Constellium SE (CSTM) 2020 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Constellium First Quarter 2020 Results Conference Call. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to turn the call over to your host, Mr. Ryan Wentling, Head of Investor Relations.

Thank you, operator. I would like to welcome everyone to our first 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 to Jean-Marc.

Thanks, Ryan. Good morning, good afternoon, everyone, and thank you for your interest in Constellium.

At Constellium, the health and safety of our employees is our first priority. We have implemented many initiatives to protect our employees in response to the COVID-19 pandemic. We have increased cleaning and sanitation, enforced social distancing and provided our personnel with personal protective equipment. We have also implemented strict visitor policies, banned business travel and enforced a work-from-home policy where possible.

Constellium is a key part of the supply chain of many critical industries. To that end, in the U.S., our plants have received the distinction of an essential industry which allows us to continue to operate despite state's stay-at-home orders. All of our plants, with the exception of our automotive-specific plants, have continued to produce to meet demand for this critical industry such as beverage, food, health care, national defense and transportation. I am very proud that despite challenging conditions, the Constellium team has stepped up to meet the challenge.

I would also like to highlight our strong financial position. The finance team, led by Peter Matt, has worked extremely hard over the past 3, 4 years to improve our cash flow profile, increase our liquidity and push out our debt maturities. These actions will help us tremendously in successfully navigating this crisis.

Now turn to Slide 6, and I would like to highlight some of the decisive actions Constellium has taken to limit the financial impact of the pandemic. Rest assured, this is not a complete list. I think it is important to lead from the top. Therefore, the Board, the executive committee and myself have all taken a temporary reduction in our compensation.

We have aggressively reduced spending to match the challenging conditions that we are currently facing. This includes flexing variable costs to better match production levels. The reduction in our workforce was necessary to reflect current operating conditions. Nearly 5,000 of our 13,000 employees or 40% of our workforce are on some type of partial unemployment or temporary layoff scheme.

To build momentum around reducing our spend, we have established spending committees that must approve all spending over preset thresholds at plant and corporate levels. For example, any corporate spend above EUR 1,000 is required to be approved by the corporate controller. For instance, again, at our Issoire plant in France, any spend over EUR 5,000 requires approval by the plant manager.

On capital spending, we are reducing our 2020 target to EUR 175 million, a EUR 96 million or 35% reduction from 2019, and EUR 75 million lower than the target provided in February. We are, for the most part, limiting our capital spending to essential maintenance or spending to ensure orderly restarts of capacity when demand returns. We are very serious about reducing spending and have already identified the specific cuts needed to achieve our revised target. Any new capital project requires executive committee level approval.

We are also utilizing governmental aid programs where available to help weather the crisis. This includes utilizing partial employment programs in Europe that reduced our costs during this period of reduced operating rates. In addition, we are deferring social contributions in Europe and deferring certain payroll taxes and pension payments in the U.S.

We are also extremely focused on optimizing working capital. We are reducing our metal purchases to be in line with our production rates and have shipped out our finished goods inventory where possible.

Lastly, we have moved aggressively to augment our liquidity position. Our strong free cash flow generation in the first quarter brought our liquidity balance to EUR 616 million. We signed a new $166 million delayed draw term loan that will add to our liquidity in April. We are also pursuing low interest rate loans through European government-sponsored borrowing programs in France, Germany and Switzerland.

Now let's move to Slide 7 and discuss our very strong first quarter performance. Shipments were 393,000 metric tons, a decrease of 5% compared to the first quarter of 2019. Revenue decreased 6% to EUR 1.4 billion. This was primarily driven by lower shipments and lower metal prices. It is important to remember that we substantially pass through metal prices. Net loss of EUR 31 million compared to net income of EUR 24 million in the first quarter of 2019. The change in net income was largely due to a noncash unfavorable change in unrealized gains and losses on derivatives related to our commodity hedging position.

