6-K
Constellium SE (CSTM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OFFOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2020
Commission File Number: 001-35931
Constellium SE
(Translation of registrant’s name into English)
WashingtonPlaza
40-44, rue Washington
75008 Paris, France
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Yes ☐ No ☒
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit 99.1 is a copy of the press release of Constellium SE (the “Company”), dated February 20, 2020, announcing its financial results for the fourth quarter and fiscal year ended December 31, 2019.
Attached hereto as Exhibit 99.2 is a copy of a presentation of the Company, dated February 20, 2020, summarizing its financial results for the fourth quarter and fiscal year ended December 31, 2019.
Exhibit Index
| No. | Description |
|---|---|
| 99.1 | Press Release issued by Constellium SE on February 20, 2020. |
| 99.2 | Presentation posted by Constellium SE on February 20, 2020. |
The information contained in Exhibit 99.1 of this Form 6-K (except for thesecond paragraph containing certain quotes by the Chief Executive Officer, and the section titled “Outlook”), is incorporated by reference into any offering circular or registration statement (or into any prospectus that forms a partthereof) filed by Constellium SE with the Securities and Exchange Commission. Exhibit 99.2 is not incorporated by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CONSTELLIUM SE<br><br><br>(Registrant) | ||
|---|---|---|
| February 20, 2020 | By: | /s/ Peter R. Matt |
| Name: | Peter R. Matt | |
| Title: | Chief Financial Officer |
EX-99.1
Exhibit 99.1
Constellium Reports Fourth Quarter and Full Year 2019 Results
Paris, February 20, 2020 – Constellium SE (NYSE: CSTM) today reported results for the fourth quarter and full year ended December 31, 2019.
Fourth quarter 2019 highlights:
| • | Shipments of 368 thousand metric tons, comparable to Q4 2018 |
|---|---|
| • | Revenue of €1.4 billion, down 2% compared to Q4 2018 |
| --- | --- |
| • | Net income of €22 million increased compared to net loss of €57 million in Q4 2018<br> |
| --- | --- |
| • | Adjusted EBITDA of €121 million, up 15% compared to Q4 2018 |
| --- | --- |
Full year 2019 highlights:
| • | Shipments of 1.6 million metric tons, up 4% compared to 2018 |
|---|---|
| • | Revenue of €5.9 billion, up 4% compared to 2018 |
| --- | --- |
| • | Net income of €64 million decreased compared to net income of €190 million in 2018<br> |
| --- | --- |
| • | Adjusted EBITDA of €562 million, up 13% compared to 2018 |
| --- | --- |
| • | Cash from Operations of €447 million and Free Cash Flow of €175 million<br> |
| --- | --- |
| • | Net debt / LTM Adjusted EBITDA of 3.9x at December 31, 2019 |
| --- | --- |
| • | Project 2019 run-rate cost savings of €78 million achieved at<br>December 31, 2019 |
| --- | --- |
Jean-Marc Germain, Constellium’s Chief Executive Officer said, “Constellium delivered strong results in 2019. Our Adjusted EBITDA of €562 million increased by 13%, driven by excellent performance from our Packaging and Automotive Rolled Products and Aerospace and Transportation segments. Notably, 2019 represented our third consecutive year of double digit Adjusted EBITDA growth. Our Free Cash Flow of €175 million was very strong and delivers on an important financial target that we set in March 2017. We also made substantial progress on our deleveraging objective in 2019, repaying gross debt during the year and reducing leverage to 3.9x at year end. Overall, I am proud of Constellium’s performance in 2019.”
Mr. Germain continued, “I am optimistic about 2020. Based on our current outlook, we expect Adjusted EBITDA growth of 6% to 9% and Free Cash Flow generation of €125 million to €175 million in 2020. We remain on track to deliver on our long-term targets of Adjusted EBITDA over €700 million and leverage of 2.5x in 2022. We are committed to shareholder value creation through the execution of our strategy.”
Group Summary
| Q42018 | Var. | FY2019 | FY2018 | Var. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shipments (k metric tons) | 368 | 370 | 0 | % | 1,589 | 1,534 | 4 | % | ||||||
| Revenue ( millions) | 1,372 | 1,398 | (2 | )% | 5,907 | 5,686 | 4 | % | ||||||
| Net income / (loss) ( millions) | 22 | (57 | ) | n.m. | 64 | 190 | n.m. | |||||||
| Adjusted EBITDA ( millions) | 121 | 104 | 15 | % | 562 | 498 | 13 | % | ||||||
| Adjusted EBITDA per metric ton () | 329 | 284 | 16 | % | 354 | 325 | 9 | % |
All values are in Euros.
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 fourth quarter of 2019, shipments of 368 thousand metric tons declined slightly compared to the fourth quarter of last year due to lower shipments in the Aerospace and Transportation segment. Revenue of €1.4 billion decreased 2% compared to the fourth quarter of last year primarily due to lower metal prices and lower shipments in the Aerospace and Transportation segment, partially offset by the consolidation of Bowling Green and improved price and mix. Net income of €22 million increased compared to net loss of €57 million in the fourth quarter of 2018. Adjusted EBITDA of €121 million increased 15% compared to the fourth quarter of last year due to improved results in the Packaging and Automotive Rolled Products and the Aerospace and Transportation segments.
For the full year of 2019, shipments of 1.6 million metric tons increased 4% compared to last year on higher shipments in the Packaging and Automotive Rolled Products segment, partially due to the consolidation of Bowling Green. Revenue of €5.9 billion increased 4% compared to last year primarily due to the consolidation of Bowling Green and improved price and mix, partially offset by lower metal prices. Net income of €64 million decreased compared to net income of €190 million in 2018. Adjusted EBITDA of €562 million increased 13% compared to last year on improved results in the Aerospace and Transportation and the Packaging and Automotive Rolled Products segments, partially offset by weaker results in the Automotive Structures and Industry segment.
