Constellium (CSTM) Q4 2025 Earnings Transcript

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Date

Wednesday, Feb. 18, 2026 at 10 a.m. ET

Call participants

• Chief Executive Officer — Ingrid Joerg
• Chief Financial Officer — Jack Guo
• Director of Investor Relations — Jason Hershiser
• Unattributed Executive — Jean-Marc Germain

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Takeaways

• Safety performance -- Recordable case rate improved to 1.9, better than industry average, though short of the 1.5 target.
• Quarterly revenue -- Revenue reached $2.2 billion, up 28%, primarily from higher shipments and revenue per tonne due to increased metal prices, with the business model minimizing metal price risk.
• Quarterly shipments -- Shipments rose 11% to 365,000 tonnes, with growth in all operating segments.
• Quarterly net income -- Net income was $113 million, reversing a net loss of $47 million, with higher gross profit as the main driver.
• Quarterly adjusted EBITDA -- Adjusted EBITDA grew 124% to $280 million, including a $67 million positive noncash metal price lag; adjusted EBITDA excluding price lag was $213 million, marking a fourth-quarter record.
• Quarterly free cash flow -- Free cash flow was $110 million.
• Share repurchase Q4 -- 2,400,000 shares were repurchased for $40 million during the quarter.
• Annual revenue -- Full-year revenue was $8.4 billion, up 15%, reflecting higher shipments and metal prices.
• Annual shipments -- Full-year shipments increased by 4% to 1,500,000 tonnes.
• Annual net income -- Annual net income reached $275 million, up from $60 million, mainly due to increased gross profit.
• Annual adjusted EBITDA -- Adjusted EBITDA for the year rose 36% to $846 million, including $126 million positive metal price lag; excluding lag, adjusted EBITDA was $720 million, the second best in company history.
• Annual free cash flow -- Free cash flow for the year was $178 million.
• Annual share repurchase -- 8,900,000 shares repurchased in 2025 for $115 million; $106 million remains under the current authorization.
• Leverage -- Ended the year with leverage at 2.5x, the upper end of the target range, with an expectation for leverage to decline in the following year.
• Segment performance — A&T -- A&T adjusted EBITDA rose 43% in the quarter to $83 million, with volume tailwind of $31 million from 41% higher TID shipments and improved operating costs; price and mix presented a $28 million headwind.
• Segment performance — PARP -- PARP adjusted EBITDA grew 143% to $136 million, a new quarterly record; packaging shipments increased 15%, and cost tailwinds of $40 million were driven by improved scrap spreads and Muscle Shoals operational improvement.
• Segment performance — AS&I -- AS&I adjusted EBITDA was $5 million, up $1 million from last year; industry shipments up 33%, while automotive shipments declined 10%.
• Cost and tariff environment -- Higher U.S. aluminum prices and improved spot scrap spreads benefited results, especially in Q4; tariff policy described as net positive with direct exposure described as manageable.
• Guidance for 2026 -- The company targets adjusted EBITDA, excluding metal price lag, between $780 million and $820 million and free cash flow in excess of $200 million, with guidance based on a stable macro and end-market environment.
• Vision 2028 program -- Announced the Vision 2028 group-wide excellence program focused on operational efficiency and cost reduction, forming part of the roadmap to $900 million adjusted EBITDA (excluding metal price lag) and $300 million free cash flow in 2028.
• Liquidity -- Year-end liquidity was $866 million, an increase of $140 million compared to the prior year.
• Capital expenditures outlook -- 2026 CapEx expected at $115 million, with $100 million allocated to aerospace and recycling projects at Issoire, Muscle Shoals, and Ravenswood.
• Operational seasonality -- First half of 2026 is expected to be stronger for EBITDA and free cash flow due to favorable recycling economics and supply chain dynamics.
• A&T segment long-term profitability target -- The adjusted EBITDA per tonne target was increased to $1,300 from $1,100, reflecting improved visibility.

Summary

Constellium (NYSE:CSTM) delivered quarter and full-year performance characterized by double-digit shipment and revenue growth across all segments, underpinned by a business model that reduces metal price risk. Management explicitly credited higher gross profit for significant improvement in earnings, with operational execution and cost discipline supporting the company's achievement of its own internal expectations. Shareholder returns remained a priority, as evidenced by substantial repurchases and leverage reduction to the upper end of the target range. Strategic visibility was enhanced through the launch of the Vision 2028 program targeting efficiency gains, operational optimization, and margin expansion, including raising the A&T segment's EBITDA per tonne target with further detail offered on the company's proactive response to changing recycling and tariff environments. The full-year guidance for fiscal 2026 signals continued operational improvement and capital allocation aimed at both organic investment and share repurchases, pointing to management's focus on maintaining financial flexibility.

