Constellium SE (CSTM) 26 Oct 222022 Q3 Earnings call transcript

Good morning and thank you for attending today's Constellium Third Quarter 2022 Results Conference Call. My name is Austin and I'll be your moderator for today. [Operator Instructions] I would now like to pass the conference over to our host, Jason Hershiser, Director of Investor Relations. Jason, please go ahead.

Thank you Austin. welcome our to earnings quarter like call. would everyone third to XXXX I

today, Chief is call After have Germain; the presentation and session. we On call today’s the of our our will a Chief slide website Officer, A constellium.com, copy we today’s and Financial recorded. Executive on Peter is presentation, Matt. call being the for have Q&A available our Jean-Marc Officer, at

Securities look company’s uncertainties. Private and I’d within statements begin, operating of and everyone to and Such our financial regarding events website call future statements known and Today’s and like a expectations Litigation include Act the Reform the performance, statements may the anticipated and we Before to the may take encourage risks company’s involve at of XXXX. forward-looking unknown filings. recent visit include meaning

under that For cause the in forward-looking risk statements, could please those XX-F. in on results Form to presented information information, heading a specific to expressed summary materially except law. from as as date our Annual result the the We of new refer Report the presentation. forward-looking “Risk or Factors” events to factors of differ no by revise a is in obligation this of undertake statements update of the as or All required otherwise, future presentation any factors

Without of disclosures. financial to Jean-Marc. attached IFRS in over measures In addition, presentation, to ado, today’s see supplement turn presentation includes now information like our regarding non-GAAP call Please the today’s certain non-GAAP I financial reconciliations the measures. which would slide further

your interest good morning, good Constellium. Thank everyone. afternoon you And you for Thank Jason. in

achieved hours to priority in quarter, sites performance We of several to to with million our quarter discuss our strategy. key the of and X.X case safety third safety am quarter. our that we results. delivered five safety our In slide I'd reducing worked. the from highlights to year-to-date best-in-class one recordable and our pleased the turn milestone. rate report I pillar sustainability a number third start third like Let’s

achieved France, to Vigo, one achieved a want and need two case. Our recordable performance. Nanjing, the both three Astrex this and this the in remain is achieved critical focused never But without we journey milestone year Spain research safety employees in center our China And excellent Canada, all on we complete. years. C-TEC I to day. priority of congratulate all on every years

third Turning financial to shipments quarter XXXX. our X% were tons the compared XXX,XXX results, down to of

as increased A&T shipments offset to €X more and billion of As and higher metal and mix. lower prices XX% were higher a than part. by in AS&I price result Revenue in shipments improved

As our minimizes previously we changes revenues we said exposure through prices, operate by metal pass are price business have a to in affected model, metal our while risk. which

metal to our added million compared was XX% third of the revenue up value quarter which cost the excluding Our last year. sales reflects €XXX

net increase Our net deferred to primarily were third income previously compared assets recognition quarter income of The net quarter to the the unrecognized. in related XXXX. tax the the is of million €XX income of in in €XXX that million of

adjusted right, top third €X was was includes of record and XXXX. in AS&I. both double a quarter third of million results the the corporate on the and process. EBITDA A&T for quarter bridge tailwind the in the is a third in million, in see record can company €XXX you quarter As XX%, Holdings This the

large continue the at be digits demand down shipments in last challenges to to facility, our were other chain though XX% But a due operators. the a challenges. and were to year engineers our row. of and shipments end in by very strong with compared year impacted to continues market quarter last platform experienced around double demand the versus quarter our in Packaging up for be up with growth. shortage due Automotive resilient, driving to in supply the part Muscle second across operating new quarter aerospace shortage shipments Looking was Shoals our we semiconductor launches

While like overall pricing The solid by Peter positioning. a despite of power market we industrial and pressures, good our seeing cost across combination later in stronger dollar of we drove markets, end team certain discuss signs significant are detail. execution the U.S. will better our results and demand, weakness which more

we flow Moving free million generation flow, record now cash our consistent cash in the with track to €XX of extended quarter.

side, the on of ending third our demonstrated see commitment hand from last maintaining committed can Overall, bottom the remain X.X As quarter times times. times I'm continuing the to you performance. of our or third target three down target very we quarter deleveraging the at quarter end right leverage term leverage third We our to range year. our of to proud X.X and achieving long X.X X.X times of times

regions and at elevated, remain material of energy not signs Looking in balance our macroeconomic to Despite the expect market. geopolitical have in more continue, Ukraine. war on-going by affected industrial end XXXX in across like directly demand we risks the and a especially in experienced of reduction seeing certain weakness pressures we for inputs and markets, inflationary core

dealing As our operating have challenges at I are business our with Muscle to well. continued But overall perform some mentioned, Shoals we facility.

