CSTM (2020 - Q3)

Ladies and gentlemen, thank you for standing by, and welcome to Constellium's Third Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there'll be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Ryan Wentling, Director of Investor Relations. Thank you. Please go ahead, sir. Ryan Wen

Thank you, operator. I would like to welcome everyone to our third quarter 2020 earnings call. On the call today are our Chief Executive Officer, Jean-Marc Germain; and our Chief Financial Officer, Peter Matt. 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'd 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 20-F. 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 IFRS disclosures. I would now like to hand the call over to Jean-Marc.

Thanks, Ryan. Good morning, good afternoon, everyone, and thank you for your interest in Constellium. Let's turn to Slide 5, please. Before we discuss our highlights from the third quarter, I want to reiterate that the health and the safety of our employees is our first priority. We continue to follow strict protocols to mitigate the risks from the COVID-19 pandemic. I want to thank our employees who are taking these precautions seriously. As the virus continues to spread in many communities around the globe, we must remain vigilant and safe. Now, let's discuss our highlights from the third quarter of 2020. Overall, this was a very good performance for the company. While our business is still recovering from the difficult second quarter, we are clearly on the right track. P&ARP benefited from strong can sheet and recovering auto body sheet demand. AS&I is experiencing a solid recovery across its automotive and industry platforms, and is benefiting from the successful ramp up and operational improvement. Aerospace demand remains weak, but there is reason for optimism on the TID side, with the recent announcement of preliminary anti-dumping duties in the U.S., and Peter will show you all three businesses did a great job on costs. Now for a few details. Shipments were 354,000 metric tons, a decrease of 11% compared to the third quarter of 2019. Revenue decreased 20% to €1.2 billion. Of the roughly €300 million decline in revenue compared to the third quarter of last year, approximately two-thirds was related to lower shipments and one-third was related to lower metal prices. I remind you that while our revenues are affected by changes in metal prices, we operate the pass-through business model to minimize mental risk. Net income of €20 million compared to net income of €1 million in the third quarter of 2019. Adjusted EBITDA of €126 million decreased 9% compared to the third quarter of 2019. This is a strong result, and I want to acknowledge the great cost performance our team delivered again this quarter. Constellium generated €354 million of adjusted EBITDA in the first nine months, a decline of 20% compared to the first nine months of last year. We are establishing guidance of adjusted EBITDA of €450 million to €460 million in 2020. This guidance is based on our current outlook and does not consider, for example, the severe deterioration in economy conditions due to the cause – COVID pandemic. We look forward to a time, hopefully in the not too distant future, when we can reinstate long-term adjusted EBITDA guidance. Our free cash flow was €75 million in the third quarter of 2020. This is an exceptional result in a challenging environment and brings our free cash flow for the first nine months of 2022 to €129 million. Based on our current view of market conditions, we expect to generate free cash flow of €100 million to €150 million in 2020. We continue to deliver on our commitment to be consistent generators of free cash flow. Our leverage was 4.3 times – end of the third quarter. Deleveraging remains the top priority of ours. I will now hand over to Peter to discuss our financial performance in detail. Peter?

