Good morning ladies and gentlemen and welcome to the Constellium First Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and answer-session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Ryan Wentling, Head of Investor Relations.

Thank you, operator. I would like to welcome everyone to our first quarter 2020 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 would 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 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 20-F. All information in this presentation is as of the date of the presentation. 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. 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.

Thanks, Ryan. Good morning. Good afternoon, everyone and thank you for your interest in Constellium. At Constellium, the health and safety of our employees is our first priority. We have implemented many initiatives to protect our employees in response to the COVID-19 pandemic. We have increased cleaning and sanitation and full social distancing and provided our personnel with personal protective equipment. We have also implemented strict visitor policies, banned business travels, and enforced a work-from-home policy wherever possible. Constellium is a key parts of the supply chain of many critical industries. To that end, in the U.S. our plants have received the distinction of an essential industry, which allows us to continue to operate despite state stay-at-home orders. All of our plants with the exception of our automotive specific plants have continued to produce, to meet demand for these critical industries such as beverage, food, healthcare, national defense and transportation. I’m very proud that, despite challenging conditions, Constellium team has stepped up to meet the challenge. I would also like to highlight our strong financial position. The finance team led by Peter Matt has worked extremely hard over the past three, four years to improve our cash flow profile, increase our liquidity and push outs our debt maturities. These actions will help us tremendously in successfully navigating this crisis. Now, turn to slide six and I would like to highlight some of the decisive actions Constellium has taken to limit the financial impact of the pandemic. Rest assured, this is not a complete list. I think it is important to lead from the top. Therefore, the Board, the Executive Committee and myself have only taken a temporary reduction in our compensation. We have aggressively reduced spending to match the challenging conditions that we are currently facing. These include flexing valuable…

Thank you John-Marc and thank you everyone for joining the call today. Turning now to Slide 8, you will find the change and adjusted EBITDA by segment for the first quarter of 2020, compared to the same periods of last year. For the first quarter of 2020, Constellium achieved €147 million of adjusted EBITDA an increase of €12 million or 9% year-over-year. PARP adjusted EBITDA of €66 million increased by €7 million or 12% year-over-year. A&T adjusted EBITDA of €52 million was comparable to the first quarter of 2019. AS&I adjusted EBITDA of €34 million, increased by €5 million or 17%, compared to last year. Lastly, holdings and corporate cost of €5 million were comparable to last year. Now turn to Slide 10 and let’s focus on the PARP segment. Adjusted EBITDA of €66 million, increased 12% compared to the first quarter of last year. Volume was €6 million headwinds as shipments fell across packaging, automotive and other rolled products, primarily due to reduced demand in Europe late in the quarter resulting from the effects of COVID-19. Price and mix was a tailwind of €5 million as we benefited from improvements in pricing and a better packaging and automotive mix. Costs were a tailwind of €7 million on solid cost controls, primarily due to improved recovery at our plants and to a lesser extent favorable metal costs and reduced energy costs. While we no longer report Bowling Green results separately, I’m proud to note that, Bowling Green adjusted EBITDA was positive in the first quarter. Lastly, FX translation was a tailwind of €1 million in the quarter. Now turn to Slide 11 and let’s focus on the A&T segment. Adjusted EBITDA of €52 million was comparable to last year. Volume was a headwind of €14 million on lower TIB shipments…

