Constellium Se · NYSE:CSTM
Constellium — Investor Day (April 2022)
78 slides from Constellium's investor day presentation, Apr 6, 2022
Slide 1: Analyst Day Muscle Shoals, AL April 6, 2022
Analyst Day Muscle Shoals, AL April 6, 2022 Exhibit 99.1
Slide 2: Important Information
Important Information Forward Looking Statements Certain statements contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This presentation may contain “forward-looking statements” with respect to our busi
Slide 3: Agenda
Topic Presenter Start Time Introduction/ Sustainability Jean-Marc Germain CEO 8:00AM P&ARP Peter Basten* BU President 8:40AM AS&I Philippe Hoffmann* BU President 9:05AM Break 9:30AM A&T Ingrid Joerg* BU President 9:45AM Finance Peter Matt EVP and CFO 10:10AM Q&A Jean-Marc Germain + Peter Matt 10:35A
Slide 4: Jean-Marc Germain: Introduction
JEAN-MARC GERMAIN INTRODUCTION
Slide 5: Today's Key Messages
Today’s Key Messages Diversified portfolio with durable, sustainability-driven secular growth trends 1 Compelling strategy with a track record of successful execution 2 Leverage closing in on 2.5x target, capital allocation priorities pivoting to growth and shareholder returns; significant opportuni
Slide 6: Safety is Our Top Priority
Safety is Our Top Priority Muscle Shoals, AL Best-in-class safety performance Targeting 1.5 recordable case rate by 2025 Note: Recordable Case Rate measures the number of fatalities, serious injuries, lost-time injuries, restricted work injuries, or medical treatments per one million hours worked, i
Slide 7: Potential 2022 Impacts from the Russia/Ukraine Conflict
Potential 2022 Impacts from the Russia/Ukraine Conflict De minimis sales in Russia or the Ukraine Supplier impacts limited thus far, though monitoring situation closely Small amount of metal input (~4% from Russian suppliers); potential for lost sales, some offset from higher metal prices More meani
Slide 8: Constellium: A Diversified Fabricator of Value Added Aluminium Products
Constellium: A Diversified Fabricator of Value Added Aluminium Products 29 Facilities €135M Free Cash Flow €6.2B Revenue ~12K Employees 25.7% Adj. EBITDA / VAR 1.6M Tons Shipped 3 Business Units 3.4x Leverage €581M Adjusted EBITDA Note: All financial and tonnage figures are for FY2021. Adjusted EBIT
Slide 9: A Global Leader with Three Strong, Well-Positioned Business Units
A Global Leader with Three Strong, Well-Positioned Business Units Note: All revenue figures are for FY2021 Packaging & Automotive Rolled Products €3.7B Revenue Sheet products Automotive Structures & Industry €1.4B Revenue Extrusions and structural products Aerospace & Transportation €1.1B Revenue Pl
Slide 10: Focused on Diversified End Markets Benefiting from Secular Growth Trends
Packaging Automotive Aerospace Other Specialties CSTM % of 2021 Revenue 43% 26% 6% 25% Forecasted Aluminium Sheet/Plate Growth (CAGR) through 2025(1) 4% to 5% 11% to 15% 13% to 15% 3% to 5% Secular Growth Drivers Sustainable packaging Lightweighting, electric vehicles, safety Lightweighting Lightwei
Slide 11: Aluminium is the Growth Catalyst Given Its Sustainable Attributes
Aluminium is the Growth Catalyst Given Its Sustainable Attributes Aluminium’s attractive characteristics are driving growth in packaging, automotive, aerospace, transportation and other markets – all core end markets for Constellium Lightweight Provides a ~40% weight reduction compared to similar st
Slide 12: Substantial Opportunities for Aluminium in Packaging and Automotive
Substantial Opportunities for Aluminium in Packaging and Automotive Lightweighting is driving secular growth opportunity Reduce emissions in ICEs Extend range in BEVs BEVs accelerate growth opportunity On average, use 3x more aluminium sheet and extrusions than traditional ICE vehicles Aluminium has
Slide 13: We Remain Committed to Our Business Strategy
