Constellium Reports Third Quarter 2023 Results

Rhea-AI Summary

Constellium SE reports Q3 2023 results with decreased shipments and revenue, but increased VAR and Adjusted EBITDA. Net income and Free Cash Flow also decreased compared to the same period last year. The company expects demand trends to continue through 2023 and remains confident in long-term targets.

Positive

• Constellium's Value-Added Revenue (VAR) increased by 5% in Q3 2023 compared to Q3 2022.
• Adjusted EBITDA of €168 million in Q3 2023 is a record for the company.
• Free Cash Flow in Q3 2023 was €78 million, showing strong generation.
• The company expects Adjusted EBITDA to be in the range of €700 million to €720 million in 2023.
• Constellium remains confident in its long-term target of achieving Adjusted EBITDA over €800 million in 2025.

Negative

• Shipments decreased by 5% in Q3 2023 compared to Q3 2022.
• Revenue decreased by 15% in Q3 2023 compared to Q3 2022.
• Net income decreased from €131 million in Q3 2022 to €64 million in Q3 2023.
• Cash from Operations and Free Cash Flow decreased compared to the same period last year.

PARIS, Oct. 25, 2023 (GLOBE NEWSWIRE) -- Constellium SE (NYSE: CSTM) today reported results for the third quarter ended September 30, 2023.

Third quarter 2023 highlights:

• Shipments of 369 thousand metric tons, down 5% compared to Q3 2022
• Revenue of €1.7 billion, down 15% compared to Q3 2022
• Value-Added Revenue (VAR) of €704 million, up 5% compared to Q3 2022
• Net income of €64 million compared to net income of €131 million in Q3 2022
• Adjusted EBITDA of €168 million, up 5% compared to Q3 2022
• Cash from Operations of €154 million and Free Cash Flow of €78 million

Nine months ended September 30, 2023 highlights:

• Shipments of 1.2 million metric tons, down 5% compared to YTD 2022
• Revenue of €5.6 billion, down 10% compared to YTD 2022
• VAR of €2.2 billion, up 11% compared to YTD 2022
• Net income of €118 million compared to net income of €278 million in YTD 2022
• Adjusted EBITDA of €542 million, up 3% compared to YTD 2022
• Cash from Operations of €321 million and Free Cash Flow of €112 million
• Net debt / LTM Adjusted EBITDA of 2.5x at September 30, 2023

Jean-Marc Germain, Constellium’s Chief Executive Officer said, “Constellium delivered strong results in the third quarter despite significant inflationary pressures and demand headwinds in several end markets. Adjusted EBITDA of €168 million is a third quarter record and includes record third quarter performance by A&T. Looking across our end markets, aerospace demand remains strong. Automotive demand decelerated slightly during the quarter but remains above prior year levels. Packaging shipments were down in the quarter though demand appears to have stabilized following the last several quarters of destocking. We continued to experience weakness in most industrial markets, especially in Europe. Free Cash Flow generation in the third quarter was strong at €78 million and we reduced our leverage to 2.5x.”

Mr. Germain concluded, “We expect recent demand trends in our markets to continue through the remainder of 2023. Based on our current outlook, in 2023 we still expect Adjusted EBITDA to be in the range of €700 million to €720 million and Free Cash Flow in excess of €150 million. We also remain confident in our ability to deliver on our long-term target of Adjusted EBITDA over €800 million in 2025. Our focus remains on executing our strategy, driving operational performance, generating Free Cash Flow, achieving our ESG objectives and increasing shareholder value.”

Group Summary

	Q3 2023	Q3 2022	Var.		YTD 2023	YTD 2022	Var.
Shipments (k metric tons)	369	387	(5	)%	1,156	1,212	(5	)%
Revenue (€ millions)	1,720	2,022	(15	)%	5,626	6,276	(10	)%
VAR (€ millions)	704	673	5	%	2,243	2,029	11	%
Net income (€ millions)	64	131	n.m.		118	278	n.m.
Adjusted EBITDA (€ millions)	168	160	5	%	542	525	3	%
Adjusted EBITDA per metric ton (€)	453	412	10	%	469	433	8	%
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 2023, shipments of 369 thousand metric tons decreased 5% compared to the third quarter of last year due to lower shipments in each of our segments. Revenue of €1.7 billion decreased 15% compared to the third quarter of the prior year primarily due to lower shipments and lower metal prices, partially offset by improved price and mix. VAR of €704 million increased 5% compared to the third quarter of the prior year primarily due to improved price and mix, partially offset by lower shipments, unfavorable metal costs and unfavorable foreign exchange translation. Net income of €64 million decreased €67 million compared to net income of €131 million in the third quarter of 2022. Adjusted EBITDA of €168 million increased 5% compared to the third quarter of last year due to stronger results in our A&T segment, partially offset by weaker results in our P&ARP and AS&I segments.

