LUXFER HOLDINGS PLC INVESTOR PRESENTATION
March 2024
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CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Examples of such forward-looking statements include but are not limited to: (i) statements regarding the Company's results of operations and financial condition; (ii) statements of plans, objectives or goals of the Company or its management, including those related to financing, products, or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes," "anticipates," "expects," "intends," "forecasts," and "plans," and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections, and other forward-looking statements will not be achieved. The Company cautions that several important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates, and intentions expressed in such forward-looking statements. These factors include but are not limited to: (i) lower than expected future sales; (ii) increasing competitive industry pressures; (iii) general economic conditions or conditions affecting demand for the products and services it offers, both domestically and internationally; (iv) worldwide economic and business conditions and conditions in the industries in which the Company operates; (v) geopolitcal issues (vi) fluctuations in the cost of raw materials, utilities, and other inputs; (vii) currency fluctuations and hedging risks; (viii) the Company's ability to protect its intellectual property; (ix) the significant amount of indebtedness the Company has incurred and may incur and the obligations to service such indebtedness and to comply with the covenants contained therein; and (x) risks related to the impact of COVID-19. The Company cautions that the foregoing list of important factors is not exhaustive. These factors are more fully discussed in the sections entitled "Forward-Looking Statements" and "Risk Factors" in its Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S. Securities and Exchange Commission on February 27, 2024. When relying on forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and events. Forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update or revise any such statement, whether because of new information, future events, or otherwise.
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CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK
We are Luxfer
We help to create a safe, clean and energy efficient world
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LUXFER OVERVIEW (NYSE: LXFR)
Company Description
Luxfer is a global industrial company innovating niche applications in materials engineering. Luxfer's high- performance materials, components and high-pressure gas containment devices are used in defense and emergency response, clean energy, healthcare, transportation and general industrial applications.
Company Snapshot | |
Equity Market Capitalization1 | ~$280M |
Net Debt/Adj. EBITDA2 | 1.6x |
ROIC on Adj. Earnings2 | 9.4% |
Income Statement | Full Year 2023 |
(excluding Graphic Arts) | |
Revenue3 | $373.5M |
Adj. EBITDA2 3 | $43.3M |
Adj. Diluted EPS2 3 | $0.80 |
Balance Sheet | 2023 |
Net Debt | $69.9M |
Full Year 2023 Sales Breakdown (excluding Graphic Arts) by End Market
Defense, Transportation
First34%
Response &
Healthcare
45% General
Industrial
21%
by Geography | Asia Pacific | |
& Other | ||
18% | ||
United States | Europe | |
20% | ||
62% | ||
1 As of Dec 31, 2023 2 Non-GAAP numbers. Reconciliation in Appendix 3 Excludes the impact of Discontinued Operations & Graphic Arts
Global Industrial Company Innovating Niche Applications in Materials Engineering | 4 |
CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK
MANUFACTURING EXCELLENCE FOOTPRINT
Gas Cylinder
- Calgary, Canada
- Pomona, CA
- Riverside, CA
• | Nottingham, UK | Elektron | |||
• | Shanghai, China | • | |||
Saxonburg, PA | |||||
• | Tamaqua, PA | ||||
• | Flemington, NJ | ||||
• | Cincinnati, OH | ||||
• | Manchester, UK | ||||
Ten major manufacturing locations around the globe | 5 | ||||
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MATERIALS TECHNOLOGY LEADERSHIP
High | Innovation leader in the use | |
of magnesium alloys for critical | ||
Performance | ||
applications in aerospace, defense, | ||
Magnesium | ||
and other industries as well as in | ||
Alloys | ||
Elektron | flameless heating applications | |
Segment | Specialty | Expertise in high-performance |
specialty zirconium-based | ||
Zirconium | solutions for a broad range of | |
Catalysts | applications, including | |
pharmaceuticals and electronics | ||
High Pressure | Trusted manufacturer of high- | |
Gas Cylinders | pressure composite and aluminum | |
Segment | Composite | cylinders with high-performance, |
Cylinders | lightweight, and durable designs | |
