Luxfer Holdings PLC · NYSE:LXFR
Luxfer — Q2 2021 Earnings Presentation
26 slides from Luxfer's earnings presentation, Jul 27, 2021
Slide 1: Second Quarter 2021 Earnings Presentation
SECOND QUARTER 2021 EARNINGS PRESENTATION Earnings Conference Call July 27th, 2021 Click here to edit key takeaway CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains 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 Com
Slide 3: Executive Summary
EXECUTIVE SUMMARY Results Driven by Solid Execution and Improving Macro Q2 2021 • Sales of $99.0M increased 29.2% YoY, FX benefit of $4.5M or 5.9% Financial • SCI acquisition added $8.0M in sales, or 10.4% to sales Performance1 • Adj. EBITDA increased 63.2% to $17.3M; margin improved 370 bps to 17.5
Slide 4: Alternative Fuel: Large Growth Opportunity
ALTERNATIVE FUEL: LARGE GROWTH OPPORTUNITY Luxfer Value Proposition Total Addressable Market Opportunity1 • Decades of experience and know-how • Proprietary technology and strong systems engineering capability $300M • Comprehensive range of cylinders with 2021 CNG by Hydrogen diameter from 16” (bus)
Slide 5: Growth Pipeline: Luxfer Innovation in Magnesium
GROWTH PIPELINE: LUXFER INNOVATION IN MAGNESIUM New Products New Applications New Capability Developing new Magnesium Engineered magnesium powders Enhanced Billet & Slab casting alloy photoengraving plate for used in manufacturing process process that increases quality, Graphic Arts application that
Slide 6: Transformation: Graphic Arts Business Unit Example
TRANSFORMATION: GRAPHIC ARTS BUSINESS UNIT EXAMPLE Simplification Productivity Growth and Culture and and Rooftop and continuous Talent consolidation Stabilization Improvement ✓ Org design to increase ✓ New leadership ✓ On-time delivery ✓ Lean management accountability improved from 53% to disciplin
Slide 7: Proactively Responding to Manufacturing Challenges
PROACTIVELY RESPONDING TO MANUFACTURING CHALLENGES Material Supply Ocean Freight • Joint planning to best serve customers • International container bookings • Frequent calls with key suppliers • Hazmat transportation focus • Adjusting safety stock given lead time • Relationship with specialized • Pr
Slide 8: Recent Performance by End-Markets
RECENT PERFORMANCE BY END-MARKETS Sales Change Q1’21 Q2’21 YTD Q2 Commentary 36% Defense, First • Growth in Magnesium defense sales +2.0% +14.2% +8.1% Response, & • Strong SCBA recovery Healthcare1 30% • Strong growth in passenger auto Transportation1 +10.8% +32.7% +21.0% • Slow aerospace recovery (
Slide 9: Q2 2021: Luxfer Financial Results
Q2 2021: LUXFER FINANCIAL RESULTS Performance Highlights Sales ($M)1 +29.2% • Sales increased by 29.2% from prior year $9.4 − Favorable FX of 5.9% driven by UK Pound $0.5 $8.0 $99.0 − SCI acquisition added $8.0M in sales, or 10.4% $4.5 − Growth in magnesium products & specialty $76.6 gas cylinders Q
Slide 10: Q2 2021: Segment Results
Q2 2021: SEGMENT RESULTS Q2 20211 Sales EBITDA Performance Commentary $52.5M $12.0M • Recovery in Industrial Magnesium products Elektron • Stronger Military sales Up 34.3% Up 126.4% • Strong auto catalyst volume recovery • Sales growth from SCI acquisition, specialty gas Gas $46.5M $5.3M cylinders a
Slide 11: Key Balance Sheet & Cash Flow Metrics
KEY BALANCE SHEET & CASH FLOW METRICS All in $M except ROIC Net Debt1 Working Capital1 $88.8 $82.4 $85.7 $84.1 $79.6 $39.5 Q2 2019 Q2 2020 Q2 2021 % of Q2 2019 Q2 2020 Q2 2021 Net Debt Annualized to EBITDA 1.1x 1.5x 0.6x Revenue 21.5% 28.0% 20.1% Free Cash Flow2 ROIC3 24.0% $12.1 $7.0 18.7% 15.0% -$
Slide 12: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES ✓ Investing in strategic growth opportunities and new product innovation STRATEGIC FILTERS Reinvestment ✓ Niche End Markets ✓ Funding transformation cost savings initiatives; $37M through 2020 ✓ Growth ✓ Attractive Margin ✓ Identifying inorganic options to drive ✓ Syner
Slide 13: 2021 Financial Guidance
2021 FINANCIAL GUIDANCE 2021 Guidance Expectations Revenue Growth • Supply disruptions and freight delays likely to 10% - 15% (including FX & Acq) impact 2H’21 results • Narrowed ‘21 guidance includes acquisition EPS $1.15 - $1.30 dilution of ~$0.10 cents in second half • Expect Revenue growth in al
Slide 14: ESG Improvements: Progress in All Categories