our year EBITDA new €XXX adjusted which would the record company. We the of at to for finish landing low million, range million of expect guidance to XXXX €XXX a be with end

cash flow to continue in free excess expect of €XXX million XXXX. We in

Europe. in been that war. the continue gas since availability comfortable affected have To our flow energy times Both also to some not point significantly The knock and be the an from levels, are reduction historical has slide gas at before availability a result the Europe, in will Europe. date, risk over effects Peter, above of been we electricity start as an of on more of in the term. and especially than XX Europe and want feel significant other than are prices war winter. in give largely environment cold near handing to There operations standpoint, in a to available is and of have in overview if situation facing though, disarray gas gas we six current today, markets. its Turning energy experiences Ukraine, to markets Russia's of it still currently I normal the European some to

demand were energy a months business. increased several impact energy of a curtailed which and creating smelters to substantially have of risk of certain Higher range ago. As is Further, also slowing costs of higher availability. across markets costs, operations, result three to compared we where the impacting inputs inflationary aluminum pressures alloy to the has lower due our wide

Constellium the company through performance working current hard manage given expect, should of team, environment. you to are As the track we this the record

On our our the across to we wide our discussions energy we operation. effort these here today have energy through company pass front, higher as customers costs. with speak active a energy to Underway reduce consumption

will details We and in on the on this into are making general. more these on and inflationary very Peter go fronts good progress pressures

the a over to you far Overall, performance. I we'll situation of and thanks will plants well monitoring great very thus now the successfully number our to interruption supply been without we to chain further costs. financial running Finally, call procurement We're Peter update Peter? our to of continue and obviously keenly on efforts developments. that, for challenges. details manage on and able team, on the focused With closely, hand operations have our are controlling

of everyone now this was Please higher quarter increase AS&I you slide price Thank added was a and more joining was a of FX €XXX this of each €XX And today. was eight. to by and translation due dollar. stronger shipments XXXX, were for VAR increase million than the revenue as Jean-Marc. thank million the million, turn to offset to headwind in €XX year. million third A&T €XXX U.S. favorable of you, in up shipments lower last part. XX% same and call to in mix our improve in compared Value due tied quarter or euros of to segments. Volume the

were this are metal on slide. performance and such input elements hardeners headwind more There million than the Finally, inflation as of quarter. our three impacts costs important offset in alloying scrap takeaways from a €XX as

revenue our versus year. in value First, the XX% we by grew added last quarter

Second, us our and year-over-year which biggest have adjusted quarter in XXXX is And was to with million third, and power. than we specifically, of in value added Pricing XX.X% helping pressures. margin is €XXX variance mix on the quarter our continue inflationary our of price pricing combat the EBITDA is better the margin. increment revenue VAR

challenges. third and was and quarter in focus Now, of million, slide million the continue lower Volume we on turn and versus versus XX% with let's last platforms shortage offset shipments demand supply by EBITDA the €XX up. and Automotive shipments of packaging new our while product. shipments Though to decreased Adjusted XXXX. by of to to year, packaging ramp more to higher XX% increased road specialty resilient. began compared automotive, decreased than year, shipments Packaging be €X and X% the other performance. chain headwind continued a quarter semiconductor to nine segment be as PARP impacted in last

the lower Shoals earlier. that the quarter at to due Jean-Marc mainly in facility shipments challenges were Muscle Our operating mentioned are

million time. but U.S. team Muscle Our inflation will across is PARP related some in due and due non-cash hard maintenance on headwind pastures. costs a contract the a Shoals that million supply the just €XX Pricing quarter working including take related to people operating mix to higher at as a recruit Muscle were to was I train stronger new and translation, €X Costs primarily €XX of was noted. inflation higher Shoals result of of dedicated town shortages improved costs tailwind a to is this which FX million dollar. hires, of highly a and pricing, is and

pricing, to in let's a of was in and XX% Now, Volume of reflecting increased of pastures €XX focus production dollar. million of aerospace. more Price were FX stronger in EBITDA turn to shipments, offsetting quarter €X markets higher Aerospace mix costs to the tailwind to U.S. aerospace slide operating recovery million XXXX. a the million as due Adjusted €XX and €X A&T improved more year a third And versus on aerospace million in shipments. TID was a mix with inflation with the X% quarter tailwind was of up XXX% ramp were a versus translation continues. year, a last inflation tailwind on and certain last segment. due stronger compared Shipments XX. the headwind up higher than related down Costs TID markets. slowdown on were shipments aerospace. industrial the million €XX lower a of contract including in