• Jean-Marc Germain stated, "our scrap consumption needs are fully contracted in the first quarter, we should see similar type of benefits as we have seen in 2025," highlighting visibility for early 2026 profitability drivers.
• The company indicated that incremental scrap benefits are expected to taper through 2026 as open volumes remain to be secured for later quarters.
• Guidance for $780 million to $820 million adjusted EBITDA (excluding metal price lag) reflects management’s base-case scenario that assumes demand trends observed in late 2025 persist into at least 2026.
• The Vision 2028 initiative focuses on asset reliability, throughput maximization, cross-qualification, debottlenecking, and enhanced recycling performance—specifically targeting packaging and aerospace segments.
• Management expects to complete the remaining $106 million share repurchase authorization using free cash flow generated in the current year.
• Tariff measures in the U.S. are described as a net benefit, and direct exposure to related cost pressures is considered manageable at this stage.
• Leadership directly addressed industry concerns on material substitution and carbon border adjustment mechanisms, stating, "With respect to aluminum substitution in automotive, we really do not see any evidence of that," and expressing collective opposition to current CBAM design due to perceived risk of carbon leakage and inadequate market protection.

Industry glossary

• Metal price lag: The timing difference between the movement in market metal prices and the pricing realized in sales contracts, often resulting in temporary noncash accounting impacts on reported profitability.
• TID (Transportation, Industry, and Defense): Sub-segment of the A&T division serving the transportation, general industrial, and defense sectors; referenced in shipment reporting.
• PARP (Packaging & Automotive Rolled Products): Segment producing rolled aluminum products for packaging and automotive end-markets (also referred to as ARP in the call).
• AS&I (Automotive Structures & Industry): Segment supplying extruded aluminum structures and profiles to automotive, industrial, and other specialty markets.
• UBCs (Used Beverage Cans): Post-consumer aluminum can scrap used as feedstock in recycling operations, impacting scrap spreads and raw material costs.
• CBAM (Carbon Border Adjustment Mechanism): European Union regulatory framework imposing tariffs or levies on imports of certain materials based on their embedded carbon emissions, with intended effects on competitiveness and carbon leakage.
• Midwest premium: A regional surcharge added to the London Metal Exchange (LME) aluminum price to reflect North American delivery costs and local supply-demand conditions.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Constellium SE Fourth Quarter and Full Year 2025 Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. I would now like to hand the conference over to your speaker today, Jason Hershiser, Director of Investor Relations at Constellium SE. Thank you, Jason.

Jason Hershiser: I would like to welcome everyone to our fourth quarter and full year 2025 earnings call. On the call today, we have our Chief Executive Officer, Ingrid Joerg, and our Chief Financial Officer, Jack Guo. 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 10-K. 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 GAAP disclosures. I will now turn the call over to Ingrid. Thank you, Jason. Good morning, good afternoon, everyone, and thank you

Ingrid Joerg: for your interest in Constellium SE. Let us begin on Slide 5. I want to start with safety, our number one priority. In 2025, we achieved a recordable case rate of 1.9, an improvement compared to 2024 and much better than the industry average. While we did not meet our ambitious target of 1.5, this progress reinforces our commitment to safety and reminds us that reaching our goal will require continued strong efforts across the organization. Our safety journey is never complete, and we all need to remain committed to this critical priority every day. Now let us turn to Slide 6 and discuss the highlights from our fourth quarter performance.

Shipments were 365,000 tonnes, up 11% compared to 2024 due to higher shipments in each of our operating segments. Revenue of $2.2 billion increased 28% compared to 2024 due to higher shipments and higher revenue per tonne, including higher metal prices. 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 net income of $113 million in the quarter compares to a net loss of $47 million in the fourth quarter last year. The main driver of the increase was higher gross profit in the quarter versus last year.

Compared to the fourth quarter last year, adjusted EBITDA increased 124% to $280 million in the fourth quarter this year. This includes a positive noncash impact from metal price lag of $67 million. If we exclude the impact of price lag, which, as you know, is the way we view the real economic performance of the business, we achieved an adjusted EBITDA of $213 million in the quarter. This is a new fourth quarter record for us and is up 113% versus the $100 million in the fourth quarter last year. Our free cash flow in the quarter was strong at $110 million. During the quarter, we returned $40 million to shareholders through the repurchase of 2,400,000 shares.

Now please turn to Slide 7 for our full year 2025 highlights. For the full year, shipments were 1,500,000 tonnes, up 4% compared to 2024. Revenue of $8.4 billion increased 15% compared to 2024 due to higher shipments and higher revenue per tonne, including higher metal prices. Our net income of $275 million compares to a net income of $60 million in 2024. The main driver of the increase was higher gross profit versus the prior year. Adjusted EBITDA increased 36% to $846 million in 2025. This includes a positive noncash impact from metal price lag of $126 million.