2
Results by Segment
Packaging and Automotive Rolled Products (P&ARP)
| Q42018 | Var. | FY2019 | FY2018 | Var. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shipments (k metric tons) | 255 | 254 | 1 | % | 1,097 | 1,039 | 6 | % | |||||
| Revenue ( millions) | 711 | 737 | (3 | )% | 3,149 | 3,059 | 3 | % | |||||
| Adjusted EBITDA ( millions) | 63 | 55 | 13 | % | 273 | 243 | 12 | % | |||||
| Adjusted EBITDA per metric ton () | 245 | 219 | 12 | % | 249 | 234 | 6 | % |
All values are in Euros.
Fourth quarter Adjusted EBITDA increased 13% compared to the fourth quarter of 2018 primarily due to favorable metal costs and improved price and mix, partially offset by incremental costs from the ramp up of our automotive programs.
For the fourth quarter of 2019, shipments of 255 thousand metric tons were comparable to the fourth quarter of last year as higher shipments of Automotive rolled products, partially due to the consolidation of Bowling Green, were offset by lower Packaging rolled product shipments. Revenue of €711 million decreased 3% compared to the fourth quarter of 2018 primarily due to lower shipments and lower metal prices, partially offset by the consolidation of Bowling Green.
For the full year of 2019, Adjusted EBITDA of €273 million increased 12% compared to last year primarily due to higher shipments and favorable metal costs, partially offset by weaker price and mix and incremental costs from maintenance and the ramp up of our automotive programs. Shipments of 1.1 million metric tons increased 6% compared to last year on higher shipments of both Packaging and Automotive rolled products, partially due to the consolidation of Bowling Green. Revenue of €3.1 billion increased 3% compared to last year primarily due to the consolidation of Bowling Green, partially offset by lower metal prices.
Aerospace and Transportation (A&T)
| Q42018 | Var. | FY2019 | FY2018 | Var. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shipments (k metric tons) | 56 | 59 | (6 | )% | 242 | 246 | (2 | )% | |||||
| Revenue ( millions) | 350 | 349 | 0 | % | 1,462 | 1,389 | 5 | % | |||||
| Adjusted EBITDA ( millions) | 45 | 38 | 18 | % | 204 | 152 | 34 | % | |||||
| Adjusted EBITDA per metric ton () | 807 | 643 | 26 | % | 843 | 619 | 36 | % |
All values are in Euros.
Fourth quarter Adjusted EBITDA increased 18% as compared to the fourth quarter of 2018 due to improved price and mix, partially offset by lower shipments and higher costs.
3
For the fourth quarter of 2019, shipments of 56 thousand metric tons decreased 6% compared to last year as lower Transportation, Industry and Other rolled product shipments were partially offset by higher Aerospace rolled product shipments. Revenue of €350 million was comparable to last year as improved price and mix was offset by lower shipments and lower metal prices.
For the full year of 2019, Adjusted EBITDA of €204 million increased 34% compared to last year on improved price and mix, partially offset by higher costs. Shipments of 242 thousand metric tons decreased 2% compared to last year as lower Transportation, Industry and Other rolled product shipments were largely offset by higher Aerospace rolled product shipments. Revenue of €1.5 billion increased 5% compared to last year primarily due to improved price and mix, partially offset by lower metal prices and lower shipments.
Automotive Structures and Industry (AS&I)
| Q42018 | Var. | FY2019 | FY2018 | Var. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shipments (k metric tons) | 57 | 57 | 1 | % | 250 | 249 | 0 | % | |||||
| Revenue ( millions) | 324 | 324 | 0 | % | 1,351 | 1,290 | 5 | % | |||||
| Adjusted EBITDA ( millions) | 21 | 21 | 2 | % | 106 | 125 | (15 | )% | |||||
| Adjusted EBITDA per metric ton () | 369 | 367 | 0 | % | 423 | 502 | (16 | )% |
All values are in Euros.
Fourth quarter Adjusted EBITDA was comparable to the fourth quarter of 2018 as growth in Automotive extrusion revenues was offset by continued elevated costs related to our footprint expansion and operational challenges on some of our newer automotive programs.
For the fourth quarter of 2019, shipments of 57 thousand metric tons were comparable to the fourth quarter of last year as higher Automotive extruded product shipments were offset by lower Other extruded product shipments. Revenue of €324 million was comparable to the fourth quarter of 2018 as improved price and mix was offset by lower metal prices.
For the full year of 2019, Adjusted EBITDA of €106 million decreased 15% compared to last year primarily due to higher costs related to our footprint expansion and operational challenges on some of our newer automotive programs, partially offset by growth in Automotive extrusion revenue. Shipments of 250 thousand metric tons were comparable to last year as higher Automotive extruded product shipments were offset by lower Other extruded product shipments. Revenue of €1.4 billion increased 5% compared to last year primarily due to improved price and mix, partially offset by lower metal prices.
4
Net Income
For the fourth quarter of 2019, net income of €22 million increased compared to a net loss of €57 million in the fourth quarter of last year. The change in net income is primarily related to a favorable change in unrealized gains and losses on derivatives related to our commodity hedging positions.
For the full year of 2019, net income of €64 million decreased compared to a net income of €190 million in the prior year. The change in net income is primarily related to a gain from the sale of the North Building at Sierre and a gain on OPEB amendments in 2018, partially offset by a favorable change in unrealized gains and losses on derivatives and improved gross profit in 2019.
