PARIS, Feb. 21, 2024 (GLOBE NEWSWIRE) — Constellium SE (NYSE:CSTM) (“Constellium” or the “Company”) today reported results for the fourth quarter and full year ended December 31, 2023.
Fourth quarter 2023 highlights:
Shipments of 336 thousand metric tons, down 9% compared to Q4 2022
Revenue of €1.6 billion, down 13% compared to Q4 2022
Value-Added Revenue (VAR) of €681 million, down 2% compared to Q4 2022
Net income of €11 million compared to net income of €30 million in Q4 2022
Adjusted EBITDA of €171 million, up 15% compared to Q4 2022
Cash from Operations of €185 million and Free Cash Flow of €58 million
Full year 2023 highlights:
Shipments of 1.5 million metric tons, down 6% compared to 2022
Revenue of €7.2 billion, down 11% compared to 2022
VAR of €2.9 billion, up 7% compared to 2022
Net income of €129 million compared to net income of €308 million in 2022
Adjusted EBITDA of €713 million, up 6% compared to 2022
Cash from Operations of €506 million and Free Cash Flow of €170 million
Adjusted Return on Invested Capital (Adjusted ROIC) of 11.3%, up 30 bps compared to 2022
Net debt / LTM Adjusted EBITDA of 2.3x at December 31, 2023
Other highlights:
The Company today announces a three-year share repurchase program of up to $300 million expiring in December 2026
Jean-Marc Germain, Constellium’s Chief Executive Officer said, “Constellium delivered strong results in 2023, and I want to thank each of our 12,000 employees for their commitment and relentless focus on safety and serving our customers. 2023 was another year full of challenges including significant inflationary pressures and demand headwinds in several end markets. Despite these challenges, we achieved record Adjusted EBITDA of €713 million, including record results in our A&T segment. We also generated strong Free Cash Flow of €170 million and reduced our leverage to 2.3x.”
Mr. Germain continued, “Looking ahead to 2024, we expect aerospace demand to remain strong as the post-pandemic recovery continues. In packaging, canstock demand has stabilized in recent quarters and we are expecting modest growth versus last year. In automotive, despite some demand deceleration in the second half of 2023, we expect demand to remain healthy this year. We continue to experience weakness in most industrial markets to start the year. We are expecting inflationary pressures to continue in 2024, though at a lower rate than the last two years. We are confident in our ability to continue to offset a substantial portion of the impact with an improved top line and our relentless focus on cost control.”
Mr. Germain concluded, “While uncertainties persist on the macroeconomic and geopolitical fronts, we like our end market positioning and we are optimistic about our prospects for this year and beyond. Some of our end markets have continued to experience softness to start the year and the extreme cold weather and snow in January also impacted operations at Muscle Shoals, which we expect will lead to a weaker first quarter in 2024. Despite these challenges, based on our current outlook, we expect to achieve Adjusted EBITDA, which excludes the non-cash impact of metal price lag, of €740 million to €770 million and Free Cash Flow in excess of €130 million in 2024. We remain confident in our ability to deliver on our long-term target of Adjusted EBITDA, which excludes the non-cash impact of metal price lag, of over €800 million in 2025. As we are now within our target leverage range, I am also pleased to announce that our Board has authorized a three-year share repurchase program of up to $300 million expiring in December 2026. Our focus remains on executing our strategy and increasing shareholder value.”
Group Summary
Q4
2023
Q4
2022
Var.
FY
2023
FY
2022
Var.
Shipments (k metric tons)
336
368
(9)%
1,492
1,580
(6)%
Revenue (€ millions)
1,613
1,844
(13)%
7,239
8,120
(11)%
VAR (€ millions)
681
696
(2)%
2,924
2,725
7%
Net income (€ millions)
11
30
n.m.
129
308
n.m.
