Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based principally on our audited Consolidated Financial Statements prepared
under U.S. GAAP at December 31, 2025 and 2024 , and for the three years ended December 31, 2025 included elsewhere in this
Annual Report, and is provided to supplement the audited Consolidated Financial Statements and the related notes to help
provide an understanding of our financial condition, changes in financial condition, results of our operations, and liquidity.
The following discussion is to be read in conjunction with our audited Consolidated Financial Statements prepared under U.S.
GAAP and the notes thereto, which are included elsewhere in this Annual Report.
The following discussion and analysis includes forward-looking statements. These forward-looking statements are
subject to risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed or
implied by our forward-looking statements. Factors that could cause or contribute to these differences include, but are not
limited to, those discussed below and elsewhere in this Annual Report. See in particular “Forward-Looking Statements” and
“Item 1A. Risk Factors . This section discusses items pertaining to and comparisons of financial results between fiscal years
2025 and 2024. A discussion of and comparisons between fiscal years 2024 and 2023 financial results can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7. of the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 28,
Amounts presented in the audited Consolidated Financial Statements are expressed in millions of U.S. dollars, except as
otherwise stated. Shipments are expressed in thousands of metric tons. Amounts may not sum due to rounding.
Management review and outlook
Constellium delivered strong results in 2025 despite the uncertain macro economic and end market environment. Looking
across our end markets, packaging demand remained healthy during 2025 , and we continued to benefit from improved
operational performance at Muscle Shoals. Aerospace demand was lower driven by continued destocking of aluminum products
in the global Aerospace supply chain, though demand for high value add products remain healthy. Automotive demand
remained weak in Europe and relatively stable in North America, and in the fourth quarter we benefited from increased demand
due to short-term supply shortages in the U.S. Industrial market conditions in North America and Europe became more stable,
and our shipments in Europe improved in the year given the post-flood recovery in Valais (Switzerland). Following the tariff
announcements in 2025, market aluminum prices (LME price + Midwest Premium) have risen sharply in North America, and
certain spot scrap aluminum spreads have improved from previous historically tight levels. We expect recent demand trends in
our end markets to continue into the early part of 2026 and the overall macroeconomic environment to remain relatively stable,
and we expect to benefit from recent market dynamics, including supply shortages for automotive rolled products as well as
improved scrap spreads in North America. We are proactively managing the business to the current environment. We remain
focused on executing on our strategy, driving operational performance, controlling costs, generating Free Cash Flow and
increasing shareholder value.
For the year ended December 31, 2025 , our operating segments represented the following percentages of total Revenue
and Segment Adjusted EBITDA :
Year ended December 31, 2025
(as a % of total)
Revenue
Segment
Adjusted
EBITDA
P&ARP
Total
(1) Holdings and Corporate primarily reflects incidental revenues and unallocated corporate activities.
Key Factors Influencing Constellium’s Financial Condition and Results from Operations
Economic, Geopolitical and General Market Conditions
We are directly impacted by the economic conditions that affect our customers and the markets in which they operate.
General economic and market conditions such as the level of disposable income, the level of inflation, the rate of economic
growth, the rate of unemployment, the rapid development of technology, interest rates, exchange rates and currency devaluation
or revaluation influence consumer confidence and consumer purchasing power. These factors, in turn, influence the demand for
our products in terms of total volumes and prices that can be charged. We attempt to respond to the variability of economic
conditions through the terms of our contracts with our customers as well as cost control .
During the year ended December 31, 2025 , we continued to monitor geopolitical and economic instability globally.
During the fourth quarter , there was continued uncertainty related to tariffs and trade conditions , and their short and long-term
impacts on the Company. Global and regional economies continue to be impacted by armed conflicts, sanctions, and volatility.
While it is difficult to predict the impact of these events, we continuously monitor them and develop contingency plans and
counter measures as necessary to seek to address adverse effects or disruptions to our operations as they arise.
Although a number of our end-markets are cyclical in nature, we believe that the diversity of our portfolio and the secular
growth trends we are experiencing in many of our end-markets will help the Company weather these economic cycles. In our
three principal end-markets of aerospace, packaging and automotive:
• Aerospace demand has stabilized following the sharp recovery post-COVID although the supply chain continues to
experience destocking of aluminum products. We continue to believe that the long-term trends of increased
passenger air traffic and fleet replacements with newer and more fuel efficient aircraft, along with new military and
space programs, will help support favorable long-term demand conditions.
