Constellium Reports Full-Year and Fourth Quarter 2015 Financial Results

AMSTERDAM, March 15, 2016 /PRNewswire/ -- Constellium N.V. (NYSE and Euronext: CSTM) today reported results for the full year and fourth quarter ended December 31, 2015. These results include the acquisition of Wise Metals, which closed on January 5, 2015.

• 2015 Shipments of 1.5 million metric tons, up 39% from 1.1 million in 2014 
• 2015 Revenue of €5.2 billion, up 41% from €3.7 billion in 2014
• 2015 Adjusted EBITDA of €343 million, up 25% from €275 million in 2014
• Improved year-end leverage to below 5x and liquidity to €733 million from the prior quarter, including €145 million from the revolving credit facility
• 2015 Diluted EPS of (€5.27) reflecting substantial impairment charges
• Expanding joint venture with UACJ to establish a leadership position in the growing North American Body-in-White market, reducing expected capital investment from $620 million to approximately $340 million
• Plan to launch a secured corporate bond offering of approximately $400 million
• CEO to retire in 2016

Constellium's Adjusted EBITDA for 2015 was €343 million, an increase of €68 million, or 25%, from the 2014 Adjusted EBITDA, driven by the acquisition of Wise Metals, record performance in the Automotive Structures and Industry (AS&I) segment, and recovery in the Aerospace and Transportation (A&T) segment. Our results in Packaging and Automotive Rolled Products (P&ARP) were driven by the acquisition of Wise Metals, which contributed €68 million in Adjusted EBITDA in 2015. Adjusted EBITDA in 2015 also included a favorable year-over-year effect from metal premiums of €15 million and a foreign exchange effect of €14 million offset by higher costs in Holdings and Corporate as compared with 2014.

Adjusted EBITDA per metric ton for 2015 was €232, a decrease of 10% from 2014, reflecting a higher proportion of packaging in our product mix as a result of the Wise Metals acquisition.

Revenues for 2015 were €5.2 billion, which represented an increase of 41% from 2014 resulting primarily from the integration of the Muscle Shoals facility. On a like-for-like basis (excluding the impact of movements in London Metal Exchange metal prices, premiums, currency exchange rates, and the acquisition of Wise Metals), revenues increased by 4% when compared to 2014. Shipments in 2015 were 1,478k metric tons, up 39% from 2014, driven mainly by the integration of Wise Metals.

In the fourth quarter of 2015, Adjusted EBITDA was €76 million, an increase of 48% from €51 million in Q4 2014 as a result of the inclusion of Muscle Shoals. Adjusted EBITDA per metric ton for the fourth quarter 2015 was €224, an increase from €207 in Q4 2014 and driven mainly by the A&T segment. Revenues were €1,122 million in the fourth quarter of 2015, an increase of 20% from €936 million in the same period of 2014. In the fourth quarter of 2015, shipments were 337k metric tons, a 36% growth from the Q4 2014 shipments.  

Commenting on 2015 results, Pierre Vareille, Constellium's Chief Executive Officer said: "2015 showed marked improvement in our performance, particularly in our A&T and AS&I segments. We also completed the Wise acquisition, and after a challenging start it is now fully integrated into our P&ARP segment. We expect to launch a secured corporate bond offering to provide ample liquidity as a prudent move to allow us to safely carry forward the implementation of our strategy. All in all, reflecting on our efforts, I believe Constellium is on a firm footing with newly invested capacity and well positioned to capitalize on the opportunities in our industry, particularly in Body-in-White, aerospace and automotive extruded products."

In addition, Pierre Vareille announced, "I have informed the Board of my desire to retire during the course of 2016, and the Company is working to ensure a smooth transition, which may occur this summer. At the Board's request, I have agreed to remain in my current role until my successor is appointed, and to thereafter become an advisor to the Board to facilitate the transition. The Company is in discussions with a particular candidate, but no agreement has been finalized at this time. The Company currently expects to provide an update on the transition plan by early May 2016."   

Our North American Body-in-White Strategy

Commenting on Constellium's Body-in-White strategy, Pierre Vareille, Constellium's Chief Executive Officer said "We are committed to our North American Body-in-White strategy which we believe we are well placed to execute. Although this is an investment with a medium term horizon we are confident that it offers the opportunity to provide a good return to shareholders. However these essential early steps in implementing our Body-in-White strategy have stretched our financial and operational resources. With the proposed broader joint venture agreement with our partner UACJ, our strategy is intact but with reduced financial risk. We are very excited about joining our efforts to serve this most promising market."   