some experienced Volume EBITDA Now higher levels. Automotive compared quarter quarter turn let's in of €X as in shipments third to €XX the Adjusted improvement increased of with the a automotive. And the on versus XXXX. shipments million to segment. in year increased AS&I million we focus slide last was by activity XX. X% tailwind XX%

to mainly However, of In due not a and the and due I challenges. slide. higher to million positive want impacted The in with inflation operating business of in is quarter. comment other supply headwind year. holdings stable shipments inflation. continues Jean-Marc result a million Costs was the the a mix a by tailwind the be quarter as in €XX conclude to €XX chain number quick adjustments factors. holdings related versus costs one-off corporate. tailwind It the was €X Industry primarily to million on noted. the semiconductor on But quarter of a was shortage Price to incorporate contract related on were improve pricing, including were last

million costs to per and continue run at We holdings annum. €XX approximately corporate to expect

continued Now environment significant to turn in quarter, we business, In inflationary pricing of across current want the on are are by our exacerbated focus third And many as give the pressures to to on these Ukraine. and update to inflationary and control our facing the offset war pressures. we XX. an slide which experience expected, cost I

is we know, Europe reduce As supply Aluminum said, million to eliminate the down we and to to energy tight us. our significant increasingly are capacity business a XXXX previously supply. in [ph] major levels. significantly to metal in we today source capacity. exposed be smelters prices due supply materially cost operate lithium changes our of supply incremental compared price pasture approximately is to input. today, in forcing and previous actions currently tons That are remains aluminum, smelter in Europe at disruptions so a most X.X model you cases for or high not expect year, but cost. able The magnesium the to our certain of this Alloy currently an cost alloying higher secure concern to not like We to took needs, with elements

incremental at Non-metal elevated also will forcing particularly add costs this European alloy inputs disruptions costs of However, supply us energy. XXXX. significant market certain in to the to prices cases year, half higher are and resource are second

previously multi-year current forward to helped basis, we mitigate of rolling pressures. As has purchased energy which on a the us cost noted, some

run particularly However, year, higher our this significantly costs will energy in Europe.

energy costs Currently, to we be averaged million €XXX around we expect over XX total in energy Our around total energy expect higher period €XXX million be total XXXX per XXXX. costs the to and in XXXX, to costs materially annum.

active costs progress are are across passing and dialogue our we with markets. very customers through in noted, on good these Jean-Marc all As making of end our

will to these as update progress We continue as we you discussions.

cost XXXX the balance extent, to and XXXX. into which pressures While same significant continue not across categories, most of also we to other expect the we’re experiencing through

a to number pressures, Given of their fronts on our impact these cost we our results. mitigate across working are across

announced ‘XX in quarter, strong are our to working consumption is cost deliver and increase initiative and lower our we recently Vision of inputs, company, fixed the our to our costs. businesses efficiency, Our performance expensive reduce continued Across helping. the

side, of are PPI or inflationary On such surcharge with our include our not inflators to working contracts do existing the customers where protections, commercial have we they where many them. and as mechanisms,

these example range for are prices increases price pricing incorporating successful protection. in extraordinary need And contracts in in existing contracts, the of where most better magnesium protections to -- mechanism. now for chain the of markets. have adding in existing and with are number in the in extraordinary we been inflationary in response lithium our some one support of extraordinary energy a energy of European a type have already The we successful signing they and We contracts, new been coming changes surcharge

pricing As being increment year-to-date in on the with you can the we very bridge see, in inflationary largest the pressures. right, priced mix, successful have offsetting been

on costs largely and While and inflationary we offset actions in be pricing of has them in our million. control. inflation XXXX are we of of by inflation for year, will improved impact significant been to pressures have that focus the our The that manageable, cost believe continues taking the to from €XXX other cost north net and XXXX. increases it's it XXXX, are a run be challenging guidance standpoint included offset relentless and

to and XXXX forward energy remaining pressures prices Looking levels, XXXX, inflationary be in elevated XXXX. with generally current in than inflation the expect to at we stubbornly greater

we XXXX, with pressure in is to or of offset of believe this the number we will open guidance a that our to past it initiatives. that this to of have be combination given year any with and continue the We able XXXX most the noted. cost in current future for provide practice, especially Consistent periods tools too early specific environment

view believe than and potential costs will conditions when passed between based EBITDA. can the However, XXXX they adjusted and XXXX current materials our lag we XXXX on our through adjusted business and when that cost lower moderately be of be EBITDA our

the cash slide to generated turn flow let's and free to We Now in our of year-to-date total million €XXX free our quarter, XX third million. cash €XX discuss flow. bringing

deliver XXXX generated left free the Since have our cash we As of continued slide, over of flow. consistent, have flow. see, to free generate the we to cash commitment strong on you on €XXX beginning the can of million bottom

