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Published: 2020-10-27 16:53:02 ET
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EX-99.1 2 d27877dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

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Constellium Reports Third Quarter 2020 Results

Paris, October 27, 2020 – Constellium SE (NYSE: CSTM) today reported results for the third quarter ended September 30, 2020.

For the third quarter of 2020:

 

   

Shipments of 354 thousand metric tons, down 11% compared to Q3 2019

 

   

Revenue of €1.2 billion, down 20% compared to Q3 2019

 

   

Net income of €20 million compared to net income of €1 million in Q3 2019

 

   

Adjusted EBITDA of €126 million, down 9% compared to Q3 2019

 

   

Cash from Operations of €111 million and Free Cash Flow of €75 million

For the first nine months of 2020:

 

   

Shipments of 1.1 million metric tons, down 14% compared to YTD 2019

 

   

Revenue of €3.6 billion, down 20% compared to YTD 2019

 

   

Net loss of €43 million compared to net income of €42 million in YTD 2019

 

   

Adjusted EBITDA of €354 million, down 20% compared to YTD 2019

 

   

Cash from Operations of €263 million and Free Cash Flow of €129 million

 

   

Net debt / LTM Adjusted EBITDA of 4.3x as of September 30, 2020

Jean-Marc Germain, Constellium’s Chief Executive Officer said, “I am very proud of our third quarter results, including our Free Cash Flow performance of €75 million in the quarter. Packaging & Automotive Rolled Products reported record quarterly Adjusted EBITDA. Aerospace & Transportation maintained a strong focus on costs in the face of difficult market conditions. Automotive Structures & Industry benefited from better-than-expected market conditions and improved operational performance in Automotive Structures. These results further demonstrate the benefits of our end market diversification and our intense focus on costs.”

Mr. Germain continued, “Based on our current outlook, we expect Adjusted EBITDA of €450 million to €460 million and Free Cash Flow generation of €100 million to €150 million in 2020.”

 

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Group Summary

 

     Q3
2020
     Q3
2019
     Var.     YTD
2020
    YTD
2019
     Var.  

Shipments (k metric tons)

     354      395      (11 )%      1,057     1,221      (14 )% 

Revenue (€ millions)

     1,172      1,461      (20 )%      3,640     4,535      (20 )% 

Net income / (loss) (€ millions)

     20      1      n.m.       (43     42      n.m.  

Adjusted EBITDA (€ millions)

     126      139      (9 )%      354     441      (20 )% 

Adjusted EBITDA per metric ton (€)

     355      351      1     335     361      (7 )% 

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 2020, shipments of 354 thousand metric tons decreased 11% compared to the third quarter of 2019 due to lower shipments in all three segments. Revenue of €1.2 billion decreased 20% compared to the third quarter of 2019 due to lower shipments and lower metal prices. Net income of €20 million compared to net income of €1 million in the third quarter of 2019. Adjusted EBITDA of €126 million decreased 9% compared to the third quarter of 2019 due to weaker results in the Aerospace and Transportation segment.

For the first nine months of 2020, shipments of 1.1 million metric tons decreased 14% compared to the first nine months of 2019 due to lower shipments in all three segments. Revenue of €3.6 billion decreased 20% compared to the first nine months of 2019 primarily due to lower shipments and lower metal prices partially offset by improved price and mix. Net loss of €43 million compared to a net income of €42 million in the first nine months of 2019. Adjusted EBITDA of €354 million decreased 20% compared to the first nine months of 2019 due to weaker results in the Aerospace and Transportation and the Automotive Structures and Industry segments.


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Results by Segment

 

Packaging and Automotive Rolled Products (P&ARP)

 

     Q3
2020
     Q3
2019
     Var.     YTD
2020
     YTD
2019
     Var.  

