Constellium SE 6-K, filed Oct 27, 2021
Constellium SE (CSTM)
About this 6-K
Constellium SE filed this 6-K on October 27, 2021.
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 October 2021
Commission File Number: 001-35931
Constellium SE
(Translation of registrant’s name into English)
| Washington Plaza, | 300 East Lombard Street |
|---|---|
| 40-44 rue Washington | Suite 1710 |
| 75008 Paris | Baltimore, MD 21202 |
| France | United States |
| (Head Office) |
(Address of principal executive offices)
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 October 27, 2021, 2021, announcing its financial results for the quarter ended September 30, 2021.
Attached hereto as Exhibit 99.2 is a copy of a presentation of the Company, dated October 27, 2021, summarizing its financial results for the quarter ended September 30, 2021.
Exhibit Index
| No. | Description |
|---|---|
| 99.1 | Press Release issued by Constellium SE on October 27, 2021. |
| 99.2 | Presentation posted by Constellium SE on October 27, 2021. |
The information contained in Exhibit 99.1 of this Form 6-K (except for thesecond and third paragraphs 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 apart thereof) 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) | ||
|---|---|---|
| October 27, 2021 | By: | /s/ Peter R. Matt |
| Name: | Peter R. Matt | |
| Title: | Chief Financial Officer |
EX-99.1
Exhibit 99.1
Constellium Reports Third Quarter 2021 Results
Paris, October 27, 2021 – 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, up 35% compared to Q3 2020 |
| --- | --- |
| • | Net income of €99 million compared to a net income of €20 million in Q3 2020<br> |
| --- | --- |
| • | Adjusted EBITDA of €143 million, up 14% 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 of 5.875% 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, up 22% compared to YTD 2020 |
| --- | --- |
| • | Net income of €255 million compared to a net loss of €43 million in YTD 2020<br> |
| --- | --- |
| • | Adjusted EBITDA of €434 million, up 23% compared to YTD 2020 |
| --- | --- |
| • | Cash from Operations of €239 million and Free Cash Flow of €121 million<br> |
| --- | --- |
| • | 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 €550 million to €560 million and Free Cash Flow in excess of €125 million in 2021.”
| • | Group Summary | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3<br>2020 | Var. | YTD<br>2021 | YTD<br>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 | % |
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 third quarter of 2021, shipments of 395 thousand metric tons increased 12% compared to the third quarter of 2020 due to higher shipments in each of our segments. Revenue of €1.6 billion increased 35% compared to the third quarter of the prior year primarily due to higher metal prices and higher shipments, partially offset by weaker mix. Net income of €99 million increased €79 million compared to net income of €20 million in the third quarter of 2020. Adjusted EBITDA of €143 million increased 14% compared to the third quarter of last year due to stronger results in our Aerospace & Transportation and Packaging & Automotive Rolled Product segments.
For the first nine months of 2021, shipments of 1.2 million metric tons increased 12% compared to the first nine months of 2020 on higher shipments in each of our segments. Revenue of €4.4 billion increased 22% compared to the first nine months of 2020 primarily due to higher metal prices and higher shipments, partially offset by weaker mix. Net income of €255 million compares to a net loss of €43 million in the first nine months of 2020. Adjusted EBITDA of €434 million increased 23% compared to the first nine months of 2020 on stronger results in our Packaging & Automotive Rolled Products and Automotive Structures & Industry segments, partially offset by weaker results in our Aerospace & Transportation segment.
2
| • | Results by Segment | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| • | Packaging & Automotive Rolled Products (P&ARP) | ||||||||||||
| --- | --- | ||||||||||||
| Q3<br>2020 | Var. | YTD<br>2021 | YTD<br>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 | % |
All values are in Euros.
For the third quarter of 2021, Adjusted EBITDA increased 10% compared to the third quarter of 2020 primarily due to higher shipments and favorable metal costs, partially offset by unfavorable mix. Shipments of 281 thousand metric tons increased 9% compared to the third quarter of last year on higher shipments of packaging and specialty rolled products. Revenue of €988 million increased 47% compared to the third quarter of 2020 primarily due to higher metal prices and higher shipments.
