Constellium SE

Good morning, ladies and gentlemen, and welcome to the Constellium First Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If you require any further assistance during the conference, please press star zero on your touchtone telephone. As a reminder, this call is being recorded. I would now like to turn the call over to your host, Mr. Ryan Whitley, Head of Investor Relations.

Thank you, Operator. I would like to welcome everyone to our first quarter 2020 earnings call. On the call today are our Chief Executive Officer, Jean-Marc Germain, and our Chief Financial Officer, Peter Matt. After the presentation, we will have a Q&A session. A copy of the slide presentation for today's call is available on our website at Concelium.com, and today's call is being recorded. Before we begin, I'd like to encourage everyone to visit the company's website and take a look at our recent filings. Today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include statements regarding the company's anticipated financial and operating performance, future events, and expectations, and may involve known and unknown risks and uncertainties. For a summary of specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to the factors presented under the heading Risk Factors in our annual report on Form 20F. All information in this presentation is as of the date of the presentation. 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. In addition, today's presentation includes information regarding certain non-GAAP financial measures. Please see the reconciliations of non-GAAP financial measures attached in today's slide presentation, which supplement our IFRS disclosures. I would now like to hand the call to Joe Mark.

Thanks, Ryan. Good morning, good afternoon, everyone, and thank you for your interest in Constellium. At Constellium, the health and safety of our employees is our first priority. We have implemented many initiatives to protect our employees in response to the COVID-19 pandemic. We have increased cleaning and sanitation, enforced social distancing, and provided our personnel with personal protective equipment. We have also implemented strict visitor policies, banned business travel, and enforced a work-from-home policy where possible. Posterium is a key part of the supply chain of many critical industries. To that end, in the U.S., our plants have received the distinction of an essential industry, which allows us to continue to operate despite state stay-at-home orders. All of our plants, with the exception of our automotive-specific plants, have continued to produce to meet demand for these critical industries, such as beverage, food, health care, national defense, and transportation. I am very proud that despite challenging conditions, the Constellium team has stepped up to meet the challenge. I would also like to highlight our strong financial position. The finance team, led by Peter Maas, has worked extremely hard over the past 3-4 years to improve our cash flow profile, increase our liquidity, and push out our debt maturities. These actions will help us tremendously in successfully navigating this crisis. Now turn to slide six, and I would like to highlight some of the decisive actions Costellium has taken to limit the financial impact of the pandemic. Rest assured, this is not a complete list. I think it is important to lead from the top. Therefore, the board, the executive committee, and myself have all taken a temporary reduction in our compensation. we have aggressively reduced spending to match the challenging conditions that we are currently facing. This includes flexing variable costs to better match production levels. A reduction in our workforce was necessary to reflect current operating conditions. Nearly 5,000 of our 13,000 employees, or 40% of our workforce, are on some type of partial unemployment or temporary layoff scheme. To build momentum around reducing our spend, we have established spending committees that must approve all spending over preset thresholds at plant and corporate levels. For example, any corporate spend above 1,000 euros is required to be approved by the corporate controller. For instance, again, at our Issoir plant in France, Any spend over 5,000 euros requires approval by the plant manager. On capital spending, we are reducing our 2020 target to 175 million euros, a 96 million euro of 35% reduction from 2019, and 75 million euros lower than the target provided in February. We are, for the most part, limiting our capital spending to essential maintenance or spending to ensure orderly restarts of capacity when demand returns. We are very serious about reducing spending and have already identified the specific cuts needed to achieve our revised target. Any new capsule project requires executive committee level approval. We are also utilizing governmental aid programs, where available, to help weather the crisis. This includes utilizing partial employment programs in Europe that reduce our costs during this period of reduced operating rates. In addition, we are deferring social contributions in Europe and deferring certain payroll taxes and pension payments in the U.S. We are also extremely focused on optimizing working capital We are reducing our mail purchases to be in line with our production rates and have shipped out of finished goods inventory where possible. Lastly, we have moved aggressively to augment our liquidity position. Our strong free cash flow generation in the first quarter brought our liquidity balance to 616 million euros. We signed a new $166 million delayed draw term loan that will add to our liquidity in April. We are also pursuing low interest rate loans through European government-sponsored borrowing programs in France, Germany, and Switzerland. Now let's move to slide 7 and discuss our very strong first quarter performance. Shipments were 393,000 metric tons, a decrease of 5% compared to the first quarter of 2019. Revenue decreased 6% to 1.4 billion euros. This was primarily driven by lower shipments and lower metal prices. It is important to remember that we substantially passed through metal prices. Net loss of 31 million euros compared to net income of 24 million euros in the first quarter of 2019. The change in net income was largely due to a non-cash, unfavorable change in unrealized gains and losses on derivatives related to our commodity hedging position. Adjusted EBITDA increased 9% to 147 million euros in the first quarter of 2020. PARP and ANT continued to deliver strong results, while AS&I delivered much improved year-over-year results. I am exceptionally proud of the AS&I team and believe this was a great first step in the right direction. Our very strong first quarter results came despite headwinds from the COVID-19 pandemic in March. which we estimate to have been a headwind to adjusted EBITDA of between 10 and 20 million euros across the three segments. Our free cash flow was very strong at 87 million euros. This performance underscores our objective of being consistent generators of free cash flow. Our first quarter of free cash flow did benefit from some working capital release due to the slowdown in activity at the end of the quarter. De-leveraging remains our top priority for free cash flow generation. As a result of a strong adjusted EBITDA and free cash flow performance in the first quarter of 2020, we reduced our leverage to 3.7 times. Our liquidity position at the end of the quarter was strong at €660 million. Now, I will hand over to Peter to provide more details on our financial performance. Peter?