Shipments (k metric tons)

     258      277      (7 )%      748      842      (11 )% 

Revenue (€ millions)

     672      789      (15 )%      1,989      2,438      (18 )% 

Adjusted EBITDA (€ millions)

     85      72      20     209      210      0

Adjusted EBITDA per metric ton (€)

     332      259      28     280      250      12

For the third quarter of 2020, Adjusted EBITDA increased 20% compared to the third quarter of 2019 primarily due to strong cost control, partially offset by lower shipments. Shipments of 258 thousand metric tons decreased 7% compared to the third quarter of 2019 due to lower shipments of packaging and specialty products. Revenue of €672 million decreased 15% compared to the third quarter of 2019, primarily due to lower metal prices and lower shipments.

For the first nine months of 2020, Adjusted EBITDA was comparable to the first nine months of 2019 due to strong cost control, offset by lower shipments. Shipments of 748 thousand metric tons decreased 11% compared to the first nine months of 2019 due to lower shipments across packaging, automotive and specialty products. Revenue of €2.0 billion decreased 18% compared to the first nine months of 2019, primarily due to lower shipments and lower metal prices.

 

Aerospace and Transportation (A&T)

 

     Q3
2020
     Q3
2019
     Var.     YTD
2020
     YTD
2019
     Var.  

Shipments (k metric tons)

     36      57      (37 )%      140      186      (25 )% 

Revenue (€ millions)

     202      351      (43 )%      811      1,112      (27 )% 

Adjusted EBITDA (€ millions)

     10      43      (77 )%      93      159      (41 )% 

Adjusted EBITDA per metric ton (€)

     275      740      (63 )%      666      854      (22 )% 

For the third quarter of 2020, Adjusted EBITDA decreased 77% compared to the third quarter of 2019 primarily due to lower shipments due to continued challenging market conditions from the COVID-19 pandemic, partially offset by strong cost control. Shipments of 36 thousand metric tons decreased 37% compared to the third quarter of 2019 due to lower shipments of aerospace and TID products. Revenue of €202 million decreased 43% compared to the third quarter of 2019 due to lower shipments and lower metal prices.


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For the first nine months of 2020, Adjusted EBITDA decreased 41% compared to the first nine months of 2019 primarily due to lower shipments, partially offset by strong cost control and improved price and mix. Shipments of 140 thousand metric tons decreased 25% compared to the first nine months of 2019 due to lower shipments of aerospace and TID products. Revenue of €811 million decreased 27% compared to the first nine months of 2019 due to lower shipments and lower metal prices, partially offset by improved price and mix.

 

Automotive Structures and Industry (AS&I)

 

     Q3
2020
     Q3
2019
     Var.     YTD
2020
     YTD
2019
     Var.  

Shipments (k metric tons)

     60      61      (3 )%      169      193      (13 )% 

Revenue (€ millions)

     304      336      (9 )%      868      1,027      (15 )% 

Adjusted EBITDA (€ millions)

     33      26      25     66      85      (23 )% 

Adjusted EBITDA per metric ton (€)

     551      428      29     389      439      (11 )% 

For the third quarter of 2020, Adjusted EBITDA increased 25% compared to the third quarter of 2019 due to strong cost control. Shipments of 60 thousand metric tons decreased 3% compared to the third quarter of 2019 on lower shipments of Industry products. Revenue of €304 million decreased 9% compared to the third quarter of 2019 primarily due to lower metal prices and lower shipments.

For the first nine months of 2020, Adjusted EBITDA decreased 23% compared to the first nine months of 2019 primarily due to lower shipments, partially offset by strong cost control. Shipments of 169 thousand metric tons decreased 13% compared to the first nine months of 2019 on lower shipments of automotive and industry products. Revenue of €868 million decreased 15% compared to the first nine months of 2019 due to lower shipments and lower metal prices.

 

Net Income

For the third quarter of 2020, net income of €20 million compared to net income of €1 million in the third quarter of last year. The change in net income is primarily related to a favorable change in gains and losses on derivatives related to our commodity hedging positions, reduced selling and administrative expenses and lower finance costs, partially offset by lower gross profit.

For the first nine months of 2020, a net loss of €43 million compared to net income of €42 million in the first nine months of last year. The change is primarily related to lower gross profit and an unfavorable change in gains and losses on derivatives related to our commodity hedging positions, partially offset by a change in income taxes and reduced selling and administrative expenses.