Adjusted EBITDA increased 9% to EUR 147 million in the first quarter of 2020. P&ARP and A&T continued to deliver strong results, while AS&I delivered much improved year-over-year results. I am exceptionally proud of the AS&I team and believe this was a great first step in the right direction. Our very strong first quarter results came despite headwinds from the COVID-19 pandemic in March, which we estimate to have been a headwind to adjusted EBITDA of between EUR 10 million and EUR 20 million across the 3 segments.

Our free cash flow was very strong at EUR 87 million. This performance underscores our objective of being consistent generators of free cash flow. Our first quarter free cash flow did benefit from some working capital release due to the slowdown in activity at the end of the quarter. Deleveraging remains our top priority for free cash flow generation. As a result of a strong adjusted EBITDA and free cash flow performance in the first quarter of 2020, we reduced our leverage to 3.7x. Our liquidity position at the end of the quarter was strong at EUR 616 million.

Now I will hand over to Peter to provide more details on our financial performance. Peter?

Thank you, Jean-Marc, and thank you, everyone, for joining the call today.

Turning now to Slide 8. You will find the change in adjusted EBITDA by segment for the first quarter of 2020 compared to the same periods of last year. For the first quarter of 2020, Constellium achieved EUR 147 million of adjusted EBITDA, an increase of EUR 12 million or 9% year-over-year. P&ARP adjusted EBITDA of EUR 66 million increased by EUR 7 million or 12% year-over-year. A&T adjusted EBITDA of EUR 52 million was comparable to the first quarter of 2019. AS&I adjusted EBITDA of EUR 34 million increased by EUR 5 million or 17% compared to last year. Lastly, holdings and corporate costs of EUR 5 million were comparable to last year.

Now turn to Slide 10, and let's focus on the P&ARP segment. Adjusted EBITDA of EUR 66 million increased 12% compared to the first quarter of last year. Volume was a EUR 6 million headwind as shipments fell across packaging, automotive and auto rolled products, primarily due to reduced demand in Europe late in the quarter resulting from the effects of Covid-19.

Price and mix was a tailwind of EUR 5 million as we benefited from improvements in pricing and a better packaging and automotive mix. Costs were a tailwind of EUR 7 million on solid cost control, primarily due to improved recovery at our plants and, to a lesser extent, favorable metal costs and reduced energy costs. While we no longer report Bowling Green results separately, I am proud to note that Bowling Green adjusted EBITDA was positive in the first quarter. Lastly, FX translation was a tailwind of EUR 1 million in the quarter.

Now turn to Slide 11, and let's focus on the A&T segment. Adjusted EBITDA of EUR 52 million was comparable to last year. Volume was a headwind of EUR 14 million on lower TID shipments due to weaker end-market demand, heightened by the effects of COVID-19. Price and mix improved by EUR 19 million in the first quarter due primarily to a very good mix in aerospace. Costs were a headwind of EUR 6 million, primarily related to higher raw material costs. Lastly, FX translation was a EUR 1 million tailwind in the quarter.

Now turn to Slide 12, and let's focus on the AS&I segment. Adjusted EBITDA of EUR 34 million increased 17% compared to the first quarter of 2019. Volume was a EUR 1 million headwind as continued growth in automotive structures was offset by lower other extruded product shipments, both of which were affected by COVID-19-related weakness in March. Price and mix was a tailwind of EUR 6 million due to improved price and mix across both Automotive Structures and Industry. Costs were comparable to the first quarter of last year.

I want to echo Jean-Marc's comments recognizing the good performance of AS&I in the quarter. The business returned to a year-over-year adjusted EBITDA growth through solid execution and a focus on cost control. While we are not yet ready to declare victory, we remain confident that we are on the right track.

Now let's turn to Slide 13 and discuss our balance sheet and our liquidity position. At the end of the first quarter, our net debt was EUR 2.1 billion, and we have no significant near-term maturities. Our leverage at the end of the first quarter was 3.7x. We generated strong free cash flow of EUR 87 million during the first quarter, supported by strong execution in each of our businesses.