Thank you, Jean-Marc, and thank you everyone for joining the call today. Turning now to Slide 7, you will find the change in adjusted EBITDA by segment for the third quarter and the first nine months of 2020 compared to the same periods of last year. For the third quarter of 2020, Constellium achieved €126 million of adjusted EBITDA, a decrease of €13 million or 9% year-over-year. P&ARP adjusted EBITDA of €85 million increased by €13 million or 20% compared to last year. A&T adjusted EBITDA of €10 million decreased by €33 million or 77% compared to the third quarter of 2019. AS&I adjusted EBITDA of €33 million increased by €7 million compared to last year. Lastly, Holdings and Corporate costs of €2 million were comparable to last year. In the first nine months of 2020, Constellium achieved €354 million of adjusted EBITDA, a decrease of €87 million or 20% year-over-year. P&ARP adjusted EBITDA of €209 million decreased by €1 million compared to last year. A&T adjusted EBITDA of €93 million decreased by €66 million or 41% compared to the first nine months of 2019. AS&I adjusted EBITDA of €66 million decreased by €19 million or 23% compared to last year. Lastly, Holdings and Corporate costs of €14 million were €1 million higher than last year. We expect H&C costs of approximately €18 million in 2020. Now turn to Slide 8 and let's focus on the P&ARP segment. Adjusted EBITDA of €85 million increased 20% compared to the third quarter of last year. Volume was a headwind of €14 million in the quarter. Packaging shipments fell by 9%, primarily as a result of the temporary shutdown in March of our Neuf-Brisach plant in France and reduced consumption of cans in Europe, both due to COVID-19. We believe these effects are temporary and we expect stronger shipment levels in the fourth quarter. Shipments to the North American can sheet market in the third quarter increased slightly year-over-year. Automotive shipments increased 7% compared to last year as demand from our automotive OEM customers recovered rapidly. Costs were a tailwind of €30 million due to improved recovery and strong broad-based cost control with labor and maintenance as important contributors. FX translation, which is non-cash, was a headwind of €2 million due to the weakening of the U.S. dollar during the quarter. While we have not provided Bowling Green result separately for the past few quarters, I want to provide an update on the trajectory of improvement. Bowling Green’s adjusted EBITDA increased from negative €48 million in 2018 to negative €15 million in negative – 2019 to what we estimate will be a positive €15 million in 2020. I think we can all agree that this is an impressive improvement in over two short years – or over two short years. Now turn to Slide 9 and let's focus on the A&T segment. Adjusted EBITDA of €10 million decreased by 77% compared to last year. Volume was a headwind of €52 million on lower aerospace and TID shipments. Aerospace shipments fell 48% compared to last year. As aerospace OEM and distributors continued to reduce orders to match lower build rates. We expect a similar decline in year-over-year shipments in the fourth quarter. TID shipments declined by 27% to lower – due to lower industrial activity in both Europe and the U.S. We expect some recovery in the fourth quarter on recent evidence of stronger demand in the U.S. Price and mix was €2 million tailwind. Cost were a tailwind of €19 million due to strong broad-based cost control with labor and maintenance as important contributors. FX translation was €1 million headwind in the quarter. Looking-forward, despite the challenging market conditions we expect A&T to remain a positive adjusted EBITDA contributor in 2021, but at a lower level than 2020 as we expect the segment will face difficult year-over-year comparisons through the first half of 2021. Now turning to Slide 10 and let's focus on the AS&I segment. Adjusted EBITDA of €33 million increased by €7 million compared to the third quarter of 2019. Volume was a €3 million headwind. Automotive shipments were comparable to last year strong demand recovery from automotive OEMs. Industry shipments declined 5% due to lower industrial activity in Europe. Price and mix was €1 million tailwind. Costs were €10 million tailwind on strong cost control with labor, maintenance and subcontractors as important contributors. I wanted to in particular compliment the Auto Structures team for its efforts to restructure the business and get it back on track. Lastly, FX translation was €1 million headwind in the quarter. Now turning to Slide 11, I want to highlight our continued strong performance on cost. In the third quarter, we flexed our cost by 96%. Cost flex represents the change of cost over the change in revenues for the third quarter of 2020, as compared to the third quarter of 2019. Effectively for every dollar change in revenue, we're able to flex our cost by 0.96. This compares favorably to the 83% cost flex we provided last quarter. At the bottom of the page, you can see that each of our businesses demonstrated strong cost control. With P&ARP at 111% cost flex, A&T at 78% and AS&I at 122%. Cost flex in excess of 100% reflects cost reduction in excess of revenue declines, partially due to the structural cost reductions during the quarter. Excluding metal and depreciation, we reduced cost by approximately €65 million compared to the third quarter of last year. These cost savings were driven by strong cost control across the business, including labor maintenance and professional fees. Labor represented over half of the total €65 million decrease, these cost savings include approximately €5 million benefit from European state employment aid related to COVID 19. As you know, we are very committed to reducing costs and running a lean operation. Fixed cost reduction is a major platform of our Horizon 2022 initiative, the successor project to Project 2019. I am pleased to announce our initial Horizon 2022 cost reduction goal of €75 million of savings. From where we stand today, we estimate in excess of one-third of these annualized Horizon 2022 savings have already been secured. Combined with our savings from Project 2019, which you'll remember was €78 million. We have cumulatively removed over €150 million out of our cost base. I remain excited about the significant cost reduction opportunities that are in front of us. We are working to emerge from this crisis with improved margins and a stronger financial profile than when we entered it. Fixed cost reduction is an important tool in the strategy. Now let's turn to Slide 12 and discuss our balance sheet and liquidity position. At the end of the third quarter, our leverage was 4.3 times, and our net debt was €2.05 billion, which is more than €100 million lower than our net debt position at the end of 2019. We remain very committed to capital discipline. As you know, we reduced our 2020 CapEx target to approximately €175 million, a €96 million reduction from 2019. Through the first nine months of 2020, we spent €46 million less CapEx than in the same period of last year. Our free cash flow was €75 million for the third quarter and €129 million for the first nine months of 2020. We are extremely proud of these achievements, given the business environment. They underscore our commitment to be a consistent and strong, free cash flow generator. As Jean-Marc noted earlier, we expect to generate €100 million to €350 million of free cash flow in 2020, based on our current view of market conditions. Generating free cash flow is a firm priority and we remain committed to de-leveraging. As you can see in our debt summary on the bottom left-hand side of the page, we have no bond maturities until 2024. Our liquidity was over €1 billion at the end of the third quarter. We remain very comfortable with this liquidity position. I'll now hand the call back to Jean-Marc.