For the first nine months of 2023, shipments of 1.2 million metric tons decreased 5% compared to the first nine months of 2022 due to lower shipments in the P&ARP and AS&I segments. Revenue of €5.6 billion decreased 10% compared to the first nine months of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix. VAR of €2.2 billion increased 11% compared to the first nine months of 2022 primarily due to improved price and mix, partially offset by lower shipments, unfavorable metal costs and unfavorable foreign exchange translation. Net income of €118 million decreased €160 million compared to net income of €278 million in the first nine months of 2022. Adjusted EBITDA of €542 million increased 3% compared to the first nine months of 2022 due to stronger results in our A&T segment, partially offset by weaker results in our P&ARP and AS&I segments.

Results by Segment

Packaging & Automotive Rolled Products (P&ARP)

	Q3 2023	Q3 2022	Var.		YTD 2023	YTD 2022	Var.
Shipments (k metric tons)	261	267	(2	)%	792	835	(5	)%
Revenue (€ millions)	954	1,140	(16	)%	3,033	3,656	(17	)%
Adjusted EBITDA (€ millions)	67	78	(14	)%	201	255	(21	)%
Adjusted EBITDA per metric ton (€)	256	291	(12	)%	254	305	(17	)%

For the third quarter of 2023, Adjusted EBITDA of €67 million decreased 14% compared to the third quarter of 2022 as a result of lower shipments, higher operating costs mainly due to inflation, operating challenges at our Muscle Shoals facility and unfavorable metal costs, and unfavorable foreign exchange translation, partially offset by improved price and mix. Shipments of 261 thousand metric tons decreased 2% compared to the third quarter of the prior year due to lower shipments of packaging and specialty rolled products, partially offset by higher shipments of automotive rolled products. Revenue of €1.0 billion decreased 16% compared to the third quarter of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.

For the first nine months of 2023, Adjusted EBITDA of €201 million decreased 21% compared to the first nine months of 2022 as a result of lower shipments and higher operating costs mainly due to inflation, operating challenges at our Muscle Shoals facility and unfavorable metal costs, partially offset by improved price and mix. Shipments of 792 thousand metric tons decreased 5% compared to the first nine months of 2022 due to lower shipments of packaging and specialty rolled products, partially offset by higher shipments of automotive rolled products. Revenue of €3.0 billion decreased 17% compared to the first nine months of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.

Aerospace & Transportation (A&T)

	Q3 2023	Q3 2022	Var.		YTD 2023	YTD 2022	Var.
Shipments (k metric tons)	53	55	(3	)%	171	170	1	%
Revenue (€ millions)	404	432	(6	)%	1,320	1,278	3	%
Adjusted EBITDA (€ millions)	79	45	76	%	248	161	55	%
Adjusted EBITDA per metric ton (€)	1,480	807	8	%	1,438	944	52	%

For the third quarter of 2023, Adjusted EBITDA of €79 million increased 76% compared to the third quarter of 2022 primarily due to improved price and mix, partially offset by lower shipments, higher operating costs mainly due to inflation and unfavorable foreign exchange translation. Shipments of 53 thousand metric tons decreased 3% compared to the third quarter of 2022 on higher shipments of aerospace rolled products, more than offset by lower shipments of transportation, industry and defense (TID) rolled products. Revenue of €404 million decreased 6% compared to the third quarter of 2022 primarily due to lower shipments, lower metal prices and unfavorable foreign exchange translation, partially offset by improved price and mix.