Our cash plus available -- plus amounts available under committed facilities was EUR 616 million at the end of the first quarter. During April, as Jean-Marc noted, we closed a $166 million delayed draw term loan to further improve our liquidity position. We are also pursuing approximately EUR 200 million of low interest loans through European government-sponsored borrowing program. We are targeting EUR 350 million of additional liquidity through these initiatives.

In challenging times like these, reducing costs and preserving liquidity are paramount. We are well prepared to deliver on both. As Jean-Marc noted, we are aggressively cutting fixed costs and are flexing our variable cost to better match production levels. While our ability to cut cost depends on many variables, we believe that in the current environment, our cost structure is approximately 75% variable or semi-variable and 25% fixed. This split includes metal, which is largely a variable input. We will leave no stone unturned to further reduce costs while also staying prepared for volumes to return.

While we are unable to provide guidance at this time, we wanted to provide a scenario to demonstrate the strength of our business. In a case where our plants run at an average utilization of approximately 70% across the system, we would burn less than EUR 100 million of free cash flow for the remainder of 2020. The majority of this cash burn would occur in the second quarter as we adjust to the lower operating rate. This scenario, when combined with our strong liquidity position, gives us confidence in our ability to navigate through the COVID-19 crisis and potentially challenging economic environments to follow. Our preference in the near term will be to preserve liquidity. So we are prepared for the unexpected. Once our visibility improves, we expect to continue deleveraging our balance sheet.

I will now hand the call back to Jeff -- Jean-Marc, excuse me.

Thank you, Peter. Now let's turn to Slide 15 and provide an end market update.

We believe our balanced portfolio of end market exposures is a competitive advantage during challenging times like these. I'll start with the packaging market. Packaging represents 37% of our LTM revenue. We continue to see strong market demand in both North America and Europe. Further evidence that this market is both recession resilient and secular growth. We believe the packaging market has long-term secular growth tailwinds driven by customer preference for aluminum cans.

Aluminum cans are infinitely recyclable and clearly the most sustainable beverage packaging container. Our customers continue to move forward with investments in new can lines, which should drive incremental demand for can sheet in the coming years. The consumer preference trend is only one of the tailwinds 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. Clearly, we are constructive on the can sheet market in the near, medium and long term.

Now let's turn to automotive. As I mentioned earlier, automotive OEMs began curtailing production in March and their facilities remain largely idle. Most OEMs are expected to restart production in May. The demand for our products will be dependent upon the speed and trajectory of the recovery once our customers resume production. However, over the medium to long term, we believe automotive remains a secular growth market for aluminum. Customers continue to prefer larger vehicles while regulations are aimed at increasing fuel efficiency or 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 their need for range. Constellium is well positioned to realize the benefits of this secular shift to aluminum in automotive and the electrification of the fleet.

Let's turn now to aerospace. Aerospace represents 15% of our LTM revenues. The near-term outlook for aerospace is uncertain due to the effects from COVID-19 and the 737-MAX. Aerospace OEMs announced temporary stoppages in March and April. Operations have largely restarted but at lower build rates. We expect this reduced build rate to continue through 2020 and potentially longer. In the long term, we believe that the fundamentals driving aerospace demand growth remain intact. Past demand shocks suggest that passenger traffic should recover over the medium term.

In TID, we expect to continue to expand in niche products in a diversified range of markets over the long term. In the near term, the defense and rail markets remain strong but most industrial and transportation markets are weak. It is unclear when these markets will rebound.

In closing, I again want to thank the Constellium team for their tireless efforts during this trying time. Given the uncertainty around the extent and duration of the effects of the pandemic, we are withdrawing our financial guidance until our visibility improves. Again, our first priority remains the health and safety of our employees and their families. We are committed to working with our suppliers and our customers to weather the current storm together. As always, we remain committed to operational execution, harvesting the benefits of our investments, disciplined capital deployment, debt reduction and shareholder value creation.

