Hello. And welcome to today’s Constellium Fourth Quarter and Full Year 2022 Results Call. My name is Bailey, and I will be the moderator for today’s call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] I would now like to pass the conference over to, Jason Hershiser, Head of Investor Relations. Please go ahead.

Thank you, Bailey. I would like to welcome everyone to our fourth quarter and full year 2022 earnings call. On the call today, we have our Chief Executive Officer, Jean-Marc Germain; our Chief Financial Officer, Peter Matt; and Jack Guo, our Chief Financial Officer designated. 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 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 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. Without further ado, I’d like to turn the call over to Jean-Marc.

Thank you, Jason. Good morning. Good afternoon, everyone, and thank you for your interest in Constellium. Let’s begin on slide five. I want to start by thanking each of our 12,500 employees for their relentless focus on safety. Safety is our number one priority and a key pillar of our sustainability strategy. I am pleased to report that we delivered again, best-in-class safety performance in 2022, reducing our recordable case rate for the year to 1.8 per million hours worked. I would like to specifically recognize several of our sites for their excellent safety performance. Our Changchun joint venture in China completed 3 million hours without a recordable case in 2022. Muscle Shoals, Neuf Brisach, Ravenswood, Singen and the Valais operations, all completed 1 million hours without a recordable case. Finally, 12 of our sites completed 2022 with zero recordable cases. Our safety journey is never complete, though, and we all need to remain focused on this critical priority every day. We remain fully committed to achieving our safety targets to reduce our recordable case rate to 1.5 per million hours by 2025. Now let’s turn to slide six and discuss the highlights from our fourth quarter performance. Shipments were 368,000 tons, down 5% compared to the fourth quarter of 2021. Revenue increased 8% to €1.8 billion as a result of improved price and mix, partially offset by lower metal prices and lower shipments. Remember, while our revenues are affected by changes in metal prices, we operate a pass-through business model, which minimizes our exposure to metal price risk. Our value-added revenue, which reflects our sales, excluding the cost of metal was €696 million, up 18% compared to the same period last year. Our net income of €30 million in the quarter, compares to net income of €7 million in…

Thank you, Jean-Marc, and thank you everyone for joining the call today. Please turn now to slide nine. Value-added revenue or VAR was €696 million in the fourth quarter, up 18% compared to the same quarter last year. Looking at the fourth quarter, €134 million of this increase was due to improved price mix in each of our segments. €35 million of this increase was due to favorable FX translation tied to a stronger U.S. dollar. Volume was a headwind of €27 million due to lower shipments in PARP. Finally, metal impacts were a headwind of €37 million as inflation and input costs such as hardeners and alloying elements more than offset our scrap performance in the quarter. For the full year of 2022, VAR drivers were similar, except for volume, which was a positive contributor. There are two important takeaways from this slide; first, we grew our value-add revenue by 21% compared to last year; and second, we continue to have pricing power. Price and mix and price specifically is the biggest increment of our year-over-year variance and helped us to offset inflationary pressures. Now turn to slide 10 and let’s focus on our PARP segment performance. Adjusted EBITDA of €71 million decreased 20% compared to the fourth quarter of 2021. Volume was a headwind of €13 million with higher shipments in automotive more than offset by lower shipments in packaging and specialty rolled products. Automotive shipments increased 20% in the quarter versus last year as new platforms began to ramp up and demand generally appeared stronger. Packaging shipments decreased 12% in the quarter versus last year due to short-term inventory adjustments from our can sheet customers in both North America and Europe, and production challenges at Muscle Shoals. Price and mix was a tailwind of €33 million, primarily…

Thank you, Peter. Let’s turn to slide 18 and discuss our current end market outlook, starting with packaging. In packaging, we have experienced some short-term inventory adjustments at can makers in both North America and Europe, but we believe this would be largely complete during the first half of the year. The focus on sustainability is driving increased demand for infinitely recyclable aluminum cans, and we are confident in the long-term outlook for this end market, given can maker capacity additions in both regions, as well as recent announcements of greenfield investments here in North America. We will participate in this growth in both North America and Europe as we announced at our Analyst Day last year. As Peter noted, the company is highly focused on stabilizing the operating challenges we have been experiencing at Muscle Shoals, so that we can take advantage of these end market dynamics. Our issues at the plant stem primarily from the labor shortages you have read about. We are very confident in our ability to restore the plant’s profitability over the course of 2023. Turning now to automotive. OEM sales and production numbers globally are still at a low base compared to pre-COVID levels, with uncertainty continuing as a result of the semiconductor shortage and other supply chain challenges. However, we remain very positive on this market and increased demand in both PARP and AS&I gives us reason for optimism. Automotive inventories are low, consumer demand remains high, vehicle electrification and sustainability trends will continue to increase the demand for lightweighting and low CO2 recycled content. Let’s turn now to aerospace. The recovery in aerospace continued in the quarter, with shipments up 50% versus last year for the third quarter in a row, though still well below pre-COVID levels. Major OEMs have announced field…

Thank you. [Operator Instructions] The first question today comes from the line of Emily Chieng from Goldman Sachs. Please go ahead. Your line is now open.