Thank you, Peter. Now, let’s turn to Slide 15 and provide an end market update. We believe our balanced portfolio of end market exposures is a competitive advantage during challenging times like these. I will start with the packaging market. Packaging represents 37% of our LTM revenue. We continue to see strong market demand in both North America and Europe. Further evidence that this market is both recession resilient and secular growth. We believe the packaging market as long-term secular growth tailwinds driven by customer preference for aluminum cans. Aluminum cans are infinity recyclables and clearly the most sustainable beverage packaging container. Our customers continue to move forward with investments in new canned lines, which should drive incremental demand for can sheet in the coming years. The consumer preference trends is only one of the tailwind for can sheet. In Europe, the demand for can sheets continues to grow based on substitution of aluminum or steel. In the U.S. we continue to expect the growth of auto body sheets demand to tighten supply to the packaging markets over the medium to long-term. Clearly, we are constructive on the can sheet market in the near, medium and long-term. Now, let’s turn to automotive. As I mentioned earlier, automotive OEMs began curtailing production in March and their facilities remain largely idle. Most OEMs are expected to restart production in May. The demand for our products would be dependent upon the speed and trajectory of the recovery, once our customers resume production. However, over the medium to long-term, we believe automotive remains a secular growth market for aluminum. Customers continue to prefer larger vehicles while regulations are aimed at increasing fuel efficiencies or reducing emissions. The automotive market will need to continue to lightweight. In addition, we expect hybrid and electric vehicles to…

[Operator Instructions]. Your first question comes from the line of Chris Terry with Deutsche Bank.

Hi, Jean-Marc and Pete. I hope you are doing well. I had a few questions. I want to run through on the markets and then on cash flow. I just wanted to - starting in aerospace sector first. I think previously you talked about having decent visibility to the middle of the year, and then more uncertain after that. Obviously Boeing and Airbus have provided updates in the last 24 hours. I just wonder whether you could give another upside on what you actually know, how far out you know what orders might be, et cetera. If you could just talk through that specifically in the relationships with the customers on the aerospace side. Thank you.

Sure. Good morning, Chris and we are doing well. Thank you or as well as can be in the circumstances. So on aerospace, we do have visibility typically three, six months out, in terms of order books and we continue to see even though there is a little bit of a reduction in order rate, pretty decent orders. But, what that means when you combine it with the reduced rates that they have announced, at some points demand will have to catch up with - demand for our products will have to catch up with demand for our aircraft. And I think that is what we mentioned in our prepared remarks. We think that demand will go down in the second half of the year and should also continue to go down in 2021.

Okay. Thanks, Jean-Marc. And then just the questions for Peter. I appreciate the scenario you went through a little bit earlier. I just wanted to clarify a couple of points on that. Firstly, can you maybe just tie in on the overall year on working capital, you obviously had a very, very strong 1Q. Does that mean sort of, you have might step change already in 1Q. So the starting base is tougher from working capital from here, or just wanted you to get step share the opportunities? And then just tying into that scenario, just a little bit confused about 2Q versus second half if you can just talk through that. Thanks.

Sure. Okay. So, first of all, I just want to emphasize the scenario is not meant to be guidance, right. So, we are trying to just create a scenario that would construct what the business might look like under this average utilization rate. So, in terms of trade working capital, I think what you can expect is that, as you slow down as business decelerates, there is going to be some trade working capital generation, and in situation where we are now, we have got this combination of businesses that would be slowing down to that rate. So, therefore cash flow generative. But we have also got some businesses that are shut down and would be ramping up, so therefore consuming trade working capital. So it is as we kind of think about the model, there is some puts and takes on either side and I would expect trade working capital in the model trade working capital shows up as a kind of a modest positive for the course of the rest of the year.

Okay. Thanks. Maybe just to follow-up on that 70% job posts. I mean, can you talk through what current utilization rates have been, just to sort of benchmark about that 70% is in context?

Sure. So, and again, this is a case study, right, that is not what we are focusing for the rest of the year. We don’t know. But what we are saying is, if you look at the different markets, right. Aerospace, as I mentioned has continued to be okay, but we believe it is going to go down at some point like OEMs at the same rate - are reducing their build rates. So 20%, 30% down. With still a sharp deceleration in TID, right, all the niches. So, if you are in that A&T segment, at the moment, we have been running in a 70% range roughly. If you look at, and sorry, I’m talking here about April, right, the current condition. If you look at packaging, it is pretty much been intact. So, we have been running at close to 100% with the exception that late in March and early April, we had some shut down in our plants for a few days. We have got time to implement all sanitation measures and the social distancing rework so far and so forth. But we are close to that 95% kind of for run rate. And then if you look at the automotive, where clearly at the moment, we are running less than 20%, and that is been the case in Europe since nearly early period of knowledge. So, it is a mixed bag of all those different rates, and as you can tell, it is impossible to know how it is going to shape up, because we don’t know for instance how OEMs in automotive are going to restart. We don’t know when exactly to give dates, but those dates get pushed out and we don’t know the ramp up either and therefore it is difficult to make any kind of prediction in the future. But I think the whole point about this case was to demonstrate how resilient we are to really, what you would describe as dire market conditions, right. We have got about half of our business, which is not really impacted by the crises and the other half which is quite impacted by the crises. And, that is the fact that we will be running less than 100 million free cash flow running at 30% down and allowing for a decline and then a run back in there is I think very good news.