Adjusted EBITDA (€ millions)
171
148
15%
713
673
6%
Adjusted EBITDA per metric ton (€)
509
403
26%
478
426
12%
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 fourth quarter of 2023, shipments of 336 thousand metric tons decreased 9% compared to the fourth quarter of 2022 due to lower shipments in each of our segments. Revenue of €1.6 billion decreased 13% compared to the fourth quarter of the prior year primarily due to lower shipments and lower metal prices, partially offset by improved price and mix. VAR of €681 million decreased 2% compared to the fourth quarter of the prior year primarily due to lower shipments, unfavorable metal impacts, the sale of Constellium Extrusions Deutschland GmbH (“CED”) in September 2023 and unfavorable foreign exchange translation, partially offset by improved price and mix. Net income of €11 million decreased by €19 million compared to net income of €30 million in the fourth quarter of 2022. Adjusted EBITDA of €171 million increased 15% compared to the fourth quarter of last year due to stronger results in our A&T and P&ARP segments, partially offset by weaker results in our AS&I segment.
For the full year of 2023, shipments of 1.5 million metric tons decreased 6% compared to the full year of 2022 primarily due to lower shipments in the P&ARP and AS&I segments. Revenue of €7.2 billion decreased 11% compared to the full year of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix. VAR of €2.9 billion increased 7% compared to the full year of 2022 primarily due to improved price and mix, partially offset by lower shipments, unfavorable metal impacts and unfavorable foreign exchange translation. Net income of €129 million decreased €179 million compared to net income of €308 million in the full year of 2022. Adjusted EBITDA of €713 million increased 6% compared to the full year of 2022 due to stronger results in our A&T segment, partially offset by weaker results in our P&ARP and AS&I segments.
Results by Segment
Packaging & Automotive Rolled Products (P&ARP)
Q4
2023
Q4
2022
Var.
FY
2023
FY
2022
Var.
Shipments (k metric tons)
238
254
(6)%
1,030
1,089
(5)%
Revenue (€ millions)
865
1,008
(14)%
3,898
4,664
(16)%
Adjusted EBITDA (€ millions)
82
71
16%
283
326
(13)%
Adjusted EBITDA per metric ton (€)
345
278
24%
274
299
(8)%
For the fourth quarter of 2023, Adjusted EBITDA of €82 million increased 16% compared to the fourth quarter of 2022 primarily due to improved price and mix and improved overall costs, partially offset by lower shipments. Higher operating costs were more than offset by favorable metal costs, favorable inflation and energy-related government grants. Shipments of 238 thousand metric tons decreased 6% compared to the fourth quarter of the prior year due to lower shipments of packaging and specialty rolled products, partially offset by higher shipments of automotive rolled products. Revenue of €865 million decreased 14% compared to the fourth quarter of 2022 primarily due to lower shipments and lower metal prices.
For the full year of 2023, Adjusted EBITDA of €283 million decreased 13% compared to the full year of 2022 as a result of lower shipments and higher operating costs mainly due to inflation, operating challenges at our Muscle Shoals facility and unfavorable metal costs, partially offset by improved price and mix. Shipments of 1.0 million metric tons decreased 5% compared to the full year of 2022 due to lower shipments of packaging and specialty rolled products, partially offset by higher shipments of automotive rolled products. Revenue of €3.9 billion decreased 16% compared to the full year of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.
Aerospace & Transportation (A&T)
Q4
2023
Q4
2022
Var.
FY
2023
FY
2022
Var.
Shipments (k metric tons)
48
53
(9)%
219
223
(2)%
Revenue (€ millions)
408
422
(3)%
1,728
1,700
2%
Adjusted EBITDA (€ millions)
76
56
36
%
324
217
50%
Adjusted EBITDA per metric ton (€)
1,583
1,079
47
%
1,475
976
51%
For the fourth quarter of 2023, Adjusted EBITDA of €76 million increased 36% compared to the fourth quarter of 2022 primarily due to improved price and mix, partially offset by lower shipments and higher operating costs. Shipments of 48 thousand metric tons decreased 9% compared to the fourth quarter of 2022 on higher shipments of aerospace rolled products, more than offset by lower shipments of transportation, industry and defense (TID) rolled products. Revenue of €408 million decreased 3% compared to the fourth quarter of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.
For the full year of 2023, Adjusted EBITDA of €324 million increased 50% compared to the full year of 2022 primarily due to improved price and mix, partially offset by higher operating costs mainly due to inflation and increased activity levels. Shipments of 219 thousand metric tons decreased 2% compared to the full year of 2022 on higher shipments of aerospace rolled products, more than offset by lower shipments of TID rolled products. Revenue of €1.7 billion increased 2% compared to the full year of 2022 primarily due to improved price and mix, partially offset by lower metal prices.
