Constellium’s Earnings Surge — But 2028 Target Remains Cautious

Date of Call: Feb 18, 2026

Financials Results

• Revenue: $2.2B, up 28% vs Q4 2024; $8.4B for full year, up 15% vs 2024

Guidance:

• Targeting adjusted EBITDA (excluding metal price lag) in range of $780M to $820M for 2026.
• Expect free cash flow in excess of $200M for 2026.
• Expect leverage to trend lower in 2026 and maintain target range of 1.5x to 2.5x over time.
• Reiterated target of adjusted EBITDA (excluding metal price lag) of $900M and free cash flow of $300M by 2028.

Business Commentary:

Strong Financial Performance in 2025:

• Constellium reported revenue of $8.4 billion for full-year 2025, an increase of 15% compared to 2024.
• Net income rose from $60 million in 2024 to $275 million in 2025.
• The growth was primarily due to higher shipments and higher revenue per ton, including higher metal prices.

Aerospace and Transportation (A&T) Segment Growth:

• The A&T segment's adjusted EBITDA increased by 43% in Q4 2025 compared to the previous year.
• This growth was driven by higher TID shipments, increased demand from onshoring in the U.S., and recovery from the flood in Valais.

Packaging, Automotive, and Industrial (PARP) Segment Performance:

• PARP's adjusted EBITDA rose by 143% in Q4 2025, reaching $136 million.
• The increase was due to higher packaging shipments, improved operational performance, and favorable metal costs.

Automotive Market Dynamics:

• Automotive shipments in North America were relatively stable, while European demand remained weak.
• The weakness in Europe was attributed to increased Chinese competition and reduced battery electric vehicle ambitions.

Scrap Spreads and Recycling Benefits:

• The company benefited from favorable scrap spreads and improved recycling economics, particularly in Q4 2025.
• The benefits were due to higher metal prices and improved scrap consumption levels, especially at the Muscle Shoals facility.

Sentiment Analysis:

Overall Tone: Positive

• Management stated 'strong results in 2025 that were ahead of our own expectations' and 'we are raising our adjusted EBITDA per ton target...to $1,300, which is up from $1,100 that we provided last year.' They also highlighted 'extremely well positioned for the long-term success' and 'strong execution'.

Q&A:

• Question from Katja Jancic (BMO Capital Markets): Maybe starting on the '26 guide. Can you let us know how much of a benefit for scrap spreads is embedded in this guide?
  Response: Management expects favorable scrap spread benefits to continue into Q1 2026, citing a $40M tailwind in Q4 2025 from improved metal costs and strong Muscle Shoals performance, with benefits expected to taper off through the year.

• Question from Katja Jancic (BMO Capital Markets): And I understand that it's complicated. But let's say if these scraps stay at the current level. And then looking more to your '28 target of $900 million, it seems that, that target might be conservative. Can you just remind us how we get there? Or what are some of the moving parts there?
  Response: Management maintains a conservative stance for the 2028 target due to the dynamic and unpredictable nature of the metal market, acknowledging current benefits but preferring prudent assumptions.

• Question from William Peterson (JPMorgan Chase & Co): Maybe outside of the scrap spread, I'm trying to get a sense for some other factors within the 2026 guidance. For example, what is your latest thoughts on the aerospace recovery? How much can be attributed to Vision 2028? Any sort of assumptions related to one of the peers in the space with their rolling mill ramping for the automotive space?
  Response: Aerospace is steady with strong product mix; packaging is a growth driver; automotive has mixed picture (stable in U.S., weak in Europe); industrial markets in Europe remain weak. Vision 2028 focuses on operational efficiencies and cost control.

• Question from William Peterson (JPMorgan Chase & Co): Okay. Great. Maybe it's a little bit early days, but there's been some news here about some potential tariff relief on downstream or derivative products. Trying to get a sense of maybe if there's 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's relief on derivative products that, that could have some impact on your business?
  Response: Management sees no impact from potential tariff relief and believes current tariffs are a net positive due to stronger domestic demand in North America.

• Question from Corinne Blanchard (Deutsche Bank AG): So maybe a few questions. And first of all, congratulations. I mean, this is an amazing quarter and a pretty good outlook what you're giving us here. Can you talk maybe about the cadence that we can expect in terms of EBITDA and free cash flow?
  Response: Q1 2026 EBITDA is expected to be strong due to favorable recycling economics and a full quarter benefit from a competitor's supply outage. Free cash flow typically builds working capital in Q1 before releasing it later.

