Constellium SE

Ladies and gentlemen, thank you for standing by. And welcome to Consilium's third quarter 2020 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker today, Ryan Wentling, Director of Investor Relations. Thank you. Please go ahead, sir.

Thank you, Operator. I would like to welcome everyone to our third 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 consilium.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 Security 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 20-F. All information in this presentation is as of the date of the presentation. We undertake no obligation to update or revise any forward-looking statements 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 will now like to hand the call over to Jean-Marc.

Jean- Thanks, Ryan. Good morning, good afternoon, everyone, and thank you for your interest in Concelium. Let's turn to slide five, please. Before we discuss our highlights from the third quarter, I want to reiterate that the health and the safety of our employees is our first priority. we continue to follow strict protocols to mitigate the risks from the COVID-19 pandemic. I want to thank our employees for taking these precautions seriously. As the virus continues to spread in many communities around the globe, we must remain vigilant and safe. Now, let's discuss our highlights from the third quarter of 2020. Overall, this was a very good performance for the company. While our business is still recovering from the difficult second quarter, we are clearly on the right track. PARP benefited from strong canned sheet and recovering auto body sheet demand. AS&I is experiencing a solid recovery across its automotive and industry platforms and is benefiting from the successful ramp-up and operational improvement. Aerospace demand remains weak. But there is reason for optimism on the TID side with the recent announcement of preliminary anti-dumping duties in the US. As Peter will show you, all three businesses did a great job on costs. Now, for a few details. Shipments were 354,000 metric tons, a decrease of 11% compared to the third quarter of 2019. Revenue decreased 20% to 1.2 billion euros. Of the roughly 300 million Euro decline in revenue compared to the third quarter of last year, approximately two-thirds was related to lower shipments and one-third was related to lower metal prices. I remind you that while our revenues are affected by changes in metal prices, we operate a fast-through business model to minimize metal risk. Net income of 20 million euros compared to net income of 1 million euros in the third quarter of 2019. Adjusted EBITDA of 126 million euros decreased 9% compared to the third quarter of 2019. This is a strong result, and I want to acknowledge the great cost performance our team delivered again this quarter. Constellium generated 354 million of adjusted EBITDA in the first nine months, a decline of 20% compared to the first nine months of last year. We are establishing guidance of adjusted EBITDA of 450 to 460 million euros in 2020. This guidance is based on our current outlook and does not consider, for example, the severe deterioration in economic conditions due to the COVID pandemic. We look forward to a time, hopefully in the not too distant future, when we can reinstate long-term adjusted EBITDA guidance. Our free cash flow was 75 million euros in the third quarter of 2020. This is an exceptional result in a challenging environment and brings our free cash flow for the first nine months of 2020 to 129 million euros. Based on our current view of market conditions, we expect to generate free cash flow of 100 to 150 million euros in 2020. We continue to deliver on our commitment to be consistent generators of free cash flow. Our leverage was 4.3 times at the end of the third quarter. Deleveraging remains the top priority of ours. I will now hand over to Peter to discuss our financial performance in detail.

Peter?