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Cash Flow

Free Cash Flow was €129 million for the first nine months of 2020 compared to €157 million in the same period of the prior year. The change was primarily due to weaker Adjusted EBITDA and less of a benefit from trade working capital, partially offset by lower capital expenditures, interest expense, and income taxes.

Cash flows from operating activities were €263 million for the first nine months of 2020 compared to cash flows from operating activities of €340 million in the same period of the prior year. Constellium decreased factored receivables by €76 million for the first nine months compared to an increase of €19 million in the same period of the prior year.

Cash flows used in investing activities were €133 million for the first nine months of 2020 compared to cash flows used in investing activities of €265 million in the same period of the prior year. Capital spending was lower in 2020 to reflect market conditions. The first nine months of 2019 included a net €83 million outflow related to the acquisition of our partner’s 49% interest in the Bowling Green joint venture.

Cash flows from financing activities were €122 million for the first nine months of 2020 compared to cash flows used in financing activities of €90 million in the same period of the prior year. In the first nine months of 2020, Constellium raised $325 million of 5.625% Senior Notes due 2028, using a portion of the proceeds to redeem the remaining balance of the 4.625% Senior Notes due 2021, and entered into a €180 million loan partially guaranteed by the French State and a CHF 20 million facility partially guaranteed by the Swiss Government. The first nine months of 2019 included a €54 million lease redemption associated with the acquisition of Bowling Green and a €100 million partial redemption of the 4.625% Senior Notes due 2021.

 

Liquidity and Net Debt

Liquidity at September 30, 2020 was €1,018 million, comprised of €432 million of cash and cash equivalents and €586 million available under our committed lending facilities and factoring arrangements. Liquidity at September 30, 2020 includes the undrawn $166 million Delayed Draw Term Loan, which can be drawn until May 1, 2021.

Net debt was €2,050 million at September 30, 2020 compared to €2,183 million at December 31, 2019.


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Outlook

Based on our current outlook, we expect Adjusted EBITDA in a range of €450 million to €460 million in 2020.

We are not able to provide a reconciliation of this Adjusted EBITDA guidance to net income, the comparable GAAP measure, because certain items that are excluded from Adjusted EBITDA cannot be reasonably predicted or are not in our control. In particular, we are unable to forecast the timing or magnitude of realized and unrealized gains and losses on derivative instruments, metal lag, impairment or restructuring charges, or taxes without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, net income in the future.

 

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 aerospace, automotive and packaging. Constellium generated €5.9 billion of revenue in 2019.

Constellium’s earnings materials for the third quarter ended September 30, 2020, are also available on the company’s website (www.constellium.com).


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CONSOLIDATED INCOME STATEMENT (UNAUDITED)

 

     Three months ended
September 30,
    Nine months ended
September 30,
 

(in millions of Euros)

   2020     2019     2020     2019  

Revenue

     1,172     1,461     3,640     4,535

Cost of sales

     (1,052     (1,316     (3,298     (4,064
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     120     145     342     471
  

 

 

   

 

 

   

 

 

   

 

 

 

Selling and administrative expenses

     (55     (66     (178     (204

Research and development expenses

     (9     (12     (29     (36

Restructuring costs

     (2     (1     (13     (2

Other gains and losses - net

     10     (15     (53     (29
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     64     51     69     200
  

 

 

   

 

 

   

 

 

   

 

 

 

Finance costs - net

     (37     (46     (124     (135

Share of income of joint-ventures

                       5
  

 

 

   

 

 

   

 

 

   

 

 

 

Income / (loss) before income tax

     27     5     (55     70
  

 

 

   

 

 

   

 

 

   

 

 

 

Income tax (expense) / benefit

     (7     (4     12     (28
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income / (loss)

     20     1     (43     42
  

 

 

   

 

 

   

 

 

   

 

 

 

Income / (loss) attributable to:

        

Equity holders of Constellium

     19           (45     39

Non-controlling interests

     1     1     2     3
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income / (loss)