Okay, thanks. Thanks very much and good luck.

Chris. Sorry, just to pick up on, you also asked about Q2, trade working capital. So, just to pick up on Q2. The big thing that we have going in Q2 on the trade working capital side is, we have got the restart of the auto business, right. So, that is a, that will be a consumer of trade working capital. The other thing that I would notice, as we said in the comments about the scenario, the bulk of the negative cash flow is in the second quarter, because as we reconfigure the business for a lower operating rate, there is working capital consumption in that and it is hard to maybe just the better way to put it, it is hard to optimize trade working capital in that scenario. So, we would expect Q2 to be a use of trade working capital.

I appreciate it. Thank you.

Yes.

Your next question comes from the line of David Gagliano with BMO Capital Markets.

Hi. Thanks for taking my questions. Just picking up on the 2Q commentary just for a second. I appreciate the cash flow commentary. I was wondering now that we are part of the way through the quarter, if you could just give us, a little more color on the actual operating expectations, both in terms of volumes and margins per ton in each of the three segments? I’m you sure given that, the timing here in the order books, you can probably provide more color on that to reset, level set, et cetera.

Yes, David. That is a difficult question. I don’t think anybody has got a real answer to it. I mean, In some segments we do know, right. In account sheet we have decent ID in a aerospace. It is tricky aerospace. We have got a decent ID, in the other markets we just don’t know. So, I think it will be completely, not prudent from us to project to anything for the second quarter. Our first priority as we said, is making sure that we operate in a safe and a healthy fashion for our employees. And the second priority is getting very close with our suppliers and our customers to be able to constantly adapt our system to changing market conditions. So, when we went into the crisis, we got calls on Friday morning asking us, are you delivering next week’s orders and from the same customer on Friday afternoon, sorry, we are shutting down the plant. We are not taking any orders anymore, any deliveries anymore and we have to turn back some trucks. And we are still in that same environment, where there is complete uncertainty as to what is going to happen. And so, what we are focused on is getting that very close connection with customers, suppliers. Running the supply chain as efficiently as possible, and then chips will fall where they fall. Knowing that we have done a lot to make sure that we adapt our cost structure, we reduce our cost and reduce our working capital, reduce our capital expenditures so that we protect cash and protect liquidity and we are able to respond to the markets environment. Beyond that, I cannot tell you where we are going to land.

And David, just to put it in perspective, as Jean-Marc said in his prepared remarks, just the impact on EBITDA in March was 10 to 20, right. So, that is a significant impact that came quite quickly.

Right? And I appreciate that. And, I was going to actually follow-up on that. So, the impact in March was 10 to 20, and so the expectation - we have got a couple of moving parts here. Seasonally, second quarters, historically anyways, stronger than the first quarter. Is it reasonable to assume that, $10 million to $20 million impact on a monthly run rate basis is going to be higher in the second quarter than what we got in March or at least in April?