Thank you, Peter. Let’s turn to Slide 14 and discuss our end-markets. We believe our balanced portfolio of products across end markets, geographies and customers is the competitive advantage. I'll start with the packaging market. Packaging represents 39% of our LTM revenue. We continue to see strong market demand in North America, stable demand in Europe. Our packaging shipments are currently running at 95% or more of last year’s levels. We believe the packaging market has long-term secular growth tailwinds driven by customer preference for aluminum cans. Our customers continue to invest in new can lines in North America. These additional lines should drive incremental demand for can sheets in the years to come. The consumer preference trend in only one of the tailwind for can sheet. In Europe, the demand for can sheet continues to grow based on substitution of aluminum for steel. In the U.S., we continue to expect the growth of auto body sheet demand to tighten supply to the packaging market over the medium-to-long term. Now let's move to automotive. Automotive remains a secular growth market for aluminum. Customers continue to prefer larger vehicles. With regulations aim at increasing fuel efficiency and reducing emissions, the automotive market will need to continue to lightweight. In addition, we expect hybrid and electric vehicles to continue to gain share of the fleet. These vehicles are aluminum intensive due to the importance of light-weighting to achieve their range objectives. Constellium is well positioned to realize the benefits of this secular shift to aluminum in automotive and the electrification of the fleet. Moving to more recent trends, automotive OEMs resumed production in the second quarter and rapidly increased demand in the third quarter. Most OEMs are running at or near last year's level, both in North America and Europe. The demand for our products will continue to be dependent on the level of production at the OEMs which as of today is very strong. Let's turn now to aerospace. Aerospace represented 14% of our LTM revenues. The near-term outlook for aerospace remains uncertain, due to the effects from the COVID-19 crises and the 737 MAX issues Aerospace OEMs have reduced build rate and it isn't clear how long build rates will remain at these levels. Our aerospace business continues to operate at approximately 50% of last year’s level. Based on our current visibility, we expect inventory destocking to persist through the fourth quarter of 2020 and likely through the first half of 2021. In other specialties, we continue to execute on our strategy of expanding in each products in a diversified range of markets. In general, these markets are dependent on the health of the industrial economy in Europe and North America. For TID, the defense markets remains strong, most industrial and transportation markets in North America are showing solid signs of improvement, while these markets remain weak in Europe. European extrusions, remain solid across most end markets. Before concluding. I want to let you know that Paul Warton has decided to leave Constellium for a different opportunity, I wanted to thank Paul for his many contributions to Constellium over the past 10 years and wish him well in his next endeavor. I would also like to announce that Philippe Hoffmann will take-over as AS&I Business Unit President and join our Executive Committee. Philippe has a long history with Constellium and has held numerous leadership positions in the company, including management roles in operations strategy and innovation. Most recently, he was in charge of Auto Structures and led that turnaround. I am excited for him to lead AS&I into what I believe has a very promising future. In conclusion, I am very proud of our third quarter results and the tremendous efforts made by the entire Constellium team during this challenging time. We remain committed to operational execution, harvesting the benefits of our investment, disciplined capital deployment, debt reduction, and shareholder value creation. With that, operator, we will now open the Q&A session, please.