On March 10, 2016, Constellium announced a planned expansion of its existing joint venture with UACJ. This strategic move establishes the joint venture as a leading player in the BiW North American market, which continues to grow at a fast pace. It includes cost sharing on the two previously announced finishing lines and reduces Constellium's total North American BiW investment from $620 million to approximately $340 million over the next five years. As a result, the total consolidated capital expenditures for the group are expected to be approximately €350 million in 2016, a reduction from our previous estimate of €400 million.

Asset Impairment

Constellium recorded a total €457 million impairment charge in 2015, reflecting primarily a €400 million impairment charge against the carrying value of the Wise Metals asset. This charge, which has no impact on cash flows, reflects management's view of the future expected performance at Muscle Shoals in light of the challenges for the can business as previously disclosed. The total charges also includes a €49 million impairment in 2015 related to our Valais facility in Switzerland, for which the assets are now fully impaired.

Quarter Highlights and Recent Developments

In November 2015, Constellium announced that it will construct a new manufacturing facility in Bartow County, Georgia in response to the acceleration of the demand for its automotive structure products in North America. This project represents a $20 million investment by Constellium and an additional $12 million investment by the developer of the site, for a total project value of $32 million. The construction of the plant will begin in 2016, with a start of production anticipated in 2017.

The transfer of the wide roof coils activity from Muscle Shoals was executed successfully in January 2016. This is expected to have a negative impact to the Adjusted EBITDA of P&ARP on an annual basis of approximately $7 million, fully compensated by a positive impact of a comparable amount to the Adjusted EBITDA of A&T.

Outlook

We expect continued growth in our aerospace and automotive markets. The packaging market is strong in Europe, but will remain flat to slightly lower than 2015 in North America. In 2016, we will also start ramping up significant new capacity in our Body-in-White projects (Bowling Green, Kentucky and Neuf-Brisach, France), in our AS&I segment (Van Buren, Michigan, and Decin, Czech Republic) and in our facility in Ravenswood, West Virginia.

Group Summary

Adjusted EBITDA per metric ton and percentage changes are calculated on unrounded underlying figures and the difference between the sum of reported segment Adjusted EBITDA and the Group Adjusted EBITDA is related to Holdings and Corporate.

Results by Segment

Packaging & Automotive Rolled Products (P&ARP)

Adjusted EBITDA per metric ton and percentage changes are calculated on unrounded underlying figures

For 2015, Adjusted EBITDA for the P&ARP segment was €183 million reflecting a 55% growth over 2014, primarily attributable to the acquisition of Wise Metals. Revenues increased by 74%, primarily due to the increased volumes from the integration of Wise Metals despite lower metal prices. The decrease in Adjusted EBITDA per metric ton was primarily due to a higher proportion of packaging sales as a result of the integration of Muscle Shoals and partially offset by an increase in shipments of 16% in automotive rolled products compared to prior year.

In the fourth quarter of 2015, the P&ARP segment grew Adjusted EBITDA by 58% to €37 million. Adjusted EBITDA per metric ton of €150 for P&ARP decreased by 6% over the same period in the prior year. The increase in shipments reflects solid growth in automotive rolled products and the integration of Muscle Shoals. Automotive rolled products volumes increased by 21% in the fourth quarter of 2015 compared to the same period in 2014.

The P&ARP investments in Body-in-White finishing projects are proceeding according to schedule in both Neuf-Brisach, France and Bowling Green, Kentucky. Both finishing lines are expected to begin pre-qualification production in the middle of 2016 as planned and ramp-up in 2017.

Aerospace & Transportation (A&T)

Adjusted EBITDA per metric ton and percentage changes are calculated on unrounded underlying figures

For 2015, Adjusted EBITDA in the A&T segment was €103 million, an increase of 14% over 2014. These results include a year-over-year positive impact of €5 million from lower premiums and €18 million from foreign exchange compared to the prior year. Adjusted EBITDA per ton increased by 17% to €445 for the year compared to 2014. Revenues for this segment grew by 13% in 2015 while shipments of aerospace rolled products increased by 8% and transportation and other rolled products shipments fell by 11% for the year.

In the fourth quarter 2015, the A&T segment grew to €26 million in Adjusted EBITDA, a 55% increase from Q4 2014. These results include a quarter-over-quarter positive impact of €5 million from lower premiums and unfavorable foreign exchange impact of €2 million compared to the fourth quarter 2014. Revenues for the fourth quarter of 2015 were flat when compared to the prior year. Shipments were 50k metric tons and represent a decrease of 8% as a result of lower transportation and industry volumes partially offset by an increase in aerospace rolled products shipments. Adjusted EBITDA per ton grew to €509 for the fourth quarter 2015, a 68% increase from the same period in the prior year reflecting a higher proportion of aerospace rolled products volumes in our total sales for this segment.