needs. built our XXXX at a in have number free €XXX we expect of Looking meet we cash we inventories customer generate to that strategic can million. ensure includes This to excess flow of

quarter. market this conditions to shifting the evaluate the Given need we continue over will fourth

be year. CapEx million €XXX to expect We between million and this €XXX

We million. interest to be expect cash €XXX approximately

€XX We of taxes expect million. cash approximately

cash At the debt end to roughly net This and €X let's and balance quarter, third the XX compared was liquidity turn sheet of billion. to was our end the flat Now position. slide discuss our free by was of in year XXXX as €XXX offset months non-cash million generated flow nine this first the U.S. of of €XXX the dollar. translation of unfavorable FX with of strengthening million the

last a at the at down times multi-year third the the Our quarter, the end three year. leverage of third quarter or end of times remained X.X low versus of

our target flow, impact and remain half for a adjusted a our the and leverage dollar, maintaining time. end stronger U.S. guidance and Given range the half term cash around two our and long one to leverage year target of two We and to and three achieving half to expect times XXXX to leverage a free committed we EBITDA times. of of the

summary, have see As in bond XXXX. you until can our we no debt maturities

at Our the €XXX at strong million liquidity remained third of end quarter. the

very are call Jean-Marc. the will now made We proud the structure on are And building. to flexibility back and Jean-Marc? of progress have we we I our the capital hand of

Thank Peter. you,

both the growth America, tons in Let's and XX turn in of to supply through announced here In participate outlooks. as unlock and by Europe North of market capacity domestic additions as investments We’ll America and capacity this remains we aluminum believe this in term the in short focus in to can-makers, continues market to these be be slide cans will a year. projects America Day announcements confident some at inventory Analyst infinitely adjustments recyclable regions, can-maker both packaging discuss for earlier The Even is of and at North sustainability on in Greenfield well driving our but please strong North our long series and end market. recent XXXX The outlook term XXX,XXX demand this we tight. lived. current are seen as North both for end increased have we Europe announced America. short

semiconductor utilization automotive, already the term, other and a be demand chain is to industry low rate. and the challenges near to shortage continues by the Turning hindered supply at operating

the COX demand market. content. very continue However, consumer and for this trends and electrification high light-weighting remains Inventories increase on vehicle are recycled remain low low, and demand positive to we'll will sustainability

versus back still OEMs XX% to Aerospace field levels. We to demand of thirds in the shipments rate were aerospace pre-COVID year, third approximately but intact, have growing passenger fuel remain including announced now confident Aerospace. efficient for up demand traffic new, only last that more fundamentals aircraft. two are quarter the remain driving greater increases. around turn Let's Major and

these As fundamentals the even consistent of these represent our a XX% page [ph] left my highlights uncertain hand of on side We each end we like comments hence our core markets the the in and chart times. three in revenue. ALTM like

in seeing continents. other we supporting are markets of markets health portfolio, note our trends well, to sustainability as industrial the these remain specialties Europe of in that America. growth across of It specialities. on of of hand signs semiconductors, number In weakness also core lastly in of the end markets North across in markets our like are both general is Defense balance, are economies those here though, in Turning the and dependent current like and rail applications, much to. high the And demand in a very play even On our course, environment. solar. at for many we

turn EBITDA quarter, our flow to Constellium up net-debt-adjusted Q&A. XX before We track Let's cash EBITDA generation €XXX of a performance remains for in of adjusted slide delivered now wrap million. including line the sales we low. and record record extended strong free quarter to open our three the times multi-year of

number €XXX given XXXX compared excess the significant this challenges low and continue strong strong €XXX Achieving be a million strong adjusted cash end XXXX guidance we of unforeseeable have flow The result, of range million. free to of this particularly of of flow very XX% and our adjusted our reflects EBITDA yield. will cash of guidance the expect a and faced growth around year. a €XXX in end million free We low EBITDA to targeting to are

in we inflationary will the facing, European recent year, Looking certain industrial extraordinary market. and costs particularly energy another the given given forward, XXXX on be slowdown challenging pressures are

XXXX or inflationary we are higher future our than most pressures to we in noted, periods. in ability in Peter currently XXXX, remain expecting in confident costs pass through these of As but XXXX in

As even subside, emerge inflationary pressures an we we believe company. will stronger

enhance future believe a we Our and with term provides and for have model opportunities return. profitability long an ahead foundation our exciting business success to we business grow and strong

a advantage consumer have of us end cans and light the the preference so. enable transportation, portfolio team different growth or electrification to infinitely take trends, diversified aluminum to has market its range And sustainability and continue to of across confident positioning driven conditions. Constellium and secular in such of recyclable weighting as ability fleet. a The do our I automotive am will We market execute demonstrated resilience will

value times. long million in adjusted optimistic free we role, We the conclusion, result, EBITDA guidance €XXX on flow the achievement our future. shareholder custom leverage focused by performance, XXXX session. will of With and open a that reiterating of our operator, term about generation, our excess remain and range I are times X.X As we In target creation. ESG very X.X cash objectives, of now operational remain of to Q&A