Again, if we exclude the impact of metal price lag, the real economic performance of the business reflects adjusted EBITDA of $720 million for the year compared to $575 million we achieved in 2024 and represents our second best year ever. Moving now to free cash flow. Our free cash flow for the year was $178 million in 2025. During the year, we returned $115 million to shareholders through the repurchase of 8,900,000 shares. We reduced our leverage by the end of 2025 to 2.5x, which is at the upper end of our target range.

Constellium SE achieved strong results in 2025 that were ahead of our own expectations coming into the year, and despite the uncertain macroeconomic and end market environment. I want to thank each of our 11,500 employees for their commitment and relentless focus on safety and serving our customers. We delivered strong execution and demonstrated our ability to control costs throughout the year in 2025, and we believe we are well positioned heading into 2026 to capitalize on market opportunities as they arise. I will now turn the call over to Jack for further details on the financial performance. Jack?

Jack Guo: Thank you, Ingrid, and thank you, everyone, for joining the call today. Please turn now to Slide 9, and let us discuss our A&T segment performance. Adjusted EBITDA of $83 million increased 43% compared to the fourth quarter last year. Volume was a tailwind of $31 million due to higher TID shipments. TID shipments were up 41% versus last year, first as we continue to see increased demand from onshoring in the U.S., and secondly, we also benefited from higher shipments in Valais, following a recovery from the flood last year. Aerospace shipments were stable in the quarter versus last year as commercial OEMs continue to work through excess aluminum inventory in the supply chain.

Demand in space and military aircraft

Operator: remained generally healthy.

Jack Guo: Price and mix was a headwind of $28 million due to unfavorable mix in the quarter, partially offset by improved contractual and spot pricing in aerospace and TID. Costs were a tailwind of $18 million, primarily as a result of lower operating costs.

Jean-Marc Germain: FX and other was also a tailwind of $4 million in the quarter due to the weaker U.S. dollar. For the full year 2025, A&T generated adjusted EBITDA of $339 million, an increase of 16% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, except volume was a headwind of $1 million for the full year. Now turn to Slide 10, and let us focus on our PARP segment performance. Adjusted EBITDA of $136 million increased 143% compared to the fourth quarter last year and is a new quarterly record for PARP. Volume was a tailwind of $19 million in the quarter.

Packaging shipments increased 15% in the quarter versus last year as demand remained healthy in both North America and Europe. In North America, we also benefited at Muscle Shoals from continued improvement of operational performance in the quarter. Automotive shipments were relatively stable in the quarter overall, though we did benefit in both regions from the current supply shortages in North America of aluminum automotive body sheet. Price and mix was a tailwind of $15 million mainly as a result of improved pricing and favorable mix in the quarter.

Costs were a tailwind of $40 million primarily as a result of favorable metal costs given improved scrap spreads and higher metal pricing environment in North America and increased consumption of scrap given the Muscle Shoals improvement, which is partially offset by higher operating costs. FX and other was a tailwind of $6 million in the quarter. For the full year 2025, ARP generated adjusted EBITDA of $353 million, an increase of 46% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, though we benefited more in the fourth quarter from favorable metal costs compared to the full year.

Now turn to Slide 11 and let us focus on the AS&I segment. Adjusted EBITDA of $5 million increased by $1 million compared to the fourth quarter of last year. Volume was a $4 million tailwind as a result of higher shipments in industry treated products partially offset by lower shipments in automotive. Industry shipments were up 33% in the quarter versus last year, as we had higher shipments in Valais following recovery from the flood last year. The industrial markets in Europe appear to have bottomed, although they remain at depressed levels. Automotive shipments were down 10% in the quarter, with weakness in both North America and Europe.

Even though the broad automotive markets in North America are relatively stable, our automotive structures business was negatively affected by the current supply shortages of aluminum automotive body sheet and its impact on production of certain platforms in the region which our automotive structures business supplies to. Price and mix was a $6,000,000,000 headwind in the quarter. Costs were a tailwind of $1 million, primarily due to lower operating costs, partially offset by the impact of tariffs. FX and other was a tailwind of $2 million in the quarter. For the full year 2025, AS&I generated adjusted EBITDA of $72 million, a decrease of 3% compared to 2024.

The drivers of the full year performance were similar to those in the fourth quarter, except that volume was stable for the full year and in the third quarter, we received net customer compensation for the underperformance of an automotive program. It is not on the slide here, but our holdings corporate expense for the full year 2025 was $44 million, up $1,111 million compared to the prior year. The increase is primarily due to higher labor costs and costs associated with corporate transformation projects. We currently expect holdings and corporate expense to run at approximately $50 million in 2026. Now please turn to Slide 12.