employed in a variety of specialized | ||
applications |
MAGNESIUM ALLOYS
ZIRCONIUM CATALYSTS
CARBON FIBER-WRAPPED COMPOSITE CYLINDERS
Our Technology Expertise Drives Our Success | 6 |
CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK
ALIGNED WITH SECULAR GROWTH TRENDS
Clean
Energy
Light Weighting
Safety,
Health & Technology
Composite gas cylinders and systems used for Alternative Fuel applications, including Hydrogen and Compressed Natural Gas
Zirconium-based emissions control and industrial catalysis materials
Lightweight carbon fiber cylinders for breathing equipment used by first responders
Magnesium alloys for aerospace and automotive components
Zirconium in consumer technologies
Specialty magnesium and zirconium for
pharmaceutical and medical applications
Significant Tailwinds for Growth | 7 | |
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HIGHLIGHTS AND KEY MESSAGES
(amounts in millions, except EPS) | Q 4 2 0 2 3 | Q 4 2 0 2 2 | F Y 2 0 2 3 |
Adj. Sales | $87.8 | $106.3 | $373.5 |
Adj. EBITDA | $8.1 | $11.2 | $43.3 |
Adj. Diluted EPS | $0.13 | $0.25 | $0.80 |
Adj. Free Cash Flow | $14.1 | $15.9 | $16.8 |
Net Debt | $69.9 | $68.6 | $69.9 |
Net Debt : EBITDA | 1.6x | 1.2x | 1.6x |
*Note: Adjusted financials exclude Graphic Arts; Free Cash Flow defined as Operating Cash Flow less Capital Expenditures
Q 4 F I N A N C I A L R E S U LT S
- Overall results above expectations for revenue, profit, and cash
- Strong EBITDA margin in Gas Cylinders reflected ongoing improvements in cost recovery
- Challenging macro impacted the Elektron General Industrial end- market, and resulting profitability, as expected
- Further sequential improvement in free cash flow resulted in lower net debt
Note: Including Graphic Arts, Q4 2023 sales were $95.9M, Adj. EBITDA was $7.1M and Adj. EPS was $0.09, all ahead of prior expectations
C O M P R E H E N S I V E S T R AT E G I C R E V I E W
- Planning immediate divestiture of Graphic Arts which no longer fits our value proposition
- Confident the long-term plan for remaining businesses can deliver profitable growth in 2025 and beyond
- Strategic optionality identified for Elektron and Gas Cylinders segments
A C T I O N S L I F T I N G F I N A N C I A L P E R F O R M A N C E
- Enhanced cost pass-through in Gas Cylinders
- Elektron supply stabilizing; volume recovering; improving outlook
- Consolidated manufacturing footprint supporting margin improvement
- Established insurance cover for Elektron legal matter
Strong Performance in Gas Cylinders; Continuing Industrial Weakness in Elektron 8
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ACTIONS TAKEN TO IMPROVE PERFORMANCE
LUXFER BUSINESS SYSTEM
REDUCING COSTS,
IMPROVING MARGIN & CASH FLOW
- Consolidated Elektron Powders plants from 3 to 2 to deliver $900K in annual savings; selling closed site in H2 2024
- Established insurance recovery for Elektron legal matter: expect elimination of future financial exposure and taking action to recover historical legal expenses
- New long-term agreement reached with major SCBA customer with enhanced carbon fiber cost pass-through and immediate margin benefit
- Completed Alternative Fuel footprint simplification delivering $1.1M in annual savings and increased output
- Managing working capital and reducing inventories to further improve cash flow; new source of magnesium for some of our North American facilities
Structural Moves Completed To Achieve Sustainable Long-Term Benefits | 9 |
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FY 2024 OUTLOOK
F U L L Y EA R 2 0 2 4 G U I DA N C E *
Sales Growth | -3% to +1% | |
(incl. volume, price, and FX) | ||
Adjusted EBITDA | $42M | - $46M |
Adjusted Diluted EPS | $0.70 | - $0.85 |
Free Cash Flow | $20M | - $24M |
*Note: The 2024 Full Year outlook excludes Graphic Arts business
A S S U M P T I O N S *
Capex | $11M - $14M |
Tax Rate | ~23% |
FX GBP:USD | 1.25 |
Net Debt: EBITDA | ~1.5x |
E X P E C TAT I O N S
- Full year Gas Cylinders performance bolstered by impact of new agreements and cost savings initiatives
- Continued Industrial end market weakness impacting Elektron during H1 2024
- Overall earnings recovery begins in Q2
- Continue to generate strong operating cash with 100% adjusted net income to cash conversion and minimal restructuring payments
- Increased Capex investment to drive organic growth within strategic review framework
- Recovery of historical legal expenses regards to legal matter provides incremental upside to earnings and cash
Modest Earnings Growth on Recovery from Weaker Second-Half 2023 | 10 |
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Disclaimer
Luxfer Holdings plc published this content on 21 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 March 2024 12:03:24 UTC.
