AMSTERDAM, The Netherlands, July 24, 2018 (GLOBE NEWSWIRE) -- Constellium N.V. (NYSE:CSTM) today reported results for the second quarter ended June 30, 2018.
Second quarter 2018 highlights:
- Shipments of 397 thousand metric tons, up 4% compared to Q2 2017; Automotive shipments increased 20%
- Revenue of €1.5 billion, up 7% compared to Q2 2017
- Net income of €55 million compared to net income of €15 million in Q2 2017
- Adjusted EBITDA of €151 million, up 19% from Q2 2017
First half 2018 highlights:
- Shipments of 785 thousand metric tons, up 4% compared to H1 2017
- Revenue of €2.9 billion, up 6% compared to H1 2017
- Net income of €31 million compared to net income of €28 million in H1 2017
- Adjusted EBITDA of €268 million, up 22% from H1 2017
- Net debt / LTM Adj. EBITDA of 4.3x compared to 5.1x at June 30, 2017
- Project 2019 run-rate cost savings of €32 million achieved as of June 30, 2018
- Completed the sale of the North Building Assets of the Sierre plant in Switzerland to Novelis for €200 million in July
Jean-Marc Germain, Constellium’s Chief Executive Officer said, “Constellium delivered strong results in the second quarter. Each business unit reported record quarterly Adjusted EBITDA. Healthy end market demand, solid operational performance, and a focus on reducing costs through Project 2019 contributed to our results. While global trade remains a source of uncertainty, we are optimistic about our prospects for the remainder of the year and are therefore increasing our Adjusted EBITDA growth guidance to a range of 11% to 13%.”
Mr. Germain continued, “Our positive momentum continues to build. Given our performance and current outlook, we now expect over €500 million of Adjusted EBITDA in 2019, which is one year ahead of our previous guidance of 2020. Our focus remains on executing on our strategy and increasing value for our shareholders.”
Group Summary
| Q2 2018 | Q2 2017 | Var. | H1 2018 | H1 2017 | Var. | |||
| Shipments (k metric tons) | 397 | 383 | 4 | % | 785 | 758 | 4 | % |
| Revenue (€ millions) | 1,474 | 1,382 | 7 | % | 2,860 | 2,710 | 6 | % |
| Net income (€ millions) | 55 | 15 | n.m. | 31 | 28 | n.m. | ||
| Adjusted EBITDA (€ millions) | 151 | 127 | 19 | % | 268 | 220 | 22 | % |
| Adjusted EBITDA per metric ton (€) | 380 | 330 | 15 | % | 341 | 290 | 18 | % |
The difference between the sum of reported segment revenue and total group revenue includes revenue from certain non-core activities and inter-segment eliminations. The difference between the sum of reported segment Adjusted EBITDA and the Group Adjusted EBITDA is related to Holdings and Corporate.
For the second quarter of 2018, shipments of 397 thousand metric tons increased 4% compared to the second quarter of last year due to higher shipments in each of our segments. Revenue of €1.5 billion increased 7% compared to the second quarter of last year due primarily to higher aluminium prices and higher shipments. Net income of €55 million compares to net income of €15 million in the second quarter of 2017. Adjusted EBITDA of €151 million increased 19% from the second quarter of last year on improved results in each of our segments.
For the first half of 2018, shipments of 785 thousand metric tons increased 4% compared to the first half of last year on higher shipments in each of our segments. Revenue of €2.9 billion increased 6% compared to the first half of last year due primarily to higher aluminium prices and higher shipments. Net income of €31 million compares to net income of €28 million in the first half of 2017. Adjusted EBITDA of €268 million increased 22% compared to the first half of last year on improved results in each of our segments.
Results by Segment
Packaging & Automotive Rolled Products (P&ARP)
| Q2 2018 | Q2 2017 | Var. | H1 2018 | H1 2017 | Var. | |||
| Shipments (k metric tons) | 266 | 258 | 3 | % | 525 | 512 | 3 | % |
| Revenue (€ millions) | 801 | 736 | 9 | % | 1,539 | 1,441 | 7 | % |
| Adjusted EBITDA (€ millions) | 75 | 57 | 30 | % | 126 | 98 | 29 | % |
| Adjusted EBITDA per metric ton (€) | 279 | 221 | 26 | % | 239 | 191 | 25 | % |
Second quarter Adjusted EBITDA increased compared to the second quarter of 2017 primarily due to higher volumes, including increased Automotive rolled product shipments, good cost control and favorable metal costs partially offset by incremental costs from the ramp up of our automotive programs and foreign exchange translation.