For the first nine months of 2023, Adjusted EBITDA of €248 million increased 55% compared to the first nine months of 2022 primarily due to improved price and mix, partially offset by higher operating costs mainly due to inflation and increased activity levels. Shipments of 171 thousand metric tons increased 1% compared to the first nine months of 2022 on higher shipments of aerospace rolled products, mostly offset by lower shipments of TID rolled products. Revenue of €1.3 billion increased 3% compared to the first nine months of 2022 primarily due to improved price and mix, partially offset by lower metal prices.

Automotive Structures & Industry (AS&I)

	Q3 2023	Q3 2022	Var.		YTD 2023	YTD 2022	Var.
Shipments (k metric tons)	55	65	(15	)%	193	207	(7	)%
Revenue (€ millions)	370	473	(22	)%	1,296	1,433	(10	)%
Adjusted EBITDA (€ millions)	26	35	(27	)%	108	118	(8	)%
Adjusted EBITDA per metric ton (€)	467	544	(14	)%	560	570	(2	)%

For the third quarter of 2023, Adjusted EBITDA of €26 million decreased 27% compared to the third quarter of 2022 primarily due to lower shipments and higher operating costs mainly due to inflation, partially offset by improved price and mix. Shipments of 55 thousand metric tons decreased 15% compared to the third quarter of 2022 due to lower shipments of automotive and other extruded products. Revenue of €370 million decreased 22% compared to the third quarter of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.

For the first nine months of 2023, Adjusted EBITDA of €108 million decreased 8% compared to the first nine months of 2022 primarily due to lower shipments and higher operating costs mainly due to inflation, mostly offset by improved price and mix. Shipments of 193 thousand metric tons decreased 7% compared to the first nine months of 2022 due to lower shipments of other extruded products, partially offset by higher shipments of automotive extruded products. Revenue of €1.3 billion decreased 10% compared to the first nine months of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.

Net Income

For the third quarter of 2023, net income of €64 million compares to net income of €131 million in the third quarter of the prior year. The decrease in net income is primarily related to the recognition in the prior year of deferred tax assets previously unrecognized of €142 million, partially offset by a gain related to the sale of Constellium Extrusions Deutschland GmbH, favorable changes in gains and losses on derivatives mostly related to our hedging positions, and higher gross profit.

For the first nine months of 2023, net income of €118 million compares to net income of €278 million in the first nine months of the prior year. The decrease in net income is primarily related to the recognition in the prior year of deferred tax assets previously unrecognized of €142 million and lower gross profit, partially offset by a gain related to the sale of Constellium Extrusions Deutschland GmbH.

Cash Flow

Free Cash Flow was €112 million in the first nine months of 2023 compared to €160 million in the first nine months of the prior year. The decrease was primarily due to increased capital expenditures and higher cash interest, partially offset by stronger Adjusted EBITDA.

Cash flows from operating activities were €321 million for the first nine months of 2023 compared to cash flows from operating activities of €323 million in the first nine months of the prior year.

Cash flows used in investing activities were €161 million for the first nine months of 2023 compared to cash flows used in investing activities of €163 million in the first nine months of the prior year. In the first nine months of 2023, cash flows used in investing activities included €47 million of net proceeds from the sale of Constellium Extrusion Deutschland GmbH in September 2023.

Cash flows used in financing activities were €167 million for the first nine months of 2023 compared to cash flows used in financing activities of €141 million in the first nine months of the prior year. In the first nine months of 2023, Constellium used cash on the balance sheet to reduce short-term borrowings and to redeem $50 million of the $300 million outstanding aggregate principal amount of its 5.875% Senior Notes due 2026. In the first nine months of 2022, Constellium drew on the Pan-U.S. ABL due 2026 and used the proceeds and cash on the balance sheet to repay the €180 million PGE French Facility due 2022 and the CHF 15 million Swiss Facility due 2025.

Liquidity and Net Debt

Liquidity at September 30, 2023 was €746 million, comprised of €159 million of cash and cash equivalents and €587 million available under our committed lending facilities and factoring arrangements.

Net debt was €1,750 million at September 30, 2023 compared to €1,891 million at December 31, 2022.

Outlook

Based on our current outlook, we expect Adjusted EBITDA to be in the range of €700 million to €720 million and Free Cash Flow in excess of €150 million in 2023. We were not impacted by the United Auto Workers union strike in the third quarter, but we do expect some impact in the fourth quarter, which is included in our guidance.