     20     1     (43     42
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share attributable to the equity holders of Constellium,
in euros per share

        

Basic

     0.13     0.00       (0.33     0.29  

Diluted

     0.13     0.00       (0.33     0.28  

Weighted average shares,
in thousands

        

Basic

     139,209     137,131     139,032     136,609

Diluted

     143,002     141,911     139,032     141,911


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

 

     Three months ended
September 30,
    Nine months ended
September 30,
 

(in millions of Euros)

   2020     2019     2020     2019  

Net income / (loss)

     20     1     (43     42  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

        

Items that will not be reclassified subsequently to the Unaudited Interim Consolidated Income Statement

        

Remeasurement on post-employment benefit obligations

     (12     (48     (53     (110

Income tax on remeasurement on post-employment benefit obligations

     3     8     12     23  

Items that may be reclassified subsequently to the Unaudited Interim Consolidated Income Statement

        

Cash flow hedges

     12     (10     12     (15

Net investment hedges

     —         —         —         4  

Income tax on hedges

     (4     3     (4     5  

Currency translation differences

     (8     5     (10     4  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

     (9     (42     (43     (89
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income / (loss)

     11     (41     (86     (47
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Equity holders of Constellium

     10     (42     (88     (50

Non-controlling interests

     1     1     2     3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income / (loss)

     11     (41     (86     (47
  

 

 

   

 

 

   

 

 

   

 

 

 


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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

 

(in millions of Euros)

   At September 30,
2020
    At December 31,
2019
 

Assets

    

Current assets

    

Cash and cash equivalents

     432     184

Trade receivables and other

     467     474

Inventories

     607     670

Other financial assets

     23     22
  

 

 

   

 

 

 
     1,529     1,350
  

 

 

   

 

 

 

Non-current assets

    

Property, plant and equipment

     1,971     2,056

Goodwill

     437     455

Intangible assets

     64     70

Investments accounted for under the equity method

     1     1

Deferred income tax assets

     218     185

Trade receivables and other

     67     60

Other financial assets

     8     7
  

 

 

   

 

 

 
     2,766     2,834
  

 

 

   

 

 

 

Total Assets

     4,295     4,184
  

 

 

   

 

 

 

Liabilities

    

Current liabilities

    

Trade payables and other

     1,010     999

Borrowings

     85     201

Other financial liabilities

     43     35

Income tax payable

     20     14

Provisions

     27     23
  

 

 

   

 

 

 
     1,185     1,272
  

 

 

   

 

 

 

Non-current liabilities

    

Trade payables and other

     29     21

Borrowings

     2,371     2,160

Other financial liabilities

     31     23

Pension and other post-employment benefit obligations

     714     670

Provisions

     98     99

Deferred income tax liabilities

     27     24
  

 

 

   

 

 

 
     3,270     2,997
  

 

 

   

 

 

 

Total Liabilities

     4,455     4,269
  

 

 

   

 

 

 

Equity

    

Share capital

     3     3

Share premium

     420     420

Retained deficit and other reserves

     (596     (519
  

 

 

   

 

 

 

Equity attributable to equity holders of Constellium

     (173     (96

Non controlling interests

     13     11
  

 

 

   

 

 

 

Total Equity

     (160     (85
  

 

 

   

 

 

 

Total Equity and Liabilities

     4,295     4,184
  

 

 

   

 

 

 


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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

 

(in millions of Euros)

  Share
capital
    Share
premium
    Re-
measurement
    Cash flow
hedges
    Foreign
currency
translation
reserve
    Other
reserves
    Retained
losses
    Total Equity
holders of
Constellium
    Non-
controlling
interests
    Total
equity
 

At January 1, 2020

    3     420     (177     (10     4     53     (389     (96     11     (85

Net (loss) / income

                                        (45     (45     2     (43

Other comprehensive (loss) / income

                (41     8     (10                 (43           (43
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive (loss) / income

                (41     8     (10           (45     (88     2     (86
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with equity holders

                   

Share-based compensation

                                  11           11           11
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At September 30, 2020