For the first nine months of 2021, Adjusted EBITDA of €256 million increased 22% compared to the first nine months of 2020 primarily due to higher shipments, solid cost control, and favorable metal costs, partially offset by unfavorable foreign exchange translation. Shipments of 832 thousand metric tons increased 11% compared to the first nine months of 2020 on higher shipments of packaging, automotive, and specialty rolled products. Revenue of €2.7 billion increased 34% compared to the first nine months of 2020 primarily due to higher metal prices and higher shipments.
| • | Aerospace & Transportation (A&T) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3<br>2020 | Var. | YTD<br>2021 | YTD<br>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 | )% |
All values are in Euros.
3
For the third quarter of 2021, Adjusted EBITDA increased 91% compared to the third quarter of 2020 primarily due to higher shipments on strong TID demand and solid cost control, partially offset by weaker mix from lower aerospace shipments. Shipments of 52 thousand metric tons increased 45% compared to the third quarter of 2020 as higher transportation, industry and defense rolled product shipments more than offset lower aerospace rolled product shipments. Revenue of €289 million increased 43% compared to the third quarter of 2020 on higher shipments and higher metal prices, partially offset by weaker mix.
For the first nine months of 2021, Adjusted EBITDA of €81 million decreased 14% compared to the first nine months of 2020 primarily due to weaker mix from lower aerospace shipments, partially offset by strong cost control and higher transportation, industry, and defense shipments. Shipments of 153 thousand metric tons increased 9% compared to the first nine months of 2020 as higher shipments of transportation, industry, and defense rolled products more than offset lower shipments of aerospace rolled products. Revenue of €821 million increased 1% compared to the first nine months of 2020 primarily due to higher metal prices and higher shipments, partially offset by weaker mix.
| • | Automotive Structures & Industry (AS&I) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3<br>2020 | Var. | YTD<br>2021 | YTD<br>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 | % |
All values are in Euros.
For the third quarter of 2021, Adjusted EBITDA decreased by €1 million compared to the third quarter of 2020 primarily due to higher shipments and solid cost control, partially offset by weaker mix. Shipments of 62 thousand metric tons increased 4% compared to the third quarter of 2020 on higher shipments of other extruded products, partially offset by lower shipments of automotive extruded products. Revenue of €326 million increased 7% compared to the third quarter of 2020 primarily due to higher metal prices, partially offset by weaker mix.
For the first nine months of 2021, Adjusted EBITDA of €111 million increased 69% compared to the first nine months of 2020 primarily due to higher shipments, improved price and mix, and solid cost control. Shipments of 201 thousand metric tons increased 19% compared to the first nine months of 2020 on higher shipments of automotive and other extruded products. Revenue of €1.0 billion increased 18% compared to the first nine months of 2020 primarily due to higher shipments and higher metal prices, partially offset by weaker price and mix.
4
| • | Net Income |
|---|
For the third quarter of 2021, net income of €99 million compares to a net income of €20 million in the third quarter of the prior year. The change in net income is primarily related to higher gross profit and a favorable change in gains and losses on derivatives related to our metal hedging positions, partially offset by a change in income tax expense.
For the first nine months of 2021, net income of €255 million compares to a net loss of €43 million in the first nine months of the prior year. The change in net income is primarily related to higher gross profit and a favorable change in gains and losses on derivatives related to our metal hedging positions, partially offset by a change in income tax expense.
| • | Cash Flow |
|---|
Free Cash Flow was €121 million in the first nine months of 2021 compared to €129 million in the first nine months of the prior year. The change was primarily due to an unfavorable change in working capital, partially offset by stronger Adjusted EBITDA and lower interest paid.
Cash flows from operating activities were €239 million for the first nine months of 2021 compared to cash flows from operating activities of €263 million in the first nine months of the prior year. Constellium decreased derecognized factored receivables by €30 million for the first nine months of 2021 compared to a decrease of €76 million in the first nine months of the prior year.
Cash flows used in investing activities were €118 million for the first nine months of 2021 compared to cash flows used in investing activities of €133 million in the first nine months of the prior year.
Cash flows used in financing activities were €241 million for the first nine months of 2021 compared to cash flows from financing activities of €122 million in the first nine months of the prior year. In the first nine months of 2021, Constellium issued $500 million of 3.75% Sustainability-Linked Senior Notes due 2029 and €300 million of 3.125% Sustainability-Linked Senior Notes due 2029 and used the proceeds and cash on the balance sheet to redeem the $650 million of 6.625% Senior Notes due 2025 and the $400 million of 5.75% Senior Notes due 2024. In the first nine months of 2020, Constellium raised $325 million of 5.625% Senior Notes due 2028 and used a portion of the proceeds to redeem the remaining balance of the 4.625% Senior Notes due 2021. In the same period, Constellium entered into a €180 million loan partially guaranteed by the French State and a CHF 20 million facility partially guaranteed by the Swiss Government.