• Historically, demand for aluminum can packaging has been fairly resilient during various economic cycles. We
believe canstock has an attractive long-term growth outlook driven in part by increased consumer preference for
aluminum cans as a beverage packaging material of choice.
• Automotive vehicle sales t end to fluctuate with the general economic cycle a nd in recent years have also been
impacted by global supply chain disruptions, the tariff and trade environment, affordability, customer offerings and
consumer preference. However, aluminum demand has increased in recent years, driven by the vehicle
lightweighting trend to improve energy efficiency, reduce emissions and enhance vehicle safety, which has resulted
in more aluminum usage for new car models. We expect the lightweighting trend to continue in the future.
Product Price and Margin
Our products are typically priced based on three components: (i) the LME price, (ii) a regional premium and
(iii) a conversion margin.
Aluminum Prices
The price we pay for primary aluminum includes the LME price and regional premiums such as the Midwest premium
for metal purchased in the U.S. or the Rotterdam premium for metal purchased in Europe. Both the LME price and the regional
premiums can be volatile. Our business model aims to pass through aluminum price exposure by pricing our products to include
the cost of the metal purchased and hedging any remaining exposure to the extent possible to achieve aluminum price
neutrality.
Aluminum prices have risen in 2025, especially in the U.S. following the tariff announcements. The average LME
transaction price, Rotterdam premium and Midwest premium per ton of primary aluminum for the years ended December 31,
2025 and 2024 are presented below.
Year ended December 31,
Percent changes
(U.S. dollars per ton)
Average LME transaction price
Average Midwest premium
Average all-in aluminum price U.S.
Average LME transaction price
Average Rotterdam premium
Average all-in aluminum price Europe
Volumes
The profitability of our business is determined, in part, by the volume of tons processed and sold. Increased production
volumes will generally result in lower per unit costs due to the fixed costs structure of our operations . Higher volumes sold will
generally result in additional revenue and associated profitability . Demand trends across key sectors — aerospace, packaging
and automotive — contribute to our production planning. Seasonal fluctuations and macroeconomic conditions are important
factors in volume variability.
Personnel Costs
Our operations are labor intensive. Personnel costs include the salaries, wages and benefits of our employees, as well as
costs related to temporary labor. During our seasonal peaks and the summer months, we have historically increased our
temporary workforce to compensate for increased volume of activity and vacation schedules. Personnel costs generally increase
and decrease with the expansion or contraction in production levels. Personnel costs also generally increase in periods of higher
inflation.
Energy
Our operations require substantial amounts of energy to run, primarily electricity and natural gas. The magnitude of
energy costs depends on the energy supply and demand relationships in the regions we operate in.
Currency
We are a global company with operations in the United States, France, Germany, Switzerland, the Czech Republic,
Slovakia, Spain, Mexico, Canada and China. As such, we are exposed to transaction and translation impacts.
Transaction impacts arise when our businesses transact in a currency other than their own functional currency. As a
result, we are exposed to foreign exchange risk on payments and receipts in multiple currencies. Where we have multiple-year
sales agreements in U.S. dollars by euro-functional currency entities, we have typically entered into derivative contracts to
forward sell U.S. dollars to match these future sales. With the exception of certain derivative instruments entered into to hedge
the foreign currency risk associated with the cash flows of certain highly probable forecasted sales, which we have designated
for hedge accounting, hedge accounting is not applied to such ongoing commercial transactions. T he mark-to-market impact
associated with these transactions is therefore recorded in Other Gains and Losses - net.
Translation impacts result from the translation at each period of the results of functional currency entities other than U.S.
dollars into our reporting currency, the U.S. dollar.
Results of Operations for the year ended December 31, 2025 and 2024
For the years ended December 31,
(in millions of U.S. dollars and as a % of revenue)
Revenue
Cost of sales (excluding depreciation and amortization)
Depreciation and amortization
Selling and administrative expenses
Research and development expenses
Other gains and losses – net
Finance costs – net
Income before tax
Income tax expense
Net income
Shipment volumes (in kt)
Revenue
For the year ended December 31, 2025 , Revenue increased 15% to $8,449 million from $7,335 million for the year ended
December 31, 2024 . This increase reflected higher shipments and higher revenue per ton, including higher metal prices.
For the year ended December 31, 2025 , sales volumes increased 4% to 1,495 kt from 1,438 kt for the year ended
December 31, 2024 . This increase reflected a 1% decrease in volumes for A&T, a 6% increase in volumes for P&ARP and
stable volumes for AS&I .