So, I think the one thing that needs to be said about the impact in March, it is an impact 10 to 20 versus what could have been, right. The other thing is the safety, we have got to remember that, the crisis started in Europe sooner than in North America and most of us are based in North America, so in the U.S. So, we have seen things happening to us two, three weeks later. It started earlier in Europe. But at the same time, it started just really impacting us beginning of March. So, essentially what you have is you have got a system that is full [indiscernible] mode, getting ready for the busy season. You got all the cuts in. You have got all the orders. As I mentioned, you have got customers timing the tables, saying deliver, deliver, and then all of a sudden we fall off a cliff. So, basically you don’t have the revenues. So, obviously the impact of 10 to 20 larger than what it could have been if that happen in a more gradual fashion where you can adjust cost structure. So, we have done a lot to adjust the cost structure. We have done a lot to adjust all the elements of cash flows. So, we are going into April in a different share than we went into March. So, I think it is difficult to extrapolate the 10, 20 into monthly run rate or quarterly run rate.

Okay. That is helpful. And then just one last question from me, a bit of a clarification question. I appreciate the additional information regarding the different class utilization rates in aero packaging and auto currently. Obviously the way, the results are reported at each of those end markets are kind of mixed in these segments. So, I still think it is a little challenging to extrapolate, where we are overall currently relative to that 70% figure that was flagged in the prepared remarks. Where our overall operating rates now?

They would be in that range knowing that auto is basically at zero or less 20%.

Okay. So, roughly 70% currently. Is that what you are saying or you are saying in that range?

Yes.

Okay. Thank you.

Your next question comes from the line of Gus Richard with Northland.

Yes. Thanks for taking my question. Could you talk a little about, you taking costs out of the system? How much has come out of cost of goods, SG&A and R&D at this point? And then of the remainder that is in costs of goods, how much is a variable versus fixed?

Okay. So, as we made the comment before in the prepared remarks, our fixed variable split is kind of 25% fixed, 75% variable, right. And that includes metal. So if you unpack that, what you get to, you get to excluding metals, we would say that we are kind of 40% variable and 60% fixed on the other costs. Just by looking at the - that is just the math of our metal - If you look at metal it is 62%, 63% of our raw material or of our total cost.

Got it. That is very helpful. And then how much came out of SG&A and R&D?

Well, so what I would say is, on SG&A, there are more - it is hard to give a precise number on that per say, because we have lumped them in the other non-metal cost. I think it is fair to say that a lot of those costs are a little bit more sticky in the sense of slightly less variable. So, maybe a slightly lower percentage than what I just provided. But, I would say in general, kind of that is a good rule of thumb to use.

Okay. Thank you. And then the other one for me is, can you talk a little bit about [clustering] (Ph) markets? How much inventory is that your customers or what I would call the channel?

Well, I think if you look at packaging, you have got normal inventories. If anything, a lot of - some of our customers have bought a bit more to make sure that they would insulate themselves from any supply disruptions. But, this is fast moving inventory. In aerospace, as I mentioned, I think we are building inventories and supply chain. If you look at our sales compared to the build rates there they are going, I think we’ll building industry inventories and supply chain. And in auto, there was such a sharp reduction and immediate stoppage to off take that I don’t think there is as much inventory in the supply chain. And so, that is going to create some challenges when we reached out, because everybody I guess will, the auto supply chain depends on many, many, many different suppliers and the ability to have the right inventory in the right place to get a restock is going to be a challenge for many, many suppliers. And depending on gradual or how fast restart will be, that may create some challenges.

Got it. Thank you. Excellent job in a bad environment.

Thank you.

Thank you. We take it as an encouragement.

Your next question comes from the line of Matthew Fields with Bank of America.

Hey, Jean-marc. Hey, Peter and Ryan. A couple of questions on the balance sheet for me. The first just wanted to confirm that €166 million delayed draw term loan is secured and it is not drawn yet.

That is correct.

Okay. And then, you mentioned some other liquidity measures earlier in the call, low interest government loans in Europe, et cetera for a total value of, I might have missed the number, was it 330 or did I hear that right?

350. Yes. Sorry to be clear, that includes the delayed draw term loan. So, the total liquidity add would be in the area of 350. And, we have very good line of sight on the piece that is not in place yet, a piece beyond the 156, but there are a couple of different pieces to it, that is why we are staying kind of in the area.

And are those mostly those government sponsored loans?

Yes. They are.

Okay, great. And are those secured loans as well?

