PARIS, Feb. 20, 2020 (GLOBE NEWSWIRE) — Constellium SE (NYSE: CSTM) today reported results for the fourth quarter and full year ended December 31, 2019.
Fourth quarter 2019 highlights:Shipments of 368 thousand metric tons, comparable to Q4 2018Revenue of €1.4 billion, down 2% compared to Q4 2018Net income of €22 million increased compared to net loss of €57 million in Q4 2018Adjusted EBITDA of €121 million, up 15% compared to Q4 2018Full year 2019 highlights:Shipments of 1.6 million metric tons, up 4% compared to 2018Revenue of €5.9 billion, up 4% compared to 2018Net income of €64 million decreased compared to net income of €190 million in 2018Adjusted EBITDA of €562 million, up 13% compared to 2018Cash from Operations of €447 million and Free Cash Flow of €175 millionNet debt / LTM Adjusted EBITDA of 3.9x at December 31, 2019Project 2019 run-rate cost savings of €78 million achieved at December 31, 2019Jean-Marc Germain, Constellium’s Chief Executive Officer said, “Constellium delivered strong results in 2019. Our Adjusted EBITDA of €562 million increased by 13%, driven by excellent performance from our Packaging and Automotive Rolled Products and Aerospace and Transportation segments. Notably, 2019 represented our third consecutive year of double digit Adjusted EBITDA growth. Our Free Cash Flow of €175 million was very strong and delivers on an important financial target that we set in March 2017. We also made substantial progress on our deleveraging objective in 2019, repaying gross debt during the year and reducing leverage to 3.9x at year end. Overall, I am proud of Constellium’s performance in 2019.”Mr. Germain continued, “I am optimistic about 2020. Based on our current outlook, we expect Adjusted EBITDA growth of 6% to 9% and Free Cash Flow generation of €125 million to €175 million in 2020. We remain on track to deliver on our long-term targets of Adjusted EBITDA over €700 million and leverage of 2.5x in 2022. We are committed to shareholder value creation through the execution of our strategy.”Group SummaryThe 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 fourth quarter of 2019, shipments of 368 thousand metric tons declined slightly compared to the fourth quarter of last year due to lower shipments in the Aerospace and Transportation segment. Revenue of €1.4 billion decreased 2% compared to the fourth quarter of last year primarily due to lower metal prices and lower shipments in the Aerospace and Transportation segment, partially offset by the consolidation of Bowling Green and improved price and mix. Net income of €22 million increased compared to net loss of €57 million in the fourth quarter of 2018. Adjusted EBITDA of €121 million increased 15% compared to the fourth quarter of last year due to improved results in the Packaging and Automotive Rolled Products and the Aerospace and Transportation segments.For the full year of 2019, shipments of 1.6 million metric tons increased 4% compared to last year on higher shipments in the Packaging and Automotive Rolled Products segment, partially due to the consolidation of Bowling Green. Revenue of €5.9 billion increased 4% compared to last year primarily due to the consolidation of Bowling Green and improved price and mix, partially offset by lower metal prices. Net income of €64 million decreased compared to net income of €190 million in 2018. Adjusted EBITDA of €562 million increased 13% compared to last year on improved results in the Aerospace and Transportation and the Packaging and Automotive Rolled Products segments, partially offset by weaker results in the Automotive Structures and Industry segment.Results by SegmentPackaging and Automotive Rolled Products (P&ARP)Fourth quarter Adjusted EBITDA increased 13% compared to the fourth quarter of 2018 primarily due to favorable metal costs and improved price and mix, partially offset by incremental costs from the ramp up of our automotive programs.For the fourth quarter of 2019, shipments of 255 thousand metric tons were comparable to the fourth quarter of last year as higher shipments of Automotive rolled products, partially due to the consolidation of Bowling Green, were offset by lower Packaging rolled product shipments. Revenue of €711 million decreased 3% compared to the fourth quarter of 2018 primarily due to lower shipments and lower metal prices, partially offset by the consolidation of Bowling Green.For the full year of 2019, Adjusted EBITDA of €273 million increased 12% compared to last year primarily due to higher shipments and favorable metal costs, partially offset by weaker price and mix and incremental costs from maintenance and the ramp up of our automotive programs. Shipments of 1.1 million metric tons increased 6% compared to last year on higher shipments of both Packaging and Automotive rolled products, partially due to the consolidation of Bowling Green. Revenue of €3.1 billion increased 3% compared to last year primarily due to the consolidation of Bowling Green, partially offset by lower metal prices.Aerospace and Transportation (A&T)Fourth quarter Adjusted EBITDA increased 18% as compared to the fourth quarter of 2018 due to improved price and mix, partially offset by lower shipments and higher costs.For the fourth quarter of 2019, shipments of 56 thousand metric tons decreased 6% compared to last year as lower Transportation, Industry and Other rolled product shipments were partially offset by higher Aerospace rolled product shipments. Revenue of €350 million was comparable to last year as improved price and mix was offset by lower shipments and lower metal prices.For the full year of 2019, Adjusted EBITDA of €204 million increased 34% compared to last year on improved price and mix, partially offset by higher costs. Shipments of 242 thousand metric tons decreased 2% compared to last year as lower Transportation, Industry and Other rolled product shipments were largely offset by higher Aerospace rolled product shipments. Revenue of €1.5 billion increased 5% compared to last year primarily due to improved price and mix, partially offset by lower metal prices and lower