For the second quarter of 2018, shipments of 266 thousand metric tons increased 3% from the second quarter of last year due to a 27% increase in Automotive rolled product shipments, partially offset by lower Packaging rolled product shipments. Revenue of €801 million increased 9% compared to the second quarter of 2017 primarily as a result of higher aluminium prices.
For the first half of 2018, Adjusted EBITDA of €126 million increased 29% compared to the same period of the prior year primarily due to higher volumes, including increased Automotive rolled product shipments, favorable metal costs and good cost control partially offset by incremental costs from the ramp up of our automotive programs and foreign exchange translation. Shipments of 525 thousand metric tons increased 3% compared to the same period of last year as higher Automotive rolled product shipments were partially offset by lower Packaging rolled product shipments. Revenue of €1.5 billion increased 7% compared to the first half of last year due primarily to higher aluminium prices and higher shipments.
Aerospace & Transportation (A&T)
| Q2 2018 | Q2 2017 | Var. | H1 2018 | H1 2017 | Var. | |||
| Shipments (k metric tons) | 65 | 63 | 1 | % | 129 | 124 | 4 | % |
| Revenue (€ millions) | 356 | 366 | (3 | )% | 699 | 709 | (1 | )% |
| Adjusted EBITDA (€ millions) | 43 | 41 | 8 | % | 77 | 69 | 12 | % |
| Adjusted EBITDA per metric ton (€) | 681 | 639 | 7 | % | 600 | 554 | 8 | % |
Second quarter Adjusted EBITDA increased as compared to the second quarter of 2017 due to good cost control and higher shipments partially offset by weaker price and mix, unfavorable metal costs and foreign exchange translation.
For the second quarter of 2018, shipments of 65 thousand metric tons increased 1% compared to the second quarter of last year due to slightly higher aerospace rolled product shipments. Revenue of €356 million decreased 3% compared to the second quarter of 2017 on weaker price and mix and foreign exchange translation partially offset by higher aluminium prices.
For the first half of 2018, Adjusted EBITDA of €77 million increased 12% compared to the first half of last year on good cost control and continued success in developing TID end markets partially offset by weaker price and mix, unfavorable metal costs and foreign exchange translation. Shipments of 129 thousand metric tons increased 4% compared to the same period of the prior year on higher Transportation, Industry and Other rolled product shipments. Revenue of €699 million decreased 1% compared to the first half of last year as higher shipments and higher aluminium prices were offset by weaker price and mix and foreign exchange translation.
Automotive Structures & Industry (AS&I)
| Q2 2018 | Q2 2017 | Var. | H1 2018 | H1 2017 | Var. | |||
| Shipments (k metric tons) | 66 | 62 | 7 | % | 131 | 122 | 8 | % |
| Revenue (€ millions) | 327 | 288 | 13 | % | 644 | 574 | 12 | % |
| Adjusted EBITDA (€ millions) | 39 | 33 | 19 | % | 75 | 64 | 17 | % |
| Adjusted EBITDA per metric ton (€) | 585 | 530 | 10 | % | 569 | 522 | 9 | % |
Second quarter Adjusted EBITDA increased compared to the second quarter of 2017 primarily due to higher shipments of both Automotive and Other extruded products on strong market demand and improved price and mix.
For the second quarter of 2018, shipments of 66 thousand metric tons increased 7% compared to the second quarter of last year. Revenue of €327 million increased 13% compared to the second quarter of 2017 on higher shipments, improved price and mix and higher aluminium prices.
For the first half of 2018, Adjusted EBITDA of €75 million increased 17% compared to the first half of last year on higher shipments and improved price and mix. Shipments of 131 thousand metric tons increased 8% compared to the first half of last year due to higher shipments of both Automotive and Other extruded products on strong market demand. Revenue of €644 million increased 12% compared to the first half of 2017 on higher shipments, improved price and mix and higher aluminium prices.