Good morning, Jean-Marc and Peter. Congratulations on the new opportunity there. My first question is just around the EBITDA guidance that you have provided for 2023, the €640 million to €670 million, I think, is down only slightly below 2022 levels, which I think was a little bit more of an improvement versus the guidance that was talked to at the last quarter call. But maybe, Jean-Marc, if you could help bridge, what has changed versus your prior quarter’s expectations there? Has there been anything from the energy cost side coming down that you might see flowing through into the back end of this year that’s been helping out?

Yeah. Good morning, Emily, and thanks for your question. The -- so, yes, we feel more comfortable now and there’s a number of reasons for that and it is true that we believe our prospects are brighter than what we believe they would be back in October. The reason for that is, number one, we have more clarity in our order book for the year. Number two, we have also much more clarity in terms of pricing. There’s obviously a contract season in the fall. In October, we are kind of halfway through it. Now we are complete. So we have got much better visibility on our pricing for the year. And number three, as you pointed out, we got a little bit lucky with energy prices. They came down with a mild winter in Europe, so that’s helping as well. So these three are helping us converge towards that range of guidance we are giving today and we feel, again, more comfortable today than we did back in October.

Great. That’s very helpful, Jean-Marc. And a follow-up, if I may. I know you have talked about a little bit of additional capital that will be spent to help support some of the operations there, some -- and with some of the growth CapEx there. But you also mentioned that, that pace could be slowed in a more adverse operating environment. Perhaps could you define what that adverse environment could look like and what the flex would be on capital spending?

Sure. So, and clearly, it’s a remote possibility, but I want to highlight that there is we have got quite a bit of flex in our ability to flex CapEx and we have demonstrated it in the COVID times when we brought down capital expenditures by €100 million, while COVID hit really in March of 2020, right? So already a lot of projects are already launched, and despite this, we are able to reduce our capital expenditures by €100 million in the year. So I think that gives you a little bit of an idea of how much flex there is, 12 months out, you can reduce by €100 million and then possibly even more if it’s for longer. But I think what we -- I mean what we have demonstrated in the past is our ability to thrive in very different environments, right? When there is a sharp reduction in demand like in a COVID times when there is a strong pickup when the business is more stable. This is a business that generates substantial and consistent free cash flow. And we think we are -- the fundamentals of our business are strong and that’s why we want to continue to invest to the extent we can and our balance sheet allows it in the future of the business. So it would take a very significant downturn in the economy for us to change our plans regarding CapEx deployment. Again, we are in it for the long run and 2025 is nearly across -- around the corner and we want to make sure that we are able to see the opportunity, the many opportunities we have ahead of us. And finally, I will add that a lot of the investments we are talking about, some that are going to contribute to our negative free cash flow in the first quarter are the investments we are making in recycling, especially in Neuf Brisach, France and these are defensive investments at the same time as they expand our margins, they make us more independent from primary suppliers. It’s better for the planet. We want to do those things from shallow or high water, I would say.

Understood. That’s very clear. Thank you.

Thank you.

Thank you. The next question today comes from the line of Curt Woodworth from Credit Suisse. Please go ahead. Your line is now open.

Yeah. Thank you. Good morning, Jean-Marc and Peter. Peter, congratulations for the new role.

Thank you.

Good morning, Curt.

Hi. So I was wondering if you could unpack the guidance a little bit. I think you did say you are still expecting over €100 million of energy inflation. And I think in the past, you noted at least €100 million, I think, of labor and other sort of consumable related inflation. So what are you assuming in terms of price cost delta for the year and then do you also have a view of how much productivity or cost down you could achieve as well?