Our revenue is discussed in more detail in the "Segment Results" section.
Cost of Sales
For the year ended December 31, 2025 , Cost of sales increased 14% to $7,262 million from $6,397 million for the year
ended December 31, 2024 . This increase in Cost of sales was primarily driven by an 18% increase in raw materials and
consumables used primarily as a result of higher metal prices and higher sales volumes .
Selling and Administrative Expenses
For the year ended December 31, 2025 , Selling and administrative expenses increased 6% to $332 million from $313
million for the year ended December 31, 2024 . The increase was primarily driven by an increase in labor costs, partially offset
by lower headcount.
Research and Development Expenses
For the year ended December 31, 2025 , Research and development expenses increased 4% to $51 million from $49
million for the year ended December 31, 2024 . This increase was primarily driven by an increase in labor costs and the impact
of foreign exchange translation .
Other Gains and Losses - net
The following table provides an analysis of realized and unrealized gains and losses by nature of exposure:
For years ended December 31,
(in millions of U.S. dollars)
Realized gains / (losses) on foreign currency derivatives - net
Realized gains on commodities derivatives - net
Realized gains on derivatives
Unrealized gains / (losses) on foreign currency derivatives - net
Unrealized gains on commodities derivatives - net
Unrealized gains / (losses) on derivatives at fair value through profit and loss - net
Realized gains or losses relate to financial derivatives used by the Group to hedge underlying commercial and commodity
transactions. Realized gains and losses on these derivatives are recognized in Other Gains and Losses - net and are offset by the
commercial and commodity transactions accounted for in Revenue and Cost of sales.
Unrealized gains or losses relate to financial derivatives used by the Group to hedge forecasted and/or committed
commercial and commodity transactions for which hedge accounting is not applied. Unrealized gains or losses on these
derivatives are recognized in Other Gains and Losses - net and are intended to offset the change in the value of forecasted and/
or committed transactions which are not yet accounted for.
Changes in realized and unrealized gains / (losses) on derivatives for the year ended December 31, 2025 as compared to
the year ended December 31, 2024 primarily reflected the fluctuation in foreign exchange, partially offset by the fluctuation in
commodity prices.
Other Gains and Losses, net are further discussed in Note 5 to the audited Consolidated Financial Statements.
Finance Costs, net
For the year ended December 31, 2025 , finance costs, net decreased 2% to $109 million from $111 million for the year
ended December 31, 2024 . This decrease primarily reflected net fluctuation in realized and unrealized gains and losses on
liquidity foreign exchange derivatives and underlying net debt , partially offset by higher interest expense . In the year ended
December 31, 2024, Finance costs, net also included $3 million of write-off of unamortized issuance costs related to the
redemption of our Senior Notes that were due in 2026.
Income Tax
For the years ended December 31, 2025 and 2024 , income tax expense totaled $133 million and $75 million ,
respectively. Our effective tax rate was 32.6% and 55.6% of our Income before tax for the years ended December 31, 2025 and
2024 , respectively . The difference between the effective tax rate and the statutory tax rate of 25.82% for the year ended
December 31, 2025 and 2024 , was primarily due to the geographical mix of the pre-tax results, losses in certain jurisdictions
where a full valuation allowance was recorde d and the United States Base Erosion Anti-Abuse Tax. Additionally, the year
ended December 31, 2025 includes the impact of the surtax in France enacted in February 2025.
Segment Results
Revenue
The following table sets forth the revenue for our three operating segments for the periods presented:
For years ended December 31,
(in millions of U.S. dollars and as a % of revenue)
P&ARP
Inter-segment eliminations
Total revenue
n.m. not meaningful
(1) Holdings and Corporate primarily reflects incidental revenues.
The following table sets forth the shipments for our three operating segments for the periods presented:
For years ended December 31,
(in kt and as a % of shipments)
P&ARP
Total shipments
For the year ended December 31, 2025 , revenue in our A&T segment increased 8% to $1,968 million from $1,816
million for the year ended December 31, 2024 , reflecting higher revenue per ton, including higher metal prices, partially offset
by lower shipments. A&T shipments were down 1% , or 2 kt, due to lower Aerospace rolled products shipments, partially offset
by higher Transportation, Industry and Defense rolled products shipments.