Cash Flow and Liquidity
Free Cash Flow was €175 million for the full year of 2019 compared to an outflow of €225 million in the prior year. The change was primarily due to improved working capital performance.
Cash flows from operating activities were €447 million for the full year of 2019 compared to cash flows from operating activities of €66 million in the prior year. Constellium increased factored receivables by €17 million for the full year of 2019 compared to a decrease of €27 million in the prior year.
Cash flows used in investing activities were €353 million for the full year of 2019 compared to cash flows used in investing activities of €91 million in the prior year. The full year of 2019 included a net €83 million outflow related to the acquisition of our partner’s 49% interest in the Bowling Green joint venture. The full year of 2018 included €198 million of proceeds from disposals net of cash related to the sale of the North Building at Sierre.
Cash flows used in financing activities were €76 million for the full year of 2019 compared to cash flows used in financing activities of €82 million in the prior year. The full year of 2019 included the €100 million partial redemption of the 4.625% Senior Notes due 2021 and a €54 million lease redemption associated with the acquisition of Bowling Green.
Liquidity at December 31, 2019 was €516 million, comprised of €184 million of cash and cash equivalents and €332 million available under our committed lending facilities and factoring arrangements.
Net debt was €2,183 million at December 31, 2019 compared to €1,996 million at December 31, 2018. The increase in net debt is primarily attributable to the acquisition of Bowling Green, the implementation of IFRS 16, and foreign exchange impacts, partially offset by the debt repayments noted above.
5
Outlook
We expect Adjusted EBITDA growth in a range of 6% to 9% in 2020 and over €700 million of Adjusted EBITDA in 2022.
We are not able to provide a reconciliation of this Adjusted EBITDA guidance to net income, the comparable GAAP measure, because certain items that areexcluded 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 orrestructuring charges, or taxes without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, net income in the future.
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; 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 aerospace, automotive and packaging. Constellium generated €5.9 billion of revenue in 2019.
Constellium’s earnings materials for the fourth quarter and full year ended December 31, 2019, are also available on the company’s website (www.constellium.com).
6
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
| (in millions of Euros) | Three monthsendedDecember 31, 2019 | Three monthsendedDecember 31, 2018 | Year endedDecember 31, 2019 | Year endedDecember 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 1,372 | 1,398 | 5,907 | 5,686 | ||||||||
| Cost of sales | (1,241 | ) | (1,288 | ) | (5,305 | ) | (5,148 | ) | ||||
| Gross profit | **** | 131 | **** | **** | 110 | **** | **** | 602 | **** | **** | 538 | **** |
| Selling and administrative expenses | (72 | ) | (67 | ) | (276 | ) | (247 | ) | ||||
| Research and development expenses | (12 | ) | (9 | ) | (48 | ) | (40 | ) | ||||
| Restructuring costs | (2 | ) | — | (4 | ) | (1 | ) | |||||
| Other gains / (losses)—net | 10 | (47 | ) | (19 | ) | 154 | ||||||
| Income from operations | **** | 55 | **** | **** | (13 | ) | **** | 255 | **** | **** | 404 | **** |
| Finance costs—net | (40 | ) | (32 | ) | (175 | ) | (149 | ) | ||||
| Share of (loss) / income of joint-ventures | (3 | ) | (10 | ) | 2 | (33 | ) | |||||
| Income before income tax | **** | 12 | **** | **** | (55 | ) | **** | 82 | **** | **** | 222 | **** |
| Income tax expense | 10 | (2 | ) | (18 | ) | (32 | ) | |||||
| Net income / (loss) | **** | 22 | **** | **** | (57 | ) | **** | 64 | **** | **** | 190 | **** |
| Income attributable to: | ||||||||||||
| Equity holders of Constellium | 20 | (58 | ) | 59 | 188 | |||||||
| Non-controlling interests | 2 | 1 | 5 | 2 | ||||||||
| Net income / (loss) | **** | 22 | **** | **** | (57 | ) | **** | 64 | **** | **** | 190 | **** |
| Earnings per share attributable to the equity holders of Constellium, in euros per share | ||||||||||||
| Basic | 0.14 | (0.43 | ) | 0.43 | 1.40 | |||||||
| Diluted | 0.14 | (0.43 | ) | 0.41 | 1.37 | |||||||
| Weighted average shares, in thousands | ||||||||||||
| Basic | 137,593 | 135,319 | 136,857 | 134,762 | ||||||||
| Diluted | 142,646 | 135,319 | 142,646 | 138,146 |
7
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS) (UNAUDITED)
| (in millions of Euros) | Three monthsendedDecember 31, 2019 | Three monthsendedDecember 31, 2018 | Year endedDecember 31, 2019 | Year endedDecember 31, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net income / (loss) | **** | 22 | **** | **** | (57 | ) | **** | 64 | **** | **** | 190 | **** |
| Other comprehensive income / (loss) | ||||||||||||
| Items that will not be reclassified subsequently to the consolidated incomestatement | ||||||||||||
| Remeasurement on post-employment benefit obligations | 49 | (14 | ) | (61 | ) | 24 | ||||||
