Constellium Reports Third Quarter 2023 Results
Paris, October 25, 2023 - Constellium SE (NYSE: CSTM) today reported results for the third quarter ended September 30, 2023.
Third quarter 2023 highlights:
- Shipments of 369 thousand metric tons, down 5% compared to Q3 2022
- Revenue of €1.7 billion, down 15% compared to Q3 2022
- Value-AddedRevenue (VAR) of €704 million, up 5% compared to Q3 2022
- Net income of €64 million compared to net income of €131 million in Q3 2022
- Adjusted EBITDA of €168 million, up 5% compared to Q3 2022
- Cash from Operations of €154 million and Free Cash Flow of €78 million
Nine months ended September 30, 2023 highlights:
- Shipments of 1.2 million metric tons, down 5% compared to YTD 2022
- Revenue of €5.6 billion, down 10% compared to YTD 2022
- VAR of €2.2 billion, up 11% compared to YTD 2022
- Net income of €118 million compared to net income of €278 million in YTD 2022
- Adjusted EBITDA of €542 million, up 3% compared to YTD 2022
- Cash from Operations of €321 million and Free Cash Flow of €112 million
- Net debt / LTM Adjusted EBITDA of 2.5x at September 30, 2023
Jean-Marc Germain, Constellium's Chief Executive Officer said, "Constellium delivered strong results in the third quarter despite significant inflationary pressures and demand headwinds in several end markets. Adjusted EBITDA of €168 million is a third quarter record and includes record third quarter performance by A&T. Looking across our end markets, aerospace demand remains strong. Automotive demand decelerated slightly during the quarter but remains above prior year levels. Packaging shipments were down in the quarter though demand appears to have stabilized following the last several quarters of destocking. We continued to experience weakness in most industrial markets, especially in Europe. Free Cash Flow generation in the third quarter was strong at €78 million and we reduced our leverage to 2.5x."
Mr. Germain concluded, "We expect recent demand trends in our markets to continue through the remainder of 2023. Based on our current outlook, in 2023 we still expect Adjusted EBITDA to be in the range of €700 million to €720 million and Free Cash Flow in excess of €150 million. We also remain confident in our ability to deliver on our long-term target of Adjusted EBITDA over €800 million in 2025. Our focus remains on executing our strategy, driving operational performance, generating Free Cash Flow, achieving our ESG objectives and increasing shareholder value."
Group Summary
Q3 | Q3 | Var. | YTD | YTD | Var. | |
2023 | 2022 | 2023 | 2022 | |||
Shipments (k metric tons) | 369 | 387 | (5)% | 1,156 | 1,212 | (5)% |
Revenue (€ millions) | 1,720 | 2,022 | (15)% | 5,626 | 6,276 | (10)% |
VAR (€ millions) | 704 | 673 | 5% | 2,243 | 2,029 | 11% |
Net income (€ millions) | 64 | 131 | n.m. | 118 | 278 | n.m. |
Adjusted EBITDA (€ millions) | 168 | 160 | 5% | 542 | 525 | 3% |
Adjusted EBITDA per metric ton (€) | 453 | 412 | 10% | 469 | 433 | 8% |
The difference between the sum of reported segment revenue and total group revenue includes revenue from certain non-core activities and inter-segment eliminations. The difference between the sum of reported segment Adjusted EBITDA and the Group Adjusted EBITDA is related to Holdings and Corporate.
For the third quarter of 2023, shipments of 369 thousand metric tons decreased 5% compared to the third quarter of last year due to lower shipments in each of our segments. Revenue of €1.7 billion decreased 15% compared to the third quarter of the prior year primarily due to lower shipments and lower metal prices, partially offset by improved price and mix. VAR of €704 million increased 5% compared to the third quarter of the prior year primarily due to improved price and mix, partially offset by lower shipments, unfavorable metal costs and unfavorable foreign exchange translation. Net income of €64 million decreased €67 million compared to net income of €131 million in the third quarter of 2022. Adjusted EBITDA of €168 million increased 5% compared to the third quarter of last year due to stronger results in our A&T segment, partially offset by weaker results in our P&ARP and AS&I segments.
