Constellium SE Q2 FY2025 earnings call

• Safety: Recordable case rate in Q2 was 2.6 per million hours worked, YTD 1.8 per million hours worked, aiming for 1.5. - Financial results: Shipments 384,000 tons (+2% y-o-y), revenue $2.1 billion (+9% y-o-y), net income $36 million vs $77 million y-o-y, adjusted EBITDA $146 million (includes -$13M noncash metal price lag), free cash flow $41M, leverage 3.6x at end of Q2. - Tariffs: Mixed impact, some opportunities and costs, monitoring fluid situation, optimizing capacity. - End markets: Aerospace backlogs robust but supply chains adjusting, packaging demand healthy, automotive production weak with tariff impact, other specialties with mixed demand.

A&T segment: Adjusted EBITDA was $78 million, decreased 13% compared to the second quarter last year. Volume was a headwind of $18 million, price and mix was a tailwind of $2 million, costs were a tailwind of $2 million, and FX and other was a tailwind of $2 million. P&ARP segment: Adjusted EBITDA was $74 million, increased 12% compared to the second quarter last year. Volume was a tailwind of $14 million, price and mix was a headwind of $7 million, costs were a modest headwind of $1 million, and FX and other was a tailwind of $2 million. AS&I segment: Adjusted EBITDA was $18 million, decreased 40% compared to the second quarter of last year. Volume was a $1 million headwind, price and mix was a $16 million headwind, costs were a tailwind of $5 million. Holdings and corporate expense was $12 million in the quarter, up $6 million from last year.

• Raising 2025 adjusted EBITDA excluding noncash metal price lag to $620M-$650M and free cash flow over $120M. - Long-term targets: Adjusted EBITDA excluding noncash metal price lag $900M and free cash flow $300M in 2028.

• Tariff and trade uncertainties impacting end markets like automotive. - Macro uncertainty affecting various segments. - Metal price and scrap spread fluctuations.

Q: Can you dive a little bit into what gave you the confidence to raise the guidance this quarter? And detail on the cadence between 3Q and 4Q?

A: Jean-Marc Germain and Jack Guo discussed that first half performance, order book, packaging growth, Vision 25 program, scrap spreads, and foreign exchange being better than initial assumptions, while automotive weakness weighs down, with third quarter expected stronger than second and Q4 weaker than Q3 due to seasonality.

Q: Could you shed a little more color on what improvement you saw at Muscle Shoals during the quarter? And if you would and/or could pivot further ABS capacity to packaging in the meantime?

A: Jean-Marc Germain said packaging strength is due to healthy demand and automotive weakness allowing time for mills to focus on packaging, with Muscle Shoals operations stabilized through better manning, trading, and predictive maintenance, and potential for further improvements.

Q: In your comments, you talked about the shift in demand to the right from some products. Was that a general comment just on the overall aerospace cycle that we've seen over the last couple of quarters that we're adjusting to? Or is there any color you can provide just on the aerospace demand incremental either way in 2Q?

A: Jean-Marc Germain explained that shipments made a few years ago were higher than needed for current aircraft delivery, pushing demand to the right, not getting worse but just shifted, and space market demand for Airware products is lumpy but growing with good properties.

Q: It sounds like a listed in the positive category into the back half, but could you help us understand, I guess, if where spreads are today, is this more than off -- enough to more than offset the prior guidance of, I think it was a $15 million to $20 million quarter headwind? And are you seeing any change in flows in Europe just given the attractive pricing in the U.S. and maybe more flows getting shipped across the pond here?

A: Jean-Marc Germain said scrap spreads have widened, with open positions larger, and while there is some leakage from Europe to U.S., it's not material to operations.

Q: Do you expect to have any impact from the big beautiful bill, whether it's tax or otherwise?

A: Jack Guo said they are currently assessing the impact but do not anticipate significant impact on financial results this year.

Q: Can you just go back on the mid-cycle margin targets? So I think in aerospace, you mentioned a jump from $1,000 per ton to like $1,100 per ton. But can you just confirm that? And then on packaging, do you have any room to see like the price increase coming at some point, maybe not over the coming months, but I'm just kind of trying to see over the next 6 to 12 months?

A: Jean-Marc Germain confirmed aerospace and TID blended margin up from $1,000 to $1,100 per ton through the cycle, and on packaging, negotiations are going well with positive trends for pricing into 2026, though with multiyear contracts causing some inertia.