Constellium Reports Third Quarter 2017 Financial Results

For the third quarter of 2017, shipments of 58k metric tons were down slightly compared to the third quarter of 2016 as lower Aerospace rolled product shipments were largely offset by higher Transportation, Industry and Other rolled product shipments. Revenue of €307 million fell by 2% compared to the third quarter of last year on lower aerospace rolled product shipments partially offset by higher aluminum prices and higher Transportation, Industry and Other rolled product shipments.

For the first nine months of 2017, Adjusted EBITDA of €99 million increased 22% compared to the first nine months of 2016 on better price and mix, strong operating cost performance and continued success in developing TID end markets. Shipments of 182k metric tons decreased slightly as compared to the same period in the prior year. Revenue of €1.0 billion increased 4% compared to the first nine months of last year primarily on higher aluminium prices.

• Automotive Structures & Industry (AS&I)
  
  

Third quarter Adjusted EBITDA increased compared to the third quarter of last year primarily due to higher shipments of both Automotive and Other extruded products on strong market demand and solid cost control.

For the third quarter of 2017, shipments of 58k metric tons increased 10% compared to the third quarter of last year. Revenue of €275 million increased 14% compared to the third quarter of 2016 primarily on higher aluminium prices.

For the first nine months of 2017, Adjusted EBITDA of €92 million increased 13% compared to the first nine months of last year on higher shipments and solid cost control. Shipments of 180k metric tons increased 7% compared to the first nine months of last year on strong market demand. Revenue of €849 million increased 10% compared to the first nine months of 2016 primarily as a result of higher aluminium prices.

• Net income

For the third quarter of 2017, net income of €21 million improved from €15 million in the third quarter of 2016. The change in net income is primarily attributable to the improvement in Adjusted EBITDA, lower finance costs and a favorable change in unrealized derivatives, partially offset by a contractual purchase price adjustment in 2016 related to the acquisition of Wise Metals.

For the first nine months of 2017, net income of €49 million improved from €16 million in the first nine months of 2016. The change in net income is primarily attributable to the improvement in Adjusted EBITDA, gains from pension plan amendments, a one-time impact in connection with the re-negotiation of terms of a customer contract in 2016, partially offset by an unfavorable change in unrealized derivatives, the contractual purchase price adjustment noted above, and a higher share of loss of joint-ventures.

• Cash flow and Liquidity

 For the first nine months of 2017, Free Cash Flow was an outflow of €19 million as compared to an outflow of €160 million in the same period of the prior year. The significant improvement as compared to the first nine months of last year was primarily due to higher Adjusted EBITDA and lower capital expenditures.

Cash flows from operating activities were €157 million for the first nine months of 2017 as compared to €88 million in the first nine months of last year. Constellium reduced factored receivables by €93 million in the first nine months of 2017 as compared to an increase of €82 million in the first nine months of last year.

Cash flows used in investing activities were €176 million for the first nine months of 2017 as compared to cash flows used in investing activities of €233 million in the first nine months of last year.

Cash flows used in financing activities were €22 million for the first nine months of 2017 as compared to cash flows from financing activities of €285 million in the first nine months of last year.

Liquidity at September 30, 2017 was €557 million, comprised of €300 million of cash and cash equivalents and €257 million available under our committed lending facilities and factoring arrangements. This compares to liquidity at December 31, 2016 of €537 million and cash and cash equivalents of €347 million.

Net debt was €1,987 million at September 30, 2017, as compared to €2,035 million at December 31, 2016. 

• Outlook

We are updating our guidance for Adjusted EBITDA growth in 2017 to around 13%. We continue to expect Adjusted EBITDA growth in the high single digits annually for the next three years, leading to over €500 million of Adjusted EBITDA in 2020.

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.

• Project 2019

"Project 2019" is well underway with a wide range of cost reduction and cash flow improvement initiatives throughout the Company. To date, the Company has achieved €15 million of run rate cost savings. In addition, the Company has made significant progress reducing trade working capital. Capital expenditures are on track to meet the Company's previous guidance of €275 million for 2017, an €80 million reduction compared to 2016.

• 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, the ability of Constellium and Wise Metals to achieve expected synergies and the timing thereof, Constellium's increased levels of indebtedness which could limit Constellium's operating flexibility and opportunities; the potential failure to retain key employees, the loss of customers, suppliers and other business relationships; disruptions to business operations; slower or lower than expected growth in the North American market for Body-in-White aluminium rolled products, 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) (Euronext Paris: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 €4.7 billion of revenue in 2016.

Constellium's earnings materials for the quarter ended September 30, 2017 are also available on the company's website (www.constellium.com).

 CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

CONSOLIDATED STATEMENT OF CASH FLOWS

SEGMENT ADJUSTED EBITDA

SHIPMENTS AND REVENUE BY PRODUCT LINE

NON-GAAP MEASURES

Reconciliation of net income to Adjusted EBITDA (a non-GAAP measure)

Reconciliation of net cash flows from operating activities to Free Cash Flow (a non-GAAP measure)

Reconciliation of borrowings to Net debt (a non-GAAP measure)

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.

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