5
| • | Liquidity and Net Debt |
|---|
Liquidity at September 30, 2021 was €900 million, comprised of €323 million of cash and cash equivalents and €577 million available under our committed lending facilities and factoring arrangements.
Net debt was €1,964 million at September 30, 2021 compared to €1,994 million at December 31, 2020.
| • | Outlook |
|---|
Based on our current outlook, we expect Adjusted EBITDA in a range of €550 million to €560 million in 2021.
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.
| • | Recent Developments |
|---|
On October 26, 2021, Constellium announced the intention to redeem $200 million of the 5.875% Senior Notes due 2026. This transaction is consistent with our targets of reducing gross debt and lowering interest cost.
6
| • | 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 €4.9 billion of revenue in 2020.
Constellium’s earnings materials for the third quarter ended September 30, 2021, are also available on the company’s website (www.constellium.com).
7
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 |
8
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 incomestatement | ||||||||||||
| 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 | ) |
9
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 | **** |
10
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
| (in millions of Euros) | Sharecapital | Sharepremium | Re-<br>measurement | Cashflowhedges | Foreigncurrencytranslationreserve | Otherreserves | Retainedlosses | Total | Non-<br>controllinginterests | Totalequity | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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) | Sharecapital | Sharepremium | Re-<br>measurement | Cashflowhedges | Foreigncurrencytranslationreserve | Otherreserves | Retainedlosses | Total | Non-<br>controllinginterests | Totalequity | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| 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 | ) |
11
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 -<br>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 | **** |
12
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 | **** |
13
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 –<br>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<br>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<br>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<br>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<br>year. | |||||||||||
| --- | --- | |||||||||||
| (B) | Start-up and development costs, for the nine months ended<br>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 €4 million of<br>procurement penalties and termination fees incurred because of the Group’s inability to fulfill certain commitments due to the COVID-19 pandemic and a €5 million loss resulting from the<br>discontinuation of hedge accounting for certain forecasted sales that were determined to be no longer expected to occur in light of the COVID-19 pandemic effects. | |||||||||||
| --- | --- |
14
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 | **** |
15
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.
16
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.
17
EX-99.2
Third Quarter 2021 Earnings Call October 27, 2021 Exhibit 99.2
Certain statements contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This presentation 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. Forward-looking statements
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
Ø Shipments: 395kt (+12% YoY) Ø Revenue: €1.6 billion (+35% YoY) Ø Net income: €99 million Ø Adj. EBITDA: €143 million (+14% YoY) Ø Cash from Operations: €91 million Ø Free Cash Flow: €40 million Ø YTD 2021 FCF: €121 million Ø Leverage: 3.6x at September 30, 2021 Ø Redeeming $200 million of 5.875% Senior Notes due 2026 2021 Guidance: Expect Adjusted EBITDA of €550-560 million and FCF of >€125 million Q3 2021 Highlights Leverage Continues to Decline Adjusted EBITDA Exceeded 2019 Levels +3%
Peter Matt Chief Financial Officer
Adjusted EBITDA Bridges YTD 2021 vs. YTD 2020 Q3 2021 vs. Q3 2020 € millions +23% € millions +14%
Q3 2021 Performance Packaging & Automotive Rolled Products Q3 2021 Q3 2020 Var. Shipments (kt) 281 258 9% Revenue (€m) 988 672 47% Adj. EBITDA (€m) 94 85 10% Adj. EBITDA (€ / t) 335 332 1% Q3 Adjusted EBITDA Bridge € in millions Ø Adjusted EBITDA of €94 million Ø Higher packaging shipments on strong demand Ø Weaker mix with higher packaging and lower automotive shipments Ø Solid cost control as favorable metal costs offset higher maintenance and labor costs