Thank you, Jean-Marc, and thank you, everyone, for joining the call today. Turning now to slide seven, you will find the change in adjusted EBITDA by segment for the third quarter and the first nine months of 2020 compared to the same periods of last year. For the third quarter of 2020, Constellium achieved 126 million euros of adjusted EBITDA a decrease of 13 million euros or 9% year-over-year. PARP adjusted EBITDA of 85 million euros increased by 13 million euros or 20% compared to last year. A&T adjusted EBITDA of 10 million euros decreased by 33 million euros or 77% compared to the third quarter of 2019. AS&I adjusted EBITDA of 33 million euros increased by 7 million euros compared to last year. Lastly, holdings and corporate costs of 2 million euros were comparable to last year. In the first nine months of 2020, Constellium achieved 354 million euros of adjusted EBITDA, a decrease of 87 million euros, or 20% year over year. PARP adjusted EBITDA of €209 million decreased by €1 million compared to last year. A&T adjusted EBITDA of €93 million decreased by €66 million or 41% compared to the first nine months of 2019. AS&I adjusted EBITDA of €66 million decreased by €19 million or 23% compared to last year. Holdings and corporate costs of 14 million euros were 1 million euros higher than last year. We expect agency costs of approximately 18 million euros in 2020. Now, turn to slide eight and let's focus on the PARP segment. Adjusted EBITDA of 85 million euros increased 20 percent compared to the third quarter of last year. Volume was a headwind of 14 million euros in the quarter. Packaging shipments fell by 9%, primarily as a result of the temporary shutdown in March of our Neuf Brassac plant in France and reduced consumption of cans in Europe, both due to COVID-19. We believe these effects are temporary, and we expect stronger shipment levels in the fourth quarter. Shipments to the North American can sheet market in the third quarter increased slightly year over year. Automotive shipments increased 7% compared to last year as demand from our automotive OEM customers recovered rapidly. Costs were a tailwind of 30 million euros due to improved recovery and strong broad-based cost control with labor and maintenance as important contributors. FX translation, which is non-cash, was a headwind of 2 million euros due to the weakening of the U.S. dollar during the quarter. While we have not provided Bowling Green results separately for the past few quarters, I want to provide an update on the trajectory of improvement. Bowling Green's adjusted EBITDA increased from negative 48 million euros in 2018 to negative 15 million euros in negative 19 to what we estimate will be a positive 15 million euros in 2020. I think we can all agree that this is an impressive improvement in over two short years, or over two short years. Now, turn to slide nine, and let's focus on the A&T segment. Adjusted EBITDA of 10 million euros decreased by 77 percent compared to last year. Volume was a headwind of 52 million euros on lower aerospace and TID shipments. Aerospace shipments fell 48 percent compared to last year, as aerospace OEMs and distributors continued to reduce orders to match lower build rates. We expect a similar decline in year-over-year shipments in the fourth quarter. TID shipments declined by 27 percent due to lower industrial activity in both Europe and the U.S. We expect some recovery in the fourth quarter on recent evidence of stronger demand in the U.S. Price and mix was a 2 million euro tailwind. Costs were a tailwind of 19 million euros due to strong broad-based cost control with labor and maintenance as important contributors. FX translation was a 1 million euro headwind in the quarter. Looking forward, despite the challenging market conditions, we expect A&T to remain a positive adjusted EBITDA contributor in 2021, but at a lower level than 2020, as we expect the segment will face difficult year-over-year comparisons through the first half of 21. Now, turn to slide 10, and let's focus on the AS&I segment. Adjusted EBITDA of 33 million euros increased by 7 million euros compared to the third quarter of 2019. Volume was a 3 million euro headwind. Automotive shipments were comparable to last year on strong demand recovery from automotive OEMs. Industry shipments declined 5% due to lower industrial activity in Europe. Price and mix was a 1 million euro tailwind. Costs were a 10 million euro tailwind on strong cost control with labor, maintenance, and subcontractors as important contributors. I want to, in particular, compliment the auto structures team for its efforts to restructure the business and get it back on track. Lastly, FX translation was a 1 million euro headwind in the quarter. Now, Turning to slide 11, I want to highlight our continued strong performance on cost. In the third quarter, we flexed our cost by 96 percent. Cost flex represents the change of cost over the change in revenues for the third quarter of 2020 as compared to the third quarter of 2019. Effectively, for every dollar change in revenue, we're able to flex our cost by 96 cents. This compares favorably to the 83% cost flex we provided last quarter. At the bottom of the page, you can see that each of our businesses demonstrated strong cost control, with PARP at 111% cost flex, A&T at 78%, and AS&I at 122%. Cost flex in excess of 100% reflects cost reductions in excess of revenue declines, partially due to the structural cost reductions during the quarter. Excluding metal and depreciation, we reduced costs by approximately 65 million euros compared to the third quarter of last year. These cost savings were driven by strong cost control across the business, including labor maintenance and professional fees. Labor represented over half of the total 65 million euro decrease. These cost savings include approximately a €5 million benefit from European state employment aid related to COVID-19. As you know, we are very committed to reducing costs and running a lean operation. Fixed cost reduction is a major platform of our Horizon 22 initiative, the successor project to Project 2019. I am pleased to announce our initial Horizon 22 cost reduction goal of 75 million euros of savings. From where we stand today, we estimate in excess of one-third of these annualized Horizon 22 savings have already been secured. Combined with our savings from Project 2019, which you will remember was 78 million euros, we will have cumulatively removed over 150 million euros out of our cost base. I remain excited about the significant cost reduction opportunities that are in front of us. We are working to emerge from this crisis with improved margins and a stronger financial profile than when we entered it. Fixed cost reduction is an important tool in this strategy. Now, let's turn to slide 12 and discuss our balance sheet and liquidity position. At the end of the third quarter, our leverage was 4.3 times and our net debt was 2.05 billion euros, which is more than 100 million euros lower than our net debt position at the end of 2019. We remain very committed to capital discipline. As you know, we reduced our 2020 CapEx target to approximately 175 million euros, a 96 million euro reduction from 2019. Through the first nine months of 2020, we've spent 46 million euros less capex than in the same period of last year. Our free cash flow was 75 million euros for the third quarter and 129 million euros for the first nine months of 2020. We are extremely proud of these achievements given the business environment. They underscore our commitment to be a consistent and strong free cash flow generator. As Jean-Marc noted earlier, we expect to generate 100 to 150 million euros of free cash flow in 2020 based on our current view of market conditions. Generating free cash flow is a firm priority and we remain committed to deleveraging. As you can see in our debt summary on the bottom left-hand side of the page, we have no bond maturities until 2024. Our liquidity was over 1 billion euros at the end of the third quarter. We remain very comfortable with this liquidity position. I'll now hand the call back to Jean-Marc.

