Executive Summary / Key Takeaways

• Constellium SE ($CSTM) delivered a record third quarter in 2025, with Adjusted EBITDA (excluding metal price lag) reaching $196 million, marking a 50% year-over-year increase, driven by strong operational execution and strategic focus on high-value products.
• The company's differentiated technology, including Airware® and Aheadd® CP1 alloys, provides a significant competitive moat in aerospace and defense, contributing to superior margins and market positioning.
• Despite ongoing macroeconomic uncertainties and automotive market weakness, Constellium raised its 2025 Adjusted EBITDA guidance to $670 million - $690 million, while maintaining its Free Cash Flow target of over $120 million, reflecting confidence in its cost control, operational improvements, and tariff mitigation strategies.
• Long-term targets for 2028 are robust, aiming for $900 million in Adjusted EBITDA and $300 million in Free Cash Flow, underpinned by strategic investments in recycling and growth projects, along with continued commercial and cost discipline.
• The upcoming CEO transition to Ingrid Joerg is expected to ensure continuity in Constellium's value creation strategy, leveraging her deep industry knowledge and operational expertise.

Forging a Path of Value and Innovation in Aluminum

Constellium SE ($CSTM), established in 2010 and headquartered in Paris, France, stands as a global leader in the design and manufacture of innovative specialty rolled and extruded aluminum products. The company serves a diverse array of blue-chip customers across critical end-markets, including aerospace, packaging, automotive, commercial transportation, general industrial, and defense. Constellium's overarching strategy centers on high value-added products, enhancing customer connectivity, optimizing margins and asset utilization, rigorous cost control, and a steadfast commitment to continuous improvement and stakeholder value.

A cornerstone of Constellium's competitive advantage lies in its advanced technological differentiators. The company's Airware® advanced aluminum-lithium alloy is a prime example, offering superior lightweighting and excellent cryogenic properties, making it a "fantastic product for space applications" due to its ability to enhance payload capacity and withstand extreme temperatures. This technology is further bolstered by "very strong patents and experience". Similarly, the Aheadd® CP1 aluminum alloy is being advanced for additive manufacturing in defense and aerospace applications through a $2.1 million project funded by the Office of the Under Secretary of Defense's Manufacturing Technology Office. These innovations are not merely theoretical; they translate directly into tangible benefits, as evidenced by the Aerospace & Transportation (AT) segment's adjusted EBITDA per ton, which has surged from less than $500 in 2015 to over $1,500-$1,600 by the third quarter of 2025. This remarkable improvement underscores Constellium's "excellent commercial and capital discipline" and "innovation drive".

Constellium's strategic positioning is further defined by its approach to the competitive landscape. While larger, integrated players like Alcoa Corporation (AA) benefit from upstream scale and raw material cost advantages, Constellium distinguishes itself through specialization and tailored solutions. Its focus on downstream technology and services, including pre-machining, surface treatment, and technical support, enhances customer loyalty and provides a differentiated offering compared to more standardized product portfolios. Against competitors like Kaiser Aluminum Corporation (KALU), Constellium's global diversification contrasts with Kaiser's regional focus, potentially offering broader revenue opportunities. Similarly, while Arconic (ARNC) emphasizes proprietary technologies, Constellium's comprehensive service ecosystem and operational execution in rolled products provide a strong competitive stance. The company's "local for local" production model also positions it favorably against import competition, particularly in the U.S. market, where tariffs are making domestically produced aluminum products "more competitive".

The company's history reflects a journey of resilience and strategic adaptation. Ingrid Joerg's leadership in the AT segment since 2015 has been instrumental in driving its high-value product focus. In 2024, Constellium navigated significant operational challenges, including extreme weather at its Muscle Shoals plant and severe flooding at its Valais facilities in Switzerland. Despite these setbacks, the company demonstrated a strong recovery, with Valais operations resuming normal function by the first quarter of 2025 with a lower cost structure. Operational issues at Muscle Shoals were stabilized, contributing to improved performance in the Packaging Automotive Rolled Products (PARP) segment. Strategic investments continued, notably the successful startup of a new recycling and casting center in Neuf-Brisach in September 2024, ahead of schedule and under budget. These historical responses to adversity highlight Constellium's operational agility and commitment to its long-term strategy.