• Question from Corinne Blanchard (Deutsche Bank AG): And then the second question, Ingrid, if you can go back on the Vision 2028. I think we know that you're probably going to focus quite a lot on cost control, but I'm interested to hear more about the operational efficiencies and especially in terms of debottlenecking, like where are the opportunity that you're seeing in which market?
  Response: Vision 2028 focuses on asset reliability, throughput maximization, portfolio optimization, and recycling efficiency. Growth capacity is targeted for packaging and aerospace, which are high-margin segments.

• Question from Timna Tanners (Wells Fargo Securities): I think I'm the only person 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's 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's baked into your guidance?
  Response: The step-down in H2 is due to less favorable metal benefits expected in the second half and reduced visibility into future market conditions, with more volume locked in Q1.

• Question from Timna Tanners (Wells Fargo Securities): And then if I could, we're 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, would be great to get any thoughts on the CBAM impact.
  Response: No evidence of aluminum substitution by steel in automotive; trends like lightweighting and safety requirements support aluminum. No significant substitution from copper observed. CBAM is seen as flawed and negative for European industry, potentially increasing metal costs for exports.

Contradiction Point 1

Scrap Spread Forecast and Financial Impact

Contradiction on scrap spread benefit magnitude and timing for 2026.

What is your outlook for the quarter? - Katja Jancic (BMO Capital Markets)

2025Q4: Scrap spreads are expected to be a tailwind in 2026, with benefits similar to those seen in Q4 2025, especially in Q1. - Jack Guo(CFO)

What is the scrap spread benefit included in your 2026 guidance? - Katja Jancic (BMO Capital Markets)

2025Q3: A larger benefit is expected as scrap spreads have widened... The benefit may trend closer to the $20M end of the range. - Jack Guo(CFO)

Contradiction Point 2

Automotive/Industrial Market Outlook

Contradiction on the near-term recovery of European automotive and industrial markets.

What is William Peterson's role at JPMorgan Chase & Co? - William Peterson (JPMorgan Chase & Co)

2025Q4: Key positive drivers include packaging growth... automotive benefits in the U.S. from a competitor's supply outage... European industrial and specialty markets remain weak. - Ingrid Joerg(CEO)

What are the key factors in the 2026 guidance beyond scrap spreads, including aerospace recovery, Vision 2028 impact, and competitor ramp in automotive? - Unknown Analyst (Timna Tanners)

2025Q3: European industrial and specialty markets... are a mixed market. Positives include strong packaging demand and potential economic stimulus. Negatives persist in automotive... and commodity-based sectors like construction. The market is a "tale of many niches," with recovery expected to be gradual and uneven. - Ingrid Joerg(CEO)

Contradiction Point 3

Automotive Demand Outlook

Contradictory assessments of automotive demand strength between quarters.

What is William Peterson's role at JPMorgan Chase & Co? - William Peterson (JPMorgan Chase & Co)

2025Q4: Key positive drivers include packaging growth in North America and Europe, automotive benefits in the U.S. from a competitor's supply outage (expected to last into H1 2026), and steady aerospace demand... - Ingrid Joerg(CEO)

What are the key factors in the 2026 guidance beyond scrap spreads, and what are the expectations regarding aerospace recovery, the impact of Vision 2028, and assumptions about competitor ramp-ups in automotive? - Corinne Jeannine Blanchard (Deutsche Bank AG)

2025Q2: However, automotive demand is weaker than anticipated, which is a headwind. - Jean-Marc Germain(CEO)

Contradiction Point 4

Aerospace Supply Chain Outlook

Contradictory statements on the duration and severity of aerospace supply chain challenges.

What is William Peterson's role at JPMorgan Chase & Co? - William Peterson (JPMorgan Chase & Co)

2025Q4: Steady aerospace demand with strong product mix. New Airware casthouse capacity will ramp in late 2026, benefiting 2027. - Ingrid Joerg(CEO)

What key factors beyond scrap spreads drive the 2026 guidance, including aerospace recovery, Vision 2028's impact, and competitor ramp-up assumptions in automotive? - Katja Jancic (BMO Capital Markets)

2025Q1: The inventory issue is not behind us. ... Challenges are expected to continue, potentially leading to another year of difficulties. - Jack Guo(CFO)

Contradiction Point 5

Characterization of Tariff Impact

Contradiction on whether tariffs are a net positive or a direct financial headwind.

What are your thoughts on JPMorgan Chase & Co's latest earnings? - William Peterson (JPMorgan Chase & Co)

2025Q4: Tariffs are viewed as a net positive as they strengthen demand within the North American market. - Ingrid Joerg(CEO)

Does potential tariff relief on derivative products overlap with your product suite and pose any risks or impacts? - Corinne Blanchard (Deutsche Bank AG)

2025Q1: The auto tariff impact is a $20 million headwind for the rest of the year. - Jack Guo(CFO)