Net Income
For the second quarter of 2018, net income of €55 million compares to net income of €15 million in the second quarter of last year. The change in net income is primarily attributable to the improvement in Adjusted EBITDA, a favorable change in the value of unrealized derivatives and favorable metal price lag, partially offset by higher income tax expense.
For the first half of 2018, net income of €31 million compares to net income of €28 million in the first half of last year. The change in net income is primarily attributable to the improvement in Adjusted EBITDA, lower financing costs compared to the first half of 2017 that included the costs of the refinancing completed in that period and lower income tax expense, partially offset by an unfavorable change in the value of unrealized derivatives and gains from pension and benefit plan amendments in the first half of 2017.
Cash Flow and Liquidity
For the first half of 2018, Free Cash Flow was an outflow of €110 million as compared to an outflow of €54 million in the same period of the prior year. The change was primarily due to higher working capital, partially offset by higher Adjusted EBITDA, lower capital expenditures and lower interest paid.
Cash flows used in operating activities were €6 million for the first half of 2018 as compared to cash flows from operating activities of €81 million in the first half of last year. Constellium reduced factored receivables by €7 million in the first half of 2018 as compared to a decrease of €78 million in the first half of last year.
Cash flows used in investing activities were €104 million for the first half of 2018 as compared to cash flows used in investing activities of €135 million last year.
Cash flows from financing activities were €7 million for the first half of 2018 as compared to cash flows used in financing activities of €2 million in the first half of last year.
Liquidity at June 30, 2018 was €561 million, comprised of €166 million of cash and cash equivalents and €395 million available under our committed lending facilities and factoring arrangements. Liquidity at December 31, 2017 was €531 million.
Net debt was €2,038 million at June 30, 2018, as compared to €1,889 million at December 31, 2017.
Outlook
We expect Adjusted EBITDA growth in a range of 11% to 13% in 2018 and in the high single digits in 2019, leading to over €500 million of Adjusted EBITDA in 2019.
The Company is not able to provide a reconciliation of this Adjusted EBITDA guidance to net income, the comparable GAAP measure, because certain items that are excluded from Adjusted EBITDA cannot be reasonably predicted or are not in our control. In particular, it is unable to forecast the timing or magnitude of realized and unrealized gains and losses on derivative instruments, metal lag, impairment or restructuring charges, or taxes without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, net income in the future.
Other Recent Developments
In July, Constellium completed the sale of the North Building Assets of its Sierre plant in Switzerland previously leased to Novelis for €200 million. In addition to the transaction, Constellium contributed the plant’s shared infrastructure to a 50-50 joint venture with Novelis. Constellium will continue to own and operate its cast houses, plate and extrusion manufacturing plants and other manufacturing assets at the Sierre plant. Constellium expects to use the proceeds from the sale to strengthen its balance sheet and increase its financial flexibility.
Forward-looking statements
Certain statements contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This press release may contain “forward-looking statements” with respect to our business, results of operations and financial condition, and our expectations or beliefs concerning future events and conditions. You can identify forward-looking statements because they contain words such as, but not limited to, “believes,” “expects,” “may,” “should,” “approximately,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” likely,” “will,” “would,” “could” and similar expressions (or the negative of these terminologies or expressions). All forward-looking statements involve risks and uncertainties. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our business and operations. These risks and uncertainties include, but are not limited to, economic downturn, the loss of key customers, suppliers or other business relationships; disruption to business operations; the inability to meet customer quality requirements; delayed readiness for the North American Auto Body Sheet market, the capacity and effectiveness of our hedging policy activities, failure to retain key employees, and other risk factors set forth under the heading “Risk Factors” in our Annual Report on Form 20-F, and as described from time to time in subsequent reports filed with the U.S. Securities and Exchange Commission. The occurrence of the events described and the achievement of the expected results depend on many events, some or all of which are not predictable or within our control. Consequently, actual results may differ materially from the forward-looking statements contained in this press release. 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.
About Constellium
Constellium (NYSE:CSTM) is a global sector leader that develops innovative, value added aluminium products for a broad scope of markets and applications, including aerospace, automotive and packaging. Constellium generated €5.2 billion of revenue in 2017.
Constellium’s earnings materials for the second quarter ended June 30, 2018, are also available on the company’s website (www.constellium.com).