| Income tax on remeasurement on post-employment benefit obligations | (10 | ) | 2 | 13 | (6 | ) | ||||||
| Items that may be reclassified subsequently to the consolidated income statement | ||||||||||||
| Cash flow hedges | 7 | (7 | ) | (8 | ) | (25 | ) | |||||
| Net investment hedges | — | — | 4 | (4 | ) | |||||||
| Income tax on hedges | (3 | ) | 1 | 2 | 8 | |||||||
| Currency translation differences | (3 | ) | 2 | 1 | 10 | |||||||
| Other comprehensive income / (loss) | **** | 40 | **** | **** | (16 | ) | **** | (49 | ) | **** | 7 | **** |
| Total comprehensive income / (loss) | **** | 62 | **** | **** | (73 | ) | **** | 15 | **** | **** | 197 | **** |
| Attributable to: | ||||||||||||
| Equity holders of Constellium | 60 | (74 | ) | 10 | 195 | |||||||
| Non-controlling interests | 2 | 1 | 5 | 2 | ||||||||
| Total comprehensive income / (loss) | **** | 62 | **** | **** | (73 | ) | **** | 15 | **** | **** | 197 | **** |
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
| (in millions of Euros) | At December 31, 2019 | At December 31, 2018 | ||||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | 184 | 164 | ||||
| Trade receivables and other | 474 | 587 | ||||
| Inventories | 670 | 660 | ||||
| Other financial assets | 22 | 30 | ||||
| **** | 1,350 | **** | **** | 1,441 | **** | |
| Non-current assets | ||||||
| Property, plant and equipment | 2,056 | 1,666 | ||||
| Goodwill | 455 | 422 | ||||
| Intangible assets | 70 | 70 | ||||
| Investments accounted for under the equity method | 1 | 1 | ||||
| Deferred income tax assets | 185 | 163 | ||||
| Trade receivables and other | 60 | 64 | ||||
| Other financial assets | 7 | 74 | ||||
| **** | 2,834 | **** | **** | 2,460 | **** | |
| Total Assets | **** | 4,184 | **** | **** | 3,901 | **** |
| Liabilities | ||||||
| Current liabilities | ||||||
| Trade payables and other | 999 | 968 | ||||
| Borrowings | 201 | 57 | ||||
| Other financial liabilities | 35 | 60 | ||||
| Income tax payable | 14 | 8 | ||||
| Provisions | 23 | 46 | ||||
| **** | 1,272 | **** | **** | 1,139 | **** | |
| Non-current liabilities | ||||||
| Trade payables and other | 21 | 27 | ||||
| Borrowings | 2,160 | 2,094 | ||||
| Other financial liabilities | 23 | 29 | ||||
| Pension and other post-employment benefit obligations | 670 | 610 | ||||
| Provisions | 99 | 94 | ||||
| Deferred income tax liabilities | 24 | 22 | ||||
| **** | 2,997 | **** | **** | 2,876 | **** | |
| Total Liabilities | **** | 4,269 | **** | **** | 4,015 | **** |
| Equity | ||||||
| Share capital | 3 | 3 | ||||
| Share premium | 420 | 420 | ||||
| Retained deficit and other reserves | (519 | ) | (545 | ) | ||
| Equity attributable to equity holders of Constellium | **** | (96 | ) | **** | (122 | ) |
| Non controlling interests | 11 | 8 | ||||
| Total Equity | **** | (85 | ) | **** | (114 | ) |
| Total Equity and Liabilities | **** | 4,184 | **** | **** | 3,901 | **** |
9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
| (in millions of Euros) | Sharecapital | Sharepremium | Re-measurement | Cash flowhedgesand netinvestmenthedges | Foreigncurrencytranslationreserve | Otherreserves | Retainedlosses | Total Equityholders ofConstellium | Non-<br>controllinginterests | Totalequity | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| At January 1, 2019 | **** | 3 | **** | 420 | **** | (129 | ) | **** | (8 | ) | **** | 3 | **** | **** | 37 | **** | (448 | ) | **** | (122 | ) | **** | 8 | **** | **** | (114 | ) |
| Net income | — | — | — | — | — | — | 59 | **** | 59 | **** | 5 | **** | 64 | **** | |||||||||||||
| Other comprehensive (loss) / income | — | — | (48 | ) | (2 | ) | 1 | — | — | **** | (49 | ) | — | **** | (49 | ) | |||||||||||
| Total comprehensive (loss) / income | **** | — | **** | — | **** | (48 | ) | **** | (2 | ) | **** | 1 | **** | **** | — | **** | 59 | **** | **** | 10 | **** | **** | 5 | **** | **** | 15 | **** |
| Transactions with equity holders | |||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | 16 | — | **** | 16 | **** | — | **** | 16 | **** | |||||||||||||
| Transactions with non-controlling interests | — | — | — | — | — | — | — | **** | — | **** | (2 | ) | **** | (2 | ) | ||||||||||||
| At December 31, 2019 | **** | 3 | **** | 420 | **** | (177 | ) | **** | (10 | ) | **** | 4 | **** | **** | 53 | **** | (389 | ) | **** | (96 | ) | **** | 11 | **** | **** | (85 | ) |
| (in millions of Euros) | Sharecapital | Sharepremium | Re-measurement | Cash flowhedgesand netinvestmenthedges | Foreigncurrencytranslationreserve | Otherreserves | Retainedlosses | Total Equityholders ofConstellium | Non-<br>controllinginterests | Totalequity | |||||||||||||||||
| At January 1, 2018 | **** | 3 | **** | 420 | **** | (147 | ) | **** | 13 | **** | **** | (7 | ) | **** | 25 | **** | (634 | ) | **** | (327 | ) | **** | 8 | **** | **** | (319 | ) |
| Change in accounting policies | — | — | — | — | — | — | (2 | ) | **** | (2 | ) | — | **** | (2 | ) | ||||||||||||
| At January 1, 2018, restated | **** | 3 | **** | 420 | **** | (147 | ) | **** | 13 | **** | **** | (7 | ) | **** | 25 | **** | (636 | ) | **** | (329 | ) | **** | 8 | **** | **** | (321 | ) |