So as we look at inflation for the full year, Curt, what we said in the prepared remarks was that we expected it to be similar to what we saw this year and -- or, sorry, last year in 2022 and that was in the order of €300 million. So we are expecting that order of magnitude. And that includes, as you noted, higher energy costs, that includes higher metal costs and that’s really kind of alloying costs. It does include higher labor cost, labor is up more than it was in 2022 and then supplies in general across the portfolio. And all of that will add up to roughly a €300 million-ish increase. We believe that we are going to be able to pass-through most of that, as Jean-Marc said, and I said in the prepared remarks, we have pricing power. And one of the things that’s been gratifying to Emily’s question on why we are more conservative in October, we are right in the front end of this discussion around energy with customers and we have had very good success through the contract season. And I think what becomes clear is that our customers, they want us to be their suppliers because we are reliable and they need the material. And so, therefore, they are willing to work with us on this. And so we have had good success and as we did in 2022, we expect to pass-through most of that to our customers in 2023 or beyond, right? There are some instances where we said there’s a lag and that remains the case. In terms of our cost, I think, we continue to grind our costs down and we will continue to do that. In Muscle Shoals, clearly with some of the challenges there, our costs are elevated relative to where they would be, but I think that’s temporary. And we feel like the programs we have in place, the productivity improvement targets that we have in place are going to lead us to a very competitive cost position. So we will continue to work on costs. And maybe just to conclude, we -- on the Analyst Day, we talked about a €50 million cost opportunity and we continue to see that as very viable.

Okay. Makes sense. And then a follow-up, I guess, with respect to PARP profitability and margins and it definitely came in weaker than we had anticipated in the back half of the year, roughly, I think, 290 metric ton. And in the past, we have discussed auto profitability, I believe, in kind of the 500 to 600 level and I thought that packaging with the contract resets is kind of moving more up to definitely above 300. So can you kind of talk to what you think margin per ton in PARP could look like this year on a more normalized basis, obviously, it’s great to see you take the A&T margin target up by €100 million. But just curious what’s going on in part, if you could unpack that a little bit?

Sure. I will start and Peter will continue. So the -- on the auto side, in PARP, we are very comfortable with the level of margin we discussed in the past and that’s what’s happening right now. So we are good there. The shortfall, which I pointed to is mainly on the packaging side, comes from the packaging side. But remember that in packaging, we have had difficulties at Muscle Shoals, as we have discussed. But also we have been squeezed last year. There is a lag in terms of our ability to pass-through inflationary pressures. A lot of that has to do with the way the PPI works, where you look at the prior year and you increase your price the following year. And also, as we discussed a couple of years ago, the alloy surcharges started being implemented only this year, but only partially -- sorry, last year, but only partially. So there has been a margin squeeze also in packaging because of those two factors, allowing cost and the PPI fundamentals. Looking forward, the PPI and the inflation are pass-through in 2023, the alloys are pass-through in 2023 and the lag should be largely resolved. That said, we still have to restore operating performance at Muscle Shoals and that is what we are working on this year. As I mentioned, it’s mostly because of lack of experience resources and that takes time to build and we believe that over the course of 2023, we will restore profitability at Changchun and Muscle Shoals [ph], and therefore, in packaging. And those three causes, right, the PPI, the alloys and the inexperienced labor should be resolved by the end of 2023.

The only thing I’d add to that is that, remember, we talked about this inventory correction across packaging that’s going on among our customers. And you can imagine with the reduction in the tonnage across the business unit, it reduces our ability to leverage our fixed costs.

And what do you think a more normalized margin level is? I think in the past, you have talked about, I think, closer to €400 million, but could you update us on what you think a more fully economic level would look like for that division or is it too difficult to say right now?

So I think maybe we should -- so, certainly, north of €300 million, we should be able to be north of €300 million. I think maybe something in the order of €325 million to €350 million is a good place to start. And then if you have automotive pulling at full strength, maybe there’s some opportunity beyond that. But we would leave it there for now.

Okay. Got it. Thank you, guys.

Thank you, Curt.

Thank you. The next question today comes from the line of Corinne Blanchard from Deutsche Bank. Please go ahead. Your line is now open.

Good morning, Jean-Marc and Peter. First question from me…

Hi, Corinne.

…would be -- hi -- would be on EBITDA guidance. Do you expect a higher seasonality to happen this year, especially in 1Q and maybe going into 2Q because of packaging versus private care?

Yeah. Well, so what you should expect to see is that Q1 is going to be weaker than it usually is and so that would be contrary to the seasonality that we usually see. Usually, our first two quarters are the strongest and we should see a weaker Q1 recover in Q2 and then, obviously, Q3 and Q4, hopefully, we are back on track.

And remember, typically, PPI adjustments take place very often on the 1st of April. So we are still pricing in some segments, but prices that yet do not reflect, yet the spike in the inflation of last year, but they will start in April.

Thank you. And then maybe two quick follow-ups. The first one on aerospace margins, so cementing to the previous question, if you can unpack or if you can give a little bit more color on, I think you mentioned, like €800 million to €900 million. Is that truly coming just from aerospace or is it also like transportation or TID impact for that?

