Constellium SE Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Leadership Change: Jean-Marc Germain will retire as CEO on December 31, 2025, and Ingrid Joerg will assume the role of CEO. Jean-Marc will serve as a special adviser in 2026.
• Safety: Third quarter recordable case rate was 1.7 per million hours worked, with year-to-date at 1.8 per million hours worked.
• Financial Results: Shipments were 373,000 tons (+6% y-o-y), revenue $2.2 billion (+20% y-o-y), net income $88 million, adjusted EBITDA $235 million (+85% y-o-y, excluding $39M noncash metal price lag impact, adjusted EBITDA was $196M, a new third quarter record).
• Divestment: Completed divestment of Nanjing automotive structures plant.
• Tariff Environment: Gross tariff exposure is manageable, indirect impacts from tariffs are positive, including improved scrap spreads in the U.S.
• Disclosures Revision: Corrected immaterial errors affecting metal price lag and segment adjusted EBITDA for prior periods, resulting in slightly higher segment adjusted EBITDA.
• Cost Environment: Scrap spreads improved, energy costs moderately more favorable, other inflationary pressures eased; accelerated Vision 25 cost improvement program.
• Free Cash Flow: Generated $30 million in Q3, year-to-date $68 million; expects full-year 2025 free cash flow over $120 million.
• Share Buybacks: Repurchased 1.7 million shares for $25 million in Q3, year-to-date $75 million.
• End Market Outlooks: Aerospace backlogs at record levels, packaging demand healthy, automotive has regional differences, other specialties markets stabilized but remain weak.

Segment Performance

• A&T segment: Adjusted EBITDA was $90 million, which increased 67% compared to the third quarter of 2024. Volume was a tailwind of $6 million due to higher TID shipments (partially offset by lower aerospace shipments). Price and mix was a tailwind of $11 million, costs were a tailwind of $16 million, and FX and other was a tailwind of $3 million.
• Parts segment: Adjusted EBITDA was $82 million, increasing 14% compared to the third quarter of 2024. Volume was a tailwind of $11 million from higher packaging shipments (partially offset by lower automotive and specialty rolled products shipments). Price and mix was a tailwind of $3 million, costs were a headwind of $7 million, and FX and other was a tailwind of $3 million.
• AS&I segment: Adjusted EBITDA was $33 million, increasing 371% compared to the third quarter of 2024. Volume was a $9 million tailwind from higher industry extruded products shipments (partially offset by lower automotive shipments). Price and mix was an $18 million tailwind, costs were a headwind of $3 million, and FX and other was a tailwind of $2 million.

Guidance

• Raised 2025 adjusted EBITDA guidance to $670 million to $690 million, excluding noncash metal price lag impact.
• Maintains 2025 free cash flow guidance over $120 million.
• Reiterates long-term target of adjusted EBITDA, excluding noncash metal price lag, of $900 million and free cash flow of $300 million by 2028.
• Guidance assumes improvement in second half 2025 including tariff mitigations, customer compensations, favorable scrap purchasing, Valais ramp-up, and favorable foreign exchange translation.

Risks

• Tariffs creating macro uncertainty and impacting end markets like automotive.
• Volatility in scrap spreads, with potential for significant quarterly impacts.
• Weakness in certain end markets, particularly automotive in Europe and some specialty markets.
• Supply chain challenges, although signs of easing in aerospace.