| Net income | — | — | — | — | — | — | 188 | **** | 188 | **** | 2 | **** | 190 | **** | |||||||||||||
| Other comprehensive income / (loss) | — | — | 18 | (21 | ) | 10 | — | — | **** | 7 | **** | — | **** | 7 | **** | ||||||||||||
| Total comprehensive income / (loss) | **** | — | **** | — | **** | 18 | **** | **** | (21 | ) | **** | 10 | **** | **** | — | **** | 188 | **** | **** | 195 | **** | **** | 2 | **** | **** | 197 | **** |
| Transactions with equity holders | |||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | 12 | — | **** | 12 | **** | — | **** | 12 | **** | |||||||||||||
| Transactions with non-controlling interests | — | — | — | — | — | — | — | **** | — | **** | (2 | ) | **** | (2 | ) | ||||||||||||
| At December 31, 2018 | **** | 3 | **** | 420 | **** | (129 | ) | **** | (8 | ) | **** | 3 | **** | **** | 37 | **** | (448 | ) | **** | (122 | ) | **** | 8 | **** | **** | (114 | ) |
10
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| (in millions of Euros) | Three monthsendedDecember 31,2019 | Three monthsendedDecember 31,2018 | Year endedDecember 31,2019 | Year endedDecember 31,2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net income / (loss) | 22 | (57 | ) | 64 | 190 | |||||||
| Adjustments | ||||||||||||
| Depreciation and amortization | 73 | 57 | 256 | 197 | ||||||||
| Finance costs—net | 40 | 32 | 175 | 149 | ||||||||
| Income tax expense | (10 | ) | 2 | 18 | 32 | |||||||
| Share of loss / (income) of joint-ventures | 3 | 10 | (2 | ) | 33 | |||||||
| Unrealized (gains) / losses on derivatives—net and from remeasurement of monetary assets and<br>liabilities—net | (21 | ) | 32 | (33 | ) | 86 | ||||||
| Losses / (gains) on disposal | 1 | 4 | 3 | (186 | ) | |||||||
| Other—net | 7 | 3 | 16 | 14 | ||||||||
| Interest paid | (26 | ) | (21 | ) | (158 | ) | (129 | ) | ||||
| Income tax paid | (3 | ) | (6 | ) | (6 | ) | (23 | ) | ||||
| Change in trade working capital | ||||||||||||
| Inventories | (1 | ) | 38 | 57 | (9 | ) | ||||||
| Trade receivables | 121 | (6 | ) | 104 | (145 | ) | ||||||
| Trade payables | (106 | ) | (36 | ) | (31 | ) | (27 | ) | ||||
| Margin calls | — | (5 | ) | 5 | (5 | ) | ||||||
| Change in provisions and pension obligations | (7 | ) | 1 | (25 | ) | (58 | ) | |||||
| Other working capital | 14 | (22 | ) | 4 | (53 | ) | ||||||
| Net cash flows from operating activities | **** | 107 | **** | **** | 26 | **** | **** | 447 | **** | **** | 66 | **** |
| Purchases of property, plant and equipment | (91 | ) | (117 | ) | (271 | ) | (277 | ) | ||||
| Acquisition of subsidiaries net of cash acquired | — | — | (83 | ) | — | |||||||
| Proceeds from disposals, net of cash | 1 | 1 | 2 | 200 | ||||||||
| Equity contribution and loan to joint ventures | — | (9 | ) | — | (24 | ) | ||||||
| Other investing activities | 2 | 2 | (1 | ) | 10 | |||||||
| Net cash flows used in investing activities | **** | (88 | ) | **** | (123 | ) | **** | (353 | ) | **** | (91 | ) |
| Repayment of Senior Notes | — | — | (100 | ) | — | |||||||
| Lease repayments | (7 | ) | (6 | ) | (86 | ) | (15 | ) | ||||
| Proceeds / (repayments) from revolving credit facilities and other loans | 21 | (2 | ) | 109 | (68 | ) | ||||||
| Transactions with non-controlling interests | (2 | ) | — | (4 | ) | — | ||||||
| Other financing activities | 2 | (12 | ) | 5 | 1 | |||||||
| Net cash flows from / (used in) financing activities | **** | 14 | **** | **** | (20 | ) | **** | (76 | ) | **** | (82 | ) |
| Net increase / (decrease) in cash and cash equivalents | **** | 33 | **** | **** | (117 | ) | **** | 18 | **** | **** | (107 | ) |
| Cash and cash equivalents—beginning of year | 152 | 279 | 164 | 269 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | (1 | ) | 2 | 2 | 2 | |||||||
| Cash and cash equivalents—end of year | **** | 184 | **** | **** | 164 | **** | **** | 184 | **** | **** | 164 | **** |
11
SEGMENT ADJUSTED EBITDA
| (in millions of Euros) | Three monthsendedDecember 31,2019 | Three monthsendedDecember 31,2018 | Year endedDecember 31,2019 | Year endedDecember 31,2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| P&ARP | 63 | 55 | 273 | 243 | ||||||||
| A&T | 45 | 38 | 204 | 152 | ||||||||
| AS&I | 21 | 21 | 106 | 125 | ||||||||
| Holdings and Corporate | (8 | ) | (10 | ) | (21 | ) | (22 | ) | ||||
| Total | **** | 121 | **** | **** | 104 | **** | **** | 562 | **** | **** | 498 | **** |
SHIPMENTS AND REVENUE BY PRODUCT LINE
| (in k metric tons) | Three monthsendedDecember 31,2019 | Three monthsendedDecember 31,2018 | Year endedDecember 31,2019 | Year endedDecember 31,2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Packaging rolled products | 192 | 196 | 822 | 799 | ||||||||
| Automotive rolled products | 56 | 49 | 234 | 196 | ||||||||
| Specialty and other thin-rolled products | 7 | 9 | 41 | 44 | ||||||||
| Aerospace rolled products | 31 | 28 | 120 | 111 | ||||||||
| Transportation, industry and other rolled products | 25 | 31 | 122 | 135 | ||||||||
| Automotive extruded products | 31 | 26 | 123 | 114 | ||||||||
| Other extruded products | 26 | 31 | 127 | 135 | ||||||||