We Remain Committed to Our Business Strategy - A Critical Driver of Our Success… Our Strategic Pillars Focus on Growing in High Value-Added and Responsible Products Increase Customer Connectivity Optimize Margins and Asset Utilization Strictly Control Costs, Manage Resources Responsibly Demonstrate
Slide 14: And to a Strong ESG Profile
Environmental …And to a Strong ESG Profile Safety record among the best in the industry Focused on training and development of our people External diversity target in place for senior management Compensation tied to safety, GHG, and diversity objectives Sustainability trends are accelerators for our
Slide 15: Digital Technologies Bring Opportunities to Enhance Safety, Efficiency and Profitability
Digital Technologies Bring Opportunities to Enhance the Safety, Efficiency and Profitability of Our Business Results and Benefits Digital tools to enhance plant safety Predictive maintenance and machine anomaly alerts Digital mobile applications for shop floor maintenance “Digital twin” applications
Slide 16: Strong Track Record of Successful Execution
Strong Track Record of Successful Execution Note: Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See Appendix for definitions of non-GAAP financial measures, and for reconciliations to their most directly comparable GAAP financial measures. Disciplined Capital Expenditure Manage
Slide 17: Exciting Earnings Growth Opportunities on the Horizon
Exciting Earnings Growth Opportunities on the Horizon for Constellium Foundation in place for a compelling medium-term and long-term growth story; Market demand profile dictates we begin making incremental investments now End Market Recovery 1 Harvest Prior Investments 2 Continuous Improvement 3 Inc
Slide 18: As Leverage Closes in on 2.5x, Capital Allocation Priorities Will Broaden
As Leverage Closes in on 2.5x, Our Capital Allocation Priorities Will Broaden Consistent Free Cash Flow Generation Future Priorities Near / Medium-Term Priorities Target leverage of 1.5x – 2.5x €75-150M annual growth capex Highly selective M&A Return capital to shareholders (dividends and share repu
Slide 19: Establishing Our Public Sustainability Targets
Reduce our scope 1, 2 and 3 GHG emissions intensity by 30% in 2030 (target of 3.5 t CO2 eq/t shipped vs. 5.1 t/t in 2021) Reduce our scope 1 and 2 GHG emissions intensity by 30% in 2030 (target of 0.5 t/t vs. 0.7 t/t in 2021) Establishing Our Public Sustainability Targets Achieve a best-in-class 1.5
Slide 20: Establishing Our Long-Term Financial Guidance
Establishing Our Long-Term Financial Guidance Adjusted EBITDA of €600M to €620M Free Cash Flow > €150M Adjusted EBITDA > €800M 2022 2025 Note: Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See Appendix for definitions of non-GAAP financial measures.
Slide 21: Today's Presenters
Today’s Presenters PETER BASTEN PRESIDENT, PACKAGING & AUTOMOTIVE ROLLED PRODUCTS INGRID JOERG PRESIDENT, AEROSPACE & TRANSPORTATION PETER MATT EVP & CHIEF FINANCIAL OFFICER PHILIPPE HOFFMANN PRESIDENT, AUTOMOTIVE STRUCTURES & INDUSTRY
Slide 22: Peter Basten: Packaging & Automotive Rolled Products
PETER BASTEN PACKAGING & AUTOMOTIVE ROLLED PRODUCTS
Slide 23: P&ARP: A Global Leader in Packaging and Automotive Rolled Products
Beverage Cans Automotive Closures Cosmetics Foilstock P&ARP: A Global Leader in Packaging and Automotive Rolled Products Bowling Green Muscle Shoals Neuf-Brisach Singen 4 PLANTS WORLDWIDE Sheet PRODUCTS 1.1MT SHIPMENTS €3.7B REVENUE €344M ADJUSTED EBITDA 3,900 EMPLOYEES 2021 Figures Note: Adjusted E
Slide 24: Strong Results on Successful Ramp-Up of NA Operations
Strong Results on Successful Ramp-Up of NA Operations; Significant Growth Opportunities on Both Sides of the Atlantic Strategic Priorities Grow our recycling and casting footprint Execute Neuf-Brisach investment Developing solutions for Muscle Shoals and Singen Grow can sheet volumes Debottlenecking
Slide 25: North America Update: Solid Execution and Strong Adjusted EBITDA Contribution