Thank you. [Operator Instructions] Your first question comes from Chris Terry from Deutsche Bank. Please go ahead. Your line is open.

Thank you, Jean-Marc and Peter, a few questions from me. Just wanted to start with the utilization rates. So I think you said for packaging 95%, autos close to 100% in last year, and then aeros at about 50%. Do you have those numbers for areos, you think about the next three quarters or so? Do you have the utilization rate that you can share? Or is it too hard to tell on that at this point?

Good morning, Chris. On aero, it's hard to tell. I think what we're preparing for is a continuation of the low rates at which we are obviously in discussions with our customers. There are also positive signs around build rates stabilizing and possibly the 737 MAX coming back. But we've heard that story before. So it's difficult really to make a prognostic of the future. And I think our best assumption now is for the six, nine months to come, we'll stay around those levels, 50%.

Okay. Thank you. And then on the auto market, are you seeing still momentum building into the end of the year or more stabilization at this point?

I think we’re seeing stable to positive. But there is uncertainty around when automakers will take their shutdowns at the end of the year. Is it for one week, two weeks or three weeks? I think the fundamentals of demand are good. Inventory levels in the supply chain remain decently low. But there is still a bit of uncertainty as to the last weeks of the year.

Okay. Thank you. And then just on the packaging market, can you just remind us when the bulk of your contracts, I think that was signed in 2017, due, is it 2021 or 2022? Can you give just some color given all the announcements downstream that it had happened recently, just thinking about potential renewals?

Sure. So we said, 2021 to some extent and 2022 to a large extent for the year of our contract renewals. And we look at them with quite a bit of optimism and excitement. We're well contracted going into 2021 and 2022, and I'm very happy with where we are or where we will be, more exactly.

Thanks, Jean-Marc. All the best.

Sure. Thank you.

Your next question comes from Curtis Woodworth from Credit Suisse. Please go ahead. Your line is open.

Hey, good morning, Jean-Marc and Peter, and congrats on a great operational quarter.

Thanks.

Good morning, Curt. Thanks.

So I guess continuing on kind of Chris' question around packaging and then your comments on how there's growing order of sheet demand in the U.S. and to some degree, that's going to continue to maybe pull hot mill capacity away from certain sectors? And there's a finite amount of hot mill capacity in the U.S., which I think is already running pretty full out. So I'm curious what your thoughts are with regards to future growth for you and packaging in the U.S. I believe you're running pretty much at full capacity today. I know in the past you've talked about debottlenecking of roughly 75,000 tons, but then potential upgrades or re-investment to even increase capacity further, because when you look at the announcements of the can maker side, that's for a pretty substantial growth the next five years. And I think it's a 2 million ton market growing at 5%, 6% a year that almost implies roughly 100,000 tons of can sheet growth annually in an industry that appears constraints. I'm just curious, like, how you think about that going forward. And then if, frankly, in the event you would want to grow more on auto, would that limit your participation in can going forward?

