PARIS - Constellium SE (NYSE: NYSE:CSTM), a leading manufacturer of innovative aluminum products with a market capitalization of $1.49 billion, announced today its plan to voluntarily file financial reports using U.S. domestic issuer forms. Starting this year, the company will present its annual, quarterly, and current reports in alignment with U.S. Securities and Exchange Commission (SEC) requirements for domestic filers. According to InvestingPro data, the company has maintained profitability over the last twelve months despite challenging market conditions.
Constellium's Chief Executive Officer, Jean-Marc Germain, expressed that this strategic move is expected to enhance the transparency and comparability of the company's financial results with U.S. peers. This transition is seen as a step towards potentially increasing shareholder value by improving eligibility for inclusion in certain stock indices and expanding strategic flexibility.
The company, which previously reported its financials in Euros and under International Financial Reporting Standards (IFRS), will now provide financial statements in U.S. Dollars and in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Constellium will restate its historical figures for the full years of 2022 and 2023, as well as for the first three quarters of 2024, to reflect this change. This transition comes as the company's stock trades near its 52-week low of $9.95, with InvestingPro analysis suggesting the stock is currently undervalued based on its Fair Value assessment.
Key changes from the transition to U.S. GAAP include adjustments in the reporting of operating leases, factoring, goodwill impairment, and pension and other long-term benefits. The company detailed the expected impacts on selected financial items for the full year of 2023, noting that these are unaudited and subject to change.
The shift in reporting standards is anticipated to affect various aspects of Constellium's financial disclosures, including the income statement, balance sheet, and statement of cash flows. For example, operating lease expenses will now be classified within cost of sales and selling and administrative expenses, and factoring fees will be recorded in selling and administrative expenses rather than finance costs.
The company also anticipates adjustments related to the impairment of goodwill and the reversal of property, plant, and equipment impairment at Muscle Shoals, leading to a net reduction in total assets and equity. Furthermore, changes in pension accounting will see past service costs amortized over the remaining service period of employees under U.S. GAAP, differing from the immediate recognition under IFRS.
This announcement is based on a press release statement and should be considered in the context of the risks and uncertainties outlined by Constellium, including market competition, economic conditions, and geopolitical tensions. The company maintains a global presence, with $7.8 billion in revenue for 2023, serving industries such as aerospace, automotive, and packaging. InvestingPro subscribers can access detailed financial health metrics, including the company's impressive free cash flow yield and comprehensive valuation analysis, along with 8 additional ProTips that provide deeper insights into the company's financial position.
In other recent news, aluminum product manufacturer Constellium has faced some challenges following its third-quarter performance which did not meet expectations. Both BMO Capital and Deutsche Bank (ETR:DBKGn) have responded to this development by adjusting their stance on the company's stock. BMO Capital reduced its price target from $22.00 to $18.00, maintaining an Outperform rating, while Deutsche Bank downgraded Constellium's stock from Buy to Hold and significantly reduced the stock's price target to $12 from the previous $22.
These adjustments were prompted by a decrease in demand across most of Constellium's markets, leading to a 5% year-over-year decrease in shipments to 352,000 tons and a 5% decrease in revenue to EUR 1.6 billion. The company reported a net income of EUR 3 million. In response to these challenges, Constellium revised its 2024 Adjusted EBITDA guidance to €580-600 million.
Despite these difficulties, Constellium remains committed to safety, cost management, and strategic growth. The company also repurchased 1.2 million shares for US $21 million in Q3 and began operations at its new Recycling and Casting Center in Neuf-Brisach ahead of schedule. These are among the recent developments for Constellium as it navigates through the current market challenges.
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