    3     420     (218     (2     (6     64     (434     (173     13     (160
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(in millions of Euros)

  Share
capital
    Share
premium
    Re-
measurement
    Cash flow
hedges
and net
investment
hedges
    Foreign
currency
translation
reserve
    Other
reserves
    Retained
losses
    Total Equity
holders of
Constellium
    Non-controlling
interests
    Total
equity
 

At January 1, 2019

    3     420     (129     (8     3     37     (448     (122     8     (114

Net income

                                        39     39     3     42

Other comprehensive (loss) / income

                (87     (6     4                 (89           (89
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive (loss) / income

                (87     (6     4           39     (50     3     (47
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with equity holders

                   

Share-based compensation

                                  12           12           12

Transactions with non-controlling interests

                                                           
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At September 30, 2019

    3     420     (216     (14     7     49     (409     (160     11     (149
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


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CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

 

     Three months ended
September 30,
    Nine months ended
September 30,
 

(in millions of Euros)

   2020     2019     2020     2019  

Net income / (loss)

     20     1     (43     42

Adjustments

        

Depreciation, amortization and impairment

     73     66     210     183

Finance costs - net

     37     46     124     135

Income Tax expense / (benefit)

     7     4     (12     28

Share of income of joint-ventures

     —         —         —         (5

Unrealized (gains) / losses on derivatives - net and from remeasurement of monetary assets and liabilities - net

     (13     5     (2     (12

Losses on disposal

     2     —         2     2

Other - net

     3     3     16     9

Interest paid

     (45     (54     (118     (132

Income tax paid

     (7     8     11     (3

Change in trade working capital

        

Inventories

     15     34     50     58

Trade receivables

     (19     12     (12     (17

Trade payables

     38     (29     20     75

Margin calls

     —         —         —         5

Change in provisions and pension obligations

     (8     (3     (6     (18

Other working capital

     8     (13     23     (10
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from operating activities

     111     80     263     340
  

 

 

   

 

 

   

 

 

   

 

 

 

Purchases of property, plant and equipment

     (36     (50     (134     (180

Acquisition of subsidiaries net of cash acquired

     —         —         —         (83

Proceeds from disposals, net of cash

     —         —         1     1

Other investing activities

     —         1     —         (3
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows used in investing activities

     (36     (49     (133     (265
  

 

 

   

 

 

   

 

 

   

 

 

 

Proceeds from issuance of Senior Notes

     —         —         290     —    

Repayment of Senior Notes

     —         (100     (200     (100

Proceeds from French loan

     —         —         180     —    

Proceeds from Swiss credit facility

     —         —         18     —    

Lease repayments

     (8     (9     (25     (79

(Repayments) / proceeds from U.S. revolving credit facility and other loans

     (8     12     (132     88

Payment of deferred financing costs

     —         —         (9     —    

Transactions with non-controlling interests

     —         —         —         (2

Other financing activities

     (2     3     —         3
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash flows from / (used in) financing activities

     (18     (94     122     (90
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase / (decrease) in cash and cash equivalents

     57     (63     252     (15

Cash and cash equivalents - beginning of period / year

     378     213     184     164

Effect of exchange rate changes on cash and cash equivalents

     (3     2     (4     3
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents - end of period

     432     152     432     152
  

 

 

   

 

 

   

 

 

   

 

 

 


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ADJUSTED EBITDA BY SEGMENT

 

     Three months ended
September 30,
    Nine months ended
September 30,
 

(in millions of Euros)

   2020     2019     2020     2019  

P&ARP

     85     72     209     210

A&T

     10     43     93     159

AS&I

     33     26     66     85

H&C

     (2     (2     (14     (13
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     126     139     354     441
  

 

 

   

 

 

   

 

 

   

 

 

 

SHIPMENTS AND REVENUE BY PRODUCT LINE

 

     Three months ended
September 30,
    Nine months ended
September 30,
 

(in k metric tons)