It is not on the slide here, but I wanted to summarize the current cost environment we are facing. As you know, we operate a pass-through business model, so we are not materially exposed to changes in the market price of primary aluminum, our largest cost input. Other metal costs, following the U.S. tariff announcements in 2025, market aluminum prices in the U.S., which includes the LME aluminum price plus the Midwest premium, have risen sharply to historical levels. Spot scrap spreads for aluminum, mainly used beverage cans or UBCs, have also improved from historically tight levels experienced in 2024 and into 2025. Both of these dynamics unfolded as we moved through the year in 2025.

Given that a portion of our scrap purchases were negotiated previously, we did not benefit much from this dynamic in 2025 until the fourth quarter, and the favorable impact was augmented through strong performance at Muscle Shoals in the quarter. As we look at 2026, we expect to benefit from these trends, especially in the first half. Moving on to inflation. Inflationary pressures continue today across operating cost categories, including labor, energy, maintenance, and supplies, albeit at more normal levels.

Regarding tariffs, we have made some progress on pass-throughs and other to mitigate a portion of our gross tariff exposure, and we believe at this stage our direct tariff exposure remains manageable and the current tariff and trade policies are net positive for us. In terms of the overall cost

Ingrid Joerg: management,

Jean-Marc Germain: we have demonstrated strong cost performance in the past, and we are confident in our ability to maintain a right-sized cost structure in any environment. On that front, we are pleased today to announce our next group-wide excellence program, which we are calling Vision 2028. This program will target both operational efficiencies and cost reduction across our businesses and is one of the building blocks in our roadmap to our 2028 targets. We look forward to updating you on our progress going forward. Now let us turn to Slide 13 and discuss our free cash flow. We generated $178 million of free cash flow in 2025, well ahead of a very challenged 2024.

The increase in free cash flow in 2025 was primarily a result of higher segment adjusted EBITDA and lower capital expenditures, partially offset by higher cash interest. Looking at 2026, we expect to generate free cash flow in excess of $200 million for the full year. We expect CapEx to be approximately $115 million, which includes approximately $100 million of return-seeking CapEx primarily related to key aerospace and recycling and casting projects we announced previously at Issoire, Muscle Shoals, and Ravenswood. We expect cash interest of approximately $125 million and cash taxes of approximately $70 million, and we expect working capital and other to be a use of cash for the full year.

As Ingrid mentioned previously, we continued our share buyback activities in the quarter. During the quarter, we repurchased 2,400,000 shares for $40 million, bringing our 2025 total to 8,900,000 shares for $115 million. We have approximately $106 million remaining on our existing share repurchase program, which we intend to complete by using our free cash flow generated this year. Now let us turn to Slide 14 and discuss our balance sheet and liquidity position. At the end of the fourth quarter, our net debt of $1.8 billion was up approximately $0 million compared to the end of 2024, with the largest driver being the translation impact from the weaker U.S. dollar at the end of the year.

We reduced our leverage to 2.5x at the end of 2025, which is at the upper end of our target range. We expect leverage to trend lower in 2026 and to maintain our target leverage range of 1.5x to 2.5x over time. As you can see in our debt summary, we have no bond maturities until 2028. And as of 2025, we had no outstanding borrowings under the Pan-U.S. ABL facility. Our liquidity increased by around $140 million from 2024 and remains very strong at $866 million as of 2025. With that, I will now hand the call over to Ingrid.

Ingrid Joerg: Thank you, Jack. Let us turn to Slide 16 and discuss our current end market outlook. The majority of our portfolio today is serving end markets benefiting from durable and attractive secular growth trends, in which aluminum, a light and infinitely recyclable material, plays a critical role. Turning first to the aerospace market. Commercial aircraft backlogs are at record levels today and continue to grow. Major aerospace OEMs remain focused on increasing build rates for both narrow-body and wide-body aircraft as evidenced by higher plane deliveries year over year and rising delivery ambitions in the near term.

Although supply chain challenges have continued to slow deliveries below what OEMs were expecting for several years in a row now, demand is steady for the most part, and aluminum destock in the supply chain appears to be easing. Demand for high value-add products, which is one of our core focus areas, remains strong. We remain confident that the long-term fundamentals driving commercial aerospace demand remain intact, including growing passenger traffic and greater demand for new, more fuel-efficient aircraft. In addition, demand remains stable in the business and regional jet market, whereas demand for space and military aircraft is strengthening.

We believe we are a leading provider of proprietary aluminum solutions for those customers in the space and military aviation markets today. As you know, we are investing in additional capacities and capabilities, such as our third Airware cast house in Issoire, which we expect to start up by the end of this year to further strengthen our position in the future. Looking across our entire military aviation and space businesses, we believe our product portfolio is unmatched in the industry, and we have industry-leading R&D capabilities for aluminum aerospace solutions.