North America Update: Solid Execution and Strong Adjusted EBITDA Contribution North America achievements: New leadership bringing solid industry experience Built a strong safety and quality culture Enhanced maintenance and reliability; improved operational performance (uptime, recovery) Strong focus
Slide 26: Can Stock is Our Largest End Market and Growing at a Mid-Single-Digit Rate
Market Trends Consumers and brand owners increasingly prefer aluminium cans for packaging More recyclable than plastic and glass Better marketing tool (e.g. cans as billboard) Lightweight, easy to transport Growth opportunities in other product categories (e.g. water) Can makers favoring domestic su
Slide 27: Can Sheet Demand Growth Underwritten by Can Maker Capacity Additions
Can Sheet Demand Growth Underwritten by Can Maker Capacity Additions Several new can plants / lines have been announced in the U.S. and Europe (representing over €3 billion of investment) ~40 billion cans or ~600kt can sheet demand ~15-20% more than the existing market in 2020/21 Substantial deficit
Slide 28: ABS Underlying Demand Remains Strong, Especially for Premium Vehicles and SUVs
Market Trends Production of light vehicles is expected to increase in both regions Share of SUVs is increasing in both regions; SUVs typically have above average aluminium content Rapid, regulatory-driven shift towards electric vehicles in both regions driving lightweighting to maximize the range Al
Slide 29: P&ARP is Well-Positioned for the EV Transition
P&ARP is Well-Positioned for the EV Transition ABS battery enclosures (also possible as extruded product) Prismatic Battery Housing Cathode Battery Foil Focus is to maximize the output and profitability of existing capacity (~300kt); further ABS capacity can be added based on customer demand Body-in
Slide 30: Expanding Recycling Brings Powerful Strategic and Financial Advantages
Expanding Recycling Brings Powerful Strategic and Financial Advantages Estimated capital investment of ~€130M Provides ~130kt of slab capacity, reducing reliance on external suppliers Improves margins and generates compelling returns Enables closed-loop recycling with automotive and packaging custom
Slide 31: P&ARP's Roadmap for Future Growth
P&ARP’s Roadmap for Future Growth Substantial opportunities to unleash capacity in both the U.S. and Europe Phase 1: ~200kt in place by 2025 with investment of €175-200M An additional ~140kt by 2030 Capacity focused on debottlenecking and system upgrades Contracts securing Phase 1 (2025) in place Re
Slide 32: P&ARP Takeaways
P&ARP Takeaways 1 2 3 4 1 2 3 4 Well-positioned to benefit from powerful sustainability-driven growth trends; these trends are strengthening our competitive advantage Debottlenecking investments across the portfolio expected to create significant additional capacity to meet growing market needs Neuf
Slide 33: Q&A
Q:A + Constellium
Slide 34: Philippe Hoffmann: Automotive Structures & Industry
PHILIPPE HOFFMANN AUTOMOTIVE STRUCTURES & INDUSTRY
Slide 35: AS&I: Leader in Advanced Extrusion-Based Products
Industrial Solar Other Automotive Transport Rail Building Van Buren Singen Decin Sierre Gottmadingen Brunel UTC 261KT SHIPMENTS €1.4B REVENUE €142M ADJUSTED EBITDA 19 PLANTS WORLDWIDE : Automotive Structures + Extrusions PRODUCTS 4,600 EMPLOYEES 2021 Figures AS&I: Leader in Advanced Extrusion-Based
Slide 36: Solid Recovery from COVID Leading to Record Profitability in AS&I
Solid Recovery from COVID Leading to Record Profitability in AS&I Strategic Priorities Further improve Automotive Structures return profile Fully utilize new press investments to strengthen leadership position in advanced extrusion-based products Use proprietary technology to build competitive advan
Slide 37: Robust Automotive Demand for Aluminium Extrusions
Robust Automotive Demand for Aluminium Extrusions Lightweighting is driving the value proposition Generational shift to BEVs (including battery enclosures) has a multiplier effect Vertical integration creates synergy opportunities and enables a differentiated product offering New alloy development f
Slide 38: Auto Structures - A Strong Platform Focused on Maximizing Returns