Instructions] Chieng is Goldman is from Thank open. Our your Emily, [Operator Sachs. Emily you. line first question with

and question Good morning, My for this just and Peter, you Jean-Marc morning. is update the first thank around.

color question I any power the has probably at there. is advantage of to if a think just you've hedging around first recent that able And power share few understandably around looks now? been understand how XXXX. wanted the And the if hedge strategy right outlook XXXX have. to prices the But European some that lowered can you moving take book of that you pieces

Yes, Emily. thanks,

multiyear we in just layer we've in on And past the time. rolling a our So set basis. we forward had over hedges

kind if year. kind we're take typically be you before the working with. aim the horizon, a that's hedge approximately, XX% year so beginning of of of what And we to And three XX% to

of to then out exactly is kind that. And kind saying with kind order in without So our of of rough respect you it your question. magnitude hedge of position XXXX, what second can for figure from

really not into forward create but itself for We closely. seen market that watching opportunities carefully. market. the energy hopefully, are some fully will are we And very But, watching the it What us. spot you've translated has in prices

the right you've if longer you're across those out Peter. you I do no I question, around consuming And now. ability And past, well. extent as we Russian either impacting a House then in see mentioned that metal Great, from to LME feel Russian may. of know you the primary second But mentioned metal, there get thanks, announcement or White believe landscape purchase aluminum? sanctioning fairly the tight do the to that how I supply that further portfolio your metal your

purchase you is just I mean and sanctioned. honor, record, Rusal metal, as so So Russian know the we've we’ll not got we some for contracts, which

I think, obviously, to difficult to But spike XXXX. sanctions it's a I NME Europe bit hand, and very was would and if happened And more against a secession whether America to Rusal, would what of to premiums, profits ascertain there little of the would are they goes through and a there both. on kind what hand, need, was, that the in difficult and happen apply purchases term scrap our on little what because from or Rusal be LME big but up. we in in means gets sanctions metal the think increasing we the which went bit find the it short other one

the impact got terms obviously. shouldn't from is upsetting But when it it. which from be means on here. standpoint, the ultimately of I regulations business catastrophe monitoring complying think, it And So you've a we'll or all of I with mechanism matters in we'll an in think see sanctions, EBITDA what think And happens. laws, what terms be any situation I that

enhance into jump to thing of metal one just buy Jean-Marc we said, our from less X% what than Rusal. And

some the year. inventories high, And the deliberately into to plan quite and well, so. As maintain of end our going inventories we to have will you high that are continue noted

So may that what from we happen vicissitudes of we saw what in terms insulated are from there. the of

both. Great, that's helpful. you very Thank

Thank you.

is next is Curt Our Suisse. your Credit from from question Woodworth open. line Curt,

and Good thank Peter. Jean-Marc Yes, morning, you.

Good morning, Curt.

at for your on million bridge, And price next to €XX guess energy we roughly year, look respect ahead you're higher seems based obviously, this continued you're And the versus materially outlining guide year. it like I inflation and with XXXX. So if year-to-date cost. on

going give see that kind year, a thinking So, magnitude. same little XXX to year-to-date, you're of ahead kind you if buckets that, a the can then the reversal us of of idea bit of you're are you maybe this

negated So kind leverage you're it's saying of operating by theoretically, getting cost. the like what price is

we about if on helpful. can be So give more granularity you should that'd how thinking any be should that,

gentlemen. We feeling giving We're to future, the on as the color not with guidance, the in look the on we to we're on mean, from how the pressures, right, trying look inflation. we I price you And XX. able nickel are given page to give cost year. side ahead at than if were the some you products suffer more our you're this inflation. improve We're we I mean

in second there terms compared However, in inflation lag the do, of push we to are on seeing can are how a is we more we seen year we and have cost can what in we first through pressures, of energy than XXXX. the half this the than half