Q3 2021 Performance Aerospace & Transportation Q3 2021 Q3 2020 Var. Shipments (kt) 52 36 45% Revenue (€m) 289 202 43% Adj. EBITDA (€m) 20 10 91% Adj. EBITDA (€ / t) 362 275 32% Q3 Adjusted EBITDA Bridge € in millions Ø Adjusted EBITDA of €20 million Ø Higher TID shipments, partially offset by lower aerospace shipments Ø Weaker mix due to lower aerospace shipments Ø Solid cost control
Q3 2021 Performance Automotive Structures & Industry Q3 Adjusted EBITDA Bridge € in millions Q3 2021 Q3 2020 Var. Shipments (kt) 62 60 4% Revenue (€m) 326 304 7% Adj. EBITDA (€m) 32 33 (0)% Adj. EBITDA (€ / t) 528 551 (4)% Ø Adjusted EBITDA of €32 million Ø Higher industry shipments, partially offset by lower automotive shipments Ø Weaker mix, primarily due to lower automotive shipments Ø Solid cost control
We have experienced increasing inflationary pressure on the business in 2021, which will have a greater impact in 2022 Currently working on mitigation strategies for the following areas: Energy prices, more significantly in Europe Alloying elements, including magnesium, manganese and silicon Transportation Labor for select skills and in specific locations Many existing contracts have inflationary protection (i.e. annual PPI inflators), working to incorporate in new contracts Signing new contracts at higher prices View many of inflationary pressures as temporary Focus on Costs Committed to Strong Cost Management in Current Inflationary Environment Q3 Cost Performance Cost Flex* * Represents change in costs over change in revenue for Q3 2021 compared to Q3 2020. Cost performance remained strong in the third quarter across all three segments Structural cost reduction providing solid offset to higher activity levels and inflationary effects across alloys, labor, maintenance, and transportation Inflation remains manageable and to a large extent offset by higher pricing
Free Cash Flow YTD 2021 YTD 2020 Net cash flows from operating activities 239 263 Purchases of property, plant and equipment, net of grants (118) (134) Other investing activities — — Free Cash Flow 121 129 € in millions YTD FCF Highlights Consistent FCF Generation 2021 FCF Guidance: >€125 million Ø Free Cash Flow of €121 million YTD 2021, with strong performance in Q3 of €40 million Ø Working capital headwind, notably increased inventory, as businesses rebounded Ø Capex expected to be fourth quarter weighted Ø Delivering on our goal of significant and consistent Free Cash Flow generation Ø Over €450 million of Free Cash Flow generated since 2019
Ø Leverage of 3.6x, a multi-year low Ø No near term bond maturities Ø Gradually reducing excess liquidity added during the pandemic Ø Redeeming $200 million of 5.875% Senior Notes due 2026 in November, further reducing gross debt Ø Expected to reduce cash interest by ~€8 million and brings the total reduction from 2021 actions to ~€38 million annually Committed to deleveraging with year end leverage expected to be at or below 3.5x Net Debt and Liquidity € in millions Net Debt and Leverage Maturity Profile Liquidity € in millions € in millions Leverage: Net Debt / LTM Adjusted EBITDA Debt / Liquidity Highlights * Does not include State Loans
Jean-Marc Germain Chief Executive Officer
End Market Updates Market Commentary Packaging Strong market in North America and in Europe Focus on sustainability driving increased demand for aluminium cans Mid-single digit annual demand growth supported by can-maker capacity additions in both North America and Europe Automotive Lightweighting mega-trend penetration driving increased demand for rolled and extruded products Consumer demand for luxury cars, light trucks, and SUVs remains strong; inventories are low Demand uncertainty continues as a result of the semiconductor shortage, which is not expected to improve in Q4 2021 Aerospace Supply chain optimism increasing Destocking appears to be largely complete Long-term trends expected to remain intact, including increased passenger traffic and higher build rates for single aisle aircraft Other Specialties Transportation, Industry and Defense (Rolled): North America: Strong demand Europe: Strong demand Industry (Extrusions): Europe: Strong demand A Diversified Platform LTM Revenue by End Market
Broad Exposure to Sustainability Trends Favorable Market Trends Packaging Automotive Aerospace Specialties Circular Economy ü ü ü ü Lightweighting in Transportation ü ü ü Electrification in Transportation ü ü ü Aluminum can as preferred beverage package ü Recession Resilient ü Diversified Cycles ü Green represents secular megatrend driven by sustainability Expanding our Competitive Advantage in Recycling * CSTM's current Estimations European Recycling Center* Investigating an increase in total capacity to ~130kt (previously >60kt) Capital expected to be spent over ~3 years Strategic Rationale Provides greater security of slab supply, including reducing our reliance on virgin alloying materials Substantially reduces our Scope 3 emissions footprint Meets customer requests for higher recycled content and low CO2 footprint product Satisfies need for more recycling capacity in Europe as aluminium consumption grows, especially in can sheet and automotive sheet