No. So these are good problems to have, and we're very excited at the opportunities you're outlining here. So we have constantly evolving plans to improve the throughput from our mills. And if you think of that 100,000 tons of additional demand every year, we can capture our fair share of it or capture or supply our fair share of it, as long as we've got a little bit of prior notice, and we can decide to allocate capital to develop our field there. The fact that that capacity is competing with auto – capacity in auto demand is a good thing for us, obviously, because strategically and tactically, it gives us options. I remind you that at the same time, there's quite a bit of talk about one of our competitors going back into the market domestically, which would also provide some needy to domestic capacity. So all that I think is positive for the market. It's a growing market. It's a consumers’ preference that goes towards cans. Our can makers are investing. And we, as an industry, and certainly we as Constellium are ready to meet the challenge as long as this makes sense for us and we get paid for what we supply. It's important whenever we talk about possible capital expenditures towards expansion that we get a fair return on the capital we would be deploying.

Okay. That makes sense. And then within Automotive Structures, great operational turnaround. And I know for a period of roughly 18 months or longer, you've purposely held back on your nomination wins. Do you feel like next year would be a year of which you could accelerate your bidding activity and increase your backlog in the Structures business? Do you have capacity to do that?

Yes. So we paused for two years essentially to make sure we digest that very significant growth. And as you can see from the results in AS&I this quarter and over this year, right, we've been successful in turning the corner. So it would stand to reason that we would progressively start to ramp-up again our activity in winning nominations and growing the business. We want to be very careful, especially in light of the current environment, where it is important that we maintain a balanced portfolio of activity, and that we make sure that the investments we made would make our derisk and that we get attractive returns. So clearly in this day and age, capital is – we're very conscious of the fact that capital is very expensive, our priority is deleveraging and want to make sure that whatever capital we deploy gets very attractive rates of return.

Okay. That makes sense. And then one last one on aerospace, and it seems like you're assuming build rates stay relatively muted. And there's been some news about Airbus potentially taking the A320 up to, I think, a 47% verse 40% rate. So kind of two questions. Your guidance seems like you're assuming status quo. But again, partly what's going on today is a very significant destock. And it's obvious that comps will be negative maybe in the first quarter or first half, but do you have any sense of how long this destock could continue for? And then in the event, Airbus were to increase A320 to what I think they publicly been saying, is there any way to quantify what that could mean to you?

Yes. So you're absolutely right, we’re in a destocking mode and destocking is very acute given how sharply the rates have come down. And by the same token, when rates go back up and especially destocking has lasted for a long enough period of time, then the ramp up will be extremely strong. It is difficult to make a prognostic, but I think the first half of 2021 is going to be, as you mentioned, very challenging. We'll still be destocking. It's a long supply chain, but when things go back up, maybe in the second half, that should be pretty strong pretty quickly. It's impossible to tell. I mean, we've seen very – we've seen various sharp variations quarter-to-quarter. And what I can tell you is given how much work we've done on the costs side to reduce our costs, when it goes back up, we’ll spring back even more full swing than when we came down. When it happens? It’s anybody's guess at this stage.

Yes. Understandable. Thanks very much for your time.

Sure.

Your next question comes from Josh Sullivan from The Benchmark Company. Please go ahead. Your line is open.

Yes. Good morning.

Good morning, Josh.

Hey, Josh.

Just looking at the free cash flow, and congratulations, on the Horizon 2022 program, can you give us any idea of how much of disruption with COVID-19 has brought those plans forward, maybe where you thought you would be by now, but how much of that has actually been accelerated because of COVID-19?