P&ARP
For the year ended December 31, 2025 , revenue in our P&ARP segment increased 21% to $5,078 million from $4,196
million for the year ended December 31, 2024 , reflecting higher shipments and higher revenue per ton, including higher metal
prices . P&ARP shipments were up 6% , or 59 kt , due to higher Packaging rolled products shipments, partially offset by lower
Automotive and Specialty rolled products shipments.
For the year ended December 31, 2025 , revenue in our AS&I segment increased 10% to $1,579 million from $1,432
million for the year ended December 31, 2024 , reflecting higher revenue per ton, including higher metal prices, and stable
shipments , as lower Automotive extruded product shipments were offset by higher Other extruded products shipments.
Segment Adjusted EBITDA
In considering the financial performance of the business, we analyze the primary financial performance measure of
Segment Adjusted EBITDA in all of our business segments. Our Chief Operating Decision Maker , as defined under Accounting
Standards Codification ("ASC") Topic 280 - Segment reporting, measures the profitability and financial performance of our
operating segments based on Segment Adjusted EBITDA.
Segment Adjusted EBITDA is defined as income from continuing operations before income taxes, results from joint
ventures, net finance costs, other expenses and depreciation and amortization as adjusted to exclude restructuring costs,
impairment charges, unrealized gains or losses on derivatives and on foreign exchange differences on transactions that do not
qualify for hedge accounting, metal price lag (as defined hereafter), share-based compensation expense, non-operating gains /
(losses) on pension and other post-employment benefits, factoring expenses, effects of certain purchase accounting adjustments,
start-up and development costs or acquisition, integration and separation costs, certain incremental costs and other exceptional,
unusual or generally non-recurring items.
The following table sets forth the Segment Adjusted EBITDA for our reportable segments for the periods presented:
For years ended December 31,
(in millions of U.S. dollars and as a % of revenue)
P&ARP
Refer to Revision of certain disclosures in previously issued financial statements within Note 1 to the audited
Consolidated Financial Statements for information regarding the A&T Segment Adjusted EBITDA for the year ended
December 31, 2024 .
The reconciliation of Segment Adjusted EBITDA is disclosed in Note 3 to the audited Consolidated Financial
Statements.
The following table presents the primary drivers for changes in Segment Adjusted EBITDA for each of our three
reportable segments:
(in millions of U.S. dollars)
P&ARP
Segment Adjusted EBITDA for the year ended December 31, 2024
Volume
Price and product mix
Costs
Foreign exchange and other
Segment Adjusted EBITDA for the year ended December 31, 2025
For the year ended December 31, 2025 , Adjusted EBITDA in our A&T segment increased 16% to $339 million from
$292 million for the year ended December 31, 2024 , primarily as a result of lower operating costs and favorable impact from
foreign exchange translation, partially offset by lower volumes and unfavorable price and mix. In the year ended December 31,
2024 , Segment Adjusted EBITDA included a $13 million negative impact from the flood in Valais (Switzerland). For the year
ended December 31, 2025 , Segment Adjusted EBITDA per ton increased 17% to $1,634 from $1,395 for the year ended
December 31, 2024 .
P&ARP
For the year ended December 31, 2025 , Adjusted EBITDA in our P&ARP segment increased 46% to $353 million from
$242 million for the year ended December 31, 2024 , primarily as a result of higher volumes in North America with improved
Muscle Shoals performance, favorable price and mix, favorable metal costs, and favorable impact from foreign exchange
translation. In the year ended December 31, 2024, Muscle Shoals results were impacted by a weather-related event in January
2024. For the year ended December 31, 2025 , Segment Adjusted EBITDA per ton increased 38% to $325 from $236 for the
year ended December 31, 2024 .
For the year ended December 31, 2025 , Adjusted EBITDA in our AS&I segment decreased 3% to $72 million from
$74 million for the year ended December 31, 2024 , primarily as a result unfavorable price and mix and unfavorable impact
from tariffs, partially offset by a customer compensation for underperformance of an automotive program and lower operating
costs. In the year ended December 31, 2024, Segment Adjusted EBITDA included a $20 million negative impact from the flood
in Valais (Switzerland). For the year ended December 31, 2025 , Segment Adjusted EBITDA per ton decreased 3% to $357
from $367 for the year ended December 31, 2024 .
Liquidity and Capital Resources
Our primary sources of cash flow have historically been cash flows from operating activities and funding or borrowings
from external parties.