Given the visibility over the next several years, we are raising our adjusted EBITDA per tonne target for our A&T business to $1,300, up from $1,100 that we provided last year. Turning now to packaging. Demand remains healthy in both North America and Europe. The long-term outlook for packaging continues to be favorable, as evidenced by the growing consumer preference for the sustainable aluminum beverage can, capacity growth plans from the can makers in both regions, and the greenfield investments ongoing here in the U.S. We continue to see aluminum gain share against other substrates in the beverage market, and the majority of new beverage products are launched in aluminum cans today due to its sustainable attributes.

Aluminum cans are highly recyclable, and we are well positioned to capitalize on the benefits from recycling packaging materials at our facilities in Muscle Shoals and Neuf-Brisach. Packaging markets are relatively stable and recession resilient, as we have seen many times in the past. Longer term, we continue to expect packaging markets to grow low to mid single digits in both North America and Europe, providing a strong base load for our operations in both regions. Now let us turn to automotive, which continues to be a bit of a different story in North America versus Europe. In North America, demand is relatively stable, though the tariff environment is creating some uncertainties.

Last year, one of our competitor’s U.S.-based facilities was impacted by fire, a very unfortunate event which has created an interruption in the aluminum rolled product supply chain in North America. The entire industry continues to mobilize to ensure we limit the impacts on our customers. In the fourth quarter, we started to benefit on the rolled product side as we were able to help our customers during this outage. On the automotive structures side, we were negatively impacted as some OEMs were forced to reduce production on certain platforms impacted by the disruption on the rolled product side. The overall impact in 2025 was a net positive on our results, which we expect to continue into 2026.

Automotive demand in Europe remains weak, particularly in the premium vehicle segment where we have greater exposure. European markets are seeing increased Chinese competition and have lowered their battery electric vehicle ambitions. Automotive production in Europe is also feeling the impact of the current Section 232 auto tariffs, given the number of vehicles Europe exports to the U.S. Longer term, we believe electric and hybrid vehicles will continue to grow but at a lower rate than previously expected. Secular trends such as light-weighting, fuel efficiency, and safety will continue to drive the demand for aluminum products. As a result, we remain positive on this market over the longer term in both regions, despite the weakness we are seeing today.

As you can see on the page, these three core end markets represent over 80% of our last twelve months revenue. Turning lastly to other specialties. These markets are typically dependent upon the health of the industrial economies in each region, including drivers like the interest rate environment, industrial production levels, and consumer spending patterns. Industrial market conditions in North America and Europe became more stable in 2025, and we believe the markets, particularly in Europe, have bottomed after three years of market downturn. Nevertheless, we expect the specialties markets in Europe to remain relatively weak in the near term.

We do believe TID markets in North America provide us with some opportunities today, given the current tariffs make imports less competitive compared to domestic production. We also believe there are some opportunities in land-based defense and semiconductor markets given current market dynamics. In most industrial markets, we are focused on niche, high value-added applications. To conclude on the end markets, we like the fundamentals in each of the markets we serve, and we strongly believe that the diversification of our end markets is an asset for the company in any environment. Turning lastly now to Slide 17, we detail our key messages and financial guidance.

Our team delivered strong execution and results in 2025 that were well ahead of our expectations coming into the year. Excluding metal price lag, our adjusted EBITDA in 2025 was our second best year ever. We returned $115 million to shareholders in the year with the repurchase of 8,900,000 shares, and we reduced our leverage to 2.5x by year end. We remain focused on strong cost control, free cash flow generation, and commercial and capital discipline. Based on our current outlook, for 2026, we are targeting adjusted EBITDA, excluding the noncash impact of metal price lag, in the range of $780 million to $820 million and free cash flow in excess of $200 million.

Our guidance assumes the recent demand trends in our end markets that I described earlier will continue into at least 2026, and the overall macroeconomic environment to remain relatively stable. Looking into the future, we also want to reiterate our targets of adjusted EBITDA, excluding the noncash impact of metal price lag, of $900 million and free cash flow of $300 million by 2028. To conclude, we are extremely well positioned for long-term success and remain focused on executing our strategy and shareholder value creation. With that, Operator, we will now open the Q&A session.

Operator: Thank you. Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. One moment for questions. Our first question comes from Katja Jancic with BMO Capital Markets. You may proceed.

Ingrid Joerg: Maybe starting on the 2026 guide, can you let us know how much of a benefit for scrap spreads is embedded in this guide?

Operator: Good morning, Katja.

Jean-Marc Germain: Thank you for the question. Regarding the scrap benefits for 2026, and here I am going to go on for a little bit. Obviously, we believe it is a tailwind for us in 2026. Our expectation is, given our scrap consumption needs are fully contracted in the first quarter, we should see similar type of benefits as we have seen in 2025. And if you were to look at the bridge for Q4 2025 for the PARP business unit, you will see that, and we called this out, the metal benefits in the system, so includes the European plants as well as Muscle Shoals, more than offset a little bit of a higher operating cost, if you will.