XX, saying XX% in point very packaging market strategic our this like should that judgment we that if be at was time business significantly at our build. been Peter from and So to continue going next much arrow, XX% in look is, trend a we standpoint, in And in, kind XX, key are rate the as to got signs below And resilient weakening auto markets then of in of we've of in XX bucket, like our I terms automotive, down, in whatsoever. the to it's quite there big of continue we've no grow a year. in volume

specialties, more of into think are year. there's good. the volumes the next we them our good going to be And on than going So very half in are fundamental which quite

we too weakness prepared think with on into we remarks, seeing like we, the and continue But not volume bad [Indiscernible]. in the this year. it's next in we're no, may it's as side, the overall, So I said

prior more There next the next at of it's the apply inflation energy be we've there's Europe. through terms push prices when how push one beginning costs And PPI price it a prices of seen compared very pushing us your to strong we protection, increases. a the significant good period, typically knock compute into get at matter PPI we into energy resolution? higher lag surcharges. of get may pricing, you been also in through you to In We've we've when But with would do year And do there on very the get the, increases in PPI very a higher a more, fast price between coming. period. here P&L. we fast and the spikes price, that are there's then got and year all coming the How to the

going I us that's that's next we're to describe XXXX. XXXX but to So our year, with are think under foreign look into why And a very that trying is temporary us into it's squeeze. in firmly current to kind our of what guidance best the life We conditions. we markets think to view, reiterating penalize going

For business that are be in, next guidance, model. passed tremendous. that we still costs through our factor Does slope will so of comfortable very And that we kind year as with to energy just been the once going we there's think pinch have has XXXX been increase these help? feel of given a

helpful. I that's Okay, Yes. I know that. mean,

your escalators XX% German Europe, as fair think well. of September. I at you had I believe PPI PPI was in business for In a mean, I amount up

it well? not the the offset? the going the still so what trying to a with I it's it you're you're dramatically energy assume can coupled So know, and to in, time, be nature contracts, the you talk that up help saying it fact is around just energy is implement as year recoup takes contractual fact that And enough of surcharges. show potentially, But meaningful PPI is it these is a help next price, be lot. just seems like that coming that to will about early I Because to to is cost or just takes that then

into play. come has XXX% not we're with XXX% good that such the I environment, I PPI been mean, factors in mean, by itself that XXX%. an mechanism both extraordinary but Right. tested prices energy Yes, it's, or

some we So months see also success make months a through But then, were three comes with surcharges does have that or sooner how but pushing to difference. out. it customers, we getting three you're later, with energy

Okay, very all had. That's you much. thank I

Blanchard Deutsche your Bank. with Our is is Corinne next open. question line from Corinne,

questions. two this you time one. Thank for the Hey, morning. good Maybe first have Jean-Marc morning, and the I Peter.

transition are provide the think You or in listen then setback the volume. and mentioned, was XXXX. Shoal operation better you the the a trying service facility. And going second packaging around market Can at the question XQ just I they commentary Muscle to into to

I I seasonality, XX% is XX% but think some decline. an understand most volume I quarter. the that there think effect on was this went of

trying about the just think next maybe happened So to to understand nine this six for and packaging? quarter months to how what

Corrine. for question. morning, Good Yes. Thanks the

I Shoals, the and down saw operational factor, of So the recently a essentially key turnover which retaining staff finding Muscle talents. I in in is is and new issues level, qualification solid XX%. that's U.S. turnover in But training around manufacturing terms the To the we people, at in them, terms that pretty need in mean, of stat bringing that XXs. that and we're experience. painful to in they boil have another the jobs

multiannual more that takes people two somebody impact one an to top to you years if has productivity. gets time spend obviously, new the it their them bring people, game, So have on that year, as training the of

that's to we into volume around the Muscle challenge And always our So them. We less a that was able produce. but that band in contractual we're faced really still translates Shoals. commitments, key meet there

the lower the to that's there's American some tend now. of And, too is at right inventory be the as grows market adjustments we never the And band fast. the addition, growing when linear very in been market fast. North end in So system,

of side. LME trained too, and lack bit experienced in another We've little the Midwest little I and bit So in engineers, factor a and mean, that's a volume price. got premium is with a the costs. in decrease cost on root costing also the which is operators, the cause, volume side, us

bit had are not little used operations we a than are around less profitable they we of past, million anymore. to to that say something scrub recycling here spreads in the Our €X benefit

experienced So it's factors. two leading to scrap mean, and people and cost of combination the higher I creating that volumes are situation. these lower a training spreads

that you're will not on make back I I've there LME in is the it lower to rollout nine to Now spreads. it the [ph] prediction as quarter to be and track. situation QX, In getting solid. And is on in just lower that next the outlook the a there be that going continues scrap it’s terms, percentage see terms how free, of very months, balance favorable, projects making situation. continue but market, think which for rest to quarters get target take have has take And open is we're around year. strong year, used the terms good going we’re Muscle we but XX, months and so XXX out progress, And sheet to to packaging to than two. back six is positions I Shoals point to, will a now, best typically is of have three We XX the the pretty a got We to a stabilized which seasonality. for of product to right few QX it's And the

So to that's, that's of your answer kind my question.