Our primary requirements for liquidity and capital resources, besides our growth initiatives, are working capital, capital
expenditures, principal and interest payments on our outstanding debt, and other general corporate needs. Historically, these
cash requirements have been met through cash provided by operating activities and cash and cash equivalents, as well as
strategic financing arrangements. As of December 31, 2025 , the Company was not party to any off-balance sheet arrangements
that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations,
liquidity, capital expenditures, or capital resources. Based on our current and anticipated levels of operations, and the condition
in our markets and industry, we believe that our cash flows from operations, cash on hand, new debt issuances or refinancing of
existing debt facilities, and availability under our factoring and revolving credit facilities will enable us to meet our working
capital, capital expenditures, debt service and other funding requirements for the short-term and long-term.
At December 31, 2025 , our material short-term and long-term contractual cash obligations consist of our debt, lease
commitments and related interest and capital expenditures, which a re detailed in Note 15.4 and Note 20 of our audited
Consolidated Financial Statements. In addition, we have material pension and other post-employment obligations as we operate
various pension plans for the benefit of our employees across a number of countries as detailed in Note 17 of our audited
Consolidated Financial Statements.
It is our policy to hedge all highly probable or committed foreign currency operating cash flows. As we have significant
third-party future receivables denominated in U.S. dollars, we generally enter into combinations of forward contracts with
financial institutions, selling forward U.S. dollars against euros.
When we are unable to align the price and quantity of physical aluminum purchases with that of physical aluminum
sales, it is also our policy to enter into derivative financial instruments to pass through the exposure to metal price fluctuations
to financial institutions.
As the U.S. dollar depreciates (appreciates) against the euro or the LME price for aluminum increases (decreases), the
derivative contracts related to transactional hedging entered into with financial institution counterparties will have a positive
(negative) mark-to-market.
In addition, we borrow in a combination of the U.S. dollar and euro. When the external currency mix of our debt does not
match the mix of our assets, we use foreign currency derivatives to balance the risk.
Our financial institution counterparties may require margin calls should our negative mark-to-market exceed a pre-agreed
contractual limit. In order to protect the Group from the potential margin calls for significant market movements, we maintain
additional cash or availability under our various borrowing facilities, we enter into derivatives with a large number of financial
counterparties and we monitor potential margin requirements on a daily basis for adverse movements in the U.S. dollar against
the euro and in aluminum prices. There were no margin calls at December 31, 2025 and 2024 .
At December 31, 2025 , we had $866 million of total liquidity, comprised of $120 million in cash and cash equivalents,
$541 million of availability under our Pan-U.S. ABL facility, $118 million of availability under the committed asset-based
facility for our French subsidiaries (“Fre nch Inventory Facility”) and $87 million of availability under our factoring
arrangements.
Factored receivables under non-recourse arrangements were $430 million and $376 million as of December 31, 2025 and
2024 , respectively, primarily as result of unfavorable fluctuation in foreign exchange .
Cash Flows
The following table summarizes our cash flows from/(used in) our operating , investing and financing activities for the
years ended December 31, 2025 and 2024 :
For years ended December 31,
(in millions of U.S. dollars)
Net Cash Flows from / (used in)
Operating activities
Investing activities
Financing activities
Net (decrease) in cash and cash equivalents, excluding the effect of exchange rate
changes
Net Cash Flows from Operating Activities
For the year ended December 31, 2025 , net cash flows from operating activities were $489 million , a $188 million
increase from $301 million in the year ended December 31, 2024 . This change primarily reflects a $225 million increase in cash
flows from operating activities before working capital and a $37 million decrease in cash flows from working capital usage.
For the year ended December 31, 2025 , changes in working capital were attributable to (i) an increase in inventory of
$149 million , primarily driven by higher ending metal prices; (ii) an increase in trade receivables of $203 million primarily
driven by higher activity levels and higher ending metal prices ; and (iii) an increase in trade payables of $168 million , primarily
driven by higher metal purchases due to higher activity levels and higher ending metal prices.
For the year ended December 31, 2024 , changes in working capital were attributable to (i) an increase in inventory of
$24 million , primarily driven by higher ending metal prices; (ii) an increase in trade receivables of $50 million primarily driven
by higher ending metal prices, partially offset by lower shipments and by $85 million of deferred purchase price from factoring ;
and (iii) a decrease in trade payables of $40 million , primarily driven by lower metal purchases due to lower activity levels,
partially offset by higher ending metal prices.