For the first nine months of 2023, shipments of 1.2 million metric tons decreased 5% compared to the first nine months of 2022 due to lower shipments in the P&ARP and AS&I segments. Revenue of €5.6 billion decreased 10% compared to the first nine months of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix. VAR of €2.2 billion increased 11% compared to the first nine months of 2022 primarily due to improved price and mix, partially offset by lower shipments, unfavorable metal costs and unfavorable foreign exchange translation. Net income of €118 million decreased €160 million compared to
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net income of €278 million in the first nine months of 2022. Adjusted EBITDA of €542 million increased 3% compared to the first nine months of 2022 due to stronger results in our A&T segment, partially offset by weaker results in our P&ARP and AS&I segments.
Results by Segment
Packaging & Automotive Rolled Products (P&ARP)
Q3 | Q3 | Var. | YTD | YTD | Var. | |
2023 | 2022 | 2023 | 2022 | |||
Shipments (k metric tons) | 261 | 267 | (2)% | 792 | 835 | (5)% |
Revenue (€ millions) | 954 | 1,140 | (16)% | 3,033 | 3,656 | (17)% |
Adjusted EBITDA (€ millions) | 67 | 78 | (14)% | 201 | 255 | (21)% |
Adjusted EBITDA per metric ton (€) | 256 | 291 | (12)% | 254 | 305 | (17)% |
For the third quarter of 2023, Adjusted EBITDA of €67 million decreased 14% compared to the third quarter of 2022 as a result of lower shipments, higher operating costs mainly due to inflation, operating challenges at our Muscle Shoals facility and unfavorable metal costs, and unfavorable foreign exchange translation, partially offset by improved price and mix. Shipments of 261 thousand metric tons decreased 2% compared to the third quarter of the prior year due to lower shipments of packaging and specialty rolled products, partially offset by higher shipments of automotive rolled products. Revenue of €1.0 billion decreased 16% compared to the third quarter of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.
For the first nine months of 2023, Adjusted EBITDA of €201 million decreased 21% compared to the first nine months of 2022 as a result of lower shipments and higher operating costs mainly due to inflation, operating challenges at our Muscle Shoals facility and unfavorable metal costs, partially offset by improved price and mix. Shipments of 792 thousand metric tons decreased 5% compared to the first nine months of 2022 due to lower shipments of packaging and specialty rolled products, partially offset by higher shipments of automotive rolled products. Revenue of €3.0 billion decreased 17% compared to the first nine months of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.
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Aerospace & Transportation (A&T)
Q3 | Q3 | Var. | YTD | YTD | Var. | |
2023 | 2022 | 2023 | 2022 | |||
Shipments (k metric tons) | 53 | 55 | (3)% | 171 | 170 | 1% |
Revenue (€ millions) | 404 | 432 | (6)% | 1,320 | 1,278 | 3% |
Adjusted EBITDA (€ millions) | 79 | 45 | 76% | 248 | 161 | 55% |
Adjusted EBITDA per metric ton (€) | 1,480 | 807 | 83% | 1,438 | 944 | 52% |
For the third quarter of 2023, Adjusted EBITDA of €79 million increased 76% compared to the third quarter of 2022 primarily due to improved price and mix, partially offset by lower shipments, higher operating costs mainly due to inflation and unfavorable foreign exchange translation. Shipments of 53 thousand metric tons decreased 3% compared to the third quarter of 2022 on higher shipments of aerospace rolled products, more than offset by lower shipments of transportation, industry and defense (TID) rolled products. Revenue of €404 million decreased 6% compared to the third quarter of 2022 primarily due to lower shipments, lower metal prices and unfavorable foreign exchange translation, partially offset by improved price and mix.