It depends on the country, but in most cases, yes.

Okay, great. And then my follow-up to that is, you guys do have a decent amount of secured capacity, understand 350 goes a long way, but do you think with the strong rally your bonds had over the last month that you might want to hit the market to kind of turn out maturity, especially the 2021, I know it is not that big, but the market has rallied back a lot and clearing out a good amount of years in the front end might go a long way.

Yes. So it is a great question and it is something that we are looking at and we are obviously kind of thinking about all the time. One of the things, we like about the liquidity structure we put in place is it gives us time to kind of observe and take stock on where the markets are, and also kind of bridge some of the volatility that is been in the market. But it is something that we will definitely look at.

Alright. Thanks very much everyone and good luck.

Thank you.

[Operator Instructions]. Your next question comes from the line of Sean Wondrack with Deutsche Bank.

Hello, John-Marc, Peter. And I appreciate you taking my questions today.

Hi, Sean.

Just one quick clarification. And I hate to do this, but just on the 70% utilization rate, in the downside scenario, does that include Q1 or would that be the run rate for the rest of the year?

That is a run rate number for the rest of the year.

Okay. Understood. Thank you. And then when you think about the automotive market, I totally appreciate that visibility is really constrained here. Could you maybe talk about what you are seeing in Europe versus the U.S.? Are you seeing sort of more activity there from the OEMs a little bit more relative to the U.S.? Is there any difference that you’re kind of saying there? I think that would be helpful. Thank you.

That is really, I think everybody is a little bit unsure about when they can restart if they can restart. And then, I think those restarts are dependence on the so many factors, right. As I mentioned earlier, you need the supply chain to be able to restart with you, otherwise you have got a problem. You need employees to want to come to work and absentees can be a problem and thoughts of Europe or the U.S. so you have got the posters or hot or areas, you have got issues around what you meant will be. So, I think it is very foggy.

Thank you for that. And then just my last one. When you think about the PARP segment and congratulations on getting to a positive EBITDA there in Bowling Green. Do you still expect the mix shift here overtime to auto sheet to sort of help offset any kind of pricing weakness and maybe some of the absorption on EBITDA per ton basis?

Yes. So, I think what is happening here is - first we are really super happy with the Bowling Green performance. We had to shutdown Bowling Green for two weeks of that month, right. So, being EBITDA positive with just two and a half months in a three months period is a real difference from where we were two years ago or even that scale. So, we are really happy with it. And when it restart it will be a great factory and a great start of vehicle system. Now that said, yes, I do anticipate that overtime, auto sheets will continue to grow, can sheets will be continue to be strong and as a consequence, that will be a little bit of technique. But in the medium-term, if you look at any scenario in the past where automotive took a nosedive, so if you look at 2008, 2009, it took some time before auto deals rent went back to pre-crisis levels. So, that will impact the supply demand dynamic over the period when the build rates go back to a normal level. So, if we have got a V-shaped recovery, if you go to U-shape recovery and L-share, which I don’t think is a recovery really, but depends on your calligraphy. We would have a different picture in terms of what the supply demand dynamics will be and what the pricing power will be. So again, we are ready for any scenario, and I think what Peter was describing around, all the steps we are taking about managing our cash flows to a working capital, CapEx, managing our cost structure, peaks and variables, managing our liquidity and doing it prudently such that we won’t have access to liquidity, but we want it to be cheap, right. Doing all these things are giving us the runway to be able to weather whatever comes at us.

Thank you for that Jean-Marc. I appreciate it.

Sure.

I would now like to turn the conference back to Jean-Marc Germain, CEO of Constellium.

Well, thank you very much everyone again for your interest in Constellium. As you can see, we are really refocused on health, safety of our employees first. Staying very close to our suppliers and our customers to be able to operationally respond to the ever-changing market conditions. And as you saw, we are very cautious and aggressive about managing our cost structure so that we emerge from these crises stronger. We have got a great platform. I think the Q1 results are showing it and we will weather the storm and come out stronger. Thank you again.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day. You may all disconnect.