ESG IMPROVEMENTS: PROGRESS IN ALL CATEGORIES ENVIRONMENT • First internal ESG Scorecard review with senior management • Executing multiple projects to reduce carbon impact of operations • Recycling waste oil from fine magnesium for environmental and cost benefits • Conducting Carbon Life Cycle Analy
Slide 15: Strong Foundation for Long Term Success
STRONG FOUNDATION FOR LONG TERM SUCCESS Achievements Onwards Strategy Execution Accelerating Momentum CUSTOMER FIRST ✓ Developed and successfully executed • Enhanced portfolio has stronger margin Transformation Plan with total cash and growth profile with focus on savings of $30M+ Magnesium Alloys,
Slide 16: Appendices
APPENDICES APPENDICES Summary Financial Statements and Reconciliation of Non-GAAP Measures Click here to edit key takeaway CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT • TEAMWORK 16
Slide 17: Summary Income Statement
SUMMARY INCOME STATEMENT1 (Unaudited) 2021 2020 Variance 2021 2020 Variance $M Q2 Q2 $M % YTD YTD $M % NET SALES 99.0 76.6 22.4 29.2% 184.2 165.0 19.2 11.6% Cost of sales (73.1) (58.6) (133.1) (122.9) Gross profit 25.9 18.0 7.9 43.9% 51.1 42.1 9.0 21.4% Selling, general and administrative expenses (
Slide 18: Cash Flow
CASH FLOW (Unaudited) 2021 2020 2021 2020 $M Q2 Q2 YTD YTD Operating activities Net income 11.0 4.1 25.5 10.3 Net loss / (income) from discontinued operations 0.9 0.5 (5.0) 1.5 NET INCOME FROM CONTINUING OPERATIONS 11.9 4.6 20.5 11.8 Equity income of unconsolidated affiliates - 0.1 - 0.1 Depreciatio
Slide 19: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES1 (Unaudited) 2021 2020 2021 2020 $M Q2 Q2 YTD YTD Net income 11.9 4.6 20.5 11.8 Accounting charges relating to acquisitions and disposals of businesses: Amortization on acquired intangibles 0.2 0.2 0.4 0.4 Acquisitions and disposals 0.7 - 0.9 0.2 Defined benefit p
Slide 20: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES1 (Unaudited) 2020 2020 2020 2020 2021 2021 $M Q1 Q2 Q3 Q4 Q1 Q2 EBITA 12.7 7.5 10.5 10.5 14.5 13.5 Effective tax rate - per income statement 19.1% 19.0% 53.8% 16.5% 24.8% 21.0% Notional tax (2.4) (1.4) (5.7) (1.7) (3.6) (2.8) EBITA after notional tax 10.3 6.1 4.8
Slide 21: Q2 2021: Elektron Segment Results
Q2 2021: ELEKTRON SEGMENT RESULTS Sales ($M) +34.3% Adj. EBITDA ($M) +126.4% $2.4 $11.6 $52.5 $1.7 $0.1 $39.1 $5.0 $12.0 $5.3 $0.8 $0.1 Q2 2020 FX Price Volume Q2 2021 Q2 2020 FX Price Volume / Mix Cost Q2 2021 Reduction CUSTOMER FIRST • INTEGRITY • ACCOUNTABILITY • INNOVATION • PERSONAL DEVELOPMENT
Slide 22: Q2 2021: Gas Cylinders Segment Results
Q2 2021: GAS CYLINDERS SEGMENT RESULTS Sales ($M)* Adj. EBITDA ($M)* +24.0% Flat $0.4 $2.2 $0.4 $0.2 $0.3 $8.0 $0.6 $0.3 $5.3 $2.8 $46.5 $5.3 $37.5 Q2 2020 FX Acquisition Price Volume Q2 2021 Q2 2020 FX Price Inflation Volume / Cost Q2 2021 Mix Reduction * Excludes the impact of Discontinued Operati
Slide 23: Q2 2021 YTD: Luxfer Financial Results
Q2 2021 YTD: LUXFER FINANCIAL RESULTS Sales ($M)* Adj. EBITDA ($M)* +11.6% +32.6% $35.0 $1.1 $1.4 $1.1 $0.9 $1.9 $7.1 $0.6 $9.2 $7.5 $184.2 $26.4 $165.0 Q2 2020 FX Acquisition Price Volume Q2 2021 Q2 2020 FX Price Inflation Volume / Cost Q2 2021 Mix Reduction * Excludes the impact of Discontinued Op
Slide 24: Q2 2021 YTD: Gas Cylinders Segment Results
Q2 2021 YTD: GAS CYLINDERS SEGMENT RESULTS Sales ($M)* Adj. EBITDA ($M)* +10.7% 18.9% $0.8 $0.8 $0.6 $11.3 $0.3 $1.5 $6.4 $2.8 $9.2 $4.4 $9.5 $82.7 $74.7 Q2 2020 FX Acquisition Price Volume Q2 2021 Q2 2020 FX Price Inflation Volume / Cost Q2 2021 Mix Reduction * Excludes the impact of Discontinued O
Slide 25: Q2 2021 YTD: Elektron Segment Results
Q2 2021 YTD: ELEKTRON SEGMENT RESULTS Sales ($M)* Adj. EBITDA ($M)* +12.4% +40.2% $23.7 $7.8 $4.3 $3.1 $0.3 $1.0 $0.3 $0.3 $3.5 $90.3 $16.9 $101.5 Q2 2020 FX Price Volume Q2 2021 Q2 2020 FX Price Inflation Volume / Cost Q2 2021 Mix Reduction * Excludes the impact of Discontinued Operations (see appe
Slide 26: Restatement Table for Discontinued Operations
RESTATEMENT TABLE FOR DISCONTINUED OPERATIONS (Unaudited) 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2019 2020 $M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY FY Net Sales Gas Cylinders segment 40.3 39.6 37.9 35.7 37.2 37.5 32.3 34.9 36.2 46.5 153.5 141.9 Elektron Segment 62.0 58.4 52.9 46.6 51.2 39.1 45