Good day, ladies and gentlemen and welcome to the Constellium Q2 2017 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions] As a reminder this conference call is being recorded. I would now like to turn the conference over to Ryan Wentling. You may begin.

Thank you, operator. And thank you everyone for your interest in Constellium. I would like to welcome you all to our second quarter 2017 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 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 filings. 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 today's 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. 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 would now like to hand the call over to Jean Marc.

Thank you, Ryan. Good morning, good afternoon, everyone. Thank you, again, for your interest in Constellium. Just over a year ago I took over the CEO position and I'm extremely proud of the work out team has done in this period and the momentum that we are gaining. On Slide #5, you will see some of the highlights for our strong second quarter. Shipments were 383,000 metric tons, down 1% compared to the second quarter of 2016, on lower packaging roll product shipments, partially offset by 18% higher automotive shipments. Our revenue was up 12% to €1.4 billion. This was primarily due to higher metal prices, which as you know we passed through. Net income of €15 million improved from €9 million in the second quarter of last year. Our adjusted EBITDA was €127 million that's up 19% compared to the second quarter of last year and I'm pleased to note that each segment contributed to our strong results as you will see. For the first half of 2017 adjusted EBITDA increased 11% to €220, so we are riding ahead of our full-year high single digit adjusted EBITDA growth guidance. As a result of our strong first half performance, we now expect to be the full-year results at a high end of our guidance range. And Peter will talk in more detail about our financial performance in just a few minutes. Moving on Project 2019 is now well underway. We have implemented initially securing €10 million of annual run rate to cost savings as of the end of the second quarter. We have also made progress on working capital reductions and we expect to meet our 2017 capital spending target of €275 million. As a result of our stronger operating performance and cash flow initiatives, we significantly improved our free…

Thank you, Jean Marc, and thank you all for joining the call today. Turning now to Slide 8, you will find a change in adjusted EBITDA by segment for the second quarter and the first half of 2017, compared to the same periods of last year. For the second quarter of 2017, Constellium achieved €127 million of adjusted EBITDA, an increase of €20 million or 19% year over year. I will walk through each of these segments at a high level here and then go into more detail in the following slides. A&T increased adjusted EBITDA by €10 million to €41 million in the quarter. AS&I adjusted EBITDA of €33 million increased €4 million year-over-year. P&ARP adjusted EBITDA of €57 million was up slightly from last year. Lastly, Holdings and Corporate improved by €5 million compared to the second quarter of last year. This was due to lower corporate cost and €2 million of onetime items. Looking forward, we now expect agency cost of approximately €6 million per quarter which is at the lower end of the €2 million to €3 million a month of the Company has historically guided to. This reduction in agency cost is largely a result of the benefits of Project 2019. At the bottom of the page, we present the first half of 2017. Constellium achieved €220 million of adjusted EBITDA in the first half, an increase of 11% compared to the first half of last year. Now turning to Slide 9 and focusing on the P&ARP segment. Adjusted EBITDA of €57 million was €1 million above last year. As you can see at bottom of the slide, we have included a bridge of the major drivers of adjusted EBITDA performance at the business units. Lower volumes drove a €5 million in adjusted EBITDA, as…

Thank you, Peter. I would like to share a few end markets updates now and I'll start with automotives, which, as you know is a very important growth driver for Constellium, and we maintained our positive outlook for this market. While the U.S. SAR was soft during the second quarter of 2017, the U.S. production of the automotive programs we are on was at year-over-year again in the second quarter. We believe this can be attributed to our greater exposure to light trucks, SUVs and luxury cars, which have a greater need for light weighting and have been in higher demand. In Europe, automotive sales have increased slightly to for this year, while growing at or faster than the market. Over the longer term, we remained confident at increased aluminum usage is a secular trend for the automotive markets, driven not only by light weighting enablers, but fuel efficiency, safety and battery technology that also by customer preference and driving enjoyment. We will continue to closely monitor this market and we will remain prudent regarding investments. As I have said many times, we will not make incremental investments without firm customer commitments. Now turning to packaging for a moment. Packaging is a stable market and provides a good base load to capacity for our plants. In the U.S., we expect the continued progression of auto body sheet demand as well as craft beer increasingly moving to cans to help further tighten the market. In Europe, demand continues to grow based on substitution of aluminum for steel. Lastly, we continued to face growing pressure from customers in payment terms as we have noted in the past. Turning now to Aerospace, we expect OEM build rates to increase in 2017 from 2016 levels with the ramp-up of narrow body aircraft offsetting the…

[Operator Instructions] Your first question is from Curt Woodworth with Crédit Suisse. Your line is open.