| Total shipments | **** | 368 | **** | **** | 370 | **** | **** | 1,589 | **** | **** | 1,534 | **** |
| (in millions of Euros) | ||||||||||||
| Packaging rolled products | 497 | 546 | 2,173 | 2,245 | ||||||||
| Automotive rolled products | 186 | 156 | 816 | 638 | ||||||||
| Specialty and other thin-rolled products | 28 | 35 | 160 | 176 | ||||||||
| Aerospace rolled products | 233 | 204 | 863 | 773 | ||||||||
| Transportation, industry and other rolled products | 117 | 145 | 599 | 616 | ||||||||
| Automotive extruded products | 208 | 192 | 797 | 714 | ||||||||
| Other extruded products | 116 | 132 | 554 | 576 | ||||||||
| Other and inter-segment eliminations | (13 | ) | (12 | ) | (55 | ) | (52 | ) | ||||
| Total revenue | **** | 1,372 | **** | **** | 1,398 | **** | **** | 5,907 | **** | **** | 5,686 | **** |
12
NON-GAAP MEASURES
Reconciliation of net income to Adjusted EBITDA (a non-GAAP measure)
| (in millions of Euros) | Three months<br>endedDecember 31,2019 | Three monthsendedDecember 31,2018 | Year endedDecember 31,2019 | Year endedDecember 31,2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net income / (loss) | **** | 22 | **** | **** | (57 | ) | **** | 64 | **** | **** | 190 | **** |
| Income tax expense | (10 | ) | 2 | 18 | 32 | |||||||
| Income before income tax | **** | 12 | **** | **** | (55 | ) | **** | 82 | **** | **** | 222 | **** |
| Finance costs – net | 40 | 32 | 175 | 149 | ||||||||
| Share of loss / (income) of joint-ventures | 3 | 10 | (2 | ) | 33 | |||||||
| Income from operations | **** | 55 | **** | **** | (13 | ) | **** | 255 | **** | **** | 404 | **** |
| Depreciation and amortization | 73 | 56 | 256 | 197 | ||||||||
| Restructuring costs | 2 | — | 4 | 1 | ||||||||
| Unrealized (gains) / losses on derivatives | (20 | ) | 31 | (33 | ) | 84 | ||||||
| (Gains) / Losses on pension plans amendments (D) | (2 | ) | 3 | (1 | ) | (36 | ) | |||||
| Share based compensation costs | 4 | 3 | 16 | 12 | ||||||||
| Metal price lag (A) | 6 | 13 | 46 | — | ||||||||
| Start-up and development costs (B) | 3 | 5 | 11 | 21 | ||||||||
| Losses / (gains) on disposals (E) | 1 | 5 | 3 | (186 | ) | |||||||
| Bowling Green one-time costs related to the acquisition<br>(C) | (1 | ) | — | 5 | — | |||||||
| Other | — | 1 | — | 1 | ||||||||
| Adjusted EBITDA | **** | 121 | **** | **** | 104 | **** | **** | 562 | **** | **** | 498 | **** |
| (A) | Metal price lag represents the financial impact of the timing difference between when aluminium prices included<br>within Constellium Revenues 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<br>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<br>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.<br> | |||||||||||
| --- | --- | |||||||||||
| (B) | For the years ended December 31, 2019 and 2018, start-up and<br>development costs include €11 million and €21 million, respectively, related to new projects in our AS&I operating segment. | |||||||||||
| --- | --- | |||||||||||
| (C) | For the year ended December 31, 2019, Bowling Green one-time costs<br>related to the acquisition include the non-cash reversal of the inventory step-up. | |||||||||||
| --- | --- | |||||||||||
| (D) | For the year ended December 31, 2018, the Group amended one of its OPEB plans in the U.S., which resulted<br>in a €36 million gain. | |||||||||||
| --- | --- | |||||||||||
| (E) | In July 2018, Constellium completed the sale of the North Building assets of its Sierre plant in Switzerland to<br>Novelis and contributed the Sierre site shared infrastructure to a joint-venture with Novelis, in exchange for cash consideration of €200 million. This transaction also resulted in the termination of the existing lease agreement for the<br>North Building assets which had been leased and operated by Novelis since 2005. For the year ended December 31, 2018, the transaction generated a €190 million net gain. | |||||||||||
| --- | --- |
13
Reconciliation of net cash flows from operating activities to Free Cash Flow (a non-GAAP measure)
| (in millions of Euros) | Three monthsendedDecember 31,2019 | Three monthsendedDecember 31,2018 | Year endedDecember 31,2019 | Year endedDecember 31,2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net cash flows from operating activities | **** | 107 | **** | **** | 26 | **** | **** | 447 | **** | **** | 66 | **** |
| Purchases of property, plant and equipment | (91 | ) | (117 | ) | (271 | ) | (277 | ) | ||||
| Equity contributions and loans to joint-ventures | — | (9 | ) | — | (24 | ) | ||||||
| Other investing activities | 2 | 2 | (1 | ) | 10 | |||||||
| Free Cash Flow | **** | 18 | **** | **** | (98 | ) | **** | 175 | **** | **** | (225 | ) |
Reconciliation of borrowings to Net debt (a non-GAAP measure)
| (in millions of Euros) | At December 31, 2019 | At December 31, 2018 | ||||
|---|---|---|---|---|---|---|
| Borrowings | 2,361 | 2,151 | ||||
| Fair value of cross currency basis swaps, net of margin calls | 6 | 9 | ||||
| Cash and cash equivalents | (184 | ) | (164 | ) | ||
| Cash pledged for issuance of guarantees | — | — | ||||
| Net debt | **** | 2,183 | **** | **** | 1,996 | **** |
14
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.