Automotive Structures & Industry (AS&I)
Q4
2023
Q4
2022
Var.
FY
2023
FY
2022
Var.
Shipments (k metric tons)
50
61
(17)%
243
268
(9)%
Revenue (€ millions)
334
428
(22)%
1,630
1,861
(12)%
Adjusted EBITDA (€ millions)
25
31
(22)%
133
149
(11)%
Adjusted EBITDA per metric ton (€)
500
514
(3)%
545
557
(2)%
For the fourth quarter of 2023, Adjusted EBITDA of €25 million decreased 22% compared to the fourth quarter of 2022 primarily due to lower shipments and higher costs, partially offset by improved price and mix. Shipments of 50 thousand metric tons decreased 17% compared to the fourth quarter of 2022 on stable shipments of automotive extruded products and lower shipments of other extruded products including the impact from the sale of CED in September 2023. Revenue of €334 million decreased 22% compared to the fourth quarter of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.
For the full year of 2023, Adjusted EBITDA of €133 million decreased 11% compared to the full year of 2022 primarily due to lower shipments and higher operating costs mainly due to inflation, partially offset by improved price and mix. Shipments of 243 thousand metric tons decreased 9% compared to the full year of 2022 due to lower shipments of other extruded products including the impact from the sale of CED in September 2023, partially offset by higher shipments of automotive extruded products. Revenue of €1.6 billion decreased 12% compared to the full year of 2022 primarily due to lower shipments and lower metal prices, partially offset by improved price and mix.
Net Income
For the fourth quarter of 2023, net income of €11 million compares to net income of €30 million in the fourth quarter of the prior year. The decrease in net income is primarily related to gains on OPEB and pension plan amendments recorded in 2022 and higher tax expense, partially offset by higher gross profit.
For the full year of 2023, net income of €129 million compares to net income of €308 million in the prior year. The decrease in net income is primarily related to the recognition in the prior year of previously unrecognized deferred tax assets of €154 million, gains on OPEB and pension plan amendments recorded in 2022, higher selling and administrative expenses and higher tax expense, partially offset by higher gross profit and a gain related to the sale of CED in September 2023.
Cash Flow
Free Cash Flow was €170 million in the full year of 2023 compared to €182 million in the prior year, reflecting a €55 million increase in cash flows from operating activities which was more than offset by increased capital expenditures as we continue to invest in maintaining and growing our manufacturing asset base including our recycling and casting investment in Neuf Brisach, France.
Cash flows from operating activities were €506 million for the full year of 2023 compared to cash flows from operating activities of €451 million in the prior year.
Cash flows used in investing activities were €288 million for the full year of 2023 compared to cash flows used in investing activities of €270 million in the prior year. In 2023, cash flows used in investing activities included €47 million of net proceeds from the sale of CED in September 2023.
Cash flows used in financing activities were €182 million for the full year of 2023 compared to cash flows used in financing activities of €163 million in the prior year. In 2023, Constellium used cash on the balance sheet to reduce short-term borrowings and to redeem $50 million of the $300 million outstanding aggregate principal amount of its 5.875% Senior Notes due 2026. In 2022, Constellium drew on the Pan-U.S. ABL due 2026 and used the proceeds and cash on the balance sheet to repay the €180 million PGE French Facility due 2022 and the CHF 15 million Swiss Facility due 2025.
Liquidity and Net Debt
Liquidity at December 31, 2023 was €737 million, comprised of €202 million of cash and cash equivalents and €535 million available under our committed lending facilities and factoring arrangements.
Net debt was €1,664 million at December 31, 2023 compared to €1,891 million at December 31, 2022.
Outlook
Based on our current outlook, we expect Adjusted EBITDA, which excludes the non-cash impact of metal price lag, to be in the range of €740 million to €770 million and Free Cash Flow in excess of €130 million in 2024.
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 price lag, impairment or restructuring charges, or taxes, without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, future net income.
Recent Developments
Share Repurchase Program
Constellium today announces that the Board of Directors has authorized a three-year share repurchase program of up to $300 million of the Company’s outstanding shares of common stock, expiring on December 31, 2026.