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
| (in millions of Euros) | Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 | ||||||||
| Revenue | 1,474 | 1,382 | 2,860 | 2,710 | ||||||||
| Cost of sales | (1,303 | ) | (1,232 | ) | (2,556 | ) | (2,420 | ) | ||||
| Gross profit | 171 | 150 | 304 | 290 | ||||||||
| Selling and administrative expenses | (60 | ) | (62 | ) | (118 | ) | (127 | ) | ||||
| Research and development expenses | (10 | ) | (8 | ) | (21 | ) | (19 | ) | ||||
| Restructuring costs | — | — | — | (2 | ) | |||||||
| Other gains / (losses) - net | 24 | (7 | ) | (23 | ) | 31 | ||||||
| Income from operations | 125 | 73 | 142 | 173 | ||||||||
| Finance costs - net | (36 | ) | (39 | ) | (70 | ) | (93 | ) | ||||
| Share of loss of joint-ventures | (9 | ) | (7 | ) | (12 | ) | (13 | ) | ||||
| Income before income tax | 80 | 27 | 60 | 67 | ||||||||
| Income tax expense | (25 | ) | (12 | ) | (29 | ) | (39 | ) | ||||
| Net income | 55 | 15 | 31 | 28 | ||||||||
| Net income attributable to: | ||||||||||||
| Equity holders of Constellium | 55 | 16 | 31 | 29 | ||||||||
| Non-controlling interests | — | (1 | ) | — | (1 | ) | ||||||
| Net income | 55 | 15 | 31 | 28 | ||||||||
| Earnings per share attributable to the equity holders of Constellium, | ||||||||||||
| in euros per share | ||||||||||||
| Basic | 0.41 | 0.15 | 0.23 | 0.27 | ||||||||
| Diluted | 0.39 | 0.15 | 0.22 | 0.27 | ||||||||
| Weighted average shares, in thousands | ||||||||||||
| Basic | 134,562 | 105,558 | 134,518 | 105,554 | ||||||||
| Diluted | 139,034 | 106,704 | 139,033 | 106,704 | ||||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS) (UNAUDITED)
| (in millions of Euros) | Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 | ||||||||
| Net income | 55 | 15 | 31 | 28 | ||||||||
| Other comprehensive income / (loss) | ||||||||||||
| Items that will not be reclassified subsequently to the consolidated income statement | ||||||||||||
| Remeasurement on post-employment benefit obligations | 2 | 8 | 27 | 17 | ||||||||
| Income tax on remeasurement on post-employment benefit obligations | (1 | ) | — | (7 | ) | (2 | ) | |||||
| Items that may be reclassified subsequently to the consolidated income statement | ||||||||||||
| Cash flow hedge | (23 | ) | 24 | (14 | ) | 29 | ||||||
| Income tax on cash flow hedge | 8 | (7 | ) | 5 | (9 | ) | ||||||
| Currency translation differences | 4 | (11 | ) | 1 | (13 | ) | ||||||
| Other comprehensive (loss) / income | (10 | ) | 14 | 12 | 22 | |||||||
| Total comprehensive income | 45 | 29 | 43 | 50 | ||||||||
| Attributable to: | ||||||||||||
| Equity holders of Constellium | 45 | 30 | 43 | 51 | ||||||||
| Non-controlling interests | — | (1 | ) | — | (1 | ) | ||||||
| Total comprehensive income | 45 | 29 | 43 | 50 | ||||||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
| (in millions of Euros) | At June 30, 2018 | At December 31, 2017 | ||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | 166 | 269 | ||||
| Trade receivables and other | 656 | 419 | ||||
| Inventories | 745 | 643 | ||||
| Other financial assets | 35 | 69 | ||||
| 1,602 | 1,400 | |||||
| Non-current assets | ||||||
| Property, plant and equipment | 1,545 | 1,517 | ||||
| Goodwill | 414 | 403 | ||||
| Intangible assets | 68 | 68 | ||||
| Investments accounted for under the equity method | 1 | 1 | ||||
| Deferred income tax assets | 159 | 164 | ||||
| Trade receivables and other | 48 | 48 | ||||
| Other financial assets | 85 | 110 | ||||
| 2,320 | 2,311 | |||||
| Total Assets | 3,922 | 3,711 | ||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Trade payables and other | 1,096 | 930 | ||||
| Borrowings | 130 | 106 | ||||
| Other financial liabilities | 28 | 23 | ||||
| Income tax payable | 10 | 11 | ||||
| Provisions | 40 | 40 | ||||
| 1,304 | 1,110 | |||||
| Non-current liabilities | ||||||
| Trade payables and other | 40 | 54 | ||||
| Borrowings | 2,054 | 2,021 | ||||
| Other financial liabilities | 29 | 43 | ||||