shipments.Automotive Structures and Industry (AS&I)Fourth quarter Adjusted EBITDA was comparable to the fourth quarter of 2018 as growth in Automotive extrusion revenues was offset by continued elevated costs related to our footprint expansion and operational challenges on some of our newer automotive programs.For the fourth quarter of 2019, shipments of 57 thousand metric tons were comparable to the fourth quarter of last year as higher Automotive extruded product shipments were offset by lower Other extruded product shipments. Revenue of €324 million was comparable to the fourth quarter of 2018 as improved price and mix was offset by lower metal prices.For the full year of 2019, Adjusted EBITDA of €106 million decreased 15% compared to last year primarily due to higher costs related to our footprint expansion and operational challenges on some of our newer automotive programs, partially offset by growth in Automotive extrusion revenue. Shipments of 250 thousand metric tons were comparable to last year as higher Automotive extruded product shipments were offset by lower Other extruded product shipments. Revenue of €1.4 billion increased 5% compared to last year primarily due to improved price and mix, partially offset by lower metal prices.Net IncomeFor the fourth quarter of 2019, net income of €22 million increased compared to a net loss of €57 million in the fourth quarter of last year. The change in net income is primarily related to a favorable change in unrealized gains and losses on derivatives related to our commodity hedging positions.For the full year of 2019, net income of €64 million decreased compared to a net income of €190 million in the prior year. The change in net income is primarily related to a gain from the sale of the North Building at Sierre and a gain on OPEB amendments in 2018, partially offset by a favorable change in unrealized gains and losses on derivatives and improved gross profit in 2019.Cash Flow and LiquidityFree Cash Flow was €175 million for the full year of 2019 compared to an outflow of €225 million in the prior year. The change was primarily due to improved working capital performance.Cash flows from operating activities were €447 million for the full year of 2019 compared to cash flows from operating activities of €66 million in the prior year. Constellium increased factored receivables by €17 million for the full year of 2019 compared to a decrease of €27 million in the prior year.Cash flows used in investing activities were €353 million for the full year of 2019 compared to cash flows used in investing activities of €91 million in the prior year. The full year of 2019 included a net €83 million outflow related to the acquisition of our partner’s 49% interest in the Bowling Green joint venture. The full year of 2018 included €198 million of proceeds from disposals net of cash related to the sale of the North Building at Sierre.Cash flows used in financing activities were €76 million for the full year of 2019 compared to cash flows used in financing activities of €82 million in the prior year. The full year of 2019 included the €100 million partial redemption of the 4.625% Senior Notes due 2021 and a €54 million lease redemption associated with the acquisition of Bowling Green.Liquidity at December 31, 2019 was €516 million, comprised of €184 million of cash and cash equivalents and €332 million available under our committed lending facilities and factoring arrangements.Net debt was €2,183 million at December 31, 2019 compared to €1,996 million at December 31, 2018. The increase in net debt is primarily attributable to the acquisition of Bowling Green, the implementation of IFRS 16, and foreign exchange impacts, partially offset by the debt repayments noted above.OutlookWe expect Adjusted EBITDA growth in a range of 6% to 9% in 2020 and over €700 million of Adjusted EBITDA in 2022.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 statementsCertain 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; 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 ConstelliumConstellium (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 fourth quarter and full year ended December 31, 2019, are also available on the company’s website (www.constellium.com).
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS) (UNAUDITED)CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)SEGMENT ADJUSTED EBITDASHIPMENTS AND REVENUE BY PRODUCT LINENON-GAAP MEASURESReconciliation of net income to Adjusted EBITDA (a non-GAAP measure)Metal price lag represents the financial impact of the timing difference between when aluminium prices included within Constellium Revenues 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 calculated 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 year.For the years ended December 31, 2019 and 2018, start-up and development costs include €11 million and €21 million, respectively, related to new projects in our AS&I operating segment.For the year ended December 31, 2019, Bowling Green one-time costs related to the acquisition include the non-cash reversal of the inventory step-up.For the year ended December 31, 2018, the Group amended one of its OPEB plans in the U.S., which resulted in a €36 million gain.In July 2018, Constellium completed the sale of the North Building assets of its Sierre plant in Switzerland to Novelis and contributed the Sierre site shared infrastructure to a joint-venture with Novelis, in exchange for cash consideration of €200 million. This transaction also resulted in the termination of the existing lease agreement for the North Building assets which had been leased and operated by Novelis since 2005. For the year ended December 31, 2018, the transaction generated a €190 million net gain.Reconciliation of net cash flows from operating activities to Free Cash Flow (a non-GAAP measure)Reconciliation of borrowings to Net debt (a non-GAAP measure)Non-GAAP measuresIn 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.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.
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