   2020     2019     2020     2019  

Packaging rolled products

     192     211     584     630

Automotive rolled products

     60     56     145     178

Specialty and other thin-rolled products

     6     10     19     34

Aerospace rolled products

     15     28     64     89

Transportation, industry, defense and other rolled products

     21     29     76     97

Automotive extruded products

     31     31     77     92

Other extruded products

     29     30     92     101
  

 

 

   

 

 

   

 

 

   

 

 

 

Total shipments

     354     395     1,057     1,221
  

 

 

   

 

 

   

 

 

   

 

 

 
     Three months ended
September 30,
    Nine months ended
September 30,
 

(in millions of Euros)

   2020     2019     2020     2019  

Packaging rolled products

     463     560     1,443     1,676

Automotive rolled products

     185     191     466     630

Specialty and other thin-rolled products

     24     38     80     132

Aerospace rolled products

     110     201     475     630

Transportation, industry, defense and other rolled products

     92     150     336     482

Automotive extruded products

     187     202     482     589

Other extruded products

     117     134     386     438

Other and inter-segment eliminations

     (6     (15     (28     (42
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     1,172     1,461     3,640     4,535
  

 

 

   

 

 

   

 

 

   

 

 

 


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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)

   2020     2019     2020     2019  

Net income / (loss)

     20     1     (43     42

Income tax expense / (benefit)

     7     4     (12     28
  

 

 

   

 

 

   

 

 

   

 

 

 

Income / (loss) before income tax

     27     5     (55     70

Finance costs - net

     37     46     124     135

Share of income of joint-ventures

     —         —         —         (5
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     64     51     69     200

Depreciation and amortization

     64     66     196     183

Impairment of assets

     9     —         14     —    

Restructuring costs

     2     1     13     2

Unrealized (gains) / losses on derivatives

     (9     4     1     (13

Unrealized exchange (gains) / losses from remeasurement of monetary assets and liabilities – net

     (2     —         (1     —    

Losses on pension plans amendments

     —         1     2     1

Share-based compensation costs

     3     5     11     12

Metal price lag (A)

     (7     9     33     40

Start-up and development costs (B)

     1     3     5     8

Losses on disposals

     2     —         2     2

Bowling Green one-time costs related to the acquisition (C)

     —         —         —         6

Other (D)

     (1     (1     9      
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     126     139     354     441
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(A)

Metal price lag represents the financial impact of the timing difference between when aluminium prices included within Constellium Revenue are established and when aluminium purchase prices included in Cost of sales are established. The Group accounts for inventory using a weighted average price basis and this adjustment aims to remove the effect of volatility in LME prices. The calculation of the Group metal price lag adjustment is based on an internal standardized methodology applied at each of Constellium’s manufacturing sites and is primarily calculated as the average value of product recorded in inventory, which approximates the spot price in the market, less the average value transferred out of inventory, which is the weighted average of the metal element of cost of sales, based on the quantity sold in the period.

(B)

Start-up and development costs in the nine months ended September 30, 2020 and 2019 were related to new projects in our AS&I operating segment.

(C)

Bowling Green one-time costs related to the acquisition in the nine months ended September 30, 2019, was the non-cash reversal of the inventory step-up.

(D)

Other in the nine months ended September 30, 2020 includes i) €4 million of procurement penalties and termination fees incurred because of the Group’s inability to fulfill certain commitments due to the Covid-19 pandemic and ii) a €5 million loss resulting from the 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.


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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)

   2020     2019     2020     2019  

Net cash flows from operating activities

     111     80     263     340

Purchases of property, plant and equipment

     (36     (50     (134     (180

Other investing activities

     —         1     —         (3
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

     75     31     129     157
  

 

 

   

 

 

   

 

 

   

 

 

 

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

 

(in millions of Euros)

   At September 30,
2020
    At December 31,
2019
 

Borrowings

     2,456     2,361

Fair value of cross currency basis swaps, net of margin calls

     26     6

Cash and cash equivalents

     (432     (184
  

 

 

   

 

 

 

Net debt

     2,050     2,183
  

 

 

   

 

 

 


LOGO

 

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.


LOGO

 

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.