| Pension and other post-employment benefit obligations | 643 | 664 | ||||
| Provisions | 96 | 113 | ||||
| Deferred income tax liabilities | 28 | 25 | ||||
| 2,890 | 2,920 | |||||
| Total Liabilities | 4,194 | 4,030 | ||||
| Equity | ||||||
| Share capital | 3 | 3 | ||||
| Share premium | 420 | 420 | ||||
| Retained deficit and other reserves | (703 | ) | (750 | ) | ||
| Equity attributable to equity holders of Constellium | (280 | ) | (327 | ) | ||
| Non-controlling interests | 8 | 8 | ||||
| Total Equity | (272 | ) | (319 | ) | ||
| Total Equity and Liabilities | 3,922 | 3,711 | ||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
| (in millions of Euros) | Share Capital | Share Premium | Remeasurement | Cash flow hedges | Foreign Currency Translation reserve | Other reserves | Retained losses | Total Equity holders of Constellium | Non- controlling interests | Total equity | ||||||||||||||||||||||||||||
| At January 1, 2018 | 3 | 420 | (147 | ) | 13 | (7 | ) | 25 | (634 | ) | (327 | ) | 8 | (319 | ) | |||||||||||||||||||||||
| Change in accounting policies | — | — | — | — | — | — | (2 | ) | (2 | ) | — | (2 | ) | |||||||||||||||||||||||||
| At January 1, 2018 restated | 3 | 420 | (147 | ) | 13 | (7 | ) | 25 | (636 | ) | (329 | ) | 8 | (321 | ) | |||||||||||||||||||||||
| Net income | — | — | — | — | — | — | 31 | 31 | — | 31 | ||||||||||||||||||||||||||||
| Other comprehensive income / (loss) | — | — | 20 | (9 | ) | 1 | — | — | 12 | — | 12 | |||||||||||||||||||||||||||
| Total comprehensive income / (loss) | — | — | 20 | (9 | ) | 1 | — | 31 | 43 | — | 43 | |||||||||||||||||||||||||||
| Transactions with equity holders | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | 6 | — | 6 | — | 6 | ||||||||||||||||||||||||||||
| Transactions with non-controlling interests | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| At June 30, 2018 | 3 | 420 | (127 | ) | 4 | (6 | ) | 31 | (605 | ) | (280 | ) | 8 | (272 | ) | |||||||||||||||||||||||
| (in millions of Euros) | Share Capital | Share Premium | Remea- surement | Cash flow hedges | Foreign Currency Translation reserve | Other reserves | Retained losses | Total Equity holders of Constellium | Non- controlling interests | Total equity | ||||||||||||||||||||||||||||
| At January 1, 2017 | 2 | 162 | (151 | ) | (18 | ) | 12 | 17 | (603 | ) | (579 | ) | 9 | (570 | ) | |||||||||||||||||||||||
| Net income | — | — | — | — | — | — | 29 | 29 | (1 | ) | 28 | |||||||||||||||||||||||||||
| Other comprehensive income / (loss) | — | — | 15 | 20 | (13 | ) | — | — | 22 | — | 22 | |||||||||||||||||||||||||||
| Total comprehensive income / (loss) | — | — | 15 | 20 | (13 | ) | — | 29 | 51 | (1 | ) | 50 | ||||||||||||||||||||||||||
| Transactions with Equity holders | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | 3 | — | 3 | — | 3 | ||||||||||||||||||||||||||||
| Transactions with non-controlling interests | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| At June 30, 2017 | 2 | 162 | (136 | ) | 2 | (1 | ) | 20 | (574 | ) | (525 | ) | 8 | (517 | ) | |||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| (in millions of Euros) | Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 | |||||||
| Net income | 55 | 15 | 31 | 28 | |||||||
| Adjustments | |||||||||||
| Depreciation and amortization | 46 | 41 | 90 | 84 | |||||||
| Finance costs - net | 36 | 39 | 70 | 93 | |||||||
| Income tax expense | 25 | 12 | 29 | 39 | |||||||
| Share of loss of joint-ventures | 9 | 7 | 12 | 13 | |||||||
| Unrealized (gains) / losses on derivatives - net and from remeasurement of monetary assets and liabilities - net | (12 | ) | 9 | 41 | (14 | ) | |||||
| Losses on disposal | 3 | 1 | 4 | 2 | |||||||
| Other - net | 3 | 2 | 5 | 3 | |||||||
| Interest paid | (24 | ) | (41 | ) | (60 | ) | (80 | ) | |||
| Income tax paid | (10 | ) | (5 | ) | (11 | ) | (7 | ) | |||
| Change in trade working capital | |||||||||||
| Inventories | (63 | ) | (10 | ) | (94 | ) | (37 | ) | |||