So the net impact is $40 million, which gives you an idea of the amount of benefit we had in 2025, and we believe that should continue to carry into at least 2026. Now obviously, there is quite a bit of interest on this topic, so I think it is important to have some context. Number one, as we mentioned and discussed previously, the recycling economics is quite complex. There are really a lot of elements at work. So we are talking about the market aluminum price levels. We are talking about scrap spreads. We are talking about scrap consumption levels, productivity, melt loss, type of scrap we procure, and it is not just UBCs.

We also consume other types of scrap. Even within UBCs, you have different grades. So it gets really, really complicated. And if you just take three of the many elements there, it becomes a three-dimensional matrix. So it is very complicated, as they can work in sync or they can work against one another. I think another important point to understand is recycling economics have averaged out over time, and that was the case when markets were much more stable in the pre-2024 time periods, where we have mentioned previously that the annual swings could

Ingrid Joerg: very

Jean-Marc Germain: between sort of the $20 million to $30 million range. But they have averaged out over time. And that is also the case in times which are more volatile, like between 2024 to today. And if you rewind a little bit, in 2024 we saw sharp contraction in scrap spreads, and we had challenges at Muscle Shoals. So we experienced actually $15 to $20 million worth of quarterly headwind, if you will. And then you multiply that by four, you will get the full-year headwind. So it is quite substantial.

And then we saw similar type of headwind in 2025, which was more pronounced in the first quarter, to a lesser extent in the second quarter, as spot spreads tightened but Muscle Shoals was doing better, and the Midwest saw a sharp increase due to the tariffs. But overall, if you look at 2024 to 2025, that was an extremely challenging eighteen months for us from a metal profit perspective. Now Q3 2025 was stable, and then in the fourth quarter, as I mentioned, we benefited from favorable environment and quite strong performance at Muscle Shoals, which have allowed us to recoup the losses we had in 2025 plus a bit more.

So now looking at 2026, I have already covered the first quarter. Looking at the future quarters, we do have some open volumes, and we are working very hard to lock in those additional open volumes beyond the first quarter. But the incremental benefits, based on the current expectation, is that they should gradually taper off as we move through the year. But overall, our expectation is that we should be able to recoup the losses we had from 2024. So that is a long answer, but it gives you a lot of color around the scrap topic.

And I think the takeaway is: one, it is a very complicated topic; two, it does average out over time; and three, recycling requires a lot of investments, which we have made. It requires a lot of know-how. We have been operating it for decades. It is one of the cylinders of our engine, as we mentioned previously. And when the market conditions are more favorable like it is today, you can count on us to make the best out of the opportunity.

Ingrid Joerg: Okay. And

Ingrid Joerg: I understand that it is complicated. But let us say if these scraps stay at the current level, and then looking more to your 2028 target of $900 million, it seems that target might be conservative. Can you just remind us how we get there, or what are some of the moving

Jean-Marc Germain: parts there?

Ingrid Joerg: Hello, Katja. Thank you for this follow-up question. I will let Jack come in later. But maybe with respect to 2028, I think when we talked the first time a year ago about our bridge, we said we were still going to take more conservative assumptions on the metal side. So what you are seeing today is that we are ahead due to metal benefits versus our 2028 target. But obviously, this is a very dynamic market environment, and things can change very, very quickly. So Midwest premium can change very quickly, and the percentages of scrap spreads can change very quickly, which is why we have taken a conservative assumption in the first place.

We do not know if the current situation that we experience in 2026 is going to last and for how long it is going to last. Which is why we have preferred to remain at a more prudent stance and assumption in our 2028 target.

Ingrid Joerg: Okay. Thank you.

Jean-Marc Germain: Thank you, Katja.

Ingrid Joerg: Thanks. Thank you.

Operator: Our next question comes from Bill Peterson with JPMorgan. You may proceed.

Jason Hershiser: Maybe

Bill Peterson: outside of the scrap spread, I am trying to get a sense for some other factors within the 2026 guidance. For example, what is your latest thoughts on aerospace recovery? How much can be attributed to Vision 2028? Any sort of assumptions related to, you know, one of the peers in this space with their, you know, their rolling mill ramping for the automotive space. Trying to get a sense for some other puts and takes within the full year guidance.

Ingrid Joerg: Thank you very much for the question, Bill. I will start and let Jack complete. Let me start on the market side. Maybe I think we believe that packaging is going to remain a good driver of growth for us going into next year. We see both regions, U.S. and Europe, with solid performance. And we have been having quite a good turnaround in our operations. And so we have been growing on the packaging side, and we expect to continue to grow. On the automotive side, I think we have a very mixed picture between the U.S. and Europe. The U.S. seems to be rather stable.