Robust Performance Amidst Market Crosscurrents

Constellium's recent financial performance underscores its ability to execute effectively in a dynamic market. For the third quarter ended September 30, 2025, the company reported a significant 20% year-over-year increase in revenue to $2.166 billion. Net income surged to $88 million, a substantial improvement from $8 million in the prior-year quarter. Critically, Adjusted EBITDA, excluding the non-cash impact of metal price lag, reached a new third-quarter record of $196 million, representing a robust 50% increase compared to $131 million in Q3 2024. This strong performance was achieved despite an "uncertain economic environment and continued demand weakness across many of our end markets".

Over the nine months ended September 30, 2025, revenue grew 11% to $6.248 billion, with net income rising to $162 million from $107 million in the same period of 2024. Adjusted EBITDA (excluding metal price lag) for the nine-month period was $507 million, up from $476 million year-over-year. Shipments for Q3 2025 increased 6% to 373 kilotons, and for the nine-month period, they were up 2% to 1130 kilotons. The increase in Cost of Sales was primarily driven by higher raw material and consumables costs, a direct consequence of elevated metal prices and increased sales volumes. Selling and administrative expenses also saw an uptick, mainly due to higher labor costs, partially offset by lower headcount.

Segment-wise, the Aerospace Transportation (AT) segment demonstrated exceptional strength. Its Q3 2025 revenue increased 14% to $481 million, with Adjusted EBITDA soaring 67% to $90 million. The Adjusted EBITDA per metric ton for AT reached an impressive $1,807, significantly up from $1,122 in Q3 2024. This was driven by higher volumes, favorable price and mix, lower operating costs, and positive foreign exchange translation. While aerospace shipments were down 9% due to OEM inventory adjustments and supply chain challenges, demand in space and military aircraft remained healthy.

The Packaging Automotive Rolled Products (PARP) segment also delivered solid results, with Q3 2025 revenue up 20% to $1,307 million and Adjusted EBITDA increasing 14% to $82 million. This performance was largely attributed to higher volumes, particularly from "improved Muscle Shoals performance" which has set "numerous operational records", favorable price and mix, and positive foreign exchange translation. Packaging demand remained healthy in both North America and Europe. In contrast, automotive shipments in PARP decreased 13% due to weakness across both continents.

The Automotive Structures Industry (ASI) segment saw a remarkable 371% increase in Q3 2025 Adjusted EBITDA to $33 million, on a 27% revenue increase to $409 million. This surge was primarily due to higher volumes and a favorable price and mix, including a "net customer compensation for underperformance of an automotive program". However, for the nine-month period, ASI's Adjusted EBITDA decreased 4% to $67 million, reflecting the broader weakness in automotive and the impact of tariffs on operating costs.

Constellium maintains a strong liquidity position, with $831 million in total liquidity as of September 30, 2025. This includes $122 million in cash and cash equivalents, $471 million under its Pan-U.S. ABL facility, $121 million from factoring arrangements, and $117 million from its French Inventory Facility. The company's net debt stood at $1.9 billion, with leverage at 3.1x, a reduction of almost 0.5 turn from its peak in the prior quarter. Management is committed to reducing leverage further to below 3x by year-end and ultimately within its target range of 1.5x to 2.5x. Notably, Constellium has no bond maturities until 2028.

Strategic Outlook and Future Growth Drivers

Constellium's forward-looking strategy is clearly articulated through its updated guidance and ambitious long-term targets. For 2025, the company raised its Adjusted EBITDA guidance (excluding metal price lag) to a range of $670 million to $690 million, while reaffirming its Free Cash Flow target of over $120 million. This confidence stems from anticipated improvements in the second half of 2025, including the realization of tariff mitigations, customer compensations, more favorable scrap purchasing dynamics, the full operational ramp-up of Valais, and beneficial foreign exchange translation. The company also expects a "modest benefit" from recent aluminum supply chain interruptions in the automotive sector, primarily impacting 2026.