Thank you, Peter. Let's turn to slide 14 and discuss our end markets. We believe our balanced portfolio of products across end markets, geographies, and customers is a competitive advantage. I'll start with the packaging markets. Packaging represents 39% of our LTM revenue. We continue to see strong market demand in North America and stable demand in Europe. Our packaging shipments are currently running at 95% or more of last year's levels. We believe the packaging market has long-term secular growth tailwinds driven by customer preference for aluminum cans. Our customers continue to invest in new can lines in North America. These additional lines should drive incremental demand for canned sheet in the years to come. The consumer preference trend is only one of the tailwinds for canned sheet. In Europe, the demand for canned sheet continues to grow based on substitution of aluminum for steel. In the U.S., we continue to expect the growth of auto body sheet demand to tighten supply to the packaging market over the medium to long term. Now let's move to automotive. Automotive remains a secular growth market for aluminum. Customers continue to prefer larger vehicles with regulations aimed at increasing fuel efficiency and reducing emissions. The automotive market will need to continue to lightweight. In addition, We expect hybrid and electric vehicles to continue to gain share of the fleet. These vehicles are aluminum intensive due to the importance of light weighting to achieve their range objectives. Constellium is well positioned to realize the benefits of this circular shift to aluminum in automotive and the electrification of the fleet. Moving to more recent trends, automotive OEMs resumed production in the second quarter and rapidly increased demand in the third quarter. Most OEMs are running at or near last year's levels, both in North America and Europe. The demand for our products will continue to be dependent on the level of production of the OEMs, which as of today is very strong. Let's turn now to aerospace. Aerospace represented 14% of our LTM revenues. The near-term outlook for aerospace remains uncertain due to the effects from the COVID-19 crisis and the 737 MAX issues. Aerospace OEMs have reduced bill rates, and it isn't clear how long bill rates will remain at these levels. Our aerospace business continues to operate at approximately 50% of last year's levels. Based on our current visibility, we expect inventory destocking to persist through the fourth quarter of 2020 and likely through the first half of 2021. In other specialties, we continue to execute on our strategy of expanding in each product in a diversified range of markets. In general, these markets are dependent upon the health of the industrial economy in Europe and North America. For TID, the defense markets remain strong. Most industrial and transportation markets in North America are showing solid signs of improvement, while these markets remain weak in Europe. In European extrusions, demand is solid across most end markets. Before concluding, I want to let you know that Paul Wharton has decided to leave Constellium for a different opportunity. I want to thank Paul for his many contributions to Constellium over the past 10 years and wish him well in his next endeavor. I would also like to announce that Philippe Hoffmann will take over as AS&I Business Unit President and join our Executive Committee. Philippe has a long history with Constellium and has held numerous leadership positions in the company, including management roles in operations, strategy, and innovation. Most recently, he was in charge of auto structures and led their turnaround. I am excited for him to lead ASNI into what I believe is a very promising future. In conclusion, I am very proud of our third quarter results and the tremendous efforts made by the entire Constellium team during this challenging time. We remain committed to operational execution, harvesting the benefits of our investments, disciplined capital deployments, debt reduction, and shareholder value creation. With that operator, we will now open the Q&A session, please.

Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press the pound key. Our first question comes from Chris Terry from Deutsche Bank. Please go ahead. Your line is open.

Thank you. Hi, Jean-Marc and Peter. A few questions from me. Just wanted to start with the utilization rate. So I think you said for packaging, 95%, autos close to 100% of last year, and then aeros at about 50%. Do you have... those numbers for Aero, as you think about the next three quarters or so, do you have a utilization rate that you can share, or is it too hard to tell on that at this point?

Good morning, Chris. On Aero, it's hard to tell. I think what we are preparing for is a continuation of the low rates at which we are. We're obviously in discussions with our customers. There are also positive signs around build rates stabilizing and possibly the 737 max coming back. But we've heard that story before, so it's difficult really to make a prognostic of the future. And I think our best assumption now is for the six, nine months to come, we'll stay around those levels of 50%.

Okay, thank you. And then on the auto market, are you seeing still momentum building into the end of the year or more stabilization at this point?

I think we're seeing stable to positive, but there is uncertainty around when automakers will take their shutdowns at the end of the year. Is it for one week, two weeks, or three weeks? I think the fundamentals of demand are good. Inventory levels in the supply chain remain decently low. But there is still a bit of uncertainty as to the last weeks of the year.

Okay, thank you. And then just on the packaging market, can you just remind us when the bulk of your contracts, I think that was signed in 2017, are due? Is it 2021 or 2022? Can you give just some color given all the announcements downstream that have happened recently, just thinking about potential renewals?

Sure. So we said, you know, 21 to some extent and 22 to a large extent were years of contract renewals. And we look at them with quite a bit of optimism and excitement. We're well contracted going into 21 and 22. And I'm very happy with where we are or where we will be more exactly.

Thanks, Mark. All the best. Sure. Thank you.

Your next question comes from Kurt Woodworth from Credit Key. Please go ahead. Your line is open.

Hey, good morning, John, Mark, and Peter, and congrats on a great operational quarter.

Thanks. Good morning, Kurt. Thanks.

So I guess continuing on kind of Chris's question around packaging and then your comments on, you know, how there's, you know, growing auto sheet demand in the U.S. to some degree, that's going to continue to maybe pull, you know, hot milk capacity away from certain sectors. And there's a finite amount of hot milk capacity in the U.S., which I think is already running pretty full out. So, you know, I'm curious, you know, what your thoughts are with regards to, you know, future growth for U.N. packaging in the U.S. I believe you're running pretty much a full capacity today. I know in the past you've talked about de-bottlenecking of roughly 75,000 tons, but then you know, potential, you know, upgrades or reinvestment to even increase capacity further. Because when you look at the announcements on the can maker side, it's for pretty substantial growth the next five years. And I think it's a 2 million ton market growing at 5%, 6% a year. So that almost implies roughly 100,000 tons of canned sheet growth annually in an industry that appears constrained. So I'm just curious, like how you think about that going forward, and then if, frankly, in the event you would want to grow more in auto, would that limit your participation and can going forward?