With that, operator, we will now open the Q&A session. Operator?

(Operator Instructions) Your first question comes from the line of Chris Terry with Deutsche Bank.

I had a few questions I wanted to run through on the markets and then on cash flow. I just wanted -- starting in the aerospace sector first. I think previously, you talked about having decent visibility to the middle of the year and then more uncertain after that. Obviously, Boeing and Airbus had provided updates in the last 24 hours. I just wondered whether you could give another update on what do you actually know, how far out you know what orders might be, et cetera? If you could just talk through that specifically in the relationships with the customers on the aerospace side.

Sure, Chris. And we are doing well. Thank you -- or as well as can be in the circumstances. So on aerospace, we do have visibility, typically 3, 6 months out in terms of order book. And we continue to see, even though there is a little bit of reduction in order rates, pretty decent orders. But what that means when you combine it with the reduced rates that they have announced, at some point the demand will have to catch up with -- demand for our products will have to catch up with demand for our aircraft. And I think that's what we meant in the prepared remarks, we think that demand will go down in the second half of the year and should also continue to go down in 2021.

Okay. And then just a question for Peter. I appreciate the scenario you went through a little bit earlier. I just wanted to clarify a couple of points on that. Firstly, can you maybe just tie in -- on the overall year on working capital, you obviously had a very, very strong 1Q. Does that mean sort of you made a step change already in 1Q, so the starting base is tougher from working capital from here? Or I just wondered if you could step through the opportunities. And then just tying into that scenario, I was just a little bit confused about 2Q versus second half, if you could just talk through that.

Sure. Okay. So first of all, I just want to emphasize, the scenario is not meant to be guidance, right? So we're trying to just create a scenario that would construct what the business might look like under this average utilization rate. So in terms of trade working capital, I think what you can expect is that as you slow down, as the business decelerates, there's going to be some trade working capital generation. And in the situation where we are now, we've got this combination of businesses that would be slowing down to that rate, so therefore, cash flow generative. But we've also got some businesses that are shut down and would be ramping up. So therefore, consuming trade working capital.

So it's a -- as we kind of think about the model, there's some puts and takes on either side. And I would expect trade working capital -- in the model, trade working capital shows up as a kind of a modest positive in the -- for the course of the rest of the year.

Okay. And maybe just a follow-up on that 70% guidepost. I mean can you talk through what current utilization rates have been, just to sort of benchmark what that -- how that 70% is in context?

Sure. So -- and again, this is a case study, right? That's not what we're forecasting for the rest of the year. We don't know. But what we're saying is if you look at the different markets, right, aerospace, as I mentioned, has continued to be okay, but we believe it's going to go down at some point like OEMs are at -- at the same rate as what OEMs are, reducing their build rates. So 20%, 30% down.

We saw a sharp deceleration in TID, right, all the niches we're in. So if you're in that A&T segment, at the moment, we've been running in a 70% range roughly. If you look at -- and sorry, I'm talking here about April, right, the current condition. If you look at packaging, it's pretty much been intact, right? So we've been running at close to 100%, with the exception that late in March and early April, we had to shut down our plant in Neuf-Brisach for a few days to implement -- to have time to implement all the sanitation measures and the social distancing rework so forth -- and so on. But we are back to that 95% kind of run rate.

And then if you look at automotive, well, clearly, at the moment, we're running at less than 20% and that's been the case in Europe since nearly -- the early period of March. So it's a mixed bag of all those different rates. And as you can tell, it's impossible to know how it's going to shape up because we don't know, for instance, how OEMs in automotive are going to restart. We don't know when exactly they give dates, but those dates get pushed out. And then we don't know the ramp-up either. And therefore, it's very difficult to make any kind of prediction in the future.