Auto Structures - A Strong Platform Focused on Maximizing Returns Fully integrating world-class R&D capabilities in nomination process Increasing asset modularity to maximize returns Able to be used for multiple platforms Extends investment horizon and enhances returns Optimizing plant footprints to
Slide 39: Industry Delivering Strong Performance
Industry Delivering Strong Performance Extrusions demand expected to grow at GDP, with pockets of higher growth (i.e. rail and solar) Active portfolio optimization and operational excellence efforts have resulted in a mix of innovative, highly contributive products State-of-the-art soft and hard all
Slide 40: Capitalizing on World-Class R&D to Create Future Opportunities
Capitalizing on World-Class R&D to Create Future Opportunities Strong Innovation Portfolio Helps Nurture Tomorrow’s Growth Dedicated AS&I R&D center at Brunel University with strong links to broader Constellium R&D team and OEM research teams Using proprietary recycling, casting, extruding, and stru
Slide 41: AS&I is Well-Positioned with Attractive Growth Potential
AS&I is Well-Positioned with Attractive Growth Potential Deliver Profitable Growth in Automotive Structures Opportunistically Grow in Industry Capture recovery of automotive demand Continue to improve efficiency and returns Moderate growth from highly selective new project investments Complete ramp
Slide 42: AS&I Takeaways
AS&I Takeaways 1 2 3 4 1 2 3 5 4 Well-positioned to capture benefits of a near-term automotive rebound and the longer-term vehicle electrification trend Technically advanced extrusion expertise and new press investments in Industry position us to capture high margin growth on incremental tons Future
Slide 43: Q&A
Q:A + Constellium
Slide 44: Analyst Day Muscle Shoals, AL April 6, 2022
Analyst Day Muscle Shoals, AL April 6, 2022
Slide 45: Ingrid Joerg: Aerospace & Transportation
INGRID JOERG AEROSPACE & TRANSPORTATION
Slide 46: A&T: A Global Leader in Aerospace; Solid Position in TID
A&T: A Global Leader in Aerospace; Solid Position in Transportation, Industry & Defense (TID) Aviation Space Defense Industry Truck / Trailer Leisure boats 206KT SHIPMENTS €1.1B REVENUE €111M ADJUSTED EBITDA Ravenswood Issoire Sierre Montreuil- Juigné Ussel 6 PLANTS WORLDWIDE(1) : Plate, Sheet, Extr
Slide 47: Aerospace Heavily Impacted by COVID-19, Offset by Strong Growth in TID
Aerospace Heavily Impacted by COVID-19 Pandemic, Offset by Strong Growth in TID Strategic Priorities Maintain leadership position in aerospace with a strong presence at all major OEMs Strengthen TID position through aerospace recovery, especially in North American transportation segment Develop inno
Slide 48: Battle-Tested by Last Two Years and Diversified
Battle-Tested by Last Two Years and Passed Diversified in 2017-2019 Aggressively cut costs to counter weak aerospace demand Took advantage of rebound in transportation and industrial markets Strong results achieved despite aerospace shipments at only 42% of 2016 level Managed COVID crisis in 2020-20
Slide 49: Aerospace Markets Return to Growth
Aerospace Markets Return to Growth Market Trends Passenger traffic improving but still down approximately 50% vs. 2019(1) Recovery of domestic travel driving strong demand for single aisle aircraft, build rates increasing International travel remains low, wide body aircraft market expected to return
Slide 50: Why We Like Our Aerospace Business
Why We Like Our Aerospace Business CSTM Aerospace Portfolio CSTM Aerospace Products Relative Contribution Contribution Margin per Metric Ton 3x Attractive long-term demand growth Competitive advantage - challenging to make products and difficult to replicate asset base Compelling margins - earns the
Slide 51: Expecting Steady Growth in Transportation, Industry and Defense
Expecting Steady Growth in Transportation, Industry and Defense Market Trends Demand is expected to grow with GDP Diverse end markets, largely tied to transportation and capital goods Strong short-term demand profile Onshoring of supply chains U.S. and EU trade actions support domestic producers Vol
