Constellium SE

Hello and welcome to today's Constellium second quarter 2022 results. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I would now like to hand over to Jason Heisheiser from Director of Investor Relations. The floor is yours. Please go ahead.

Thank you, Elliot. I would like to welcome everyone to our second quarter 2022 earnings call. On the call today, we have our Chief Executive Officer, John Marks 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 Constellium.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 filing. 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. will 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 reconciliation of non-GAAP financial measures attached in today's slide presentation, which supplement our IFRS disclosures. I would now like to hand the call over to Jean-Marc.

Thank you Jason. Good morning, good afternoon everyone and thank you for your interest in Constellium. Let's turn to slide five and discuss the highlights from our second quarter results. I would like to start with safety, our number one priority. After a strong first quarter performance, our recordable case rate climbed in the second quarter, leading to a rate of 2.2 per million hours worked for the first half of the year. This is a humbling reminder that While we always strive to deliver best-in-class safety performance, we need to constantly maintain our focus on safety to achieve the ambitious targets we have set. It is a never-ending task for our company and one that we take very seriously. Turning to our financial results, shipments were 424,000 tons, up 4% compared to the second quarter of 2021, due to higher shipments in each of our segments. Revenue increased 50% to 2.3 billion euros as a result of higher metal prices, improved price and mix, and increased volumes. As we have said previously, while our revenues are affected by changes in metal prices, we operate a pass-through business model, which minimizes our exposure to metal price risk. Our value-added revenue, which reflects our sales, excluding the cost of metal, was 704 million euros, up 22% compared to the second quarter last year. Our net loss of 32 million euros in the quarter compares to a net income of 108 million euros in the second quarter of 2021. The decreases in net income is primarily related to a 158 million euro unfavorable change in unrealized gains and losses on derivatives, mostly related to our metal hedging position. As you can see in the bridge on the top right, adjusted EBITDA was 198 million euros, 17% above the second quarter of 2021. This is a new record for the company, and it includes record results in both PARP and ASNI. Demand remained strong across most end markets during the quarter, and notably, the aerospace recovery continued in the quarter with strong growth both year-over-year and sequentially. Automotive continues to be impacted by the semiconductor shortage and other supply chain challenges. The combination of stronger demand, pricing power, solid execution by our team, and a stronger U.S. dollar drove better results despite the significant cost pressures, which Peter will discuss later in more detail. Moving now to free cash flow, we extended our track record of consistent free cash flow generation with 60 million euros in the quarter. As you can see on the bottom right of the slide, we demonstrated our continuing commitment to deleveraging, ending the second quarter at 3.0 times or down almost half a turn from the end of 2021. We remain committed to achieving our leverage target of 2.5 times and maintaining our long-term leverage target range of 1.5 to 2.5 times. Overall, I am very proud of our second quarter performance. Looking forward, macroeconomic and geopolitical risks remain elevated, and we expect inflationary pressures to continue, especially for inputs like energy in regions more directly affected by the ongoing war in Ukraine. Despite some warning signs, we are not experiencing a material reduction in demand in our core end markets, and our business has continued to perform well. As a consequence, we are optimistic about our prospects for the remainder of this year. We are therefore raising our 2022 adjusted EBITDA guidance to a range of 670 to 690 million euros. That increases our previous guidance of 640 to 660 million euros. In addition, we continue to expect free cash flow in excess of 170 million euros in 2022. Turning to slide six, and before handing it over to Peter, I want to directly address a topic I know you are all focused on, and so are we, which is natural gas prices and availability in Europe. As is the case for Europe generally, a portion of the natural gas used in our facilities comes from Russia. To date, our operations have not been affected from an availability standpoint. There is clearly an increased risk that Russia further reduces or stops its flow of natural gas to Europe at some point. It is difficult to know if or when this may occur, though we believe there is good logic for Russia to gradually reduce the flow of gas to Europe. We noted Nord Stream 1's recent return to service at a lower flow rate than pre-maintenance level, and well below capacity. To address this risk, Europe is moving quickly to limit any potential impacts. This includes finding alternative sources of gas, the European Commission's 15% demand reduction plan, and a broader plan to end dependence on Russian gas in the future. As you all know, Russian gas dependence varies widely by country across Europe. While we do have exposure in some countries that depend heavily on Russian gas, a substantial amount of our EBITDA in Europe is generated in countries with less dependence. In addition, we believe a 15% reduction in gas supply would lead to much less than a 15% reduction in our production capacity. Also, as a reminder, during COVID, most of our plants were deemed critical, given our exposure in markets such as aerospace, defense, and packaging, food and pharmaceutical. If we are afforded the same treatment in a scenario where gas rationing is necessary, it could limit the impact on our operations. We are obviously monitoring the situation very closely and will continue to update you on developments. For the avoidance of doubt, the guidance I provided a moment ago assumes that natural gas will continue to be available, albeit at elevated prices. With that, I will now hand the call over to Peter for further details on our financial performance.