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, future net income.

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 Russian war on Ukraine; the inability to meet customer demand and quality requirements; the loss of key customers, suppliers or other business relationships; supply disruptions; excessive inflation; 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 €8.1 billion of revenue in 2022.

Constellium’s earnings materials for the third quarter ended September 30, 2023 are also available on the company’s website (www.constellium.com).

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

		Three months ended September 30,						Nine months ended September 30,
(in millions of Euros)		2023			2022			2023			2022
Revenue		1,720			2,022			5,626			6,276
Cost of sales		(1,562	)		(1,889	)		(5,094	)		(5,711	)
Gross profit		158			133			532			565
Selling and administrative expenses		(70	)		(63	)		(221	)		(206	)
Research and development expenses		(11	)		(11	)		(37	)		(32	)
Other gains and losses - net		41			(29	)		(15	)		(53	)
Income from operations		118			30			259			274
Finance costs - net		(36	)		(36	)		(106	)		(98	)
Income / (loss) before tax		82			(6	)		153			176
Income tax (expense) / benefit		(18	)		137			(35	)		102
Net income		64			131			118			278
Net income attributable to:
Equity holders of Constellium		64			130			115			273
Non-controlling interests		—			1			3			5
Net income		64			131			118			278
Earnings per share attributable to the equity holders of Constellium, (in Euros)
Basic		0.44			0.90			0.79			1.90
Diluted		0.43			0.88			0.77			1.86
Weighted average number of shares, (in thousands)
Basic		146,820			144,302			145,897			143,398
Diluted		148,704			146,759			148,704			146,759

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS) (UNAUDITED)

		Three months ended September 30,						Nine months ended September 30,
(in millions of Euros)		2023			2022			2023			2022
Net income		64			131			118			278
Other comprehensive income
Items that will not be reclassified subsequently to the consolidated income statement
Remeasurement on post-employment benefit obligations		26			26			30			181
Income tax on remeasurement on post- employment benefit obligations		(6	)		(9	)		(8	)		(39	)
Items that may be reclassified subsequently to the consolidated income statement
Cash flow hedges		(6	)		(12	)		(2	)		(27	)
Income tax on cash flow hedges		2			3			1			7
Currency translation differences		20			47			7			89
Other comprehensive income		36			55			28			211
Total comprehensive income		100			186			146			489
Attributable to:
Equity holders of Constellium		99			184			143			483
Non-controlling interests		1			2			3			6
Total comprehensive income		100			186			146			489

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

(in millions of Euros)		At September 30, 2023		At December 31, 2022
Assets
Current assets
Cash and cash equivalents		159		166
Trade receivables and other		642		539
Inventories		1,137		1,320
Other financial assets		34		31
		1,972		2,056
Non-current assets
Property, plant and equipment		2,020		2,017
Goodwill		482		478
Intangible assets		50		54
Deferred tax assets		228		271
Trade receivables and other		40		43
Other financial assets		3		8
		2,823		2,871
Assets of disposal group classified as held for sale		—		14
Total Assets		4,795		4,941
Liabilities
Current liabilities
Trade payables and other		1,354		1,467
Borrowings		54		148
Other financial liabilities		46		41
Income tax payable		15		16
Provisions		21		21
		1,490		1,693
Non-current liabilities
Trade payables and other		64		43
Borrowings		1,855		1,908
Other financial liabilities		14		14
Pension and other post-employment benefit obligations		369		403
Provisions		88		90
Deferred tax liabilities		4		28
		2,394		2,486
Liabilities of disposal group classified as held for sale		—		10
Total Liabilities		3,884		4,189
Equity
Share capital		3		3
Share premium		420		420
Retained earnings and other reserves		466		308
Equity attributable to equity holders of Constellium		889		731
Non-controlling interests		22		21
Total Equity		911		752
Total Equity and Liabilities		4,795		4,941