Slide 52: TID: A Critical Piece of the Diversification Story
TID: A Critical Piece of the Diversification Story TID End Market Breakout Main TID customers are OEMs in commercial transportation and leisure boats €30M investment in quality and capacity debottlenecking for coil products; more automation for process improvement; stronger market capabilities openi
Slide 53: Significant Earnings Power; Outsized Adjusted EBITDA Growth Through 2025
Significant Earnings Power; Well-Positioned to Deliver Outsized Adjusted EBITDA Growth Through 2025 Stepping stones in place to return to >€200M of Adjusted EBITDA €539 €700-800 €111M >€200M Growth Drivers Increase shipments to >275kt by 2025 with a modest level of growth investments Recovery of aer
Slide 54: A&T Takeaways
A&T Takeaways 1 2 3 4 1 2 3 4 Substantial earnings leverage in an aerospace recovery Aerospace demand trends remain favorable over the near, medium and long term Continue to grow the TID business Strong focus on people, costs, operational excellence and capital discipline
Slide 55: Q&A
Q:A + Constellium
Slide 56: Finance: Peter Matt
e Constellium FINANCE PETER MATT
Slide 57: Finance Priorities Drive Shareholder Value Creation
Finance Priorities Drive Shareholder Value Creation 1 2 3 4 5 Rigorous cost & capital discipline Grow topline Maintain financial flexibility Generate free cash flow Optimize margins and improve returns
Slide 58: Introducing VAR and ROIC
Introducing VAR and ROIC VAR = Revenue - Cost of metal Where: Cost of metal = cost of aluminium + Freight out costs + Realized gains and losses from hedging + Cost of other alloying metals + Scrap result VAR is useful because it: Reflects our sales excluding metal Eliminates the impact of metal pric
Slide 59: Executing on Drivers of Shareholder Value Creation
Executing on Drivers of Shareholder Value Creation Growing VAR despite COVID Steady Adjusted EBITDA growth Significant margin improvement ~8% CAGR +700 bps ~3% CAGR Note: VAR and Adjusted EBITDA are non-GAAP financial measures. See Appendix for definitions of non-GAAP financial measures, and for rec
Slide 60: Our Balance Sheet is an Emerging Strength
Our Balance Sheet is an Emerging Strength Much improved balance sheet Reduced leverage No near-term debt maturities, substantial liquidity Excellent access to capital Sustainability-linked bonds align our capital structure and our ESG goals 2.5x remains our medium-term leverage target Consistent FCF
Slide 61: Well-Prepared to Face Current Cost Challenges
Well-Prepared to Face Current Cost Challenges Demonstrated ability to flex costs down during COVID and to manage their increase in recovery Cost control remains a core focus Horizon 2022 / Vision ‘25 opportunities in operating efficiency, metal optimization, energy, and fixed costs €50M+ opportunity
Slide 62: Sustainability Megatrends Will Strengthen Our Financial Performance
Sustainability Megatrends Will Strengthen Our Financial Performance Strong demand across most end markets Customer value proposition leading to improved contract pricing and terms Environmental targets increasing our focus on costs Focused on improving efficiency and reducing consumption Recycling i
Slide 63: Near-Term We Expect to Increase Investment in Our Business
Can Sheet Capacity Expansion Capital Spending €175-200M IRR 20%+ Trade Working Capital ~40% of Capex Payback (from 1st spend) ~6 years Neuf-Brisach Recycling Investment Capital Spending €125-135M IRR 20%+ Trade Working Capital ~10% of Capex Payback (from 1st spend) ~8 years Near-Term We Expect to In
Slide 64: Confident in Our Adjusted EBITDA Guidance of Over €800M in 2025
Confident in Our Adjusted EBITDA Guidance of Over €800M in 2025 STRUCTURAL COST REDUCTION AND OPERATIONAL IMPROVEMENTS (NET) MARKET GROWTH AND GROWTH INVESTMENTS END MARKET RECOVERY PRICING (NET) 2021 2025 Target Aerospace Automotive EU Recycling Horizon 22/ Vision ‘25: Operational Excellence Metal