No, so these are good problems to have, and we're very excited at the opportunities you're outlining here. So we have constantly evolving plans to improve the throughput from our mills. And if you think of that 100,000 tons of additional demand every year, we can capture our fair share of it or capture or supply our fair share of it as long as we've got a little bit of prior notice and we can decide to allocate capital to the bottleneck here or there. The fact that that capacity is, you know, competing with other countries capacity and auto demand is a good thing for us obviously because strategically and tactically it gives us options. I remind you that at the same time there's quite a bit of talk about one of our competitors going back into the market domestically which would also provide some needed domestic capacity. So all that I think is positive for the market. It's a growing market. It's a consumer's preference that goes towards a our can makers are investing and we as an industry and certainly we as Constellium are ready to meet the challenge as long as this makes sense for us and we get paid for what we supply. It's important whenever we talk about possible capital expenditures towards expansion that we get a fair return on the capital we would be deploying.

Okay, that makes sense. And then within automotive structures, great operational turnaround. I know for a period of roughly 18 months or longer, you've purposely held back on your nomination wins. Do you feel like next year would be a year in which you could accelerate your bidding activity and increase your backlog in the structures business? Do you have capacity to do that?

Yeah, so we paused for two years, essentially, to make sure we digest that very significant growth. And as you can see from the results in AS&I this quarter and over this year, right, we've been successful in turning the corner. So it would stand to reason that we would progressively start to ramp up again our activity in winning nominations and growing the business. We want to be very careful, especially in light of the current environment where It is important that we maintain a balanced portfolio of activity and that we make sure that the investments we make are de-risked and that we get attractive returns. So clearly, in this day and age, we're very conscious of the fact that capital is very expensive. Our priority is deleveraging, and we want to be sure that whatever capital we deploy gets very attractive rates of returns.

Okay, makes sense. And then one last one on aerospace. It seems like you're assuming build rates stay relatively muted, and there's been some news about Airbus potentially taking the A320 up to, I think, a 47 versus 40 rate. So kind of two questions. Your guidance seems like you're assuming status quo, but, again, partly what's going on today is a very significant destocked. And it's obvious that comps will be negative maybe in the first quarter, first half. But do you have any sense of, you know, how long this destock could continue for? And then in the event Airbus were to increase A320 to what I think they've publicly been saying, is there any way to quantify what that could mean to you?

Yeah, so you're absolutely right. We're in destocking mode, and the destocking is very acute given how sharply the – the rates have come down. And by the same token, when rates go back up, and especially if destocking has lasted for a long enough period of time, then the ramp-up will be extremely strong. It is difficult to make a prognostic, but I think the first half of 2021 is going to be, as you mentioned, very challenging. We'll still be destocking. It's a long supply chain. But when things go back up, maybe in the second half, that should be very strong, very quickly. It's impossible to tell. I mean, we've seen very sharp variations quarter to quarter. And what I can tell you is, given how much work we've done on the cost side to reduce our costs, when it goes back up, we'll spring back even more forcefully than before. than when we came down. When it happens, is anybody's guess at this stage?

Yes, understandable. Thanks very much for your time. Sure.

Your next question comes from Josh Sullivan from The Benchmark Company. Please go ahead. Your line is open.

Hey, good morning. Morning, Josh. Hey, Josh. Just looking at the free cash flow, and congratulations. You know, on the Horizon 22 program, Can you give us any idea of how much of, you know, disruption with COVID-19 has brought those plans forward? Maybe where you thought you would be by now, but where, you know, how much of that has actually been accelerated because of COVID-19?