But I think the whole point about this case was to demonstrate how resilient we are to really what you would describe as dire market conditions, right? We've got about half of our business, which is not really impacted by the prices, and the other half, which is quite impacted by prices. And that's the fact that we will be burning less than EUR 100 million of free cash flow running at 30% down and allowing for a decline and then a ramp back up in there is, I think, very good news.

Okay.

Chris, sorry, just to pick up on -- you also asked about Q2 trade working capital. So just to pick up on Q2, the big thing that we have going in Q2 on the trade working capital side is we've got the restart of the auto business, right? So that is a -- that will be a consumer of trade working capital.

The other thing that I would note is, as we said in the comments about the scenario, the bulk of the negative cash flows is in the second quarter. Because as we reconfigure the business for a lower operating rate, there's working capital consumption in that, and it's hard to -- maybe just the better way to put it is it's hard to optimize trade working capital in that scenario. So we would expect Q2 to be a use of trade working capital.

Your next question comes from the line of David Gagliano with BMO Capital Markets.

Just picking up on the 2Q commentary just for a second. Just -- I appreciate the cash flow commentary. I was wondering now that we're 1/3 of the way through the quarter, if you could just give us a little more color on the actual operating expectations, both in terms of volumes and margins per tonne in each of the 3 segments, I'm not sure, given the timing here in the order books. You can probably provide more color on that to reset, level set, et cetera.

Yes, David, that's a difficult question. I don't think anybody has got a real answer to it. I mean we don't know. In some segments, we do know, right? In can sheet, we have a decent idea. In aerospace, it's tricky. In aerospace, we've got a decent idea. In the other markets, we just don't know. So I think it will be completely not prudent from us to project anything for the second quarter.

This -- our first priority, as we said, is making sure that we operate in a safe and healthy fashion for our employees. And the second priority is getting very close with our suppliers and our customers to be able to constantly adapt our system to changing market conditions.

So when we went into the crisis, we got calls on Friday morning, asking us, are you delivering next week's orders? And from the same customer on Friday afternoon, sorry, we're shutting down the plant, we're not taking any orders anymore -- any deliveries anymore. And we have to turn back some trucks. And we are still in that same environment where there is complete uncertainty as to what's going to happen. And so what we're focused on is getting that very close connection to customers, suppliers, running the supply chain as efficiently as possible. And then the chips will fall where they fall.

Knowing that we've done a lot to make sure that we adapt our cost structure, we reduce our costs, and we reduce our working capital or reduced our capital expenditures so that we protect cash, we protect liquidity, and we're able to respond to the market environment. Beyond that, I cannot tell you where we're going to land.

And David, just to put it in perspective, as Jean-Marc said in his prepared remarks, just the impact on EBITDA in March was 10 to 20, right? So that's a significant impact that came quite quickly.

Right. And I appreciate that. And I was going to actually follow up on that. So the impact in March was $10 million to $20 million. And -- so is the expectation -- we've got a couple of moving parts here. Seasonally, second quarter is historically anyway stronger than the first quarter. Is it reasonable to assume that $10 million to $20 million impact on a monthly run rate basis is going to be higher in the second quarter than what we got in March or at least in April?

So I think the one thing that needs to be said about the impact in March is it's an impact $10 million to $20 million versus what could have been, right? Now the other thing is -- the thing -- we've got to remember that the crisis started in Europe sooner than in North America, and most of us are based in North America. So in the U.S. So we've seen things happening to us 2, 3 weeks later. It started earlier in Europe. But at the same time, it started just really impacting us beginning of March.

So essentially, what you have is you've got a system that is in full ramp-up mode, getting ready for the busy season, you got all the costs in, you've got all the orders. As I mentioned, you've got customers pounding the table saying deliver, deliver. And then all of a sudden, we fall off the cliff. So you basically have all the costs, then you don't have the revenues. So obviously, the impact of $10 million to $20 million is larger than what it could have been if it had happened in a more gradual fashion where you can adjust your cost structure.