Yeah. I think it’s based essentially on better performance in our plants and better pricing as well and we look at it across the cycle, right? So securing a time when aerospace is very strong and the rest of TID is lower than drifting up. And if it’s the other way around, TID is strong, but aerospace is at a bottom and it’s drifting a little bit lower.

Okay. Thank you. And just the last one from me, can you remind us on the energy contract. Most of it is lock and you would renegotiate in September, October. How much of the energy cost is kind of export exposed? Is that 25%, 20%?

How much is? What was that?

Yeah. So I am not sure we fully understood the question. We try to answer. So going into 2023 today, about 90% of our energy needs are locked in, hedged, okay, essentially physically or through supply contracts, some derivatives as well. And then since we do it on a rolling three-year basis, we have to renew 25% roughly, 25%, 30% of our needs over the course of the year and split of the hedges for 24% and 25%.

Okay. Great. Thank you.

Thank you. The next question today comes from the line of Timna Tanners from Wolfe Research. Please go ahead. Your line is now open.

Hey. Great. Good morning and congrats on the opportunity. Peter will talk to you on the other side. I wanted to ask a couple of questions. One, maybe this is a dumb question, but inventory adjustments, is that -- it just seems like a euphemism for something? Like what exactly does that mean? Do you not have protection from context? Is that something more onerous in terms of underlying demand? I’d just love to get some more color on that on the packaging side?

Yeah. Hi, Timna. Yeah. I will take this one. So there’s excess inventory of cans and coils in the system compared to demand. There’s a number of reasons for that, like in the summer, the lack of promotion activities that the beverage companies, which typically there is and people start to stock up and then it doesn’t happen, so then the supply chain slows down. There’s been also a period of high growth after 20 years of markets being essentially flat. You have three years at plus 5%. People expect that the following year is going to be also a plus 5% that you have got a war, you have got inflation, people spend less money, buy less product, you expect have promotions, you don’t have promotions. So all of a sudden, the supply chain gets full with metal and it takes time to resolve that. Our contracts typically provide for a fixed amount of tons, but there is some variation around it and I will not go into the specific details, but let’s say, plus 5%, plus 10% or minus 5%, 10%. So when everybody is pulling below, then you can have -- and that happens that variance is, say, over the course of one year, but it materializes over the course of six months, and obviously, that creates a big swing in what demand is and people are still within their contracts. So I think that’s what we are seeing. And that’s why also, fundamentally, this is a reasonably stable market. There is not that much floor space on the shelves or in the warehouses to have full cans or empty cans, so it will resolve reasonably quickly and that’s why we believe in our -- through our discussions with our customers, we are confirming that, that by the end of the first half of this year, things will be back to normal.

No. That’s helpful. I guess I am wondering if this is a sign of just slowing demand after very strong COVID activity. I mean, do you see anything structurally weaker in the packaging outlook? Just obviously, there’s more cans and adoption of greater cans, but maybe the market get ahead of itself and needs to adopt maybe a slower growth outlook?

Well, I wouldn’t revise the growth outlook, but I think that, the COVID spike in consumption took everybody by surprise and people got maybe a little bit too excited about it. But fundamentally, you see more and more categories moving to cans. I mean, I don’t know if you have noticed in your -- going to the grocery store or your travel, you start to see flat water in cans and bottles and that’s a very good sign for us, because there’s a tremendous amount of plastic displays. So when things grow, it’s never linear, but I do believe that the growth trends for -- in favor of metal against plastic are going to stay on for many, many, many years.

And Timna, just one maybe to add to what Jean-Marc is saying. So as we look at our forecast for packaging demand in 2023, we expect it’s going to grow. It’s going to grow at kind of low-single digits, probably, zero to 2% type of thing -- type of range. And then longer term, I think, we are in line with what the can makers are saying, which is somewhere in the range of kind of 2% to 5% is probably the right way to bracket it and that feels right to us.

Okay. That’s great. And if I could squeeze one more in, just how good is your visibility on Europe? I am asking kind of, if things were to start to recover there, when would you start to see it, how well locked in are you and kind of more color on what you are seeing in Europe would be great? Thank you.

Yeah. So, I mean, depending on the products, our lead times are six weeks to six months, right, in aerospace, there’s some that take a long time to products that take a long time to make. I think we have got pretty good visibility for 2023 for over 75% of our business there. I mean aerospace is pretty locked in. Automotive, I mean, the signs are quite encouraging. And packaging, even though it’s flattish, as Peter mentioned, I think we have got a pretty decent visibility, because those inventory corrections really are not going to last longer than the first half of the year. So I think we have got decent visibility in Europe for 75% of our business perfect. I don’t know if I am answering…

Okay. Great.