Yeah, I would say, thanks, Josh. Good question. I would say that, you know, the adage never let a good crisis go to waste. We've definitely kind of taken advantage of that. in the sense that it sharpens everyone's focus on cost reduction. We, you know, throughout each of the business units, I think you can see it in the numbers and in the cost selects in the third quarter, I think you can see really, you know, the outperformance as the costs are coming down sharper or the costs are coming down quicker than the revenues. So, in terms of the, you know, how much has really been brought forward, I would say, you know, when we look at the Horizon 22 initiative, we say we've announced it's a $75 million program. We feel we're probably, you know, kind of, as I said earlier, over a third of the way through that. And we're probably further along. It's hard to say exactly how much further along we are, but I would say we're definitely further along than we would be otherwise.

Got it. And then just switching over to the canned sheet market, do you anticipate imports for canned sheet in North America, just given the tightness in the market? And then would the economics work for you to import anything from Europe at this point?

Yeah, so we have seen an increase in imports of canned sheet over the past year. That is due to a large extent to distortion induced by trade policies. where you know that there is 232 tariffs coming into the U.S. of 10%. However, there are numerous exemptions that are being filed and granted, which essentially means that if you import from a foreign country, you're importing the LME content of the can sheet at 10% less than what the domestic mills have access to. So it's one of those exemptions. interesting situations where, while the administration is trying to help domestic mills, they are actually penalizing us by giving us a higher price of metal than what foreigners get if they get an exemption. So yes, we've seen a little increase of imports, and I think imports will continue to play a role as long as we have this distorted trade policy. But remember that these are long supply chains, and you've got problems with what you do with the process scrap. You can't return it to the mill as you can if you're sourcing from a domestic supplier. And then a lot of those mills are in a time of stronger and stronger focus on sustainability. A lot of these imports come from... sources in the world where power generation is much dirtier than it is here in the U.S. or Canada. And I think over time this is something that will become less and less palatable as the carbon content of that aluminum source from overseas is penalized by the source of the electricity that is used to produce the aluminum, the high transportation cost and energy requirements to get it here, and the lack of recyclability of the process crap. So we'll see. I think impulse will continue to play a role, but not a major role in the balance. And quite frankly, we've been dealing with that for the past couple of years, and we've been doing just fine, as you can see from our numbers.

Got it. And then just a follow-up to Kurt's question. As far as the battery box opportunity, have you seen any specific nominations on the EV front for the battery box at this point?

So we are participating in three projects that we communicated about nearly two years ago. We haven't had more nominations, but that's part of the conscious choice we've made to make sure that we can digest all the projects we had secured and that we can also let the technology mature. There's many different designs for battery boxes. and we want to make sure that the technology matures before we get into, you know, what will be the winning choices or the winning options for battery boxes. We have a substantial R&D project that we're doing with two OEMs in Europe on ways to make battery boxes much more efficient than one that than what the traditional designs are today. We'll see when this matures. This is quite exciting, and we've gotten substantial grants from the UK government to do that. So I think more to come in one year, one and a half years' time, when that project will have evolved sufficiently and we'll be working with those OEMs.

Great. Thank you for the time. Sure.

As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your next question comes from Sean Wondrak from Deutsche Bank. Please go ahead. Your line is open.

Hi, Peter and John Mark. Hey, Sean. How are you? Hope you're doing well. Yep. So it's great to hear what's going on in the packaging and the auto market that demand is resuming and you're in pretty high-capacity utilization now. I'm sorry, I'm just going to ask one more question sort of around the aerospace sector, which obviously is very difficult right now. But in the past, you've sort of discussed the five- to seven-year-long contracts in aerospace. Obviously, there's only a few suppliers out there. How do these contracts work? And are they minimum take or pay? Or, you know, how does that sort of function in this kind of an environment? Do you have to work with your customers, I would assume?

