Constellium SE Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Safety: Strong safety performance with a recordable case rate of 1.02 per million hours worked, aiming to reduce it to 1.5 this year.
• Financial Results: Shipments 372,000 tons (-2% Y/Y), revenue $2 billion (+5% Y/Y), net income $38 million, adjusted EBITDA $186 million (includes $46 million non-cash metal price lag impact; excluding this, adjusted EBITDA $140 million). Free cash flow negative $3 million, expecting >$120 million for 2025.
• Section 232 Tariffs: Tariff situation is fluid; impacts both positively and negatively. Automotive structure business in U.S. affected by extrusions from Canada costing ~$20 million this year, working on pass-throughs. Aerospace shipments from Europe to U.S. not impacted. Scrap aluminum excluded from tariffs, beneficial.
• Vision '25: Accelerated cost reduction program to right-size cost structure, benefiting first quarter results with run rate benefits expected.

Segment Performance

• A&T Segment: Adjusted EBITDA was $75 million, a 14% decrease compared to first quarter 2024. Volume was a $20 million headwind due to lower aerospace and TID shipments. Price and mix was a $16 million headwind, while costs were a $25 million tailwind.
• P&ARP Segment: Adjusted EBITDA was $60 million, a 25% increase compared to first quarter 2024. Volume was a $4 million tailwind with higher packaging shipments offset by lower automotive and specialties shipments. Price and mix was a $9 million tailwind, costs a $2 million tailwind, and FX and other was a $3 million headwind.
• AS&I Segment: Adjusted EBITDA was $16 million, a 50% decrease compared to first quarter 2024. Volume was a $12 million headwind due to lower automotive and industry extruded products shipments. Price and mix was a $2 million headwind, and costs were a $1 million headwind.

Guidance

• Expect to generate free cash flow in excess of $120 million for 2025, unchanged from prior guidance.
• Maintain adjusted EBITDA guidance excluding non-cash metal price lag in range of $600 million to $630 million.
• Modestly reduce CapEx by ~5%-10% in 2025 to stay prudent.

Risks

• Tariff uncertainties with fluid trade policies creating broader macro uncertainty, especially impacting automotive end market.
• End market demand weakness across most segments except packaging.
• Lingering financial impact of the Valais flood on operations.

Q: Jean-Marc, you mentioned first quarter was ahead of expectations. Can you talk more about what drove that?

A: Good performance at Muscle Shoals plant and progress on Vision '25 cost reduction program.

Q: Katja asked about aerospace inventory issue. Is it behind?

A: Inventories are well in control, but supply chain still struggling to ramp up.

Q: Corinne asked about auto tariff cost impact. How much and cadence?

A: Gross impact before mitigation ~$20 million headwind, assumed fairly even across the year.

Q: Bill asked about tariff opportunities and scrap. How is scrap affecting?

A: Scrap spreads are better, helping, but included in guidance. Pass-throughs with customers to mitigate auto extrusion tariff impact.

Q: Josh asked about aerospace supply chain and European defense demand. How impacted?

A: Aerospace supply chain challenges continue, but fundamentals intact. European defense demand showing good signs with potential for increased production if spending is implemented.