Net Cash Flows used in Investing Activities
For the years ended December 31, 2025 and 2024 , net cash flows used in investing activities were $309 million and $313
million , respectively. Capital expenditures, net of Property, Plant and Equipment inflows were $311 million and $401 million ,
respectively, and related primarily to maintenance investments in our manufacturing facilities as well as return-seeking and
growth projects such as investments in our recycling and casting capacities. For the years ended December 31, 2025 and 2024 ,
c ollection of deferred purchase price receivables under certain of our factoring agreements was $2 million and $85 million ,
respectively.
Capital expenditures by segment are detailed in Note 3.3 of our audited Consolidated Financial Statements.
Net Cash Flows used in Financing Activities
For the year ended December 31, 2025 , net cash flows used in financing activities were $215 million , primarily reflecting
share repurchases, repayment of the borrowings under the Pan-U.S. ABL facility as well as realized foreign exchange losses on
net debt hedging instruments due to the weakening of the U.S. dollar. During the year ended December 31, 2025 , Constellium
repurchased 8.9 million ordinary shares of the Company for $115 million .
For the year ended December 31, 2024 , net cash flows used in financing activities were $61 million , primarily reflecting
share repurchases , the impact of the August 2024 refinancing, and borrowings under the Pan-U.S. ABL facility. During the year
ended December 31, 2024 , Constellium repurchased 4.6 million ordinary shares of the Company for $79 million . In August
2024, Constellium issued $350 million of 6.375% Senior Notes due 2032 and €300 million of 5.375% Senior Notes due 2032,
using the proceeds and cash on hand to redeem the remaining portion of the $250 million of 5.875% Senior Notes due 2026 and
the €400 million of 4.250% Senior Notes due 2026.
Principal Accounting Policies, Critical Accounting Estimates and Key Judgments
Our principal accounting policies and new standards and interpretations not yet adopted are set out in Note 1 to the
audited Consolidated Financial Statements, which appear in this Annual Report.
The preparation of our consolidated financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, as
well as the disclosure of contingent liabilities. These judgments, estimates and assumptions are based on management’s best
knowledge of the relevant facts and circumstances, giving consideration to previous experience. However, actual results may
differ from the amounts included in the audited Consolidated Financial Statements. Key sources of estimation uncertainty that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year include the items presented below. The Company continuously reviews its significant assumptions and estimates in light of
the uncertainty associated with the global geopolitical and macroeconomic conditions and their potential direct and indirect
impacts on its business and its financial statements. There can be no guarantee that our assumptions will materialize or that
actual results will not differ materially from estimates.
Pension, other post-employment benefits and other long-term employee benefits
The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial
basis using a number of assumptions, and its determination requires the application of judgment. Assumptions used and
judgments made in determining the defined benefit obligations and net pension costs include discount rates, the expected long-
term rate of return on plan assets, rates of future compensation increase, and the criteria considered to determine when a plan
amendment has occurred.
Any material changes in these assumptions could result in a significant change in Pensions and other post-employment
benefit obligations and in employee benefit expenses recognized in the Consolidated Income Statement or actuarial gains and
losses recognized in Other Comprehensive Income. Details of the key assumptions made and judgments applied are set out in
Note 17 to our audited Consolidated Financial Statements.
Deferred income taxes
Significant judgment is also required to determine the extent to which deferred tax assets can be recognized. In assessing
the recognition of deferred tax assets, management considers whether it is more likely than not (greater than 50%) that the
deferred tax assets will be utilized. If it is determined that it is more likely than not that some or all of the deferred tax assets
will not be realized, a valuation allowance is recognized to reduce the carrying amount of these assets. The deferred tax assets
will be ultimately utilized to the extent that sufficient taxable profits will be available in the years in which the temporary
differences become deductible. This assessment is conducted through a detailed review of deferred tax assets by jurisdiction
and takes into account the scheduled reversals of taxable and deductible temporary differences, past, current and expected
future performance deriving from the budget, the business plan and tax planning strategies. A full valuation allowance is
recognized for deferred tax assets in the jurisdictions where it is less likely than not that sufficient taxable profits will be
available against which the deductible temporary differences can be utilized. Details of the key assumptions made and
judgments applied are set out in Note 7 to our audited Consolidated Financial Statements.