Yeah, so they are requirement-based. So it's a share of market, right, or share of demand by the OEMs. And within a frozen window, which can be, say, up to a year, it's a take or pay. And obviously, in the case of the days we are living through, we have decided to work with our customers so that we don't impose on them to take off a provision for 2020, right? We could be forcing them to take volumes they don't need. At the end of the day, that sounds very conducive to a good business and a good strategic partnership with a customer, and that would prolong the destocking into 2021 way too long. So I think I commented on this in the prior earnings call. We've decided to take more pain this year so that we adjust more quickly to the realities of the market. I mean, ultimately, these are very strategic relationships that we've had for, you know, longer than our lifetimes as individuals, and we want to make sure they continue into the future. It's very collaborative, and we want to make sure that we confront the crisis very solidly with our customers.

Brian, I think that makes a lot of sense. Have you seen any sort of peers or competitors who have been trying to you know, maybe grow market share at lower prices, or is that sort of based on the construct that you just described, is that sort of limited?

Well, I don't think so. I mean, with the OEMs, we've got, you know, we made the comment on, you know, the Elvis contract we signed earlier this year that's a 10-year contract. These are, you know, the market shares are fixed for 10 years, essentially. So there's not really an opportunity to, for somebody to come in and get a little more business at the expense of somebody who's already got a contract. Now, Airbus doesn't do all their business with us, so other competitors may have different timeframes or contractual provisions. But in our case, we are not exposed to using market share except when contracts renew. Yeah.

It's also really hard for competitors to do that in a period of destocking. So...

Right, right. That would make a lot of sense. And then just quickly on the cost front, obviously you guys have done a great job at taking out costs starting with Project 2019. And basically, you know, through the corona outbreak, you talked about $65 million, you know, going forward. Excuse me. I think that was this year versus last year that you've taken out. Is it getting more and more difficult to take out additional costs? And sort of where are you looking at this point? given that you've done such a good job.

Yeah, thanks, Sean. So I think a couple things. Number one, you remember our Project 2019 achievement was $78 million, and our fixed cost reduction initiative as part of Horizon 22 is $75 million. So we continue to see opportunities in the company, and just the relative magnitude shows you that we're not finding them so hard to find. We still think there's a lot of opportunity and we'll never be done with this, so that's kind of part of the DNA of the team here. In terms of where the big opportunities are, we've talked in the past a lot about metal and kind of efficiencies around metal. There's also a lot of opportunities around manufacturing and kind of running our plants more efficiently, running our equipment more efficiently. We've done a lot of cost reduction around reducing external resources. You know, there are times in a company like this where you've got a lot of external consultants. A good example of that is what we, you know, had going on in AS&I when we were trying to turn it around. We brought a lot of people in to help us kind of get it fixed quickly. And they did that, but it added a lot of extra costs, as you saw in the, you know, kind of last two quarters of last year. So we've now kind of gotten rid of all of that cost, and we're kind of running on our own at a much lower and a more sustainable base. So it's coming from a lot of different places, but I would say we still see quite a bit of opportunity.

Sounds good. And then just a quick last one for me. Obviously, you know, between the two presidential candidates, candidate Biden has basically touted somewhat of a greener agenda than which could sort of present opportunities for your company. I was curious if you thought about any of the opportunities there and how you might attack them.

Well, we'll see next Tuesday or later, whenever the elections get called. I think we've got a very balanced portfolio of activities, and some activities could benefit from a change in policy, but... Other activities may benefit from a continuation of policies. I think we'll have to see how it goes. And I think, again, the balanced portfolio of activities we have give us the ability to sail through, you know, whatever changing policies in a pretty good fashion.

All right. Thank you very much. I appreciate all the guidance here.

Thanks, Sean.

We have no further questions in queue. I would now like to turn the call over to Jean-Marc Jamet, Constellium's CEO, for closing remarks.

Well, thank you very much, everybody, again, for your interest in Constellium, and we are very proud of this quarter. We're very determined to finish the year on a strong note with strong free cash flow generation, and we look forward to being able to tell you more about the long term when we come back to you in February with our Q4 earnings. Thank you so much for your interest. Goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.