My first question is just regarding the margin dynamics and A&T. The progression sequentially is much better than what the industry has been modeling. So can you give us some color on the sustainability of that margin? Do you think the next will remain some more over the back half for the year? And can you just comment on, how you're seeing aerospace pricing evolve through the back half of the year?

Sure. Good morning, Curt, and thanks for your kind words. So regarding the A&T margins, yes, they are very strong in Q2. I think as I mentioned at the Analyst Day, we were expecting strong demand in Q2 and we also knew what kind of orders we are having. And I think what we need to do is look at the average of Q1 and Q2 and that gives a better feel for what margins are like because as you know mix can change quite a bit for month to months or quarter to quarter and you need to look at it over a longer period of time. I think those margins are the result of good product mix but also strong operational performance in our plans and team has done a very good job that stabilizing our operations and getting bit more efficiencies months after months. So I feel we’re in a good place. Pricing, as you know in aerospace is long-term pricing, so the prices we have is at the beginning of the year at the end of the year and the following year, our prices are same. So, really, we are not expecting a pricing movement in the quarters or years to come, but much more mix adjustment that can happen and from time to time. Also I would point out and sorry for the long answer that our TID business has been developing quite nicely, and we are also very selective in terms of which products are we going after and there is a wide range of products. I think I mentioned, we are in one of the earlier calls that actually the top end of the TID markets, our prices and margins that are actually better than the average of aerospace, and obviously that's why we are trying to migrate. So that is also doing a roll and I'm very pleased with you know both the commercial performance and the operating performance in A&T. I think the first half is a good benchmark and we will try to keep it up.

Okay, that's helpful. And then just with respect to the improved execution you talked about operationally in aero. Do you think that will give you the ability to recapture some of the market share you lost at certain OEMs? And can you comment at all on some of the destocking trends that you've been seeing in the market?

Yes, so we hope so, we hope our improved performance and quality of service will help us to callback some of a -- some a little bit of the volume. But really we are also trying to diversify and turn to more and deeper relationships with other OEMs in aerospace. So, that's what we're focused on. And sorry I -- what was your second part of your question?

Destocking evidence, the destocking has starting to fade or change at all?

Well, we -- I think every company has their own views on whether the market is in destocking or restocking mode and very often people took more of the destocking than they talk about restocking. So, on average even that the planes we own, I said we did experience a bit of load in Q4, Q1. We knew Q2 was strong and we are looking at a reasonably stronger second half of the year. So for us, it looks like destocking is very much kind of forward and I'm not suggesting that restocking is underway, but I think we are in a stable and steady market now.

Your next question is from David Gagliano with BMO Capital Markets. Your line is open.

First one is a bit of the clarification on the last question. Just in terms of the margin commentary on the A&T side, were you -- and you mentioned the average of Q1 and Q2 moving forward. Were you referencing for the second half of this year or 2018?

I wouldn’t go into that level of specificity, David, I apologize.

Okay. How should we be thinking about the margins in A&T for 2018?

Again, I'm not going to go into that level of detail, David, sorry.

Okay, a follow-up question. On the Automotive Rolled products investments, I'm just curious you mentioned in your commentary, not making investments until from customer commitments are received. I'm wondering if you received any from customer commitments recently, and if not, when do you expect to start to see some of this from customer commitments coming in?

No, we haven’t. Otherwise, I would be announcing our second count line in Bowling Green. So that's, no, we are in active discussions with the number of customers and we are looking for substantial size of contract that would be available to us. I can tell you that I don’t want to tell you, but I don’t know when that could happen.