Looking further ahead, Constellium has set compelling long-term targets for 2028: Adjusted EBITDA (excluding metal price lag) of $900 million and Free Cash Flow of $300 million. This growth trajectory is underpinned by several strategic pillars. The full recovery of Valais and sustained operational enhancements at Muscle Shoals are foundational. Significant contributions are expected from return-seeking investments, including cost-saving projects like the Neuf-Brisach recycling and casting center (already operational) and future cast house investments in Valais and Ravenswood. Growth initiatives, such as a new Alcoa cast house and battery foil investments, are also integral to achieving these targets, all within the existing capital expenditure framework.

Management's assumptions for market growth across all end-markets are deliberately conservative, generally below current industry estimates, providing a potential upside. The company will maintain its "disciplined on price" approach and "strict cost control to mitigate future inflationary impacts through productivity gains and other cost reduction initiatives". While the "historically tight" North American scrap market is assumed to persist through 2028, Constellium is not banking on significant improvement, suggesting a conservative stance with potential for upside if spreads normalize. The company also includes a contingency in its 2028 target to offset potential deviations from these assumptions.

The upcoming leadership transition, with Ingrid Joerg succeeding Jean-Marc Germain as CEO on January 1, 2026, is expected to be seamless, building on a multi-year succession plan. Ms. Joerg's extensive industry experience and operational expertise are poised to continue the company's strategic focus on value creation and innovative solutions.

Risks and Competitive Dynamics

Despite the positive outlook, Constellium operates within a complex global environment. Economic and geopolitical instability, including tariffs and trade wars, continue to pose risks, influencing consumer confidence and purchasing power. The automotive market remains a significant area of concern, particularly in Europe, where production is "well below pre-COVID levels" and demand is weak in luxury, premium, and electric vehicle segments. The aerospace supply chain, while showing signs of improvement, still faces challenges that could slow OEM deliveries.

The volatility of scrap spreads, particularly the "dramatic tightening" experienced in North America, presents a headwind for metal costs, especially for the PARP segment. However, Constellium's business model aims to pass through aluminum price exposure, and its recycling capabilities offer a natural hedge. The company's diversified portfolio across end-markets is a key asset, providing resilience against cyclical downturns in any single sector.

In the competitive arena, Constellium's technological edge in specialty alloys like Airware® and Aheadd® CP1 provides a distinct advantage, allowing it to focus on "more value-add per product" rather than solely on volume ramp-ups, differentiating it from some peers. The company's ability to repurpose capacity, such as shifting production from automotive to packaging markets, demonstrates strategic flexibility in response to market shifts. While indirect competitors offering alternative materials like steel or composites exist, the high capital requirements, regulatory hurdles, and specialized technological expertise in the aluminum industry create significant barriers to entry, protecting Constellium's established market position.

Conclusion

Constellium SE is demonstrating compelling momentum, transforming operational challenges into strategic advantages and delivering record financial performance in its high-value segments. The company's unwavering commitment to technological differentiation, particularly in advanced aluminum alloys for aerospace and defense, underpins its superior margins and competitive positioning. With a clear strategic roadmap, robust cost control initiatives, and a disciplined approach to capital allocation, Constellium is well-positioned to achieve its ambitious long-term targets for 2028.

The upcoming leadership transition to Ingrid Joerg signals continuity and a renewed focus on operational excellence and stakeholder value creation. While macroeconomic uncertainties and specific market headwinds, particularly in automotive, persist, Constellium's diversified portfolio, strong liquidity, and proactive management of risks, including tariffs and scrap market dynamics, provide a solid foundation. For discerning investors, Constellium offers a compelling narrative of resilience, innovation, and sustained value creation in the evolving global aluminum industry.