But remember, we only have one continuous annealing line in the U.S., so our capacity on the rolled product side is limited to this one line. We have seen nice benefits in Q4 from this unfortunate event that happened in the U.S. supply chain. And we have also had benefits in Europe, which we expect to last into 2026. As you know, the European automotive market has remained weak. And we have not seen any change. It seems that the market has bottomed out, but it is very hard to predict at this point in time. On the aerospace side, we see the business as steady.

We see quite a good and strong mix on the aerospace products today in 2026. We have a little bit more visibility today than we had during our last call on 2026 and maybe also 2027. We feel that military jets and space are going to continue to grow and be positive for us. Just as a reminder, we are also going to get our new Airware cast house that will ramp up towards the end of this year. So most of the benefit you should expect starting to come in 2027 and not this year, but we are fully on track with the expansion of our aerospace capacities and capabilities.

I think on the more negative side, industrial markets, specialty markets in Europe remain weak. We also feel they have bottomed out, but we do not see a recovery coming in Europe as of yet. So I think there is a good mixture of positives and also some uncertainties in the market that we see for 2026. On the recycling side, we continue to expand our recycling with investments we have made in the past and the strong operating performance that we also had. So it was not just because of scrap spreads, but also strong operating performance. And we expect that to continue in 2026. As Jack already explained, the second half scrap spreads may be less favorable.

So this is something that we will update as we go along. Important also to note that inflation pressures are continuing. That is why we are very focused on cost control and controlling what we can control in this fluid environment that we are experiencing. And with our Vision 2028 program, we want to underpin our roadmap to 2028 in terms of operating efficiencies, which is something that we need to focus on every year.

Bill Peterson: Okay. Great for that. Thanks for all that information. Maybe it is a little bit early days, but there has been some news here about some potential tariff relief on downstream or derivative products. Trying to get a sense of maybe if there is any overlap with your own product suite that you sell into the U.S. What are you hearing on the ground? And I guess, specifically, is there any risk if there is relief on derivative products that could have some impact on your business? Any sort of thoughts would be helpful.

Ingrid Joerg: I think the situation remains very fluid as it comes to tariffs. With the information we have today, we do not see any impact on us. And we continue to believe that tariffs are a net positive for us, given that we will have stronger demand within the North American market.

Bill Peterson: I will pass on.

Ingrid Joerg: Thank you.

Operator: Our next question comes from Mike McNulty with Deutsche Bank. You may proceed. Mike McNulty, your line is now open.

Ingrid Joerg: Hi. Hey. Sorry. This is Corinne. Can you hear me?

Jean-Marc Germain: Yes. Hey, Corinne. Good morning. Corinne. Hey.

Ingrid Joerg: I do not know why you went through to Mike. Hey. Good morning. So maybe a few questions, and first of all, congratulations. I mean, this is an amazing quarter and a pretty good outlook, which you are giving us here. Can you talk maybe about the cadence that we can expect in terms of EBITDA and free cash flow? And then the second question, Ingrid, if you can go back on the Vision 2028, I think we know that you are probably going to focus quite a lot on cost control, but interested to hear more about the operational efficiencies and especially in terms of debottlenecking, like, where are the opportunities that you are seeing and in which market?

Thank you.

Ingrid Joerg: K. K. Thank you.

Jean-Marc Germain: Thank you for the question. I will start, Corinne, and appreciate the comments. I will start on the cadence question, and then Ingrid can

Ingrid Joerg: help on the Vision 2028. So

Jean-Marc Germain: in terms of 2026 cadence for EBITDA, typically there is seasonality in our business. So from a seasonality perspective, the first half tends to be stronger than the second half. That is normal course. Now, for 2026, I have mentioned about the incremental benefits we expect to see in the first quarter from favorable recycling economics, recycling profits. So that should come in the first quarter, and on top of it, we expect to see a full quarter of benefits related to the automotive supply due to the unfortunate fire that happened at one of our competitors’ plants last year. So we should see a full quarter benefit.

So Q1 is set up nicely, and it should be stronger than Q4 of 2025 based on the current expectation. And then from a free cash flow perspective, we typically build working capital in the first quarter and then into the first half of the year, and then we would release working capital. So that gives you an idea on the cadence for free cash flow.

Corinne Blanchard: Thank you, Jack.

Ingrid Joerg: Thanks, Corinne. So in terms of Vision 2028, this is a program that is really going to support our 2028 target. We have net productivity assumed in our bridge, and this program is there to support achieving those numbers. In terms of major pillars, we certainly target asset reliability. You see when Muscle Shoals is running well that it is a very important driver of profitability for us. So asset reliability remains an opportunity across our system, which will support throughput maximization, and it goes along with the portfolio optimization of the products that we make today.

Given that some markets are rather weak and others have continued growth ahead of us, we want to better optimize how we are using our assets, and this project is going to help us work more on cross-qualification so that we optimize our overall footprint and not just optimize one site. So asset reliability, throughput, and optimized load, we have debottlenecking activities that are part of our bridge to 2028, with some limited investment that is embedded in our numbers. And then on top of it, I think we also have still opportunity to improve recycling and metal cost reduction. These are really going to be the focus areas of this program.