15
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.
16
EX-99.2
Fourth Quarter and Full Year 2019 Earnings Call February 20, 2020 Exhibit 99.2
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; 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.
Non-GAAP measures This presentation includes information regarding certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA per metric ton, Free Cash Flow and Net debt. These measures are presented because management uses this information to monitor and evaluate financial results and trends and believes this information to also be useful for investors. 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, Adjusted EBITDA per Metric Ton, Free Cash Flow and Net debt are not presentations made in accordance with IFRS and may not be comparable to similarly titled measures of other companies. These non-GAAP financial measures supplement our IFRS disclosures and should not be considered an alternative to the IFRS measures. This presentation provides a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures. We are not able to provide a reconciliation of 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, our net income in the future.
Jean-Marc Germain Chief Executive Officer
} Total Shipments of 1.6 million tons, up 4% YoY } Revenue increased 4% YoY to €5.9 billion } Net income of €64 million compared to net income of €190 million in 2018 } Adjusted EBITDA of €562 million increased 13% YoY } Cash from Operations of €447 million in 2019 } Free Cash Flow of €175 million in 2019 } Net Debt / LTM Adjusted EBITDA of 3.9x } Project 2019 run rate cost savings of €78 million Strong Adjusted EBITDA growth and significant Free Cash Flow generation in 2019 FY 2019 Highlights
} Total Shipments of 368 thousand tons, comparable to Q4 2018 } Revenue decreased 2% YoY to €1.4 billion } Net income of €22 million compared to net loss of €57 million in Q4 2018 } Adjusted EBITDA of €121 million increased 15% YoY } Cash from Operations of €107 million in Q4 2019 } Free Cash Flow of €18 million in Q4 2019 Solid results; fourth consecutive quarter of positive Free Cash Flow generation Q4 2019 Highlights
Peter Matt Chief Financial Officer
Adjusted EBITDA Bridges FY 2019 vs. FY 2018 Q4 2019 vs. Q4 2018 € millions +15% +13% € millions
Q4 2019 Performance Ø Adjusted EBITDA of €63 million Ø Higher automotive shipments offset by lower packaging shipments Ø Improved price and mix Ø Favorable metal costs, partially offset by higher costs from the ramp up of automotive programs Packaging and Automotive Rolled Products Q4 Adjusted EBITDA Bridge € in millions Q4 2019 Q42018 Var. Shipments (kt) 255 254 1 % Revenues (€m) 711 737 (3 )% Adj. EBITDA (€m) 63 55 13 % Adj. EBITDA (€ / t) 245 219 12 % FY Adjusted EBITDA Bridge € in millions * Record Adjusted EBITDA in 2019
Q4 2019 Performance Ø Adjusted EBITDA of €45 million Ø Lower TID shipments partially offset by higher Aerospace shipments Ø Improved price and mix from both TID and Aerospace Ø Higher costs, primarily labor and energy Aerospace and Transportation Q4 Adjusted EBITDA Bridge € in millions Q4 2019 Q42018 Var. Shipments (kt) 56 59 (6 )% Revenues (€m) 350 349 0 % Adj. EBITDA (€m) 45 38 18 % Adj. EBITDA (€ / t) 807 643 26 % FY Adjusted EBITDA Bridge € in millions * Record Adjusted EBITDA in 2019
Q4 2019 Performance Ø Adjusted EBITDA of €21 million Ø Executing on growth plan with higher Automotive shipments, offset by lower Industry shipments Ø Continued elevated costs related to our footprint expansion and operational challenges on some of our newer automotive programs Automotive Structures and Industry Q4 Adjusted EBITDA Bridge € in millions Q4 2019 Q42018 Var. Shipments (kt) 57 57 1 % Revenues (€m) 324 324 0 % Adj. EBITDA (€m) 21 21 2 % Adj. EBITDA (€ / t) 369 367 0 % FY Adjusted EBITDA Bridge € in millions
Project 2019 Three Pillars Cost Reduction } €78 million of annual run rate cost savings achieved as of December 31, 2019 } Exceeded €75 million Project 2019 target } Confident in ability to realize further cost savings over time Working Capital Improvement } Strong working capital performance on improved operational performance and increased discipline } Significant contributor to Free Cash Flow in 2019 } Continue to expect working capital investments related to the ramp up of growth projects Capital Discipline } €271 million of capital spending in 2019 is €84 million below the 2016 spending peak 80 Successful completion of Project 2019; launching "Horizon 2022"
Free Cash Flow Ø Free Cash Flow: €125-175 million Ø Capex: €250 million Ø Cash interest: €140-150 million Ø Cash taxes: €10-20 million 2019 Free Cash Flow Highlights Ø Free Cash Flow generation of €175 million in 2019 Ø Significant improvement from 2018 Ø Four consecutive quarters of FCF Ø Strong trade working capital performance Ø Delivers on a financial target originally set in March 2017 FY19 FY18 Net cash flows from operating activities 447 66 Purchases of property, plant and equipment (271 ) (277 ) Equity contributions and loans to joint-ventures — (24 ) Other investing activities (1 ) 10 Free Cash Flow 175 (225 ) Current 2020 Expectations Strong Free Cash Flow performance in 2019