| Trade receivables | (55 | ) | (48 | ) | (196 | ) | (170 | ) | |||
| Trade payables | 26 | 29 | 108 | 152 | |||||||
| Change in provisions and pension obligations | (2 | ) | (1 | ) | (3 | ) | (22 | ) | |||
| Other working capital | (19 | ) | (5 | ) | (32 | ) | (3 | ) | |||
| Net cash flows from / (used in) operating activities | 18 | 45 | (6 | ) | 81 | ||||||
| Purchases of property, plant and equipment | (50 | ) | (60 | ) | (97 | ) | (120 | ) | |||
| Equity contributions and loans to joint-ventures | (13 | ) | (10 | ) | (13 | ) | (24 | ) | |||
| Other investing activities | 3 | 4 | 6 | 9 | |||||||
| Net cash flows used in investing activities | (60 | ) | (66 | ) | (104 | ) | (135 | ) | |||
| Proceeds from issuance of Senior Notes | — | — | — | 610 | |||||||
| Repayments of Senior Notes | — | — | — | (610 | ) | ||||||
| Proceeds / (Repayments) from revolving credit facilities and other loans | 4 | 8 | 10 | 18 | |||||||
| Payment of deferred financing costs and exit fees | — | (2 | ) | — | (42 | ) | |||||
| Other financing activities | (7 | ) | (4 | ) | (3 | ) | 22 | ||||
| Net cash flows (used in) / from financing activities | (3 | ) | 2 | 7 | (2 | ) | |||||
| Net (decrease) / increase in cash and cash equivalents | (45 | ) | (19 | ) | (103 | ) | (56 | ) | |||
| Cash and cash equivalents - beginning of period | 211 | 309 | 269 | 347 | |||||||
| Effect of exchange rate changes on cash and cash equivalents | — | (4 | ) | — | (5 | ) | |||||
| Cash and cash equivalents - end of period | 166 | 286 | 166 | 286 | |||||||
SEGMENT ADJUSTED EBITDA
| (in millions of Euros) | Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 | ||||||||
| P&ARP | 75 | 57 | 126 | 98 | ||||||||
| A&T | 43 | 41 | 77 | 69 | ||||||||
| AS&I | 39 | 33 | 75 | 64 | ||||||||
| Holdings and Corporate | (6 | ) | (4 | ) | (10 | ) | (11 | ) | ||||
| Total | 151 | 127 | 268 | 220 |
SHIPMENTS AND REVENUE BY PRODUCT LINE
| (in k metric tons) | Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 | ||||||||
| Packaging rolled products | 205 | 208 | 404 | 416 | ||||||||
| Automotive rolled products | 49 | 39 | 97 | 73 | ||||||||
| Specialty and other thin-rolled products | 12 | 11 | 24 | 23 | ||||||||
| Aerospace rolled products | 29 | 28 | 56 | 56 | ||||||||
| Transportation, industry and other rolled products | 36 | 35 | 73 | 68 | ||||||||
| Automotive extruded products | 31 | 28 | 60 | 56 | ||||||||
| Other extruded products | 35 | 34 | 71 | 66 | ||||||||
| Total shipments | 397 | 383 | 785 | 758 | ||||||||
| (in millions of Euros) | ||||||||||||
| Packaging rolled products | 589 | 566 | 1,125 | 1,116 | ||||||||
| Automotive rolled products | 163 | 123 | 318 | 227 | ||||||||
| Specialty and other thin-rolled products | 49 | 47 | 96 | 98 | ||||||||
| Aerospace rolled products | 197 | 207 | 376 | 408 | ||||||||
| Transportation, industry and other rolled products | 159 | 159 | 323 | 301 | ||||||||
| Automotive extruded products | 178 | 151 | 347 | 309 | ||||||||
| Other extruded products | 149 | 137 | 297 | 265 | ||||||||
| Other and inter-segment eliminations | (10 | ) | (8 | ) | (22 | ) | (14 | ) | ||||
| Total revenue | 1,474 | 1,382 | 2,860 | 2,710 | ||||||||
NON-GAAP MEASURES
Reconciliation of net income to Adjusted EBITDA (a non-GAAP measure)
| (in millions of Euros) | Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 | ||||||||
| Net income | 55 | 15 | 31 | 28 | ||||||||
| Income tax expense | 25 | 12 | 29 | 39 | ||||||||
| Income before income tax | 80 | 27 | 60 | 67 | ||||||||
| Finance costs – net | 36 | 39 | 70 | 93 | ||||||||
| Share of loss of joint-ventures | 9 | 7 | 12 | 13 | ||||||||
| Income from operations | 125 | 73 | 142 | 173 | ||||||||
| Depreciation and amortization | 46 | 41 | 90 | 84 | ||||||||
| Restructuring costs | — | — | — | 2 | ||||||||
| Unrealized (gains) / losses on derivatives | (11 | ) | 10 | 43 | (18 | ) | ||||||
| Unrealized exchange losses / (gains) from remeasurement of monetary assets and liabilities - net | — | 1 | (1 | ) | 5 | |||||||