Can you just give us a bit of window timeframe within the next 12 months? Should we expect a year or two?

So, I wouldn't expect anything until the end of this year. So, we will be talking of your commitments, closure of contracts with that the new sooner than 2019 -- sorry 2018, which is kind of a year away from now.

The next question is from Piyush Sood with Morgan Stanley. Your line is open.

Quick one on packaging. Just want to understand what's driving the weakness and volumes in 2Q?

Hi Piyush, good question thanks. So, we -- as I said, we got substantial readiness -- auto readiness activity going on in Muscle Shoals and also in [indiscernible] [0:29:02.5] so that’s driving it down a bit. At same time, we've made no mystery of our trend to display some of the packaging volumes by auto volumes. So, we got those two factors of play, but most of it is we got rent as a -- we rent half when we rent, but we don’t rent as many days as we could be because of the rent of the order lines.

That’s helpful. And would you be able to break out the benefit you may have received from higher scrap spreads this quarter?

No, but I will give you an answer that I think extended the problem. So, you're absolutely right that as LME goes up typically scrap spreads widens. And therefore, it’s a benefit when you recycle metal. At the same time obviously you got the inverse impact to different scale which is as LME prices go up, you have more melt loss for all your other activities. And given how much we make for recycling and how much we buy, sheeting that we buy, those two factors basically even out. So, the materiality of the impact of LME through scraps spreads and melt loss is very -- I mean it's a very small amount. So it's not material.

Okay, thank you. And last one for me. So, next year, we have strong EBITDA guide from you and I would assume that CapEx like the falls. So just want to better understand what's keeping your free cash flow to negative in 2018? Is it just you've been conservative or is there some big spending that you're missing?

I’ll say a few words and then Peter will jump in too. We all working on our plans for next year and as you point, there is a number of factors between EBITDA and free cash flow right and the significant one is CapEx. We see a lot of opportunities for investments. So we have to see which one we really want to go after. So that’s one uncertainly and as you got working capital which got for one way or the other, we also year ago we talked about this big contract that we have to customer as an option to extend and the payment terms and that would have the negative free cash flow impact in 2019, depending how this spends out. Maybe, we have some of that into '18, some of that into '19 and all back. So, we still got a number of factors that play that causes to view -- there to not be able to tell you now, on both CapEx and free cash flow, but '18 would be that -- Peter, if you want to add?

No, I think that's exactly right. And again, you made the comment that you would expect CapEx to come down. And I wouldn’t assume that I think it's a fair assumption to say CapEx will not go up, but remember we have these maintenance expenditures that we feel we need to do to have kind of keep the operation running and build the asset integrity for the system and so were are going to continue to do that. And we also have some really attractive growth investments that we are intending to make that will kind of keep CapEx probably around the same area. But we will update as we kind of get closer to be year-end, we will give you a more clear update on where the CapEx are.

[Operator Instructions] And your next question is from Sean Wondrack with Deutsche Bank. Your line is open.

As I take a look at your TID segment and obviously, you posted very good numbers this quarter. Can you discuss some of the niche markets that you've been targeting and maybe some of the changes or to your commercial effort that you are undertaking that's kind of resulting in this improvement?

Sure, we can do that. So TIDs are very diverse sets of end markets. So what we've done is and the couple of years ago, established, first of all dedicated sales force to address these markets. And I think focus is very important in our business, so we can comprehend with you, and historically you got the aerospace market. The aerospace customers are referenced to be served and the TID could be an asset thought. Clearly, [indiscernible] [0:33:58.7] is not enough of thought, so kind of you're right frontend center in terms of developing a strategy, focusing on it, giving it to the Company. So, we started with having a dedicated sales team, marketing activities and a game plan to execute upon. Then with better operating performance in our plans, we are much more reliable, we know much better what capacity we have available when, and these markets in TID, really value short lead times. So, our ability to run both an aerospace stream and a TID stream through the same plans will be a key advantage, if we get it right. But it supposes that you have a well operating plan that are reliable and that can quickly turn and then deliver on them to customers. And then in each of the profit quality of product and there has been quite bit of CapEx and our industrial guys are asking for more to better [indiscernible] [0:35:04.7] just healthy dialogue here to really upgrade the quality and capabilities of our mills, so we can really offer the short lead times and the superior quality of products to our customers. So all that was going to what have went behind the scenes on to get to these states where we can deliver and well serve these markets. So, those markets, we call them transportation industry defense. You got a bunch of applications in there. You got things like what you see in the transpiration trucks and trailers in U.S. and Europe, we got [moags], industrial moags. We got navel applications, so freights containers for natural gas and LNG tanks and all that. We’ve got some defense applications like armor plates, precision plates. I don’t know whether I've mentioned that. So, there is a bunch of different applications, typically lower volumes, but when you know how to make them they can be very, very advantage to them.