Ø Committed to deleveraging Ø Leverage at 3.9x at year end Ø Repaid leases at Bowling Green in Q1 and €100 million of 2021 notes in Q3 Ø Ample liquidity of over €500 million Net Debt and Liquidity € in millions Net Debt and Leverage Maturity Profile Liquidity Reduced leverage, ample liquidity and no bond maturities until 2021 € in millions € in millions Leverage: Net Debt / LTM Adjusted EBITDA Debt / Liquidity Highlights
Jean-Marc GermainChief Executive Officer
End Market Updates Diversified end market exposure; primarily targets secular growth markets Market Highlights % LTMRevenue Packaging } Market strong in North America and in Europe } Focus on sustainability driving increased demand for aluminium cans } Conversions to ABS to help North American market over the medium to long term } Conversion from steel to aluminium continues in Europe 37% Automotive } Aluminium penetration driving increased demand for rolled and extruded products } Demand for luxury cars, light trucks, and SUVs remains strong } Pockets of weakness in broader automotive market persist 27% Aerospace } Long-term secular growth trend intact with passenger traffic expected to grow } OEM backlogs remain strong } Near-term demand remains strong despite 737-MAX uncertainty 15% Other Specialties Transportation, Industry and Defense: } North America: Strong defense market; weak transportation and industry markets } Europe: Strong defense market; stable industry market at a low base Industry (Extrusions) } Europe: Stable demand with strong rail market 21%
Financial Guidance and Outlook Focused on delivering on our strategy and increasing shareholder value Targets for 2020 : u Adjusted EBITDA growth of 6% to 9% u Free Cash Flow of €125 million to €175 million Targets for 2022: u Adjusted EBITDA of over €700 million u Net Debt / Adjusted EBITDA of 2.5x
Q&A
Appendix
December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018 Borrowings 2,361 2,370 2,378 2,421 2,151 Fair value of cross currency basis swaps, net of margin calls 6 (5 ) 8 2 9 Cash and cash equivalents (184 ) (152 ) (213 ) (222 ) (164 ) Cash pledged for issuance of guarantees — — — — — Net Debt 2,183 2,213 2,173 2,201 1,996 LTM Adjusted EBITDA 562 545 524 512 498 Leverage 3.9x 4.1x 4.1x 4.3x 4.0x Net Debt Reconciliation € millions
Reconciliation of Net Income to Adjusted EBITDA € millions Three months endedDecember 31, 2019 Three months endedDecember 31, 2018 Net income / (loss) 22 (57 ) Income tax expense (10 ) 2 Income before income tax 12 (55 ) Finance costs – net 40 32 Share of loss / (income) of joint-ventures 3 10 Income from operations 55 (13 ) Depreciation and amortization 73 56 Restructuring costs 2 — Unrealized (gains) / losses on derivatives (20 ) 31 Unrealized exchange losses / (gains) from remeasurement of monetary assets and liabilities – net — — (Gains) / Losses on pension plans amendments (2 ) 3 Share based compensation costs 4 3 Metal price lag 6 13 Start-up and development costs 3 5 Losses / (gains) on disposals 1 5 Bowling Green one-time costs related to the acquisition (1 ) — Other — 1 Adjusted EBITDA 121 104
Reconciliation of Net Income to Adjusted EBITDA € millions Twelve months ended December 31, 2019 Twelve months ended September 30, 2019 Twelve months ended June 30, 2019 Twelve months ended March 31, 2019 Twelve months ended December 31, 2018 Net income / (loss) 64 (16 ) 200 238 190 Income tax expense 18 30 27 43 32 Income before income tax 82 14 227 281 222 Finance costs – net 175 167 160 157 149 Share of loss / (income) of joint-ventures (2 ) 6 16 25 33 Income from operations 255 187 403 463 404 Depreciation and amortization 256 239 224 210 197 Restructuring costs 4 2 2 1 1 Unrealized (gains) / losses on derivatives (33 ) 18 24 (1 ) 84 Unrealized exchange losses / (gains) from remeasurement of monetary assets and liabilities – net — — 1 — — (Gain) / loss on pension plan amendments (1 ) 4 (36 ) (36 ) (36 ) Share based compensation costs 16 15 13 12 12 Metal price lag 46 53 55 22 — Start-up and development costs 11 13 17 19 21 Losses / (Gains) on disposals 3 7 (187 ) (185 ) (186 ) Bowling Green one-time costs related to the acquisition 5 6 6 6 — Other — 1 2 1 1 Adjusted EBITDA 562 545 524 512 498
Borrowings Table December 31, 2019 December 31, 2018 € millions Nominal Value in Currency NominalRate Effective Rate Nominal Value in Euros (Arrangement fees) Accrued Interests CarryingValue CarryingValue Secured Pan US ABL (due 2022) $142 Floating 4.2 % 127 — — 127 — Secured Inventory Based Facility (due 2021) — Floating — % — — — — — Senior Unsecured Notes Constellium SE(Issued May 2014, due 2024) $400 5.75 % 6.26 % 356 (3 ) 2 355 348 Constellium SE(Issued May 2014, due 2021) €200 4.63 % 5.16 % 200 (1 ) 1 200 300 Constellium SE(Issued February 2017, due 2025) $650 6.63 % 7.13 % 579 (10 ) 13 582 568 Constellium SE(Issued November 2017, due 2026) $500 5.88 % 6.26 % 445 (6 ) 10 449 440 Constellium SE(Issued November 2017, due 2026) €400 4.25 % 4.57 % 400 (6 ) 6 400 399 Unsecured Revolving Credit Facility (due 2021) — Floating — % — — — — — Lease liabilities — — — 187 — 1 188 73 Other loans — — — 59 — 1 60 23 Total Borrowings 2,353 (26 ) 34 2,361 2,151 Of which non-current 2,160 2,094 Of which current 201 57