeasurement of monetary assets and liabilities - net | (23 | ) | (13 | ) | (68 | ) | (2 | ) | ||||
| Losses on disposal | 1 | 2 | 1 | 2 | ||||||||
| Other - net | 3 | 3 | 8 | 16 | ||||||||
| Change in working capital | ||||||||||||
| Inventories | (122 | ) | 15 | (334 | ) | 50 | ||||||
| Trade receivables | (23 | ) | (19 | ) | (257 | ) | (12 | ) | ||||
| Trade payables | 56 | 38 | 356 | 20 | ||||||||
| Other | 15 | 8 | 15 | 23 | ||||||||
| Change in provisions | (3 | ) | (2 | ) | (7 | ) | 3 | |||||
| Pension and other post-employment benefits paid | (13 | ) | (15 | ) | (34 | ) | (35 | ) | ||||
| Interest paid | (27 | ) | (45 | ) | (99 | ) | (118 | ) | ||||
| Income tax (paid) / refunded | (1 | ) | (7 | ) | 4 | 11 | ||||||
| Net cash flows from operating activities | 91 | 111 | 239 | 263 | ||||||||
| Purchases of property, plant and equipment | (54 | ) | (38 | ) | (128 | ) | (138 | ) | ||||
| Property, plant and equipment grants received | 3 | 2 | 10 | 4 | ||||||||
| Proceeds from disposals, net of cash | — | — | — | 1 | ||||||||
| Net cash flows used in investing activities | (51 | ) | (36 | ) | (118 | ) | (133 | ) | ||||
| Proceeds from issuance of Senior Notes | — | — | 712 | 290 | ||||||||
| Repayments of Senior Notes | — | — | (863 | ) | (200 | ) | ||||||
| Repayments from U.S. revolving credit facilities | — | — | — | (129 | ) | |||||||
| Proceeds from other borrowings | — | (5 | ) | 2 | 202 | |||||||
| Repayments from other borrowings | (1 | ) | (3 | ) | (10 | ) | (7 | ) | ||||
| Lease repayments | (8 | ) | (8 | ) | (25 | ) | (25 | ) | ||||
| Payment of financing costs and redemption fees | (2 | ) | — | (28 | ) | (9 | ) | |||||
| Transactions with non-controlling interests | — | — | (2 | ) | — | |||||||
| Other financing activities | 2 | (2 | ) | (27 | ) | — | ||||||
| Net cash flows (used in) / from financing activities | (9 | ) | (18 | ) | (241 | ) | 122 | |||||
| Net increase / (decrease) in cash and cash equivalent | 31 | 57 | (120 | ) | 252 | |||||||
| Cash and cash equivalents - beginning of year | 290 | 378 | 439 | 184 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | 2 | (3 | ) | 4 | (4 | ) | ||||||
| Cash and cash equivalents - end of period | 323 | 432 | 323 | 432 | ||||||||
SEGMENT ADJUSTED EBITDA
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in millions of Euros) | 2021 | 2020 | 2021 | 2020 | ||||||||
| P&ARP | 94 | 85 | 256 | 209 | ||||||||
| A&T | 20 | 10 | 81 | 93 | ||||||||
| AS&I | 32 | 33 | 111 | 66 | ||||||||
| Holdings and Corporate | (3 | ) | (2 | ) | (14 | ) | (14 | ) | ||||
| Total | 143 | 126 | 434 | 354 | ||||||||
SHIPMENTS AND REVENUE BY PRODUCT LINE
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in k metric tons) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Packaging rolled products | 215 | 192 | 622 | 584 | ||||||||
| Automotive rolled products | 55 | 60 | 177 | 145 | ||||||||
| Specialty and other thin-rolled products | 11 | 6 | 33 | 19 | ||||||||
| Aerospace rolled products | 13 | 15 | 39 | 64 | ||||||||
| Transportation, industry, defense and other rolled products | 39 | 21 | 114 | 76 | ||||||||
| Automotive extruded products | 26 | 31 | 89 | 77 | ||||||||
| Other extruded products | 36 | 29 | 112 | 92 | ||||||||
| Total shipments | 395 | 354 | 1,186 | 1,057 | ||||||||
| (in millions of Euros) | ||||||||||||
| Packaging rolled products | 730 | 463 | 1,897 | 1,443 | ||||||||
| Automotive rolled products | 216 | 185 | 637 | 466 | ||||||||
| Specialty and other thin-rolled products | 42 | 24 | 127 | 80 | ||||||||
| Aerospace rolled products | 92 | 110 | 279 | 475 | ||||||||
| Transportation, industry, defense and other rolled products | 197 | 92 | 542 | 336 | ||||||||
| Automotive extruded products | 167 | 187 | 544 | 482 | ||||||||
| Other extruded products | 159 | 117 | 477 | 386 | ||||||||
| Other and inter-segment eliminations | (16 | ) | (6 | ) | (57 | ) | (28 | ) | ||||
| Total revenue | 1,587 | 1,172 | 4,446 | 3,640 | ||||||||
NON-GAAP MEASURES
Reconciliation of net income to Adjusted EBITDA (a non-GAAP measure)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in millions of Euros) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Net income / (loss) | 99 | 20 | 255 | (43 | ) | |||||||