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

(in millions of Euros)		Share capital		Share premium		Re measure ment			Cash flow hedges			Foreign currency translation reserve		Other reserves		Retained earnings			Total		Non- controlling interests			Total equity
At January 1, 2023		3		420		28			(10	)		41		101		148			731		21			752
Net income		—		—		—			—			—		—		115			115		3			118
Other comprehensive income / (loss)		—		—		22			(1	)		7		—		—			28		—			28
Total comprehensive income / (loss)		—		—		22			(1	)		7		—		115			143		3			146
Share-based compensation		—		—		—			—			—		15		—			15		—			15
Other		—		—		(1	)		—			—		—		1			—		—			—
Transactions with non-controlling interests		—		—		—			—			—		—		—			—		(2	)		(2	)
At September 30, 2023		3		420		49			(11	)		48		116		264			889		22			911
(in millions of Euros)		Share capital		Share premium		Re measure ment			Cash flow hedges			Foreign currency translation reserve		Other reserves		Retained (deficit) / earnings			Total		Non- controlling interests			Total equity
At January 1, 2022		3		420		(94	)		(4	)		19		83		(153	)		274		17			291
Net income		—		—		—			—			—		—		273			273		5			278
Other comprehensive income / (loss)		—		—		142			(20	)		88		—		—			210		1			211
Total comprehensive income / (loss)		—		—		142			(20	)		88		—		273			483		6			489
Share-based compensation		—		—		—			—			—		13		—			13		—			13
Transactions with non-controlling interests		—		—		—			—			—		—		—			—		—			—
At September 30, 2022		3		420		48			(24	)		107		96		120			770		23			793

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

		Three months ended September 30,						Nine months ended September 30,
(in millions of Euros)		2023			2022			2023			2022
Net income		64			131			118			278
Adjustments
Depreciation and amortization		77			73			221			209
Pension and other post-employment benefits service costs		5			7			16			18
Finance costs - net		36			36			106			98
Income tax expense / (benefit)		18			(137	)		35			(102	)
Unrealized (gains) / losses on derivatives - net and from remeasurement of monetary assets and liabilities - net		(23	)		(18	)		5			67
(Gains) / losses on disposal		(36	)		1			(30	)		2
Other - net		5			4			15			12
Change in working capital
Inventories		25			18			175			(238	)
Trade receivables		133			195			(91	)		(92	)
Trade payables		(109	)		(119	)		(123	)		206
Other		14			(1	)		20			3
Change in provisions		(1	)		(3	)		(3	)		(7	)
Pension and other post-employment benefits paid		(11	)		(12	)		(30	)		(33	)
Interest paid		(33	)		(31	)		(96	)		(85	)
Income tax paid		(10	)		10			(17	)		(13	)
Net cash flows from operating activities		154			154			321			323
Purchases of property, plant and equipment		(76	)		(80	)		(210	)		(164	)
Property, plant and equipment grants received		—			—			1			1
Proceeds from disposals, net of cash		48			—			48			—
Net cash flows used in investing activities		(28	)		(80	)		(161	)		(163	)
Repayments of long-term borrowings		(46	)		(2	)		(51	)		(188	)
Net change in revolving credit facilities and short- term borrowings		(90	)		(57	)		(83	)		67
Lease repayments		(13	)		(7	)		(29	)		(27	)
Payment of financing costs and redemption fees		—			(1	)		—			(1	)
Transactions with non-controlling interests		—			—			(3	)		(2	)
Other financing activities		1			5			(1	)		10
Net cash flows used in financing activities		(148	)		(62	)		(167	)		(141	)
Net (decrease) / increase in cash and cash equivalent		(22	)		12			(7	)		19
Cash and cash equivalents - beginning of period		178			156			166			147
Transfer of cash and cash equivalents classified from / (to) assets classified as held for sale		2			—			1			—
Effect of exchange rate changes on cash and cash equivalents		1			3			(1	)		5
Cash and cash equivalents - end of period		159			171			159			171

SEGMENT ADJUSTED EBITDA

		Three months ended September 30,						Nine months ended September 30,
(in millions of Euros)		2023			2022			2023			2022
P&ARP		67			78			201			255
A&T		79			45			248			161
AS&I		26			35			108			118
Holdings and Corporate		(4	)		2			(15	)		(9	)
Total		168			160			542			525