For the first nine months of 2023, Adjusted EBITDA of €248 million increased 55% compared to the first nine months of 2022 primarily due to improved price and mix, partially offset by higher operating costs mainly due to inflation and increased activity levels. Shipments of 171 thousand metric tons increased 1% compared to the first nine months of 2022 on higher shipments of aerospace rolled products, mostly offset by lower shipments of TID rolled products. Revenue of €1.3 billion increased 3% compared to the first nine months of 2022 primarily due to improved price and mix, partially offset by lower metal prices.
Automotive Structures & Industry (AS&I)
Q3 | Q3 | Var. | YTD | YTD | Var. | |
2023 | 2022 | 2023 | 2022 | |||
Shipments (k metric tons) | 55 | 65 | (15)% | 193 | 207 | (7)% |
Revenue (€ millions) | 370 | 473 | (22)% | 1,296 | 1,433 | (10)% |
Adjusted EBITDA (€ millions) | 26 | 35 | (27)% | 108 | 118 | (8)% |
Adjusted EBITDA per metric ton (€) | 467 | 544 | (14)% | 560 | 570 | (2)% |
For the third quarter of 2023, Adjusted EBITDA of €26 million decreased 27% compared to the third quarter of 2022 primarily due to lower shipments and higher operating costs mainly due to inflation, partially offset by improved price and mix. Shipments of 55 thousand metric tons decreased 15% compared to the third quarter of 2022 due to lower shipments of automotive and
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other extruded products. Revenue of €370 million decreased 22% compared to the third quarter of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.
For the first nine months of 2023, Adjusted EBITDA of €108 million decreased 8% compared to the first nine months of 2022 primarily due to lower shipments and higher operating costs mainly due to inflation, mostly offset by improved price and mix. Shipments of 193 thousand metric tons decreased 7% compared to the first nine months of 2022 due to lower shipments of other extruded products, partially offset by higher shipments of automotive extruded products. Revenue of €1.3 billion decreased 10% compared to the first nine months of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.
Net Income
For the third quarter of 2023, net income of €64 million compares to net income of €131 million in the third quarter of the prior year. The decrease in net income is primarily related to the recognition in the prior year of deferred tax assets previously unrecognized of €142 million, partially offset by a gain related to the sale of Constellium Extrusions Deutschland GmbH, favorable changes in gains and losses on derivatives mostly related to our hedging positions, and higher gross profit.
For the first nine months of 2023, net income of €118 million compares to net income of €278 million in the first nine months of the prior year. The decrease in net income is primarily related to the recognition in the prior year of deferred tax assets previously unrecognized of €142 million and lower gross profit, partially offset by a gain related to the sale of Constellium Extrusions Deutschland GmbH.
Cash Flow
Free Cash Flow was €112 million in the first nine months of 2023 compared to €160 million in the first nine months of the prior year. The decrease was primarily due to increased capital expenditures and higher cash interest, partially offset by stronger Adjusted EBITDA.
Cash flows from operating activities were €321 million for the first nine months of 2023 compared to cash flows from operating activities of €323 million in the first nine months of the prior year.
Cash flows used in investing activities were €161 million for the first nine months of 2023 compared to cash flows used in investing activities of €163 million in the first nine months of the prior year. In the first nine months of 2023, cash flows used in investing activities included €47 million of net proceeds from the sale of Constellium Extrusion Deutschland GmbH in September 2023.
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Cash flows used in financing activities were €167 million for the first nine months of 2023 compared to cash flows used in financing activities of €141 million in the first nine months of the prior year. In the first nine months of 2023, Constellium used cash on the balance sheet to reduce short-term borrowings and to redeem $50 million of the $300 million outstanding aggregate principal amount of its 5.875% Senior Notes due 2026. In the first nine months of 2022, Constellium drew on the Pan-U.S. ABL due 2026 and used the proceeds and cash on the balance sheet to repay the €180 million PGE French Facility due 2022 and the CHF 15 million Swiss Facility due 2025.