| Income tax expense / (benefit) | 20 | 7 | 53 | (12 | ) | |||||||
| Income / (loss) before tax | 119 | 27 | 308 | (55 | ) | |||||||
| Finance costs - net | 34 | 37 | 126 | 124 | ||||||||
| Income from operations | 153 | 64 | 434 | 69 | ||||||||
| Depreciation and amortization | 67 | 64 | 195 | 196 | ||||||||
| Impairment of assets | — | 9 | — | 14 | ||||||||
| Restructuring costs | — | 2 | 3 | 13 | ||||||||
| Unrealized (gains) / losses on derivatives | (23 | ) | (9 | ) | (67 | ) | 1 | |||||
| Unrealized exchange gains from the remeasurement of monetary assets and liabilities – net | — | (2 | ) | (1 | ) | (1 | ) | |||||
| Losses on pension plan amendments | — | — | 2 | 2 | ||||||||
| Share based compensation costs | 4 | 3 | 11 | 11 | ||||||||
| Metal price lag (A) | (59 | ) | (7 | ) | (144 | ) | 33 | |||||
| Start-up and development costs (B) | — | 1 | — | 5 | ||||||||
| Losses on disposal | 1 | 2 | 1 | 2 | ||||||||
| Other (C) | — | (1 | ) | — | 9 | |||||||
| Adjusted EBITDA | 143 | 126 | 434 | 354 | ||||||||
| (A) | Metal price lag represents the financial impact of the timing difference between when aluminium prices included within Constellium's Revenue are established and when aluminium purchase prices included in Cost of sales are established. The Group accounts for inventory using a weighted average price basis and this adjustment aims to remove the effect of volatility in LME prices. The calculation of the Group metal price lag adjustment is based on an internal standardized methodology calculated at each of Constellium’s manufacturing sites and is primarily calculated as the average value of product recorded in inventory, which approximates the spot price in the market, less the average value transferred out of inventory, which is the weighted average of the metal element of cost of sales, based on the quantity sold in the year. |
| (B) | Start-up and development costs, for the nine months ended September 30, 2020 were related to new projects in our AS&I operating segment. |
| (C) | Other, for the nine months ended September 30, 2020, included |
Reconciliation of net cash flows from operating activities to Free Cash Flow (a non-GAAP measure)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in millions of Euros) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Net cash flows from operating activities | 91 | 111 | 239 | 263 | ||||||||
| Purchases of property, plant and equipment | (54 | ) | (38 | ) | (128 | ) | (138 | ) | ||||
| Property, plant and equipment grants received | 3 | 2 | 10 | 4 | ||||||||
| Free Cash Flow | 40 | 75 | 121 | 129 | ||||||||
Reconciliation of borrowings to Net debt (a non-GAAP measure)
| (in millions of Euros) | At September 30, 2021 | At December 31, 2020 | ||||
| Borrowings | 2,282 | 2,391 | ||||
| Fair value of net debt derivatives, net of margin calls | 5 | 42 | ||||
| Cash and cash equivalents | (323 | ) | (439 | ) | ||
| Net debt | 1,964 | 1,994 | ||||
Non-GAAP measures
In addition to the results reported in accordance with International Financial Reporting Standards (“IFRS”), this press release includes information regarding certain financial measures which are not prepared in accordance with IFRS (“non-GAAP measures”). The non-GAAP measures used in this press release are: Adjusted EBITDA, Adjusted EBITDA per metric ton, Free Cash Flow and Net debt. Reconciliations to the most directly comparable IFRS financial measures are presented in the schedules to this press release. We believe these non-GAAP measures are important supplemental measures of our operating and financial performance. By providing these measures, together with the reconciliations, we believe we are enhancing investors’ understanding of our business, our results of operations and our financial position, as well as assisting investors in evaluating the extent to which we are executing our strategic initiatives. However, these non-GAAP financial measures supplement our IFRS disclosures and should not be considered an alternative to the IFRS measures and may not be comparable to similarly titled measures of other companies.