Yes, I would say – thanks, Josh. Good question. I would say that the adage never let a good crisis go to waste. We've definitely kind of taken advantage of that in the sense that it's sharpened everyone's focused on cost reduction. We throughout each of the business units, I think you can see it in the numbers and in the cost flex in the third quarter, I think you can see really the outperformance of costs are coming down sharper, or the costs are coming down quicker than the revenues. So in terms of how much has really been brought forward, I would say, when we look at the Horizon 2022 initiative, we say, we've announced it's a €75 million program. We feel we're probably kind of, as I said earlier, over a third of the way through that. And we're probably further along, it's hard to say exactly how much further along we are, but we're – I would say we're definitely further along than we would be otherwise. So…

Got it. And then switching over to the can sheet market. Do you anticipate imports for can sheet in North America, just given the tightness in the market and then with the economics work for you to import anything from Europe at this point?

Yes, so we have seen an increasing imports of can sheet over the past year, that is due to large extent to a distortion induced by trade policies, where that there is Section 232 tariff coming into the U.S. of 10%. However, there are numerous exemptions that are being filed and granted, which essentially means that if you import from a foreign country, you're importing the enemy content of the can sheet at 10% less than what the domestic mills have access to. So it's one of those interesting situations where, while the administration is trying to help domestic mills are actually penalizing us by giving us a higher price of metal than what foreigners get – used to get an exemption. So, yes, we've seen a little increase of imports and I think imports will continue to play a role as long as we have this distorted trade policy. But remember that these are long supply chains and you get problems with what you do with the processed scraps, you can't return it to the mill as you can from if you're sourcing from a domestic supplier. And then a lot of those mills are in a time of stronger and stronger focus on sustainability, a lot of these imports come from sources in the world where power generation is much dirtier than it is here in the U.S. or Canada. And I think over the time this is something that will become less and less palatable as the carbon content of that aluminum sourced from overseas is penalized by the source of the electricity that is used to produce the aluminum, the high transportation cost and energy requirements to get it here and the lack of recyclability of the processed scrap. So we'll see, I think imports will continues to play a role, but not a major role in the balance. And quite frankly, we've been dealing with that for the past couple of years, and we've been doing just fine as you can see from our numbers.

Got it. And then just a follow-up to Curt’s question. As far as the battery box opportunity, have you have any – have you seen any specific nominations on the EV front for the battery box at this point?

So we were – we are participating in three projects that we communicated about nearly two years ago, we haven't had more nominations, but that's part of the conscious choice we've made to make sure that the we can digest all the projects we had secured and that we can also let the technology mature. There's many different designs for battery boxes and we want to make sure that the technology matures before we get into what would be the winning choices or the winning option for battery boxes. We have a substantial R&D projects that we're doing with two OEMs in Europe on ways to make battery boxes much more efficient than one – than what the traditional designs are today. We'll see when this matures, this is quite exciting and we've gotten a substantial grants from the UK government to do that. So I think more to go in a one year, 1.5 years time when that project would have evolved sufficiently and we would be working with those OEMs.

Great. Thank you for the time.

Sure.

[Operator Instructions] Your next question comes from Sean Wondrack from Deutsche Bank Please go ahead. Your line is open.

Hi, Peter and Jean-Marc.

Hi, Sean. How are you?

Hope you're doing well.

Yes.

So it's great to hear what's going on in the packaging and the auto market, Jean, the demand is resuming and you've pretty high capacity utilization there. So I'm just going to ask one more question sort of around the aerospace sector, which obviously is very difficult right now. But in the past, you've sort of discussed the five to seven year long contracts in aerospace. Obviously there's only a few suppliers as there, how do these contracts work and are they minimum take or pay or how does that sort of function in this kind of an environment? You have to work with your customers, I would assume.