Liquidity and Net Debt
Liquidity at September 30, 2023 was €746 million, comprised of €159 million of cash and cash equivalents and €587 million available under our committed lending facilities and factoring arrangements.
Net debt was €1,750 million at September 30, 2023 compared to €1,891 million at December 31, 2022.
Outlook
Based on our current outlook, we expect Adjusted EBITDA to be in the range of €700 million to €720 million and Free Cash Flow in excess of €150 million in 2023. We were not impacted by the United Auto Workers union strike in the third quarter, but we do expect some impact in the fourth quarter, which is included in our guidance.
We are not able to provide a reconciliation of this Adjusted EBITDA guidance to net income, the comparable GAAP measure, because certain items that are excluded from Adjusted EBITDA cannot be reasonably predicted or are not in our control. In particular, we are unable to forecast the timing or magnitude of realized and unrealized gains and losses on derivative instruments, metal lag, impairment or restructuring charges, or taxes, without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, future net income.
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Forward-looking statements
Certain statements contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may contain "forward-looking statements" with respect to our business, results of operations and financial condition, and our expectations or beliefs concerning future events and conditions. You can identify forward-looking statements because they contain words such as, but not limited to, "believes," "expects," "may," "should," "approximately," "anticipates," "estimates," "intends," "plans," "targets," likely," "will," "would," "could" and similar expressions (or the negative of these terminologies or expressions). All forward-looking statements involve risks and uncertainties. Many risks and uncertainties are inherent in our industry and markets, while others are more specific to our business and operations. These risks and uncertainties include, but are not limited to: market competition; economic downturn; disruption to business operations, including the length and magnitude of disruption resulting from the global COVID-19 pandemic; the Russian war on Ukraine; the inability to meet customer demand and quality requirements; the loss of key customers, suppliers or other business relationships; supply disruptions; excessive inflation; the capacity and effectiveness of our hedging policy activities; the loss of key employees; levels of indebtedness which could limit our operating flexibility and opportunities; and other risk factors set forth under the heading "Risk Factors" in our Annual Report on Form 20-F, and as described from time to time in subsequent reports filed with the U.S. Securities and Exchange Commission. The occurrence of the events described and the achievement of the expected results depend on many events, some or all of which are not predictable or within our control. Consequently, actual results may differ materially from the forward-looking statements contained in this press release. We undertake no obligation to update or revise any forward- looking statement as a result of new information, future events or otherwise, except as required by law.
About Constellium
Constellium (NYSE: CSTM) is a global sector leader that develops innovative, value-added aluminium products for a broad scope of markets and applications, including packaging, automotive and aerospace. Constellium generated €8.1 billion of revenue in 2022.
Constellium's earnings materials for the third quarter ended September 30, 2023 are also available on the company's website (www.constellium.com).