Under this program, the Company may purchase shares from time to time for cash in open market transactions or in privately-negotiated transactions, in accordance with applicable state and federal securities laws and in compliance with applicable provisions of French corporate law, and it may make all or part of the purchases pursuant to Rule 10b5-1 plans. The timing and the amount of repurchases, if any, will be determined based on the Company’s evaluation of market conditions, capital allocation alternatives and other factors. The share repurchase program does not require the Company to acquire any dollar amount or number of shares of CSTM common stock and may be modified, suspended, extended or terminated by the Company’s Board of Directors at any time without prior notice.
The Company intends to use a portion of the repurchased shares under this new program to satisfy employee equity obligations in lieu of issuing new shares, which would limit future dilution for its shareholders.
Changes to the Presentation of Certain Non-GAAP Financial Measures
Constellium today announces future changes to the presentation of certain Non-GAAP financial measures. Such announcement is being made to provide investors and other stakeholders with an opportunity to become familiar with the expected impact of these changes to the Company’s presentation of financial results in advance of the Company’s earnings release for the first quarter 2024, where the changes will be implemented. These changes are based on discussions with the staff of the Securities and Exchange Commission (SEC) during a comment letter review process which began in late 2023.
Following the SEC review process, the Company has determined that it will no longer report VAR, a Non-GAAP financial measure.
Based on discussions with the SEC, the Company has also decided to revise its definition of Adjusted EBITDA, a Non-GAAP financial measure, to no longer exclude the non-cash impact of metal price lag from its Adjusted EBITDA. Constellium will continue to exclude the non-cash impact of metal price lag from its Segment Adjusted EBITDA, which it uses for evaluating the performance of its operating segments. As a reminder, consolidated Adjusted EBITDA following the revision of its definition, less the non-cash impact of metal price lag, is equal to consolidated Adjusted EBITDA prior to the revision of its definition. Constellium will continue to provide its investors and other stakeholders with the necessary information to explain the non-cash impact of metal price lag on its reported results. The Company will continue to provide Adjusted EBITDA guidance excluding the non-cash impact of metal price lag, and leverage will continue to be calculated as Net debt divided by Adjusted EBITDA, excluding metal price lag. For comparability, please refer to the table below to see a reconciliation of prior periods’ Adjusted EBITDA under the old definition to the new definition, including the metal price lag adjustment in each period.
For the years ended December 31,
(in millions of Euros)
2023
2022
2021
2020
2019
Net income
129
308
262
(17
)
64
Income tax expense / (benefit)
67
(105
)
55
(17
)
18
Income before tax
196
203
317
(34
)
82
Finance costs – net
141
131
167
159
175
Share of income of joint-ventures
—
—
—
—
(2
)
Income from operations
337
334
484
125
255
Depreciation and amortization
294
287
267
259
256
Impairment of assets
—
—
—
43
—
Restructuring costs
—
1
3
13
4
Unrealized (gains) / losses on derivatives
3
46
(35
)
(16
)
(33
)
Unrealized exchange losses / (gains) from the remeasurement of monetary assets and liabilities – net
2
1
(1
)
(1
)
—
Losses / (gains) on pension plan amendments
—
(47
)
32
2
(1
)
Share based compensation costs
20
18
15
15
16
Start-up and development costs
—
—
—
5
11
(Gains) / losses on disposal
(29
)
4
3
4
3
Bowling Green one-time cost related to the acquisition
—
—
—
—
5
Other
—
—
—
8
—
Metal price lag
86
29
(187
)
8
46
Adjusted EBITDA (current)
713
673
581
465
562
less: Metal price lag
(86
)
(29
)
187
(8
)
(46
)
Adjusted EBITDA (future)
627
644
768
457
516
For the three months ended
(in millions of Euros)
December 31,
2023
September 30,
2023
June 30,
2023
March 31,
2023
Net income
11
64
32
22
Income tax expense / (benefit)
32
18
12
5
Income before tax
43
82
44
27
Finance costs – net
35
36
35
35
Income from operations
78
118
79
62
Depreciation and amortization
73
77
72
72
Unrealized (gains) / losses on derivatives
(2
)
(23
)
20
8
Unrealized exchange losses / (gains) from the remeasurement of monetary assets and liabilities – net
2
—
1
(1
)
Share based compensation costs
5
5
7
3
Losses / (gains) on disposal
1
(36
)
—
6
Metal price lag
14
27
30
16
Adjusted EBITDA (current)
171
168