The other thing I just jump in on this, the mix here is evolving because so roughly 25% of our margins that are comparable to our aerospace business and obviously we're working to try to find that most value added mix products that we can sell. And I think that one other things, that's really very interesting and very compelling about the TID strategy is that we're were -- the team is working on developing market that we're currently not even selling into, right. So that some of these offers I think potentially really attractive opportunities for us, as some of the market that we're may be softened a little bit and then other kind take up the slack of it. So I think it really as Jean Marc said, I think it really underpins the broadening and the diversification of our story.

Yes, that’s very helpful. And some of these new winds that you had in that segment. Is there lumpy there? Or do you expect this to kind continue overtime?

No, it's not lumpy. Obviously, those markets as Peter said, one can go up, one can go down, right. So, we’re providing plates for the fabrication of semiconductors.

Right.

That work can go down. We are also proving armor plates. We know that defense spend can do up all at once and then can come up, very quickly, and hopefully all know, not all these cycles, [indiscernible] [0:37:42.6] same time, but there are so many cycle in there that overall it's not too lumpy.

Okay great. And then in terms of the 10 million run rate cost savings. Will those becoming at COGS or SG&A and what will be the split there?

Both, we haven’t given a split, we may give more of split on that as we get into this, but they will come from both places. We are -- as I think I said at the Analyst Day, we're not going to leave any stone unturned and hopefully from the prepared comments, you can see that we've taken cost out of corporate, we’ve taken cost out of each of the business units and we’ve those are coming from SG&A and they are coming from COGS.

It's definitely been busy Peter I appreciate all the color here. Just last question real quick. You guys mentioned on Slide 16, you're getting pressure from customers on payment terms. Can you delve into that a little bit more? Where does that originate from?

Well, I think we have a Project 2019 underway as well. So, cash flow is very important to both our customer and us. And I think the good news is we are still talking which means we don’t give in that easily.

Okay so I guess more to come on that.

Typically, negotiations were historically about volume and price, and now working capital [indiscernible] [0:39:18.8] [maximum] will become really frontend center in every discussion we have with customer. So [indiscernible] [0:39:20.3] why it's used to be the kind of thing that was left for the last minute and give five days here or five days there or little bit more interest on this or that. It's becoming much more prevalent in our discussions.

Yes, what we'd like to say that a commercial team is payment terms or economic terms.

Right, right. And then do you have an estimate, I mean, how much worth could it get like 15 million of working capital or is it like 50 million to second order of magnitude, if things were not to go your way?

What we motioned -- I mentioned the 2019 risk, I think three weeks into the job, a year ago. So, three years, I'll go saying hey we've got a risk. So, obviously it's not a $15 million total risk, otherwise, I wouldn't have talked about it that early.

Okay, thank you.

But again it's important to understand these are economic terms, right.

[Operator Instructions] Your next question is from Josh Sullivan with Seaport Global. Your line is open.

Great quarter. You just answered my question. Thank you.

Thanks Josh. Appreciate your comment.

And I'm showing no further questions. I will now like to turn the call back to Jean-Marc Germain for any further remarks.

Well, thank you very much for your interest today. And obviously, we are pleased with Q2 and H1, and as you could, you can tell we are looking at the head with confidence. I also hope you are getting a sense and some evidence as well, that we are very focused on the execution of our strategy, and as we are going to deliver, de-lever and deliver, without delivering for this company and create shareholder value. Thank you so much. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.