In terms of which markets additional should be going to, I think it is clear from what we see in the market, it is on the packaging side. So can sheet, we would continue to like to grow with the market in both regions. And then obviously on the aero side, as this is our highest-margin product, and with the new cast house coming in on the aero side, we would like to continue to grow this business for space, military, but also commercial aviation. And we have invested in some finishing capability in our sites that will allow us to support the ramp of the aerospace that is expected to come somewhere around 2027.

Ingrid Joerg: Thank you.

Operator: Thank you. And as a reminder, to ask a question, please press—Our next question comes from Timna Tanners with Wells Fargo. You may proceed.

Ingrid Joerg: Hi. I think I am the only one from Wells Fargo. This is Timna. I hope you all are doing well. I wanted to dig down back to Katja’s question if I could. Just if you look at the second half cadence and annualize it, that is above where the midpoint is on your guidance. So just trying to really understand what takes a step down, maybe more in the second half. Can you help elaborate on that and please give us the assumptions on the Midwest premium and scrap spread that are baked into your guidance?

Jean-Marc Germain: I will start. The way to think about it is Q4 2025, we have seen a fairly substantial amount of metal benefits, as I mentioned previously. But then the first half is quite challenged. From a relative comparison perspective, as we go through the year, 2025 was extremely weak. Q2 was also weak, so the incremental benefit on the metal side, you would expect it to be more significant in the first half of 2026. I think that is one point. Then the other piece of it is we have more certainty,

Operator: more visibility,

Jean-Marc Germain: obviously, as we stand here today, February, looking at Q1 and into the half of the year. And some of the markets, the visibility there is not as certain into the second half.

Timna Tanners: Okay. So does that

Corinne Blanchard: mean that you have an assumption of Midwest premium and scrap spreads stronger in the first half than the second half? I was hoping for quantification, but even if we just know that is

Unknown Analyst: the way to think about it would be helpful.

Jean-Marc Germain: I think there is more consumption volume that is locked in the first quarter relative to the future quarters. So we have more exposure.

Ingrid Joerg: Got it. And then if I could,

Unknown Analyst: we are hearing a bit about demand destruction, a little bit of switching to steel away from aluminum in some auto and tractor trailer applications, but also opportunities for aluminum to take share from copper. So I was hoping you could comment on that. And along those same lines, it would be great to get any thoughts on the CBAM impact, as there were some public quotes from Constellium SE on that topic recently.

Ingrid Joerg: Let me start, Timna. With respect to aluminum substitution in automotive, we really do not see any evidence of that, and particularly nothing related to the outage that has happened in North America. You know that these design decisions take a long time to change design. It is very, very costly, and we develop a lot of platform-specific products. And usually, once you are on the program, on a platform, it really does not happen that you get substituted. So we have not seen any impact or any talk from our customers with respect to substitution with steel. You know, the trailer builds are low right now, and that is more related, I think, also to the general economic situation.

But clearly, we have not seen it, and we do not expect it, because they are trying to lightweight. The safety needs and the fuel economy, this is just going to stay. So we are not worried that on the automotive or trans market anything like this could happen. And then with respect to copper, I have to say I am not aware of this. In terms of substitution of materials, we have been able to substitute some materials in the past with our more high-performing alloys on the aerospace side, for example, but not particularly related to copper.

Now going to your question on CBAM, even though CBAM has been adjusted a little bit, we still think it is negative for the industry in Europe. We need to really create a level playing field with people importing into Europe. We need much more than what is on the table right now. We think the CBAM is going to be reflected in the regional premium in Europe, and so for people who are exporting a lot from Europe, it is not going to be good to pay higher metal prices in Europe for exports. We produce mostly local for local, so we are not really directly impacted by this.

But clearly, the CBAM design as it is today is flawed and will not prevent carbon leakage, and it could potentially lead to resource reshuffling, material coming into Europe based on recycled content that is very, very difficult to prove. So overall, we continue as an industry to oppose its current design. We are working with industry associations like European Aluminium to work on changing it and adjusting it to the needs that the industry has.

Unknown Analyst: Okay. Appreciate all the color and best of luck.

Ingrid Joerg: Thank you. Thank you, Katja.

Operator: I would now like to turn the call back over to Ingrid Joerg, CEO of Constellium SE, for any closing remarks.

Ingrid Joerg: Thank you, everybody, for your interest in Constellium SE. As you see, we have delivered strong results in 2025. And today, we provided a strong outlook for 2026. We are very happy with the steps that we are making towards our 2028 targets, and we look forward to updating you on our progress in April. Thank you very much, everyone.

Ingrid Joerg: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

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