Thank you.

down seasonal in when anything them? quarter So like was like move is purely see so the follow XX% from just sense, say up for coming to portfolio we this it a or whether let's volume like or

portion there a is enough able run is a at fact wished been trained rate which have. there from we lacking staff, we staff, we not that productivity that of No, it, of have comes to would the the

market. is And some is reaching adjustments we circumstances. in it, productivity is there which would inventory of in wish there have the which So it, is normal not some of we us levels the under

you. Thank great. Okay,

Timna, next open. from Timna Research. line your Tanners question is with Our is Wolfe

a reason I been certain inventories that lower keep strategic watchful, there's touch inventory level. inventory wanted a know, a inventory of with of of We've But sticky there's still thanks alloys the been I just guys, Hey, to lot. you again, and down. prices. work kind pretty on. and Yes. on situation so mentioned And to

a an ask to unwind you way. the it What think guess takes capital I see working do to an So question there? release in improvement different and there

Timna. Yes, thanks,

first I we, hedge that we all, our remember inventory. think, of well,

there terms in to the, kind still of we us to us. serve that's end see from impacts on of in be in terms But all uncertainty there metal the of that And want market, sure variability, forth. customers. material kind make of to but translation terms impacts, So some decent of, have a in demand that might shouldn't materials our and be sure cash market be the supply, a amount metal we of price what we a leading we're seeing, so

So little of economy, little picture, therefore, a, on clearer and have prices down. number do I'll as energy think kind on us it. two, a more a of just stability of alloys to where I cash bit more clearer stability is paint on for we the that the kind call bit we've guide of the see guide a opportunity significant that source direction remind we on are And various would that it's probably an that, the the be to that from mean got clear, we'd output smelters unwind to, And us. it's bring metals then eventually definitely But and everyone when for prepared it's going. we

So.

Right.

the you at call, watchful Okay. And said three below leverage your on the you leverage that's expectation. this it. talked quarter, with XX times, had then of and lines, same said your the prior why and guess, we're you the and Last of quarter, so I times along earnings. about

guide? slower to else inventory question just anything of laid is there targets there? purely visibility greater So you the that of release out? And and you've there Thanks. this low end EBITDA the the the and timing a is is Or that is get can

Yes, sure.

are the impacts had the of there FX, moving couple is end definitely on headwind of it. a So But have one, the that I we right. big EBTIDA low to things. guess Number guide

is generating offset if cash of the negative flow, of but not the that math on not kind FX we're the this, get is the FX incremental Right. do So does all the on from this debt. we from translation dollar the this, kind we get And you offsetting EBITDA that it. free FX tailwind

consequence, we our being be. will of the way. then than what leverage FX moderates So up are, we as a But bit to course, ends it other little go this higher a expected when

Got it.

much. Okay, very Thanks that sense. makes

Yes, maybe just other one point.

the been. Given we've than conservative structure been in we little bit have more a capital might market some the our with otherwise probably of uncertainties

our example, a at For trading significant debts discount. pretty

back buy we kind why before know But heading or to you And don't what decisions. we're so say, of through debt. sure those for some some start making make might want heading we we

Thank you.

next question your Sullivan open. The from Company. Josh is Our Josh, Benchmark line is with

Hey good morning.

Josh. Morning,

North America? fungible coordinate too you're the between and there European is How arbitrage in Can ship Or is in friction or inventories? Is the Europe? the North able cost you any to production American high? operations anything

markets marginal I on typically good very are Europe. do it utilization, at in running we a a mean, avoid we for it. like high the can we're to And basis. rate. think still I free But us

much, not that which not economical there's advantages really even were they So are they so much. if

booked pre Europe. are in We

And do in in the right? U.S. the to a way. big We have don't capacity that

prepare inventory? in what Okay. line And side, are to unique inventory cycle. seeing clearly then just see stocking OEM historically time ahead going increases, kind these we on for Or relative think on changes production to of increases, policy to the structural you the would do aerospace in upcoming of environment you reflects the that the term demand that adjust any forward? been policy Do more, seeing, you you're long current think any there's

they really I is rebuild to think Everybody it's depleted. too scrambling inventories. early to were tell. Because

by markets XX% I’m down think be two As shipping years, to we of were mentioned used I them at were what shipping. for we XX%,

think that So I think now too I early trying everybody's to it's rebuild. tell. settles, to And

Okay. Thank for you the time.