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CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Three months ended | Nine months ended | |||||||
September 30, | September 30, | |||||||
(in millions of Euros) | 2023 | 2022 | 2023 | 2022 | ||||
Revenue | 1,720 | 2,022 | 5,626 | 6,276 | ||||
Cost of sales | (1,562) | (1,889) | (5,094) | (5,711) | ||||
Gross profit | 158 | 133 | 532 | 565 | ||||
Selling and administrative expenses | (70) | (63) | (221) | (206) | ||||
Research and development expenses | (11) | (11) | (37) | (32) | ||||
Other gains and losses - net | 41 | (29) | (15) | (53) | ||||
Income from operations | 118 | 30 | 259 | 274 | ||||
Finance costs - net | (36) | (36) | (106) | (98) | ||||
Income / (loss) before tax | 82 | (6) | 153 | 176 | ||||
Income tax (expense) / benefit | (18) | 137 | (35) | 102 | ||||
Net income | 64 | 131 | 118 | 278 | ||||
Net income attributable to: | ||||||||
Equity holders of Constellium | 64 | 130 | 115 | 273 | ||||
Non-controlling interests | - | 1 | 3 | 5 | ||||
Net income | 64 | 131 | 118 | 278 | ||||
Earnings per share attributable to the equity | ||||||||
holders of Constellium, (in Euros) | ||||||||
Basic | 0.44 | 0.90 | 0.79 | 1.90 | ||||
Diluted | 0.43 | 0.88 | 0.77 | 1.86 | ||||
Weighted average number of shares, | ||||||||
(in thousands) | ||||||||
Basic | 146,820 | 144,302 | 145,897 | 143,398 | ||||
Diluted | 148,704 | 146,759 | 148,704 | 146,759 | ||||
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS) (UNAUDITED)
Three months ended | Nine months ended | |||||||
September 30, | September 30, | |||||||
(in millions of Euros) | 2023 | 2022 | 2023 | 2022 |
Net income
Other comprehensive income
Items that will not be reclassified subsequently to the consolidated income statement
Remeasurement on post-employment benefit obligations
Income tax on remeasurement on post- employment benefit obligations
Items that may be reclassified subsequently to the consolidated income statement
64 | 131 | 118 | 278 |
26 | 26 | 30 | 181 |
(6) | (9) | (8) | (39) |
Cash flow hedges | (6) | (12) | (2) | (27) | ||||
Income tax on cash flow hedges | 2 | 3 | 1 | 7 | ||||
Currency translation differences | 20 | 47 | 7 | 89 | ||||
Other comprehensive income | 36 | 55 | 28 | 211 | ||||
Total comprehensive income | 100 | 186 | 146 | 489 | ||||
Attributable to: | ||||||||
Equity holders of Constellium | 99 | 184 | 143 | 483 | ||||
Non-controlling interests | 1 | 2 | 3 | 6 | ||||
Total comprehensive income | 100 | 186 | 146 | 489 | ||||
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
(in millions of Euros) | At September 30, 2023 | At December 31, 2022 | ||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | 159 | 166 | ||
Trade receivables and other | 642 | 539 | ||
Inventories | 1,137 | 1,320 | ||
Other financial assets | 34 | 31 | ||
1,972 | 2,056 | |||
Non-current assets | ||||
Property, plant and equipment | 2,020 | 2,017 | ||
Goodwill | 482 | 478 | ||
Intangible assets | 50 | 54 | ||
Deferred tax assets | 228 | 271 | ||
Trade receivables and other | 40 | 43 | ||
Other financial assets | 3 | 8 | ||
2,823 | 2,871 | |||
Assets of disposal group classified as held for sale | - | 14 | ||
Total Assets | 4,795 | 4,941 | ||
Liabilities | ||||
Current liabilities | ||||
Trade payables and other | 1,354 | 1,467 | ||
Borrowings | 54 | 148 | ||
Other financial liabilities | 46 | 41 | ||
Income tax payable | 15 | 16 | ||
Provisions | 21 | 21 | ||
1,490 | 1,693 | |||
Non-current liabilities | ||||
Trade payables and other | 64 | 43 | ||
Borrowings | 1,855 | 1,908 | ||
Other financial liabilities | 14 | 14 | ||
Pension and other post-employment benefit obligations | 369 | 403 | ||
Provisions | 88 | 90 | ||
Deferred tax liabilities | 4 | 28 | ||
2,394 | 2,486 | |||
Liabilities of disposal group classified as held for sale | - | 10 | ||
Total Liabilities | 3,884 | 4,189 | ||
Equity | ||||
Share capital | 3 | 3 | ||
Share premium | 420 | 420 | ||
Retained earnings and other reserves | 466 | 308 | ||
Equity attributable to equity holders of Constellium | 889 | 731 | ||
Non-controlling interests | 22 | 21 | ||
Total Equity | 911 | 752 | ||
Total Equity and Liabilities | 4,795 | 4,941 | ||
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Constellium SE published this content on 25 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 October 2023 10:31:43 UTC.