So we've done a lot to adjust the cost structure. We've done a lot to adjust all the elements of cash flow. So we're going into April in a different shape than we went into March. So I think it's difficult to extrapolate, the $10 million, $20 million, into a monthly run rate or a quarterly run rate.

Okay. That's helpful. And then just one last question for me on -- a bit of a clarification question. I appreciate the additional information regarding the different capacity utilization rates in aero, packaging and auto currently. Obviously, the way the results are reported, each of those end markets are kind of mixed into each segment. So I still think it's a little challenging to extrapolate where we are overall currently relative to that 70% figure that was flagged in the prepared remarks. Where are overall operating rates now?

They would be in that range, knowing that auto is basically at 0 or less than 20%.

Okay. So roughly 70% currently? Is that what you're saying when you say in that range?

Yes.

Our next question comes from the line of Gus Richard with Northland.

Could you talk a little bit about you taking costs out of the system? How much has come out of cost of goods, SG&A and R&D at this point? And then of the remainder that's in cost of goods, how much is variable versus fixed?

Okay. So as we made the comment before in the prepared remarks, our fixed variable split is kind of 25% fixed, 75% variable, right? And that includes metal. So if you unpack that, what you get to is you get to a -- excluding metal, we would say that we're kind of 40% variable and 60% fixed on the other costs. Just by looking at -- it's just the math of our metal -- if you look at metal, it's 62%, 63% of our raw material -- or of our total cost.

Got it. That's very helpful. And then how much came out of SGA and R&D?

Well, so what I would say is on SG&A, they're more -- it's hard to give a precise number on that per se because we've lumped them in the other nonmetal costs. I think it's fair to say that a lot of those costs are a little bit more sticky in the sense of -- slightly less variable. So maybe a slightly lower percentage than what I just provided. But I would say in general, kind of that's a good rule of thumb to use.

Okay. And then the other one for me is, can you talk a little bit about across your end markets how much inventory is at your customers or what I would call the channel?

Well, I think -- if you look at packaging you've got normal inventories. If anything, a lot of -- some of our customers have bought a bit more to make sure that they would insulate themselves from any supply disruption, but this is fast-moving inventory. In aerospace, as I mentioned, I think we're building up inventory in the supply chain. If you look at our sales compared to the build rates, where they're going, I think we're building up as an industry inventory in the supply chain. And in auto, there was such a sharp reduction, an immediate stoppage to offtake that I don't think there is that much inventory in the supply chain.

And so we'll -- that's going to create some challenges when we restart because everybody, I guess, will -- the auto supply chain depends on many, many, many different suppliers, and the ability to have the right inventory in the right place to restart is going to be a challenge for many, many suppliers. And depending on how gradual or fast this restart will be, that may create some challenges.

Got it. Excellent job in a bad environment.

Thank you. We'll take it as an encouragement.

Our next question comes from the line of Matthew Fields with Bank of America.

A couple of questions on the balance sheet for me. The first was just wanted to confirm that, that EUR 166 million delayed draw term loan is secured and it's not drawn yet.

That's correct.

Okay. And then you mentioned some other liquidity measures earlier in the call, low interest government loans in Europe, et cetera. For a total value of -- I might have missed the number, was it EUR 330 million? Or did I hear that wrong?

EUR 350 million. EUR 350 million. In that area. Yes. And that includes -- yes, sorry, to be clear, that includes the delayed draw term loan. So the total liquidity add would be in the area of EUR 350 million. And we have very good line of sight on the piece that's not in place yet, the piece beyond the 156, but there are a couple of different pieces to it. That's why we're saying kind of in the area.

Are those mostly those government-sponsored loans?

Yes. Yes, they are.

Okay, great. And are those secured loans as well?

It depends on the country, but in most cases, yes.