Slide 65: Pivot to Growth is Increasing Our Focus on ROIC
Pivot to Growth is Increasing Our Focus on ROIC Determined to drive compelling investment returns Potential in our current operations Growth / return seeking capital opportunity Each business has substantial opportunities to improve its returns P&ARP: Debottlenecking, recycling investments, automoti
Slide 66: Strong Free Cash Flow Profile is Core to Our Plan
Strong Free Cash Flow Profile is Core to Our Plan Business strategy supports consistent “through the cycle” FCF generation >€460 million of FCF since 2019, despite COVID Free Cash Flow profile supported by: Durable and growing Adjusted EBITDA Manageable TWC requirements (~€50M) Disciplined capital s
Slide 67: Long-Term Capital Allocation Priorities
Long-Term Capital Allocation Priorities Maintain a strong balance sheet Invest in growth at attractive IRRs Return capital to shareholders Dividends and Share Repurchases #1 #2 #3 Leverage between 1.5x and 2.5x €75-150 million annual growth capex invested at >15% IRRs; highly selective M&A
Slide 68: CSTM is a Compelling Investment
CSTM is a Compelling Investment 1 2 3 4 1 2 3 4 Adjusted EBITDA of €600M to €620M Free Cash Flow > €150M Capex: ~€250-260M Cash interest: ~€100M Cash taxes: ~€20-25M Adjusted EBITDA > €800M 2022 2025 Our Financial Guidance Note: Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See
Slide 69: Q&A
Q:A + Constellium
Slide 70: Investor Contact
Analyst Day Muscle Shoals, AL April 6, 2022 Investor Contact Jason Hershiser +1 (443) 988 0600 investor-relations@constellium.com
Slide 71: Appendix
APPENDIX + Constellium
Slide 72: Non-GAAP Measures
Non-GAAP Measures In addition to the results reported in accordance with International Financial Reporting Standards (“IFRS”), this presentation includes information regarding certain financial measures which are not prepared in accordance with IFRS (“non-GAAP measures”). The non-GAAP measures used
Slide 73: Non-GAAP Measures
Non-GAAP Measures Free Cash Flow is defined as net cash flow from operating activities less capital expenditure, equity contributions and loans to joint ventures and other investing activities. Management believes that Free Cash Flow is a useful measure of the net cash flow generated or used by the
Slide 74: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA Year ended December 31, (in millions of Euros) 2021 2020 2019 2018 2017 2016 2015 Net income / (loss) 262 (17) 64 190 (31) (4) (552) Income tax expense / (benefit) 55 (17) 18 32 80 69 (32) Income / (loss) before tax 317 (34) 82 222 49 65 (584) Finance
Slide 75: VAR Reconciliation
VAR Reconciliation As of December 31, (in millions of Euros) 2021 2020 2019 2018 2017 2016 2015 Revenue 6,152 4,883 5,907 5,686 5,237 4,743 5,153 Hedged cost of alloyed metal (3,685) (2,810) (3,541) (3,517) (3,149) (2,781) (3,215) Revenue from incidental activities (20) (20) (20) (17) (18) (21) (31)
Slide 76: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (in millions of Euros) Year ended December 31, 2021 2020 2019 2018 2017 2016 2015 Net cash flows from operating activities 357 334 447 66 160 88 368 Purchases of property, plant and equipment (232) (182) (271) (277) (276) (355) (350) Property, plant and equipment grants
Slide 77: Net Debt Reconciliation
Net Debt Reconciliation As of December 31, (in millions of Euros) 2021 2020 2019 2018 2017 2016 2015 Borrowings 2,129 2,391 2,361 2,151 2,127 2,468 2,233 Fair value of net debt derivatives, net of margin calls (1) 42 6 9 32 (77) (47) Cash and cash equivalents (147) (439) (184) (164) (269) (347) (472
Slide 78: Reconciliation of Net Income to NOPAT and ROIC
Reconciliation of Net Income to NOPAT and ROIC Year ended December 31, (in millions of Euros) 2021 2020 2019 2018 2017 Net income / (loss) 262 (17) 64 190 (31) Income tax expense / (benefit) 55 (17) 18 32 80 Finance costs - net 167 159 175 149 260 Share of (income) / loss of joint ventures - - (2) 3