… your question, feel free to follow up, if not...

No. That’s -- what -- when you say decent visibility, you mean for the full 2023 timeframe?

Correct. Yeah.

Okay. Great. Thank you.

Thank you, Timna.

Thank you. The next question today comes from the line of Karl Blunden from Goldman Sachs. Please go ahead. Your line is now open.

Hi. Thanks very much for the time and congratulations to Peter and Jack on the new roles. I wanted to talk just about the 2025 guidance and then certainly good to hear the reiteration there of over €800 million. Is it fair to say that can demand and energy costs have come in more challenging and perhaps the outlook is a bit more challenging than when that guidance was initially adopted. And I’d be interested to hear what the offsets are giving you confidence on that longer term guide presumably a few things going better than expected and love to hear what those are?

Sure. So, Karl, if I go back to what we thought in April of last year when we gave that €8 -- more than €800 million guidance. I think can is a bit challenged now, but I don’t think it is that much by 2025, and if anything, the volumes may be a bit lower, but the pricing is better. So, overall, in can, I’d say it’s even. Energy prices are definitely higher. We offset that by increased pricing and better efficiencies in our plants as well and I am quite encouraged by the early progress we are making. There’s nothing like lighting a fire under us to get us moving for sure. And then in aerospace, we are -- we were really at the beginning of the recovery last year. It’s come stronger. Maybe there is some upside in aerospace on our 2025 guidance and automotive is steady compared to of projections of last year. Finally, on the cost side, I mean, it’s -- our costs are much higher because of inflation, obviously, than what we thought they would be. But at the same time, we think our productivity and our progress in Vision 2025 gives us good confidence. So since the inflation is pass-through and our productivity could be better, I think, we got some upside. So, all in all, can in the same place, automotive in the same place, aero may be some upside and on the productivity cost side, maybe some upside.

That’s really helpful. Thanks. Just a quick one on the balance sheet. We have done a lot of good work there in deleveraging and approaching the high end of that target range. Should we think of Constellium is interested in notional debt reduction or should we think about your leverage target being achieved primarily through EBITDA growth from here?

We want to pay down debt also.

It will be both. It will be both. We want to reduce…

Okay.

… gross debt and our EBITDA is going to grow, too.

Great. Thank you.

Thank you. [Operator Instructions] Our next question today comes from the line of Richard Phelan from Deutsche Bank. Please go ahead. Your line is now open.

Hello. Yeah. Thanks, and Peter, good luck in the new role. You have touched on this multiple times here. So, but let me just a little clarification on the lower packaging volumes, I think, you said, 12% in Q4, that’s going to contribute to the lower EBITDA performance in Q1. You still think that where you stand today, that continues into Q2 as well and are they similarly double-digit sorts of declines in terms of volumes in that end segment?

Yeah. So I think -- so, yes, on Q1, it will be lower in Q1, and then as we get into Q2, we think we should be starting to recover. So we are kind of calling the trough somewhere around where we are today.

We think the full year should be about the same or maybe a bit better than last year.

Great. Thank you. And then, again, you have already partially addressed this, but the higher cost, roughly €300 million in total. There was some mention of -- in one of the questions about energy comprising over €100 million, but you didn’t attach a specific figure to the breakdown between energy, labor, the higher material, allowing or supply costs. It’s fair to say, though, that energy will still be the largest component of that €300 million basket year-on-year above the sort of €275 million expense that the group spent in 2022?

That is fair. That is fair. And we -- and remember, we have a piece of our energy that’s still open. So, hopefully, that will continue to be an opportunity for us.

Okay. And related to that on -- just in terms of supply, access to metal, no problems at all in terms of that at this point?

No. We are no problem with access to metal. I mean we...

We are going to work [ph].

Yeah. It’s…

But it’s so far so good and we don’t see a problem.

Understood. Thank you very much.

Yeah.

Thank you. There are no additional questions waiting at this time. So I’d like to pass the conference back over to Jean-Marc Germain, CEO of Constellium. Please go ahead when you are ready.

Thank you, Bailey. As you can tell, we are very happy with our performance in 2022 and we look forward with a lot of confidence to our performance of 2023. I want to wish good luck to Peter, perhaps, not his last day with us, far from it. We still have the benefit of his presence for quite a few weeks. And I look forward to updating you on our progress at -- when we release our Q1 results at the end of April. Thank you and have a good day all.

This concludes today’s conference call. Thank you all for your participation. You may now disconnect your lines.