Automotive Structures & Industry (AS&I)

Adjusted EBITDA per metric ton and percentage changes are calculated on unrounded underlying figures

For 2015, Adjusted EBITDA in the AS&I segment reached €80 million, an 11% increase from 2014, and Adjusted EBITDA per ton for 2015 grew 8% to €380 from 2014, resulting primarily from the growing demand in automotive extruded product shipments and a year-over-year favorable impact of €4 million from metal premiums compared to 2014. Revenues for 2015 grew by 14% due to an 8% increase in automotive extruded product shipments in 2015 while overall shipments increased by 2%.

The AS&I segment achieved Adjusted EBITDA of €18 million in the fourth quarter of 2015, representing an improvement of 14% from the fourth quarter 2014. Adjusted EBITA per ton increased 23% to €396 due to automotive extruded products. Shipments fell 7% to 48k metric tons in the fourth quarter while revenues grew slightly by 2%.

Net income

Net income in 2015 was a net loss of €552 million compared with net income of €54 million in 2014. The change over the prior year was primarily attributable to impairment charges, higher depreciation, significant one-time charges, higher finance costs, and unfavorable metal price lag, partially offset by higher Adjusted EBITDA, lower unrealized losses on derivative instruments, and a €32 million income tax benefit recognized in 2015.

The increase in depreciation was primarily attributable to an additional €61 million of depreciation related to the Muscle Shoals assets, which were acquired in January 2015. Significant one-time charges in 2015 included a €457 million asset impairment substantially related to Muscle Shoals and our Valais facility in Switzerland, €22 million of metal premium losses at Muscle Shoals, and €16 million in hedging policy and purchase accounting adjustments related to Muscle Shoals. Significant one-time charges in 2014 included €34 million of acquisition costs related to Wise Metals.

The increase in finance costs was mainly attributable to a €117 million increase in interest expense on borrowings, driven by a full year of interest expense related to our Senior Notes issued in May and December 2014 and interest expense on borrowings at Muscle Shoals. The year-over-year change in the effect of metal price lag on net income was €61 million (changed from a favorable impact in 2014 to an unfavorable impact in 2015), driven by lower aluminium prices. The decrease in unrealized losses was driven by a €31 million decrease in losses on foreign exchange related derivative instruments, as a result of lower currency exchange rate volatility in 2015 compared to 2014.

Earnings per share

For the fiscal year ended December 31, 2015, the fully diluted earnings per share was a negative €5.27 versus a positive €0.48 per share for the same period in 2014. Fully diluted earnings per share is based on a weighted average number of ordinary shares of approximately 105 million for the years ended December 31, 2015 and 2014.

Cash flow and liquidity

Adjusted free cash flow was a positive €160 million for the full year 2015 compared to a positive €2 million for the full year 2014. This reflects increased cash flows from operating activities from €212 million in 2014 to €511 million in 2015 partially offset by an increase of €151 million in capital expenditures which grew from €199 million in 2014 to €350 million in 2015. Cash flows from operating activities benefited from a substantial reduction in accounts receivables, of which €335 million was contributed by non-recourse sales of receivables.

Net debt at December 31, 2015 was €1,703 million, an increase from €222 million as of December 31, 2014, mainly due to the acquisition of Wise Metals. Our cash position at the end of 2015 was €472 million.

As of December 31, 2015, liquidity was €733 million, comprised of €472 million of cash and cash equivalents, €50 million available under our factoring facilities, €56 million available under our Asset Based Lending facilities, and €155 million available under revolving credit facilities. We expect to launch a new secured corporate bond offering of approximately $400 million, subject to all necessary approvals and market conditions.

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 to achieve expected synergies and the timing thereof; the risk that the businesses will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; Constellium's increased levels of indebtedness as a result of the acquisition of Wise Metals, which could limit Constellium's operating flexibility and opportunities; the potential failure to retain key employees as a result of the acquisition of Wise Metals or during the integration of the business, the loss of customers, suppliers and other business relationships as a result of the acquisition of Wise Metals; disruptions to business operations resulting from the acquisition of Wise Metals; slower or lower than expected growth in the North American market for Body-in-White aluminium rolled products, the possibility that Constellium joint venture expansion with UACJ may have terms that differ materially from those currently contemplated, the possibility that a secured bond offering will not ultimately be completed or will be completed on more restrictive terms than expected, 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 publicly 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 and NYSE Euronext: CSTM) is a global sector leader that develops innovative, value added aluminium products for a broad scope of markets and applications, including aerospace, automotive and packaging. Constellium generated €5.2 billion of revenue in 2015. Constellium's earnings materials for the full year and quarter ended December 31, 2015 are also available on the company's website (www.constellium.com).