| Gains on pension plans amendments (A) | — | — | — | (22 | ) | |||||||
| Share based compensation costs | 3 | 1 | 6 | 3 | ||||||||
| Metal price lag (B) | (20 | ) | (7 | ) | (24 | ) | (20 | ) | ||||
| Start-up and development costs (C) | 5 | 5 | 9 | 10 | ||||||||
| Manufacturing system and process transformation costs | — | 1 | — | 1 | ||||||||
| Losses on disposals | 3 | 1 | 4 | 2 | ||||||||
| Other | — | 1 | (1 | ) | — | |||||||
| Adjusted EBITDA | 151 | 127 | 268 | 220 |
- For the six months ended June 30, 2017, amendments to certain Swiss pension plan, US pension plan and OPEB resulted in a €22 million gain.
- Metal price lag represents the financial impact of the timing difference between when aluminium prices included within Constellium revenues are established and when aluminium purchase prices included in Cost of sales are established. The Group accounts for inventory using a weighted average price basis and this adjustment aims to remove the effect of volatility in LME prices. The calculation of the Group metal price lag adjustment is based on an internal standardized methodology calculated at each of Constellium’s manufacturing sites and is primarily calculated as the average value of product recorded in inventory, which approximates the spot price in the market, less the average value transferred out of inventory, which is the weighted average of the metal element of cost of sales, based on the quantity sold in the period.
- For the six months ended June 30, 2018, start-up and development costs include €9 million related to new projects in our AS&I operating segment. For the six months ended June 30, 2017, start-up and development costs include €7 million related to new sites in our AS&I operating segment and €3 million to ABS growth projects both in Europe and the U.S.
Reconciliation of net cash flows from operating activities to Free Cash Flow (a non-GAAP measure)
| Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 | ||||||||
| Net cash flows from / (used in) operating activities | 18 | 45 | (6 | ) | 81 | ||||||
| Purchases of property, plant and equipment | (50 | ) | (60 | ) | (97 | ) | (120 | ) | |||
| Equity contributions and loans to joint-ventures | (13 | ) | (10 | ) | (13 | ) | (24 | ) | |||
| Other investing activities | 3 | 4 | 6 | 9 | |||||||
| Free Cash Flow | (42 | ) | (21 | ) | (110 | ) | (54 | ) |
Reconciliation of borrowings to Net debt (a non-GAAP measure)
| (in millions of Euros) | At June 30, 2018 | At December 31, 2017 | ||||
| Borrowings | 2,184 | 2,127 | ||||
| Fair value of cross currency basis swaps, net of margin calls | 20 | 32 | ||||
| Cash and cash equivalents | (166 | ) | (269 | ) | ||
| Cash pledged for issuance of guarantees | — | (1 | ) | |||
| Net debt | 2,038 | 1,889 |
Non-GAAP measures
In addition to the results reported in accordance with International Financial Reporting Standards (“IFRS”), this press release includes information regarding certain financial measures which are not prepared in accordance with IFRS (“non-GAAP measures”). The non-GAAP financial measures used in this press release are: Adjusted EBITDA, Adjusted EBITDA per metric ton, Free Cash Flow and Net debt. Reconciliations to the most directly comparable IFRS financial measures are presented in the schedules to this press release. We believe these non-GAAP measures are important supplemental measures of our operating and financial performance. By providing these measures, together with the reconciliations, we believe we are enhancing investors’ understanding of our business, our results of operations and our financial position, as well as assisting investors in evaluating how well we are executing our strategic initiatives. However, these non-GAAP financial measures supplement our IFRS disclosures and should not be considered an alternative to the IFRS measures and may not be comparable to similarly titled measures of other companies.