SHIPMENTS AND REVENUE BY PRODUCT LINE

		Three months ended September 30,						Nine months ended September 30,
(in k metric tons)		2023			2022			2023			2022
Packaging rolled products		187			196			564			623
Automotive rolled products		68			64			209			184
Specialty and other thin-rolled products		6			7			19			28
Aerospace rolled products		23			19			74			55
Transportation, industry, defense and other rolled products		30			36			97			115
Automotive extruded products		27			29			93			89
Other extruded products		28			36			100			118
Total shipments		369			387			1,156			1,212
(in millions of Euros)
Packaging rolled products		630			792			2,014			2,629
Automotive rolled products		286			308			902			879
Specialty and other thin-rolled products		38			40			117			148
Aerospace rolled products		234			184			758			510
Transportation, industry, defense and other rolled products		171			248			562			768
Automotive extruded products		213			248			723			721
Other extruded products		157			225			573			712
Other and inter-segment eliminations		(9	)		(23	)		(23	)		(91	)
Total revenue		1,720			2,022			5,626			6,276

NON-GAAP MEASURES

Reconciliation of Revenue to VAR (a non-GAAP measure)

		Three months ended September 30,						Nine months ended September 30,
(in millions of Euros)		2023			2022			2023			2022
Revenue		1,720			2,022			5,626			6,276
Hedged cost of alloyed metal		(1,037	)		(1,414	)		(3,435	)		(4,191	)
Revenue from incidental activities		(6	)		(5	)		(20	)		(16	)
Metal price lag		27			70			72			(40	)
VAR		704			673			2,243			2,029

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)		2023			2022			2023			2022
Net income		64			131			118			278
Income tax expense / (benefit)		18			(137	)		35			(102	)
Income / (loss) before tax		82			(6	)		153			176
Finance costs - net		36			36			106			98
Income from operations		118			30			259			274
Depreciation and amortization		77			73			221			209
Unrealized (gains) / losses on derivatives		(23	)		(19	)		5			65
Unrealized exchange losses from the remeasurement of monetary assets and liabilities - net		—			1			—			2
Share based compensation costs		5			4			15			13
Metal price lag (A)		27			70			72			(40	)
(Gains) / losses on disposal		(36	)		1			(30	)		2
Adjusted EBITDA		168			160			542			525
(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 a 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 period.

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)		2023			2022			2023			2022
Net cash flows from operating activities		154			154			321			323
Purchases of property, plant and equipment, net of grants received		(76	)		(80	)		(209	)		(163	)
Free Cash Flow		78			74			112			160

Reconciliation of borrowings to Net debt (a non-GAAP measure)

(in millions of Euros)		At September 30, 2023			At December 31, 2022
Borrowings		1,909			2,056
Fair value of net debt derivatives, net of margin calls		—			1
Cash and cash equivalents		(159	)		(166	)
Net debt		1,750			1,891

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: VAR, 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.

Value-Added Revenue (“VAR”) is defined as revenue, excluding revenue from incidental activities, minus cost of metal which includes, cost of aluminium adjusted for metal lag, cost of other alloying metals, freight out costs, and realized gains and losses from hedging. Management believes that VAR is a useful measure of our activity as it eliminates the impact of metal costs from our revenue and reflects the value-added elements of our activity. VAR eliminates the impact of metal price fluctuations which are not under our control and which we generally pass-through to our customers and facilitates comparisons from period to period. VAR is not a presentation made in accordance with IFRS and should not be considered as an alternative to revenue determined in accordance with IFRS. 

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, net of grants received. 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.

Jason Hershiser - Investor Relations	Delphine Dahan-Kocher - External Communications
Phone:   +1 443 988 0600	Phone:   +1 443 420 7860
Investor-relations@constellium.com	delphine.dahan-kocher@constellium.com

FAQ

What is the VAR of Constellium in Q3 2023 compared to Q3 2022?

The VAR of Constellium increased by 5% in Q3 2023 compared to Q3 2022.

What is the Adjusted EBITDA in Q3 2023?

The Adjusted EBITDA in Q3 2023 was €168 million, which is a record for the company.

What is the Free Cash Flow in Q3 2023?

The Free Cash Flow in Q3 2023 was €78 million.

What is the expected Adjusted EBITDA range for 2023?

Constellium expects Adjusted EBITDA to be in the range of €700 million to €720 million in 2023.

What is Constellium's long-term target for Adjusted EBITDA in 2025?

Constellium remains confident in its long-term target of achieving Adjusted EBITDA over €800 million in 2025.