Okay, great. And then my follow-up to that is, you guys do have a decent amount of secured capacity. Understand EUR 350 million goes a long way, but do you think with the strong rally your bonds have had over the last month that you might want to hit the market to kind of term out maturities, especially the 2021? I know it's not that big, but the market has rallied back a lot and clearing out a good amount of years in the front end might go a long way.

Yes. So it's a great question, and it's something that we are looking at, and we're obviously kind of thinking about all the time. One of the things we like about the liquidity structure we put in place is it gives us time to kind of observe and take stock on where the markets are and also kind of bridge some of the volatility that's been in the market. So -- but it's something that we'll definitely look at.

(Operator Instructions) Your next question comes from the line of Sean Wondrack with Deutsche Bank.

Just one quick clarification. And I hate to do this, but just on the 70% utilization rate, does that include -- in the downside scenario, does that include Q1? Or would that be the run rate for the rest of the year?

No, that's a run rate number.

For the rest of the year.

Okay. Understood. And then when you think about the automotive market, I totally appreciate that visibility is really constrained here. Can you maybe talk about what you're seeing in Europe versus the U.S.? Are you seeing sort of more activity there? Are you hearing from the OEMs a little bit more relative to the U.S.? Is there any difference you're kind of seeing there? I think that would be helpful.

Not really. I think everybody is a little bit unsure about when they can restart, if they can restart. And I think those restarts are dependent on so many factors, right? As I mentioned earlier, you need the supply chain to be able to restart with you. Otherwise, you've got to think you've got a problem. You need employees to want to come to work and absenteeism can be a problem in some parts of Europe or the U.S. So you got clusters or hot epidemic areas. You've got issues around what demand will be. So I think it's very foggy. It's early.

And then just my last one. When you think about the P&ARP segment -- and congratulations on getting to a positive EBITDA there and in Bowling Green. Do you still expect the mix shift here over time to auto sheet to sort of help offset any kind of pricing weakness and maybe some of the absorption costs on EBITDA per tonne basis?

Yes. So I think what's happening here is -- so first, we're really super happy with the Bowling Green's performance and we had to shut down Bowling Green for 2 weeks of that month, right? So being EBITDA positive with just 2.5 months in a 3-month period is a real difference from where we were 2 years ago or even last year. So we're really happy with it. And when it restarts, it will be a great factory and a great part of the Constellium system.

Now that said, yes, I do anticipate that over time, auto sheet will continue to grow, can sheet will be -- continue to be strong. And as a consequence, there will be a little bit of tightening. But in the medium term, if you look at any scenario in the past where automotive took a nosedive, so if you look at 2008, 2009, it took some time before all build rates went back to pre-crisis levels. So that will impact the supply-demand dynamics over the period when the build rates go back to a "normal" level.

So if you've got a V-shape recovery, if you got a U-shape recovery, an L-shape -- which I don't think is a recovery really, but -- depends on your calligraphy, we'll have a different picture in terms of what the supply-demand dynamics will be and what the pricing power will be. So again, but we are ready for any scenario. And I think what Peter was describing around all the steps we're taking about managing our cash flows, to our working capital, Capex, managing our cost structure, fixed and variables, managing our liquidity and doing it prudently such that -- we want to have access to liquidity, but we want it to be cheap, right? Doing all these things are giving us the runway to be able to weather whatever comes at us.

I would now like to turn the conference back to Jean-Marc Germain, CEO of Constellium.

Well, thank you very much, everyone, again, for your interest in Constellium. As you can see, we are really focused on the health, safety of our employees first, staying very close to our suppliers and our customers to be able to operationally respond to the ever-changing market conditions. And as you saw, we are very cautious and aggressive about managing our cost structure so that we emerge from this crisis stronger. We've got a great platform. I think the Q1 results are showing it. And we'll weather this storm and come out stronger. Thank you again.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. And have a wonderful day. You may all disconnect.