In considering the financial performance of the business, management and our chief operational decision maker, as defined by IFRS, analyze the primary financial performance measure of Adjusted EBITDA in all of our business segments. The most directly comparable IFRS measure to Adjusted EBITDA is our net income or loss for the period. We believe Adjusted EBITDA, as defined below, is useful to investors and is used by our management for measuring profitability because it excludes the impact of certain non-cash charges, such as depreciation, amortization, impairment and unrealized gains and losses on derivatives as well as items that do not impact the day-to-day operations and that management in many cases does not directly control or influence. Therefore, such adjustments eliminate items which have less bearing on our core operating performance.
Adjusted EBITDA measures are frequently used by securities analysts, investors and other interested parties in their evaluation of Constellium and in comparison to other companies, many of which present an Adjusted EBITDA-related performance measure when reporting their results.
Adjusted EBITDA is defined as income / (loss) from continuing operations before income taxes, results from joint ventures, net finance costs, other expenses and depreciation and amortization as adjusted to exclude restructuring costs, impairment charges, unrealized gains or losses on derivatives and on foreign exchange differences on transactions which do not qualify for hedge accounting, metal price lag, share based compensation expense, effects of certain purchase accounting adjustments, start-up and development costs or acquisition, integration and separation costs, certain incremental costs and other exceptional, unusual or generally non-recurring items.
Adjusted EBITDA is the measure of performance used by management in evaluating our operating performance, in preparing internal forecasts and budgets necessary for managing our business and, specifically in relation to the exclusion of the effect of favorable or unfavorable metal price lag, this measure allows management and the investor to assess operating results and trends without the impact of our accounting for inventories. We use the weighted average cost method in accordance with IFRS which leads to the purchase price paid for metal impacting our cost of goods sold and therefore profitability in the period subsequent to when the related sales price impacts our revenues. Management believes this measure also provides additional information used by our lending facilities providers with respect to the ongoing performance of our underlying business activities. Historically, we have used Adjusted EBITDA in calculating our compliance with financial covenants under certain of our loan facilities.
Adjusted EBITDA is not a presentation made in accordance with IFRS, is not a measure of financial condition, liquidity or profitability and should not be considered as an alternative to profit or loss for the period, revenues or operating cash flows determined in accordance with IFRS.
Free Cash Flow is defined as net cash flow from operating activities less capital expenditure, equity contributions and loans to joint ventures and other investing activities. Management believes that Free Cash Flow is a useful measure of the net cash flow generated or used by the business as it takes into account both the cash generated or consumed by operating activities, including working capital, and the capital expenditure requirements of the business. However, Free Cash Flow is not a presentation made in accordance with IFRS and should not be considered as an alternative to operating cash flows determined in accordance with IFRS. Free Cash Flow has certain inherent limitations, including the fact that it does not represent residual cash flows available for discretionary spending, notably because it does not reflect principal repayments required in connection with our debt or capital lease obligations.
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 the issuance of guarantees. Management believes that Net debt is a useful measure of indebtedness because it takes into account the cash and cash equivalent balances held by the Company as well as the total external debt of the Company. Net debt is not a presentation made in accordance with IFRS, and should not be considered as an alternative to borrowings determined in accordance with IFRS.
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