Thank you.

open. Blunden Our your Karl, question is Karl is Goldman next with Sachs. from line

Peter, Thanks some trading. given so much for one to of the pre-empted there kind not it's questions where of buy debt, my as time. why you back

improving? are Now, for debt really look the step that more heading just to think about XXXX? becoming when sheet need that get down on making extend you Is really, the extend the I on unclear pay be prior question, visibility pay maybe to were the leverage or words, to comment that to is build the next towards market, guess you to balance as the target to maturity the get down normalizing just other it would you're and looking you that where by to was runway? to to just world to In versus it

think we lower you growth said debt. to if we want again, what Well, consistently, about

as direction to the of of us paying extending. points kind down of just that in kind So opposed debt,

as be thing said, Europe. blip going other these through Horizon, Jean-Marc say a of headwinds I'd we we're we The have, kind take despite of when in can do. kind opportunities lot the some of opportunities we this projects energy of we overall that advantage for prices do, the to at see company, can that, that better But and we of internal is look of that

So markets our that really project. want

so by there place leads direct can we us returns of that product, So to more to what that of company these believe our really the enhance that initiatives. where, environment really a forcefully getting some we opportunities the the some these sheet regardless are because pursue our to towards balance what is, one ourselves of

for And that's all context.

Karl. any not Sorry, We really, do feel to refinance we really stage. need at this anything

be have quantum due of cash to have that look compare free you that the by now company, what handsomely. and not at time, becomes down that it the we in we If XXXX, we and of should will of flow to the generation quite inventory the you level paying

at So in away that I just capital process. think we'll patient chipping structure place we're good a standpoint. And the be from very a

a earlier the and comments we in there energy given to month? a hard that Understand purchases might is another expect exact over that But how Or around year? of doing be the forward on to fairly Should more you basis. consistent course much details do it? to helpful. rolling That's flexibility month disclose. There some be do of were it versus have

have Well, and we, I be think policy you follow policy, should that mean, fairly expect right. thought we to we I it a the linear. we

the the ability however, other we wait the within have bit. we a should there's get little policy, here, should hand, context also a good together we So decide or and the team on the of to opportunity

the have some policy. following within speaking, we flexibility we're But generally So it.

for time, Thanks appreciate it. the

Wondrack with Deutsche Our Bank. your is Sean next line from question open. is Sean,

just there, from Hey, couple a me.

the back question. going to aerospace I guess So just

sort you're utilization pre-COVID assume of level? we of thirds said two two think Should roughly you levels. utilization? where the Is I thirds sort that of in

Yes, statement. fair that's a

think that economies moving ramps as Is greater guys to that scale get it you forward? up of fair

and that. the got and Somewhat, hire time, but effects, same staff to more we threshold you all at need

So that's very Shoal's not the gravy. It's is done read, you like some everything economies of scale. pure

right. best our product, I margin mean, it's, definitely it's

So seeing through fall you'll for it through A&T. all you're on see fall the EBITDA line and it

respect And just then think Right. you I the talked the little guidance But that. a of you've past, in flexibility Absolutely. maintenance adjust conditions. and or on I versus then sustaining can to comment Peter, I can is CapEx remind was given growth? or haven't you CapEx And obviously, the about switching guess, bit, sort just that. also, market curious of you what if sort us

Yes.

XXX. first, well, about second the on was question, So on maintenance the

on good So to that's that use a front. number

thing in with response to place our we've we need stakeholders, we CapEx little we're So this, structure. continue And the hitting those of can be in even might though the some outlined of long frustrating gotten We the this that put the side. the projects for almost a we're, to think to we deliver on And we there. question. where I for plan speed been really run therefore, to and the goes is bit bump right. company journey And term the adjusted plan returns, that the in gave this is, a think we to our we're we've place improve benefit bit EBITDA analyst think then, we us here. day, we and our little lower on bit But when a the is a that capital Karl's this at that look to one thing that of

for is CapEx is the taking had advantage the of I that build time to company stick to the and the day we being, see. at never never, being, plan we for analyst plan mean, opportunities our to so outlined the time say but again, the the future, So, for

just ahead. enough, Fair on and work…Sorry, the go

profitability, site few we to around the returns recycling making that their compliment. on April's mean, that of are liked the to these efficiencies attractive these analysts are their some projects the the quite higher actually, very I a projects it that wanted costs us. energy Just And improving. of and have I in we day

in short would the long shareholders. be and the think plan projects onwards, long and for So we run XXXX, these because yes, the are in good when to plough very in ahead

Alright. much. very your all help. I Understood. you Thank appreciate

Thank you.

Q&A session. our concludes That

back will of Germain pass Jean-Marc to the I over So our conference host, CEO Constellium.

Thank you you, in Austin. And for thank listening everyone today.

said, Thank sure our challenges so and you the worst temporary again. temporary we some up But make much. ahead. our a very and I'm prevail in we we've ability these I’m past very will got company squeeze challenges As our the about to faced future optimistic one. to

today's you for That concludes Thank your call. participation.

your You may line. disconnect now