In considering the financial performance of the business, management and our chief operational decision maker, as defined by IFRS, analyze the primary financial performance measure of Adjusted EBITDA in all of our business segments. The most directly comparable IFRS measure to Adjusted EBITDA is our net income or loss for the period. We believe Adjusted EBITDA, as defined below, is useful to investors and is used by our management for measuring profitability because it excludes the impact of certain non-cash charges, such as depreciation, amortization, impairment and unrealized gains and losses on derivatives as well as items that do not impact the day-to-day operations and that management in many cases does not directly control or influence. Therefore, such adjustments eliminate items which have less bearing on our core operating performance.
Adjusted EBITDA measures are frequently used by securities analysts, investors and other interested parties in their evaluation of Constellium and in comparison to other companies, many of which present an Adjusted EBITDA-related performance measure when reporting their results.
Adjusted EBITDA is defined as income / (loss) from continuing operations before income taxes, results from joint ventures, net finance costs, other expenses and depreciation and amortization as adjusted to exclude restructuring costs, impairment charges, unrealized gains or losses on derivatives and on foreign exchange differences on transactions which do not qualify for hedge accounting, metal price lag, share based compensation expense, effects of certain purchase accounting adjustments, start-up and development costs or acquisition, integration and separation costs, certain incremental costs and other exceptional, unusual or generally non-recurring items.
Adjusted EBITDA is the measure of performance used by management in evaluating our operating performance, in preparing internal forecasts and budgets necessary for managing our business and, specifically in relation to the exclusion of the effect of favorable or unfavorable metal price lag, this measure allows management and the investor to assess operating results and trends without the impact of our accounting for inventories. We use the weighted average cost method in accordance with IFRS which leads to the purchase price paid for metal impacting our cost of goods sold and therefore profitability in the period subsequent to when the related sales price impacts our revenues. Management believes this measure also provides additional information used by our lending facilities providers with respect to the ongoing performance of our underlying business activities. Historically, we have used Adjusted EBITDA in calculating our compliance with financial covenants under certain of our loan facilities.
Adjusted EBITDA is not a presentation made in accordance with IFRS, is not a measure of financial condition, liquidity or profitability and should not be considered as an alternative to profit or loss for the period, revenues or operating cash flows determined in accordance with IFRS.
Free Cash Flow is net cash flow from operating activities less capital expenditure, equity contributions and loans to joint ventures and other investing activities. Net debt is defined as borrowings plus or minus the fair value of cross currency basis swaps net of margin calls less cash and cash equivalents and cash pledged for the issuance of guarantees.
Management believes that Free Cash Flow is a useful measure of the net cash flow generated or used by the business as it takes into account both the cash generated or consumed by operating activities, including working capital, and the capital expenditure requirements of the business. Management believes that Net debt is a useful measure of indebtedness because it takes into account the cash and cash equivalent balances held by the Company as well as the total external debt of the Company.
Net debt and Free Cash Flow are not presentations made in accordance with IFRS, and should not be considered as an alternative to borrowings or operating cash flows determined in accordance with IFRS.
Contact:
Ryan Wentling – Investor Relations
Phone: +1 (212) 675-5450
Investor-relations@constellium.com
Delphine Dahan-Kocher – Communications
Phone: +1 (212) 858 9963
delphine.dahan-kocher@constellium.com