Key Messages and Guidance Focused on delivering on our strategy and increasing shareholder value 2021 Adjusted EBITDA: €550 to €560 million 2021 Free Cash Flow: >€125 million Long-Term Leverage: 2.5x Targets Solid performance in Q3 2021 Successfully navigated an environment that was more challenging than expected Adj. EBITDA surpassed 2019 level despite reduced contribution from aerospace, continued impact from the semiconductor shortage and increased inflationary pressures Continued Free Cash Flow generation and deleveraging Delivering in 2021 Solid operational performance, strong cost control, and consistent Free Cash Flow generation Meeting strong demand from our end markets and prepared for a recovery in aerospace Committed to deleveraging with expected year end leverage at or below 3.5x Prepared for a bright future Focused on executing our strategy Substantial value creation opportunities remain — planting the seeds for future growth Horizon 2022 and pricing initiatives are critical to offset inflationary impacts
Appendix
Reconciliation of Net Income to Adjusted EBITDA 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 (59) (7) (144) 33 Start-up and development costs — 1 — 5 Losses on disposal 1 2 1 2 Other — (1) — 9 Adjusted EBITDA 143 126 434 354
Free Cash Flow Reconciliation (in millions of Euros) Three months ended September 30, Nine months ended September 30, 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
(in millions of Euros) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 Borrowings 2,282 2,257 2,325 2,391 2,456 Fair value of net debt derivatives, net of margin calls 5 9 25 42 26 Cash and cash equivalents (323) (290) (342) (439) (432) Net Debt 1,964 1,976 2,008 1,994 2,050 LTM Adjusted EBITDA 545 528 439 465 475 Leverage 3.6x 3.7x 4.6x 4.3x 4.3x Net Debt Reconciliation
Reconciliation of Net Income to Adjusted EBITDA Twelve months ended (in millions of Euros) September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 Net income / (loss) 281 202 62 (17) (21) Income tax expense / (benefit) 48 35 2 (17) (22) Income / (loss) before tax 329 237 64 (34) (43) Finance costs - net 161 164 169 159 164 Share of losses of joint ventures — — — — 3 Income from operations 490 401 233 125 124 Depreciation and amortization 258 255 256 259 269 Impairment of assets 29 38 43 43 14 Restructuring costs 3 5 14 13 15 Unrealized gains on derivatives (84) (70) (97) (16) (19) Unrealized exchange gains from the remeasurement of monetary assets and liabilities - net (1) (3) (5) (1) (1) Losses on pension plan amendments 2 2 2 2 — Share based compensation costs 15 14 15 15 15 Metal price lag (169) (117) (37) 8 39 Start-up and development costs — 1 3 5 8 Losses on disposals 3 4 4 4 3 Bowling Green one-time cost related to the acquisition — — — — (1) Other (1) (2) 8 8 9 Adjusted EBITDA 545 528 439 465 475
Borrowings Table At September 30, At December 31, 2021 2020 (in millions of Euros) Nominal Value in Currency Nominal Rate Nominal Value in Euros (Arrangement fees) Accrued Interests Carrying Value Carrying Value Secured Pan-U.S. ABL (due 2026) $ — Floating — — — — — Secured U.S. DDTL (expired in 2021) $ — Floating — — — — — Secured PGE French Facility (due 2022) € 180 Floating 180 — — 180 180 Secured German Facility (expired in 2021) € — 2.000% — — — — — Secured Inventory Facility (due 2023) € — Floating — — — — — Senior Unsecured Notes Issued May 2014 and due 2024 $ 400 5.750% — — — — 325 Issued February 2017 and due 2025 $ 650 6.625% — — — — 534 Issued November 2017 and due 2026 $ 500 5.875% 432 (5) 3 430 411 Issued November 2017 and due 2026 € 400 4.250% 400 (4) 2 398 401 Issued June 2020 and due 2028 $ 325 5.625% 281 (5) 4 280 260 Issued February 2021 and due 2029 $ 500 3.750% 432 (7) 10 435 — Issued June 2021 and due 2029 € 300 3.125% 300 (5) 3 298 — Unsecured Revolving Credit Facility (due 2021) € — Floating — — — — — Unsecured Swiss Facility (due 2025) CHF 17 1.175% 16 — — 16 18 Unsecured German Facility (expired in 2021) € — 2.120% — — — — — Lease liabilities 181 — 1 182 195 Other loans 61 — 2 63 67 Total Borrowings 2,283 (26) 25 2,282 2,391 Of which non-current 2,020 2,299 Of which current 262 92