Impairment tests for property, plant and equipment
Long-lived assets, including property, plant and equipment are reviewed for impairment when facts and circumstances
indicate that the asset carrying value may not be recoverable from its undiscounted projected cash flows. Any impairment loss
is measured by comparing the carrying value of the asset to its fair value. Impairment tests on property, plant and equipment
depend on a number of assumptions, in particular market data, estimated future cash flows and discount rates. These
assumptions are subject to risk and uncertainty. Any material changes in these assumptions could result in a significant change
in any impairment of assets. Details of the key assumptions made and judgments applied, where applicable, are set out in Note
11 to our audited Consolidated Financial Statements.
Recently issued accounting standards
See Note 1 - General information and summary of significant accounting policies to our accompanying Consolidated
Financial Statements for a full description of recent accounting pronouncements, if applicable, including the respective
expected dates of adoption and expected effects on results of operations and financial condition.
Non-GAAP measures
Adjusted EBITDA is not a measure defined by GAAP. We believe the most directly comparable GAAP measure to
Adjusted EBITDA is our net income or loss for the relevant period.
Adjusted EBITDA is defined as income/(loss) from continuing operations before income taxes, results from joint
ventures, net finance costs, other expenses and depreciation and amortization as adjusted to exclude restructuring costs,
impairment charges, unrealized gains or losses on derivatives and on foreign exchange differences on transactions that do not
qualify for hedge accounting, share-based compensation expense, non-operating gains / (losses) on pension and other post-
employment benefits, factoring expenses, effects of certain purchase accounting adjustments, start-up and development costs or
acquisition, integration and separation costs, certain incremental costs and other exceptional, unusual or generally non-recurring
items.
We believe Adjusted EBITDA, as defined above, is useful to investors as it illustrates the underlying performance of
continuing operations by excluding certain non-recurring and non-operating items. Similar concepts of adjusted EBITDA are
frequently used by securities analysts, investors and other interested parties in their evaluation of our company and in
comparison to other companies, many of which present an adjusted EBITDA-related performance measure when reporting their
results.
Adjusted EBITDA has limitations as an analytical tool. It is not a measure defined by GAAP and therefore does not
purport to be an alternative to operating profit or net income as a measure of operating performance or to cash flows from
operating activities as a measure of liquidity. Adjusted EBITDA is not necessarily comparable to similarly titled measures used
by other companies. As a result, you should not consider Adjusted EBITDA in isolation from, or as a substitute analysis for, our
results prepared in accordance with GAAP.
The following table reconciles our net income to our Adjusted EBITDA:
For years ended December 31,
(in millions of U.S. dollars)
Net income
Income tax expense
Finance costs – net
Expenses on factoring arrangements
Depreciation and amortization
Impairment of assets (A)
Restructuring costs (B)
Unrealized (gains) / losses on derivatives
Unrealized exchange losses / (gains) from the remeasurement of monetary assets and
liabilities – net
Pension and other post-employment benefits - non - operating gains
Share based compensation
Losses on disposal
Other (C)
Adjusted EBITDA 1
of which Metal price lag (D)
1 Adjusted EBITDA includes the non-cash impact of metal price lag
(A) For the year ended December 31, 2025, we recognized impairment related to property, plant and equipment primarily in our Valais
extrusion operations and at 2 other AS&I facilities. For the year ended December 31 , 2024 , impairment related to property, plant and
equipment in our Valais operations.
(B) For the year ended December 31, 2025 and 2024 restructuring costs were related to cost reduction programs in the United States and in
Europe.
(C) For the year ended December 31, 2025 , Other mainly includes $9 million of insurance proceeds and $9 million of losses resulting from
flooding in the Valais (Switzerland) facilities at the end of June 2024 .
For the year ended December 31, 2024 , Other mainly includes $45 million of insurance proceeds and $43 million of losses resulting from
flooding in the Valais (Switzerland) facilities at the end of June 2024 , $4 million of insurance proceeds related to assets damaged in 2021
and $3 million gain from the acquisition of the non-controlling interests of Railtech Alu-Singen , as well as $6 million of costs associated
with non-recurring corporate transformation projects.
(D) Metal price lag represents the financial impact of the timing difference between when aluminum prices included within Constellium's
Revenue are established and when aluminum purchase prices included in Cost of sales are established, which is a non-cash financial
impact. The calculation of metal price lag adjustment is based on a standardized methodology applied at each of Constellium’s
manufacturing sites. Metal price lag is calculated as the average value of product purchased in the period, approximated at the market
price, less the value of product in inventory at the weighted average of metal purchased over time, multiplied by the quantity sold in the
period.