Yes. So they are requirement based. So it's a share of markets, right, share of demand by the OEMs and within the frozen window, which can be say up to a year, it should take or pay. And obviously in the case of the – in the days we are living through, we have decided to work with our customers so that we don't impose on them to take-off the provisions for 2020, right. Because otherwise we could be forcing them to take volumes they don't need, at the end of the day that's not very conducive to a good business and a good strategic partnership with a customer and that would prolong the destocking into 2021 way too long. So we've – I think I commented on this on the prior earnings call, we decided to take more paying this year so that we adjust more quickly to the realities of the market. I mean, ultimately these are very strategic relationships that we've had for, at times longer than our lifetimes as individuals and we want to make sure they continue into the future. It's very collaborative and we want to make sure that we come from the crisis very solidly with our customers.

Right. And I think that makes a lot of sense. Have you seen any sort of peers or competitors who have been trying to maybe grow market share at lower prices? Or is that sort of based on the construct that you just described is that sort of limited?

Well, I don't think so. I mean – with the OEMs, we've got – we've made the comment on the Airbus contract we signed earlier this year, that’s a 10-year contract. These are the market share that’s fixed for 10 years, essentially. So there's no not really an opportunity of somebody to come in and get to do more business at the extent of somebody who has already got the contract. Now, Airbus doesn't do all their business with us. So other competitors may have different timeframes or contractual provisions, but in our case, we are now exposed to the market share except when contracts renew.

Yes. It's also really hard for competitors to do that in a period of destocking.

Right, right. That would make a lot of sense. And then just quickly on the cost front, obviously you guys have done a great job at taking out costs, starting with Project 2019. And basically through the corona outbreak, you talked about 65 million going forward excuse me – I think that was this year versus last year that you've taken out. Is it getting more and more difficult to take out additional costs and sort of where are you looking at this point given that you've done such a good job?

Yes. Thanks, Sean. So I think so a couple of things, number one. You remember our Project 2019 achievement was 78 million and our fixed cost reduction initiative as part of Horizon 2022 is 75 million. So we continue to see opportunities in the company and just the relative magnitude shows you that we're not finding them so hard to find. We think we still think there's a lot of opportunity and we'll never be done with this. So that's kind of part of the DNA of the team here. In terms of where the big opportunities are, we've talked in the past a lot about metal and kind of efficiencies around metal. There's also a lot of opportunities around manufacturing and kind of running our plants more efficiently, running our equipment more efficiently. We've done a lot of cost reduction around reducing external resources, there are times in a company like this where you've got a lot of external consultants, a good example of that is what we had going on in AS&I, when we were trying to turn it around, we brought a lot of people in to help us kind of get it fixed quickly and they did that, but it added a lot of extra cost as you saw in the kind of last two quarters of last year. So we've now kind of gotten rid of all of that cost and we're kind of running on our own at a much lower and a more sustainable base. So I'd say it's coming from a lot of different places, but I would say we still see quite a bit of opportunity.

Sounds good. And then just quick last one from me. Obviously, between the two presidential candidates can they – Biden has basically touted somewhat of a greener agenda, which could sort of present opportunities for your company. And I was curious if you thought about any of the opportunities there and how you might attack them.

Well, we'll see next Tuesday or later whenever the election gets over. I think we've got a very balanced portfolio of activities and some activities could benefit from the change in policy. But other activities may have benefits from a continuation of the policies. I think we have to see how it goes and I think, again the balanced portfolio of activities we have give us the ability to sail through, whatever change in policies are in for your good faction.

All right. Thank you very much and appreciate all the guidance here.

Thanks, Sean.

We have no further questions in queue. I would now like to turn the call over to Jean-Marc Germain, Constellium’s CEO for closing remarks.

Well, thank you very much, everybody again for your interest in Constellium and we are very proud of this quarter. We're very determined to finish the year on a strong note with strong free cash flow generation. And we look forward to being able to tell you more about the long-term when we come back to you in February with our Q4 earnings. Thank you so much for your interest. Goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.